SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
X Quarterly report pursuant to Section 13 or 15(d) of the Securities
- -------
Exchange Act of 1934
For the quarterly period ended June 30, 1996 or
Transition report pursuant to Section 13 or 15(d) of the Securities
- -------
Exchange Act of 1934
For the transition period from _________ to _________
Commission file number 33-60296
Globalink, Inc.
(Exact name of small business issuer as specified in its charter)
Delaware 54-1473222
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
9302 Lee Highway, 12th Floor, Fairfax, VA 22031
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (703) 273-5600
Not Applicable
(Former name, address and fiscal year, if changed since last report)
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
Registrant had 5,331,352 shares of common stock outstanding as of June 30, 1996.
<PAGE>
GLOBALINK, INC.
TABLE OF CONTENTS
Part I Financial Information: Page No.
Item 1. Financial Statements
Balance Sheets as of June 30, 1996,
and December 31, 1995 1
Statements of Operations for the Three
Months Ended June 30, 1996, and
June 30, 1995 2
Statements of Operations for the Six
Months Ended June 30, 1996, and
June 30, 1995 3
Statements of Cash Flows for the Six
Months Ended June 30, 1996, and
June 30, 1995 4
Notes to Interim Financial Statements 5
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 9
Part II Other Information:
Item 6. Exhibits and Reports on Form 8-K 12
<PAGE>
<TABLE>
<CAPTION>
Item 1. Financial Statements
GLOBALINK, INC.
BALANCE SHEETS
June 30, December 31,
1996 1995
--------------- ---------------
ASSETS (Unaudited) (Audited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 138,832 $ 819,846
Marketable securities 996,459 1,579,237
Accounts receivable, net of allowances of
$2,529,427 and $3,107,001 8,442,644 7,180,600
Inventories 735,493 585,350
Prepaid expenses and deposits 442,481 263,051
Other receivables 78,139 93,252
--------------- ---------------
Total Current Assets 10,834,048 10,521,336
Equipment and Furniture, net of accumulated
depreciation of $615,691 and $441,349 929,263 979,534
Capitalized Software, net of accumulated
amortization of $4,334,092 and $4,079,950 937,106 951,324
--------------- ---------------
Total Assets $ 12,700,417 $ 12,452,194
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable - trade $ 1,847,489 $ 1,793,705
Accrued and other liabilities 863,488 795,749
Current portion of notes payable 740,000 740,000
--------------- ---------------
Total Current Liabilities 3,450,977 3,329,454
Long-Term Notes Payable 268,889 388,889
Deferred Rent 75,875 83,579
Stockholders' Equity:
Common stock, $.01 par value, 20,000,000 shares
authorized, 5,331,352 and 5,304,017 shares
issued and outstanding 53,314 53,040
Additional paid-in capital 17,378,831 17,246,384
Accumulated deficit (8,527,469) (8,649,152)
--------------- ---------------
Total Stockholders' Equity 8,904,676 8,650,272
--------------- ---------------
Total Liabilities and Stockholders' Equity $ 12,700,417 $ 12,452,194
=============== ===============
<FN>
The accompanying notes are an integral part of these statements.
1
</FN>
<PAGE>
<CAPTION>
GLOBALINK, INC.
STATEMENTS OF OPERATIONS
Three Months Ended
June 30,
1996 1995
--------------- ---------------
(Unaudited) (Unaudited)
<S> <C> <C>
Product sales (net of returns and allowances) $ 3,783,612 $ 4,654,382
Translation service revenue 328,799 161,545
--------------- ---------------
4,112,411 4,815,927
Costs and Expenses:
Cost of products sold 481,630 757,103
Amortization of capitalized software 163,609 121,410
Direct labor and fringes 160,802 52,957
Development 362,013 388,237
Selling, marketing and other 2,067,022 2,870,003
Administrative 772,928 658,360
--------------- ---------------
4,008,004 4,848,070
--------------- ---------------
Earnings (Loss) From Operations 104,407 (32,143)
Interest (expense) income, net (3,691) 39,104
--------------- ---------------
Earnings Before Income Taxes 100,716 6,961
Income tax expense 0 0
--------------- ---------------
Net Earnings $ 100,716 $ 6,961
=============== ===============
Earnings per common share $ 0.02 $ 0.00
=============== ===============
Average number of common shares and common share
equivalents outstanding during the period 5,374,812 5,401,773
=============== ===============
<FN>
The accompanying notes are an integral part of these statements.
