================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(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, 1997
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
------------------
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.)
2300 Computer Avenue (Bldg. G-25), Willow Grove, Pennsylvania 19090
(Address of principal executive officers, including zip code)
Registrant's telephone number, including area code: (215) 830-1351
----------------
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock ($.001 Par Value)
Indicate by check mark whether the registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- ----
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporation by reference in Part III of this Form 10-KSB or any
amendment to this Form 10KSB [ ].
As of July 31, 1997, 3,011,930 shares of Common Stock ($.001 par value)
were issued and outstanding and fully paid and non-assessable. The aggregate
market value of the Common Stock held by non-affiliates was approximately
$1,315,593, determined by the closing sale price on that same day based upon
3,007,069 shares owned by non-affiliates.
================================================================================
<PAGE>
TABLE OF CONTENTS
Part I
Item 1. Description of 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 Stockholder
Matters
Item 6. Management's Discussion and Analysis
Item 7. Financial Statements
Item 8. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosures
Part III
Item 9. Directors and Executive Officers of the Registrant;
Compliance with Section 16(a) of the Exchange Act
Item 10. Executive Compensation
Item 11. Security Ownership of Certain Beneficial Owners and Management
Item 12. Certain Relationships and Related Transactions
Part IV
Item 13. Exhibits and Reports on Form 8-K
<PAGE>
PART I
Item 1. Description of Business
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.
PLAN OF REORGANIZATION
In April, 1996, because of a demonstrable inability to meet its debts
as they matured, Global, with the assistance of its financial advisors
determined to undertake a comprehensive Plan of Reorganization (the "Plan").
Such Plan included the (a) sale of the four operating subsidiaries for cash
consideration only, (b) liquidation of the debt due to the senior secured
creditor (Meridian Bank), (c) elimination of debt in its entirety, and (d)
reclassification of the issued and outstanding shares of Common Stock. The Plan
also provided for the acquisition by Global of a going business, one that would
permit Global to satisfy the then continuous listing standards of NASDAQ (on
which Small Cap market shares of Global Common Stock were listed). The results
of the implementation of the Plan were as follows:
Sale of Subsidiaries
By June 30, 1997, Global sold the capital stock or the net assets of its then
four operating subsidiaries. An aggregate of $1,200,000 was paid to Meridian
Bank in full and complete satisfaction of secured indebtedness to Meridian Bank
in the principal amount of $1,480,000 (plus accrued interest of $47,000). In
addition, Global was a co-maker and co-guarantor of the Note of a former
subsidiary, in the principal amount of $100,000, issued to Meridian Bank under
date of June 28, 1996. Such note provided for a discount of $50,000 if paid
prior to September 30, 1996. The co-maker paid such $50,000 prior to September
30, 1996; Global repaid $37,500 of such $50,000 to the co-maker prior to
September 30, 1996, and the balance of $12,500 on July 18, 1997. Meridian Bank
satisfied its lien and executed a General Release in favor of Global on June 28,
1996.
(The $50,000 paid by Global to the co-maker is included within the amount of
$1,200,000 mentioned above.)
As a result of the disposition of the above-mentioned subsidiaries, Global
ceased to be an operating company.
1
<PAGE>
Elimination of Debt
In addition to the discharge of all obligations due to Meridian Bank, Global
also undertook the elimination of all other debt. Employment contracts (under
which Global was obligated in the amounts of $1,230,600 for 1996 and $848,000
for 1997, respectively), were terminated, lease obligations were canceled and
general unsecured creditors (other than those owed minimal amounts or those
professionals and firms continuing to provide necessary services for Global),
were settled for 37.5 cents on the dollar.
Giving effect to (a) the satisfaction of the indebtedness due Meridian Bank and
(b) the liabilities assumed by the purchasers of the four operating
subsidiaries, each occurring on June 28, 1996, Global remained, as of June 30,
1996, with accounts payable and accrued expenses totaling $814,000. Commencing
in July 1996, Global, as an alternative to creditor proceedings that would have
involved legal and accounting costs disproportionate to the dollar amount of its
remaining liabilities, commenced a voluntary plan of payment at a discount.
Creditors were offered an immediate settlement equal to 37.5% on the dollar
(except for claims under $100 (which were liquidated in full)). Such offer,
denominated as a common law composition, required that all creditors be treated
equally. Such offer resulted in these claims (including current liabilities)
being settled for the sum of $359,754. As of June 30, 1997, total liabilities of
Global were $148,427 and represented current accounts payable endemic to any
public entity. Such amount does not encompass any sums Global may be forced to
pay as a result of current litigation. (See "Legal Proceedings" hereinafter.)
In addition, amounts due to the former shareholders of Allied Environmental
Services, Inc., one of the subsidiaries sold by the Company, amounting to
$932,727 were also forgiven.
Acquisition and Disposition of Phoenix
Because Global would not, as a result of such Plan, (a) be an operating company,
and (b) remain in compliance with NASDAQ continuous listing requirements,
Global, on June 28, 1996 (the date on which the sales of the operating
subsidiaries was effected), agreed to acquire 100% of the issued and outstanding
shares of capital stock of Phoenix Wrecking Corporation (Phoenix), a New York
corporation which was also engaged in the remediation business. The proposed
acquisition of Phoenix, which was publicly announced on July 1, 1996, was
rescinded nunc pro tunc on November 6, 1996.
Two issues remain unresolved from the association of Phoenix with Global: (a) an
aggregate of 1,135,000 shares of Global Common Stock were caused to be issued by
Phoenix pursuant to two filings on Form S-8 with the Securities and Exchange
Commission. Global was not current in its required filings when such two
Registration Statements were filed. Therefore, no effective Registration
Statement could have been filed on Form S-8. Global has instituted proceedings
to recover all such shares as well as the proceeds derived from the sale
thereof; and (b) Global is a defendant in a lawsuit brought in New York State
Supreme Court to recover the sum of $1.3 million allegedly made available to
Phoenix by plaintiff. Global received none of such proceeds.
2
<PAGE>
Global is a party defendant because Phoenix utilized Global Debentures to obtain
such funds. A motion for summary judgment against the Phoenix defendants and not
against Global was decided on July 30, 1997, and judgment was entered against
the Phoenix defendants only. Global intends to move to have the matter dismissed
as to Global. At a conference held before the Judge to whom the case has been
assigned on September 11, 1997, Plaintiff was given until October 30, 1997 to
proceed against Global or be marked off the calendar as to Global only.
