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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________________ to ______________________
Commission File Number 0-20317
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GLOBAL SPILL MANAGEMENT, INC.
(Exact name of registrant as specified in its charter)
Nevada 88-0270266
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization identification No.)
37-61 39th Street, Long Island City, New York, 11101
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (718)482-7878
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Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock ($.001 Par Value)
Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes No X
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Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K [ ].
As of October 14, 1996, 11,215,462.17 Shares of Common Stock ($.001 par
value) were outstanding and the aggregate market value of the Common Stock held
by non-affiliates was approximately $3,256,834.48 determined at the average of
the closing bid and asked prices on that same day based upon 5,210,935.17 shares
owned by non-affiliates.
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Table of Contents
Part I
Item 1. Business
Item 2. Properties
Item 3. Legal Proceedings
Item 4. Submission of Matters to a Vote of Security Holders
Part II
Item 5. Market for Registrant's Common Equity and Related
Stockholders Matters
Item 6. Selected Financial Data
Item 7. Management's Discussion and Financial Analysis
Part III
Item 8. Financial Statements and Supplementary Data
Item 9. Changes in and Disagreements with Accountants on Accounting
And Financial Disclosures
Part IV
Item 10. Directors and Officers of Registrant
Item 11. Executive Compensation
Item 12. Security Ownership of Certain Beneficial Owners and Management
Item 13. Certain Relationships and Related Transactions
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
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PART I
Item 1. Description of Business.
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Global Spill Management, Inc., a Nevada corporation (hereinafter referred
to as Global), was organized under the laws of the State of Nevada on September
26, 1990 under the name Happy Mergers, Inc. ("Happy Mergers"). On November 25,
1991, Global Spill Management, Inc., a Delaware Corporation organized on June
12, 1991, was merged with and into Happy Mergers. Happy Mergers, which was the
surviving corporation, changed its name to Global Spill Management, Inc. As of
June 28, 1996, the Company entered into a reverse acquisition with Phoenix
Wrecking Corp. (Phoenix), a corporation organized and incorporated under the
laws of the state of New York on April 2, 1986. In this acquisition the
shareholders of Phoenix gained voting control of Global. As a result, Phoenix is
deemed to have acquired Global and Phoenix, is thus, operating as Global (
hereinafter referred to as the Company).
As a result of the June 28, 1996 reverse acquisition with Phoenix, certain
changes have occurred in the services offered and operations of the Company. The
Company has sold its four operating subsidiaries. (See Acquisitions-Subsidiaries
and Business Operating Subsidiaries). The Company anticipates increasing and
expanding its services to include industrial demolition. Mainly, the Company
intends to phase out the Spill Response and Recovery portion of its services.
The Company maintains its involvement in the diversified business of
environmental clean up and related businesses. The Company carries on its
business as a solid waste management, environmental abatement and specialty
contracting company focusing on, site and facility remediation. The Company
continues to provide its services and sells its products to a broad range of
public and private customers. The Company's fiscal year ends on June 30.
Industry Background.
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The Environmental Protection Agency (the "EPA") estimates that it will
cost $30 billion to clean up the first 1,200, and most highly contaminated sites
on its Superfund priority list, and another $30 billion to clean up the next
1,200 priority sites. Such sites are increasing in number because of the 250
million metric tons of "nonhazardous" waste and 10.4 billion pounds of toxic
materials pumped annually into the U.S. environment by industry, utilities,
municipalities and individuals and the 2.7 billion gallons of waste water poured
into the same environment.
Federal and state laws now require the removal of leaking or corroded
underground storage tanks and the remediation of the soil at the tank site. More
than 750,000 tanks may be involved in this process, with costs ranging from
$3,000 to up to $100,000 in certain industrial areas. It costs a homeowner or
business an average of $15,000 to remove a corroded tank, dispose of the tank
and remediate the contaminated soil.
Federal legislation also covers the handling and disposal of hazardous and
solid waste and applies to more than 100,000 companies. When fully implemented,
the laws applicable to solid and hazardous waste transportation and disposal,
are expected to cost American industry around $20 billion a year.
Polychlorinated byphenyls ("PCBs"), lead and asbestos removal are expected to
cost American businesses, municipalities and individuals billions of dollars
each year as regulations regarding PCBs, lead paint and asbestos are more
strictly enforced. Federal and state environmental regulations and enforcement
efforts have increased in recent years.
Market Factors.
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The Company believes that environmental laws and regulations are still
evolving and that, while there can be no assurance, the enactment of new
environmental laws and regulations in the future, the more stringent enforcement
of existing environmental laws and regulations, and the emphasis on the remedial
or restorative phase of environmental problems will increase the demand for the
Company's services and products. Compliance with such laws and regulations
requires or will require the Company's customers to respond immediately to
industrial and environmental emergencies, to remove hazardous materials from
structures and equipment, to remove corroded underground and above ground
storage tanks, and to remediate contaminated areas.
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Business Strategy.
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The Company believes that the environmental services industry is
consolidating while the need for its services expands. The environmental
services industry has grown and matured over the past 20 years and has now begun
to consolidate, following the trend of many other service industries in the
1980's. For example, in the early 1980's, there were more than 3,000 asbestos
removal firms in the United States, most of them small "mom and pop" operations.
By 1992, many of the firms had been merged or consolidated into larger firms or
ceased operations, unable to compete with larger companies. Paradoxically, at
the same time that such consolidation is beginning to take hold, management
believes that the need for environmental services is increasing due to evolving
new laws and regulations, stricter enforcement of existing laws and regulations,
and greater emphasis on remediation and restoration of environmental
degradation.
The Company intends to pursue its growth and acquisition strategy on both
a national and regional level. On a national level, it intends to acquire
companies in industrial areas and transportation hubs. The Company intends to
acquire companies in regional clusters which integrate a number of related
services. See "Business Acquisitions." Such regional companies will be able to
share the capabilities of related companies, and, therefore, should be able to
increase and improve their services to customers, as well as increase their
market penetration. The regional companies will also be able to draw on the
operational and management expertise of the national company. While there can be
no assurance that the Company will succeed in implementing its strategy or that
its strategy will be successful, the Company continues to actively pursue its
growth strategy.
Acquisitions.
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The Company as of June 28, 1996, pursuant to a unanimous vote of the Board
of Directors, acquired, in exchange for 6,000,000 shares of its Common Stock,
all of the issued and outstanding Common Shares of Phoenix from the existing
Shareholders of Phoenix. While Phoenix had more than five shareholders,
two-thirds of the shares were owned by Begonia Corp., a corporation in which
Karl Schwab is the principal shareholder and sole director. None of the other
shareholders of Phoenix were affiliated with Begonia and/or Mr. Schwab nor were
any one of them officers, directors or employees of Phoenix. Moreover, none of
the ten other Shareholders became, as a result of the aforementioned exchange of
stock, owners of record or beneficially owning of 5% or more of the issued and
outstanding capital Shares of the registrant. In order to consummate the
transaction, the Registrant, pursuant to Shareholder consent, amended its
Certificate of Incorporation so as to increase its authorized common shares from
1,333,333 to 25,000,000.
Phoenix has been engaged as a privately held company in business as a
diversified waste management company providing services similar to that of
Global. The principal services of Phoenix include solid waste management,
industrial demolition, dismantling and abatement, and hazardous waste services.
The Company intends to grow by acquisition and to expand its markets and
capabilities by acquiring environmental companies and related, complementary
businesses primarily in transportation hubs, and industrial areas which tend to
experience a high incidence of other environmental problems need remediation. By
acquiring companies in diverse markets, management believes that the revenues
and business of the Company will be geographically diversified and should be
less subject to economic fluctuations in the service economy, or to variations
in the weather, which may curtail contracting work performed outdoors during
inclement weather.
Management believes that the fragmentation in the environmental services
industry will contribute to the Company's ability to effectively pursue its
acquisition program. In addition, many small and medium-sized companies have
reached the limits of their ability to grow due to lack of access to necessary
capital, management, marketing, systems infrastructure, the cost and burden of
increasingly stringent regulatory compliance, and lack of access to new
technology in the industry. Management believes that it can provide the
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companies it acquires the strategic direction, management and resources needed
to grow and allow the former owners of such companies the ability, over time, to
realize the value of their work and investment, while at the same time helping
the Company build a regional and national presence in the environmental services
industry.
The Company has both a regional and national acquisition strategy. On a
national level, it intends to acquire companies in industrial areas and
transportation hubs. With respect to its regional strategy, the Company intends
to create regional clusters of environmental contracting companies to service a
broad geographic market area, gain greater market penetration, and increase the
scope of services provided. In addition, within such regional clusters, the
Company intends to acquire companies complementary to each other, such as
thermal soil treatment facilities, contaminated water treatment facilities,
transfer stations, and laboratory and testing facilities, and to integrate those
services with its contracting business. For example, the Company, in the process
of removing a corroded tank, excavates the contaminated soil, then transports
the contaminated soil to a thermal soil treatment facility, which, for a fee,
incinerates the soil and then sells the soil for its own account for fill and
other purposes. If the Company owned a thermal soil treatment facility, it would
remove the tank, incinerate the soil for a fee and use the decontaminated soil
for other purposes for a fee charged by the Company.
The Company also intends to acquire businesses related to the
environmental services industry which has more predictable and recurring levels
of business and income streams than certain segments of the environmental
services industry. For example, spill response and recovery, although highly
profitable and less sensitive to the economy, is also opportunistic. Tank
removal, soil remediation and other such environmental services are more
susceptible to marketing and sales efforts, but are also more susceptible to
economic conditions and climate and may be delayed or deferred. Therefore, by
acquiring companies in related businesses, such as manufacturers of equipment or
instruments used in environmental contracting, the Company could have a certain
core portion of its business with more predictable and recurring levels of
business income. There can be no assurance, however, that the Company will be
able to acquire such companies or that, if acquired, such companies will
continue to have predictable and recurring levels of business and income.
Although the Company seeks to comply with environmental and other
governmental regulations, there is no certainty that the companies it acquires
will have so complied. The Company could be subject to liabilities arising from
an acquired company's failure to comply with such regulations in the event the
Company assumes unknown or contingent liabilities or in the event such
liabilities are imposed on the Company under theories of successor liability.
Prior to making acquisitions, the Company typically conducts a due diligence
investigation and an environmental assessment of the facilities of acquisition
candidates. In addition, the Company may seek to avoid assuming or incurring
liabilities by purchasing only specific assets of an acquisition candidate. The
Company may also seek to obtain indemnification from the selling parties.
However, if the Company became subject to such a liability of sufficient
magnitude and was unable to enforce its rights of indemnification against the
acquired companies or selling stockholders, such liability could have a material
adverse effect on the Company's financial condition and results of operations.
Operations.
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Management intends to integrate the companies it acquires on a national
and regional level, to bring controls, efficiencies and standardized policies
and procedures to such companies, and to centralize a number of functions that
are performed on an individual basis. The Company intends to centralize finance,
cash management, accounting, insurance, industry compliance, marketing,
purchasing and human resource functions. To the extent possible, the Company
intends to standardize policies and procedures, environmental and safety
compliance programs and employee benefits for the individual companies. There
can be no assurance that management will be able to successfully integrate the
companies it acquires or to successfully centralize or standardize certain
functions or policies or that such centralization or standardization will result
in cost reductions or better service.
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Services and Products.
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The Company provides a number of Environmental Services. The Company plans
to expand these services thorough the Continental Untied States.
Industrial Demolition, Dismantling and Abatement Services.
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The demolition department combines several generations of topnotch
operators and engineers experienced in all phases of commercial and industrial
wrecking, including plants, paper mills, factories, holding tanks, office
buildings, hotels stacks, bridges and structures precariously damaged by
explosion or fire. Demolition and dismantling projects result from a myriad of
reasons including obsolescence of facility, retooling, fire, consolidation of
operations and relocation. The environmental abatement department consists of
licensed professionals specifically trained and skilled in removal of asbestos
and hazardous wastes in strict accordance with applicable regulations. (See
discussion below of Regulation). The Company uses the most up-to-date equipment
to ensure the safety of its personnel and the protection of the site. In
addition, site remediation , particularly in the case of environmental
contamination of a site, frequently requires demolition or dismantling of a
contaminated facility.
Dismantling is a precise disassembly of a manufacturing or production
facility on a piece-by-piece basis in order to recover equipment as complete
operating units in order to recover equipment as complete operating units
capable of reinstallation. Demolition is the precise science of destruction of
facilities in defined areas. The Company's engineers are pioneers in the
advanced technology of implosion-the inward burst of an exploding substance to
demolish a structure. Certain demolition products also require the removal of
asbestos and other hazardous wastes as well as cleanup and removal.
Tank Removal and Installation.
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Certain states and municipalities, such as Pennsylvania, New Jersey and
the City of Philadelphia, require companies and/or employees to be licensed or
qualified to remove or install storage tanks. The Company and where required,
its employees, has been able to obtain the necessary qualifications or licenses
to conduct such activities in those locations in which the Company does
business. The Company removes and disposes of, and installs, underground and
above ground storage tanks in the Company's service area. Tanks are often
required by federal and state law to be removed because of deterioration from
age, condensation, oxidation and/or metal fatigue. Due to environmental
concerns, tanks are increasingly removed when real property and facilities are
sold, leased or financed. The Company not only removes and disposes of the
tanks, but tests the soil for contamination due to leakage, removes, remediates
and disposes of the soil, and provides the owner with the required or
appropriate certification of removal and disposal of the tank. The Company's
tank removal and installation services are, in general, utilized by individual
residential customers, commercial and industrial customers, government agencies
and public and private institutions.
Tank Cleaning.
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Underground and above ground storage tanks, even though not corroded or
oxidized, must be cleaned from time to time. The Company removes any substance
in the tank, and transports and disposes, or arranges for the disposal of, such
substance, then cleans the tank with water or a particular solvent, depending on
the substance which was in the tank. For example, petroleum products require a
citric-based solvent for cleaning; sulfur hydrochloride might be used to adjust
the Ph level in an acidic tank. Tank cleaning services are utilized by
commercial and industrial customers such as manufacturers, chemical plants and
pharmaceutical companies.
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Soil Remediation.
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On-site remediation involves treating hazardous materials at the
customer's site or the excavation and removal thereof. Soil and other solid
materials which have become contaminated from petroleum, chemical or PCB leakage
or spills or improper dumping of toxic materials are almost always required by
federal, state or local authorities to be remediated. Excavation and removal
involve the excavation of contaminated materials for containment, on-site
treatment or off-site disposal. Much of the contamination is historical and
occurred prior to the enactment of current environmental laws, rules and
regulations. In performing soil remediation, the Company tests the soil,
excavates the contaminated soil and disposes of such soil, at the direction of
the customer, through thermal destruction (incineration) at a state licensed
facility or deposits the soil in a state-approved landfill. The Company then
tests and certifies the site and also obtains and provides the customer with
certification as to the proper disposition of the soil and other solid or liquid
waste. As part of its quality control, the Company regularly monitors excavated
materials to verify consistency with contaminants identified in the remediation
plan. Employees that work with contaminated soil and other contaminated
substances must have a minimum of 40 hours of OSHA training, meet continuing
education requirements, and be subject to periodic drug testing. The Company's
soil remediation services are, in general, utilized by individual residential
customers, commercial and industrial customers, property managers, government
agencies, and public and private institutions.
Infrastructure Maintenance, Rehabilitation and Cleaning.
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The Company inspects, through closed circuit television, infrastructure
systems such as sanitary sewers, storm sewers, wells and manholes, identifies
breaks and/or weaknesses therein, and either repairs the defects through bypass
plumbing, polyethylene slip lining and/or chemical grouting or installs a new
system.
Industrial Environmental Maintenance.
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The Company provides on-site industrial environmental maintenance to
industrial customers in New Jersey, Pennsylvania and Delaware. The Company
supplies labor, equipment, materials and/or supervision, thereby supplementing a
plant's normal maintenance resource and increasing the efficiency of a plant's
resources. Such maintenance includes, without limitation, on-site spill
response, tank cleaning and decontamination activity.
Subsidiaries.
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Coincident with the reverse acquisition of June 28, 1996, the Company
disposed of its four operating subsidiaries. These were Land N' Sea
Environmental Services, Inc., Allied Environmental Services, Inc. And Allied
Environmental Services, West Inc. and Professional Pipe Services, Inc. Such
sales resulted in all such operating subsidiaries being assumed by the
respective purchaser of each operating subsidiary.
The Company received an aggregate of $980,000 in cash from the sale of the
operating subsidiaries and the Company eliminated $971,000 of acquisition
indebtedness which was outstanding to one such subsidiary. Global used such cash
proceeds, in part to satisfy and liquidate in full approximately $1517,000
including $40,000 in accrued interest of senior secured bank debt, which was
secured by the assets of the former operating subsidiaries. The total
obligations of Global on a consolidated basis were $6,746,000 as of June 30,
1995. After the sale of the operating subsidiaries, the obligations of the
Company were approximately $253,436. This figure does not include the
obligations of Phoenix.
The Company currently has one operating subsidiary, Iroquois Industries
Inc., (Iroquois) which was incorporated and organized under the laws of the
State of New York in April of 1992. Iroquois holds the leases to Company's
principal offices. Iroquois is utilized by the Company for non-union work.
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Insurance.
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The Company carries a broad range of insurance coverage which management
considers adequate for the protection of its assets and operations. The coverage
includes general liability, comprehensive property damage, workers' compensation
and other coverage customary in the industry up to $10,000,000, per occurrence.
The insurance covers incidents on a "claims made" basis. The Company also
carries environmental impairment liability insurance of up to $5,000,000, per
occurrence, on a "claims made" basis. The Company does not maintain funded
reserves to provide for payment of partially or completely uninsured claims.
Marketing.
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The Company markets its services principally through the direct efforts of
its sales personnel, its field supervisors and foremen and its operating and
executive management, all of whom call upon existing and prospective customers.
The Company also uses direct advertising and promotional material to market and
sell its services and products.
The Company has centralized its marketing strategy for its environmental
contracting in the Mid-Atlantic region, but customizes each its marketing
program to its local service area and the specific capabilities of the Company
in each area of its operations.
Customers.
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The Company's environmental contracting business has a broad base of
public and private sector customers, including individual residential customers,
federal, state, and local governmental agencies, public and private institutions
such as hospitals, colleges and airports, public utilities, and commercial and
industrial customers, ranging from sole entrepreneurs, to small and mid-size
firms, to Fortune 500 companies.
The Company's marketing and sales efforts are directed toward establishing
and maintaining business relations with customers that have repetitive
requirements or needs for one or more of the Company's services or products.
Although a significant portion of the Company's business for its services or
products is derived from customers for whom the Company had previously provided
services or products, the work performed for such customers is generally for
specific projects when the need arises and the Company has very few long-term
written agreements with any such customer. During fiscal year 1996, no one
customer accounted for 10% or more of the Company's revenues. The Company does
not believe that the loss of any single customer would have a material adverse
effect on the financial condition or results of operations of the Company or any
of its operating subsidiaries.
