<PAGE>2
Amendment 2 to
FORM 10-KSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] 15,ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: 10/31/99
OR
[ ] 15,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: 0-25614
GLOBUS WIRELESS, LTD.
(formerly Globus Cellular, Ltd.
Globus Cellular & User Protection, Ltd.
And Leridges International, Inc.)
(Exact name of Small Business Company in its charter)
NEVADA 88-0228274
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
1955 Moss Court
Kelowna, British Columbia, Canada V1Y 9L3
(Address of principal executive offices) (Zip Code)
Company's Telephone number, including area code:
(604) 860-3130
Securities registered pursuant to
Section 12(b) of the Act: None
Securities registered pursuant to
Section 12(g) of the Act: Common Stock, $.001 par value
Warrants to purchase $.001 par
value Common Stock
Check whether the Company (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act during
the preceding 12 months (or such shorter period that the Company
was required to file such reports), and (2) has been subject to such
filing requirements for at least the past 90 days.
Yes __x__ No _____
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no
disclosure will be contained, to the best of Company's knowledge, in
definitive proxy or information statements incorporated by reference in
Part III of this Form 10-KSB or any amendment to this Form 10-KSB.[x]
The Company's revenues for its most recent fiscal year were $0.00. As
of October 31, 1999, the market value of the Company's voting $.00l par
value common stock held by non-affiliates of the Company was
$23,427,844.
The number of shares outstanding of Company's only class of common
stock, as of October 31,1999 was 11,079,930 shares of its $.001 par
value common stock. Check whether the Issuer has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the
Exchange Act after the distribution of securities under a plan
confirmed by a court. Yes __x__ No _____
No documents are incorporated into the text by reference.
Transitional Small Business Disclosure Format (check one)
Yes No x
-------- --------
<PAGE> 3
PART I
FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K includes both historical and forward-
looking statements. Any forward-looking statements contained herein
are based on Globus Wireless, Ltd's (the "Company) current expectations
and projections about future events. All forward-looking statements
are subject to risks, uncertainties, and assumptions about the Company,
including anticipated growth strategies, anticipated trends in the
business, including trends in technology and growth of the wireless
communication industry, and future business directions for the Company
and associated financial commitments.
The Company's actual results could differ materially from those
discussed herein. Factors that could cause or contribute to such
differences include, but are not limited to, those discussed in this
section as well as in the section entitled "Management's Discussion And
Analysis of Financial Condition and Results of Operations."
ITEM 1. BUSINESS - General
Globus Wireless, Ltd., with its wholly-owned subsidiary Celltech
Research Inc. ("Celltech"), is engaged in the research, design,
manufacture, marketing and distribution of wireless communication
products. The Company has three primary objectives: to become a leading
provider of wireless antennae solutions and antennae product for
Original Equipment Manufacturers ("OEMs); to become a major supplier of
quality wireless phone accessories in North America, South America,
Latin American and South Korean markets, through sales to industry
dealer organizations, buyer groups, major retail networks and service
providers; and to secure new marketing, manufacturing and technology
opportunities in the wireless communication industry which are
synonymous with the Company's commitment to market products which
enhance performance, reduce operating costs and/or improve efficiency,
and which will provide significant earnings to the Company.
The Company's recently debuted "Voyager Battery" is a new technology
that eliminates the need for an external charger for wireless phones by
plugging directly in to a standard AC outlet. In late 1999 the Company
announced a partnership with Auden Technology of Pa-Te City, R.O.C., to
develop and market ceramic embedded antennae for wireless devices.
Globus Wireless, Ltd., originally Daytona-Pacific Corporation, was
incorporated June 10, 1987, under the laws of the State of Nevada.
On October 18, 1994 the Company acquired all of the assets of Globus
Cellular & User Protection Ltd. (Canada), a corporation formed in the
Province of British Columbia, Canada, on July 28, 1993.
With the move to wireless technology the Company's name changed to
Globus Cellular & User Protection Ltd. On September 19, 1995, the
Company became a publicly traded corporation, trading on the NASD Over-
the-Counter (OTC) Bulletin Board. In August 1997, the Company changed
its name to Globus Cellular, Ltd.
In June 1999 there was a change in the management of the Company
following the resignation of the President and CEO. The Board of
Directors subsequently appointed a new executive group to manage the
business of the Company. Past Vice President (1994-97) Mr. Bernard
Penner was appointed President, CEO and Chairman; past General Manager
Mr. Nick Wizinsky was appointed Chief Operations Officer and Secretary
Treasurer; and Mr. Cary Tremblay was appointed Vice President Marketing
& Sales. The Executive was directed by the Board to move the Company
forward from being a development company to an operational concern with
proven product, manufacturing capabilities, marketing and sales revenue
and profitability.
On December 9, 1999 the Company name was changed to Globus Wireless,
Ltd., the name being more indicative of the Company's expertise,
technologies and new product lines, which are applicable to all
industry protocols as well as applications outside the wireless
industry. The Company remains listed on the OTC Bulletin Board, under
the trading symbol GBWL.
Globus, with Celltech serving as a solutions provider, continues to
research new applications and is developing new antennae technology
platforms to meet the changing requirements of wireless communication
devices.
<PAGE>4
Employees
The Company has eleven full time employees in operations and research.
In September of 1999 Celltech Research Inc., located in Kelowna,
British Columbia, Canada, officially opened a state-of-the-art testing
and engineering services lab for compliance testing and antenna design.
The Company currently maintains offices at Celltech's location in
Kelowna.
Competition
The Company is not aware of any direct competition for its core antenna
technologies that focus on low radiation and high performance. There
are several antenna manufacture and supply firms in the marketplace
providing a variety of antenna technologies however, Globus has
established certain expertise in antenna design and research,
particularly in the areas of low radiation and high performance, via
it's wholly-owned subsidiary Celltech Research.
Globus and Celltech's commitment to design and engineer low radiation
high performance antennae was brought about by growing concerns over
SAR levels being experienced by users of wireless phones (SAR -
specific absorption rate, a measurement to determine the amount of
microwave radiation absorbed by human tissue). Throughout the 1990s
there has been increasing industry, consumer and government awareness
of the issues of radiation levels and exposure limits. OEMs are now
facing stringent FCC compliance guidelines and having to satisfy the
demands of major carrier buyers seeking high conductive power and
sufficient Effective Radiated Power (ERP/EIRP), coupled with increased
consumer demand for better all-round performance. Globus is marketed
as a solution provider, providing testing results and antenna and phone
shielding design solutions that can assist OEMs in meeting applicable
government regulations and consumer performance requirements.
Celltech, in addition to serving the OEM design and testing
requirements of Globus OEM clientele, provides independent testing
services to other OEMs. In these capacities Celltech is competing with
a very limited number of like qualified testing labs around the world,
based primarily in North America and Europe. Through to year end the
Company had expended over $500,000 in upgrading the research and
testing equipment at Celltech labs.
The Company has recently launched the Globus Accessory Line, a full
line of high performance wireless phone accessories starting with 35
core products and over 400 models to fit the lifestyles of a wide range
of users. Globus Accessories are marketed in North America, South
America, Latin America and in Korea. There are competitors to the
product line in these and other world markets. The Company's product
line has a proven track record in the European marketplace.
Competition with similar products, if any, would be on the basis of
price, performance and quality of the products. Certain products, such
as the Company's VoyagerT Battery, provide an exclusive technology
leadership position.
Principal Product
The Company's original wireless industry product was a shielding
device, sold as an aftermarket add-on for cellular phones. Low market
acceptance and performance factors led to the Company abandoning any
further progression of the shielding technology in late 1994, in favor
of research into new antenna technologies. By early 1995 researchers
at the Company had identified a new antenna technology.
From 1995 to 1999 the Company was a development stage company.
Research prototype antennae were continually designed and tested by
researchers at Globus as they pursued advancements in near field
radiation reduction and far field performance enhancement. An
extensive patent program commenced.
