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, 1996
( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from to
Commission file number 1-13478
GLOBAL TELECOMMUNICATION SOLUTIONS, INC.
(Exact name of small business issuer as specified in its charter)
Delaware 13-3698386
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
40 Elmont Road, Elmont, New York 11003
(Address of principal executive offices)
(516) 326-1940
(Issuer's telephone number)
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: As of November 8, 1996,
there were 5,512,801 shares of common stock outstanding.
Page 1 of 15 Pages
Exhibit Index -- Page 14
1
<PAGE>
GLOBAL TELECOMMUNICATION SOLUTIONS, INC. AND SUBSIDIARIES
<TABLE>
Page
Part I. Financial Information
Item 1. Consolidated Financial Statements
<S> <C>
Consolidated Balance Sheets - September 30, 1996 (unaudited) and December 31, 1995............................. 3
Consolidated Statements of Operations - Nine and three months ended September 30,
1996 and 1995 (unaudited)........................................................................................ 4
Consolidated Statements of Cash Flows - Nine months ended September 30, 1996
and 1995 (unaudited).......................................................................................... 5
Notes to Consolidated Financial Statements.................................................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.................................................................................. 9
Part II Other Information
Item 1-6 Other Information.......................................................................... 12
Signatures........................................................................................... 13
</TABLE>
2
<PAGE>
GLOBAL TELECOMMUNICATION SOLUTIONS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
Assets September 30, December 31,
1996 1995
------------- -----------
(unaudited)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 396,073 $ 928,516
Accounts receivable, less allowance for doubtful
accounts of $284,000 and $165,000 in 1996 and 1995 4,121,771 3,508,250
Inventory 300,606 268,874
Deferred costs 1,063,634 1,235,972
Convertible notes receivable 325,000 325,000
Note receivable -- 237,000
Prepaid royalties and patent license fees 151,580 292,911
Prepaid expenses and other current assets 270,654 155,008
--------- ----------
Total current assets 6,629,318 6,951,531
--------- ----------
Goodwill, net 18,265,198 --
Fixed assets, net 1,929,790 428,381
Deferred financing fees, net 60,303 --
Other assets 285,826 102,052
---------- ----------
Total assets $27,170,435 $7,481,964
=========== ==========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable 3,714,365 1,819,813
Accrued liabilities 845,045 491,488
Deferred revenue 5,925,633 3,513,909
Sales and excise tax liability 1,246,964 --
Amounts payable to related party 1,354,630 --
Capital lease obligation, current 53,221 --
---------- ----------
Total current liabilities 13,139,858 5,825,210
---------- ----------
Capital lease obligation, long-term 52,139 --
Convertible notes payable 2,800,000 --
---------- ----------
Total liabilities 15,991,997 5,825,210
========== ==========
Stockholders' equity:
Preferred stock, $.01 par value, authorized
1,000,000 shares; none issued -- --
Common stock, $.01 par value, authorized
15,000,000 shares; issued and outstanding
5,512,801 and 3,141,678 shares, respectively 55,128 31,417
Additional paid-in capital 21,375,835 7,308,784
Deferred compensation (234,498) (197,165)
Accumulated deficit (9,910,074) (5,486,282)
Common stock subscription receivable (100,000) --
Cumulative foreign currency translation adjustment (7,953) --
----------- -----------
Total stockholders' equity 11,178,438 1,656,754
----------- -----------
Total liabilities and stockholders equity $27,170,435 $ 7,481,964
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
GLOBAL TELECOMMUNICATION SOLUTIONS, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended Three months ended
September 30, September 30,
1996 1995 1996 1995
------------------------------ ----------------------------
<S> <C> <C> <C> <C>
Net sales $ 8,412,887 $2,261,948 $3,816,531 $996,602
Cost of sales 5,973,124 2,131,868 2,586,076 875,184
------------ ------------ ------------ ----------
Gross profit 2,439,763 130,080 1,230,455 121,418
------------ ------------ ------------ ----------
Selling and marketing expenses 2,016,561 805,208 724,185 305,830
General and administrative expenses 4,728,618 1,521,531 1,865,583 555,300
------------ ------------ ------------ ----------
Operating expenses 6,745,179 2,326,739 2,589,768 861,130
---------- ------------ ------------ ----------
Operating loss (4,305,416) (2,196,659) (1,359,313) (739,712)