2
</FN>
<PAGE>
<CAPTION>
GLOBALINK, INC.
STATEMENTS OF OPERATIONS
Six Months Ended
June 30,
1996 1995
--------------- ---------------
(Unaudited) (Unaudited)
<S> <C> <C>
Product sales (net of returns and allowances) $ 7,275,397 $ 9,348,919
Translation service revenue 479,333 369,646
--------------- ---------------
7,754,730 9,718,565
Costs and Expenses:
Cost of products sold 866,729 1,521,711
Amortization of capitalized software 254,142 242,820
Direct labor and fringes 258,581 213,117
Development 727,027 727,779
Selling, marketing and other 3,985,981 5,067,705
Administrative 1,540,968 1,424,426
--------------- ---------------
7,633,428 9,197,558
--------------- ---------------
Earnings From Operations 121,302 521,007
Interest income, net 381 83,927
--------------- ---------------
Earnings Before Income Taxes 121,683 604,934
Income tax expense 0 0
--------------- ---------------
Net Earnings $ 121,683 $ 604,934
=============== ===============
Earnings per common share $ 0.02 $ 0.11
=============== ===============
Average number of common shares and common share
equivalents outstanding during the period 5,369,812 5,391,773
=============== ===============
<FN>
The accompanying notes are an integral part of these statements.
3
</FN>
<PAGE>
<CAPTION>
GLOBALINK, INC.
STATEMENTS OF CASH FLOWS
Six Months Ended
June 30,
1996 1995
--------------- ---------------
(Unaudited) (Unaudited)
<S> <C> <C>
Increase (Decrease) in Cash and Cash Equivalents
Cash flows from operating activities
Net earnings $ 121,683 $ 604,934
Adjustments to reconcile net earnings to net cash
used in operating activities
Amortization of capitalized software 254,142 242,820
Depreciation 174,342 76,568
Change in Assets and Liabilities
Increase in accounts receivable (1,262,044) (1,501,224)
Increase in inventories (150,143) (228,882)
Increase in prepaid expenses and deposits (179,430) (526,147)
Decrease in other receivables 15,113 6,794
Increase (decrease) in accounts payable 53,784 (201,621)
Increase in accrued and other liabilities 67,739 210,239
Decrease in deferred rent (7,704) (2,139)
--------------- ---------------
Total Adjustments (1,034,201) (1,923,592)
--------------- ---------------
Net cash used in operating activities (912,518) (1,318,658)
Cash flows from investing activities
Decrease in marketable securities 582,778 1,724,948
Increase in capitalized software (239,924) (178,508)
Capital expenditures for equipment and furniture (124,071) (350,611)
--------------- ---------------
Net cash provided by investing activities 218,783 1,195,829
Cash flows from financing activities
Issuance of common stock 132,721 161,173
Repayment of debt (120,000) (9,722)
--------------- ---------------
Net cash provided by financing activities 12,721 151,451
--------------- ---------------
Net (decrease) increase in cash (681,014) 28,622
Cash and cash equivalents at beginning of period 819,846 503,367
--------------- ---------------
Cash and cash equivalents at end of period $ 138,832 $ 531,989
=============== ===============
<FN>
The accompanying notes are an integral part of these statements.
4
</FN>
</TABLE>
<PAGE>
GLOBALINK, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS
JUNE 30, 1996
NOTE A -- Summary of Significant Accounting Policies
The accompanying unaudited financial statements have been prepared in accordance
with generally accepted accounting principles and with the instructions to Form
10-QSB. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting only of
normal recurring accruals) considered necessary for a fair presentation have
been included. The results of operations for the interim period ended June 30,
1996, are not necessarily indicative of the results to be expected for the full
year. For further information, refer to the financial statements and the related
footnotes included in the Company's audited financial statements for the year
ended December 31, 1995.
NOTE B -- Acquisition of MicroTac Software
On November 22, 1994, the stockholders of Globalink, Inc. (Globalink), and
MicroTac Software, Inc. (MicroTac), approved the acquisition of MicroTac by
Globalink (collectively referred to as the Company). The closing of the
acquisition was executed on December 22, 1994, in a business combination
accounted for as a pooling of interest. MicroTac, which developed and marketed
foreign language translation software, became a wholly-owned subsidiary of
Globalink through the exchange of 880,000 shares of Globalink's common stock for
all the outstanding stock of MicroTac. The accompanying financial statements
reflect the combined accounts of the companies for the periods presented, and
financial statements for prior periods have been restated to give effect to the
combination.
