U.S. 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, 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 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 6,045,948 shares of common stock outstanding as of June 30, 1997.
<PAGE>
GLOBALINK, INC.
TABLE OF CONTENTS
Part I Financial Information: Page No.
Item 1. Financial Statements
Balance Sheets as of June 30, 1997,
and December 31, 1996 1
Statements of Operations for the Three
Months Ended June 30, 1997, and
June 30, 1996 2
Statements of Operations for the Six
Months Ended June 30, 1997, and
June 30, 1996 3
Statements of Cash Flows for the Six
Months Ended June 30, 1997, and
June 30, 1996 4
Notes to Interim Financial Statements 5
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 8
Part II Other Information:
Item 6. Exhibits and Reports on Form 8-K 11
<PAGE>
<TABLE>
<CAPTION>
Item 1. Financial Statements
GLOBALINK, INC.
BALANCE SHEETS
June 30, December 31,
1997 1996
--------------- ---------------
ASSETS (Unaudited) (Audited)
<S> <C> <C>
Current Assets:
Cash and cash equivalents $ 723,728 $ 1,606,088
Marketable securities 993,120 0
Accounts receivable, net of allowances of
$2,627,227 and $3,004,653 11,123,320 9,040,297
Inventories 707,651 818,294
Prepaid expenses and deposits 382,626 108,745
Other receivables 363,900 126,894
--------------- ---------------
Total Current Assets 14,294,345 11,700,318
Equipment and Furniture, net of accumulated
depreciation of $978,530 and $768,629 735,106 879,753
Capitalized Software, net of accumulated
amortization of $5,008,204 and $4,650,197 693,553 817,988
--------------- ---------------
Total Assets $ 15,723,004 $ 13,398,059
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable - trade $ 2,455,189 $ 2,057,002
Accrued and other liabilities 806,955 763,948
Current portion of notes payable 1,073,000 1,279,000
--------------- ---------------
Total Current Liabilities 4,335,144 4,099,950
Long-Term Notes Payable 164,856 216,356
Deferred Rent 53,932 65,706
Stockholders' Equity:
Preferred stock, $.01 par value, 250,000 shares
authorized, 29,722 and 40,224 shares
issued and outstanding 3,051,271 1,154,658
Common stock, $.01 par value, 20,000,000 shares
authorized, 6,045,948 and 5,341,352 shares
issued and outstanding 60,459 53,413
Additional paid-in capital - common stock 19,151,223 18,702,013
Accumulated deficit (11,093,881) (10,894,037)
--------------- ---------------
Total Stockholders' Equity 11,169,072 9,016,047
--------------- ---------------
Total Liabilities and Stockholders' Equity $ 15,723,004 $ 13,398,059
=============== ===============
<FN>
The accompanying notes are an integral part of these statements.
1
</FN>
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GLOBALINK, INC.
STATEMENTS OF OPERATIONS
Three Months Ended
June 30,
1997 1996
--------------- ---------------
(Unaudited) (Unaudited)
<S> <C> <C>
Product sales (net of returns and allowances) $ 3,012,546 $ 3,783,612
Translation service revenue 448,607 328,799
--------------- ---------------
3,461,153 4,112,411
Costs and Expenses:
Cost of products sold 386,027 481,630
Amortization of capitalized software 183,769 163,609
Direct labor and fringes 152,504 160,802
Development 214,597 362,013
Selling, marketing and other 1,873,824 2,067,022
Administrative 949,984 772,928
--------------- ---------------
3,760,705 4,008,004
--------------- ---------------
Income (Loss) From Operations (299,552) 104,407
Interest expense, net (506) (3,691)
--------------- ---------------
Income (Loss) Before Income Taxes (300,058) 100,716
Income tax expense 0 0
--------------- ---------------
Net Income (Loss) $ (300,058) $ 100,716
=============== ===============
Preferred Stock Dividends (24,132) 0
--------------- ---------------
Net Income (Loss) Applicable to Common Shares $ (324,190) $ 100,716
=============== ===============
Earnings (Loss) Per Common Share $ (0.05) $ 0.02
=============== ===============
Average number of common shares and common share
equivalents outstanding during the period 5,899,485 5,374,812
=============== ===============
<FN>
The accompanying notes are an integral part of these statements.