Investment income 59,971 160,946 18,817 47,902
Interest expense (188,147) -- (100,639) --
Other 9,800 525 4,200 4,295
-------------- -------------- ------------- -----------
Loss before income taxes (4,423,792) (2,035,188) (1,436,935) (687,515)
Income tax expense -- -- -- --
---------------- ---------------- ---------------- -----------
Net loss $(4,423,792) $(2,035,188) $(1,436,935) $(687,515)
=========== =========== =========== =========
Net loss per share $ (.91) $ (.65) $ (.26) $ (.22)
============== ============== ============== ============
Weighted average shares of common stock 4,844,202 3,141,678 5,512,801 3,141,678
=========== =========== ============ ==========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
GLOBAL TELECOMMUNICATION SOLUTIONS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net loss $(4,423,792) $(2,035,188)
Adjustments to reconcile net loss to net cash provided by or used in operating
activities:
Depreciation and amortization 965,304 27,432
Deferred compensation 362,667 58,334
Amortization of deferred financing costs 11,891 --
Changes in operating assets and liabilities, net of effects of acquisition:
(Increase) decrease in accounts receivable 342,913 (538,827)
(Increase) decrease in inventory 65,268 (110,483)
(Increase) decrease in deferred costs 172,338 (348,454)
(Increase) decrease in prepaid royalties and patent license fees 141,331 (227,294)
(Increase) decrease in prepaid expenses and other current assets 39,649 (66,066)
Increase in other assets (53,170) (83,527)
Increase (decrease) in accounts payable (411,026) 695,897
Increase (decrease) in accrued liabilities (180,174) 96,656
Increase in sales and excise taxes payable 520,333 --
Increase in deferred revenue 413,578 281,840
------------ ------------
Net cash used in operating activities (2,032,890) (2,249,680)
------------ ------------
Cash flows from investing activities:
Purchases of fixed assets (252,919) (285,655)
Convertible notes receivable -- (325,000)
Cash acquired in excess of cash payment for acquisition 54,190 --
------------- -----------
Net cash used in investing activities (198,729) (610,655)
------------ ------------
Cash flows from financing activities:
Net proceeds from issuance of common stock and warrants 2,651,274 --
Payment of notes payable to related party (650,000) --
Increase in notes receivable from Global Link prior to merger (250,655) --
Payments on capital lease obligations (43,490) --
------------- ----------
Net cash provided by financing activities 1,707,129 --
------------ ----------
Effects of exchange rate changes on cash (7,953) --
-------------- ----------
Net decrease in cash (532,443) (2,860,335)
Cash and cash equivalents at beginning of period 928,516 5,135,260
------------- -----------
Cash and cash equivalents at end of period $ 396,073 $2,274,925
============ ==========
Supplemental disclosures:
Interest paid during the period $ 24, 225 $ --
============= =========
Income taxes paid during the period $ -- $ --
================ =========
Non-cash investing and financing activities:
Issuance of common stock in connection with acquisition $11,039,488 $ --
============ ========
Deferred compensation arising from grant of warrants $ 400,000 $ --
============= ========
Capital lease obligations incurred to acquire fixed assets $ 148,850 $ --
============= ========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
GLOBAL TELECOMMUNICATION SOLUTIONS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
September 30, 1996
(1) Business and Basis of Presentation
Business
Global Telecommunication Solutions, Inc. (the "Company") was
incorporated on December 23, 1992 and is engaged in the designing,
developing and marketing of prepaid phone cards featuring licensed,
promotional and standard graphics. The Company also provides card users
access to long distance service through its switching facilities and
long distance network arrangements.
Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
for interim financial information and with the instructions to Form
10-QSB and Item 310(b) of Regulation S-B. 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 of normal
recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the nine and three months ended
September 30, 1996 are not necessarily indicative of the results that
may be expected for the year ending December 31, 1996.
(2) Loss Per Share
Weighted average shares of common stock for the nine and three months
ended September 30, 1996 and 1995 does not include common stock
equivalents as their effect would be anti-dilutive.
(3) Reclassifications
Certain reclassifications have been made to the 1995 consolidated
financial statements to conform to the 1996 presentation.