NOTE C -- Composition of Certain Financial Statement Captions
1. Cash and Cash Equivalents
The Company considers all highly liquid securities purchased with a maturity of
three months or less to be cash equivalents.
2. Marketable Securities
Marketable securities consist of U.S. Government debt securities which mature
within one year. The Company classifies debt securities as held-to-maturity.
Held-to-maturity securities are carried at amortized cost which equals estimated
fair value.
3. Inventories
Inventories consist of finished goods and work-in-process which are stated at
the lower of first-in, first-out (FIFO) cost or market.
4. Prepaid Expenses and Deposits
Prepaid expenses and deposits consist of prepaid advertising and brochures and
other prepaid amounts. The Company expenses the costs of first-time advertising
when the material is published. Prepaid advertising and brochures consist of
advertising costs paid in advance of publication. Also included in prepaid
advertising and brochures expense are the costs of developing various marketing
and product materials for new software. These costs are expensed when the
software is released.
5
<PAGE>
NOTES TO INTERIM FINANCIAL STATEMENTS -- (Continued)
5. Equipment and Furniture
Equipment and furniture consist of office and other equipment and furniture and
fixtures. Depreciation is provided for in amounts sufficient to relate the cost
of depreciable assets to operations over their estimated service lives, ranging
from three to seven years. The straight-line method of depreciation is followed
for all assets for financial reporting purposes. Accelerated methods are used
for tax purposes.
6. Capitalized Software
The Company capitalizes certain initial software development costs and
enhancements thereto incurred after technological feasibility has been
demonstrated. To date, all products and enhancements thereto have utilized
proven technology. Such capitalized amounts are amortized commencing with
product introduction over the greater of the ratio of current gross revenue for
a product to the total expected gross revenue over the life of that product, or
the straight-line method over the remaining estimated economic life, ranging
from three to six years. The unamortized capitalized costs by product are
reduced to an amount not to exceed the future net realizable value by product at
each balance sheet date.
8. Accrued and Other Liabilities
Accrued and other liabilities consist of accrued salaries, commissions, payroll
taxes and fringe benefits, accrued royalties and other accrued liabilities.
NOTE D - Employment Agreements
The Company has entered into employment agreements with three of its employees.
The agreements are each for a three-year period commencing between March and
November 1995 and will renew automatically for succeeding periods of 1 year
unless sooner terminated. In the event the Company terminates without cause the
employment of any of these employees, the employee shall receive an amount equal
to one year's base salary plus accrued benefits and incentive compensation. The
agreements contain a provision which triples certain amounts due in the event of
a hostile takeover. The agreements also contain provisions for the accelerated
vesting of options if certain defined changes to the composition of the Board of
Directors should occur.
Note E - Warrants and Stock Options
1. Warrants - Translator Associates
At December 31, 1994, the Company had outstanding warrants for a total of 5,247
shares of its common stock exclusively to Translator Associates Partners
exercisable at a price of $.32 per share. At the date of grant, the exercise
price approximated or was greater than the fair market value of the shares at
that time. The warrants became exercisable on December 29, 1989, and expire on
December 29, 1999. During 1995, the original warrants representing 5,247 shares
were exercised by Translator Associates. An additional 8,501 warrants were
issued and exercised at $5.25 per share by Translator Associates under certain
preemptive rights attached to the warrants. At December 31, 1995, there were no
outstanding warrants to Translator Associates.
6
<PAGE>
NOTES TO INTERIM FINANCIAL STATEMENTS - (Continued)
2. Warrants - M.H. Meyerson and Company, Inc.
The Company had outstanding warrants to M.H. Meyerson for 50,000 units, each
unit consisting of two shares of common stock and one common stock purchase
option at $8.00 per share. At the date of grant, the exercise price approximated
or was greater than the fair market value of the shares at that time. The
warrants were exercisable at $12.00 per unit for a five-year period, commencing
in June 1994. The warrants and related options were exercised in June 1994 for a
total of $1,000,000.