Common Stock Reconciliation
Excluding the transactions initiated by Phoenix and described hereinabove,
Global has, since June 30, 1996, caused the following shares to be issued:
(616,463 issued and outstanding giving effect to the May 13, 1996, Amendment to
the Articles of Incorporation):
100,000 shares issued on July 5, 1996, accounted for as issued and outstanding
as of June 30, 1996, upon conversion of a Convertible Debenture (in the
principal amount of $50,000) issued in 1992 (plus all accrued interest thereon,
the cancellation of a long-term employment contract having a remaining liability
of $43,750 and the forgiveness of accrued interest of $2,500); and,
750,000 shares (on July 18, 1996), accounted for as issued and outstanding as of
June 30, 1996, 250,000 shares (on August 19, 1996), 800,000 shares (on October
13, 1996), and 500,000 shares (on March 7, 1997) the aggregate having been
issued in exchange for cash value of $1,095,000, plus a commitment to fund the
additional amount of $120,000 (as of September 4, 1997).
As of the date hereof, therefore, Global has an aggregate of 3,011,930 shares of
its Common Stock validly issued and outstanding, fully paid and non-assessable.
Upon the assumption that the 1,197,500 shares of Global still not returned for
cancellation (out of the 6 million shares originally issued on July 10, 1996,
for Phoenix) may be cancelled because the transaction with Phoenix has been
rescinded nunc pro tunc, and upon the further assumption that the aggregate of
1,085,000 shares issued pursuant to the two improperly filed Form S-8 filings
are not validly issued, fully paid and non-assessable because such shares either
were not registered for public sale, or were issued without consideration
(because no services were rendered to Global by the recipients), or were not
authorized to be issued by the Global Board, the result is that Global would
have an aggregate of 3,011,930 shares of its Common Stock validly issued, fully
paid and non-assessable as of the date hereof.
Item 2. Properties
Since June 28, 1996 (the date on which Global divested itself of all of
its operating subsidiaries), the principal offices of Global have been located
at 2300 Computer Avenue (Bldg. G-25), Willow Grove, Pennsylvania 19090, on a
month-to-month leasehold basis. Such premises had been occupied by Global's
former Chief Financial Officer principally for the purposes of
3
<PAGE>
completing the June 30, 1996, audited and September 30, 1996, unaudited (first
quarter) financial statements, closing-out the books and accounts of the
subsidiaries disposed of on June 28, 1996, resolving the remaining creditor
claims, and assisting in the preparation of the June 30, 1995, and 1996 tax
returns. Global utilizes such premises today solely for mail and telephone
purposes.
Global (through a subsidiary) owns a 2,400 square foot office building
and garage (400 feet) located on approximately 10 acres of land (waterfront
property) in Camden, New Jersey. Global intends, upon the resolution of certain
environmental issues, to offer such parcel and building and garage for sale for
cash. Global carries such property at zero value on its books.
Item 3. Legal Proceedings
Global is a defendant in several lawsuits in which the principal
defendant is the former Global subsidiary that incurred the underlying debt.
Global is vigorously defending all such suits, on the basis that Global is not a
proper party defendant because Global entered into no contractual relationship
with the particular plaintiff and bears no responsibility to such plaintiff.
Global does not deem such litigation to be material.
Prior to June 30, 1995, Global sold to Corporate Relations Group,
Orlando, Florida (CRG), 1,150,000 shares, of Global's pre-reverse split
authorized and unissued Common Stock. CRG is indebted to Global today in the
amount of $677,000, such amount representing the remaining balance on the
purchase price for such shares. Global believes that all such shares have been
sold by CRG. Global has sued CRG in Federal court for such amount. A motion,
made by CRG to dismiss, was denied on July 24, 1997.
Global was sued by Peter V. White, a former Global Executive Vice President,
Chief Financial Officer and Treasurer. Mr. White has demanded payment to him by
Global of amounts allegedly due pursuant to a termination agreement entered into
between Mr. White and Global upon Mr. White's resignation of all positions with
Global as of June 30, 1995. Global's alleged liability under such termination
amounts to $57,000. Such suit was settled for the sum of $21,375 payable on or
before September 30, 1997.
In November 1996, Global was sued by Alpine Petroleum Company/Raymond Kerwood
(Plaintiff) pursuant to a certain consulting agreement entered into between
Global and Plaintiff on December 1, 1994. Plaintiff claims it is due the amount
of $51,000 through August 1, 1996. Global intends to defend vigorously such
lawsuit upon the basis that such consulting agreement was entered into in
connection with Global's acquisition of Professional Pipe Services Corporation
(Propipe) on December 1, 1994; that such consulting agreement was a disguised
attempt to increase the acquisition cost of Propipe by Global; that Common Stock
of Global was issued to Plaintiff as a shareholder of Propipe (and that
Plaintiff executed a Stock Restriction Agreement) with respect to the shares of
Global Common Stock received by Plaintiff as a shareholder of Propipe; that
Plaintiff performed no services for Global pursuant to such consulting
agreement; that the execution and delivery of the disputed consulting agreement
to Plaintiff was an ultra vires act on the part of Global; that Plaintiff has
been fully compensated by its receipt of shares of
4
<PAGE>
Global Common Stock in exchange for its interest in Propipe; and that (in any
event) the sale by Global of Propipe to the latter's former principal
shareholder on June 28, 1996, effectively rescinded such alleged consulting
agreement. (See the discussion in Item 7 hereinafter.)
In November, 1996, Global was sued by F.T. Trading Company et al (F.T.) in New
York State Supreme Court (trial court). F.T. alleges that it funded $1.3 million
upon the receipt of Global Debentures executed and delivered to F.T. by the
Phoenix designees. F.T. further alleges that such amount was wire transferred to
a Phoenix account maintained in a Queens County, New York, bank. Global held no
Board meetings between June 28 and September 30, 1996 (the latter being
disputed): and, the minutes prepared for such disputed meeting by Phoenix'
designee as counsel contain no mention of F.T., of the prior issuance of Global
debentures to F.T., or of the receipt by Phoenix of $1.3 million of F.T.
funding. Global intends to defend vigorously such action, on the basis that
Global's Board did not authorize any Reg S transaction or any other funding by
F.T., any Global documents delivered to F.T. were fraudulently executed and
delivered by Phoenix nominees, none of the alleged F.T. funding was received by
Global and the rescission agreement between Global and Phoenix specifically
provides that the liability for any F.T. proceeds rests with Phoenix.
Plaintiff's summary judgment motion against the Phoenix defendants only was
granted on July 30, 1997. (See Item 1 ("Acquisition and Disposition of Phoenix")
hereinabove.)