Backlog of Orders.
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The Company provides its services and sells its products pursuant to
proposals, purchase orders or retainer letters. It is the Company's policy to
perform all services pursuant to a detailed written proposal, which, when
accepted, serves as a contract with respect to the services to be performed, the
cost thereof and the terms of the payment therefor. In the event that the
nature, scope or magnitude of the services to be provided changes materially
from the original proposal, it is Company policy to amend the original proposal
by executing a change order in writing to cover the changes in the services to
be provided, the cost thereof and the payment therefor. Certain agreements allow
for the Company to bill for work-in-progress, other bills are paid upon
presentation, and others have payment terms of 10 to 30 days after completion of
the services to be performed, or products sold, depending on the nature and
scope of such service or the nature or quantity of the product, and the
creditworthiness of the customer.
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Competition.
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The environmental contracting business is highly competitive and
fragmented. The Company is engaged in highly competitive markets in all of its
service areas. The Company competes with both large and small companies.
Management does not believe that any single firm is dominant in any of the
Company's primary service areas. Many of the Company's competitors have greater
financial resources and longer operating histories. The Company's revenues and
results of operations could be adversely affected by these competitive forces.
The Company believes that its environmental contracting business competes
in terms of price, service, quality and responsiveness. The Company further does
not have geographic limitations within the United States as many of its
competitors do. The Company maintains a trained and qualified work force, with
the majority of its personnel employed in the environmental contracting
operations being OSHA-trained and qualified. The Company believes it brings
business discipline, professional standards and financial and marketing
expertise to the companies it acquires. Because of the need for certain permits
and licenses, specialized equipment, OSHA-trained employees, and the need to be
knowledgeable of and to comply with federal, state and local environmental laws,
regulations and requirements, the Company believes that there are certain
barriers to becoming a full-service environmental contracting and consulting
company.
The Company believes it attracts and retains customers primarily because
of its reputation in its service areas for quality work, its ability to respond
effectively to customers' needs, and the broad range of services it can provide
to a customer.
Employees.
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As of August 31, 1996, the Company employed 60 full-time people. From time
to time, the Company also utilizes qualified temporary personnel with OSHA
training. The Company has not experienced any work stoppages and the Company
believes that its relationship with all its employees is good.
Regulation.
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The Company and, in particular, its customers, are subject to extensive
and evolving environmental laws and regulations. These laws and regulations are
directly related to the demand for many of the services offered by the Company
and often subject the Company to stringent regulation in the conduct of its
operations. The principal environmental legislation affecting the Company and
its customers is described below.
Resource Conservation and Recovery Act of 1976 ("RCRA"). RCRA regulates
the treatment, storage and disposal of hazardous and solid wastes. RCRA has
therefore created a need generally for some of the types of services provided by
the Company. The 1984 Hazardous and Solid Waste Amendments to RCRA ("HSWA")
expanded RCRA's scope by providing for the listing of additional wastes as
"hazardous" and lowering the quantity threshold of wastes subject to regulation.
HSWA also imposes restrictions on land disposal of certain wastes, prescribes
more stringent management standards for hazardous waste disposal sites, sets
standards for underground storage tanks and provides for "corrective" action
procedures. Both SM Environmental and Land N Sea are RCRA permit holders. Under
RCRA, liability and stringent management standards are imposed on a person who
is an RCRA permit holder, namely, a "generator" or "transporter" of hazardous
waste or an "owner" or "operator" of a waste treatment, storage or disposal
facility. Both the EPA and states with authorized hazardous waste programs can
bring several types of enforcement actions under RCRA, including administrative
orders and actions seeking civil and criminal penalties. RCRA also provides for
citizens suits as an additional enforcement tool.
Comprehensive Environmental Response, Compensation and Liability Act of
1980 ("Superfund Act"). The Superfund Act addresses cleanup of sites at which
there has been or may be a release of hazardous substances into the environment.
The Superfund Act assigns liability for costs of cleanup and damage to natural
resources to any person who, currently or at the time of disposal of a hazardous
substance, owned or operated any facility at which hazardous substances were
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deposited, to any person who by agreement or otherwise arranged for disposal or
treatment, or arranged with a transporter for transport of hazardous substances
owned or possessed by such person for disposal or treatment, and to any person
who accepted hazardous substances for transport to disposal or treatment
facilities or sites from which there is a release or threatened release of
hazardous substances. The Superfund Act authorizes the federal government either
to clean up these sites itself or to order persons responsible for the situation
to do so. The Superfund Act created a fund to be used by the federal government
to pay for the cleanup efforts. Where the federal government expends money for
remedial activities, it must seek reimbursement from the potentially responsible
parties. Where the EPA performs remedial work with Superfund dollars, it
frequently sues potentially responsible parties for reimbursement under the
"cost recovery" authority of Section 107 of the Superfund Act. The EPA may also
issue an administrative order seeking to compel potentially responsible parties
to perform remedial work with their own funds under the "abatement" authority of
Section 106 of the Superfund Act. In lieu of instigating such actions, the EPA
may also seek through negotiations to persuade such parties to perform and/or
pay for any and all stages of remedial action at a site in discharge of their
liabilities under the Superfund Act.
While the Superfund Act provides that transporters of hazardous waste may
be jointly and severally liable for the costs of remedial action at the site to
which the hazardous waste is taken, the Company attempts to minimize such
exposure by having the generator select the disposal site and method. Under
Section 101(20)(B) of the Superfund Act, when a common or contract carrier
delivers a hazardous substance to a site selected by the shipper, the carrier is
not considered to have caused or contributed to any release at such disposal
facility resulting from circumstances or conditions beyond its control.
Superfund Amendments and Reauthorization Act ("SARA"). SARA was enacted in
1986 and authorizes increased federal expenditures and imposes more stringent
cleanup standards and accelerated timetables. SARA also contains provisions
which expand the enforcement powers of the EPA.
While there can be no assurance, management believes that, even apart from
funding authorized by RCRA and the Superfund Act, industry and governmental
entities will continue to try to resolve hazardous waste problems due to their
need to comply with other statutory requirements and to avoid liabilities to
private parties. Although the liabilities imposed by the Superfund Act are more
directly related to the Company's customers, they could under certain
circumstances apply to some of the broad range of activities of the Company,
including failure to properly design or implement a cleanup, removal or remedial
action plan or to achieve required cleanup standards and activities related to
the transport of hazardous substances. Such liabilities can be joint and several
where other parties are involved.
Clean Air Act and 1990 Amendments (the "1990 Amendments"). The Clean Air
Act requires compliance with ambient air quality standards and empowers the EPA
to establish and enforce limits on the emission of various pollutants from
specific types of facilities. The 1990 Amendments modify the Clean Air Act in a
number of significant areas. Among other things, they establish emissions
allowances for sulfur and nitrogen oxides, establish strict new requirements
applicable to ozone emissions and other air toxins, establish a national permit
program for all major sources of pollutants and create significant new
penalties, both civil and criminal, for violations of the Clean Air Act.
Other Federal and State Environmental Regulations. The Company's services
are also used by its customers in complying with, among others, the following
federal laws: the Toxic Substances Control Act, the Clean Water Act, the Safe
Drinking Water Act, the Occupational Safety and Health Act, the Hazardous
Materials Transportation Act. In addition, many states have passed
Superfund-type legislation and other regulations and policies to cover more
detailed aspects of environmental impairment and the remediation thereof. This
legislation addresses such topics as air pollution, underground storage tanks,
water quality, solid waste, hazardous materials, surface impoundments, site
cleanup and wastewater discharge. Most states also regulate the transportation
of hazardous wastes and certain flammable liquids within their borders by
requiring that special permits be obtained in advance of such transportation.
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These statutes and regulations impact upon the liquid and solid waste
transportation and disposal business conducted by the Company.
The foregoing discussions identify the principal environmental legislation
currently affecting the Company and its customers. To the extent that the
Company acquires thermal soil treatment facilities, contaminated water treatment
facilities, transfer stations and laboratory and testing facilities, the Company
would be primarily subject to and impacted by RCRA and the Superfund Act. To the
extent that such facilities, particularly waste water treatment facilities,
would engage in the discharge of treated wastewater, compliance with the Clean
Water Act of 1972 would be required.
Clean Water Act of 1972 ("CWA"). Originally enacted as the Federal Water
Pollution Control Act, but renamed as the Clean Water Act in 1977, CWA regulates
the discharge of pollutants into the surface waters of the United States. CWA
established a system of minimum national efficiency standards on an
industry-by-industry basis, water quality standards, and a discharge permit
program. It also contains special provisions addressing accidental or
unintentional spills of oil and hazardous substances into waterways.
Revenue.
- --------
Through June 30, 1996, the Company's had a net operating loss of approximate
$1,668,000. In addition, through June 28, 1996, prior to the reverse acquisition
of June 28, 1996 between Global and Phoenix, Phoenix's estimated $9,371,801.00
(unaudited) in revenue derived from operations.
Patents, Trademarks, Franchises, and Concessions.
- -------------------------------------------------
Patents, Trademarks, Franchises and Concessions are of little or no importance
to the Company.
Seasonal Nature of Business.
- ----------------------------
The Company is not engaged in a seasonal business.
Government Contracts.
- ---------------------
The Company during its last fiscal year has had contracts with two
governmental entities. These are the City of New York and Staten Island. The
Company was hired by the City of New York to rehabilitate the train platforms in
Grand Central Station. The city of Staten Island hired the Company for asbestos
removal from a demolished structure in Fresh Kills in Staten Island, New York.
Item 2. Properties.
-----------
The principal offices of the Company were located at 2550 Boulevard of the
Generals, Norristown, Pennsylvania, until the reverse acquisition of June 28,
1996 with Phoenix. The National Railroad Passenger Association, (AMTRAK),
entered into an agreement with Iroquois Inc., a subsidiary of the Phoenix in
October 1993, wherein they agreed to exchange remedial services for prepaid rent
credit through October 1, 1999. The Authority valued this rent at $404,000 per
year. The principal offices of the Company are located on this property which
comprises 8 acres located at 37-61 39th Street, Long Island City, New York,
11101. The property is at the foot of the 59th Street Bridge and has a
6,000-foot office building on the premises. Phoenix . Management believes that
the Company's facilities are adequate to support the Company's current
operations.
Phoenix acquired a property in Hamtramck, Michigan, previously owned by
"Cook Family Foods, Ltd.". The Property consists of 124,146 square feet or 2.85
acres +. The improvements on the property include two buildings, one built in
1948 of 72,000 square feet, and one built in 1991 of 18,800 square feet. The
property is paved and fenced by chain link fencing. The zoning is "M H Heavy
Manufacturing", City of Hamtramck, Michigan, 48212, located at 8800 Conant &
3827 Oliver, and is located in close proximity to I-75 and I-94. The property
9
<PAGE>
was acquired by "Phoenix" on March 3, 1994 in exchange for the company's
providing remedial services to Cook Family Foods, Ltd., which costs Phoenix
$40,000.
Item 3. Litigation.
----------
From time to time, the Company and its subsidiaries are subject to
lawsuits arising in the ordinary course of business. While management believes
that no pending lawsuit is likely to have a material adverse effect on the
financial condition or results of operations of the Company or its subsidiaries,
the outcome of any such litigation cannot be predicted with certainty.
Currently, the Company is involved in a suit in the with a Contractor located in
Fort Brag, North Carolina. This dispute involves a breach of contract action
whereby, the Contractor is attempting to obtain damages in the amount of
$100,000.00. The Company intends to vigorously defend against this lawsuit.
Item 4. Submission of Matters to a Vote of Securities Holders.
-----------------------------------------------------
The following matters were submitted to a vote of the securities holders:
1. Election of Directors.
2. Increase of authorized shares from twenty five million (25,000,000)
to forty million (40,000,000) shares of common stock (prior to the
30-1 split).
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
---------------------------------------------------------------------
On July 29, 1992, the Company's Common Stock commenced quotation on the
NASDAQ Small Cap Market ("NASDAQ") under the symbol "GSMI". The following table
sets forth the reported high and low bid and asked quotations for the Compan's
Common Stock.
The Company's Common Stock on NASDAQ for the period September 30, 1994 to
June 30, 1996. The "Quarters" set forth below are based on the Company's June
30th fiscal year. Such quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commission and may not represent actual transactions.
Bid Asked
--------------------- ---------------------
Quarter Ended High Low High Low
- ------------- ---- --- ---- ---
September 30, 1994 $ 2 $ 1 13/16 $ 2 1/8 $ 2
December 31, 1994 1 9/16 1 1/2 1 5/8 1 5/8
March 31, 1995 3/4 3/4 27/32 13/16
June 30, 1995 11/32 5/6 13/32 3/8
September 30, 1995 $20 11/16 9 15/16 28 3/10 11 3/8
December 30, 1995 13 15/16 7 1/2 15 7/8 9 15/16
March 31, 1996 8 3/8 5 11/16 10 13/16 6 5/8
June 30, 1996 6 5/8 2 1/4 8 7/16 2 7/8
The closing bid and asked prices on September 3,1996 for the Common Stock
were 2 13/16 and 3 3/16, respectively. On May 13, 1996 the Company effected a 30
to 1 reverse split of its common stock. On the date of the split there were
23,768,846 shares issued and outstanding. After the split, the shares issued and
outstanding was 792,295. The Company canceled and retired 5,274,818 shares of
its common stock (pre-split). This reduced the issued and outstanding number of
Common Shares of the Company to 616,466. On July 5, 1996, the Company increased
the number of authorized Shares of Common Stock to 25,000,000.
As of October 14, 1996, there were 11,215,462.17 shares of Common Stock
outstanding and approximately 11,518 holders of record of the Company's Common
Stock. The Company believes, based upon security positions listing, that there
are beneficial owners of the Company's Common Stock. Of the Preferred Stock no
Shares have been issued.
10
<PAGE>
Exempt Transactions.
- --------------------
In September 1996, the Company entered into a transaction with an offshore
purchaser pursuant to Rule 903 of the Securities Act of 1933, as amended for the
sale of Series I Debentures of the Company for a total of $2,000,000. Of this
amount 1,200,000 has been delivered. The sale price of these debentures was
discounted from market by thirty (30) percent. The initial funds in the amount
of $1,200,000 has been used for operating expenses and to expand and develop
Company's operations.
Dividends.
- ----------
As of the date hereof, the Company has not paid or declared any dividends.
The Company does not anticipate paying any dividends on its Common Stock in the
foreseeable future. The Company currently intends to reinvest earnings, if any,
in the development and expansion of its business. The payment of dividends, if
any, by the Company rests within the discretion of its Board of Directors and
depends, among other things, upon the Company's earnings, its capital
requirements and its financial position, as well as other pertinent factors.
Item 6. Selected Consolidated Financial Data.
------------------------------------
The following selected combined financial data should be reviewed in
conjunction with Item 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operations and the Consolidated Financial Statements
and Notes thereto in Part IV of this report.
THE FINANCIAL DATA CONTAINED BELOW HAS NOT BEEN AUDITED.
11
<PAGE>
GLOBAL SPILL MANAGEMENT, INC. AND SUBSIDIARIES
UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended June 30
- -------------------------------------------------------------------------------------------
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
REVENUES:
Service $ -- $ 18,267,164 $ 8,417,642
Product -- 950,031 2,347,405
------------ ------------ ------------
-- 19,217,195 10,765,047
------------ ------------ ------------
COST OR REVENUES:
Service -- 13,805,189 6,182,680
Product -- 728,234 1,613,339
------------ ------------ ------------
-- 14,533,423 7,769,019
------------ ------------ ------------
Gross profit -- 4,683,772 2,969,028
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 1,668,000 5,578,054 4,303,750
------------ ------------ ------------
Operating (loss) (1,668,000) (894,282) (1,334,722)
OTHER INCOME (EXPENSE):
Interest Expense -- (287,726) (148,946)
Other net -- (615) 167,843
Gain (loss) on Sale of Subsidiaries (5,666,000) -- 202,259
(Loss) on Investment and Note Receivable -- (260,000) --
------------ ------------ ------------
(Loss) from continuing operations
before income taxes and cumulative
effect of change in accounting principle (7,334,000) (1,442,623) (1,113,566)
(Loss) from Discontinued Operations
(Loss) from Operations (325,000) -- --
Writedown of Goodwill (1,328,000) -- --
INCOME TAX BENEFIT (EXPENSE) -- 15,516 (16,612)
------------ ------------ ------------
(Loss) before cumulative effect of change in
in accounting principle (9,047,000) (1,427,107) (1,130,178)
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE -- -- 169,596
------------ ------------ ------------
NET (LOSS) $ (9,047,000) $ (1,427,107) $ (960,582)
============ ============ ============
INCOME (LOSS PER SHARE BEFORE
CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE $ (15.03) $ (.12) $ (.14)
------------ ------------ ------------
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE -- $ -- $ .02
------------ ------------ ------------
NET (LOSS) PER SHARE - CONTINUING
OPERATIONS $ (12.18) $ (.12) $ (.12)
============ ============ ============
NET (LOSS) PER SHARE -
DISCONTINUED OPERATIONS $ (2.85) -- --
============ ============ ============
SHARES USED IN COMPUTING NET LOSS
PER SHARE 602,009 11,654,137 8,170,145
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements
12
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
-----------------------------------------------------------------------
of Operation.
------------
General.
- --------
The Company strategy has been to grow through acquisitions and by
developing the necessary programs and infrastructure to stimulate the internal
growth of the acquired companies. The Company's acquisition strategy is focused
on the need to (I) expand the Company both regionally and nationally in order to
lessen the effects of local economics and weather; (ii) acquire companies in
industrial areas and transportation hubs where there is a high probability of
spills and other environmental problems in need of remediation, (iii) broaden
the Company's revenue base by acquiring companies complementary to the
environmental contracting and consulting business, such as manufacturing of
equipment or instruments used in environmental contracting and consulting,
environmental testing laboratories, and liquid waste treatment and soil
remediation facilities, in order to lessen the impact of the unpredictability of
spill activity; and (iv) acquire several companies in a specific region to
increase the already existing local capabilities, which should result in
increased production and higher profit margins. These and future acquisitions
may affect the relative contribution of service and product revenues to the
Company's total revenues. The Company's ability to integrate acquired businesses
will also affect the Company's financial condition and results of operations.
During Fiscal 1995 the Company acquired Land N Sea Environmental Services,
Inc. ("LNS"), Professional Pipe Services Corporation ("Propipe"), and Allied
Environmental Services, Inc. ("Allied") in July 1994, October 1994, and December
1994, respectively. In December 1994 the Company spun-off its Acme Containment
Group, Inc. ("Acme") subsidiary. The acquisitions of LNS and Allied were
accounted for as a purchase and consequently only the results of their
operations subsequent to acquisition are included in the financial statements.
