<PAGE>2
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES AND EXCHANGE ACT OF 1934
For the Quarter ended July 31, 1998
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period to
Commission file number - 0-25614
GLOBUS CELLULAR, LTD.
(formerly Globus Cellular & User Protection, Ltd.)
(Exact name of Small Business Issuer in its charter)
NEVADA 88-0228274
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1980 Windsor Road
Kelowna, British Columbia, Canada V1Y 4R5
(Address of principal executive offices) (Zip Code)
Registrant's Telephone number, including area code: (604) 860-3130
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 and Exchange
Act of 1934 during the preceding twelve months (or such shorter period that
the Registrant was required to file such reports), and (2) has been subject
to
file such filing requirements for the past thirty days.
Yes x No
------- --------
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the close of the period covered by this report:
7,289,866 Shares of Common Stock ($.001 par value)
(Title of Class)
Transitional Small Business Disclosure Format (check one):
Yes No x
--------- --------
<PAGE> 3
GLOBUS CELLULAR, LTD.
PART I: Financial Information
ITEM 1 - Financial statements
ITEM 2 - Management's' discussion and analysis of
financial condition and results of operations
PART II: Other Information
ITEM 6 - Exhibits and Reports on Form 8-K
<PAGE> 4
PART I
Item 1. Financial Statements:
Globus Cellular Ltd.
Balance Sheet
July 31, 1998
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets:
Cash $ 112,366
Accounts receivable, trade 3,652
Accounts receivable, other 6,811
Inventories 60,355
Prepaid expenses 31,426
Prepaid expenses - related party -
-----------
Total current assets 214,611
Property and equipment, at cost, less
accumulated depreciation of $50,093 52,121
Other assets 20,104
-----------
$ 286,836
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 10,267
Loans from stockholders 155,103
-----------
Total current liabilities 165,370
Stockholders' equity:
Preferred stock, $.001 par value,
20,000,000 shares authorized, -
Common stock, $.001 par value,
100,000,000 shares authorized,
7,289,866 shares issued and
outstanding 7,290
Additional paid-in capital 3,419,382
Stock subscriptions 42,534
Foreign exchange adjustment (30,099)
(Deficit) (3,317,641)
-----------
121,466
-----------
$ 286,836
===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>5
Globus Cellular Ltd.
Statements of Operations
Three Months and Nine Months Ended July 31, 1998 and 1997
<TABLE>
<CAPTION>
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
July 31, July 31, July 31, July 31,
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Revenue:
Sales $ 15,874 $ 14,323 $ 50,302 $ 74,177
Other income 1,309 9,360 12,148 28,603
----------- ----------- ----------- -----------
17,182 23,683 62,449 102,780
Other costs and expenses:
Cost of sales 3,047 5,392 24,412 46,556
General and administrative 126,950 218,476 537,343 663,361
Research and development 19,895 8,984 46,938 28,170
----------- ----------- ----------- -----------
149,892 232,852 608,693 738,087
----------- ----------- ----------- -----------
Income (loss) from operations (132,710) (209,169) (546,244) (635,307)
Other income and (expense):
Interest expense (327) (190) (8,677) (2,439)
----------- ----------- ----------- -----------
(327) (190) (8,677) (2,439)
----------- ----------- ----------- -----------
Income (loss) before income taxes (133,037) (209,359) (554,921) (637,746)
Provision for income taxes
- -
----------- ----------- ----------- -----------
Net income (loss) $ (133,037) $ (209,359) $ (554,921) $ (637,746)
=========== =========== =========== ===========
Basic (loss) per share:
Net income (loss) $ (0.02) (0.05) $ (0.08) (0.16)
=========== =========== =========== ===========
Weighted average shares
outstanding 7,289,866 4,223,830 7,212,828 4,074,391
=========== =========== =========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>6
Globus Cellular Ltd.
Statements of Cash Flows
Nine Months Ended July 31, 1998
<TABLE>
<CAPTION>
Nine Months Nine Months
Ended Ended
July 31, July 31,
1998 1997
-------- --------
<S> <C> <C>
Net cash provided by (used in)
operating activities $ (245,017) $ (98,267)
---------- ----------
Cash flows from investing activities:
Purchase of equipment (38,462) (18,465)
---------- ---------
Net cash provided by (used in)
investing activities (38,462) (18,465)
Cash flows from financing activities:
Common stock sold for cash 59,199 48,073
Increase on common stock subscribed 42,534 -
Increase in officer loans 47,309
Repayment of officer loans (55,021) -
--------- ---------
Net cash provided by (used in)
financing activities 46,712 95,382
--------- ---------
Increase (decrease) in cash (236,767) (21,350)
Cash and cash equivalents,
beginning of period 349,133 40,009
-------- ---------
Cash and cash equivalents,
end of period $ 112,366 $ 18,659
========= =========
</TABLE>
See accompanying notes to financial statements.