Item 4. Submission of Matters to a Vote of Security Holders
The following matters were submitted to a vote of the securities
holders:
None
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters
On July 29, 1992, Global's Common Stock commenced quotation on the
NASDAQ Small Cap Market (NASDAQ) under the symbol GSMI. (The symbol was changed
to GEGI coincident with the May 13, 1996, Amendment to the Articles of
Incorporation.) The following table sets forth the reported high and low bid and
high and low asked quotations for Global's Common Stock on NASDAQ for the period
January 1, 1995, to June 30, 1997. (The quarters set forth below are based on
Global's June 30 fiscal year period.) Such quotations reflect inter-dealer
prices, without retail mark-up, mark-down, or commissions and may not represent
actual transactions. No bid or asked quotations are available from November 28,
1996, through April 17, 1997:
5
<PAGE>
<TABLE>
<CAPTION>
High Bid Low Bid Closing Bid High Ask Low Ask Closing Ask
-------- ------- ----------- -------- ------- -----------
<S> <C> <C> <C> <C> <C> <C>
1995
Jan 1 - Mar 31 45.045 19.707 22.523 48.799 20.646 25.337
Apr 1 - Jun 30 22.523 9.384 10.323 25.338 11.261 12.2
Jul 1 - Sep 30 24.399 9.584 12.2 28.153 11.261 13.138
Oct 1 - Nov 30 15.015 7.508 9.384 15.953 8.446 12.2
1996
Jan 1 - Mar 31 9.384 5.631 6.569 10.323 6.569 8.446
Apr 1 - Jun 30 6.569 2.25 4 8.446 3 4.75
Jul 1 - Sep 30 9 31/32 13/16 9.25 0.75 7/8
Oct 1 - Nov 27 27/32 0.25 N/A 7/8 5/16 N/A
1997
Apr 17 - Jun 30 0.3125 0.1 0.27 0.46875 0.2 0.4375
</TABLE>
(The prices stated for all periods give effect to the 30-1 reverse stock split
that was effective on May 13, 1996)
On November 27, 1996, Global's Common Stock was delisted from trading
on NASDAQ. On April 17, 1997, Global's Common Stock commenced listing on the OTC
Electronic Bulletin Board. Such delisting was prompted by Global's inability to
file a timely Form 10-K with audited financials for the fiscal year ended June
30, 1996. (In addition, the NASDAQ hearing held on November 21, 1996, raised
issues relating to the issuance of the aggregate of 1,135,000 S-8 Common Stock
and the Reg S transaction with F.T. See "The Acquisition and Disposition of
Phoenix" hereinabove.) Having been delisted, Global is now required to meet
NASDAQ standards applicable to an initial listing application. Presently, such
criteria include $4 million in total assets, $2 million in capital and surplus,
$1 million market value of the public float and a minimum bid price of $3 per
share. There can be no assurance that Global will be able to meet such initial
listing requirements, that Global's Common Stock will be included on NASDAQ even
if such initial listing requirements are met, or that thereafter the
requirements for continuous listing will continue to be met. In any such event,
Global's Common Stock would continue to be traded on the OTC Electronic Bulletin
Board, in which event a shareholder may find it more difficult to dispose of (or
to obtain accurate quotations as to the price of) Global's Common Stock.
As of the date hereof there were 3,011,930 shares of Common Stock
validly issued and outstanding, fully paid and non-assessable. (See "Common
Stock Reconciliation" in Part I, Item 1 hereinabove). There were a total of 485
holders of record as of July 15, 1997. Global believes, based upon available
information, that there are in excess of 1,000 beneficial owners of Global
Common Stock. No shares of Global's authorized Preferred Stock have ever been
issued.
6
<PAGE>
DIVIDENDS
The payment of dividends, if any, by Global rests within the discretion
of its Board of Directors and depends, among other things, upon Global's
earnings, its capital requirements, its financial condition, as well as other
relevant factors. As of the date hereof, Global has not issued or declared any
dividends. Global does not anticipate paying any dividends on its Common Stock
in the foreseeable future.
Item 6. Management's Discussion and Analysis of Financial Condition and Results
of Operations
GENERAL
As a direct consequence of the implementation of the Plan of Reorganization
described in Part I hereinabove, Global has (as of June 30, 1996) disposed of
all its operations and may today be fairly characterized as a non-operating
"shell" corporation. Therefore, there is no need for discussion herein of prior
results of operations, of year-to-year operating results and comparisons, and of
liquidity and capital resources. As of the date hereof, Global is able to meet
its debts as they mature, which obligations (giving effect to the completion of
the Plan of Reorganization described in Part I hereinabove) consist exclusively
of legal, accounting and miscellaneous expenses endemic to any public company.
Management believes that its principal focus today should be directed toward the
(a) realization of the cash value of Global's remaining assets and (b)
acquisition of a going concern that will provide stability of operation and cash
flow. The Company received $100,000 subsequent to June 30, 1997 as payment on
subscriptions receivable as of that date. The balance of the subscription will
be collected to pay liabilities and expenses of the Company as they become due.
Management expectes ongoing operating expenses to be minimal until and upon
which time an acquisition may occur.
Item 7. Financial Statements
Consolidated Financial Statements and supplementary financial
information specified by this Item 7 are presented following Item 13 in Part IV
of this report.
7
<PAGE>
Item 8. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosures
This Item is inapplicable.
PART III
Item 9. Directors and Executive Officers of the Company;
Compliance with Section 16(a) of the Exchange Act
The executive officers, directors and key personnel of Global are as
follows: (the information set forth hereunder is as of June 30, 1997 (the end of
the fiscal period), and gives effect to the resignations of directors whose
services were terminated by Global upon the sale of the subsidiaries occurring
on June 28, 1996.
<TABLE>
<CAPTION>
Name Age Positions held with the Company
- ---- --- -------------------------------
<S> <C> <C>
David R. Stith 69 Acting President and Director
Herbert S. McDonald 61 Director
Desiree L. Pierson 34 Secretary
</TABLE>
Biographies of the directors and executive officers of Global 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 Global
serve at the will of the Board of Directors.
David R. Stith became Vice Chairman and a Director of Global on
November 1, 1991, and of the Company on November 25, 1991. Mr. Stith founded
Underwater Technics in 1967 and has served as its Chairman and President since
such date. Mr. Stith led the crew 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 crew that dove for sunken treasure on the Spanish Galleon "San Jose"
which sank off Colombia in 1708.
Herbert S. McDonald became a director of Global on December 27, 1995.
Mr. McDonald has, since January 1993, been the President of The Fulcrum Group, a
management consulting firm specializing in the restructuring and
merger/acquisition of corporate clients. Prior thereto, Mr. McDonald was (since
August 1990) the President (CEO) and principal shareholder of European
Automotive Products, Inc., a major importer of imported cars specializing in
higher end German automotive parts. Prior thereto, Mr. McDonald was the
President (CEO) and principal shareholder of Fulcrum Investments, a firm making
investments in manufacturing, leasing, automobile dealerships and real estate.
8
<PAGE>
Desiree L. Pierson became Secretary of Global in January, 1996. Ms.
Pierson was an employee of Global from 1991 until June 28, 1996. In her capacity
as Secretary, Ms. Pierson's duties include shareholder relations, matters
involving the Transfer Agent and corporate record keeping and do not include
corporate decision making or substantive matters involving Global.
No director, officer or affiliate of Global is an adverse party to
Global or any of its subsidiaries in any material proceeding.
The Company and its directors and executive officers are in compliance
with the requirements of Section 16(a) of the Exchange Act.