(4) Acquisition
On February 29, 1996, pursuant to an Agreement and Plan of Merger dated
January 18, 1996, the Company, through a wholly-owned subsidiary,
acquired all the issued and outstanding common stock of Global Link
Teleco Corp. ("Global Link"), which designs, develops and markets
prepaid phone cards through retail telephone calling centers as well as
through distribution arrangements. The acquisition was accounted for as
a purchase. Accordingly, the acquired assets and liabilities were
recorded at their estimated fair values at the date of acquisition and
the operating results of Global Link were included in the accompanying
consolidated statement of operations from the acquisition date.
In connection with the merger, the Company issued 1,718,318 shares of
common stock in exchange for all of the issued and outstanding common
stock of Global Link. In addition, the Company issued 52,805 shares of
common stock to a creditor of Global Link. The total cost of the
acquisition was approximately $11,500,000 including direct transaction
costs of approximately $450,000. In addition, Global Link has
$2,800,000 aggregate principal amount of 6% Debentures outstanding,
which principal amounts are due and payable on June 23, 1999 for which
the Company has guaranteed the payment.
6
<PAGE>
The acquisition resulted in goodwill of $18,965,860, based on
an allocation of purchase price, calculated as follows:
Fair market value of common stock issued $11,039,488
Fair value of liabilities assumed 10,718,587
Fair value of assets acquired (3,242,215)
Acquisition related costs 450,000
----------
Goodwill $18,965,860
===========
The following unaudited combined pro forma information
reflects the results of operations assuming the acquisition of
Global Link had been made at the beginning of the respective
periods.
Nine Months Ended
September 30,
1996 1995
Net sales $ 9,776,000 $ 8,808,000
Net loss (5,243,000) (5,109,000)
Net loss per share $ (1.00) $ (1.04)
Pro forma adjustments include recording amortization expense
on goodwill (using the straight-line method over 15 years),
the elimination of amortization of the predecessor's goodwill
and the elimination of interest expense on debt of Global Link
repaid in connection with the acquisition.
The pro forma results of operations are not necessarily
indicative of the actual results of operations that would have
occurred had the purchase been made at the beginning of the
respective periods, or of results which may occur in the
future.
(5) Private Placement
In May 1996, the Company sold 600,000 shares of the Company's common
stock and 1,200,000 warrants through a private placement for an
aggregate of $3,000,000. Each warrant entitles the holder to purchase
one share of common stock. The warrants are identical to the public
warrants, however, the Company has agreed that, notwithstanding the
terms of the public warrants, the warrants issued pursuant to the
private placement are not redeemable by the Company until registered
for sale and transferred by the original purchasers. In connection with
this private placement, the Company issued a warrant to Whale
Securities Co., L.P., the placement agent ("Whale"), to purchase,
through May 10, 2001, up to 60,000 shares of common stock and 120,000
warrants for $5.00 per each share of common stock and two warrants.
(6) Warrants
In January 1996, the Company issued five-year warrants to Whale and/or
its designees to purchase an aggregate of 200,000 shares of common
stock at $5.125 per share in consideration for consulting services. The
estimated fair market value of these warrants of $400,000 was recorded
as deferred compensation and the Company has recorded an expense of
$266,664 to date.
7
<PAGE>
(7) Amounts Payable to Related Parties
Simultaneously with the execution of the merger agreement, Global Link
executed an agreement with Peoples Telephone Company, Inc. ("Peoples")
pursuant to which Peoples agreed to accept $1,050,000 ($550,000 of
which was paid on the date of the merger with the balance of $500,000
payable on June 28, 1996) to settle certain obligations and
indebtedness to Peoples. In August 1996, the Company and Peoples
executed an agreement (the "New Payment Agreement") whereby Peoples
agreed to restructure the payment terms of the remaining $500,000 as
follows: $100,000 which was paid upon execution of the New Payment
Agreement and a monthly payment of $33,333 beginning in November 1996
until all amounts including accrued interest at 8% per annum are paid
in full. In addition, the agreement provides for certain prepayments in
the event the Company obtains additional financing or the occurrence of
any change of control.
