<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 April 30, 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:
7,260,998 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 and User Protection Ltd.
Balance Sheet
April 30, 1998
<TABLE>
<CAPTION>
ASSETS
<S> <C>
Current assets:
Cash $ 146,191
Accounts receivable, trade 1,142
Accounts receivable, other 11,430
Inventories 60,534
Prepaid expenses 29,868
Prepaid expenses - related party -
-----------
Total current assets 249,166
Property and equipment, at cost, less
accumulated depreciation of $34,893 57,121
Other assets 21,482
-----------
$ 327,769
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 16,123
Loans from stockholders 108,148
-----------
Total current liabilities 124,272
Stockholders' equity:
Preferred stock, $.001 par value,
20,000,000 shares authorized, -
Common stock, $.001 par value,
100,000,000 shares authorized,
7,260,998 shares issued and
outstanding 7,261
Additional paid-in capital 3,404,881
Stock subscriptions -
Foreign exchange adjustment (24,039)
(Deficit) (3,184,604)
-----------
203,497
-----------
$ 327,769
===========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 5
Globus Cellular, Ltd.
Statements of Operations
Three Months and Six Months Ended April 30, 1998 and 1997
<TABLE>
<CAPTION>
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
April 30, April 30, April 30, April 30,
1998 1997 1998 1997
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Sales $ 15,160 $ 29,378 $ 34,428 $ 59,854
Cost of sales 9,461 22,948 41,164 19,243
--------- -------- -------- --------
Gross profit (loss) 24,621 48,621 45,267 79,097
Other costs and expenses:
Cost of Sales 5,787 22,948 21,365 41,164
General and administrative 180,464 202,820 410,393 444,885
Research and development 16,002 7,645 27,043 19,186
--------- -------- -------- --------
202,253 210,465 458,801 464,071
--------- -------- -------- --------
Income (loss) from operations (177,632) (204,035) (413,535) (445,381)
Other income and (expense):
Interest expense (5,551) (948) (8,350) (2,249)
-------- -------- -------- --------
(5,551) (948) (8,350) (2,249)
-------- --------- -------- --------
Income (loss) before income taxes (183,183) (185,740) (421,885) (428,387)
Provision for income tax
--------- --------- -------- --------
Net income (loss) $ (183,183) $ (185,740) $ (421,885) $ (428,387)
=========== ========== ===========
==========
Earnings (loss) per share:
Net income (loss) $ (0.03) $ (0.05) $ (0.06) $ (0.11)
=========== =========== ===========
===========
Weighted average shares outstanding 7,235,985 4,046,954 7,174,309 3,999,671
=========== =========== ===========
===========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 6
Globus Cellular, Ltd.
Statements of Cash Flows
Six Months Ended April 30, 1998 and 1997
<TABLE>
<CAPTION>
Six Months Six Months
Ended Ended
April 30, April 30,
1998 1997
-------- --------
<S> <C> <C>
Net cash provided by (used in)
operating activities $ (174,203) $ (77,166)
Cash flows from investing activities:
Purchase of equipment (38,462) (16,906)
----------- -----------
Net cash provided by (used in)
financing activities (38,462) (16,906)
Cash flows from financing activities:
Common stock sold for cash 59,199 27,823
Increase (repayment) of officer loans - 58,559
Repayment of officer loans (49,476) -
----------- -----------
Net cash provided by (used in)
financing activities 9,723 86,382
----------- -----------
Increase (decrease) in cash (202,942) (7,690)
Cash and cash equivalents,
beginning of period 349,133 40,009
----------- -----------
Cash and cash equivalents,
end of period $ 146,191 $ 32,319
=========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE> 7
Globus Cellular, 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.
Income (loss) per share was computed using the weighted average number of
common shares outstanding.
During the period ended April 30, 1998, the Company issued 118,185 shares of
its common stock pursuant to a registration statement of Form S-8. The
shares issued were valued at $85,193 based on quoted market prices at the
date the shares were authorized for issuance. Additionally during the
period, the Company issued 59,500 shares of its restricted common stock for
services provided to the Company valued at $27,784, 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.
During the period ended April 30, 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
quarter.