Propipe was accounted for as a pooling of interests and, accordingly, the
Company's results of operations have been restated to include those of Propipe
for the year ended June 30, 1994. Management has not restated its results of
operations for the year ended June 30, 1993 to account for the pooling of
interests of Propipe since the effect of the restatement is considered
immaterial.
In addition to acquisitions, the Company's operations are affected by a
number of factors, including, without limitation, the enactment of new, and the
enforcement of existing, Federal, State and Local environmental laws and
regulations; general economic conditions; weather conditions in specific
locations; and the unpredictability of significant spill activity. These factors
are beyond the control of the Company and will continue to have a significant
effect on the future financial condition and results of operations of the
Company.
The Company has incurred significant operating losses for the past several
years. These losses have hindered the Company's ability to finance its
operations. In October 1995, the Company received a binding commitment for new
financing from CKN Holdings ("CKN") which would have provided 1.5 million of new
common equity and convertible loan amounting to 1.5 million. Proceeds of $2.0
million were applied to the acquisition of American Marine Inc. and $1.0 million
was to be used for general working capital purposes. CKN defaulted on its
obligations to the Company in November 1995 and the Company filed a complaint
against CKN as a result. In February 1996, the Court entered a default judgment
against CKN and awarded a judgment in favor of the Company.
Collection of the judgment is unlikely.
In January 1996, as a result of the shortage of working capital and high
expense of operations, the Company undertook a restructuring and consultation
program to reduce expenses. The consolidation and restructuring plan entailed
replacing the Company's President, and eliminating the Chief Operating Officer's
position by merging his responsibilities into the workforce and other members of
management. The Company also suspended payments under certain consulting and
employment agreements and relocated its corporate headquarters into another
existing operating facility.
During this period the Company renegotiated a forbearance agreement with
its primary lender, in which the collateral was the aggregate assets of the
13
<PAGE>
Company. These forbearance agreements required the Company to find a new lender
to replace its primary lender. In January 1996, the Company obtained a
commitment from another lender for a $3.0 million revolving collateralized line
of credit. Borrowings under this new line were limited to 80% of eligible
accounts receivable, as defined, up to $30,000,000. Due to an unexpected drop in
business and therefore, eligible accounts receivable, the Company lacked
sufficient collateral to repay the $1,350,000 owed to this lender.
On April 25, 1996, the Company negotiated a forbearance agreement with its
the commercial bank, its primary lender, extending the line to May 31, 1996.
Under the terms of this forbearance agreement, the Company agreed to remit
collections of the accounts receivable of its Environmental Disposal Options
Corporation ("EDOC") subsidiary as a permanent reduction of the line. EDOC's
operations were discontinued by the Company on March 28, 1996 due to the lack of
profitability and the lack of working capital to operate this subsidiary. An
involuntary Chapter 7 Bankruptcy was filed against EDOC on June 28, 1996. Since
EDOC's liabilities are greater than its assets, which are pledged as collateral
to the primary lender, the Company has not contested this filing.
The Board explored its options and strategies in dealing with its primary
lender whose loan the Company was now in default. The alternative reviewed
included sales of all or part of the Company and seeking Bankruptcy protection.
On June 28, 1996, the Company sold its remaining operating subsidiaries
GSM Environmental Inc., LNS, Allied and Propipe, utilizing the proceeds to
satisfy the loans to the primary lender. At this time the Company obtained a
commitment from an investment group for financing totaling $250,000 to be used
to satisfy the remaining creditors of the Parent corporation. The Board also
converted a fourth quarter 1996 $315,000 convertible debenture into 750,00
Shares of the Company's Common Stock. In conjunction with the sale of these
subsidiaries came the termination of burdensome employment contracts and debt
service that made it difficult to obtain profitability without large increases
in revenues. It became extremely difficult to grow the Company through
acquisition or internal growth because of the difficulty in obtaining financing.
After the wholly owned Subsidiaries were sold, and substantially all of
the debts were satisfied, all that remained was sundry accounts payable and
office equipment leases totaling approximately 650,000 repaid, on June 28, 1996.
It was the Board's belief that the sale of the operating subsidiaries was
necessary to repay the primary lender or Bankruptcy would have been inevitable.
It is felt that though the acquisitions were Dilutive to the existing
shareholders that shareholder value will be better served through the profits
now provided by the new organization. Of course future profitability is
dependant on many factors including general economic and regulatory conditions,
the additional expenses incurred by the Phoenix organization as a result of
being a public entity.
The Company acquired Phoenix Wrecking Corporation for 6,000,000 Shares of
the Company's Common Stock valued $21,750,000. Phoenix Wrecking is a solid waste
management, environmental abatement and specialty contractor focusing on site
and facility remediation. The Phoenix purchase price is subject to adjustment
based on the financial statement of Phoenix when they become available. As a
result of the Phoenix acquisition by the Company management of the Company was
replaced with representatives of Phoenix. The new management did not retain any
employees of Global Spill Management or any of its former subsidiaries.
Unaudited financial statements of Phoenix as of March 31, 1996, show
revenues of $8.2 million, a pre-tax profit of $797,000, and a profit after taxes
of $534,000. The Company through Global's previous activity, has over $10.0
million in net operating loss carry forward (NOL). A change in controls, as has
taken place, may limit the annual utilization of NOL carry forward.
In September 1996 the Company announced the acquisition of Recycling
Unlimited of Queens, New York. Recycling Unlimited is the operator of a transfer
and crushing plant of construction debris. Their annual revenues are expected to
be between $6.0 and $8.0 million.
14
<PAGE>
On October 6, 1996, the Board of Global approved the renegotiation of the
terms of the acquisition of Phoenix. The six million (6,000,000) shares of
common stock of Global are to be returned to Global for cancellation. In return,
the former shareholders of Phoenix will receive a number of shares of previously
authorized preferred stock at a dollar value and with conversion and voting
rights to be determined. The holders of preferred stock will have a preference
in the event the Company becomes insolvent or declares bankruptcy and they will
be entitled to the stock of Phoenix Wrecking Corporation upon any dissolution or
liquidation of the parent company, Global Spill Management, Inc.
The Company has equipment valued at approximately two million dollars
($2,000,000) consisting of excavators, track loaders, cranes, rubbertire
loaders, dozers, skid-steer, trucks, hydraulic boom man-lift trucks, and other
miscellaneous equipment.
YEAR ENDED JUNE 30, 1995 COMPARED TO YEAR ENDED JUNE 30, 1994
All representations and statements contained herein regarding Fiscal Year
1996 is based upon unaudited financial statements. Revenues of $19,217,195 for
the year ended June 30, 1995 ("Fiscal 1995") increased $8,452,148 or 78.5%, as
compared to Fiscal 1994. Approximately $11,840,738 of the total revenues for
Fiscal 1995 were attributable to Environmental Disposal Options Corporation
("EDOC"), Land N Sea and Allied, which were acquired by the Company as of April
28, 1994, July 15, 1994 and December 1, 1994, respectively. American Industrial
Marine Services, Inc. ("AIMS"), which was sold by the Company as of April 4,
1994 contributed $2,529,245 to Fiscal 1994 revenues. Acme which was spun off by
the Company as of December 22, 1994 contributed $1,446,138 and $2,677,907 for
Fiscal 1995 and 1994, respectively. Excluding revenues from these subsidiaries,
revenues would have increased $1,007,656 or 20%. This increase is attributable
to the emergency spill activity in the early months of Fiscal 1995. Revenues and
Operating Income (Loss) for Fiscal 1995 would have been approximately
$23,707,500 and $(886,000) compared to Revenues and Operating Income of
$23,210,700 and $472,500 in Fiscal 1994 had the Company owned Allied, Land N Sea
and EDOC and disposed of Acme and AIMS as of July 1, 1993.
Product revenues of $950,031 for Fiscal 1995 decreased $1,397,374 or
59.5%, as compared to Fiscal 1994. Almost all product revenues were attributable
to Acme, which was spun off as of December 22, 1994.
Gross profit of $4,683,772 for Fiscal 1995 increased $1,714,744 or 57.8%,
as compared to Fiscal 1994. Of the gross profit for Fiscal 1995, $3,094,679 was
attributable to EDOC, Land N Sea, Allied and Acme, and $333,898 of gross profit
for the same period in 1994 was attributable to AIMS. Excluding the gross profit
attributable to EDOC, Land N Sea, Allied and Acme for Fiscal 1995 and EDOC, Acme
and AIMS for Fiscal 1994, gross profit would have increased $136,180 or 9.4%
from Fiscal 1994 to 1995, primarily due to the emergency spill activity in July
and August 1994. The gross profit percentage declined from 27.6% in Fiscal 1994
to 24.4% in Fiscal 1995 due to the disposition of Acme. Acme is a manufacturer
whose gross margin historically is higher than the Company's other subsidiaries
that are service companies.
Selling, general and administrative expenses ("SG&A") for Fiscal 1995 of
$5,578,054, which includes $177,500 of amortization of goodwill, increased
$1,274,304, as compared to the same period in 1994. SG&A as a percentage of
revenues was 29.0% of revenues in 1995 versus 40.0% of revenues in Fiscal 1994
due mainly to an increase in revenue without a proportionate increase in SG&A.
Due to management's continuing focus on the company's cost containment and
reduction programs (which have reduced salaries and both general and medical
insurance), SG&A excluding goodwill amortization and expenses attributable to
EDOC, Land N Sea, Allied and Acme for Fiscal 1995 and AIMS and EDOC for the same
period in 1994, would have decreased by $240,624 or 7.5%.
Interest expense for Fiscal 1995 increased $138,780 from the same period
in 1994. Higher interest rates, greater borrows under the Company's Line of
Credit and debt issued to finance the purchase of Allied resulted in the
increase in interest expense.
SG&A for Fiscal 1994 of $4,303,750 (40.0% of revenues) decreased $735,000
or 14.6% as compared to Fiscal 1993. The decrease was offset, in part, by
15
<PAGE>
$74,100 of additional SG&A attributable to EDO which the Company acquired as of
April 28, 1994. SG&A includes $790,600 and $832,200 for Fiscal 1994 and Fiscal
1993, respectively, attributable to AIMS. Excluding EDO for Fiscal 1994 and AIMS
for Fiscal 1994 and 1993, SG&A would have decreased $905,717 or 26.3% as
compared to Fiscal 1993. The decrease was attributed to (I) a reduction of
$360,000 in salaries and consulting costs and related costs, (ii) a $356,500
decrease in professional fees, other expenses associated with the Company's
acquisition programs and the costs associated with being a public company, (iii)
a decrease in advertising of $20,000, (iv) a reduction of $31,000 in insurance
costs, and (v) $206,000 of cost related to bad debts, relocation and other
employee costs incurred in Fiscal 1993 which were not incurred in Fiscal 1994.
Interest expense for Fiscal 1994 of $148,900 decreased $46,700 from Fiscal
1993. Approximately $80,300 and $81,200, respectively, of interest expense for
Fiscal 1994 and Fiscal 1993, respectively, was attributable to AIMS. Excluding
AIMS for Fiscal 1994 and Fiscal 1993, interest expense would have decreased
$45,800 due primarily to decreases in interest rates and average borrowing for
the year.
Other income - net for Fiscal 1994 decreased $24,400. Approximately
$70,900 and $102,300 of other income - net for Fiscal 1994 and Fiscal 1993,
respectively, was attributable to AIMS. Excluding AIMS, other income - net would
have decreased $1,300.
Liquidity and Capital Resources.
- --------------------------------
Cash and cash equivalents as of June 30, 1995 were $183,567, compared to
$166,105 as of June 30, 1994. The Company had a working capital deficit of
$433,522 as of June 30, 1995 compared to positive working capital of $1,320,455
as of June 30, 1994.
Cash used in operations of $(561,036) for Fiscal 1995 compared to
$(781,220) used in Fiscal 1994.
The proceeds of Common Stock sales and short term debt were used primarily
to fund $578,615 in operating losses, $337,718 in capital expenditures, and
$1,967,502 for the acquisitions of Allied.
The Company has a $1,150,000 line of credit which expires in October 1995.
Under the terms of the line of credit the Company can borrow against its
eligible accounts receivable, as defined, up to $1,150,000. As of June 30, 1995
eligible accounts receivable were approximately $2,195,000. The Company has been
in technical default of its line of credit from time to time. The bank has
waived these defaults and has agreed to forebear any action under the credit
agreement until October 31, 1995.
The Company has incurred significant operating losses in each of the three
years in the period ended June 30, 1995, has a consolidated working capital
deficit of approximately $434,000, and has a consolidated accumulated deficit of
$4,620,000.
Management has received a firm commitment for new financing which will
provide $1,500,000 of new common equity, a one-year, convertible loan amounting
to $1,500,000 bearing interest at 11.5%, and a new line of credit of up to
$3,000,000. The number of shares of Company Common Stock to be issued for cash
or upon conversion will be based upon 65% of the bid price on the date of the
transaction.
The Note Payable - Allied as of June 30, 1995 was $1,105,058, of which
$166,568 is current, and payable in cash or in Common Stock.
During Fiscal 1995, the Company sold 6,764,000 shares of Common Stock to
various investment groups in private placements. The proceeds of these
transactions net of related costs were $2,563,799. In addition, the Company also
collected $408,333 of Common Stock sale receivables in Fiscal 1995.
As of June 30, 1995, the Company has $497,875 of subscriptions receivable
from various investment groups.
In Fiscal 1994, the Company (I) restructured its employee health coverage,
capping the monthly premiums and adopted employee co-payments, which resulted in
16
<PAGE>
a savings of $129,000 annually; (ii) consolidated its liability insurance
throughout the Company, resulting in approximately $100,000 in annual savings;
and (iii) consolidated certain corporate staff functions, resulting in annual
savings of $100,000.
During Fiscal 1996, the Company expects to continue its organizational
efficiency and cost reduction programs. Cost savings are expected to be obtained
primarily through consolidation of facilities which will result in occupancy
cost savings of approximately $60,000 per year. Further reduction in liability
insurance through consolidation will yield savings of $80,000 next year. In
addition, the Company expects to consolidate certain sales and administrative
departments that will result in payroll savings of $100,000.
Management believes the availability under the new financing package
detailed above, the collection of stock subscriptions receivable, cost reduction
programs and organizational efficiencies, will provide sufficient cash to meet
its working capital and capital expenditure requirements through June 30, 1996.
In order to implement its acquisition and growth strategy over the longer
term, the Company will have significant capital requirements. The Company
anticipates the future issuance of shares of its capital stock to fund portions
of the purchase price for acquisitions. In addition, the Company may seek to
raise additional capital through public or private debt or equity financing. The
availability of these capital sources will depend upon prevailing market
conditions, interest rates and the then existing financial position and results
of operations of the Company. In the event that a public market for the
Company's Common Stock does not continue with sufficient strength and liquidity,
potential acquisition candidates may be unwilling to accept the Company's Common
Stock as part of the consideration for the sale of their businesses. In such
circumstances, the Company would be required to use more of its capital
resources in order to continue its acquisition program. As a result, the timing,
number and character of acquisitions over the longer term could be adversely
affected.
Item 8. Financial Statements and Supplementary Data.
-------------------------------------------
Consolidated Financial Statements and supplementary financial information
specified by this Item 8. are presented following Item 14 in Part IV of this
report.
Item 9. Changes in and Disagreements with Accountants or Accounting and
------------------------------------------------------------------------
Financial Disclosure.
--------------------
The Company is in the process of engaging SEC qualified Certified Public
Accountants to audit the Company's Fiscal 1996 financial statements. The
decision to change accountants was approved by the Company's Board of Directors.
Management prepared the unaudited financial statements attached to this report.
At no time were there any disagreements with the prior accountants, BDO Seidman,
LLP, on any matter of accounting principles or practices, financial statement
disclosures or auditing scope or procedures.
17
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Company.
-----------------------------------------------
As a result of the reverse acquisition of June 28, 1996 between the
Company and Phoenix, the Prior members of the Board of Directors, other than
David R. Stith, resigned and the following new members were elected.
The executive officers, directors and key personnel of the Company are as
follows:
Name Age Positions held with the Company
---- --- -------------------------------
Karl Schwab 31 Chairman, President and Director
Roger Imperial 57 Director
David R. Stith 69 Director
George Weast 63 Chief Financial Officer, Assistant
Secretary And Director
Charles C. Chillingworth 53 Director and General Counsel
Biographies of the directors, executive officers, and key personnel of the
Company are set forth below. All directors hold office until the next annual
stockholders' meeting and until their successors have been elected and qualified
or until their death, resignation, retirement, removal or disqualification.
Vacancies in the existing Board are filled by majority vote of the remaining
directors. Officers of the Company serve at the will of the Board of Directors.
current executive officers of the Company have employment contracts ending in
1996.
No Director, Officer or affiliate of the Company is an adverse party to
the Company or any of its subsidiaries in any material proceeding.
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership of equity securities of the Company with the
Securities and Exchange Commission and NASDAQ. Officers, directors and
greater-than-ten-percent shareholders are required by SEC regulation to furnish
the Company with copies of all Section 16(a) forms that they file.
KARL SCHWAB has been Chairman, President and Director of the Company since
June 28, 1996. In addition, from 1986 to the present, Mr. Schwab has been
President and founder of Phoenix Wrecking Corporation. Phoenix Wrecking
Corporation, a company specializing in the demolition of large buildings and
factories throughout the United States, expects revenue in excess of fifteen
million dollars during the fiscal year 1996. Major clients of Phoenix Wrecking
Corporation include Cargill, Con Edison and U.S. Steel. During 1985 and 1986,
Mr. Schwab served as Vice President of Cuyahoga Wrecking and was the Project
Manager responsible for overseeing numerous demolition sites. Mr. Schwab
received his B.S. degree in Finance from Iona College in 1986. Mr. Schwab
receives a salary of $75,000 from the Company.
ROGER A. IMPERIAL has been a Director since June 28, 1996. Mr. Imperial is
Vice Chairman of Acordia Northeast/New York Region and Chairman of Arordia's
National Construction Committee. Acordia produces, manages and oversees large
commercial accounts. Mr. Imperial's areas of expertise are in development and
implementation of national property/casualty programs. Mr. Imperial received a
B.A. degree from St. John's University and an LLB from St. John's University
School of Law. He is a licensed insurance broker in the State of New York and
has served on the Board of Trustees of the New Jersey Highway Authority and was
appointed by the Governor of New York as special counsel to the Joint
Legislative Committee on Rates and Regulations. He has appeared before panels
studying tort reform liability as it applies to the insurance industry and is a
member of the Board of Trustees of Catholic Charities of NYC, Nursing Home
Division. Mr. Imperial receives no salary from the Company.