(8) Tax Obligations and Compliance
At September 30, 1996, the Company is delinquent in remitting certain
amounts previously collected for sales, use and excise taxes to various
taxing jurisdictions. Further, the Company has not filed certain sales
and use, excise, income or franchise tax returns in certain
jurisdictions in which it does business. Management is in the process
of reviewing the Company's tax collection, remittance and compliance
policies and procedures and has recorded a reserve for estimated tax
obligations and related compliance issues. Depending on the ultimate
resolution of these matters, it is reasonably possible that the amount
of this reserve could require adjustment in the near term.
(9) Liquidity
The Company has substantial capital requirements resulting from the
funding of losses from operations, the need to finance continued growth
and certain payment obligations. The Company anticipates that cash
flows will improve as a result of the increase in revenues and
improvement in margins are anticipated. The Company anticipates, based
on its current plans and assumptions relating to its operations, that
its cash balances, together with projected cash flows from operations
will be sufficient to satisfy the Company's contemplated cash
requirements for the next 12 months, although there can be no assurance
that this will be the case. In the event that the Company's plans
change, its assumptions change or prove to be inaccurate or cash flows
otherwise prove to be insufficient to fund operations, the Company
would be required to seek additional financing or curtail its proposed
expansion and possibly its operations.
(10) Convertible Notes Receivable
In March and May 1995, the Company advanced $200,000 and $125,000,
respectively, to Fone America, Inc. ("Fone") evidenced by convertible
promissory notes bearing interest at 10% per annum. The principal and
accrued interest thereon was due and payable on June 23, 1995 and July
14, 1995, respectively. Accrued interest at September 30, 1996 amounted
to approximately $69,000. The Company has the option of converting any
part of the principal into shares of Fone America's common stock on the
basis of two shares for each $1.00 of principal. Fone has also agreed
that, at the Company's option, Fone will repay the notes by allowing
the Company to utilize services which Fone will provide. Such services
consist of access to Fone's switching platforms, the utilization of
Fone's network personnel and the sale and service of phone card vending
machines. Management anticipates that the Company will utilize
approximately $100,000 of these services from Fone in the fourth
quarter of 1996 and the remaining balance of the principal and interest
owed under the notes during the first half of 1997. Based upon a review
of Fone's financial statements, discussions with Fone and knowledge of
the industry, management of the Company believes that Fone will
continue to have the wherewithal to provide such services to the
Company during such period.
8
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations
The Company generates revenues from the sales of prepaid phone cards.
To date, the Company's expenses have exceeded revenues, resulting in losses of
$4,423,792 and $2,035,188, respectively, for the nine months ended September 30,
1996 and September 30, 1995.
The Company's primary cost of sales are incurred in connection with the
design and manufacture of its prepaid phone cards, royalties in connection with
the various license agreements, switch administration fees and long distance
carriers fees (which long distance costs are generally not billed or incurred
until such time as long distance service is accessed).
The Company records deferred revenue at the time it sells its prepaid
phone cards and recognizes revenue at the time the consumer accesses long
distance service. In connection with sales of cards featuring licensed graphics,
the Company generally charges a premium per minute charge for long distance
services. The premium, if any, is recognized at the time of sale, while the
remaining revenue is deferred and recognized when long distance service is
accessed. The Company recognizes deferred revenue as revenue relating to unused
calling time remaining upon each card's expiration (generally 12 to 18 months
after issuance).
Nine months ended September 30, 1996 Compared to Nine months ended
September 30, 1995
Net sales for the nine months ended September 30, 1996 were $8,412,887,
compared to $2,261,948 for the nine months ended September 30, 1995, an increase
of $6,150,939 or 271.9%. Approximately $5,981,000 or 264.4% of the increase is
attributable to the acquisition of Global Link (see note 4). Revenues from the
sale of cards featuring licensed graphics decreased by approximately $692,000 or
30.6% primarily as a result of a decrease in revenue recognized upon the
expiration of certain cards and a decrease of licensed product offerings in
1996. Furthermore, revenue derived from the Company's standard cards decreased
by approximately $144,000 or 6.4%. Revenues from the sale of promotional cards
increased by approximately $186,000 or 8.2%. Sales of cards to other carriers
increased by approximately $751,000 or 33.2%. The remaining increase in revenues
of approximately $69,000 or 3.1% was due to an increase in the sale of non-card
products and services. Gross margins increased to 29% of net sales for the nine
months ended September 30, 1996, compared to 5.8% of net sales for the
comparable period in the prior year. The increase in the gross margin is
partially a result of the acquisition of Global Link whose margins for the
period approximated 31.3%. The remaining net increase in the gross margin is a
result of a decrease in transmission costs as a percentage of sales resulting
primarily from the recognition of revenue upon the expiration of certain cards
which had no associated transmission costs, offset by an increase in sales of
cards with lower margins and an increase in production costs as a percentage of
sales primarily due to the write off of printing and production costs related to
unsold expired prepaid phone cards.