<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 April 30, 1998, the Company issued 118,185 shares of
its common stock pursuant to a registration statement of Form S-8. The
shares issued were valued at $85,193 based on quoted market prices at the
date the shares were authorized for issuance. Additionally during the
period, the Company issued 59,500 shares of its restricted common stock for
services provided to the Company valued at $27,784, 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.
For the six months ended April 30, 1998, the Company repaid $49,476 in
officer loans. As a result, net cash provided by financing activities for
the six months ended April 30, 1998 was $9,723
During the period ended April 30, 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
quarter.
During the six months ended April 30, 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 quarter ended April 30, 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 period ended April 30, 1997, the Company issued 1,823 shares of
its common stock pursuant to the exercise of warrants for cash aggregating
$1,823. Also, options to purchase 100,000 shares of the Company's common
stock issued to an officer during the year ended October 31, 1995 were
exercised for cash consideration to the Company aggregating $26,000.
For the six months ended April 30, 1998, the Company purchased equipment
valued at $38,462 resulting in net cash used in investing activities of
$38,462.
The Company acquired plant and equipment valued at $16,906 for the period
ended April 30, 1997. This resulted in net cash used in investing
activities of $16,906.
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.
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 $413,535 for
the six months ended April 30, 1998. Total Sales were $34,428 for the six
months ended April 30, 1998 and decreased from $79,097 for the six months
ended April 30, 1997. Cost of Sales, however, were $21,365 and $41,164 for
the same periods, respectively. No CUP products were sold during the
periods presented. Substantial selling, general and administrative
expenses of $410,393 were incurred for the six months ended April 30, 1998
due to the Company's increased operations compared to $444,885 for the same
period in 1996. Selling, general and administrative expenses consisted
primarily of accounting of $14,504, consulting expense of $168,375, Freight
of $2,428, legal fees of $25,447, office expense of $8,023, promotion expense
of $27,749, rent expense of $5,410, technology lease expense of $60,000,
telephone expense of $3,812, travel of $14,990, wages of $51,419,
professional fees of $1,844 and other expenses of $26,392. The Company
expended $27,043 and $19,186 on research and development expenses for the
six months ended April 30, 1998 and April 30, 1997, respectively.
The Company experienced a net loss from operating activities of $445,381 for
the six months ended April 30, 1997. Total Sales were $59,854 for the six
months ended April 30, 1997 and did not vary significantly from the 1996
amount. Cost of Sales, however, were $41,164 and $31,663 for the same
periods, respectively. No CUP products were sold during the periods
presented. Substantial selling, general and administrative expenses of
$444,885 were incurred for the six months ended April 30, 1997 due to the
Company's increased operations. Selling, general and administrative expenses
consisted primarily of accounting of $6,033, consulting expense of $214,131,
freight of $5,534, legal fees of $21,062, office expense of $4,845, promotion
expense of $7,051, rent expense of $3,201, technology lease expense of
$61,958, telephone expense of $5,407, travel of $10,322, wages of $32,529 and
other expenses of $72,812. The Company expended $19,186 and $4,590 on
research and development expenses for the six months ended April 30, 1997 and
April 30, 1996, respectively.
<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: June 16, 1998 /s/ Dr. Paul F. Bickert
-------------------------------
Dr. Paul F. Bickert, President
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> APR-30-1998
<CASH> 146,191
<SECURITIES> 0
<RECEIVABLES> 12,572
<ALLOWANCES> 0
<INVENTORY> 60,534
<CURRENT-ASSETS> 249,166
<PP&E> 57,121
<DEPRECIATION> 34,893
<TOTAL-ASSETS> 327,769
<CURRENT-LIABILITIES> 124,272
<BONDS> 0
<COMMON> 7,261
0
0
<OTHER-SE> 196,236
<TOTAL-LIABILITY-AND-EQUITY> 327,769
<SALES> 34,428
<TOTAL-REVENUES> 45,267
<CGS> 21,365
<TOTAL-COSTS> 458,801
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 8,350
<INCOME-PRETAX> (421,885)
<INCOME-TAX> 0
<INCOME-CONTINUING> (421,885)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (421,885)
<EPS-PRIMARY> (.06)
<EPS-DILUTED> (.06)
</TABLE>