DAVID R. STITH became a Director of Global on November 1, 1991, and of the
Company on November 25, 1991. Mr. Stith founded Underwsater Technics in 1967 and
has served as its Chairman and President since such date. Mr. Sith led the crew
18
<PAGE>
that cleaned up the major oil spills from the tankers the "Elias", the "Mellon",
and the "Athos". Mr. Stith was also involved in underwater testing for the
National Aeronautics and Space Administration, and led the cred that dove for
sunken treasure on the Spanish Gallon "San Jose" which sank off Columbia in
1708.
GEORGE E. WEAST is Chief Financial Officer, Assistant Secretary and
Director. Mr. Weast has been President and Co-Founder of Washington Capital
Corporation, formerly Washington Financial Services, Inc., since 1990.
Washington Capital provides investment banking and commercial lending services
to corporations and institutional clients. The company has established
relationships with major banks, insurance companies, venture capital firms,
trust funds, pension funds, finance companies and private lending groups. Mr.
Weast has successfully syndicatd real estate and equipment leasing programs to
the investment banking community. Additionally, Mr. Weast serves as a financial
consultant to several banks, a major investment banking house and fixed income
money manager. Mr. Weast receives a salary of $75,000 from the Company.
CHARLES C. CHILLINGWORTH, General Counsel. Mr. Chillingworth has practiced
law in Palm Beach County, Florida, for 24 years, specializing in litigation. He
is a member of the Trial Bar of the U.S. Court for the Southern District of
Florida, and the Bars of the U.S. Courts of Appeal of the Fifth and Eleventh
Circuits. He has been Certified by The Florida Bar as a Civil Trial Lawyer for
thirteen years, and served on the Continuing Legal Education Committee of The
Florida Bar for three years. He is a member of the Academy of Florida Trial
Lawyers and the Attorneys' Title Insurance Fund. He has served as General
Counsel to the South Indian River Water Control District for seventeen years,
and has been general and special counsel to several other water control and
community development districts in Florida, and, as such, has been instrumental
in the issuance of many millions of dollars of improvement bonds. He is
President and General Counsel of a number of investment companies holding
shopping centers and pasture land in Florida. He received his B.A. and J.D.
degrees from the University of Florida. He served in the U.S. Army as a Field
Artillery Battery Commander and in the Florida Army National Guard as an
Infantry Company Commander. He will be paid fees for his services as General
Counsel, but will receive no salary from the Company.
Item 11. Executive Compensation.
----------------------
The following table sets forth the cash compensation earned during the
last fiscal year by the Company's chief executive officer and each of the
Company's executive officers whose aggregate annual salary and bonus exceeded
$100,000 for the fiscal year ended June 30, 1996. (the "named executive
officers"). Of those individuals listed below only Karl Schwab remains on the
Board of Directors of the Company. The Company became a reporting company under
the Securities Exchange Act of 1934 on July 29, 1992, the effective date of its
Registration Statement on Form 8-A.
Directors who are also officers of the Company receive no remuneration for
their services as Directors, other than reimbursement of expenses incurred in
connection with such service. It is the current policy of the Company not to pay
Director's fees or other forms of remuneration to Directors who are not officers
of the Company, other than reimbursement of expenses incurred in connection with
such service as a Director.
19
<PAGE>
SUMMARY COMPENSATION TABLE
--------------------------
<TABLE>
<CAPTION>
| Long-Term Compensation
| ----------------------------------
Annual Compensation | Awards | Payouts |
------------------------------- | ------------------------ | -------- |
(a) (b) (c) (d) (e) | (f) (g) | (h) | (I)
| | |
Other | | |
Name and Annual | Restricted Securities | | All
Principal Compensa- | Stock underlying | LTIP | Other
Position Year Salary($) Bonus($) tion($)(3) | Award(s)($) Options/ | Payouts($)| Compen-
| SARs(#) | | sation($)(3)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Karl Schwab 1996 $75,000
Thomas D. Lewis, Sr. 1996
Chairman of the Board, 1995 178,345 100,000
Chief Executive 1994 29,920 135,000
Officer(1)
Aubrey L. Pettit, Jr. 1996
President, General 1995 163,081 100,000
Counsel and Secretary 1994 155,110 64,000
Peter V. White 1996
Executive Vice 1995 163,081 0
President, 1994 167,938 67,500
Chief Financial
Officer,
and Treasurer(2)
David R. Stith 1996
Vice Chairman; 1995 150,500 10,313 0
President, Underwater 1994 150,000 0
Technics, Inc.
</TABLE>
- ------------------
(1) From July 1, 1992 to April 20, 1994, Mr. Lewis served as a consultant to the
Company, at an annual consulting fee of $175,000 per annum.
(2) From June 1, 1992 to April 20, 1994, Mr. White also served as Chairman and
Chief Executive Officer of the Company. Mr. White resigned all positions with
the Company as of June 30, 1995.
(3) For the fiscal year ended June 30, 1995, no bonuses, long term compensation,
stock grants or other compensation were awarded, paid or accrued on behalf of
the named executive officers. None of the named executive officers received
perquisites and other personal benefits in excess of the lesser of (I) $50,000,
or (ii) ten percent of their total salaries and bonuses. In Fiscal 1995, Mr.
Lewis and Mr. Pettit each received stock options for 100,000 shares at an option
price of $.34 per share.
(4) All of the above Officers and Directors othar than Karl Schwab and David
Stith have resigned as result of the June 28, 19986, reverse acquisition with
Phoenix.
The Company has discontinued the Senior Management Incentive Compensation Plan
and an Equity Incentive Plan described below as of June 28, 1996. During the
Company's fiscal year ended June 30, 1996, no awards were made or accrued under
the Incentive Compensation Plan; and no options were issued under the Equity
Incentive Plan.
The following table sets forth information concerning grants of stock
options during the fiscal year ended June 30, 1996, to the named executive
officers.
20
<PAGE>
OPTION/SAR/GRANTS IN LAST FISCAL YEAR
----------------------------------------------
1,152,660 Options were granted, canceled or forfeited.
The following table sets forth information concerning the exercise of
options to purchase the Company's Common Stock by the named executive officers
during the fiscal year ended June 30, 1996 as well as the number of securities
underlying unexercised options and potential value of unexercised options as of
June 30, 1996.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES(1)
<TABLE>
<CAPTION>
Number of Value of
Securities Unexercised In-
Underlying the-Money
Options/SARs at Options/SARs at
Shares Fiscal Year- Fiscal Year-
Acquired on Value End(#) End($)
Exercise(#) Realized($) Exercisable/ Exercisable/
Unexercisable(2) Unexercisable(3)
----------- ---------- ---------------- ----------------
<S> <C> <C> <C> <C>
Thomas D. Lewis, Sr. 0 0 235,000/0 $1,500
Aubrey L. Pettit, Jr. 0 0 164,000/0 $1,500
Peter V. White 0 0 67,500/0 0/0
</TABLE>
- ------------------
(1)All amounts represent stock options. No SARs or SARs granted in tandem with
stock options were granted in Fiscal 1996.
(2)All options were exercisable as of the date of grant.
(3)At June 30, 1996, the Closing Bid and Asked price of the Company's Common
Stock was $11/32 and $13/32, respectively.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
--------------------------------------------------------------
The following table sets forth the number and percentage of the Company's
shares of Common Stock owned of record and beneficially by (a) each person or
entity owning more than five percent of such shares, (b) each executive officer
and director, and (c) all executive officers and directors as a group, as of
June 30, 1996.
Name and Address(1)(2) Number of Shares Owned Percentage
- ---------------------- ---------------------- ----------
Northeast Surety Service Inc. 3,415,000 30%
37-61 39th Street,
Long Island City,
New York, 11101
On July 3, 1996, as a direct result of the transactions referred to in
Item 1 above Karl Schwab, principal Shareholder of Northeast Surety Service
Inc., became a "control Person" of the Registrant as that term is defined in the
Securities Act of 1933, as amended. Mr. Schwab's status as a control person
arises from the issuance of 4,000,000 shares of the Registrant's common stock
(approximately 565 of the total issued and outstanding Common Shares) to
Northeast Surety Service Inc. Additionally with the consummation of the
transaction referred to in Item 1, all prior directors and Board Members
resigned as directors of the Registrant.
Item 13. Certain Relationships.
---------------------
Not Applicable.
21
<PAGE>
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
---------------------------------------------------------------
(a) 1. All financial statements - see index to Consolidated Financial
Statements and Schedule on page 23.
2. Financial statement schedule - see index to Consolidated
Financial Statements and Schedule on page 23.
3. Exhibits - see exhibit on page 44.
Schedules not included are omitted because they are not applicable, or are
not required, or the information is shown in the Consolidated Financial
Statements or the Notes thereto.
(b) The following Current Reports on Form 8-K were filed by the Company
with the Securities and Exchange Commission during the last quarter of the
period covered by this Annual Report on Form 10-K:
(i)Current Report on Form 8-K dated June 30, 1995.
(ii)Current Report on Form 8-K dated July 11, 1996.
(iii)Current Report on Form 8-K dated July 18, 1996.
22
<PAGE>
GLOBAL SPILL MANAGEMENT, INC. AND SUBSIDIARIES
----------------------------------------------
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND SCHEDULE
-------------------------------------------------------
Page
----
Consolidated Balance Sheets (Unaudited) 24
Consolidated Statements of Operations (Unaudited) 25
Consolidated Statements of Stockholders' Equity (Deficit) (Unaudited) 26
Consolidated Statements of Cash Flows (Unaudited) 27
Notes to Consolidated Financial Statements 28
Supplemental Schedule --
23
<PAGE>
GLOBAL SPILL MANAGEMENT, INC. AND SUBSIDIARIES
UNAUDITED
CONSOLIDATED BALANCE SHEETS
-------------------------
JUNE 30
-------
1996 1995
----------- ----------
ASSETS
- ------
CURRENT ASSETS:
Cash and cash equivalents $ 62,000 $ 183,567
Accounts receivable, net of allowance
for doubtful accounts of $0 in 1996 -- 3,961,615
and $301,532 in 1995
Inventories -- 114,230
Notes receivable 90,000 90,000
Other current assets 4,000 451,417
----------- ----------
Total current assets 156,000 4,800,829
PROPERTY AND EQUIPMENT: net of
accumulated depreciation of $24,000 in
1996 and $1,025,620 in 1995 38,000 1,195,097
GOODWILL - Net of accumulated amortization
of $177,500 in 1995 -- 4,581,122
INVESTMENT IN UNCONSOLIDATED 21,750,000 --
SUBSIDIARY
OTHER ASSETS 51,000 179,531
NOTE RECEIVABLE - RELATED PARTIES -- 169,970
----------- ----------
Total Assets $ 21,995,000 $10,926,549
=========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
CURRENT LIABILITIES:
Line of credit $ 50,000 $ 1,080,000
Advances from Stockholders 94,000 --
Current portion of long-term debt 27,000 234,919
Accounts payable 519,000 3,381,881
Accrued income taxes -- 3,217
Accrued payroll and bonuses -- 67,410
Other accrued expenses 162,000 300,356
Current portion of notes payable -- 166,568
-related parties
----------- ----------
Total current liabilities 852,000 5,234,351
LONG-TERM DEBT 100,000 509,287
DEFERRED TAXES -- 14,197
NOTES PAYABLE - RELATED PARTIES -- 988,490
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, $.001 par value, authorized
5,0000,000 shares, none issued -- --
Common Stock, $.001 par value, authorized
25,000,000 shares, issued and outstanding -
7,366,468 shares in 1996 and 532,463 shares
in 1995 25,000 15,974
Additional paid-in capital 34,885,000 9,282,609
Accumulated deficit (13,667,000) ( 4,620,484)
----------- ----------
21,243,000 4,678,099
Subscriptions Receivable ( 200,000) ( 497,875)
----------- ----------
Total stockholders' equity 21,043,000 4,180,224
----------- ----------
Total Liabilities and Stockholders' Equity $ 21,995,000 $10,926,549
=========== ==========
The Accompanying Notes are an Integral Part of These Statements
24
<PAGE>
GLOBAL SPILL MANAGEMENT, INC. AND SUBSIDIARIES
UNAUDITED
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Year Ended June 30
- -------------------------------------------------------------------------------------------
1996 1995 1994
------------ ------------ ------------
<S> <C> <C> <C>
REVENUES:
Service $ -- $ 18,267,164 $ 8,417,642
Product -- 950,031 2,347,405
------------ ------------ ------------
-- 19,217,195 10,765,047
------------ ------------ ------------
COST OR REVENUES:
Service -- 13,805,189 6,182,680
Product -- 728,234 1,613,339
------------ ------------ ------------
-- 14,533,423 7,769,019
------------ ------------ ------------
Gross profit -- 4,683,772 2,969,028
SELLING, GENERAL AND
ADMINISTRATIVE EXPENSES 1,668,000 5,578,054 4,303,750
------------ ------------ ------------
Operating (loss) (1,668,000) (894,282) (1,334,722)
OTHER INCOME (EXPENSE):
Interest Expense -- (287,726) (148,946)
Other net -- (615) 167,843
Gain (loss) on Sale of Subsidiaries (5,666,000) -- 202,259
(Loss) on Investment and Note Receivable -- (260,000) --
------------ ------------ ------------
(Loss) from continuing operations
before income taxes and cumulative
effect of change in accounting principle (7,334,000) (1,442,623) (1,113,566)
(Loss) from Discontinued Operations
(Loss) from Operations (325,000) -- --
Writedown of Goodwill (1,328,000) -- --
INCOME TAX BENEFIT (EXPENSE) -- 15,516 (16,612)
------------ ------------ ------------
(Loss) before cumulative effect of change in
in accounting principle (9,047,000) (1,427,107) (1,130,178)
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE -- -- 169,596
------------ ------------ ------------
NET (LOSS) $ (9,047,000) $ (1,427,107) $ (960,582)
============ ============ ============
INCOME (LOSS PER SHARE BEFORE
CUMULATIVE EFFECT OF CHANGE
IN ACCOUNTING PRINCIPLE $ (15.03) $ (.12) $ (.14)
------------ ------------ ------------
CUMULATIVE EFFECT OF CHANGE IN
ACCOUNTING PRINCIPLE -- $ -- $ .02
------------ ------------ ------------
NET (LOSS) PER SHARE - CONTINUING
OPERATIONS $ (12.18) $ (.12) $ (.12)
============ ============ ============
NET (LOSS) PER SHARE -
DISCONTINUED OPERATIONS $ (2.85) -- --
============ ============ ============
SHARES USED IN COMPUTING NET LOSS
PER SHARE 602,009 11,654,137 8,170,145
============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
25
<PAGE>
GLOBAL SPILL MANAGEMENT, INC. AND SUBSIDIARIES
----------------------------------------------
UNAUDITED
---------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
--------------------------------------------------------
<TABLE>
<CAPTION>
Additional Retained Receivables for
Common Paid in Earnings Common Stock
Stock Capital (Deficit) Sold
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
BALANCE, JUNE 30, 1994 $ 9,000 $ 6,865,000 $ (3,193,000) $ --
Spin-off of Acme (1,000) (1,263,000) -- --
Acquisition of Land N Sea 400 50,000 -- --
Exercise of Options 100 50,000 -- --
Exercise of Warrants 100 50,000 -- --
Issuances for Payment of Services 600 125,000 -- --
Common Stock issued through
Private Placements 6,800 2,954,000 -- (448,000)
Common Stock issued to employees
through employee stock purchase plan -- 2,000 -- --
Net Loss -- -- (1,427,000)
------------ ------------ ------------ ------------
BALANCE, JUNE 30, 1995 $ 16,000 $ 9,283,000 $ (4,620,000 $ (498,000)
============ ============ ============ ============
Persuant to Earnouts of Environmental 500 232,000 -- --
Disposal Options Corporation
Persuant to Earnout of Land N Sea 100 64,000 -- --
Common Stock Issued Through Senior 100 56,000 -- --
Management Incentive Compensation
Plan
Sales of Subsidiaries -- 3,111,000 -- --
Acquisition of Phoenix Wrecking 6,000 21,774,000
Corporation
Common Stock issued through Private 2,300 365,000 -- (298,000)
Net Loss -- -- (9,047,000) --
------------ ------------ ------------ ------------
BALANCE, JUNE 30, 1996 $ 25,000 $ 34,885,000 $(13,667,000) $ (200,000)
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
26
<PAGE>
GLOBAL SPILL MANAGEMENT, INC. AND SUBSIDIARIES
UNAUDITED
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Year Ended June 30
------------------
1996 1995 1994
-------------- ------------ ------------
<S> <C> <C> <C>
CASH FLOW'S FROM OPERATING ACTIVITIES:
Net (loss) $ (9,047,000) $ (1,427,107) $ ( 960,582)
Adjustments to reconcile net (loss) to net cash provided by
(used in) operating activities -
Depreciation and amortization 688,000 495,157 415,426
Write down of Goodwill 1,601,000 - -
Loss on sale of subsidiaries 5,666,000 - -
Issuance of common stock for services rendered ( 56,000) 125,063 -
Gain on sale of AIMS - - ( 202,259)
Loss on investment and note receivable - 260,000 -
Cumulative effect of change in accounting principle - - ( 169,596)
(Gain) loss on sale of assets, net - 13,394 ( 72,785)
Provision for doubtful accounts ( 301,000) 42,226 -
(Increase) decrease in assets-
Accounts receivable 4,263,000 17,339 568,833
Inventories 114,000 39,481 78,086
Prepaid expenses and other assets 473,000 ( 4,646) ( 47,926)
Increase (decrease) in liabilities-
Accounts payable (2,850,000) ( 47,412) ( 9,875)
Accrued expenses and other current liabilities ( 209,000) ( 74,591) ( 380,542)
------------ ------------ ------------
Net cash from (used in) operating activities 342,000 ( 561,036) ( 781,220)
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment ( 16,000) ( 337,718) ( 319,300)
Proceeds from sale and disposal of equipment 859,000 86,132 75,720
Decrease in amount due from related parties - 11,898 80,000
(Increase) decrease in amount due to related parties - - ( 144,042)
(Increase) decrease in other assets - - ( 30,644)
Cash balance of subsidiary at date of sale - ( 232,961) ( 235,366)
Acquisitions ( 25,000) (2,275,583) 37,913
------------ ------------- ------------
Net cash from (used in) investing activities) 818,000 ( 2,748,232) ( 535,719)
------------ ------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of deferred equity financing costs - ( 20,477) ( 118,157)
Borrowings (repayments) on line of credit, net ( 1,030,000) 502,792 ( 393,986)
Borrowings (repayments) from related parties 47,000 - 30,588
Proceeds from long-term debt 128,000 321,404 -
Repayments of long-term debt ( 758,000) ( 449,121) ( 156,104)
Issuance of common stock, net of expenses 175,000 ( 2,563,799) ( 519,714
Payments on common stock receivable, net of expenses 156,000 408,333 -
------------ ------------ -----------
Net cash provided by (used in) financing activities ( 1,282,000) 3,362,730 ( 117,945)
------------ ----------- -----------
NET INCREASE (DECREASE) IN CASH ( 122,000) 17,462 (1,434,884)
------------ ------------- ------------
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 184,000 166,105 1,600,989
------------ ------------ ------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 62,000 $ 183,567 $ 166,105
============ =========== ============
The accompanying notes are an integral part of these statements
</TABLE>
27
<PAGE>
GLOBAL SPILL MANAGEMENT, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
1. ORGANIZATION AND BASIS OF PRESENTATION:
--------------------------------------
Background
- ----------
Global Spill Management, Inc. ("Global") was incorporated in June 1991, to
acquire, operate and develop environmental contracting and consulting companies
and related businesses. Global merged into Happy Mergers, Inc., a Nevada
corporation ("Happy Mergers"), on November 25, 1991 and the name was changed to
Global. (Hereinafter, the "Company" shall refer to Global Spill Management,
Inc., a Nevada corporation, the surviving entity after the merger of Global into
Happy Mergers).