3. Warrants - Other
The Company had outstanding 575,000 warrants to purchase one share of Common
Stock at $8.00 per share. At the date of grant, the exercise price approximated
or was greater than the fair market value of the shares at that time. The
warrants were redeemable by the Company for $.01 per warrant, upon thirty (30)
days prior written notice, provided the average closing bid price of the Common
Stock for ten (10) consecutive trading days ending not more than fifteen (15)
days prior to the date of the redemption notice was $9.00 or more per share. As
of March 1994, the average closing bid price of the Common Stock had been above
$9.00 for more than ten (10) trading days. Accordingly, in April 1994, the
Company exercised its right to call these warrants. The Company received
$4,597,920 less related expenses of $34,439 from the exercise of 574,740
warrants. The remaining 260 warrants were redeemed at $.01 per warrant.
4. Options - Other
At June 30, 1996, and December 31, 1995, the Company had outstanding options to
purchase 62,500 and 40,000 shares, respectively, of common stock to individuals
at exercise prices ranging from $6.50 to $10.00 per share. At the date of grant,
the exercise price approximated or was greater than the fair market value of the
shares at that time. The options have a term of 5 years.
5. Options - Officers and Directors
At June 30, 1996, and December 31, 1995, the Company had outstanding options to
purchase 409,000 and 416,000 shares, respectively, of common stock to current
and previous officers of the Company at exercise prices ranging from $3.00 to
$11.00 per share. At the date of grant, the exercise price approximated or was
greater than the fair market value of the shares at that time. The options have
a term of 5 years.
At June 30, 1996, and December 31, 1995, the Company had outstanding options to
purchase 40,000 shares of common stock to members of the Board of Directors at
an exercise price of $4.00 per share under the Company's 1992 Directors'
Non-Qualified Stock Option Plan. At the date of grant, the exercise price
approximated or was greater than the fair market value of the shares at that
time. The options expire in December 1997.
At June 30, 1996, and December 31, 1995, the Company had outstanding options to
purchase 140,000 and 40,000 shares, respectively, of common stock to members of
the Board of Directors at exercise prices ranging from $6.00 to $9.18 per share.
At the date of grant, the exercise price approximated or was greater than the
fair market value of the shares at that time. The options have a term of 5
years.
7
<PAGE>
NOTES TO INTERIM FINANCIAL STATEMENTS - (Continued)
6. Options - Employees
At June 30, 1996, and December 31, 1995, the Company had outstanding options to
purchase 264,600 and 270,800 shares of common stock, respectively, to certain
employees of the Company at exercise prices ranging from $6.38 to $14.88 per
share. At the date of grant, the exercise price approximated or was greater than
the fair market value of the shares at that time. The options have a term of 5
years.
NOTE F - Export Sales
The Company sells software abroad through distributors, dealers and mail orders.
During the six months ended June 30, 1996, export sales to France, Germany and
Mexico totaled $2,079,000, $969,000 and $855,000, respectively, or approximately
27%, 12% and 11% of total sales, respectively. During the corresponding period
in 1995, export sales to Canada totaled $951,000, or approximately 10% of total
sales. Total export sales for the six months ended June 30, 1996 and 1995, were
approximately $4,455,000 and $4,100,000, respectively. Substantially all sales
are completed in U.S. Dollars. For those transactions completed in a foreign
currency, the company has taken foreign exchange hedging positions to prevent
any potential foreign currency exchange risk.
NOTE G - Concentration of Credit Risk
Due to the nature of the Company's business, sales to a few customers, primarily
software distributors, have accounted for a significant percentage of the
Company's sales. During the six months ended June 30, 1996, two customers
accounted for 24% of total sales. During the corresponding period in 1995, one
customer accounted for more than 13% of total sales. Accounts receivable at June
30, 1996, and December 31, 1995, include approximately $4,898,000 and
$4,473,000, respectively, in amounts due from five customers.
8
<PAGE>
PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Results of Operations
The Registrant's net income for the three months ended June 30, 1996, was
$101,000 compared to net income of $7,000 for the corresponding period in 1995.
Revenues for the same three month period decreased 15% to $4,112,000 from
$4,816,000. For the six months ended June 30, 1996, the net income was $122,000
compared to net income of $605,000 for the corresponding period in 1995.
Revenues for the same six month period decreased 20% to $7,755,000 from
$9,719,000.