2
</FN>
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GLOBALINK, INC.
STATEMENTS OF OPERATIONS
Six Months Ended
June 30,
1997 1996
--------------- ---------------
(Unaudited) (Unaudited)
<S> <C> <C>
Product sales (net of returns and allowances) $ 6,568,251 $ 7,275,397
Translation service revenue 599,067 479,333
--------------- ---------------
7,167,318 7,754,730
Costs and Expenses:
Cost of products sold 861,716 866,729
Amortization of capitalized software 358,007 254,142
Direct labor and fringes 222,564 258,581
Development 437,824 727,027
Selling, marketing and other 3,662,607 3,985,981
Administrative 1,811,670 1,540,968
--------------- ---------------
7,354,388 7,633,428
--------------- ---------------
Income (Loss) From Operations (187,070) 121,302
Interest (expense) income, net (12,774) 381
--------------- ---------------
Income (Loss) Before Income Taxes (199,844) 121,683
Income tax expense 0 0
--------------- ---------------
Net Income (Loss) $ (199,844) $ 121,683
=============== ===============
Preferred Stock Dividends (56,543) 0
--------------- ---------------
Net Income (Loss) Applicable to Common Shares $ (256,387) $ 121,683
=============== ===============
Earnings (Loss) Per Common Share $ (0.04) $ 0.02
=============== ===============
Average number of common shares and common share
equivalents outstanding during the period 5,748,496 5,369,812
=============== ===============
<FN>
The accompanying notes are an integral part of these statements.
3
</FN>
<PAGE>
GLOBALINK, INC.
STATEMENTS OF CASH FLOWS
Six Months Ended
June 30,
1997 1996
--------------- ---------------
(Unaudited) (Unaudited)
<S> <C> <C>
Increase (Decrease) in Cash and Cash Equivalents
Cash flows from operating activities
Net income (loss) $ (199,844) $ 121,683
--------------- ---------------
Adjustments to reconcile net income (loss) to net cash
used in operating activities
Amortization of capitalized software 358,007 254,142
Depreciation 209,901 174,342
Change in Assets and Liabilities
Increase in accounts receivable (2,083,023) (1,262,044)
Decrease (increase) in inventories 110,643 (150,143)
Increase in prepaid expenses and deposits (273,881) (179,430)
Decrease (increase) in other receivables (237,006) 15,113
Increase in accounts payable 398,187 53,784
Increase in accrued and other liabilities 43,007 67,739
Decrease in deferred rent (11,774) (7,704)
--------------- ---------------
Total Adjustments (1,485,939) (1,034,201)
--------------- ---------------
Net cash used in operating activities (1,685,783) (912,518)
--------------- ---------------
Cash flows from investing activities
Decrease (increase) in marketable securities (993,120) 582,778
Increase in capitalized software (233,572) (239,924)
Capital expenditures for equipment and furniture (65,254) (124,071)
--------------- ---------------
Net cash provided by (used in) investing activities (1,291,946) 218,783
--------------- ---------------
Cash flows from financing activities
Issuance of preferred stock 2,381,776 0
Issuance of common stock 27,636 132,721
Preferred stock dividends (56,543) 0
Repayment of debt (257,500) (120,000)
--------------- ---------------
Net cash provided by financing activities 2,095,369 12,721
--------------- ---------------
Net decrease in cash and cash equivalents (882,360) (681,014)
Cash and cash equivalents at beginning of period 1,606,088 819,846
--------------- ---------------
Cash and cash equivalents at end of period $ 723,728 $ 138,832
=============== ===============
<FN>
The accompanying notes are an integral part of these statements.
4
</FN>
</TABLE>
<PAGE>
GLOBALINK, INC.
NOTES TO INTERIM FINANCIAL STATEMENTS
JUNE 30, 1997
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,
1997, 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, 1996.
NOTE B -- 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 include 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. 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 18 months to three 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.