Thereafter, on June 28, 1996, the Company, in order to repay the primary
lender to which the Company had defaulted, sold all of its operating
subsidiaries: Specifically, Land N Sea Environmental Services, Inc., Allied
Environmental Services, Inc., Allied Environmental Services, West, Inc., GSM
Environmental, Inc., Global Environmental, Inc., and Professional Pipe Services
Corporation. All proceeds were utilized to pay existing debt held by the primary
lender.
Simultaneously, on June 28, 1996, the Company, pursuant to a unanimous
vote of the Board of Directors, acquired, in exchange for 6,000,000 Shares of
its Common Stock, all of the issued and outstanding Common Shares of Phoenix
Wrecking Corporation from Phoenix's existing Shareholders. Phoenix is a solid
waste management, environmental abatement and specialty contracting company
focusing on, site and facility remediation. The 6,000,000 Shares represented
approximately 90% of the total issued and outstanding Common Shares of Global
issued on July 10, 1996. Concurrent with the acquisition of Phoenix, two of the
five directors and the President (CEO) of Global resigned and were replaced by
the directors and the President of Phoenix.
Acquisitions and Sales of Subsidiaries Prior to June 28, 1996
- -------------------------------------------------------------
Global acquired Acme Containment Group, Inc. on November 15, 1991, and
Underwater Technics, Inc. on December 11, 1991. The acquisition agreements
contained certain provisions that would have allowed each subsidiary to be
reacquired by their respective former stockholders. Accordingly, the total
stockholders' equity of these two companies was classified as "Net Assets
Subject to Unwind" through July 1992, when the former stockholders terminated
their respective unwind provisions.
The Company acquired all of the outstanding Common Stock of American
Industrial Marine Services, Inc. ("AIMS") for 60,000 shares of the Company's
Common Stock on February 9, 1993, effective as of February 1, 1993. In
connection with the transaction, the Company entered into an employment
agreement with AIMS' sole stockholder and president, which was terminated,
effective August 16, 1993.
The acquisition of AIMS has been accounted for as a combination of related
party companies at historical cost in accordance with Staff Accounting Bulletin
No. 48, Topic 5:G, since the largest shareholder of the Company was also a
significant shareholder of AIMS until he sold his shares in AIMS to another AIMS
shareholder in December 1992. Accordingly, as of February 1, 1993, the effective
date of the acquisition of AIMS, the consolidated financial statements include
the accounts of the Company and AIMS.
28
<PAGE>
On April 4, 1994, the Company sold all of the outstanding capital stock of
AIMS to Omnicorp Limited ("Omni") for a $200,000 note receivable and 600,000
shares of Omni common stock valued by the Company at $150,000 which is included
in other assets in the consolidated balance sheet at June 30, 1994. The Company
was required to make a capital contribution of $200,000 in cash to AIMS prior to
the consummation of the sale. The note receivable was originally due on
September 30, 1994, bears an interest rate of prime plus 2.0% and is secured by
a security interest in substantially all of the assets of AIMS. The Company has
demand registration rights to register all such 600,000 shares of Omni Common
Stock in a registration statement on Form S-3.
The sale of AIMS resulted in a gain of $202,259.
In October 1994, the Company agreed, under certain conditions, to reduce
the Omni note receivable from $200,000 to $110,000 and extend the maturity date
from September 30, 1994 to April 30, 1995. In consideration for the reduction of
the Omni note and extending the maturity date, Omni agreed, among other things,
to convey to the Company a certain parcel of land on which the Company has a
first mortgage. Omni was, as of June 30, 1995, and continues to be in default of
the extended note, and Omni appears to not have the ability to meet the
financial terms of that agreement. Also, its common stock has lost considerable
value and it appears the Company may not be able to realize any proceeds from
its investment. Accordingly, the Company has written off the balance of its note
receivable and its investment in Omni common stock realizing a loss of $260,000
in the year ended June 30, 1995.
Effective April 28, 1994 the Company acquired all of the outstanding
common stock of Environmental Disposal Options Corporation ("EDOC") in exchange
for 479,717 shares of the Company's Common Stock, valued at $1,137,239, plus an
earnout. The earnout, payable in common stock, is equal to 2.5 times EDOC's
earnings before income taxes for the calendar year ending December 31, 1994,
divided by the market price of the Company's Common Stock at such time. The
transaction was accounted for as a purchase and, accordingly, the results of
operations of EDOC have been included in the Consolidated Statement of
Operations, prospectively from the date of acquisition. The purchase price
exceeded the fair value of EDOC's net assets by $1,175,100 which has been
assigned to goodwill. EDOC specializes in laboratory chemical disposal, solvent
recovery, and identification of unknown chemicals. On March 28, 1996, due to the
lack of profitability and a shortage of working capital, the Company
discontinued the operations of EDOCC. All of the assets of EDOCC were pledged as
collateral to the Company's primary lender. Subsequently, on June 28, 1996, EDOC
was forced into involuntary Chapter 7 Bankruptcy. As of that date, the
investment in EDOCC of $934,592 was recorded in discontinued operations as a
loss by the Company. The associated goodwill of $1,175,100 was also written off
net of any amortization previously taken.
Effective July 15, 1994 the Company acquired all of the outstanding Common
Stock of Land N Sea Environmental Services, Inc. ("Land N Sea") in exchange for
423,729 shares of the Company's Common Stock, valued at $500,000. The
transaction was accounted for as a purchase and, accordingly, the results of the
operations of Land N Sea are included in the Consolidated Statement of
Operations, prospectively from the date of acquisition. The purchase price
exceeded the fair value of Land N Sea's net assets by $598,800 which was
assigned to goodwill. Land N Sea is an environmental contracting company
specializing in emergency spill response and recovery, residential spill
clean-up, tank removals and environmental remediation. On June 28, 1996, the
Company sold all of the issued and outstanding stock it owned of Land N Sea to
the original founder for the sum of $75,000. This sum was paid to the primary
lender which held a first lien in and to the assets of Land N Sea. As of that
date, the Investment in Land N Sea of $911,562 was recorded in discontinued
operations as a loss by the Company. The associated goodwill of $598,800 was
also written off net of any amortization previously taken.
29
<PAGE>
On October 1, 1994, the Company issued 650,000 of its Common Stock for all
of the outstanding Common Stock of Professional Pipe Services Corporation
("Propipe"). Propipe inspects and repairs infrastructures including sanitary
sewers, storm sewers and manholes. The transaction was accounted for as a
pooling of interests and, accordingly, the Company's financial statements have
been restated to include those of Propipe for the year ended June 30, 1994.
On June 30, 1996, the Company sold the assets of Propipe to the original
founder for $105,000 and the assumption of Propipe's liabilities. As of that
date, the investment in Propipe of $679,039 was recorded in discontinued
operations as a loss by the Company. The proceeds from the sale were remitted to
the Company's primary lender.
On December 1, 1994 the Company acquired all of the issued and outstanding
Common Stock of Allied Environmental Services, Inc., Allied Mid- Atlantic, Inc.,
Allied Waste Management, Inc. and Allied Environmental Services West, Inc.
(hereinafter collectively referred to as "Allied") for $3,072,560 payable
$43,750 in cash, $1,956,250 in short term notes, bearing interest at 8.5%, of
which $1,923,752 was paid prior to June 30, 1995 with the remaining balance of
$32,498 paid in July 1995 and $1,072,560 in an eight year note bearing interest
at a rate of 2% above the WSJ published prime rate, payable, at the election of
the Company, in either cash or shares of its Common Stock. This transaction was
accounted for as a purchase and, accordingly, the results of operations of
Allied are included in the Consolidated Statement of Operations, prospectively
from the date of acquisition. The purchase price exceeded the fair value of
Allied's net assets by $2,984,800 which was assigned to goodwill. Allied
arranges for the transportation and disposal of contaminated soil. On June 28,
1996, the Company effected the sale of all of the assets of Allied in
consideration for the assumption by the purchaser of substantially all of the
liabilities of Allied, as well as the payment of $700,00 worth of the
purchaser's Stock. This Stock was sold contemporaneously at closing at a private
sale with the cash proceeds utilized to pay the Company's primary lender which
held a first lien in and to the assets of the Allied Companies. As of June 30,
1996, the investment in Allied of $940,133 net of proceeds was recorded in
discontinued operations as a loss by the Company. The associated goodwill of
$2,984,800 was also written off net of any amortization previously taken.
On December 22, 1994, the Company spun-off its wholly owned subsidiary,
Acme Containment Group, Inc. ("Acme") to its original stockholders
("Stockholders"), pursuant to an Agreement and Plan of Corporation Separation
("Agreement"). Pursuant to the Agreement, Stockholders exchanged 1,100,000
shares of the Company's Common Stock for all of the issued and outstanding stock
of Acme. The transaction was accounted for as a tax free spin-off under Section
355 of the Internal Revenue Code of 1986. On December 22, 1994 the Company
canceled the 1,100,000 shares of its Common Stock it exchanged pursuant to the
agreement. The Company accounted for this transaction as an acquisition, and
concurrent retirement of treasury shares, and recorded the transaction at the
book value of the net assets transferred.
On June 28, 1996, the Company sold all of its issued and outstanding
Shares of Stock of GSM Environmental, Inc. and Global Environmental, Inc. to its
outgoing Chairman of the Board. As part of this transaction, the Purchaser paid
$100,000 to the Company's primary lender which maintained a first priority lien
in and to the assets of GSM Environmental, Inc. and Global Environmental, Inc.,
and additionally executed a note in favor of the same lien holder for $100,000,
which note can be discounted to $50,000 if such payment is made within ninety
days of June 28, 1996. Such payment was made prior to September 30, 1996, and
the $100,000 note was canceled.
30
<PAGE>
Acquisition of Subsidiaries Subsequent to June 30, 1996
- -------------------------------------------------------
On June 28, 1996, the Company, pursuant to a unanimous vote of the Board
of Directors, acquired, in exchange for 6,000,000 Shares of its Common Stock
issued on July 10, 1996, all of the issued and outstanding Common Shares of
Phoenix Wrecking Corporation from Phoenix's existing Shareholders. A summary of
Phoenix's Financial condition as of June 30, 1996, and statement of operations
for the year then ended is indicated in the chart below.
15. Subsequent Events:
-----------------
On July 15, 1996, the Company, in exchange for $500,000 and a note for
$2,700,000, acquired all of the issued and outstanding of Recycling Unlimited,
Inc., a company whose primary line of business is the recycling of demolitioned
concrete matter and subsequent sale to the construction industry for use in
foundations of roads, buildings and other structures. The note, payable by the
Company, includes monthly payments of principle and interest of $30,000.
Interest is at 10%. The note carries a balloon payment due July 15, 2001.
31
<PAGE>
Phoenix Wrecking Corporation
Unaudited Balance Sheet
For the Year Ended June 30, 1996
ASSETS
Current Assets:
Cash $ 36,768
Marketable Commodities 2,383,000
Accounts receivable, net allowance
For doubtful accounts of $108,624 2,063,872
Unbilled Receivables (see note) 513,000
Total Current Assets $ 4,996,640
Fixed Assets:
Land & Building 540,000
Machinery & Equipment (Net of Depreciation) 1,031,452
Equipment under capital leases 295,457
Small Tools 165,325
-----------
Total Fixed Assets 2,032,234
Notes Receivable (see note) 1,920,000
Prepaid Rent (see note) 1,413,999
-----------
TOTAL ASSETS $10,362,873
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Current Liabilities:
Accounts Payable - Trade $ 457,750
Notes Payable 328,620
Leases Payable 185,762
Corporate Income Tax Payable 262,454
Payroll Taxes 527,650
-----------
Total Current Liabilities $ 1,762,236
Subordinate Debt/Begonia Corp. (See Note) 1,128,362
Total Liabilities $ 2,890,598
Shareholders' Equity
Capital Stock 350,000
Retained Earnings 7,122,275
Total Shareholders' Equity $ 7,472,275
-----------
TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $10,362,873
===========
32
<PAGE>
Phoenix Wrecking Corporation
Unaudited
Statement of Income and Retained Earnings
For the Year Ended June 30, 1996
REVENUE $ 9,247,631
LESS:
Cost of Revenue 6,324,638
-----------
GROSS PROFIT 2,922,993
General & Administrative Expense 1,126,392
-----------
INCOME BEFORE TAXES 1,796,601
Provision For Income Taxes -262,454
-----------
NET INCOME 1,534,147
Retained Earnings 6/30/95 5,588,128
-----------
Retained Earnings 6/30/96 7,122,275
===========
NOTES TO FINANCIAL STATEMENTS
NOTE 1. MARKETABLE COMMODITIES:
Marketable Commodities consists primarily of scrap steel recorded at its listed
value as per the Wall Street Journal as of the date received.
NOTE 2. UNBILLED RECEIVABLES:
Company incurs payroll and related expenses on contracts prior to billing
customers. Management estimates this to be $513,000.
NOTE 3. NOTES RECEIVABLE:
The Company has lent or taken for work performed, notes from three companies
that management is confident of collection. The notes mature in 3 years from
January 1, 1996 and bear an interest rate of 10% per annum. The notes are
interest only during the term, paid semi-annually, but can be paid earlier at
the debtors option.
NOTE 4. PREPAID RENT:
The National Railroad Passenger Association, (AMTRAK), entered into an agreement
with the Company in October 1993 wherein they agreed to exchange remedial
services for prepaid rent credit through October 1, 1999. The Authority valued
this rent at $404,000 per year. The property is comprised of 8 acres located at
37-61 39th Street, Long Island City, New York, 11101. The property is at the
foot of the 59th Street Bridge and has a 6,000-foot office building on the
premises.
NOTE 5. SUBORDINATED DEBT - BEGONIA CORP.
The Begonia Corporation has loaned Phoenix Wrecking Corporation $1,128,362 on a
subordinated basis as of March 31, 1996.
The 3 year note is payable interest-only in arrears annually. The note is dated
August 10, 1995. The entire principal is due in August 1998.
33
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
------------------------------------------
Investment in Subsidiaries
- --------------------------
The accompanying Financial Statements include the accounts of Global Spill
Management, Inc. at June 30, 1996. At June 30, 1995, and June 30, 1994,and for
the years then ended, the accounts of Global Spill Management, Inc., giving
effect to the divestiture of operating subsidiaries on the acquisition of
Phoenix Wrecking Corp., on July 10, 1996 (See footnote hereto) and its then
wholly owned subsidiaries, after elimination of all significant intercompany
balances and transactions, have been presented on a consolidated basis.
Income Taxes
- ------------
In 1994, the Company adopted Statement of Financial Standards ("SFAS") No.
109, "Accounting for Income Taxes," which requires a change form the deferred
method to the asset and liability method of accounting for income taxes. Under
the asset and liability method, deferred income taxes are recognized for the tax
consequences of "temporary differences" by applying enacted statutory tax rates
applicable to future years to differences between the financial statement
carrying amounts and the tax bases of existing assets and liabilities. Under the
SFAS No. 109, the effect on deferred taxes of a change in tax rates is
recognized in income in the period that includes the enactment date. Under the
deferred method, deferred taxes were recognized using the tax rate applicable to
the year of the calculation and were not adjusted for subsequent changes in tax
rates. Corporate tax returns for the years ending June 30, 1996, and June 30,
1995, have not been filed to date.
Environmental Expenditures
- --------------------------
Environmental expenditures that relate to an existing condition caused by
past operations, and which do not contribute to current or future revenues, were
charged to expense. Liabilities were recorded when environmental assessments
and/or cleanups are probable, and the costs were reasonably estimated.
Generally, the timing of these accruals coincides with the Company's commitment
to a formal plan of action.
Revenue Recognition
- -------------------
Service revenues were recognized as the services were performed. Such
revenues also include the cost of services subcontracted to third parties that
are reimbursed to the Company by its customers. Product revenues are recognized
when the products are shipped.
Net Income (Loss) Per Share
- ---------------------------
The Loss Per Common Share is computed by dividing the loss applicable to
Common Stock by the weighted average number of common shares outstanding and
common stock equivalents, if dilutive. For the years ended June 30, 1996, 1995
and 1994, the outstanding warrants and options and the subordinated debenture
were excluded from the computation because their effect was antidilutive.
3. NOTES RECEIVABLE:
----------------
On April 4, 1994, the Company sold all of the outstanding capital stock of
AIMS to Omni for a $200,000 note receivable and 600,000 shares of Omni stock.
The note receivable was due on September 30, 1994, bears interest at prime plus
2.0% and is secured by a security interest in substantially all of the assets of
AIMS. As discussed in Note 1 to the consolidated financial statements, Omni is
in default of the note and the Company accordingly has taken a loss of $110,000
in the year ended June 30, 1995.
34
<PAGE>
As of June 30, 1996, the Note remains unpaid. The Company is in the
process of foreclosing on the real estate, established as security for the Note.
The real estate has a fair market value substantially greater than the loan
balance and, therefore, no allowance for uncollectible amounts has been
established at June 30, 1996.
4. PROPERTY, PLANT AND EQUIPMENT
June 30, 1996 June 30, 1995
------------- -------------
Land $ - $ 26,794
Building and Improvements - 443,354
Machinery and Equipment 41,000 1,675,824
Furniture and Fixtures 21,000 74,745
---------- ----------
62,000 2,220,717
Less Accumulated
Depreciation
(24,000) (1,025,620)
---------- -----------
Property, Plant and Equipment,
Net $ 38,000 $1,195,097
========== ==========
Property and equipment are stated at cost. Depreciation is computed
primarily on a straight-line basis using the following estimated useful lives:
Building and improvements 10 to 30 years
Machinery and equipment 5 to 7 years
Furniture and fixtures 5 years
Assets under capital lease are amortized over the shorter of the life of
the lease or the useful life of the asset.
Depreciation expense for fiscal 1996, 1995 and 1994 was $30,100,
$317,700, and $389,900, respectively.
Expenditures for repairs and maintenance are charged to expense as
incurred and were $450, $105,200, and $148,000 in fiscal 1996, 1995 and 1994,
respectively.