Item 10. Executive Compensation
The following table sets forth the cash compensation earned by each of
Global's executive officers for the fiscal year ended June 30, 1997 (the "named
executive officers"). Global 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 Global not to pay
director's fees or other forms of remuneration to directors who are not officers
of Global, other than reimbursement of expenses incurred in connection with such
service as a director.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Name and Principal Position Other Annual
Year Salary($) Bonus($) Compensation($)
<S> <C> <C> <C> <C>
Thomas D. Lewis, Sr. (1)(2) 1997 -- -- --
Chairman of the Board, 1996 183,980 -- 28,560
1995 178,345 -- --
Aubrey L. Pettit, Jr. (3)(2) 1997 -- -- --
President, General Counsel 1996 84,502 -- 28,560
& Secretary 1995 163,051 -- --
David R. Stith 1997 -- -- --
Acting President 1996 74,997 -- --
1995 150,500 10,313 --
</TABLE>
9
<PAGE>
- ----------
(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. Mr.
Lewis' employment contract was terminated on June 28, 1996.
(2) In August, 1995, Messrs. Lewis and Pettit each received 50,000 shares
of pre-reverse split Common Stock of Global having a value of $28,075.
None of the other named executive officers received perquisites or
other personal benefits.
(3) Employment terminated on January 3, 1996.
Item 11. Security Ownership of Certain Beneficial Owners and Management
Prior to June 28, 1996, Global had in effect various plans designed to
benefit senior management. These included a Senior Management Incentive
Compensation Plan, an Equity Incentive Plan, management employment contracts, a
Qualified Profit Sharing Plan and an Employee Stock Purchase Plan. Each and all
of such compensation arrangements was canceled as of June 28, 1996. Aggregate
employment and consulting agreement obligations of Global for the fiscal years
ending June 30, 1997 and 1998, respectively, would have amounted to $848,800 and
$395,500, respectively.
The following tables set forth the number and percentage of Global'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, 1997 (giving effect to the May 13, 1996, reverse split):
Name and Address(1)(2) Number of Shares Owned Percentage
- --------------------- ---------------------- ----------
David R. Stith (3)(4) 4,861 *
721 St. Davids Avenue
Warminster, PA 18974
Herbert S. McDonald (5) -- --
160 Abraham's Lane
Villanova, PA 19085
Desiree L. Pierson (6) -- --
244 Main Street
Linfield, PA 19468
All Officers and Directors 4,861 *
as a Group (3 persons)
10
<PAGE>
- ------------------
* Less than 1%
(1) Unless otherwise noted, Global believes that the person named in the
above table has sole voting and dispositive power with respect to all
shares of Common Stock beneficially owned by him.
(2) Based on 3,011,930 shares of Global's Common Stock issued and
outstanding at June 30, 1997.
(3) This individual may be deemed a "parent" and/or "promoter" of Global
under the rules and regulations of the Securities Act by virtue of his
efforts in the organization of Global.
(4) Executive officer and director.
(5) Director.
(6) Officer.
Item 12. Certain Relationship and Related Transactions
Employment Agreements
For information regarding former employment agreements for Messrs.
Lewis, Pettit, and Stith, see Item 10 "Executive Compensation" hereinabove.
PART IV
Item 13. Exhibits and Reports on Form 8-K
(a) 1. All financial statements - see index to Consolidated
Financial Statements on page 14
2. Exhibits - see Exhibits below.
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) Form 8-K filed on April 15, 1997.
(ii) Form 8-K filed on June 9, 1997.
11
<PAGE>
(The following Exhibits (filed with Form 10-KSB for the fiscal year
ended June 30, 1996) are applicable to the period commencing July 1, 1995, and
terminating as of the date of the filing of such Form 10-KSB):
A. Amendment to Articles of Incorporation, filed May 13, 1996.
B. Amendment to Articles of Incorporation, filed July 3, 1996.
C. Agreement, dated June 27, 1996, between Registrant and shareholders of
Phoenix Wrecking Corporation.
D. Rescission Agreement, dated November 6, 1996, between Registrant and
shareholders of Phoenix Wrecking Corporation.
E. Memorandum from counsel to Registrant summarizing subsidiary sales
effected as of June 28, 1996.
F. Press Releases issued by Registrant since July 1, 1995.
(i) July 1, 1996
(ii) August 29, 1996
(iii) September 3, 1996
(iv) October 23, 1996
(v) October 25, 1996 (#1)
(vi) October 25, 1996 (#2)
(vii) November 7, 1996
G. Disputed Form S-8 filing under the 1993 Act, dated August 2, 1996, and
relating to 385,000 shares (incorporated herein by reference).
H. Disputed Form S-8 filing under the 1933 Act, dated September 19, 1996,
and relating to 750,000 shares (incorporated herein by reference).
I. Disputed Form 8-K filed on October 4, 1996 (incorporated herein by
reference).
(The following Exhibits (incorporated herein by reference) are applicable to the
period subsequent to the filing of Form 10-KSB for the fiscal year ended June
30, 1996, and prior to the filing date hereof):
A. Form 10-KSB, for the fiscal year ended June 30, 1996, filed on February 19,
1997.
B. Form 10-QSB, for the quarter ended September 30, 1996, filed on March 5,
1997.
C. Form 10-QSB, for the quarter ended December 31, 1996, filed on March 5, 1997.
D. Form 10-QSB, for the quarter ended March 31, 1997, filed on May 15, 1997.
E. Form 8-K, filed on April 15, 1997.
F. Form 8-K, filed on June 9, 1997.
G. Press Release, dated June 6, 1997 (filed herewith).
H. Press Release, dated September 17, 1997 (filed herewith).
12
<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 September , 1997.
GLOBAL SPILL MANAGEMENT, INC.
By: /s/
-----------------------------
David R. Stith,
Acting President & Director
September , 1997
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities indicated, on September , 1997.
<TABLE>
<CAPTION>
Signatures Title Date
- ---------- ----- ----
<S> <C> <C>
/s/ Acting President and Director September , 1997
- ---------------------------
David R. Stith
/s/ Acting Principal Financial September , 1997
- --------------------------- and Accounting Officer
Allan Esrine
</TABLE>
13
<PAGE>
Global Spill Management, Inc.
and Subsidiaries
Contents
- --------------------------------------------------------------------------------
Report of Independent Certified Public Accountants F-1
Consolidated financial statements
Balance sheet F-2
Statements of operations F-3
Statements of capital deficit F-4
Statements of cash flows F-5 - F-6
Summary of significant accounting policies F-7 - F-9
Notes to consolidated financial statements F-10 - F-16
14
<PAGE>
Report of Independent Certified Public Accountants
Global Spill Management, Inc.
Willow Grove, Pennsylvania
We have audited the accompanying consolidated balance sheet of Global Spill
Management, Inc. and subsidiaries as of June 30, 1997, and the related
consolidated statements of operations, capital deficit, and cash flows for each
of the two years in the period ended June 30, 1997. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Global Spill Management, Inc.
and subsidiaries as of June 30, 1997, and the results of their operations and
their cash flows for each of the two years in the period ended June 30, 1997, in
conformity with generally accepted accounting principles.