5
<PAGE>
NOTES TO INTERIM FINANCIAL STATEMENTS -- (Continued)
7. Accrued and Other Liabilities
Accrued and other liabilities consist of accrued salaries, commissions, payroll
taxes and fringe benefits, accrued royalties and other accrued liabilities.
8. Earnings Per Common Share
Earnings per common share are computed by dividing net income, adjusted for
dividends related to the Company's preferred stock, by the weighted average
number of common shares and common share equivalents, unless antidilutive,
outstanding during the period.
The Financial Accounting Standards Board has issued SFAS No. 128, "Earnings Per
Share," which will be effective for financial statements issued for periods
ending after December 15, 1997. SFAS No. 128 requires that public companies
present basic and diluted earnings per share, which are computed differently
than the currently used primary and fully diluted earnings per share. The most
significant difference in the computation for the Company is the exclusion of
the effect of dilutive stock options from the computation of basic earnings per
share. Basic and diluted earnings per share for the quarters ended June 30, 1997
and 1996, would not have been different than the earnings per common share
reported for those periods.
NOTE C - Related Party Transactions
During 1996, the Company loaned $95,000 to two officers. One officer was loaned
$25,000 at an interest rate of 9-1/4%, which is payable on demand. A second
officer was loaned $70,000 at an interest rate of 8% in two separate promissory
notes, which are both payable on or before December 1, 1997. In January and
April 1997, the second officer was loaned an additional $110,000 and $125,000,
respectively, at an interest rate of prime plus 1%, which is due on demand.
NOTE D - Employment Agreements
The Company has entered into employment agreements with four of its employees.
The agreements are each for a three-year period commencing between March 1995
and June 1996 and will renew automatically for succeeding periods of one 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. During 1996, one agreement was terminated by mutual
agreement between the Company and an employee.
NOTE E - Warrants, Options and Other Stock Issued
1. Stock Options Issued
The Company issues options to employees, members of its Board of Directors and
outside vendors based on merit or in payment of debt. The Company has accounted
for its options under APB Opinion No. 25 and related interpretations. The
options, which have a term of five years when issued, are granted at various
times during the year and vest based upon individual grant specifications. The
exercise price of each option equals or exceeds the market price of the
Company's stock on the date of grant. No compensation cost has been recognized
for employee options.
2. Prepaid Warrants Issued
During 1996, the Company sold three prepaid warrants to a private fund in the
amount of $500,000 each for a total of $1,500,000. Each warrant is convertible
into shares of common stock at the lower of $5.25 per share, or 85% of the
arithmetic average of the prior five days closing prices. As part of the
agreement, the Company also issued 33,613 options at an exercise price of $5.25
per share to the private
6
<PAGE>
NOTES TO INTERIM FINANCIAL STATEMENTS -- (Continued)
fund. The options have a term of four years. In addition, the Company issued
20,000 options at an exercise price of $5.25 per share to both Tanner Unman
Securities, Inc., and Prudential Securities, Inc., both of whom facilitated the
agreement with the private fund. These options also have a term of four years.
As of June 30, 1997, the private fund had converted the prepaid warrants into
526,832 shares of common stock.
3. Preferred Stock Issued
During 1996, the Company's Board of Directors approved a private placement of
Series A-2, 8% convertible, redeemable preferred stock and associated stock
warrants. Dividends on the preferred stock are cumulative and payable annually
in arrears, beginning January 1, 1998, in either cash or additional shares of
preferred stock, at the option of the Company. The dividend is calculated as 8%
of the book value of the stock, based on its original trading price. The
preferred stock is convertible into ten shares of common stock any time after 30
days from the date of issuance. Any unconverted preferred stock remaining at
January 1, 2002, will automatically be converted into ten shares of common stock
per preferred share at that time. Each share of preferred stock was also issued
with one warrant entitling the holder to purchase ten shares of common stock
each at $4.18 per share.
At June 30, 1997, and December 31, 1996, the Company had outstanding 27,220 and
40,224 shares of Series A-2 preferred stock and 44,415 and 40,224 associated
stock warrants, respectively.