Research efforts were to be bolstered when on August 16, 1996, the
United States Federal Communications Commission came out with new
stringent guidelines for the cellular industry manufacturers of phone
devises requiring that these products not exceed certain radiation
exposure levels to users. These guidelines force manufacturers into
compliance by either tuning down the output of the phones or
redesigning the antennas to reduce exposure to users.
Since 1995 the Company's research and testing capabilities have been
developed in-house and with the assistance of Canada's National
<PAGE>5
Research Counsel, providing grant monies as well as assisting the
Company in its relationship with the Department of Physics of Okanagan
College University (OCU) in British Columbia. Various research
efforts were led by Dr. Dan Murray (as Director of Research from 1994
to 1997, from the Dept. of Physics at the Okanagan College University),
and more recently by Mr. Shawn McMillen. It was not until late 1999
that the Company's various research efforts resulted in an antenna
technology that could meet the specifications required by OEMs and the
US Federal Communications Commission.
It would however, take until late 1999 before the Company could meet
exacting specifications demanded by OEMs and the marketplace.
Today, with Celltech labs providing Globus on-going research, design
advancements and unique testing capabilities the Company now has
several antennae technology platforms of significant interest to the
wireless equipment OEM industry. Currently there are two OEM
prototype design programs underway, and additional OEMs are utilizing
the testing services now available to industry members. Until such
time as the Company secures a purchase commitment for Globus-designed
and manufactured antennae, all design, research and testing contracts
are held confidential.
Patents
The Company, since 1995, has incurred significant expense in patenting
fees for its antenna technology. A favorable opinion on the technology
was granted by the International Patent Cooperation Treaty Examiner and
subsequently patents have been issued in the United States and in
Europe. Patent applications are in various states of pendency in
several other jurisdictions. In December 1999 the Company filed a
statement of claim in British Columbia Supreme Court to confirm
rightful ownership of its antenna technology. The Company seeks full
return of patent rights. A further explanation of the Statement of
Claim is provided in Item 3 - Legal Proceedings.
With supporting facilities at Celltech the Company will continue filing
for patent protection of new antennae designs. It is the Company's
policy to seek patent protection in the major industrial markets
firstly, and to then seek protection in emerging markets where wireless
networks are or will be surpassing growth of traditional land-based
communication networks.
Marketing
The world wide wireless industry has been and will continue to
demonstrate tremendous growth. In less than a decade it has become a
trillion US dollar industry. The emergence of new wireless platforms
that are able to converge with the other technologies are opening up
new markets worldwide. Lower acquisition and operating costs for the
consumer are making wireless technology more accessible each day. So
much so that in some markets in Asia Pacific wireless is starting to
directly compete with traditional landline services. There are
conflicting analyst projections regarding the rate of growth, but there
is consensus the industry will continue to experience explosive growth.
In providing customized antennae solutions coupled with trade secret
shielding application technologies, the Company is well positioned to
capitalize on the growth that is projected for wireless handset
manufacturers segment of the industry. Industry analysts like the
Yankee Group predict that world wide production of wireless handsets
will exceed 500 million units in the next 24 months.
The primary objective of the Company's R&D division, Celltech, is to
assist OEMs with their product compliance to Federal Communications
Commission guidelines for SAR and Effective Radiated Power (ERP/EIRP)
emissions, simultaneously providing real-world performance enhancing
solutions as demanded from the marketplace.
Since opening Celltech labs in September 1999 the Company has received
growing recognition from OEMs for the unique services now offered, and
the Company is forging a leadership position as a wireless solution
provider.
The Company's plans include a diversification of product offerings in
wireless technology, which has led to the development of the Globus
Accessories Line. The Company can now utilize relationships with
potential OEM customers as well as capitalize on strategic
<PAGE>6
alliances and opportunities with large retail chains, service providers
and the wireless dealer organizations in this market segment. The
Company anticipates healthy revenues from this product channel.
The Company reached an exclusive agreement with 2001 Technology Inc. of
Taipei, R.O.C., for distribution of its wireless accessories line, in
July 1999. The agreement significantly reduced the Company's own
development costs and time to market. The product line has been highly
successful in Europe and the Company expects similar success in the
Americas and Korean markets. Launch of the line commenced in Las Vegas
at Consumer Electronic Show in January 2000 and the Cellular Telephone
Industry Association show in New Orleans in February. A comprehensive
online dealer e-commerce program will support marketing efforts.
In the next year the Company will continue to explore new market and
technology opportunities in the industry.
Manufacturing
Focusing on the design and engineering of antennae and other wireless
technologies, in 1999 the Company elected to outsource manufacturing of
its product line.
In late 1999 the Company announced it had secured an agreement with
Auden Technology Manufacturing for the purposes of manufacturing
antennae product designed and engineered at Celltech labs. Auden has
current capacity for 14.4 million units per year and will integrate the
Company's antenna design processes, technologies and wireless
engineering services into their manufacturing processes. The agreement
positions the Company to satisfy OEM requirements for ISO 9001 and ISO
9002 certification, as well as providing complete turnkey antenna
services from testing through to prototype design and manufacturing.
Finished product are to be shipped direct to the OEMs, many of which
are also based in the Far East.
Environmental Regulations
According to federal environmental regulators, both the US and Canada,
the Company's antennae and other wireless accessories product are
considered passive devices and, as such, fall outside the scope of
Radiation Emitting Devices Regulations. At present there are no
federal environmental regulations to which the Company's product is
subject. Currently, the US government, through the FCC, has set
guidelines for antenna radiation emission levels, measured in
conjunction with the operation of a wireless phone. The Company's
antennae products are designed to assist wireless phone OEMs whose
product must satisfy these guidelines.
There is no assurance, however, that specific regulations on antennae
product will not be implemented in the future, by FCC or other
government agencies, and the Company will be required to comply
therewith.
Globus Accessory Line products are tested and in compliance with their
respective standards.
Research & Development
For the year ended October 31, 1999 the Company has expensed
approximately $70,745 in research & development. Design and
engineering of antenna technologies have been the primary focus of the
Company's research and development efforts. Research efforts have been
further defined to focus on resolving emissions and design issues to
enable clients to get their products to market as quickly as possible.
The opening of Celltech in 1999 provides the Company with the
opportunity to serve as a solutions provider to OEMs. In addition to
providing antenna design and engineering services, Celltech provides
for FCC compliance testing and performance testing. Mr. Shawn McMillen,
General Manager for Celltech, is recognized in the wireless industry as
a leading SAR expert and has extensive experience in antenna research
and FCC compliance testing.
The Celltech lab has garnered considerable attention among wireless
handset producers and is gaining a reputation as one of the most
progressive solutions providers in the industry. The new lab facilities
are proving to be an effective catalyst in pursuit of the Company's
marketing goals for its various antennae technologies.
<PAGE>7
Liability Insurance; Indemnification
The Company has a general liability, fire and medical insurance policy
of insurance to protect against liabilities arising out of the
negligence of its officers and directors and/or deficiencies in any of
its business operations. It presently pays $2470 annually for
$2,000,000 coverage. There is no assurance, however, that such
insurance coverage would be adequate to satisfy any potential claims
made against the Company, its officers and directors, or its business
operations or products. Any such liability that might arise could be
substantial and may exceed the assets of the Company. The Articles of
Incorporation and By-Laws of the Company provide for indemnification of
its officers and directors to the fullest extent permitted under Nevada
law. However, insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors, officers and
controlling persons, it is the opinion of the Securities Exchange
Commission such indemnification is against public policy, as expressed
in the Act, and is therefore, unenforceable.
ITEM 2. PROPERTIES.
On January 1, 1999 the Company opened offices at the site now housing
Celltech Research Labs, in Kelowna, British Columbia. The facility is
a stand-alone 6000 sq.ft. winged style building, with cement block
construction, and provides for office space for corporate, marketing,
administration, Canadian sales warehousing and distribution as well as
housing the lab facilities of Celltech. The Company leases the
facility at $2467 per month.
It is the Company's policy to lease required operations facilities, as
may be required, and it is anticipated that expanded facilities,
primarily for marketing and distribution, will be required in the next
year.
From 1993 to 1998 the Company operated from a 1600 sq.ft. warehouse
unit facility in Kelowna, British Columbia.
