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 March 31, 1998
_ 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)
(610) 495-8413
(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 March 31, 1998 was 3,711,930.
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 -
March 31, 1998 and June 30, 1997 3
Consolidated Statements of Operations - Nine months
and Three months ended March 31, 1998 and 1997 4-5
Consolidated Statements of Cash Flows - Nine months ended
March 31, 1998 and 1997 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8-9
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 10
Item 2. Changes in Securities 11
Item 3. Defaults Upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 12
<PAGE>
Global Spill Management, Inc.
and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
<TABLE>
<CAPTION>
March 31, June 30,
1998 1997
------------ --------
<S> <C> <C>
Assets
Current assets
Cash $ 29,967 $ 2,111
Subscriptions receivable -- 100,000
------------ ------------
Total current assets $ 29,967 $ 102,111
============ ============
Liabilities and Stockholders' Equity (Deficit)
Current liabilities
Notes payable, stockholder $ -- $ 12,500
Accounts payable 18,545 148,427
------------ ------------
Total current liabilities 18,545 160,927
------------ ------------
Commitments and contingencies
Stockholders' equity (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 3,711,930 and 3,011,930 3,712 3,012
Additional paid-in capital 13,475,215 13,225,917
Deficit (13,267,507) (13,167,745)
Less: subscriptions receivable (200,000) (120,000)
------------ ------------
Total stockholders' equity (deficit) 11,422 (58,816)
------------ ------------
Total liabilities and stockholders' equity (deficit) $ 29,967 $ 102,111
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
Global Spill Management, Inc.
and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended March 31, 1998 1997
---- ----
<S> <C> <C>
Revenues $ -- $ --
---------- ----------
Costs and expenses
Selling, general and administrative expenses 99,762 --
---------- ----------
Total costs and expenses 99,762 --
---------- ----------
(Loss) from operations (99,762) --
Gain from debt forgiveness, net of administrative costs -- 1,569,672
---------- ----------
Net (loss) income $ (99,762) $1,569,672
========== ==========
Net (loss) income per share $ (.03) $ .72
Weighted average number of common shares outstanding 3,165,215 2,179,877
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE>
Global Spill Management, Inc.
and Subsidiaries
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Three months ended March 31, 1998 1997
---- ----
<S> <C> <C>
Revenues $ -- $ --
---------- ----------
Costs and expenses
Selling, general and administrative expenses 56,234 --
---------- ----------
Total costs and expenses 56,234 --
---------- ----------
(Loss) from operations (56,234) --
(Loss) from debt forgiveness, net of administrative costs -- (14,710)
---------- ----------
Net (loss) $ (56,234) $ (14,710)
========== ==========
Net (loss) per share $ (.02) $ (.01)
Weighted average number of common shares outstanding 3,478,597 2,649,202
========== ==========
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
Global Spill Management, Inc.
and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended March 31, 1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities
Net (loss) income $ (99,762) $ 1,569,672
Adjustments to reconcile net (loss) income to
net cash (used in) operating activities
Non-cash litigation settlement 50,000 --
Gain from debt forgiveness -- (1,569,672)
(Decrease) in liabilities
Accounts payable and accrued expenses (129,882) (278,454)
-------- -----------
Net cash (used in) operating activities (179,644) (278,454)
-------- -----------
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 -- (53,530)
Issuance of common stock, net of expenses -- 481,500
Proceeds from common stock receivable 220,000 --
Payments on notes payable, stockholder (12,500) (37,500)
-------- -----------
Net cash provided by (used in) financing activities 207,500 (464,530)
-------- -----------
Net increase (decrease) in cash 27,856 (62,016)
Cash, at beginning of year 2,111 62,016
-------- -----------
Cash, at end of year $ 29,967 $ --
========= ===========
</TABLE>
See accompanying notes to consolidated financial statements.
6
<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 nine months and three months ended March 31, 1998 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.
7
<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 $220,000 subsequent to June 30, 1997 as payment of
the entire subscriptions receivable as of that date. 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.
Sale of Subsidiaries
On June 30, 1996, 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.