BDO SEIDMAN, LLP
Philadelphia, Pennsylvania
September 4, 1997
F-1
<PAGE>
- -------------------------------------------------------------------------------
Spill Management, Inc.
and Subsidiaries
Consolidated Balance Sheet
================================================================================
June 30, 1997
- --------------------------------------------------------------------------------
Assets
Current assets
Cash $ 2,111
Subscriptions receivable (Note 1) 100,000
- --------------------------------------------------------------------------------
Total assets $ 102,111
================================================================================
Liabilities and Capital Deficit
Current liabilities
Note payable, stockholder (Note 5) 12,500
Accounts payable 148,427
- --------------------------------------------------------------------------------
Total current liabilities 160,927
- --------------------------------------------------------------------------------
Commitments and contingencies (Notes 1, 9 and 10)
Capital deficit (Notes 6, 8 and 9)
Preferred stock, $.001 par value
Authorized 5,000,000 shares, none issued --
Common stock, $.001 par value,
Authorized 25,000,000 shares
Issued and outstanding 3,011,930 3,012
Additional paid-in capital 13,225,917
Deficit (13,167,745)
Less: subscriptions receivable (120,000)
- --------------------------------------------------------------------------------
Total capital deficit (58,816)
- --------------------------------------------------------------------------------
Total liabilities and capital deficit $ 102,111
================================================================================
See accompanying notes to consolidated financial statements.
F-2
<PAGE>
Global Spill Management, Inc.
and Subsidiaries
Consolidated Statements of Operations
================================================================================
Year ended June 30, 1997 1996
- --------------------------------------------------------------------------------
Revenues $ -- $ --
- --------------------------------------------------------------------------------
Expenses
General and administrative expenses 227,136 255,800
Loss on investment and note receivable -- 90,000
Debenture conversion expense (Note 8) -- 2,595,703
Interest expense -- 394,304
- --------------------------------------------------------------------------------
Total expenses 227,136 3,335,807
- --------------------------------------------------------------------------------
(Loss) from continuing operations (227,136) (3,335,807)
(Loss) from discontinued operations (Note 2) -- (6,724,912)
- --------------------------------------------------------------------------------
(Loss) before extraordinary item (227,136) (10,060,719)
Extraordinary income - gain
on forgiveness of indebtedness (Note 11) 1,740,594 --
- --------------------------------------------------------------------------------
Net income (loss) $1,513,458 $(10,060,719)
================================================================================
(Loss) per share from continuing operations $ (.10) $ (5.47)
(Loss) per share from discontinued operations -- (11.02)
Extraordinary income per share .73 --
- --------------------------------------------------------------------------------
Net income (loss) per share $ .63 $ (16.49)
================================================================================
Weighted average number of shares outstanding 2,387,639 610,044
================================================================================
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
Global Spill Management, Inc.
and Subsidiaries
Consolidated Statements of Capital Deficit
<TABLE>
<CAPTION>
==================================================================================================================
Additional
Common Paid-In Subscriptions
Stock Capital (Deficit) Receivable
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance, June 30, 1995 $ 15,974 $ 9,282,609 $ (4,620,484) $ (497,875)
1 for 30 reverse stock split (15,442) 15,442 -- --
Shares issued for services 37 56,213 -- --
Shares issued for cash 28 219,972 -- --
Shares issued as additional
consideration for acquired
companies 19 296,588 -- --
Shares issued upon conversion
of debentures 850 2,959,853 -- --
Payment of subscriptions -- -- -- 108,438
Adjustment to subscriptions resulting
from decline in market value of
Common Stock -- (189,437) -- 189,437
Allowance for subscriptions
receivable -- (200,000) -- 200,000
Other adjustments -- 57,223 -- --
Net (loss) for the year -- -- (10,060,719) --
- ------------------------------------------------------------------------------------------------------------------
Balance, June 30, 1996 1,466 12,498,463 (14,681,203) --
Shares issued for cash
and subscriptions 1,550 727,450 -- (250,000)
Shares retired during the year (4) 4 -- --
Payment of subscriptions -- -- -- 30,000
Reclassification of
subscriptions receivable -- -- -- 100,000
Net income for the year -- -- 1,513,458 --
- ------------------------------------------------------------------------------------------------------------------
Balance, June 30, 1997 $ 3,012 $ 13,225,917 $ (13,167,745) $ (120,000)
==================================================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
Global Spill Management, Inc.
and Subsidiaries
Consolidated Statements of Cash FlowS
<TABLE>
<CAPTION>
==================================================================================================================
Years ended June 30, 1997 1996
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities
Income (loss) from continuing operations $ 1,513,458 $(3,335,807)
(Loss) from discontinued operations -- (6,724,912)
Adjustments to reconcile net (loss) to net
cash (used) in operating activities
Extraordinary gain on forgiveness of indebtedness (1,740,594) --
Depreciation and amortization -- 376,714
Issuance of common stock for services -- 56,250
Loss on investment and note receivable -- 90,000
Bond conversion expense -- 2,595,703
Loss on sale of subsidiaries -- 183,252
Gain on abandonment of subsidiary -- (311,058)
Write-off of goodwill -- 4,697,254
Other, net -- 246,925
Loss on abandonment of assets -- 165,190
Write-off of other assets -- 179,531
Decrease in assets
Accounts receivable -- 977,477
Inventory -- 18,090
Prepaid expenses and other assets -- 359,716
Increase (decrease) in liabilities
Accounts payable (45,922) (56,271)
Accrued expenses (165,222) 82,864
- ------------------------------------------------------------------------------------------------------------------
Net cash (used in) operating activities (438,280) (399,084)
- ------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities
Proceeds from sale of assets 805,000 --
Decrease in amounts due to related parties -- 169,970
Proceeds from sale of subsidiaries -- 175,000
- ------------------------------------------------------------------------------------------------------------------
Net cash provided by investing activities 805,000 344,970
- ------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities
Borrowings on line of credit, net -- 54,553
Repayments of stockholder note (37,500) --
Repayment of note payable, bank (855,000) --
Repayments of long-term debt (43,125) (450,428)
Issuance of common stock, net of expenses 479,000 220,000
Payments of common stock receivables 30,000 108,438
- ------------------------------------------------------------------------------------------------------------------
Net cash (used in) financing activities (426,625) (67,437)
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
F-5
<PAGE>
Global Spill Management, Inc.
and Subsidiaries
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
==========================================================================================================
Years ended June 30, 1997 1996
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net (decrease) in cash $ (59,905) $ (121,551)
Cash, at beginning of year 62,016 183,567
- ----------------------------------------------------------------------------------------------------------
Cash, at end of year $ 2,111 $ 62,016
==========================================================================================================
Supplemental disclosures of cash flow information
Cash paid during the year for
Interest $ -- $ 354,610
Taxes $ -- $ --
- ----------------------------------------------------------------------------------------------------------
Noncash investing and financing activities
Amounts to be collected upon sale of subsidiaries $ -- $ 805,000
Stock issued as additional consideration
for acquired companies -- 296,607
Issuance of common stock upon conversion
of debenture -- 2,960,703
Debenture converted to common stock -- (365,000)
</TABLE>
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
Global Spill Management, Inc.
and Subsidiaries
Summary of Accounting Policies
================================================================================
Organization Global Spill Management, Inc. ("Global") was incorporated
and Principles in June 1991, to acquire, operate and develop environmental
of Consolidation contracting and consulting companies and related
businesses.