ITEM 3. LEGAL PROCEEDINGS.
In 1997 a successor company to Idex, 2834332 Canada Inc., filed an
action in Supreme Court of the State of New York against the Company
and its past President Paul Bickert. In late 1999 the Company settled
the action out of court.
In December 1999 the Company filed a Statement of Claim in British
Columbia Supreme Court to confirm rightful ownership of its antenna
technology and a declaration that license and other agreements related
to that antenna technology under which Dr. Paul Bickert was paid
monies, are void. The Company asserted that Dr. Paul Bickert breached
fiduciary duties as a director and president of the Company when
license and other agreements were improperly executed with him in his
personal capacity. In addition to confirmation of ownership of patent
rights, the Company seeks unspecified damages including a full
accounting of all monies paid by the Company to Dr. Paul Bickert and
for an order that he repay to the Company all monies received in breach
of his fiduciary duties and all monies received without proper
authorization of the Company. On the advice of counsel, the Company
believes its claims to be meritorious.
<PAGE>8
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
On December 9, 1999 the Company held its 1998 Annual Meeting of
Stockholders, for fiscal year ending October 31, 1998. The following
matters were submitted to a vote of the Company's security holders,
through the solicitation of proxies.
1. Election of Directors
2. Approval of James E. Schiefley & Associates, P.C., as
Independent Certified Accountants for fiscal year ended
October 31, 1999
3. Approval of a name change of the Company to Globus
Wireless, Ltd.
4. Approval for an Amendment to the Bylaws to specifically
allow the Chairman of the Board of Directors to break a
tie vote, if the number of Directors is even.
<PAGE>9
PART II
ITEM 5. MARKET FOR COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
Market Information. The Company's common stock commenced trading in
the over-the-counter market on September 19, 1995.
The following table sets forth the range of high and low bid quotations
for the Company's common stock for each quarter of the last two fiscal
years, as reported on the NASD Bulletin Board, by ACAP Financial, M.H.
Meyerson & Co., Inc. and Vantage Point Capital (Canada). The quotations
represent inter-dealer prices without retail markup, markdown or
commission, and may not necessarily represent actual transactions.
<TABLE>
<CAPTION>
Quarter Ended High Bid Low Bid
<S> <C> <C>
1/31/98 .656 .656
4/30/98 .531 .500
7/30/98 .375 .375
10/31/98 .250 .250
1/31/99 .343 .218
4/30/99 1.656 .562
7/31/99 3.250 1.218
10/31/99 2.625 1.968
</TABLE>
The approximate number of holders of record of the Company's $.001 par
value common stock, as of October 31, 1999, was 298. Currently, as of
February 11, 2000, there are 320 holders of record.
Dividends. Holders of the Company's common stock are entitled to
receive such dividends as may be declared by its Board of Directors.
No dividends on the Company's common stock have ever been paid, and the
Company does not anticipate that dividends will be paid on its common
stock in the next fiscal year.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Capital Resources and Liquidity
The 1994 acquisition of the assets of Globus Cellular & User Protection
Ltd. (B.C.), put the Company in the position of starting a new business
in the wireless technology industry.
The Company's initial product was promoted actively in the marketplace
until December 1994. In early 1995 the Company moved towards research
of new antennae technologies and through until mid-1999 was a
development company. In 1996 final inventories of the original
shielding product were sold at a discount in a one-time sale.
For the year ended October 31, 1999, the Company purchased equipment
valued at $277,582 resulting in cash flows from investing activities of
$277,582.
For the year ended October 31, 1998, the Company purchased equipment
valued at $41,193 resulting in cash flows from investing activities of
$31,193.
For the year ended October 31, 1999, the Company sold common stock for
$1,402,763 cash and received advances from an officer of $14,975. For
the year ended October 31, 1999, the Company repaid notes payable of
$769 and officer loans of $150,812. As a result, the Company had net
cash provided by financing activities of $1,266,157.
For the year ended October 31, 1998, the Company sold common stock for
$98,900 cash and received advances from an officer of $2,714. For the
year ended October 31, 1999, the Company repaid notes payable of $142
and officer loans of $167,221. As a result, the Company had net cash
used in financing activities of $65,749.
During the year ended October 31, 1999, the Company issued 223,424
shares of its Common stock pursuant to the exercising of options
granted in 1999 to current officers, paid by way of repayable loans and
promissory notes totaling $68,197.85.
<PAGE>10
No dividends have been declared since the inception of the Company nor
does the Company anticipate that dividends will be declared in the
ensuing fiscal year.
As at October 31, 1999, there were 1,093,332 options to purchase Common
Shares of the Company reserved by the Board at exercise prices between
$0.85 and $3.00; 818,332 of these options had been allocated by October
31, 1999, including 300,000 options at an exercise price of $0.85,
43,332 options at an exercise price of $1.06, and 425,000 options at an
exercise price of $3.00. For the majority of these options, to be
fully vested certain performance criteria for the Company must first be
achieved.
Commitments & Contingencies
Following the change in management in June 1999, the Company entered
into employment contracts with the officers for the Company. Two of
the agreements are for a three-year term and the third agreement is
scheduled for renewal in the second quarter of 2000. At year end
October 31, 1999 the agreements provided for monthly payments
aggregating $12,500 in total for the three officers. Each of the
agreements call for increases in the Company's monthly commitment,
subject to certain performance criteria being achieved. The agreements
are expected to continue in force until terminated by either party and
further details are provided in Item 10, Executive Compensation.
Discontinued Operation
Following the change in the management of the Company in June 1999, a
decision was made to immediately wind-up activities of the unprofitable
x-ray products division and set the core focus on wireless industry
technologies and products. Inventories were subsequently liquidated
and supplier contracts cancelled. In July 1999 the Company had
effectively ceased to operate this division, instead focusing on
bringing its antennae technologies and solutions expertise to market
and launching its new wireless accessories line.
Results of Operation
1999 compared to 1998
The Company experienced a net loss from operating activities of
$986,487 for the year ended October 31, 1999. The Company did not
receive any sales revenue for the years ended 1999 and 1998. Selling,
general and administrative expenses increased to $915,204 for the year
ended October 31, 1999 compared to $687,003 for the same period in 1998
due primarily to accounting fees of $14,505, advertising of $5,422,
consulting of $122,500, legal of $19,442, management contract payments
of $183,770, promotion costs of $8,570, office expense of $23,681,
marketing expense of $20,028, telephone of $10,617, travel of $72,205,
rent of $27,455, wages of $39,719. Research and development expenses
decreased from $67,685 for the year ended October 31, 1998 to $20,226
for the same period of 1999 due to the continuing development of the
Company's proprietary antennae technologies and opening of Celltech
labs.
The Company issued stock options for officer services of $126,141 for
the year ended October 31, 1999. The compensation value of options
issued was $20,600. Depreciation and amortization for the year ended
October 31, 1999 was $49,133. Salary and license costs and expenses
converted to officer loans were $183,376.
For the year ended October 31, 1999, the Company experienced a decrease
in accounts receivable of $29,635, an increase in prepaid expenses of
$60,606 and an increase in accounts payable of $68,664, all due to
increased operations. Additionally, the company had a decrease in net
assets of discontinued operation of $56,647 for the year ended October
31, 1999. Foreign exchange translation adjustment was $39,483 for the
year ended October 31, 1999. These items resulted in net cash used in
operating activities of $532,686 for the year ended October 31, 1999.
1998 compared to 1997
The Company experienced a net loss from operating activities of
$737,836 for the year ended October 31, 1998. The Company did not
receive any sales revenue for the years ended 1998 and 1997. Selling,
general and administrative expenses decreased to $687,003 for the year
ended October 31, 1998 compared to $821,455 for the same period in 1997
<PAGE>11
due to accounting fees of $22,420, advertising of $679, consulting of
$216,764, legal of $43,535, management contract payments of $90,000,
technology lease expense of $120,000, travel of $17,576, rent of
$10,669, wages of $50,237.09 and miscellaneous office expenses of
$115,123. Research and development expenses decreased from $78,789 for
the year ended October 31, 1997 to $67,685 for the same period of 1998
due to the stage of development of the antenna product.
