SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
(Mark One)
X Quarterly report under Section 13 or 15(d) of the Securities Exchange
- --- Act of 1934 for the quarterly period ended September 30, 1997
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 of (I.R.S. Employer
incorporation or organization) Identification No.)
2300 Computer Avenue (Bldg. G-25), Willow Grove, Pennsylvania 19090
-------------------------------------------------------------------
(Address of principal executive offices)
(215) 830-1351
---------------------------
(Issuer's telephone number)
Indicate by check mark whether the Issuer: (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities and 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
--- ---
The number of shares outstanding of the Issuer's Common Stock, $.001 Par Value,
as of September 30, 1997 was 3,011,930.
Transitional small business disclosure format:
Yes No X
--- ---
<PAGE>
GLOBAL SPILL MANAGEMENT, INC.
Form 10-QSB
INDEX
PART I - FINANCIAL INFORMATION
Page
----
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets -
September 30, 1997 and June 30, 1997 3
Consolidated Statements of Operations - Three months ended
September 30, 1997 and 1996 4
Consolidated Statements of Cash Flows - Three months ended
September 30, 1997 and 1996 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7-9
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 10-11
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on From 8-K 12
Signatures 13
<PAGE>
Global Spill Management, Inc.
and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
================================================================================
September 30, June 30,
1997 1997
- --------------------------------------------------------------------------------
Assets
Current assets
Cash $ 323 $ 2,111
Subscriptions receivable -- 100,000
- -------------------------------------------------------------------------------
Total current assets $ 323 $ 102,111
===============================================================================
Liabilities and Capital Deficit
Current liabilities
Notes payable, stockholder $ -- $ 12,500
Accounts payable 81,490 148,427
- -------------------------------------------------------------------------------
Total current liabilities 81,490 160,927
- -------------------------------------------------------------------------------
Commitments and contingencies
Capital deficit
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 3,012
Additional paid-in capital 13,225,917 13,225,917
Deficit (13,202,596) (13,167,745)
Less: subscriptions receivable (107,500) (120,000)
- -------------------------------------------------------------------------------
Total capital deficit (81,167) (58,816)
- -------------------------------------------------------------------------------
Total liabilities and capital deficit $ 323 $ 102,111
===============================================================================
The accompanying notes are an integral part of these statements.
3
<PAGE>
<TABLE>
<CAPTION>
Global Spill Management, Inc.
and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
=========================================================================================
Three months ended September 30, 1997 1996
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Revenues $ -- $ --
- -----------------------------------------------------------------------------------------
Costs of expenses
Selling, general and administrative expenses 34,851 --
- -----------------------------------------------------------------------------------------
Total costs and expenses 34,851 --
- -----------------------------------------------------------------------------------------
(Loss) from operations (34,851) --
Gain from debt forgiveness, net of administrative costs -- 1,595,406
- -----------------------------------------------------------------------------------------
Net (loss) income $ (34,851) $1,595,406
=========================================================================================
Net (loss) income per share $ (.01) $ 1.01
Weighted average number of common shares outstanding 3,011,930 1,580,598
=========================================================================================
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
<TABLE>
<CAPTION>
Global Spill Management, Inc.
and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
=========================================================================================
Three months ended September 30, 1997 1996
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities
Net (loss) income $ (34,851) $ 1,595,406
Adjustments to reconcile net (loss) income to
net cash (used in) operating activities
Gain from debt forgiveness -- (1,595,406)
Increase (decrease) in liabilities
Accounts payable and accrued expenses (66,937) (180,421)
- -----------------------------------------------------------------------------------------
Net cash (used in) operating activities (101,788) (180,421)
- -----------------------------------------------------------------------------------------
Cash flows from investing activities
Sale of subsidiaries -- 805,000
- -----------------------------------------------------------------------------------------
Cash flows from financing activities
Borrowings (repayments) on line of credit, net -- (855,000)
(Repayments) of long-term debt -- (10,405)
(Repayments) of borrowings from shareholder (12,500) (25,000)
Issuance of common stock, net of expenses -- 215,000
Proceeds from common stock receivable, net of expenses 112,500 --
- -----------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 100,000 (675,405)
- -----------------------------------------------------------------------------------------
Net (decrease) in cash $ (1,788) $ (50,826)
Cash, at beginning of year 2,111 62,016
- -----------------------------------------------------------------------------------------
Cash, at end of year $ 323 $ 11,190
=========================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
Global Spill Management, Inc. and Subsidiaries
Notes to Consolidated Financial Statements
Unaudited
1. The accompanying unaudited consolidated financial statements, which are for
an interim period, do not include all disclosures provided in the annual
consolidated financial statements. These unaudited consolidated financial
statements should be read in conjunction with the consolidated financial
statements and footnotes thereto contained in the Annual Report on Form
10-KSB for the year ended June 30, 1997 of Global Spill Management, Inc.