The accompanying consolidated financial statements include
the accounts of Global Spill Management, Inc. and its
wholly owned subsidiaries (the "Company"), after
elimination of all significant intercompany balances and
transactions.
Use of Estimates The preparation of financial statements in conformity with
generally accepted accounting principles requires
management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual
results could differ from those estimates.
Income Taxes Income taxes are calculated using the liability method
specified by Statement of Accounting Standards No. 109,
"Accounting for Income Taxes."
Income (Loss) The income (loss) per share data are computed by dividing
Per Share the loss applicable to common stock by the weighted average
number of common shares outstanding. For the years ended
June 30, 1997 and 1996, outstanding warrants and options
were excluded from the computation because their effect
would have been antidilutive.
F-7
<PAGE>
Global Spill Management, Inc.
and Subsidiaries
Summary of Accounting Policies
================================================================================
Recent In March 1997, the Financial Accounting Standards Board
Accounting issued Statement of Financial Accounting Standards No. 128,
Pronouncements Earnings Per Share ("SFAS 128"). SFAS 128 provides a
different method of calculating earnings per share than is
currently called for in Accounting Principle Board Opinion
15. SFAS 128 provides for the calculation of basic and
diluted earnings per share. Basic earnings per share includes
no dilution and is computed by dividing income available to
common stockholders by the weighted average number of common
shares. Diluted earnings per share reflects the potential
dilution of securities that could share in the earnings of an
entity, similar to existing fully diluted earnings per share.
The Company believes adopting SFAS 128 will not have a
material effect on its calculation of earnings per share. The
Company will adopt the provisions for computing earnings per
share set forth in SFAS 128 for its quarter ending December
31, 1997.
Statement of Financial Accounting Standards No. 129,
Disclosure of Information about Capital Structure ("SFAS
129") effective for periods ending after December 15, 1997,
establishes standards for disclosing information about an
entity's capital structure. SFAS 129 requires disclosure of
the pertinent rights and privileges of various securities
outstanding (stock, options, warrants, preferred stock, debt
and participation rights) including dividend and liquidation
preferences, participant rights, call prices and dates,
conversion or exercise prices and redemption requirements.
Statement of Financial Accounting Standards No. 130,
"Reporting Comprehensive Income," ("SFAS 130") establishes
standards for reporting and display of comprehensive income,
its components and accumulated balances. Comprehensive income
is defined to include all changes in equity except those
resulting from investments by owners and distributions to
owners. Among other disclosures, SFAS No. 130 requires that
all items that are required to be recognized under current
accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the
same prominence as other financial statements.
F-8
<PAGE>
Global Spill Management, Inc.
and Subsidiaries
Summary of Accounting Policies
================================================================================
Statement of Accounting Standards No. 131, "Disclosures About
Segments of an Enterprise and Related Information," ("SFAS
No. 131") which supersedes SFAS No. 14, "Financial Reporting
for Segments of a Business Enterprise," establishes standards
for the way that public enterprises report information about
operating segments in annual financial statements and
requires reporting of selected information about operating
segments in interim financial statements issued to the
public. It also establishes standards for disclosures
regarding products and services, geographic areas and major
customers. SFAS No. 131 defines operating segments as
components of an enterprise about which separate financial
information is available that is evaluated regularly by the
chief operating decision maker in deciding how to allocate
resources and in assessing performance.
SFAS 130 and 131 are effective for financial statements for
periods beginning after December 15, 1997 and require
comparative information for earlier years to be restated.
The Company has discontinued their operations. Management
does not believe that adoption of any of these pronouncements
would materially effect the Company's financial statements.
Environmental Environmental expenditures that relate to existing conditions
Expenditures caused by past operations, and which do not contribute to
current or future revenues, are charged to expense.
Liabilities are recorded when environmental assessments
and/or cleanups are probable, and the costs can be reasonably
estimated. Generally, the timing of these accruals have
coincided with the Company's commitment to a formal plan of
action.
F-9
<PAGE>
Global Spill Management,
Inc. and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
1. Business The Company has discontinued its operating activities (see
Notes 2 and 3) and has liquidated all of the debts that
existed as of June 30, 1996 (see Note 11). It is actively
looking to acquire other businesses.
Subsequent to June 30, 1997, the Company received $100,000 as
payment on subscriptions receivable. The balance of the
subscription ($120,000) will be collected to pay liabilities
and expenses of the Company as they become due.
2. Discontinued During 1996, as a result of significant losses from the
Operations Company's operations and an inability to obtain sufficient
working capital, the Company discontinued all operating
activities of its environmental contracting and consulting
companies and related businesses. As discussed in Note 3, the
Company sold Land N' Sea Environmental Services, Inc.
("LNS"), GSM Environmental, Inc. ("GSMI") and Global
Environmental, Inc. ("GE") and agreed to sell Allied
Environmental, Inc., Allied Environmental Services West, Inc.
and Professional Pipe Services Corporation ("Propipe"). The
Company's other operating subsidiary, Environmental Disposal
Options Corporation ("EDOC"), was shut down in March 1996.
EDOC was subsequently put into involuntary bankruptcy by its
creditors and is currently liquidating its assets in
accordance with Chapter 7 of the United States Bankruptcy
Code.
As a result of the disposal of all its operations, in 1996
the Company recorded a charge of $4,816,372 as a loss on
disposal of discontinued operations. This amount included,
among other things, a write-off of goodwill amounting to
$4,697,255, and a charge for $183,250, representing a loss on
the sales and abandonment of the Company's subsidiaries.
There were no material losses incurred during the phase out
period.
F-10
<PAGE>
Global Spill Management,
Inc. and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
The operating results from discontinued operations for 1996 are summarized as
follows:
Year ended June 30, 1996
- --------------------------------------------------------------------------------
Total revenues $ 17,043,156
Gross profit 4,136,242
(Loss) from discontinued operations
(Loss) from discontinued operations $ (1,908,540)
(Loss) on disposal of discontinued
operations (4,816,372)
- --------------------------------------------------------------------------------
$ (6,724,912)
================================================================================
(Loss) per share amounts from discontinued operations are summarized as follows:
Year ended June 30, 1996
- --------------------------------------------------------------------------------
(Loss) from discontinued operations
(Loss) from discontinued operations $ (3.13)
(Loss) from disposal of discontinued
operations (7.89)
- --------------------------------------------------------------------------------
$ (11.02)
- --------------------------------------------------------------------------------
F-11
<PAGE>
Global Spill Management,
Inc. and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
3. Sale of On June 28, 1996, the Company sold all of the issued and
Subsidiaries outstanding stock of its subsidiaries, Land 'N Sea
Environmental Services, Inc. ("LNS"), GSM Environmental, Inc.