The Company issued stock options for officer services of $150,630 for
the year ended October 31, 1998. Depreciation for the year ended
October 31, 1998 was $16,446. The Company had amortization of unpaid
stock subscriptions of $97,276. The Company had a loss on the sale of
fixed assets of $4,520. Additionally, the company converted salary and
license costs to officer loans. Additionally, the company converted
salary and license costs to officer loans of $210,000 for the year
ended October 31, 1998. For the year ended October 31, 1998, the
Company experienced a decrease in accounts receivable of $90,512, a
increase in inventory of $2,548 due to decreased sales, a decrease in
prepaid expenses of $646 and a decrease in accounts payable of $7,033,
all due to decreased operations. Additionally, the company had a
decrease in net assets of discontinued operation of $3,623 for the year
ended October 31, 1998. Foreign exchange translation adjustment was
$(36,756) for the year ended October 31, 1998. These items resulted in
net cash used in operating activities of $210,519 for the year ended
October 31, 1998.
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Financial Statements
The response to this item is being submitted as a separate section of
this report beginning on page 14.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
There have not been any changes in or disagreements with accountants on
accounting and financial disclosure.
<PAGE>12
PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
Identification of Directors and Executive Officers of the Company.
The principal executive officers and directors of the Company are as
follows:
<TABLE>
<CAPTION>
Name Position Term(s) of
Office
<S> <C> <C>
Bernard Penner, age 39 President, CEO June 9, 1999
Director & Chairman to present
Nicholas Wizinsky, age 39 Secretary/Treasurer, October 27, 1998
Chief Operations Officer to present
A. Cary Tremblay, age 42 Vice President July 2, 1999
Marketing & Sales to present
Jerome W. Cwiertnia, age 58 Director April 8, 1997
to present
Anthony Dyck, age 54 Director June 25, 1999
to present
Hans Schroth, age 55 Director June 25, 1999
to present
</TABLE>
Subsequent to fiscal year ending October 31, 1999, the Company held its
1998 Annual Meeting of Stockholders on December 9, 1999. At the
meeting Mr. Nick Wizinsky announced his stepping down from the Board
and the shareholders of the Company then reelected the four remaining
members, Bernard Penner, Jerome Cwiertnia, Anthony Dyck and Hans
Schroth. All directors will serve on the Board of Directors until the
next annual meeting of the shareholders of the Company, or until their
successors have been duly elected and qualified
Background of Directors & Officers
Bernard Penner - Mr. Penner was appointed President, Chief Executive
Officer and Chairman on June 9, 1999. Prior to then Mr. Penner had
served as a member of the Globus Advisory Board and manufacturing
planning group examining opportunities with foreign manufacturers. From
1994 to 1997 Mr. Penner served as Vice President and Director for the
Company. Between 1997 and 1999 Mr. Penner was President of Redline
Contracting Ltd.
Jerome W. Cwiertnia - Mr. Cwiertnia has served as a Director since
April 8, 1997. Currently Mr. Cwiertnia is Chairman for Poly-Tak
Protection Systems, Inc., Huntington Beach, California. Mr. Cwiertnia
was Chief Financial Officer and Director from 1979 to 1989, President,
Chief Operating Officer and Director in 1990 and Chief Executive
Officer, President and Director from 1991 to 1995 for National
Education Corporation. Mr. Cwiertnia graduated in 1963 from Northern
Illinois University and is a Certified Public Accountant.
Anthony Dyck - Mr. Dyck has served as a Director since June 25, 1999.
Since 1992 Mr. Dyck has initiated several real estate developments and
acquired properties in Western Canada and Quebec. From 1971 to 1992
Mr. Dyck was in public school administration. In 1969 Mr. Dyck
graduated from the University of British Columbia with a Bachelor of
Science in Math & Economics, and in 1971 obtained his MA in Math
Education, also from the University of British Columbia.
Hans Schroth - Mr. Schroth has served as a Director since June 25,
1999. Since 1994 Mr. Schroth has been the major principal and served
as President for six corporate-owned restaurants in British Columbia.
He is also a major principal in a home manufacturing operation in
Western Canada. In 1981 Mr. Schroth immigrated to Canada and up to
1993 undertook a series of business ventures while semi-retired in
Ontario, Canada. From 1972 to 1981 Mr. Schroth built and franchised
seven Wood Fire Bakery and Coffee Shops in Germany & Austria. In 1972
Mr. Schroth obtained a Masters in Business from Munich Management
School.
<PAGE>13
Nick Wizinsky - Mr. Wizinsky was General Manager from August 1997 to
October 1998, and was re-appointed as Secretary/Treasurer and Chief
Operations Officer by the Board in July 1999. Mr. Wizinsky served as
a Director of the Company from October 1998 to December 1999. From
1994 to 1997, Mr. Wizinsky was self-employed as a business management
consultant, including serving as Business Consultant to the Company
from February 1997 to July 1997. From 1986 to 1993, Mr. Wizinsky
worked in various positions for FCSAL. Mr. Wizinsky obtained a
Bachelor of Commerce from the University of British Columbia in 1985.
A. Cary Tremblay - Mr. Tremblay was appointed Vice President Marketing
& Sales in July 1999. From October 1998 to June 1999 he served as
Marketing Consultant to the Company. From 1997 to 1998 Mr. Tremblay
served as a marketing consultant to the wireless telecommunications
industry, building and implementing strategies for bring new products
to market. From 1994 to 1997 Mr. Tremblay served as Senior Vice
President of ComTec Communications, a chain of cellular retail stores.
Directorships. No director or nominee for director holds a
directorship in any other company with a class of securities registered
pursuant to Section 12 of the Securities Exchange Act of 1934 or
subject to the requirements of Section 15(d) of such Act or any company
registered as an investment company under the Investment Company Act of
1940.
ITEM 10. EXECUTIVE COMPENSATION
The Company provided payments aggregating $7500 per month for the
services of Dr. Paul F. Bickert, past President, up until his
retirement in May 1999. From November 1, 1998 through to May 30, 1999
Dr. Paul F. Bickert received $52,500 for services in the fiscal year
1999. Additionally, during fiscal year 1999, the Company paid
technology lease payments of $90,000 to Dr. Paul F. Bickert prior to
his departure. Payments of $90,000 to Dr. Paul Bickert were made under
the antenna technology license agreement during the fiscal year 1999
before his departure from the Company. The Company seeks return of
those monies, as part of the aforementioned Statement of Claim.
In June 1999 the company entered into a services agreement with Bernard
D. Penner, President, CEO and Chairman, which provides payments
aggregating $5,000 per month. The three-year agreement, which also
provides for increases and stock option bonuses subject to certain
Company performance goals being achieved, is expected to continue in
force until terminated by either party or the expiry of the term.
In March 1999 the Company entered in to a services agreement with A.
Cary Tremblay, Vice President Marketing & Sales. In September 1999 the
Company extended the agreement, and which now provides payments
aggregating $4,166 per month. The three-year agreement, which also
provides for increases and stock option bonuses subject to certain
Company performance goals being achieved, is expected to continue in
force until terminated by either party or the expiry of the term.
In March 1999 the Company entered in to a service agreement with Nick
Wizinsky, Secretary Treasurer and Chief Operations Officer, which
provides payments aggregating $3,333 per month. The one-year agreement
is expected to continue in force until terminated by either party or
the expiry of the term.
Members of the Board of Directors receive an honorarium of $12,000 US
per year, payable in cash, S-8 stock at market, restricted stock of the
Company at 85% of the market bid or in stock options with the exercise
price set at 85% of the market bid. During fiscal 1999, $48,000 in
directors' fees has been paid by way of stock and $8,000 in directors'
fees has been paid by way of options reserved and allotted. All
officers and directors are reimbursed for expenses incurred on behalf
of Company.
The Company presently has no other pension, health, stock option,
annuity, bonus, insurance, profit sharing or other similar benefit
plans; however, the Company may adopt such plans in the future. There
are presently no personal benefits available for directors, officers or
employees of Company.