In March 1997, the Company's Board of Directors approved a private placement of
Series A-3, convertible, redeemable preferred stock and associated stock
warrants. The Company sold 2,502 shares of Series A-3 preferred stock to a
private fund for a total of $2,502,000. Each share is convertible into shares of
common stock at the lower of $3.44 per share, or 85% of the arithmetic average
of the prior five days closing prices. As part of the agreement, the Company
also issued 85,568 options at an exercise price of $4.30 per share to the
private fund. The options have a term of four years. In addition, the Company
issued 25,020 options at an exercise price of $3.44 per share to Tanner Unman
Securities, Inc., and 20,000 options at an exercise price of $4.30 per share to
Prudential Securities, Inc., both of whom facilitated the agreement with the
private fund. These options also have a term of four years.
NOTE F - Export Sales
The Company sells software abroad through distributors, dealers and mail orders.
During the six months ended June 30, 1997, export sales to Brazil totaled
$1,760,000, or approximately 25% of net sales. During the corresponding period
in 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.
Total export sales for the six months ended June 30, 1997 and 1996, were
approximately $4,007,000 and $4,455,000, 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, 1997, two customers
accounted for 22% of net sales. During the corresponding period in 1996, two
customers accounted for 24% of net sales. Accounts receivable at June 30, 1997,
and December 31, 1996, include approximately $3,737,000 and $3,981,000,
respectively, in amounts due from three customers.
7
<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 loss for the three months ended June 30, 1997, was $300,000
compared to net income of $101,000 for the corresponding period in 1996.
Revenues for the same three month period decreased 16% to $3,461,000 from
$4,112,000. For the six months ended June 30, 1997, the net loss was $200,000
compared to net income of $122,000 for the corresponding period in 1996.
Revenues for the same six month period decreased 8% to $7,167,000 from
$7,755,000.
Product sales for the three months ended June 30, 1997, decreased 20% to
$3,013,000 from $3,784,000 for the corresponding period in the prior year. For
the six months ended June 30, 1997, product sales decreased 10% to $6,568,000
from $7,275,000 for the corresponding period in the prior year. The decrease
resulted primarily from the Company's increased efforts to reduce distributor
inventory in the channels, align sell-through campaigns with sales of products
into the channels, and collect existing receivable balances to provide for more
consistent sales cycles. 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, Power Translator 6.0 in June 1996, Talk to Me in
December 1996, and Power Translator Pro 6.2 in March 1997, all of which have
also been well accepted and contributed to sales during the period ended June
30, 1997.
International sales for the three months ended June 30, 1997, decreased 7% to
$2,122,000 from $2,690,000 for the corresponding period in 1996. For the six
months ended June 30, 1997, international sales decreased 8% to $4,007,000 from
$4,455,000 for the corresponding period in 1996. The primary exports have been
to Europe, Canada and Latin America. International sales have been primarily
attributable to further development of the Company's network of international
distributors, along with additional OEM contracts entered into in Latin America
and Europe. The Company has also shifted its focus in Europe away from the
exclusive use of key major distributors towards smaller, more active, second
tier distributors who are better able to promote and sell its products into the
retail channel of their respective geographical locations.
Translation service revenue for the three months ended June 30, 1997, increased
36% to $449,000 from $329,000 for the corresponding period in the prior year.
For the six months ended June 30, 1997, translation service revenue increased
25% to $599,000 from $479,000 for the corresponding period in 1996.