<PAGE>7
Globus Cellular & User Protection, Ltd.
Notes to Financial Statements
Basis of presentation
The accompanying condensed unaudited financial statements have
been prepared in accordance with generally accepted accounting
principles for interim financial information 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 of normal
recurring adjustments) considered necessary for a fair
presentation have been included.
The results of operations for the periods presented are not
necessarily indicative of the results to be expected for the full
year. The accompanying financial statements should be read in
conjunction with the Company's form 10-KSB filed for the year
ended October 31, 1997.
Stockholders' equity
Basic (loss) per share was computed using the weighted average
number of common shares outstanding.
During the period ended April 30, 1998 the Company issued 137,053
shares of its common stock pursuant to a registration statement
on Form S-8. The shares issued were valued at $95,193 based on
quoted market prices at the date the shares were authorized for
issuance. Additionally during the period, the Company issued
69,500 shares of its restricted common stock for services
provided to the Company valued at $32,315, completed the private
sale of 72,500 shares of restricted common stock for net cash
proceeds of $50,949, and issued 50,000 shares of restricted
common stock pursuant to the exercise of stock options for which
the Company received $8,250 in cash Additionally, during the
quarter ended July 31, 1998, the Company received $42,534 in cash
for subscriptions to 140,039 shares of common stock which will be
issued in the fourth quarter.
During the nine months ended July 31, 1998, the Company continued
to amortize unpaid stock subscriptions for shares issued in prior
periods for future services. An aggregate of $72,690 of
consulting services and directors compensation is included in
general and administrative expense for period ended July 31,
1998.
<PAGE> 8
GLOBUS CELLULAR, LTD.
PART I (cont.)
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations:
Capital Resources and Liquidity.
During the period ended July 31, 1998, the Company issued 137,053 shares of
its common stock pursuant to a registration statement of Form S-8. The
shares issued were valued at $95,193 based on quoted market prices at the
date the shares were authorized for issuance. Additionally during the
period, the Company issued 69,500 shares of its restricted common stock for
services provided to the Company valued at $32,315, completed the private
sale of 72,500 shares of restricted common stock for net cash proceeds of
$50,949, and issued 50,000 shares of restricted common stock pursuant to the
exercise of stock options for which the Company received $8,250 in cash.
Additionally, during the quarter ended July 31, 1998, the Company received
$42,534 in cash for subscriptions to 140,039 shares of common stock which
will be issued in the fourth quarter.
For the nine months ended July 31, 1998, the Company repaid $55,021 in
officer loans. Officer loans increased by $47,309 for the nine months ended
July 31, 1998. As a result, net cash provided by financing activities for
the nine months ended July 31, 1998 was $95,382.
During the period ended July 31, 1998, the Company continued to amortize
unpaid stock subscriptions for shares issued in prior periods for future
services. An aggregate of $72,690 of consulting services and directors
compensation is included in general and administrative expense for the
period.
During the nine months ended July 31, 1997, two of the Company's officers
agreed to forego cash payments for salary and technology lease payments
accrued during the quarter in exchange for common stock of the Company. The
restricted shares to be issued to the officers in lieu of cash payments of
$101,250 were valued at $.22 per share, an amount equal to one-half of the
bid price for the Company's common stock on the date the transaction was
approved by the Company's board of directors. Additionally one of the
officers received 110,720 shares of restricted common stock for services
rendered during the second quarter of the current fiscal year and for
payment of other amounts due him. The aggregate value of the stock issued
was $23,930.
During the nine months ended July 31, 1997, the Company sold its interest the
building used for its office and warehouse activities to its president. The
Company recorded a gain from the transaction of $5,604. Corresponding
reductions of mortgage indebtedness of $60,960 and amounts due its president
of $33,205 were recorded in connection with the transaction. The Company
plans to lease the facility from its president at market rates.