Except for payment of one month's service fee per year of service,
there is no plan or arrangement with respect to compensation received
or that may be received by the executive officers in the event of
termination of employment or in the event of a change in
responsibilities following a change in control.
<PAGE>14
ITEM 11 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following tables list the Company's stockholders who to the best of
the Company's knowledge own of record or, to the Company's knowledge,
beneficially, more than 5% of the Company's outstanding Common Stock,
either directly or indirectly, as of the date hereof:
<TABLE>
<CAPTION>
Amount and Nature of
Title of Beneficial % of
Name and Address Class Ownership Class
<S> <C> <C> <C>
Bernard D. Penner Common 276,341 Direct 4.49%
1523 Lawrence Avenue 221,645 Indirect(1)
Kelowna, B.C., Canada
Jerome W. Cwiertnia Common 62,736 0.56%
17 Montecito Drive
Corona del Mar, CA 92625
Anthony Dyck Common 550,278 4.97%
8299 Okanagan Landing Road
Vernon, B.C., Canada
Hans Schroth Common 90,696 Direct
365 Clifton Place 63,000 Indirect(2) 1.39%
Kelowna, B.C., Canada
Nick Wizinsky Common 111,840 Indirect(3) 1.01%
1160 Trevor Drive
Kelowna, B.C., Canada
A. Cary Tremblay Common 33,334 Direct
3132 Shannon Court 6,500 Indirect(4) 0.36%
Westbank, B.C., Canada
Dr. Paul F. Bickert Common 401,000 Direct 6.67%
3200 Watt Road 337,667 Indirect(5)
Kelowna, B.C., Canada
CEDE & Co. Common 5,299,188 47.82%
P.O. Box 222
Bowling Green Station
New York, NY 10004
All Officers and Common 1,013,385 Direct 12.78%
Directors as a Group 402,985 Indirect
</TABLE>
(1)121,522 of these shares are held in the name of Loretta Penner, wife
of Mr. Penner, and Mr. Penner has shared voting rights in and to the
shares. 21,346 of these shares are held in the name of Burns Fry Ltd.,
in trust for Loretta Penner, 3GDJNT5, a Canadian retirement account,
and Mr. Penner has shared voting rights in and to the shares. 22,647
of these shares are held in the name of Burns Fry Ltd., in trust for
Bernie Penner #3GDFXT2, a Canadian retirement account, and Mr. Penner
has 100% voting rights in and to the shares. 488725 B.C. Ltd. and
Redline Contracting Ltd. are both controlled by Mr. Penner and hold
38,553 and 17,547 shares respectively.
(2)63,000 of these shares are held jointly in the names of Ruth and
Hans Schroth and Hans Schroth has shared voting rights to the shares.
(3)102,840 of these shares are held jointly in the names of Sharon and
Nick Wizinsky and Nick Wizinsky has shared voting rights to the shares.
2,500 of these shares are held in a Registered Education Savings Plan
and Nick Wizinsky has shared voting rights; 532773 B.C. Ltd. is
controlled by Mr. Wizinsky and holds 6,500 shares.
(4)4,500 of these shares are held jointly in the names of Cindy and
Cary Tremblay and Cary Tremblay has shared voting rights to the shares.
(5)216,667 of these shares are held in the name of Marlene Bickert,
wife of Dr. Bickert, and Dr. Bickert has shared voting rights in and to
the shares. 111,111 of these shares are held in jointly by Marlene and
Dr. Bickert and Dr. Bickert has shared voting rights in and to the
<PAGE>15
shares. 10,000 of these shares are held in the name of RBC Dominion
Securities, in trust for Dr. Bickert in a Canadian retirement account,
and Dr. Bickert as 100% voting rights in and to the shares.
The Company does not know of any arrangements, the operation of which
may, at a subsequent date, result in a change in control of the
Company.
As of October 31, 1999 there were 1,093,332 options to purchase Common
Shares of the Company reserved by the Board at exercise prices between
$0.85 and $3.00; 818,332 options have been allocated to date, the
majority of which are subject to certain performance criteria for the
Company being achieved. Options held by current officers and
directors, and controlling persons in subsidiaries, are as follows:
Name Options %
Bernie Penner
(President & Director) 400,000(1) 36.59%
A. Cary Tremblay
(Vice President Marketing) 325,000(2) 29.73%
Anthony Dyck (Director) 21,666 1.98%
Hans Schroth (Director) 21,666 1.98%
Shawn McMillen (GM Celltech) 50,000 4.57%
1. Pursuant to a services agreement Mr. Penner is to be allocated stock
options subject to certain Company performance goals being achieved,
including: 50,000 stock options exercisable at $0.85 per share subject
to acceptance of three year services agreement; 50,000 stock options
exercisable at $0.85 per share subject to the Company securing and OEM
order more than $275,000; 50,000 stock options exercisable at $0.85 per
share subject to Company obtaining NASDAQ Small Cap listing; 50,000
stock options exercisable at $0.85 per share subject to the closing
price for the Company stock being at or above $5.00 for a period of 20
days or more; and 200,000 stock options exercisable at $3.00 per share,
subject to performance criteria as set by the Board of Directors on the
first anniversary of the services agreement.
2. Pursuant to a services agreement Mr. Tremblay is to be allocated
stock options subject to certain Company performance goals being
achieved, including: 33,334 stock options exercisable at $0.85 per
share subject to acceptance of three year services agreement; 33,333
stock options exercisable at $0.85 per share subject to the Company
securing and OEM order more than $275,000; 33,333 stock options
exercisable at $0.85 per share subject to Company stock being at or
above $5.00 for a period of 20 days or more, any time after September
1, 2000; 75,000 stock options exercisable at $3.00 per share, subject
to Company stock being at or above $5.00 for a period of 20 days or
more, any time after September 1, 2001; 75,000 stock options
exercisable at $3.00 per share, subject to Company stock being at or
above $7.50 for a period of 20 days or more, any time after September
1, 2002; 75,000 stock options exercisable at $3.00 per share, subject
to sales for the Company exceeding $30,000,000.
ITEM 12 CERTAIN TRANSACTIONS AND RELATED TRANSACTIONS
The past President, past CEO, past Director, founder and a major
stockholder of the Company is Dr. Paul Bickert. Dr. Bickert and his
wife jointly are collectively the Company's largest stockholder.
Subsequent to fiscal year ending October 31, 1999 and on December 9,
1999 the Company, having been unsuccessful in gaining formal ownership
of an antenna technology developed at the Company, filed a statement of
claim in British Columbia Supreme Court against past-President Paul F.
Bickert, to confirm rightful ownership of its patented technology. The
Company is seeking full assignment of any and all applicable patent
allowances and patents pending as well as unspecified damages.
On May 2, 1997, Dr. Bickert entered the Company, as Licensee, into a
four year License of Technology Agreement with himself, as Licensor,
with an option to renew for another 6 years. Under this Agreement,
the Company was to pay Dr. Bickert $10,000 monthly to use the
technology identified in certain patent filings. At fiscal year end
1999 the Company had not yet manufactured or sold any products using
<PAGE>16
that technology. At fiscal year end 1999 the Company had not yet
manufactured and/or sold any products utilizing the particular antenna
technology. In fiscal 1998 Dr. Bickert returned to Treasury of 755,000
shares, valued at $169,875, paid earlier to him for license of
technology fees in 1997, 1996 and 1995. Prior to Dr. Bickert's
departure in May 1999, the Company made a $90,000 payment during fiscal
1999. Also on May 1, 1997, the Company was entered in to a Royalty
agreement by Dr. Bickert whereby Dr. Bickert was to receive a 4%
royalty on gross receipts from the sale of products incorporating the
patented technology. No royalty payments had been made since the date
of the Royalty Agreement. All agreements related to the antenna
technology under which Dr. Paul Bickert purported to receive monies,
are part of the aforementioned Statement of Claim.
From November 1, 1995 to October 31, 1996, the Company paid $18,800 to
patent attorneys for services in connection with patent applications
filed in behalf of Dr. Bickert for the above-mentioned technology. The
sum of these amounts was applied to reduce unpaid technology lease
obligations due Dr. Bickert. The Company maintains the patents and
bears the cost of filing them.