Selling and marketing expenses were $2,016,561 for the nine months
ended September 30, 1996, compared to $805,208 for the nine months ended
September 30, 1995, an increase of $1,211,353 or 150.4%. Approximately
$1,051,000 or 130.5% of this increase is attributable to the Global Link
acquisition. The remaining increase consists of approximately $162,000 or 20.1%
of increased salaries due to the hiring of additional creative, marketing and
sales personnel, an increase of approximately $36,000 or 4.5% in travel expenses
related to the additional personnel, and an increase of approximately $78,000 or
9.7% in commissions paid to independent sales agents, offset by a decrease of
approximately $110,000 or 13.7% in costs of the advertisement and promotion of
the Company's products, including attendance at trade shows and a decrease of
approximately $6,000 or 0.7% in other selling and marketing expenses.
General and administrative expenses increased to $4,728,618 for the
nine months ended September 30, 1996, compared to $1,521,531 for the nine months
ended September 30,1995, an
9
<PAGE>
increase of $3,207,087 or 210.8%. Approximately $2,992,000 or 196.6% of the
increase is attributable to the Global Link acquisition. The remaining increase
is due to approximately $304,000 or 20% of additional amortization of deferred
compensation costs with respect to warrants issued to outside consultants, an
increase of approximately $70,000 or 4.6% in costs resulting from the relocation
of the Company's headquarters to a larger facility and the rent expense related
to new sales offices, an increase of approximately $37,000 or 2.4% in
depreciation expense due to the acquisition of additional switching equipment,
and an increase of approximately $59,000 or 3.9% in insurance expense. These
increases were offset by a decrease of approximately $62,000 or 4.1% in
salaries, a decrease of approximately $33,000 or 2.2% in travel expenses and a
decrease in professional fees of approximately $49,000 or 3.2. Furthermore,
costs associated with the utilization of outside consultants and temporary
personnel decreased $23,000 or 1.5% and other general and administrative costs
decreased approximately $88,000 or 5.8% in the aggregate.
Investment and interest income amounted to $59,971 for the nine months
ended September 30,1996 as compared to $160,946 for the nine months ended
September 30, 1995. The decrease of $100,975 is a result of lower balances of
cash and cash equivalents on hand offset by an increase as a result of
convertible notes receivable acquired in March and May 1995.
Interest expense for nine months ended September 30,1996 increased to
$188,147 from $0 for the nine months ended September 30, 1995, as a result of
interest on the $2,800,000 convertible notes payable and amounts due to Peoples
Telephone Company, Inc. (Peoples) acquired from Global Link and interest expense
on capital lease obligations recorded in 1996.
For the foregoing reasons, the Company incurred a net loss of
$4,423,792 for the nine months ended September 30,1996 compared to a net loss of
$2,035,188 for the nine months ended September 30,1995.
Liquidity and Capital Resources
At September 30, 1996 the Company had cash and cash equivalents of $
396,073 and a working capital deficit of $6,510,540 compared to 928,516 and
$1,126,321, respectively, at December 31, 1995. This decrease in working capital
was primarily a result of the assumption by the Company of certain obligations
and other debt of Global Link in connection with the merger. Refer to Note 10
for a discussion on the collection of convertible notes receivable.
Net cash used in operating activities for the nine months ended
September 30, 1996 of $2,032,890 was primarily due to the Company's net loss and
a decrease in accounts payable and accrued liabilities, offset by non-cash
items, including depreciation and amortization, increases in sales and excise
taxes payable and deferred revenue and a decrease in accounts receivable.