35
<PAGE>
5. LINES OF CREDIT:
The Company had a $1,150,000 line of credit with a commercial bank that
expired on October 31, 1995.
On December 29, 1995, the Company negotiated an increase in this line of
credit to $1,350,000 and extended the maturity date to January 31, 1996. A
condition to extending the line of credit required the Company to obtain by
January 15, 1996, a commitment letter from another lender sufficient to payoff
the bank(such commitment was not obtainable). Due to an unexpected drop in
business and, therefore, eligible accounts receivable, the Company lacked
sufficient collateral to repay the $1,350,000 owed to the lender. On April 25,
1996, the Company entered into a forbearance agreement with the commercial bank,
extending the line of credit to May 31, 1996.
Subsequently, the Company was unable to fulfill the terms of the
forbearance agreement and consequently negotiated with the primary lender a
workout arrangement whereby the Company would sell its subsidiaries, utilizing
any proceeds received to reduce the line of credit. At June 30, 1996, the line
of credit had been satisfied with proceeds received from the sales of the
subsidiaries. (See Footnote 1 hereto).
The interest rate on the line of credit balance outstanding at June 30,
1995 and 1994 was 11.00% and 8.50%, respectively. Based on month end balances
during fiscal 1996, 1995 and 1994, amounts borrowed under the lines of credit
averaged $939,881, $707,700, and $377,200, respectively, with maximum borrowings
of $1,172,063, $1,080,000, and $670,000, respectively. The weighted average
interest rate on these borrowings was 9.5%, 10.74%, and 7.48%, during fiscal
years 1996, 1995, and 1994 respectively (computed by dividing the applicable
interest expense by the average borrowings).
36
<PAGE>
6. LONG-TERM DEBT:
--------------
June 30
-------------------------------
1996 1995
---- ----
Equipment term loans, payable monthly $ - $ 303,134
with interest rates of 7% to 11% until
January 1996. Collateralized by
specific equipment with a net book
value of $254,304 as of June 30, 1995
.
Mortgage loans payable, payable - 163,741
monthly until November 2002 and
November 2003, with interest rates of
12% and 7.8%, respectively.
Collateralized by buildings with a net
book value of $255,007 as of June 30,
1995.
Capitalized lease obligations, 27,000 276,331
implicit rates of 6% to 18%, payable
monthly until May 2000.
Collateralized by equipment with a net
book value of $313,970 as of June 30,
1995.
Subordinated convertible debenture 100,000 -
payable monthly until November 1,
1998, with interest at 13.75% per
annum, convertible into Common Stock
of the Company after August 31, 1996,
at the rate of $.35 per share.
$ 127,000 $ 744,206
Less current portion Long-Term Debt 27,000 (234,919)
----------- ------------
$ 100,000 $ 509,287
============ ===========
7. GLOBAL SPILL MANAGEMENT EQUITY INCENTIVE PLAN:
---------------------------------------------
In September 1991, the Company adopted the Global Spill Management
Equity Incentive Plan (the "Plan"), in order to provide directors, officers and
certain key employees with stock options and awards. Initially, there were
255,800 shares of Common Stock reserved for issuance under the Plan; on January
26, 1994 the stockholders voted to increase the number of shares to 1,500,000.
Options granted may be either incentive or nonqualified stock options, with an
exercise price equal to or more than the fair market value of the underlying
Common Stock at grant date. The options will be exercisable over ten years from
the grant date and will have vesting terms determined by the Compensation
Committee of the Board of Directors.
Under the Plan, each non-employee director is granted in June of each
year a nonqualified option to purchase 2,000 shares of Common Stock. In
addition, the Plan allows the Company to make Common Stock awards to employees,
without payment, based on performance milestones determined by the Board of
Directors. Also, the Plan allows for the granting of stock appreciation rights,
as defined.
37
<PAGE>
8. COMMON STOCK
------------
Pursuant to Amendments to the Articles of Incorporation filed on
May 13 and July 12, 1996, the issued and outstanding and the authorized shares
of Common Stock were changed as follows: (a) 25 million shares of Common Stock
were authorized for issuance and 18,493,980 shares of issued and outstanding
Common Stock were changed into 616,466 shares of Common Stock (on a 30-1 basis).
All Common Stock numbers mentioned hereinafter in this footnote 8 give effect to
such 30-1 change.
In September, 1995, the Company sold 27,500 shares of Common Stock to
Fondo de Adquisiciones E Inversiones ("Fondo") for the sum of $220,000. (See
Footnote 15 hereinafter)
On April 26, 1996, the Company sold a Convertible Debenture to Cedar
Internationa S.A. (Panama) in the principal amount of $250,000. Subsequent
hereto, the Company has received an additional $355,000 and a commitment to fund
an additional maximum of $200,000. The aggregate of $905,000 in such funding
resulted in the issuance of 750,000 shares on July 18, 1996. (See Footnote 15
hereinafter.)
On July 5, 1996, the Company issued 100,000 shares of its Common Stock
upon conversion of a Debenture (in the principal amount of $50,000) issued in
1992,the cancellation of a longterm employment contract and the forgiveness of
certain accrued expenses. (See Footnote 13 hereinafter)
9. SUBSCRIPTIONS RECEIVABLE
------------------------
In December 1994, the Company issued Warrants to ITI Glendale to
purchase up to 500,000 Shares of Common Stock at a price of $1.00 per share. The
Warrants were subsequently exercised in consideration of $500,000 as evidenced
by a promissory note. The promissory note carried interest at a rate of 4% per
annum (8% in the event of default) and was due after the effective date of a
registration statement in respect of such shares, but, in any event, no later
than June 15, 1995 which was subsequently extended to October 31, 1995. In June
1995, the Company agreed, due to market conditions, to reduce the share price to
$.25 per share (which reduced the principal amount of the note from $500,000 to
$125,000). As of June 30, 1995, $25,000 had been paid on this note. The balance
of $100,000 was remitted during the year ended June 30, 1996.
In December 1994, the Company issued Warrants to Corporate
Relations Group to purchase 500,000 shares of Common Stock at a price of $1.00
per share. The Warrants were subsequently exercised in consideration of $500,000
as evidenced by a promissory note. The promissory note carried interest at a
rate of 4% per annum (8% in the event of default) and is due after the effective
date of a registration statement in respect to such shares but, in any event, no
later than June 30, 1995 (which was subsequently been extended to October 31,
1995). In April 1995, the Company agreed, due to market conditions, to reduce
the share price to $.40 per share which reduced the principal amount of the note
from $500,000 to $200,000. As of June 30, 1996, and 1995, $125,000 remains
unpaid on the note.
In January of 1995 the Company issued Warrants to Financial Asset
Management ("FAM") to purchase 300,000 shares of Common Stock at a price of
$1.00 per share. The Warrants were subsequently exercised in consideration of
$300,000 as evidenced by a promissory note. The promissory note carried interest
at 4% per annum (8% in the event of default) and is due after the effective date
of a registration statement in respect to such shares, but, in any event, no
later than June 30, 1995 (which has subsequently been extended to October 31,
38
<PAGE>
1995) In April 1995, the Company agreed, due to market conditions, to reduce the
share price to $.625 per share which reduced the principal amount of the note
from $300,000 to $187,500. As of June 30, 1996, $175,000 remains unpaid on the
note.
In May 1995, the Company issued Warrants to ITI Glendale to
purchase 350,000 shares of Common Stock at a price of $.50 per share. The
Warrants were subsequently exercised in consideration of $175,000 as evidenced
by a promissory note. The promissory note carried interest at a rate of 4% per
annum (8% in the event of default) and is due after the effective date of a
registration statement in respect to such shares but, in any event, no later
than June 15, 1995 which has subsequently been extended. In June 1996, the
Company agreed, due to market conditions, to reduce the principal amount of the
note to $32,000 at which time the balance of the note was paid in full.
10. RELATED-PARTY TRANSACTIONS:
--------------------------
Notes Receivable
----------------
The Company has a note receivable, amounting to $169,000 from the
Co- Chairman of the Board of Directors and the former principal stockholder and
president of Underwater Technics, Inc., a subsidiary of the Company that is
secured by the assignment of the proceeds from that individual's $1,000,000 life
insurance policy, up to the aggregate amount of the note receivable and accrued
interest. The note is payable upon the earlier of November 30, 2011, or the 91st
day after the death of the stockholder. The note bears interest at 7%, which had
been accrued through June 30, 1992 and is payable on November 30, 1996.
Thereafter, interest is payable annually until the note is paid in full.
Interest through June 30, 1995 has been forgiven. In December 1995, the Company
discontinued payment under the employment contract of the Co-Chairman, and in
June, 1996, the Board of Directors agreed to offset the remaining liability of
the employment contract with the outstanding balance of the note receivable, of
approximately equivalent value.
Long-Term Debt Related Parties:
------------------------------
June 30
---------------------------------
1996 1995
----- ----
11% Subordinated Convertible Debenture
due January 31, 1998. Convertible
into 14,286 shares of Common Stock.
Due to an executive officer. $ - $ 50,000
Notes payable - Allied, balance due on - 32,498
short-term notes (see Note 1).
Balance paid in full in July 1995.
Note Payable - Allied payable in eight
annual installments each December 1,
plus interest at prime plus 2%.
Payments may be made in cash or in
Common Stock. Due to former
shareholders of Allied. - 1,072,560
----------- ----------
- 1,155,058
Less current portion - (166,568)
-----------
$ - $ 988,490
=========== ==========
39
<PAGE>
11 OTHER INCOME, NET:
Year Ended June 30,
---------------------------------
1996 1995 1994
-------- -------- ------
Forgiveness of Debt $34,100 $ - $ -
Interest and other investment income,
net - 16,373 17,390
Recovery of receivables written off in
prior years - - 33,355
Gain (loss) on sale of equipment - (13,394) 72,785
Other - 3,594 44,313
-------- --------- ---------
$ 34,100 $ (615) $ 167,843
======== ========= =========
12. INCOME TAXES:
------------
As discussed in Note 2, the Company adopted SFAS 109 as of July 1, 1993,
and the cumulative effect of this accounting change, a tax benefit of $169,600,
or $.02 per share, is reported in the consolidated statement of operations for
the year ended June 30, 1994. Prior years' financial statements have not been
restated to apply the provisions of SFAS 109.
Temporary differences and carry forwards which give rise to a significant
portion of the deferred tax assets and liabilities for 1996 and 1995 are as
follows:
June 30, 1996
---------------------------------
Deferred Tax Deferred Tax
Assets Liabilities
------ -----------
Federal Net Operating Loss Carryforward $ 10,759,418 $ -
Capital Loss Carryforward 49,264 -
Accounts Receivable - -
Miscellaneous - -
Property, Plant and Equipment 9,231 -
----------- -----------
Subtotal 10,817,913 -
Valuation Allowance (10,817,913) -
------------ -----------
Total Deferred Taxes $ - $ -
============ ===========
Federal Net Operating Loss Carryforward $ 1,712,418 $ -
Capital Loss Carryforward 49,264 -
Accounts Receivable 120,613 -
Miscellaneous - 14,197
Property, Plant and Equipment 9,231 -
------------ -----------
Subtotal 1,891,526 14,197
Valuation Allowance (1,891,526) -
------------ ----------
Total Deferred Taxes $ - $ 14,197
============ ==========
40
<PAGE>
A reconciliation setting forth the differences between the effective tax
rate of the Company and the U.S. Federal statutory rate is as follows:
1996 1995 1994
---- ---- ----
Federal Statutory Rate 34.0 % 34.0 % 34.0 %
State Income Taxes net of Federal Tax Benefits 0.0 % 1.1 % 1.5 %
Loss Producing No Current Tax Benefits (34.0)% (34.0)% (34.0)%
---- ---- ----
Effective Tax Rate 0.0 % 1.1 % 1.5 %
=== === ===
The income tax provisions (benefits) consist of:
1996 1995 1994
---- ---- ----
Federal Taxes $ - $ - $ (7,327)
State Taxes - 15,516 (2,737)
Deferred Income Taxes - - (6,548)
-------- --------- ---------
- $ 15,516 $(16,612)
======== ========= =========
At June 30, 1995, the Company had net operating loss (NOL) carry
forwards for federal, income tax purposes of approximately $10,817,900 that
begins to expire in 2006. The change in control (discussed in Note 1) may limit
the annual, utilization of the NOL Carry forward. As of this report date, the
Company has not filed its corporate tax returns for the years ended June 30,
1996 and June 30, 1995.
13. COMMITMENTS AND CONTINGENCIES:
-----------------------------
Operating Leases
- ----------------
No operating leases existed at June 30, 1996 Rent expense was $42,483,
$137,400, and $74,000 in fiscal 1996, 1995, and 1994, respectively.
Employment and Consulting Agreements
- ------------------------------------
The Company had employment contracts with various officers and employees
with remaining terms of up to five years at approximately their past
compensation. The remaining commitments at June 30, 1995, under such contracts
for fiscal 1996, 1997, 1998, 1999 and 2000 were $1,230,600, $848,800, $395,500,
$328,200 and $127,100 respectively. At June 30, 1996, these contracts were
terminated and the Company believes it has no ongoing obligations with any of
these three individuals. Specifically, (a) the Chairman voluntarily resigned his
position upon the consumption of the sale of the subsidiaries and the resulting
change of control, (b) the Vice Chairman's contractual obligation was offset by
the Company against the Vice Chairman's obligation to the Company approximating
same (see Note 10), and (C) the President's contract was terminated as a result
of just cause. All other employment contracts were terminated as a result of the
sale of the subsidiaries.
41
<PAGE>
14. ENVIRONMENTAL RISKS:
-------------------
The Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended in 1986 (also known as the Superfund Act) imposes strict
joint and several liability upon the generators of hazardous substances and
those transporters who have arranged for disposal of hazardous substances or who
have selected the disposal site for such substances. All such persons may be
liable for waste site investigation, waste site cleanup and natural resource
damages, regardless of whether they exercised due care and complied with all
relevant laws and regulations. Such costs can be substantial. Certain of the
Company's subsidiaries are transporters of hazardous waste materials, but should
not be liable therefore, unless they are deemed to have arranged for such
disposal or the selected disposal sites. The Company's policy and practice is to
refrain from arranging for the disposal of hazardous substances, including
waste, and/or the selection of disposal sites, and to have the generator do so.
However, there can be no assurance that the Company and its subsidiaries will
not fail to adhere to such practice and thereby be potentially liable for claims
in connection with the transportation and disposal of such materials.
15. SUBSEQUENT EVENTS:
-----------------
On July 15, 1996, the Company, in exchange for $500,000 and a note for
$2,700,000, acquired all of the issued and outstanding Capital Stock of
Recycling Unlimited, Inc., a company whose primary line of business is the
recycling of demolitioned concrete matter and subsequent sale thereof to the
construction industry for use in foundations of roads, buildings and other
structures. The note, payable by the Company, includes monthly payments of
principle and interest of $30,000. Interest is at 10%. The note carries a
balloon payment due July 15, 2001.
On July 31, 1996, the Company offered its vendors, on an individual basis,
a sum equal to 37.5% of the total payables due. As of the date of this report,
all vendors except four which represent $139,365 in payables, agreed to accept
such offer, resulting in savings through debt forgiveness of $122,615. The
remaining four vendors are still in negotiations with the Company.
Subsequent to June 30, 1996, all capital leases have been terminated and
all property and equipment transferred to the former subsidiaries as part of the
negotiated sales of the subsidiaries by the Company (See Footnote 1 above).
The Completion of the transactions described in footnote 1 above (i.e.,
the sale of the operating subsidiaries), the funding of $905,000 described in
footnote 8 above, and the liquidation of amounts due vendors described in this
footnote 15, cumulatively resulted in the Company having total obligations of
approximately $254,000 as of September 30, 1996. (As of June 30, 1995, the
Company had total obligations of approximately $6.6 million) (None of the
members mentioned in this paragraph includes Phoenix Wrecking Corporation,
acquired by the Company on July 10, 1996.)
The Company is owed funds for Common Stock subscription receivables from
each of Corporate Relations Group (CRG) and Financial Asset Management. The
amounts due the Company are, respectively, $302,000 and $175,000. The Company
has instructed Counsel to pursue collection of such amounts. CRG is an affiliate
of Fondo (See footnote 8 above); therefore, the Company will not permit the sale
by Fondo of the 27,500 shares of Common Stock issued to Fondo for the sum of
$220,000 unless and until CRG liquidates its promissory notes or returns to the
Company the 33,333 new shares represented by such promissory notes.
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16. Litigation
----------
In October 1995 the Company received a binding commitment for new
financing from CKN Holdings Corporation ("CKN") which would provide $1.5 million
of new common equity and a one year convertible loan amounting to $1.5 million
bearing interest at 11.5%. Proceeds of $2.0 million were to be applied to the
acquisition of American Marine, Inc. And $1.0 million were to be used for
general working capital purposes. On November 14, 1995, the Company and CKN
executed a Stock Subscription Agreement, which would be completed upon the
transfer of $3.0 million to the Company. On November 15, 1995, CKN defaulted on
its commitment under the Stock Subscription Agreement. On December 28, 1995, the
Company filed two separate complaints against CKN due to CKN's failure to fund
its commitment under the Stock Subscription Agreement. In the first Complaint,
the Company sought an immediate return of the stock and promissory note which
had been previously delivered to CKN pursuant to the terms of the Stock
Subscription Agreement. In the second Complaint, the Company sought a
declaration that it held title to the stock and promissory note and further
sought damages against CKN for violation of the Stock Subscription Agreement.
As a result of the litigation, CKN returned the stock and promissory note
to the Company. CKN failed to answer or otherwise plead in response to either of
the Complaints. On February 4, 1996, the Company filed a Motion for the Entry of
Default Judgment with respect to the second Complaint. The Court has entered a
default judgment as to liability in favor of the Company. Collection of the
judgment is highly doubtful.
As a result of CKN's failure to fund, the Company is in default of its
purchase agreement for American Marine, Inc. ("AMI"). Accordingly, the Company
has written-off $315,000 of costs related to the AMI acquisition. In addition,
as a result of CKN's failure to fund, the Company had to discontinue the
operations of it's EDOC subsidiary as a result of the lack of the working
capital needed to expand its business to attain profitability.
The Company is party to certain claims and litigation arising in the
ordinary course of business. In the opinion of management, the outcome of such
claims will not have a material adverse effect on the Company's financial
position.
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EXHIBIT INDEX
Exhibit
Number Item
1.1 Underwriting Agreement between Happy Mergers, Inc. and Grady and Hatch
& Company, Inc, filed as an exhibit to the Company's Form S-18
Registration Statement (File No. 33-48276-NY) on June 9, 1992 and
incorporated herein by reference.
1.2 Form of Selected Dealer Agreement, filed as Exhibit 2 to the Company's
Form S-18 Registration Statement (File No. 33-37546-NY) on November 6,
1990 and incorporated herein by reference.