On April 23, 1999, the Company's past president Dr. Bickert, prior to
his resignation, was issued 238,055 shares of the Company's restricted
stock as payment of $42,850 of outstanding advances to the Company.
During the fiscal year 1999 the Company repaid officer loans of
$150,812 to Dr. Bickert.
The Company's new President. CEO and Chairman, and past Vice-president
(1995-97), Mr. Bernie Penner and his wife, jointly are as well major
stockholders in the Company.
Between January and May 1999, and prior to Mr. Penner rejoining the
Company in June 1999, the Company hired and paid $74,820 to Redline
Contracting Ltd., a company controlled by Mr. Penner, for improvements
to the Company's new Celltech Research facility and offices in Kelowna,
B.C. The Company undertook a further $10,900 in improvements,
completed by this same company, following Mr. Penner's appointment. The
Company believes that such amounts for the services rendered are not in
excess of their fair market value.
On January 1, 1999 the Company established offices at the site now
housing Celltech Research Labs, in Kelowna, British Columbia. The
facility is a stand-alone 6000 sq.ft. winged-style building, with
cement block construction, and provides for office space for corporate,
marketing, Canadian sales warehousing and distribution as well as
housing the lab facilities of Celltech. The Company leases the
facility at $2467 per month.
From 1993 to 1998 the Company maintained offices and a research center
at a 1600 sq.ft. warehouse unit facility in Kelowna, British Columbia.
Changes in Control. There are no arrangements, known to the Company,
including any pledge by any person of securities of the Company, the
operation of which may at a subsequent date result in a change of
control of the Company.
ITEM 13. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS
ON FORM 8-K
(A) FINANCIAL STATEMENTS AND SCHEDULES
The following financial statements and schedules are filed as part of
this report:
Report of Independent Public Auditors....18
Balance Sheet........................... 19
Statement of Operations..................20
Statement of Stockholder's Equity........21
Statement of Cash Flows..................22
Notes to Financial Statements............23
<PAGE>17
Schedules Omitted: All schedules other than those shown have been
omitted because they are not applicable, not required, or the required
information is shown in the financial statements or notes thereto.
(b) List of Exhibits
The following of exhibits are filed with this report:
Exhibit 2 Plan of Reorganization, Disclosure Statement and
Order Confirming Plan of Reorganization incorporated
by reference to Form 10-SB, File # 0-25614
Exhibit 3(a)(i) Articles of Incorporation of Company and Amendments
thereto incorporated by reference to Form 10-SB, File
# 0-25614
Exhibit 3(a)(ii) Bylaws of Company incorporated by reference to Annual
Report on Form 10-SB, File # 0-25614, and
Amendments thereto
Exhibit 3(b) Articles of Incorporation of Globus Cellular &
User Protection, Ltd. (Canada) and Amendments thereto
incorporated by reference to Annual Report on Form
10-SB, File # 0-25614
Exhibit 10(b) Press and News Releases incorporated by reference to
Form 10-SB, File # 0-25614
(B) REPORTS ON FORM 8-K
None
<PAGE>18
REPORT OF INDEPENDENT AUDITORS
Shareholders and Board of Directors
Globus Wireless Ltd.
We have audited the accompanying balance sheet of Globus Wireless
Ltd. as of October 31, 1999, and the related statements of
operations, stockholders' equity, and cash flows for the years
ended October 31, 1999 and 1998. These financial statements are
the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates by management, as well as evaluating the
overall financial statement presentation. We believe that our
audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position
of Globus Wireless Ltd. as of October 31, 1999, and the results
of its operations, and its cash flows for the years ended October
31, 1999 and 1998, in conformity with generally accepted
accounting principles.
James E. Scheifley & Associates, P.C.
Certified Public Accountants
Denver, Colorado
April 4, 2000
<PAGE>19
Globus Wireless Ltd.
Balance Sheet
October 31, 1999
ASSETS
Current assets:
Cash $ 487,562
Accounts receivable, other 35,197
Inventories -
Prepaid expenses 62,432
Net assets of discontinued operation -
-----------
Total current assets 585,191
Property and equipment, at cost, less
accumulated depreciation of $91,236 290,351
Other assets 16,111
-----------
$ 891,653
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 76,869
Accrued expenses 11,393
Note payable 1,121
Accrued expenses - related party 51,843
-----------
Total current liabilities 141,226
Stockholders' equity:
Preferred stock, $.001 par value,
20,000,000 shares authorized, -
Common stock, $.001 par value,
100,000,000 shares authorized,
11,079,930 shares issued and
outstanding 11,080
Additional paid-in capital 4,714,212
Subscriptions to common stock 382,627
Foreign exchange adjustment (12,601)
(Deficit) (4,344,891)
-----------
750,427
-----------
$ 891,653
===========
See accompanying notes to financial statements.
<PAGE>20
Globus Wireless Ltd.
Statements of Operations
Years Ended October 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
<S> <C> <C>
Revenue: -------- --------
Sales $ - $ -
Other income 3,171 10,129
----------- -----------
3,171 10,129
Other costs and expenses:
General and administrative 795,204 687,003
Research and development 70,745 67,685
----------- -----------
865,949 754,689
----------- -----------
Income (loss) from continuing operations (862,778) (744,560)
Other income and (expense):
Other income & expense 22,150 -
Interest expense (3,709) (8,868)
----------- -----------
(18,441) (8,868)
----------- -----------
Income (loss) from
continuing operations before income taxes (844,337) (753,428)
Provision for income taxes - 2,340
----------- -----------
Income (loss) from
continuing operations (844,337) (751,088)
Income (loss) from
discontinued operation
net of income taxes of $2,340 - 13,252
----------- -----------
Net income (loss) $ (844,337) $ (737,836)
=========== ===========
Basic earnings (loss) per share:
Net income (loss) from
continuing operations $ (0.10) $ (0.10)
Net income (loss) from discontinued
operation - 0.01
----------- -----------
$ (0.10) $ (0.09)
=========== ===========
Weighted average shares outstanding 8,742,127 7,224,437
=========== ===========
Net income (loss) $(844,337) $ (737,836)
Foreign exchange gain
(loss) net of income taxes (24,259) 26,058
----------- -----------
Comprehensive income (loss) $ (868,596) $ (711,778)
=========== ==========
</TABLE>
See accompanying notes to financial statements.
<PAGE>21
Globus Wireless Ltd.
Statements of Cash Flows
Years Ended October 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Net income (loss) $ (844,337) $ (737,836)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 49,133 16,446
Stock subscribed for lawsuit settlement 97,850
Stock and options issued for services 126,141 150,630
Compensation value of options issued 20,600 4,520
Salary and license costs and expenses
converted to officer loans (56,624) 210,000
Amortization of unpaid stock subscriptions - 97,276
Foreign exchange translation adjustment 39,483 (36,756)
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (29,635) 90,512
(Increase) decrease in net assets of
discontinued operation 56,647 1,075
(Increase) decrease in prepaid expenses (60,606) 646
Increase (Decrease) in accounts payable 68,664 (7,033)
------------ ------------
Total adjustments 311,651 527,317
------------ ------------
Net cash provided by (used in)
operating activities (532,686) (210,519)
------------ ------------
Cash flows from investing activities:
Purchase of equipment (277,582) (41,193)
----------- -----------
Net cash provided by (used in)
financing activities (277,582) (41,193)
Cash flows from financing activities:
Common stock sold for cash 1,402,763 98,900
Repayment of notes payable (769) (142)
Advances from officer 14,975 2,714
Repayment of officer loans (150,812) (167,221)
----------- -----------
Net cash provided by (used in)
financing activities 1,266,157 (65,749)
----------- -----------
Increase (decrease) in cash 455,889 (317,461)
Cash and cash equivalents,
beginning of period 31,673 349,133
----------- -----------
Cash and cash equivalents,
end of period $ 487,562 $ 31,673
=========== ===========
</TABLE>
<PAGE>22
Globus Cellular Ltd.