Product sales for the three months ended June 30, 1996, decreased 19% to
$3,784,000 from $4,654,000 for the corresponding period in the prior year. For
the six months ended June 30, 1996, product sales decreased 22% to $7,275,000
from $9,349,000 for the corresponding period in the prior year. The decrease is
primarily due to the Company's increasing efforts to reduce distributor
inventory and align sell-through campaigns with sales of products into the
channels. The Company continues to open new distributor channels, increase
growth in the existing distributor channels and pursue additional OEM
opportunities. The Language Assistant Series Localized version and the Power
Translator and Language Assistant Series versions for Windows in CD-ROM media
have been the primary vehicle for sales to the Company's distributors and have
been well accepted. In addition, the Company introduced Web Translator and
Telegraph in March 1996, and Power Translator 6.0 in June 1996, which have also
been well accepted and contributed to sales during the period ended June 30,
1996.
International sales for the three months ended June 30, 1996, increased 37% to
$2,690,000 from $1,959,000 for the corresponding period in 1995. For the six
months ended June 30, 1996, international sales increased 8% to $4,455,000 from
$4,100,000 for the corresponding period in 1995. The primary exports have been
to Europe, Canada, Mexico and Latin America. International sales have been
attributable to further development of the Company's network of international
distributors, along with additional OEM contracts entered into in Latin America
and Europe.
Translation service revenue for the three months ended June 30, 1996, increased
103% to $329,000 from $162,000 for the corresponding period in the prior year.
For the six months ended June 30, 1996, translation service revenue increased
30% to $479,000 from $370,000 for the corresponding period in 1995. The increase
resulted from increased revenue generating efforts by the department's personnel
who were previously concentrating on the translation of localized versions of
the Company's new products.
Sales returns and allowances decreased to $1,723,000 for the six months ended
June 30, 1996, compared to $1,896,000 for the corresponding period in 1995. The
decrease is attributable to the decreased distribution sales. Distribution
agreements typically allow for the return of certain merchandise to provide for
stock balancing. The Company continuously monitors these programs and makes
appropriate accruals monthly to handle future distribution stock balancing. The
following table shows the gross product sales, returns and net product sales for
the periods indicated.
<TABLE>
<CAPTION>
Six months ended June 30,
1996 1995
------------------------------
<S> <C> <C>
Gross Product Sales $ 8,998,579 $11,244,562
Returns (1,723,182) (1,895,643)
-------------------------------------
Net Product Sales $ 7,275,397 $ 9,348,919
-------------------------------------
</TABLE>
9
<PAGE>
Cost of products sold for the three months ended June 30, 1996, decreased 36% to
$482,000 from $757,000 for the corresponding period in the prior year. For the
six months ended June 30, 1996, cost of products sold decreased 43% to $867,000
from $1,522,000 for the corresponding period in the prior year. The decrease in
cost of products sold was primarily due to decreased product sales along with
decreased cost of certain packaging components and a shift in the mixture of
products sold. This shift was both to the CD-ROM editions of the Power
Translator and the Language Assistant Series product lines and additional OEM
contracts which contribute higher margins along with a decrease in the Language
Computers which carried lower margins. Gross profit margin was 88% for the three
months ended June 30, 1996, compared to 84% for the corresponding period in
1995. For the six months ended June 30, 1996, gross profit margin was 89%
compared to 84% for the corresponding period in 1995. The increase in gross
profit margin was directly attributable to the decrease in cost of products
sold.
Amortization of capitalized software for the three months ended June 30, 1996,
increased 35% to $164,000 from $121,000 for the corresponding period in the
prior year. For the six months ended June 30, 1996, amortization of capitalized
software increased 5% to $254,000 from $243,000 for the corresponding period in
the prior year. The increase is due to the release of new products in 1996 for
which previously capitalized development costs began to be amortized.
Direct labor and fringes, which principally include charges for independent and
in-house translators within the translation services group, increased 204% for
the three months ended June 30, 1996, to $161,000 from $53,000 for the
corresponding period in 1995, as a result of the increased revenues for this
group. For the six months ended June 30, 1996, direct labor and fringes
increased 21% to $259,000 from $213,000 for the corresponding period in 1995.
These expenses decreased from 58% to 54% as a percentage of Translation Services
revenues. This decrease was primarily attributable to fluctuations in the number
and relative size of jobs being performed, as the gross margin varies with the
size of the job due to the fixed administrative tasks which still must be
performed.
Product development expenses, which consist of the current cost of
non-capitalizable development expenses, decreased 7% for the three months ended
June 30, 1996, to $362,000 from $388,000 for the corresponding period in the
prior year. For the six months ended June 30, 1996, product development expenses
decreased less than 1% to $727,000 from $728,000 for the corresponding period in
the prior year. The decrease was a result of the Company's completion of several
new products resulting in reduced costs associated with certain outside
consultants who were assisting in the development of those products.