("GSMI") and Global Environmental, Inc. ("GE") for $175,000
in cash. LNS was purchased by a former employee and
stockholder of the Company for $75,000. GSMI and GE were
purchased by the Company's former chairman of the board and
chief executive officer for $100,000.
On June 28, 1996, the Company entered into an agreement to
sell the assets net of substantially all of the liabilities
of Allied Environmental, Inc. and Allied Environmental
Services, West, Inc., in exchange for Common Stock of the
purchaser, Eastern Environmental Services, Inc. ("EESI")
valued at $700,000. The sale was consummated in July 1996.
On June 30, 1996, the Company signed an agreement to sell the
assets, net of substantially all of the liabilities, of
Professional Pipe Services Corporation ("Propipe") to a
former employee and stockholder of the Company for $105,000
in cash. The sale was completed in July 1996.
All of the proceeds from the sale of the subsidiaries,
including $700,000 received upon sale of the EESI shares,
which amounted to $980,000, were used to pay down the notes
payable, bank (see Note 4).
4. Notes Payable, The Company had a revolving line of credit, for which the
Bank balance payable at June 30, 1996, including accrued interest,
was $1,134,556. That obligation was liquidated in full for
$855,000 during July, 1996, with a full release being
obtained. The gain on that forgiveness is reflected within
the statement of operations for the year ended June 30, 1997.
5. Note Payable, The note, repaid on July 19, 1997, was payable to the
Stockholder Company's former chief executive officer.
6. Subscriptions The Company has fully reserved promissory notes receivable
Receivable with face amounts totalling $677,000, issued to the Company
in 1995 as payment for the purchase price of shares of Common
Stock. The Company is pursuing the collection of these notes
(see Note 9).
F-12
<PAGE>
Global Spill Management,
Inc. and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
7. Income Taxes The Company had deferred tax assets of approximately
$2,800,000 as of June 30, 1997, related to net operating loss
carryforwards ("NOL"), which have yet to be utilized. As a
result of the sale of the Company's operating subsidiaries
and the issuance of additional shares of Common Stock, the
amount of the NOL of approximately $8,300,000 may be limited.
Also, the utilization of these losses, if available, to
reduce the future income taxes will depend upon the
generation of sufficient taxable income prior to the
expiration of the net operating loss carryforwards.
Therefore, at June 30, 1997, the Company established a 100%
valuation allowance against the deferred tax assets as the
likelihood of recognizing this benefit cannot be certain. The
net operating losses will expire in various years through
June 2011.
8. Common Stock In April 1996, the Company borrowed $315,000 from an investor
in exchange for a subordinated convertible debenture in the
amount of $350,000. Based on the conversion provisions, the
debenture was convertible into 119,658 shares of stock. On
June 28, 1996, the debentures were converted into 750,000
shares of common stock and the amount of $2,284,990 was
charged to operations as a debenture bond conversion expense
in accordance with Statement of Financial Accounting
Standards 84. The remaining original issue discount of
$35,000 was also charged to operations.
On June 28, 1996, a $50,000 debenture was converted into
100,000 shares of common stock. As a result of the
conversion, the Company charged operations for $310,713 as a
bond conversion expense.
On May 13, 1996, the Company effected a 1 for 30 reverse
stock split. All references in the accompanying statements to
the number of shares and per share amounts have been adjusted
to reflect the reverse stock split.
On July 2, 1996, the Company amended its Certificate of
Incorporation to increase the authorized shares of common
stock to 25,000,000 shares.
F-13
<PAGE>
Global Spill Management,
Inc. and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
9. Litigation The Company is a defendant in several lawsuits in which the
principal defendants are the former subsidiaries that
performed allegedly negligent remediation work for a
particular plaintiff. The Company is vigorously defending all
such suits, on the basis that it is not a proper party
defendant because the parent company has no contractual
relationship with the respective plaintiffs and bears no
responsibility to such plaintiffs. Management has determined
that the outcome of these matters will not have a material
effect on the financial statements of the Company.
Prior to June 30, 1995, the Company (upon the advice of
former counsel that sales of Common Stock for promissory
notes was legal under Nevada law), sold to Corporate
Relations Group, Orlando, Florida ("CRG") 21,667 shares of
the Company's authorized and unissued Common Stock, pursuant
to two promissory notes in the amounts of $177,000 and
$500,000, respectively. CRG is currently indebted to the
Company in such original amount of $677,000, such amount
representing the remaining balance on the purchase price for
such shares. The Company believes that all such shares have
been sold by CRG. The Company has instructed counsel to
pursue diligently the collection of that amount.
Global, on June 28, 1996 (the date on which the sales of the
operating subsidiaries was effected), agreed to acquire 100%
of the issued and outstanding shares of capital stock of
Phoenix Wrecking Corporation ("Phoenix"), a New York
corporation which was also engaged in the remediation
business. The proposed acquisition of Phoenix, which was
publicly announced on July 1, 1996, was rescinded nunc pro
tunc on November 6, 1996.
Two issues remain unresolved from the association of Phoenix
with Global: (a) an aggregate of 1,135,000 shares of Global
Common Stock were caused to be issued by Phoenix pursuant to
two filings on Form S-8 with the Securities and Exchange
Commission. Global was not current in its required filings
when such two Registration Statements were filed. Therefore,
no effective Registration Statement could have been filed on
Form S-8. Global has instituted proceedings to recover all
such shares (none of which have been reflected as issued and
outstanding in the Company's financial statements) as well as
F-14
<PAGE>
the proceeds derived from the sale thereof; and (b) Global is
a defendant in a lawsuit brought in New York State Supreme
Court to recover the sum of $1.3 million allegedly made
available to Phoenix by Plaintiff. Global received none of
such proceeds. Global is a party defendant because Phoenix
utilized Global Debentures to obtain such funds. A motion for
summary judgment against the Phoenix defendants and not
against Global was decided on July 30, 1997, and judgment was
entered against the Phoenix defendants only. Global intends
to move to have the matter dismissed as to Global.
The Company is unable to determine the outcome of the two
above-mentioned legal matters and has not recorded any
adjustments for them in the financial statements.
10. Environmental The Superfund Act imposes strict joint and several liability
Risks upon the generators of hazardous substances and those
transporters who have arranged for disposal of hazardous
substances or those 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
were 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 was 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 did not fail to adhere to such practice and
thereby could be potentially liable for claims in connection
with the transportation and disposal of such materials.