Statements of Cash Flows
Years Ended October 31, 1999 and 1998
<TABLE>
<CAPTION>
1999 1998
-------- --------
<S> <C> <C>
Supplemental cash flow information:
Cash paid for interest $ 3,709 $ 8,868
Cash paid for income taxes $ - $ -
Non-cash investing and financing activities:
Equipment financed by note payable $ - $ 1,984
Abandonment of leasehold improvements $ - $ 4,518
Return of common stock by officer $ - $ 169,875
Conversion of officer loan to stock $ 128,550 $ -
</TABLE>
See accompanying notes to financial statements.
<PAGE>23
Globus Wireless Ltd.
Statement of Changes in Stockholders' Equity
For the Periods Indicated
<TABLE>
<CAPTION>
Additional Foreign
Common Stock Paid -in Stock Accumulated Exchange
ACTIVITY Shares Amount Capital Subscriptions Deficit Adjustment
<S> <C> <C> <C> <C> <C> <C>
Balance, October 31, 1997 6,960,813 $ 6,960 $ 3,243,115 $ (97,276) $(2,762,718) $ (15,327)
Exercise of warrants and options
for cash 156,343 157 47,794 - -
Stock issued for services or
equipment 310,055 310 152,605 - -
Stock sold for cash by private
placement 72,500 73 50,876
Shares returned by officer (755,000) (755) (169,120) -
Amortization of unpaid subscriptions 97,276
Foreign exchange (loss) - - - - 39,482
Net (loss) for the year ended
October 31, 1998 - - - (737,836) -
------------ ------------ ------------ --------- ------------ ----------
Balance, October 31, 1998 6,744,711 6,745 3,325,270 - (3,500,554) 24,155
Exercise of warrants and options
for cash 3,081,813 3,079 964,209 -
- -
Compensation value of options - 20,600
Stock issued for services or
equipment 291,927 292 125,849 -
- -
Stock issued for debt conversion 238,055 238 128,312
Options exercised for notes
receivable 723,424 723 149,975 (150,698)
Common stock subscribed for cash - - - 435,475
Common stock subscribed for
lawsuit settlement 97,850
Foreign exchange (loss) - - - -
(36,756)
Net (loss) for the year ended
October 31, 1999 - - - (851,837) -
------------ ------------ ------------ ----------- ------------ -------
Balance, October 31, 1999 11,079,930 $ 11,077 $ 4,714,215 $ 382,627 $(4,352,391) $ (12,601)
============ ============ ============ =========== ============= ==========
</TABLE>
<PAGE>24
Globus Wireless Ltd.
Notes to Financial Statements
Note 1. Business and Significant Accounting Policies
Business
The Company formerly manufactured and distributed a cellular telephone
radiation shielding product which universally fit most cellular
phones and formerly distributed other radiation shielding products,
X-ray film and film development products manufactured by others to
customers in the medical and veterinary fields. During the year
ended October 31, 1999, the Company disposed of the net assets
and operations of its X-ray products division. The Company is
developing advanced antenna designs that incorporate the
Company's proprietary technology. Prior to 1999, the
Company was known as Globus Cellular Ltd.
The Company was incorporated in the State of Nevada on June 10,
1987.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, in banks and all
highly liquid investments with maturity of three months or less
when purchased. Cash equivalents are stated at cost that
approximates market.
Inventories
Inventories, which consist primarily of finished goods, are
valued at the lower of cost or market. Cost is determined using
the first in, first-out (FIFO) method.
Prepaid Expenses
Prepaid expenses consist primarily of prepayments relating to
advertising and marketing.
Property and Equipment
Property and equipment are carried at cost. Depreciation is computed
using the straight-line method over the estimated useful lives of the
assets. When assets are retired or otherwise disposed of, the cost
and the related accumulated depreciation are removed from the
accounts, and any resulting gain or loss is recognized in operations
for the period. The cost of repairs and maintenance is charged to
operations as incurred and significant renewals or betterments are
capitalized. Depreciation has been provided using both straight-
line and accelerated methods over the useful lives of the assets,
ranging from three to ten years.
Foreign Currency Translation
The financial statements are presented in United States dollars.
The Company has significant Canadian operations, however United
States dollars are considered its functional currency.
Monetary assets and liabilities are translated into United States
dollars at the balance sheet date rate of exchange and non-
monetary assets and liabilities at historical rates. Revenues
and expenses are translated at appropriate transaction date
rates. Net gains or losses arising on translation are reflected
a separate component of stockholders' equity
Loss Per Share
In February 1997, the Financial Accounting Standards Board
("FASB") issued SFAS No. 128, "Earnings Per Share." SFAS No. 128
supersedes and simplifies the existing computational guidelines
under Accounting Principles Board ("APB") Opinion No. 15,
"Earnings Per Share." The statement is effective for financial
statements issued for periods ending after December 15, 1997.
Among other changes, SFAS No. 128 eliminates the presentation of
primary earnings per share and replaces it with basic earnings
per share for which common stock equivalents are not considered
in the computation. It also revises the computation of diluted
earnings per share. The Company has adopted SFAS No. 128 and
there is no material impact to the Company's earnings per share,
financial condition, or results of operations. The Company's
earnings per share have been restated for all periods presented
to be consistent with SFAS No. 128.
<PAGE>25
Basic loss per share for periods presented has been computed
using the weighted average number of shares of common stock
outstanding during the periods presented. Common stock
equivalents are excluded from the computation as their effect
would be anti-dilutive.
Revenue Recognition
Sales are recognized at the time goods are shipped. Revenue from
the sale of license distribution rights is recorded when the
licensee commences product operations.
Advertising Expenses
Advertising expenses are charged to expense upon first showing.
Amounts charged to expense were $5,422 and $679 for the periods
ended October 31, 1999 and 1998, respectively.
Income Taxes
Effective July 1, 1993, the Company adopted the provisions of
Financial Accounting Standards Board Statement No.109 (Statement
No.109), Accounting for Income Taxes. Statement No.109 requires
that deferred taxes reflect the tax consequences on future years
of differences between the tax bases of assets and liabilities
and their financial reporting amounts. At the date of adoption
of Statement No. 109, there was no material effect on the
Company's financial statements.
Prior to July 1, 1993, the Company accounted for income taxes
using the deferred method. As of October 31, 1999 the Company
has accumulated net operating losses available to offset future
taxable income of approximately $4,341,000, expiring $72,000 in
2008, $370,000 in 2009, $700,000 in 2010, $734,000 in 2011,
$884,000 in 2012, $740,000 in 2013 and $851,000 in 2014. The
Company has fully reserved the deferred tax asset that would
arise from the loss carryforward (approximately $1,476,000) since
the Company believes that it is more likely than not that future
income from operations will not be available to utilize the
deferred tax asset. The increase in the deferred tax asset and
related reserve applicable to the 1999 operating loss was
approximately $290,000.
Estimates
Management of the Company uses estimates and assumptions in
preparing financial statements in accordance with generally
accepted accounting principles. Those estimates and assumptions
affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported
revenues and expenses. Actual results could vary from the
estimates that management uses.
Fair value of financial instruments
The Company's short-term financial instruments consist of cash and
cash equivalents, accounts and loans receivable, and accounts payable
and accruals. The carrying amounts of these financial instruments
approximate fair value because of their short-term maturities.
Financial instruments that potentially subject the Company to a
concentration of credit risk consist principally of cash and accounts
Stock-based Compensation
The Company adopted Statement of Financial Accounting Standard
No. 123 (FAS 123), Accounting for Stock-Based Compensation
beginning with the Company's first quarter of 1996. Upon
adoption of FAS 123, the Company continued to measure
compensation expense for its stock-based employee compensation
plans using the intrinsic value method prescribed by APB No. 25,
Accounting for Stock Issued to Employees, and has provided in
Note 6 pro forma disclosures of the effect on net income and
earnings per share as if the fair value-based method prescribed
by FAS 123 had been applied in measuring compensation expense.