Sales returns and allowances decreased to $1,417,000 for the six months ended
June 30, 1997, compared to $1,723,000 for the corresponding period in 1996,
primarily due to the decrease in product sales. The Company has continued its
efforts to reduce distributor inventory and align sell-through campaigns with
sales of products into the channels. 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,
1997 1996
--------------------------------------
<S> <C> <C>
Gross Product Sales $ 7,985,000 $ 8,998,000
Returns (1,417,000) (1,723,000)
--------------------------------------
Net Product Sales $ 6,568,000 $ 7,275,000
--------------------------------------
</TABLE>
Cost of products sold for the three months ended June 30, 1997, decreased 20% to
$386,000 from $482,000 for the corresponding period in the prior year. For the
six months ended June 30, 1997, cost of products sold decreased 1% to $862,000
from $867,000 for the corresponding period in the prior year. The decrease in
cost of products sold was primarily due to decreased product sales. This was
partially offset by the increased costs of certain products due to associated
royalties for the licensing of products, such as Talk to Me, and various
features, such as speech recognition and word processing filters in other
8
<PAGE>
products. Gross profit margin was 89% for the three months ended June 30, 1997,
compared to 88% for the corresponding period in 1996. For the six months ended
June 30, 1997, gross profit margin was 88% compared to 89% for the corresponding
period in 1996.
Amortization of capitalized software for the three months ended June 30, 1997,
increased 12% to $184,000 from $164,000 for the corresponding period in the
prior year. For the six months ended June 30, 1997, amortization of capitalized
software increased 41% to $358,000 from $254,000 for the corresponding period in
the prior year. The increase is due to the release of new products in the latter
part of 1996 and in March of 1997 for which previously capitalized software
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, decreased 5% for the
three months ended June 30, 1997, to $153,000 from $161,000 for the
corresponding period in 1996. For the six months ended June 30, 1997, direct
labor and fringes decreased 14% to $223,000 from $259,000 for the corresponding
period in 1996. These expenses decreased from 54% to 37% 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. The Company has experienced an
increase in the number of larger jobs being performed, which carry a higher
gross margin.
Product development expenses, which consist of the current cost of
non-capitalizable development expenses, decreased 41% for the three months ended
June 30, 1997, to $215,000 from $362,000 for the corresponding period in the
prior year. For the six months ended June 30, 1997, product development expenses
decreased 40% to $438,000 from $727,000 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 9%, or $193,000, to $1,874,000 for the three months ended June 30,
1997, from $2,067,000 for the corresponding period in 1996. For the six months
ended June 30, 1997, selling, marketing and other expenses decreased 8%, or
$323,000, to $3,663,000 from $3,986,000 for the corresponding period in 1996.
This decrease was primarily attributable to the Company's increased focus of
fiscal resources on more effective promotion and advertising programs,
particularly in print media and retail store promotions.
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, 1997, these expenses increased 23%, or $177,000, to $950,000 from
$773,000 for the corresponding period in the prior year. For the six months
ended June 30, 1997, these expenses increased 18%, or $271,000, to $1,812,000
from $1,541,000 for the corresponding period in the prior year. The increases
occurred primarily in the areas of payroll, legal fees, insurance costs, rent
and depreciation as a result of additional expenses incurred to support the
anticipated growth of the Company.
Interest expense was $1,000 for the three months ended June 30, 1997, compared
to $4,000 for the corresponding period in 1996. For the six months ended June
30, 1997, interest expense was $13,000 compared to interest income of less than
$1,000 for the corresponding period in 1996. This was due to interest expense
incurred as a result of draws on the Company's revolving and equipment lines of
credit.
Income Tax Expense
No provision for income taxes was required due to the Company's net operating
loss ("NOL") carryforwards. Approximately $9,084,000 of NOL carryforwards
existed at December 31, 1996. Accordingly, the NOL carryforwards at June 30,
1997, are sufficient to cover any potential income tax expense generated as a
result of the earnings as reported.
9
<PAGE>
Liquidity and Financial Resources
The Company anticipates that the net proceeds from the private placements in
October and December 1996 and March 1997, 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 1997.
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, 1997, there was a
$750,000 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 also had $488,000 outstanding under the equipment line
which was used 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.
10
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
None.
b. Reports on Form 8-K
The Company filed a report in order to disclose the
resignation of Michael J. Murphy as a director of the
Registrant on Form 8-K on June 4, 1997.
11
<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: July 30, 1997 By:/s/Mark A. Paiewonsky
------------------------
Mark A. Paiewonsky
Chief Financial & Accounting Officer
12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
June 30, 1997, Financial Statements and is qualified in its entirety
by reference to such financial statements.
</LEGEND>
<S> <C>
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0
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