Selling, marketing and other expenses, which include the costs of selling,
marketing, customer support, shipping and administration for product sales,
decreased 28%, or $803,000, to $2,067,000 for the three months ended June 30,
1996, from $2,870,000 for the corresponding period in 1995. For the six months
ended June 30, 1996, selling, marketing and other expenses decreased 21%, or
$1,082,000, to $3,986,000 from $5,068,000 for the corresponding period in 1995.
This decrease was primarily attributable to the decrease in revenues along with
the Company's increased focus of fiscal resources on more effective promotion
and advertising programs, particularly in print media and retail store
promotions. In addition, the Company was increasing its sales force and
instituting new incentive plans during the corresponding period in 1995 as it
was expanding internationally into Europe, Canada, Mexico and Latin America.
Other costs within this category, such as sales commissions, travel and other
similar costs, are generally related to revenues and decreased accordingly.
10
<PAGE>
General and administrative expenses consist primarily of payroll and related
expenses, occupancy costs, travel and related expenses for senior management,
finance and accounting, legal and administration. For the three months ended
June 30, 1996, these expenses increased 17%, or $115,000, to $773,000 from
$658,000 for the corresponding period in the prior year. For the six months
ended June 30, 1996, these expenses increased 8%, or $117,000, to $1,541,000
from $1,424,000 for the corresponding period in the prior year. The increases
occurred in the areas of payroll, travel, professional fees, business taxes and
depreciation as a result of additional expenses incurred to support the growth
of the Company.
Interest expense was $4,000 for the three months ended June 30, 1996, compared
to interest income of $39,000 for the corresponding period in 1995. For the six
months ended June 30, 1996, interest income decreased to less than $1,000 from
$84,000 for the corresponding period in 1995. This decrease was due to interest
expense incurred as a result of draws on the Company's revolving and equipment
lines of credit. The previous interest income was attributable to short-term
investments made by the Company after receiving the proceeds of the redemption
of the warrants in May 1994.
Income Tax Expense
No provision for income taxes was required due to the Company's net operating
loss carryforwards. Approximately $7,444,000 of net operating loss ("NOL")
carryforwards existed at December 31, 1995. Accordingly, the NOL carryforwards
at June 30, 1996, are sufficient to cover any potential income tax expense
generated as a result of the earnings as reported.
Liquidity and Financial Resources
The Company anticipates that the net proceeds from the exercise of the warrants,
together with cash flow from operations, existing cash balances, and periodic
borrowings under the Company's bank line of credit will be adequate to meet the
Company's expected cash requirements through 1996. In addition, the Company has
received and is considering a number of offers for an equity placement to raise
up to $5,000,000 in additional capital to be used for the funding of marketing
and sales programs directed at the introduction of the Company's new products.
The Board of Directors has instructed the Executive Committee and certain
officers of the Company to investigate these various financing options and make
a recommendation for final selection.
While operating activities may provide cash in certain periods, to the extent
the Company experiences growth in the future, the company anticipates that its
operating and product development activities may use cash and, consequently,
such growth may require the Company to obtain additional sources of financing.
There can be no assurances that unforeseen events may not require more working
capital than the Company currently has at its disposal.
The Company has secured a $2,000,000 revolving short-term line of credit, a
$2,000,000 revolving intermediate line of credit and a $750,000 equipment line
of credit with First Union National Bank. As of June 30, 1996, there was a
$500,000 loan balance outstanding under the revolving intermediate line, which
is being used to bridge cash needs between maturity dates of its short-term
investments. The Company has borrowed $720,000 under the equipment line to pay
off prior financing of equipment purchases and to finance additional equipment
purchases.
Other than as discussed above, the Company is not aware of any known trends, or
uncertainties, that have had or are reasonably likely to have a material effect
on the Company's liquidity, capital resources or operations.
11
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
None.
b. Reports on Form 8-K
None.
12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned thereunto duly authorized.
GLOBALINK, INC.
(Registrant)
Date: August 7, 1996 By: /s/Ronald W. Johnston
-------------- --------------------------
Ronald W. Johnston
Chief Operating Officer
(Chief Accounting Officer)
13
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
June 30, 1996, Financial Statements and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
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0
0
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