1.3 Underwriting Agreement between Global Spill Management, Inc. and J.
Gregory & Company, Inc., dated July 31, 1992, filed as Exhibit 1.3 to
Post-Effective Amendment No. 2 to the Company's Registration Statement
on Form S-18 (File No. 33-37546-NY) on August 7, 1992, and incorporated
herein by reference.
1.4 Form of Selected Dealers Agreement, filed as an exhibit to the
Company's Form S-18 Registration Statement (File No. 33-48276-NY), on
July 16, 1992 and incorporated herein by reference.
3.1 Articles of Incorporation of Happy Mergers, Inc., a Nevada corporation,
filed as Exhibit 8 to the Company's Form S-18 Registration Statement
(File No. 33-37546-NY) on November 6, 1990 and incorporated herein by
reference.
3.2 By-laws of Happy Mergers, Inc., a Nevada corporation, filed as Exhibit
9 to the Company's Form S-18 Registration Statement (File No.
33-37546-NY) on November 6, 1990 and incorporated herein by reference.
3.2.1 Restated By-laws of Global Spill Management, Inc., filed as an Exhibit
to the Company's Quarterly Report on Form 10-Q for the period ended
December 31, 1993, and incorporated herein by reference.
3.3 Certificate of Merger of Global Spill Management, Inc. into Happy
Mergers, Inc., dated November 7, 1991 in the State of Delaware
effective March 15, 1992, filed as an exhibit to the Company's Form
S-18 Registration Statement (File No. 33-48276-NY) on June 9, 1992 and
incorporated herein by reference.
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3.4 Agreement of Merger of Global Spill Management, Inc., into Happy
Mergers, Inc. in the State of Nevada effective November 25, 1991, filed
as an exhibit to the Company's Form S-18 Registration Statement (File
No. 33-37546-NY) on March 16, 1992 and incorporated herein by
reference.
3.41 Certificate of Incorporation of Global Spill Management of Delaware,
Inc. (Delaware), filed as an exhibit to the Company's Post-Effective
Amendment No. 1 to its Form SB-2 Registration Statement (File No.
33-56910) and incorporated herein by reference.
3.5 Amended Certificate of Incorporation of Acme Containment Group, Inc.
(Oklahoma) filed January 13, 1992, filed as an exhibit to the Company's
Form S-18 Registration Statement (File No. 33-48276-NY) on June 9, 1992
and incorporated herein by reference.
3.6 Amendment to Article Fourth of the Company's Articles of Incorporation,
filed with the State of Nevada on November 30, 1992, filed as an
exhibit to the Company's Form SB-2 Registration Statement (File No.
33-56910) on March 1, 1993 and incorporated herein by reference.
4.1 Warrant Agreement dated as of September 10, 1991, between Happy
Mergers, Inc. and American Stock Transfer & Trust Company, filed as an
exhibit to the Company's Form S-18 Registration Statement (File No.
33-37546-NY) on March 16, 1992 and incorporated herein by reference.
4.2 Specimen Class A Warrant Certificate of Happy Mergers, Inc., filed as
Exhibit 6 to the Company's Form S-18 Registration Statement (File No.
33-37546-NY) on November 6, 1990 and incorporated herein by reference.
4.3 Specimen Class B Warrant Certificate of Happy Mergers, Inc., filed as
Exhibit 7 to the Company's Form S-18 Registration Statement (File No.
33-37546-NY) on November 6, 1990 and incorporated herein by reference.
4.4 Specimen Common Stock Certificate of Happy Mergers, Inc., filed as
Exhibit 5 to the Company's Form S-18 Registration Statement (File No.
33-37546-NY) on November 6, 1990 and incorporated herein by reference.
4.5 Specimen Common Stock Certificate of Global Spill Management, Inc., a
Nevada Corporation, filed as an exhibit to the Company's Form S-18
Registration Statement (File No. 33-37546-NY) on March 16, 1992 and
incorporated herein by reference.
4.6 Underwriter's Purchase Warrant Agreement and Certificate between Happy
Mergers, Inc., and Grady and Hatch & Company, Inc, dated September 10,
1991 filed as an exhibit to the Company's Form S-18 Registration
Statement (File No. 33-48276-NY) on June 9, 1992 and incorporated
herein by reference.
4.7 Underwriter's Warrant Certificate between the Company and J. Gregory &
Company, Inc., dated August 5, 1992, filed as Exhibit 4.7 to
Post-Effective Amendment No. 2 to the Company's Registration Statement
on Form S-18 (File No. 33-37546-NY) on August 7, 1992, and incorporated
herein by reference.
4.8 Specimen Class "A" Warrant Certificate of Company, filed as an exhibit
to the Company's Form S-18 Registration Statement (File No.
33-48276-NY) on June 24, 1992 and incorporated herein by reference.
4.9 Specimen Class "B" Warrant Certificate of Company, filed as an exhibit
to the Company's Form S-18 Registration Statement (File No.
33-48276-NY) on June 24, 1992 and incorporated herein by reference.
4.10 Underwriter's Warrant Certificate between the Company and James Mongno,
dated August 5, 1992, filed as Exhibit 4.8 to Post-Effective Amendment
No. 2 to the Company's Registration Statement on Form S-18 (File No.
33-37546-NY) on August 7, 1992, and incorporated herein by reference.
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10.1 Employment Agreements between the Company and each of Messrs. Iorio,
White, Pettit, Stanfield and Stith, ending at various dates between
June 30, 1996 and November 30, 1996, filed as an exhibit to the
Company's Form S-18 Registration Statement (File No. 33-37546-NY) on
March 16, 1992 and incorporated herein by reference.
10.2 Consulting Agreement dated as of July 1, 1991 between GSM Environmental
and Thomas D. Lewis, Sr., filed as an exhibit to the Company's Form
S-18 Registration Statement (File No. 33-37546-NY) on March 16, 1992
and incorporated herein by reference.
10.3 Non-Negotiable Promissory Note dated as of November 27, 1991 in the
principal amount of $169,000 by David R. Stith to Underwater Technics,
Inc., filed as an exhibit to the Company's Form S-18 Registration
Statement (File No. 33-37546-NY) on March 16, 1992 and incorporated
herein by reference.
10.33 Stock Purchase Agreement dated as of March 31, 1994 between the Company
and Omnicorp Limited, filed as an Exhibit to the Company's Quarterly
Report on Form 10-Q dated April 4, 1994 and incorporated herein by
reference.
10.34 Promissory Note from Omnicorp Limited dated as of March 31, 1994 in the
principal amount of $200,000, filed as an Exhibit to the Company's
Quarterly Report on Form 10-Q dated April 4, 1994 and incorporated
herein by reference.
10.4 Subordinated Note dated March 31, 1991 in the principal amount of
$125,000 by FH Acquisition Corporation (now "Global Environmental,
Inc.") (Maker) to Total Recovery, Inc. (Holder), filed as an exhibit to
the Company's Form S-18 Registration Statement (File No. 33-37546-NY)
on March 16, 1992 and incorporated herein by reference.
10.5 Subordinated Promissory Note dated June 15, 1991 in the principal
amount of $72,418.63 by GSM Environmental, Inc. (Maker) to Total
Recovery, Inc. (Holder), filed as an exhibit to the Company's Form S-18
Registration Statement (File No. 33-37546-NY) on March 16, 1992 and
incorporated herein by reference.
10.6 Non-Negotiable Promissory Note dated January 1, 1992 in the principal
amount of $35,000 by the Company (Maker) to Underwater Technics, Inc.
(Holder), filed as an exhibit to the Company's Form S-18 Registration
Statement (File No. 33-37546-NY) on March 16, 1992 and incorporated
herein by reference.
10.7 Non-Negotiable Promissory Note dated November 27, 1991 in the principal
amount of $100,000 by the Company to Underwater Technics, Inc.
(Holder), filed as an exhibit to the Company's Form S-18 Registration
Statement (File No. 33-37546-NY) on March 16, 1992 and incorporated
herein by reference.
10.8 Non-Negotiable Promissory Note dated June 30, 1991, in the principal
amount of $700,000 by Acme Containment Group, Inc. (Maker) to Leslie H.
Stanfield (Holder), filed as an exhibit to the Company's Form S-18
Registration Statement (File No. 33-37546-NY) on March 16, 1992 and
incorporated herein by reference.
10.9 8.5% Subordinated Convertible Debenture Due July 1, 2001 in the
principal amount of $100,000 issued by the Company as of July 1, 1991
to Thomas D. Lewis, filed as an exhibit to the Company's Form S-18
Registration Statement (File No. 33-37546-NY) on March 16, 1992 and
incorporated herein by reference.
10.10 Amendment dated March 6, 1992 to 8.5% Subordinated Convertible
Debenture Due July 1, 2001 in the principal amount of $100,000, filed
as an exhibit to the Company's Form S- 18 Registration Statement (File
No. 33-37546-NY) on March 16, 1992 and incorporated herein by
reference.
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<PAGE>
10.11 11% Subordinated Convertible Debenture Due December 12, 1998, in the
principal amount of $50,000 issued by the Company to Ernst Pick and
Marcelle Pick, filed as an exhibit to the Company's Form S-18
Registration Statement (File No. 33-48276-NY) on June 9, 1992 and
incorporated herein by reference.
10.12 Series C 11% Subordinated Convertible Debenture Due January 31, 1998,
in the principal amount of $50,000 issued by the Company to Dorothea L.
Lewis and/or Anne L. Kutzer, filed as an exhibit to the Company's Form
S-18 Registration Statement (File No. 33-37546-NY) on March 16, 1992
and incorporated herein by reference.
10.13 Surety Agreement between GSM Environmental, Inc., Meridian Bank and
Global Environmental, Inc., dated December 17, 1991, filed as an
exhibit to the Company's Form S-18 Registration Statement (File No.
33-37546-NY) on March 16, 1992 and incorporated herein by reference.
10.14 Promissory Note in the principal amount of $300,000 by Meridian Bank
(Holder) and GSM Environmental, Inc. (Maker), filed as an exhibit to
the Company's Form S-18 Registration Statement (File No. 33-37546-NY)
on March 16, 1992 and incorporated herein by reference.
10.15 Surety Agreement between GSM Environmental, Inc., Meridian Bank and
Global Spill Management, Inc, dated December 17, 1991., filed as an
exhibit to the Company's Form S-18 Registration Statement (File No.
33-37546-NY) on March 16, 1992 and incorporated herein by reference.
10.16 Security Agreement dated December 2, 1991 between GSM Environmental,
Inc. and Meridian Bank, filed as an exhibit to the Company's Form S-18
Registration Statement (File No. 33-37546-NY) on March 16, 1992 and
incorporated herein by reference.
10.17 Guaranty Agreements dated December 2, 1991 by each of William E. Iorio,
Peter V. White and Aubrey L. Pettit to Meridian Bank, filed as an
exhibit to the Company's Form S-18 Registration Statement (File No.
33-37546-NY) on March 16, 1992 and incorporated herein by reference.
10.18 Stock Purchase Agreement of Total Recovery, Inc. dated as of March 31,
1991 by and between Thomas D. Lewis Sr. and Private Capital Advisors, a
General Partnership, filed as an exhibit to the Company's Form S-18
Registration Statement (File No. 33-48276-NY) on June 9, 1992 and
incorporated herein by reference.
10.19 Assignment of Contract dated June 15, 1991 between Private Capital
Advisors and Total Recovery, Inc., filed as an exhibit to the Company's
Form S-18 Registration Statement (File No. 33-37546-NY) on March 16,
1992 and incorporated herein by reference.
10.20 Letter Agreement dated August 28, 1991 by and between Global Spill
Management, Inc. and Thomas D. Lewis, filed as an exhibit to the
Company's Form S-18 Registration Statement (File No. 33-37546-NY) on
March 16, 1992 and incorporated herein by reference.
10.21 Asset Acquisition Agreement dated as of March 31, 1991 by and between
FH Acquisition Corporation (now "Global Environmental, Inc.") and Total
Recovery, Inc., filed as an exhibit to the Company's Form S-18
Registration Statement (File No. 33-37546-NY) on March 16, 1992 and
incorporated herein by reference.
10.22 Stock Contribution Agreement dated October 2, 1991 by and among William
E. Iorio, Peter V. White, Aubrey L. Pettit, Jr. and Global Spill
Management, Inc., filed as an exhibit to the Company's Form S-18
Registration Statement (File No. 33-37546-NY) on March 16, 1992 and
incorporated herein by reference.
10.23 Agreement and Plan of Merger by and among Global Spill Management,
Inc., Acme Spill Management, Inc. and Acme Containment Group, Inc.
dated as of October 31, 1991 (the "Acme Merger Agreement"), filed as an
exhibit to the Company's Form S-18 Registration Statement (File No.
33-37546-NY) on March 16, 1992 and incorporated herein by reference.
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10.24 Amendment to the Acme Merger Agreement, dated as of November 1, 1991,
filed as an exhibit to the Company's Form S-18 Registration Statement
(File No. 33-37546-NY) on March 16, 1992 and incorporated herein by
reference.
10.25 Stock Valuation Agreement dated as of October 31, 1991 by and between
Global Spill Management, Inc. and Leslie H. and Suzanne H. Stanfield,
filed as an exhibit to the Company's Form S-18 Registration Statement
(File No. 33-37546-NY) on March 16, 1992 and incorporated herein by
reference.
10.26 Escrow Agreement dated as of October 31, 1991 by and among Global Spill
Management, Inc., James S. Boese (Escrow Agent), Leslie H. Stanfield
and Suzanne H. Stanfield (the "Acme Escrow Agreement"), filed as an
exhibit to the Company's Form S-18 Registration Statement (File No.
33-37546-NY) on March 16, 1992 and incorporated herein by
reference.
10.27 Amendment to the Acme Escrow Agreement dated as of November 1, 1991,
filed as an exhibit to the Company's Form S-18 Registration Statement
(File No. 33-37546-NY) on March 16, 1992 and incorporated herein by
reference.
10.28 Certificate of Merger between Acme Spill Management, Inc. and Acme
Containment Group, Inc., in the State of Oklahoma, effective November
15, 1991, filed as an exhibit to the Company's Form S-18 Registration
Statement (File No. 33-48276-NY) on June 9, 1992 and incorporated
herein by reference.
10.29 Agreement and Plan of Merger dated as of November 27, 1991 by and among
Global Spill Management, Inc., U.T. Spill Management, Inc., Underwater
Technics, Inc., and the stockholders of Underwater Technics, Inc.,
filed as an exhibit to the Company's Form S-18 Registration Statement
(File No. 33-37546-NY) on March 16, 1992 and incorporated herein by
reference.
10.30 Stock Valuation Agreement dated as of November 27, 1991 by and among
Global Spill Management, Inc. and the stockholders of Underwater
Technics, Inc., filed as an exhibit to the Company's Form S-18
Registration Statement (File No. 33-37546-NY) on March 16, 1992 and
incorporated herein by reference.
10.31 Escrow Agreement dated as of November 27, 1991 by and among Brandeis,
Bernstein and Wasserman (Escrow Agent), Global Spill Management, Inc.
and the stockholders of Underwater Technics, Inc., filed as an exhibit
to the Company's Form S-18 Registration Statement (File No.
33-48276-NY) on June 9, 1992 and incorporated herein by reference.
10.32 Articles of Merger between U.T. Spill Management, Inc. and Underwater
Technics, Inc. in the Commonwealth of Pennsylvania, effective December
11, 1991., filed as an exhibit to the Company's Form S-18 Registration
Statement (File No. 33-48276-NY) on June 9, 1992 and incorporated
herein by reference.
10.33 Stock Purchase Agreement dated as of March 31, 1994 between the Company
and Omnicorp Limited, filed as an Exhibit to the Company's Current
Report on Form 8-K dated April 4, 1994 and incorporated herein by
reference.
10.34 Promissory Note from Omnicorp Limited dated as of March 31, 1994 in the
principal amount of $200,000, filed as an Exhibit to the Company's
Current Report on Form 8-K dated April 4, 1994 and incorporated herein
by reference.
10.35 Mortgage dated October 9, 1987 by Total, Inc. ("Borrower") to Daniel
and Patricia Lieberman (Lender), and Report of Title., filed as an
exhibit to the Company's Form S- 18 Registration Statement (File No.
33-37546-NY) on March 16, 1992 and incorporated herein by reference.
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10.36 Global Spill Management Equity Incentive Plan., filed as an exhibit to
the Company's Form S-18 Registration Statement (File No. 33-37546-NY)
on March 16, 1992 and incorporated herein by reference.
10.37 Global Spill Management Senior Management Incentive Compensation Plan.,
filed as an exhibit to the Company's Form S-18 Registration Statement
(File No. 33-37546-NY) on March 16, 1992 and incorporated herein by
reference.
10.38 Consulting Agreement between the Company and Mr. William E. Iorio,
filed as an exhibit to the Company's Form S-18 Registration Statement
(File No. 33-48276-NY) on June 9, 1992 and incorporated herein by
reference.
10.39 Settlement Agreement between the Company and Mr. William E. Iorio,
filed as an exhibit to the Company's Form S-18 Registration Statement
(File No. 33-48276-NY) on June 9, 1992 and incorporated herein by
reference.
10.40 Amendment dated June 1, 1992 to the Escrow Agreement filed as Exhibit
10.26 to this Registration Statement, filed as an exhibit to the
Company's Form S-18 Registration Statement (File No. 33-48276-NY) on
June 9, 1992 and incorporated herein by reference.
10.41 Amendment dated June 1, 1992 to the Escrow Agreement filed as Exhibit
10.31 to this Registration Statement, filed as an exhibit to the
Company's Form S-18 Registration Statement (File No. 33-48276-NY) on
June 9, 1992 and incorporated herein by reference.
10.42 Supplemental Agreement dated June 1, 1992 by and among Company, Leslie
H. Stanfield, Suzanne Stanfield and Acme Containment Group, filed as an
exhibit to the Company's Form S-18 Registration Statement (File No.
33-48276-NY) on June 9, 1992 and incorporated herein by reference.
10.43 8% Subordinated Convertible Debenture Due January 1, 1996, in the
principal amount of $125,000 issued by GSM Environmental, Inc. to
Rudolph Henley and Janice Henley, filed as an exhibit to the Company's
Form S-18 Registration Statement (File No. 33-48276-NY) on June 9, 1992
and incorporated herein by reference.
10.44 Consulting Agreement between the Company and J. Gregory & Company,
Inc., dated August 5, 1992, filed as Exhibit 10.42 to the
Post-Effective Amendment No. 2 to the Company's Registration Statement
on Form S-18 (File No. 33-37546-NY) on August 7, 1992, and incorporated
herein by reference.