Accounts receivable are generated pursuant to sales of prepaid phone cards
primarily to distributors, dealers and corporations. Deferred revenue represents
sales of prepaid phone cards for which revenue has not yet been recognized, but
will typically be recognized in future periods as customers access long distance
services or at the expiration dates of the phone cards. Net cash used in
investing activities for the nine months ended September 30, 1996 consisted of
$252,919 of capital expenditures, net of $54,190 in cash acquired in excess of
cash payment for the Global Link acquisition. Net cash provided by financing
activities consisted of $2,651,274 of net proceeds from the issuance of common
stock and warrants pursuant to a private placement completed in May 1996, a
payment to Peoples of $650,000, an increase in notes receivable of $250,655 from
Global Link prior to the merger and payments on capital lease obligations of
$43,490. The Company does not have any material commitments for capital
expenditures.
The Company has substantial capital requirements resulting from the
funding of losses from operations, the need to finance continued growth and
certain payment obligations. The Company anticipates that cash flows will
improve as a result of the increase in revenues and improvement in margins are
anticipated. The Company anticipates, based on its current plans and assumptions
relating to its operations, that its cash balances, together with projected cash
flows from operations will be
10
<PAGE>
sufficient to satisfy the Company's contemplated cash requirements for the next
12 months, although there can be no assurance that this will be the case. In the
event that the Company's plans change, its assumptions change or prove to be
inaccurate or cash flows otherwise prove to be insufficient to fund operations,
the Company would be required to seek additional financing or curtail its
proposed expansion and possibly its operations.
Forward-Looking Statements
When used in this Form 10-QSB and in future filings by the Company with
the Securities and Exhange Commission, in the Company's press releases and in
oral statements made with the approval of an authorized executive officer of the
Company, the words or phrases "will likely result," and "the Company expects,"
"will continue," "is anticipated," "estimated," "project," or "outlook" or
similar expressions (including confirmations by an authorized executive officer
of the Company of any such expressions made by a third party with respect to the
Company) are intended to identify "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. The Company
wishes to caution readers not to place undue reliance on any such
forward-looking statements, each of which speak only as of the date made. Such
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from historical earnings and those presently
anticipated or projected. Such risks and other aspects of the Company's business
and operations are described in the Company's Registration Statement on Form S-3
(No. 333-6925). The Company has no obligation to publicly release the result of
any revisions which may be made to any forward-looking statements to reflect
anticipated or unanticipated events or circumstances occurring after the date of
such statements.
11
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
A. Exhibits
27 Financial Data Schedule (9/30/96)
B. Current Reports on Form 8-K
Current Report on Form 8-K for event dated March 1, 1996, filed with
the Commission on March 15, 1996, and amendments thereto on Form 8-K/A,
filed with the Commission on May 10, 1996 and September 6, 1996,
respectively.
12
<PAGE>
SIGNATURES
In accordance with requirements of the Exchange Act, the Registrant
caused this Report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Dated: November 18,1996
GLOBAL TELECOMMUNICATION SOLUTIONS, INC.
By: /s/ Maria Bruzzese
Maria Bruzzese, Chief Financial Officer
13
<PAGE>
EXHIBIT INDEX
Exhibit Number Description Page
27 Financial Data Schedule 15
14
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-Mos
<FISCAL-YEAR-END> Dec-31-1996
<PERIOD-START> Jan-01-1996
<PERIOD-END> Sep-30-1996
<CASH> 396,073
<SECURITIES> 0
<RECEIVABLES> 4,405,771
<ALLOWANCES> (284,000)
<INVENTORY> 300,606
<CURRENT-ASSETS> 1,810,868
<PP&E> 2,481,659
<DEPRECIATION> (551,869)
<TOTAL-ASSETS> 27,170,435
<CURRENT-LIABILITIES> 13,139,858
<BONDS> 0
<COMMON> 55,128
0
0
<OTHER-SE> 11,123,310
<TOTAL-LIABILITY-AND-EQUITY> 27,170,435
<SALES> 3,816,531
<TOTAL-REVENUES> 3,816,531
<CGS> (2,586,076)
<TOTAL-COSTS> (2,586,076)
<OTHER-EXPENSES> (2,589,768)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> (100,639)
<INCOME-PRETAX> (1,436,935)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,436,935)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,436,935)
<EPS-PRIMARY> (.26)
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</TABLE>