8
<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
resulted, as of March 31, 1998, in $794,622 in the aggregate of claims being
settled for the sum of $433,148. As of March 31, 1998, total liabilities of
Global were $18,545 and represented current accounts payable endemic to any
public entity.
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.
9
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Global is a plaintiff in an action commenced in Federal court seeking the
recovery of 1,085,000 shares of Global Common Stock and $3,855,000 in cash. The
gravamen of the complaint is that former counsel filed with the SEC two Form S-8
Registration Statements covering such 1,085,000 shares, which filings violated
the General Instructions to the use of Form S-8 because Global was not then
current in its required SEC filings and because the recipient-sellers of the
1,085,000 shares were not qualified consultant-employees. On January 22, 1998,
four of the five causes of action brought by Global were sustained when attacked
by the defendants. Once all answers are received, Global intends to move for
summary judgment.
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.
Global has settled definitively the litigation previously instituted against
Global by F.T. Trading et al (which litigation is referred to in previous Form
10-KSB and 10-QSB filings). With a view toward saving legal fees and associated
costs and time, and without admitting any liability of any kind whatsoever,
Global, on January 30, 1998, caused to be issued to Plaintiffs an aggregate of
100,000 shares of Global Common Stock having a market value on that date of
approximately $50,000. On April 27, 1998, Global agreed to issue an additional
100,000 shares to complete the settlement. The matter was marked "dismissed" and
settled on April 27, 1998. Plaintiffs stipulated to the Court that they may sell
only upon a specific date, only above a specific price and only in specific
maximum daily amounts. Plaintiffs have also stipulated that they will engage in
no other transactions of any kind whatsoever in Global Common Stock. Finally,
Plaintiff's judgment against Phoenix Wrecking Corporation et al has been
assigned to Global. (See Item 5 hereinafter.)
10
<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 has entered into a contract with Litchfield Consolidated, Ltd.
(Litchfield) to acquire from Litchfield the capital stock of Biofarm S.A., a
Romanian pharmaceutical company specializing in homeopathic products. Reference
is made to the Form 8-K filed by Global on March 6, 1998, for information
concerning such acquisition.
On January 30, 1998, an aggregate of 700,000 shares of Common Stock were issued,
increasing the issued, outstanding and fully-paid shares to 3,711,930. Of such
700,000 shares, 600,000 thereof were issued in exchange for $200,000 in
subscription receivables and 100,000 were issued in contemplation of settlement
of litigation. (See Legal Proceedings hereinabove.) The 600,000 shares were
issued to persons who had, prior thereto, provided Global with an aggregate of
$1,220,000 in funding since June 28, 1996 (inclusive of the receivable referred
to in Item 2 hereinabove). (On January 30, 1998, the shares traded at $.50 per
share.)
Upon the closing of the Biofarm transaction, the intermediary in that
transaction (which will be paid in stock and not in cash) has agreed to (a)
replace 100,000 of the 200,000 shares delivered by Global to the F.T. Plaintiffs
and (b) itself deliver to the F.T. Plaintiffs up to but not exceeding an
additional 100,000 shares of Global Common Stock. Thus, the net cost to Global
to settle the F.T. matter is 100,000 shares of Global Common Stock. The same
restrictions upon sale apply to the additional 100,000 shares. (See Item 1
hereinabove.)
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits:
None
(B) Reports on Form 8-K (for the third quarter ended March 31, 1998):
- Items 2, 5 and 7
- Coopers & Lybrand Report, dated November 18, 1997, on
Biofarm S.A., for the two years and six month periods
ended June 30, 1997
- Filed March 6, 1998
11
<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: May 12, 1998
By: /s/ David R. Stith
--------------------------------
David R. Stith,
Acting President
Date: May 12, 1998
By: /s/ Allan Esrine
--------------------------------
Allan Esrine,
Acting Principal Financial
and Accounting Officer
12
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> MAR-31-1998
<CASH> 30
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 30
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 30
<CURRENT-LIABILITIES> 19
<BONDS> 0
0
0
<COMMON> 4
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 30
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 100
<LOSS-PROVISION> (100)
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (100)
<INCOME-TAX> 0
<INCOME-CONTINUING> (100)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (100)
<EPS-PRIMARY> (.03)
<EPS-DILUTED> (.03)
</TABLE>