During the nine months ended July 31, 1997, the Company issued 32,049 shares
of its restricted common stock pursuant to the exercise of warrants for cash
aggregating $48,073. Additionally, the Company received additional
shareholder loans ($47,309) resulting in net cash provided by financing
activities of $95,382 for the nine months ended July 31, 1997.
The Company acquired plant and equipment valued at $38,462 for the nine
months ended July 31, 1998. This resulted in net cash used in investing
activities of $38,462. The Company does not anticipate purchasing any
additional plant or significant equipment and does not expect any significant
changes in the number of its employees, nor does Company expect to perform
any material product research and development during the next twelve (12)
months.
The Company acquired plant and equipment valued at $18,465 for the nine
months ended July 31, 1997. This resulted in net cash used in investing
activities of $18,465.
Long-term liquidity will be dependent on anticipated future revenue.
Additionally, the Company shall pursue a registration of its Common Shares
and Class "A" Warrants and will, in part, rely on the subsequent exercise of
said Warrants. Any additional funds raised and any revenues received from
sale of Company's products will enable Company to expand its plan of
operations by increasing its production and expanding its product line.
The Company is not presently aware of any known trends, events or
uncertainties that may have a material impact on net sales, revenues or
income from its operations. However, Company's product is new in the market
and there are not assurances it can be marketed successfully and/or
profitably.
<PAGE>9
Results of Operations.
The Company experienced a net loss from operating activities of $637,746 for
the nine months ended July 31, 1998. Total Sales were $50,302 for the nine
months ended July 31, 1998 and decreased from $74,177 for the nine months
ended July 31, 1997. Cost of Sales, however, were $24,412 and $46,566 for
the same periods, respectively. No CUP products were sold during the
periods presented. Substantial selling, general and administrative
expenses of $537,343 were incurred for the nine months ended July 31, 1998
due to the Company's increased operations compared to $663,671 for the same
period in 1997. Selling, general and administrative expenses consisted
primarily of accounting of $16,733, consulting expense of $194,111, Freight
of $4,170, legal fees of $26,892, office expense of $10,736, promotion
expense of $28,161, rent expense of $8,096, technology lease expense of
$90,000, telephone expense of $5,643, travel of $11,898, wages of $54,709,
management contract payments of $67,500 and other expenses of $18,694. The
Company expended $46,938 and $28,170 on research and development expenses
for the nine months ended July 31, 1998 and 1997, respectively.
The Company experienced a net loss from operating activities of $98,267 for the
nine months ended July 31, 1997. Total Sales were $14,323 for the three
months ended July 31, 1997 and $74,177 for the nine months ended July 31, 1997.
Cost of Sales, however, were $5,392 and $46,556 for the same periods
respectively. Substantial selling, general and administrative expenses of
$218,477 were incurred for the three months ended July 31, 1997 and $663,362 for
the nine months ended July 31, 1997 due to the Company's increased operations.
The Company expended $8,984 on research and development expenses for the three
months ended July 31, 1997 and $28,170 for the nine months ended July 31, 1997
due to the stage of development of the C.U.P. product and commencement of
sale of said product.
<PAGE>10
GLOBUS CELLULAR, LTD.
PART II
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits (numbered in accordance with Item 601 of
Regulation S-K)
None
(b) Reports on Form 8-K
None
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: September 21, 1998 /s/ Dr. Paul F. Bickert
-------------------------------
Dr. Paul F. Bickert, President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> OCT-31-1999
<PERIOD-END> JUL-31-1998
<CASH> 112,366
<SECURITIES> 0
<RECEIVABLES> 10,463
<ALLOWANCES> 0
<INVENTORY> 60,355
<CURRENT-ASSETS> 214,611
<PP&E> 52,121
<DEPRECIATION> 50,093
<TOTAL-ASSETS> 286,836
<CURRENT-LIABILITIES> 124,272
<BONDS> 0
<COMMON> 7,290
0
0
<OTHER-SE> 114,176
<TOTAL-LIABILITY-AND-EQUITY> 286,836
<SALES> 50,302
<TOTAL-REVENUES> 62,449
<CGS> 24,412
<TOTAL-COSTS> 546,244
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,677
<INCOME-PRETAX> (554,921)
<INCOME-TAX> 0
<INCOME-CONTINUING> (554,921)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (554,921)
<EPS-PRIMARY> (.08)
<EPS-DILUTED> (.08)
</TABLE>