F-15
<PAGE>
Global Spill Management,
Inc. and Subsidiaries
Notes to Consolidated Financial Statements
================================================================================
11. Forgiveness In fiscal 1997, the Company concluded settlement with its
of Debt unsecured creditors to retire all outstanding indebtedness at
37.5 cents on the dollar, except for amounts under $100
(which were paid in full). In addition, the Company settled
outstanding secured debt at less than face value (see Note 4
for amounts relating to certain notes payable to bank).
Finally, debt payable to the former owners of one of the
subsidiaries (which was sold in 1997) was forgiven. The
forgiveness of indebtedness was recorded as an extraordinary
item in 1997 and consisted of the following:
Unsecured creditors $ 454,181
Former owners of a subsidiary 932,727
Secured debt 353,686
- --------------------------------------------------------------------------------
$1,740,594
- --------------------------------------------------------------------------------
F-16
<PAGE>
EXHIBIT 99.(a)
Contact: Global Spill Management, Inc.
Attention: Desiree Pierson
(610) 495-8413
June 6, 1997...Global Spill Management, Inc. (GEGI)(OTC) announces that;
a) Form 10-QSB (for the nine months ended March 31, 1997) was timely filed
with the SEC on May 14, 1997. GEGI is current in all of its required SEC
filings;
b) Negotiations have commenced with several different acquisition candidates.
A decision with respect to which specific acquisition to consummate will be
made prior to the close of the current fiscal year on June 30, 1997;
c) Aggregate indebtedness of approximately $6.7 million at June 30, 1995, has
been reduced to approximately $62,000;
d) Final submissions and oral agreements on motions relating to GEGI's action
commenced in U.S. District Court (EDNY) against the law firm that prepared
and filed the two Form S-8 Registration Statements with the SEC in August
and September 1996, covering an aggregate of 1,135,000 shares of GEGI
Common Stock, are scheduled for August 29, 1997. Also named as parties
defendant in such action are those persons who received and sold such
shares. Form S-8 was not available for use by GEGI at such times because
GEGI was not then current in its required SEC filings. Therefore, none of
such 1,135,000 shares was validly registered under the 1993 Act and the
public sale thereof was illegal. The aggregate value of such 1,135,000
shares (as stated in the two S-8 filings) was approximately $4 million.
GEGI seeks the recovery of such $4 million and of the 1,135,000 shares;
and,
e) GEGI has instituted suit in Philadelphia Federal Court to collect upon
promissory notes in the amount of $677,000. Such notes were issued to GEGI
in 1994-5 in connection with the sale by prior management of an aggregate
of 650,000 shares of GEGI Common Stock. Such notes were not paid at
maturity and the shares purchased thereby were not returned by GEGI.
####
EXHIBIT EX-99.(b)
Contact: Global Spill Management, Inc. FOR IMMEDIATE RELEASE
Desiree Pierson
(610) 495-8413
GLOBAL SPILL MANAGEMENT, INC. NEGOTIATING TO ACQUIRE
77-YEAR OLD EUROPEAN PHARMACEUTICAL COMPANY
Global to File Fiscal 1997 Financials with SEC Showing 99% Reduction of Debt
Willow Grove, Pennsylvania, September 17, 1997...Global Spill Management, Inc.
announced today that it is negotiating to acquire BioFarm Holdings S.A. Plc., a
U.K. - based holding company which controls BioFarm S.A. in Romania. BioFarm
S.A., a $16 million pharmaceutical company incorporated in Romania in 1920,
produces more than 220 drugs for both human and veterinary use. The "BioFarm"
brand is long established and enjoys an excellent reputation in the
pharmaceutical market.
The acquisition, when made, will be with shares of Global authorized Common
Stock. Global is traded on the NASDAQ Bulletin Board under the symbol GEGI.
At the same time it announced the acquisition, Global also revealed that it
expects to file within five days with the Securities and Exchange Commission its
Form 10-KSB for the fiscal year ended June 30, 1997. The fully audited
financials will show a 99% reduction in total indebtedness to approximately
$62,000 from approximately $6.7 million on June 30, 1996. The year end 1997
financial statements also show 3,011,930 total issued and outstanding,
fully-paid and non-assessable Common shares (no Preferred Stock, warrants,
options or convertible securities). The company also will report an available
tax loss carry forward in excess of $10 million.
BioFarm's unaudited results for fiscal 1996/1997 show annual gross revenues of
approximately $16 million (USD), which includes exports sales to the Eastern
European market. BioFarm S.A. Holdings Plc has recently appointed KPMG, a "Big
Six" accounting firm, to conduct its audit. BioFarm's audit will conform to SEC
accounting standards, and BioFarm's auditors will report to Global's
independent outside auditors.
<PAGE>
Global to Acquire Bio Farm -- 2
BioFarm manufactures drugs for its domestic market and for some of the largest
foreign pharmaceutical firms. Their products include Gastopezin and Berotec for
Boehringer-Ingelheim, Sermion and Farmenibicin for Farmitalia, and Tavegyl and
Zoditen for Sandoz. BioFarm has nearly 700 employees in three manufacturing
sites situated in central Bucharest.
BioFarm products are natural medicinal drugs based on animal and vegetable raw
materials. The main biologically active substances used are alkaloids,
caratenoids, glycosides, flavones, enzymes, homones, biologically active
proteins, anticoagulants, extracts and tinctures. Raw materials used include
aromatic and medicinal plants, glands, organs and animal by-products such as
pancreas, stomach, spleen, lypophysal (pituitary) and epiphysal (piveal),
glands, intestinal mucosa, thyroid glands, bovine bile and stomach mucosa.
The range of drugs include compressed and coated tablets, powders and granules,
injectable solutions, injectable lyophilized powders, sprays, suspensions, eye
washes, syrups, cast compressed tablets and soft gelatino capsules.
Future plans for BioFarm include additional acquisitions in the pharmaceutical
industry, further development of its production processes and product range to
meet additional international GMP and Pharmacoepia standards, and marketing its
products in more foreign markets. All products comply with standards currently
established by the Ministry of Public Health in Romania and several products
comply with the standards of international Pharmacoepias.
Pending the completion of all necessary acquisition documents to complete the
BioFarm acquisition, Global has put aside negotiations also being conducted with
three other private entities with which Global has been negotiating. Global
fully expects to complete the acquisition of an operating entity within the next
two week period. (Global has not conducted operations since June 28, 1996, when
it adapted a Plan of Reorganization (previously announced) designed to eliminate
debt, dispose of operating subsidiaries and concentrate upon maximizing assets.)
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> JUN-30-1997
<CASH> 2
<SECURITIES> 0
<RECEIVABLES> 100
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 102
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 102
<CURRENT-LIABILITIES> 161
<BONDS> 0
0
0
<COMMON> 3
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> (59)
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 227
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (227)
<INCOME-TAX> 0
<INCOME-CONTINUING> (227)
<DISCONTINUED> 0
<EXTRAORDINARY> 1,740
<CHANGES> 0
<NET-INCOME> 1,513
<EPS-PRIMARY> .63
<EPS-DILUTED> .63
</TABLE>