("Global"), as filed with the Securities and Exchange Commission. The June
30, 1997 balance sheet was derived from audited consolidated financial
statements, but does not include all disclosures required by generally
accepted accounting principles.
2. In the opinion of Global, the accompanying unaudited consolidated financial
statements contain all adjustments (which are of a normal recurring nature)
necessary for a fair presentation of the financial statements. The results
of operations for the three months ended September 30, 1997 are not
necessarily indicative of the results to be expected for the full year.
3. Per share data was calculated by dividing the net income (loss) by the
weighted average number of shares outstanding during the period.
6
<PAGE>
Item 2. 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 below, 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) 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 $112,500 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 expects ongoing operating expenses to be minimal until and upon which
time an acquisition may occur.
PLAN OF REORGANIZATION
In April, 1996, because of a demonstrable inability to meet its debts as they
matured, Global and its designated 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 included 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
On 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.)
7
<PAGE>
As a result of the disposition of the above-mentioned subsidiaries, Global
ceased to be an operating company.
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 resolved with an offer of 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, being treated herein as having occurred on June 28, 1996, Global
remained, as of June 30, 1996, with fixed liabilities of $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, as of October 1, 1996, in $565,000 in the
aggregate of claims being settled for the sum of $359,754. As of September 30,
1997, total liabilities of Global were $81,490 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.)
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 sock 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 was 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 filing 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.
8
<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.
9
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Global is a defendant in several lawsuits in which the principal defendant is
the former Global subsidiary that performed allegedly negligent remediation work
for the particular plaintiff. 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.
Subsequent to September 30, 1997, Global received from Corporate Relations Group
(CRG) the sum of $50,000 in settlement in full of an action brought against CRG
to recover upon certain promissory notes. The entirety of such promissory notes
had previously been written off; therefore, the $50,000 will appear as income
for the quarter ended December 31, 1997.
Global completed its settlement with Peter V. White (a former director and
officer) by paying to Mr. White the sum of $21,549. Final payment was made on
October 15, 1997; general releases were exchanged and a dismissal was entered.
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 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.
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 $1.3 million of F.T.
funding.
10
<PAGE>
Global intends to defend vigorously such action, on the basis that Global's
Board did not authorize any Reg S transaction or any other funding by F.T., any
Global documents delivered to F.T. were fraudulently executed and delivered by
Phoenix nominees, none of the alleged F.T. funding was received by Global and
the rescission agreement between Global and Phoenix specifically provides that
the liability for any F.T. proceeds rests with Phoenix. Plaintiff's summary
judgment motion against the Phoenix defendants only was granted on July 30,
1997.
11
<PAGE>
Item 2. Changes in Securities
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other information
Global on October 13, 1997, announced publicly that it had entered into a
definitive letter of intent with BioForm S.A. Holding PLC (a United Kingdom
entity) to acquire 100% of the latter conditioned upon receipt by the Company of
audited financial statements acceptable to the Company's independent auditors
and complying fully with S.E.C. accounting standards. The principal asset of the
United Kingdom entity is its ownership of Bioform S.A. (Bucharest), a Romanian
pharmaceutical company.
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits:
None
(B) Reports on Form 8-K:
None
12
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Date: November 13, 1997 /s/ David R. Stith
-------------------------------
By:
-------------------------------
David R. Stith,
Acting President
Date: November 13, 1997 /s/ Allan Esrine
-------------------------------
By:
-------------------------------
Allan Esrine,
Acting Principal Financial
and Accounting Officer
13
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1000
<CURRENCY> U.S.$
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-1-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1.000
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 0
<CURRENT-LIABILITIES> 81
<BONDS> 0
0
0
<COMMON> 3
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 35
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (35)
<INCOME-TAX> 0
<INCOME-CONTINUING> (35)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (35)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