10.45 Termination Agreement dated July 10, 1992, by and among the Company,
Leslie H. Stanfield and Suzanne H. Stanfield, filed as an exhibit to
the Company's Form S-18 Registration Statement (File No. 33-48276-NY)
on July 16, 1992 and incorporated herein by reference.
10.46 Letter Agreement dated July 13, 1992, by and among the Company, Leslie
H. Stanfield and Suzanne H. Stanfield, filed as an exhibit to the
Company's Form S-18 Registration Statement (File No. 33-48276-NY) on
July 16, 1992 and incorporated herein by reference.
10.47 Registration Rights Agreement dated July 13, 1992, by and among the
Company, Leslie H. Stanfield and Suzanne H. Stanfield, filed as an
exhibit to the Company's Form S-18 Registration Statement (File No.
33-48276-NY) on July 16, 1992 and incorporated herein by reference.
10.48 Termination Agreement dated July 10, 1992, by and among the Company,
David R. Stith, J. Welles Henderson, Ruth Dugan, Richard W. Palmer,
David J. Stith, Susan L. Stith, Carol Hoffmeier and Barbara Hess, filed
as an exhibit to the Company's Form S-18 Registration Statement (File
No. 33-48276-NY) on July 16, 1992 and incorporated herein by reference.
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10.49 Letter Agreement dated July 10, 1992, by and among the Company, David
R. Stith, J. Welles Henderson, Ruth Dugan, Richard W. Palmer, David J.
Stith, Susan L. Stith, Carol Hoffmeier and Barbara Hess, filed as an
exhibit to the Company's Form S-18 Registration Statement (File No.
33-48276-NY) on July 16, 1992 and incorporated herein by reference.
10.50 Registration Rights Agreement dated July 9, 1992, by and among the
Company, David R. Stith, J. Welles Henderson, Ruth Dugan, Richard W.
Palmer, David J. Stith, Susan L. Stith, Carol Hoffmeier and Barbara
Hess, filed as an exhibit to the Company's Form S-18 Registration
Statement (File No. 33-48276-NY) on July 16, 1992 and incorporated
herein by reference.
10.51 Registration Rights Agreement dated July 15, 1992, by and between the
Company and E.E. Corporation, filed as an exhibit to the Company's Form
S-18 Registration Statement (File No. 33-48276-NY) on July 16, 1992 and
incorporated herein by reference.
10.52 Global Spill Management Amended and Restated Equity Incentive Plan,
filed as Exhibit 10.35 to the Company's Annual Report on Form 10-K for
the fiscal year ended June 30, 1992 (File No. 0-2317) on October 6,
1992, and incorporated herein by reference.
10.53 Resolutions of the Board of Directors of the Company, dated September
30, 1992, adopting the Company's Acquisition Bonus Program, filed as
Exhibit 10.37 to the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1992 (File No. 0-2317) on October 6, 1992,
and incorporated herein by reference.
10.54 Letter of Commitment, dated August 4, 1992, from Meridian Bank, filed
as an exhibit to the Company's Form SB-2 Registration Statement (File
No. 33-53374-NY), and incorporated herein by reference.
10.55 Surety Agreement, dated August 6, 1992, between Meridian Bank and
Underwater Technics, Inc., filed as an exhibit to the Company's Form
SB-2 Registration Statement (File No. 33-53374-NY), and incorporated
herein by reference.
10.56 Surety Agreement, dated August 6, 1992, between Meridian Bank and Acme
Containment Group, Inc., filed as an exhibit to the Company's Form SB-2
Registration Statement (File No. 33-53374-NY), and incorporated herein
by reference.
10.57 Undertaking dated October 14, 1992 of EE Corporation to the Securities
and Exchange Commission and the Company, filed as an exhibit to the
Company's Form SB-2 Registration Statement (File No. 33-53374-NY) and
incorporated herein by reference.
10.58 Undertaking dated October 14, 1992 of IDIICO to the Securities and
Exchange Commission and the Company, filed as an exhibit to the
Company's Form SB-2 Registration Statement (File No. 33-53374-NY) and
incorporated herein by reference.
10.59 Undertaking dated October 14, 1992 of Alan Esrine to the Securities and
Exchange Commission and the Company, filed as an exhibit to the
Company's Form SB-2 Registration Statement (File No. 33-53374-NY) and
incorporated herein by reference.
10.60 Undertaking dated October 14, 1992 of Pamela J. Wilkinson to the
Securities and Exchange Commission and the Company, filed as an exhibit
to the Company's Form SB-2 Registration Statement (File No.
33-53374-NY) and incorporated herein by reference.
10.61 Undertaking dated October 14, 1992 of Monar, N.V. to the Securities and
Exchange Commission and the Company, filed as an exhibit to the
Company's Form SB-2 Registration Statement (File No. 33-53374-NY) and
incorporated herein by reference.
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10.62 Loan Agreement dated December 23, 1992 between Meridian Bank and GSM
Environmental, Inc., Global Environmental, Inc., Underwater Technics,
Inc. and Acme Containment Group, Inc., filed as an exhibit to the
Company's Form SB-2 Registration Statement (File No. 33-56910) and
incorporated herein by reference.
10.63 Line of Credit Note in the principal amount of $750,000 dated December
23, 1992 in favor of Meridian Bank by GSM Environmental, Inc., Global
Environmental, Inc., Underwater Technics, Inc. and Acme Containment
Group, Inc., filed as an exhibit to the Company's Form SB-2
Registration Statement (File No. 33-56910) and incorporated herein by
reference.
10.64 Term Loan Note in the principal amount of $165,000 dated December 23,
1992 in favor of Meridian Bank by GSM Environmental, Inc., Global
Environmental, Inc., Underwater Technics, Inc. and Acme Containment
Group, Inc., filed as an exhibit to the Company's Form SB-2
Registration Statement (File No. 33-56910) and incorporated herein by
reference.
10.65 Equipment Loan Note in the principal amount of $350,000 dated December
23, 1992 in favor of Meridian Bank by GSM Environmental, Inc., Global
Environmental, Inc., Underwater Technics, Inc. and Acme Containment
Group, Inc., filed as an exhibit to the Company's Form SB-2
Registration Statement (File No. 33-56910) and incorporated herein by
reference.
10.66 Security Agreement dated December 23, 1992 between Meridian Bank and
GSM Environmental, Inc., Global Environmental, Inc., Underwater
Technics, Inc. and Acme Containment Group, Inc., filed as an exhibit to
the Company's Form SB-2 Registration Statement (File No. 33-56910) and
incorporated herein by reference.
10.67 Equipment Loan Security Agreement dated December 23, 1992 between
Meridian Bank and GSM Environmental, Inc., Global Environmental, Inc.,
Underwater Technics, Inc. and Acme Containment Group, Inc., filed as an
exhibit to the Company's Form SB-2 Registration Statement (File No.
33-56910) and incorporated herein by reference.
10.68 Guaranty dated December 23, 1992 in favor of Meridian Bank by Global
Spill Management, Inc., filed as an exhibit to the Company's Form SB-2
Registration Statement (File No. 33-56910) and incorporated herein by
reference.
10.69 Warrant Agreement dated December 23, 1992 between Meridian Bank and
Global Spill Management, Inc., filed as an exhibit to the Company's
Form SB-2 Registration Statement (File No. 33-56910) and incorporated
herein by reference.
10.70 Common Stock Purchase Warrant dated December 23, 1992 issued by Global
Spill Management, Inc. to Meridian Bank, filed as an exhibit to the
Company's Form SB-2 Registration Statement (File No. 33-56910) and
incorporated herein by reference.
10.71 Stock Purchase Agreement dated as of February 1, 1993 between Global
Spill Management, Inc. and Sergio Germinario, sole stockholder of
American Industrial Marine Services, Inc, filed as an exhibit to the
Company's Form SB-2 (File No. 33-56910) on March 1, 1993 and
incorporated herein by reference.
10.72 Employment Agreement dated as of February 9, 1993 between Global Spill
Management, Inc., American Industrial Marine Services, Inc. and Sergio
Germinario, filed as an exhibit to the Company's Form SB-2 (File No.
33-56910) on March 1, 1993 and incorporated herein by reference.
10.73 Promissory Note in the principal amount of $250,000 by American
Industrial Marine Services, Inc. dated February 10, 1993, filed as an
exhibit to the Company's Form SB-2 (File No. 33-56910) on March 1, 1993
and incorporated herein by reference.
51
<PAGE>
10.74 Commitment Letter dated June 20, 1990 and Master Promissory Note dated
as of June 21, 1990 between American Industrial Marine Services, Inc.
and United National Bank of Plainfield, New Jersey, filed as an exhibit
to the Company's Form SB-2 (File No. 33- 56910) on March 1, 1993 and
incorporated herein by reference.
10.75 Security Agreement dated as of June 21, 1990 between American
Industrial Marine Services, Inc. and United National Bank of
Plainfield, New Jersey, filed as an exhibit to the Company's Form SB-2
(File No. 33-56910) on March 1, 1993 and incorporated herein by
reference.
10.76 Commitment Letters of United National Bank of Plainfield, New Jersey
dated February 23, 1993 and March 6, 1992 re: continuation of line of
credit, filed as an exhibit to the Company's Form SB-2 (File No.
33-56910) on March 1, 1993 and incorporated herein by reference.
10.77 Union Agreement dated March 1, 1991 between American Industrial Marine
Services, Inc. and Local No. 11, affiliated with the International
Brotherhood of Teamsters, et al., filed as an exhibit to the Company's
Form SB-2 (File No. 33-56910) on March 1, 1993 and incorporated herein
by reference.
10.78 Lease Agreement dated October 16, 1990 between American Industrial
Marine Services, Inc. at GG&S Investments, filed as an exhibit to the
Company's Form SB-2 (File No. 33- 56910) on March 1, 1993 and
incorporated herein by reference.
10.79 Lease Agreement dated January 5, 1990 between American Industrial
Marine Services, Inc. and Paul Laubner and corresponding Letter of
Continuation dated November 19, 1991, filed as an exhibit to the
Company's Form SB-2 (File No. 33-56910) on March 1, 1993 and
incorporated herein by reference.
10.80 Global Spill Management, Inc. Employee Stock Purchase Plan, effective
as of December 1, 1992, filed as an exhibit to the Company's Form SB-2
Registration Statement (File No. 33-56910) on March 1, 1993 and
incorporated herein by reference.
10.81 Global Spill Management, Inc. 401(k) Deferred Profit Sharing Plan
effective as of January 1, 1993, filed as an exhibit to the Company's
Form SB-2 Registration Statement (File No. 33-56910) on March 1, 1993
and incorporated herein by reference.
10.82 Lease Agreement dated June 12, 1993 between Global Spill Management of
Delaware, Inc. and HOC, Inc., filed as an exhibit to the Company's
Post-Effective Amendment No. 1 to its Form SB-2 Registration Statement
(File No. 33-56910) and incorporated herein by reference.
10.82A Lease Agreement dated July 1, 1993 between Jan and Ellen Valeriano and
Environmental Disposal Options Corporation.
10.82B Lease Agreement dated January 14, 1994 between Vincent and Marion
Falabella and Land N Sea Environmental Services, Inc.
10.83 Consulting Agreement dated as of August 1, 1993 between Global Spill
Management, Inc. and Luke P. LaValle, Jr., filed as Exhibit 10.3 to the
Company's Annual Report on Form 10-K for the year ended June 30, 1993,
and incorporated herein by reference.
10.84 Union Agreement dated January 1, 1991 between AIMS and Local 575,
affiliated with the International Brotherhood of Teamsters, Automatic
Sales, Servicemen and Allied Workers, filed as Exhibit 10.77 to the
Company's Annual Report on Form 10-K for the year ended June 30, 1993,
and incorporated herein by reference.
10.85 Promissory Note dated October 6, 1993, from (ITI) Glendale, Inc. in the
principal amount of $800,000 filed as an exhibit to the Company's
Registration Statement on Form S-3 (File No. 33-70344) and incorporated
herein by reference.
52
<PAGE>
10.86 Letter Agreement dated April 22, 1994 to that certain Promissory Note
dated April 15, 1994 from (ITI) Glendale, Inc.
10.87 Promissory Note dated April 15, 1994 from (ITI) Glendale, Inc. in the
principal amount of $800,000.
10.88 Stock Purchase Agreement dated as of March 31, 1994 between Global
Spill Management, Inc. and Omnicorp Limited, filed as an exhibit to the
Company's Current Report on Form 8-K dated April 4, 1994 and
incorporated herein by reference.
10.89 Promissory Note from Omnicorp Limited (Maker) dated as of March 31,
1994, in the principal amount of $200,000, filed as an exhibit to the
Company's Current Report on Form 8-K dated April 4, 1994 and
incorporated herein by reference.
10.90 Stock Purchase Agreement dated as of April 28, 1994 by and among the
Company, Jan A. Valeriano and Anthony Thomas, filed as an exhibit to
the Company's Current Report on Form 8-K dated April 4, 1994 and
incorporated herein by reference.
10.91 Stock Restriction Agreement dated as of May 9, 1994 by and between the
Company and Jan A. Valeriano, filed as an exhibit to the Company's
Current Report on Form 8-K dated April 4, 1994 and incorporated herein
by reference.
10.92 Stock Restriction Agreement dated as of May 9, 1994 by and between the
Company and Anthony Thomas, filed as an exhibit to the Company's
Current Report on Form 8-K dated April 4, 1994 and incorporated herein
by reference.
10.93 Employment Agreement dated as of May 9, 1994 by and between the
Company, Environmental Disposal Options Corporation and Anthony Thomas,
filed as an exhibit to the Company's Current Report on Form 8-K dated
April 4, 1994 and incorporated herein by reference.
10.94 Settlement Agreement dated May 9, 1994 between the Company,
Environmental Disposal Options Corporation and Jan A. Valeriano, filed
as an exhibit to the Company's Current Report on Form 8-K dated April
4, 1994 and incorporated herein by reference.
10.95 Agreement between Corporate Relations Group, Inc., a Florida
corporation, and the Company, dated as of May 31, 1994.
10.96 Amendatory Agreement between the Company and Corporate Relations Group,
Inc. dated July 29, 1994.
10.97 Stock Restriction Agreement dated as of July 15, 1994 by and among
Global Spill Management, Inc. and Michael G. Thibodeau, Edgar J.
Thibodeau and William Brewster, filed as an exhibit to the Company's
Current Report on Form 8-K dated July 27, 1994 and incorporated herein
by reference.
10.98 Employment Agreement dated as of July 15, 1994 by and between Global
Spill Management, Inc., Land N Sea Environmental Services, Inc. and
Michael G. Thibodeau, filed as an exhibit to the Company's Current
Report on Form 8-K dated July 27, 1994 and incorporated herein by
reference.
10.99 Promissory Note dated July 15, 1994 in the principal amount of $56,092,
payable to Edgar J. Thibodeau, filed as an exhibit to the Company's
Current Report on Form 8-K dated July 27, 1994 and incorporated herein
by reference.
11.1 Security and Surety Agreement dated July 15, 1994 in favor of Edgar J.
Thibodeau, filed as an exhibit to the Company's Current Report on Form
8-K dated July 27, 1994 and incorporated herein by reference.
53
<PAGE>
11.2 Non-Negotiable Promissory Note dated October 1, 1994 in the principal
amount of $1,050,000, from (ITI) Glendale, Inc., as maker, to the
Company, as payee.
11.3 Non-Negotiable Promissory Note dated October 1, 1994 in the principal
amount of $177,000, from Corporate Relations Group, Inc., as maker, and
the Company, as payee.
11.4 Lease Agreement dated July 1, 1993 between Jan and Ellen Valeriano and
Environmental Disposal Options Corporation.
11.5 Lease Agreement dated January 14, 1994 between Vincent and Marion
Falabella and Land N Sea Environmental Services, Inc.
11.6 Lease Agreement dated November 11, 1993 between Thomas W.
Morellit/Marchwood Shopping Center and Professional Pipe Services, Inc.
11.7 Plan and Agreement of Reorganization as of October 1, 1994 by and among
Global Spill Management, Inc. and Ray K. Kerwood, Thomas V. D'Angelo,
Penelope Kearns-Miller, Dennis C. Fry, and Michael T. Kelly, filed as
an Exhibit to the Company's Current Report on Form 8-K dated October 1,
1994, and incorporated herein by reference.
11.8 Stock Restriction Agreement dated as of October 1, 1994 by and among
Global Spill Management, Inc. and Ray K. Kerwood, Thomas V. D'Angelo,
Penelope Kearns-Miller, Dennis C. Fry, and Michael T. Kelly, filed as
an Exhibit to the Company's Current Report on Form 8-K dated October 1,
1994, and incorporated herein by reference.
11.9 Employment Agreement dated as of October 1, 1994 by and between Global
Spill Management, Inc., Professional Pipe Services, Inc. and Thomas V.
D'Angelo, filed as an Exhibit to the Company's Current Report on Form
8-K dated October 1, 1994, and incorporated herein by reference.
11.91 Mortgage dated October 4, 1993 between Ray K. and Donna Kerwood, as
Mortgagors and Professional Pipe Services, Inc., as Mortgagee.
16.1 Resignation of Jody M. Weber as auditor for Happy Mergers, Inc., dated
January 6, 1992, filed as an exhibit to the Company's Form S-18
Registration Statement (File No. 33-37546-NY) on March 16, 1992 and
incorporated herein by reference.
22.1 Updated List of Subsidiaries of Company as of October 1, 1994.
27.1 Financial Data Schedule (Electronic filing only)
54
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized on October 13, 1995.
GLOBAL SPILL MANAGEMENT, INC.
By: /s/ Karl Schwab
--------------------------------
Karl Schwab, Chairman of
the Board, President and Director
Pursuant to the requirements of the Securities Act of 1934, this report
has been signed below by the following persons on behalf of the Registrant and
in the capacities indicated, on October 13, 1995, including a majority of the
Board of Directors of the Company.
Signatures Title Date
/s/ Karl Schwab
- --------------------------
Karl Schwab Chairman of the Board, President October 15, 1996
and Director ----------------
/s/ Roger Imperial
- --------------------------
Roger Imperial Director October 15, 1996
----------------
/s/ George Weast
- -------------------------- Chief Financial Officer, October 15, 1996
George Weast And Assistant Secretary ----------------
Secretary and Director
/s/ Charles Chillingworth
- ------------------------- Director and General Counsel October 15, 1996
----------------
55
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF GLOBAL SPILL MANAGEMENT, INC. FOR THE TWELVE MONTHS
ENDED JUNE 30, 1996 , AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 62
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
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<CURRENT-ASSETS> 156
<PP&E> 62
<DEPRECIATION> 24
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0
0
<COMMON> 25
<OTHER-SE> 21,018
<TOTAL-LIABILITY-AND-EQUITY> 21,995
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<TOTAL-COSTS> 1,668
<OTHER-EXPENSES> 5,666
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (9,047)
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<INCOME-CONTINUING> (7,334)
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<EPS-PRIMARY> (15.03)
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