New Accounting Pronouncements
SFAS No. 130, "Reporting Comprehensive Income", establishes
guidelines for all items that are to be recognized under
accounting standards as components of comprehensive income to be
reported in the financial statements. The statement is effective
for all periods beginning after December 15, 1997 and
reclassification of financial statements of financial statements
for earlier periods will be required for comparative purposes. To
date, the Company has engaged in transactions that would result in
any significant difference between its reported net loss and
<PAGE>26
comprehensive net loss as defined in the statement. The Company's
accounting for foreign currency translation adjustments may be
affected by SFAS No. 130.
In April 1998, the American Institute of Certified Public
Accountants issued Statement of Position ("SOP") 98-5, "Reporting
on the Cost of Start-up Activities". This SOP requires that the
cost of start-up activities, or one-time activities that relate
to the opening of a new facility and organizational cost be
expensed as incurred instead of being capitalized. This SOP must
be implemented by no later than the first quarter of 1999 at
which time the write-off of any unamortized pre-opening costs or
organization cost will be reported as a cumulative effect of a
change in accounting principle in the statement of operations.
The Company adopted the statement upon its issuance, however, the
Companies organization costs had been fully amortized in prior
years.
Note 2. Property and Equipment
At October 31, 1999 Property and equipment consists of:
Machinery and office equipment $ 54,483
Leasehold improvements 78,863
Computer software 8,363
Research and development equipment 239,878
--------
381,587
Less accumulated depreciation 91,236
--------
$290,351
Depreciation charged to expense was $40,255 and $16,687 for the
years ended October 31, 1999 and 1998, respectively.
Note 3. Commitments and Contingencies
The Company has an agreement with Dr. Paul F. Bickert (its
founder, major stockholder and former President) to pay Dr.
Bickert lease of technology payments of $10,000 (US) monthly for
the technology utilized in the Company's products. This
agreement expires in 2002, with an option to renew.
The Company commenced a lawsuit against Paul F. Bickert in the
British Columbia Supreme Court in December of 1999, claiming,
among other things, that he breached his legal duties by
improperly asserting his inventorship and ownership of a certain
technology that rightfully belongs to the Company. The Company
seeks, among other things, a declaration that that certain
technology belongs to the Company and corollary relief (in
particular, that the license technology license agreements, based
on Bickert's asserted ownership of that certain technology, are
void accordingly). Bickert filed a Defense and Counterclaim.
Therein, he denied the Company's claims, and counterclaimed to
seek a declaration that certain technology license agreements are
valid and subsisting, and that he be paid compensation being the
issuance of 755,000 shares of the Company to him or equitable
damages in lieu, and "judgment for monies due and owing in an
amount to be determined by this Honourable Court" that he
estimates to be in excess of $600,000, plus unspecified damages
and interest.
Based only on the information received from the Company to date,
and relying on its accuracy, the Company's attorney's are of the
opinion that the Company's claims are more likely to succeed than
not.
In connection with the lawsuit the Company has ceased all
accruals of technology lease payments for the year ended October
31, 1999 amounting to $120,000 per year and had reversed accruals
of unpaid technology lease accruals for the year ended October
31, 1998 amounting to $120,000. The reversal of the accrual for
1998 has been accounted for as a change in accounting estimate
and therefore no adjustment to the prior year financial
statements has been made. Additionally the Company suspended all
unexercised warrants held by the stockholder.
<PAGE>27
The Company entered into one to three year employment contracts
with three of its officers that provide aggregate monthly
compensation of $12,500. The contracts provide for unspecified
periodic bonus payments and options to purchase common stock of
the Company at $.85 to $3.00 per share. An aggregate of 300,000
options to purchase stock at $.85 per share of which 83,334 were
fully vested at the respective contract dates were awarded and
33,334 were exercised during the year.
The vested shares included an aggregate of $28,100 of
compensation expense as a result of an exercise price that was
less than the fair value of the options at the grant date.
Vesting of the remaining $.85 options is contingent upon
attainment of specified corporate goals contained in the
agreements and may include additional compensation expense that
will be recorded as the goals are realized. An aggregate of
350,000 options exercisable at $3.00 per share were awarded.
Vesting of the remaining $3.00 options is contingent upon
attainment of specified and unspecified corporate goals contained
in the agreements and may include additional compensation expense
that will be recorded as the goals are realized.
During 1996, the Company began selling distribution rights to
products included in its line of X-ray film and developer
catalogue. The distribution rights covered certain eastern
provinces in Canada and other territories outside of Canada. The
Company had been purchasing developer products exclusively from
Idex International Corp., a company now in bankruptcy. The
Company has substituted developer chemicals purchased from a new
supplier to its distributors.
A successor company to Idex, 2834332 Canada Inc., has filed an
action in the Supreme Court of the State of New York claiming
that the Company has fraudulently misrepresented that it was the
worldwide licensee or holder of worldwide rights to distribute
the X-ray developing technology belonging to Idex. The claim
seeks the return of $200,000 of distribution rights income plus
interest and unspecified punitive damages. The Company settled
the lawsuit by way of a settlement agreement dated September 27,
1999 whereby the Company will issue 47,500 shares of its
restricted common stock. The Company has recorded $97,850 of
expense related to the settlement based upon the closing bid
price of the common stock at the settlement date. The shares
remained unissued at October 31, 1999 and the value thereof is
included in subscriptions to common stock.
Notes 4. Related Party Transactions
The former President and General Manager of the Company, Dr. Paul
Bickert is the founder of the Company. Dr. Bickert and his wife
jointly is the Company's largest stockholder.
The Company has an exclusive four-year lease on the cellular
phone user protection technology from Dr. Bickert. The Company
possesses the exclusive right to sublease or sell this technology
to others. The technology lease is the subject of a lawsuit
described in Note 3.
The Company leases its office and research facility from the
stockholder on a month-to-month basis at a rate of $2,267 per
month.
Dr. Bickert had net loan balances due from the Company for cash
advances and unpaid salary and technology lease payments totaling
$51 843 and $372,885 at October 31, 1999 and 1998 respectively
During the year ended October 31, 1998, the Company received cash
advances from the stockholder amounting to $2,714 and repaid
advances in the amount of $167,221. Additionally, the Company
cancelled 755,000 shares of common stock, which had been
authorized by the Company and issued by its transfer agent in
prior years as repayment of amounts due the stockholder. The
shares returned had a fair value of $169,875 and such amount has
been added to the officer loan account. The loan account was
also increased by $210,000 during 1998 due to technology lease
and salary payments due to the stockholder. The amount due for
technology payments ($120,000) was reversed in 1999 due to the
lawsuit disclosed in Note 3. The reversal is included in other
income and expense in the accompanying financial statements.
<PAGE>28
During the year ended October 31, 1999, the Company incurred
salary expense of $45,000 and other expenses including rent of
$18,143 in favor of the former officer and received cash advances
of $10,287. During the year ended October 31, 1999, the Company
made cash payments of $150,812 to the officer and issued to him
238,055 shares of common stock valued at $128,550 based upon the
bid price of the Company's common stock at the date the issuance
was approved.
Note 5. Stockholders' Equity
During the year ended October 31, 1999, the Company issued
3,081,813 shares of its common stock pursuant to the exercise of
warrants and options for cash aggregating $697,288. The warrants
were issued in connection with a 1997 private placement as
described. No outstanding warrants remain outstanding at October
31, 1999.
Additionally during 1999, the Company issued an aggregate of
291,927 shares of its common stock to individuals or entities that
had provided goods or services to the Company during the year.
The shares were valued at the fair value of the common stock
issued at the date the issuance was authorized by the board of
directors. The aggregate value of the goods and services provided
to the Company was $126,141.
Additionally during 1999, the Company accepted subscriptions for
the issuance of 843,250 shares of its common stock for cash
aggregating $435,475. The shares remained unissued at October 31,
1999 and the fair value thereof is included in subscriptions to
common stock.
During the year ended October 31, 1998, the Company issued
156,343 shares of its common stock pursuant to the exercise of
warrants for cash aggregating $47,951. The "A" warrants were
issued in connection with a 1997 private placement of the
Company's common stock and had an original exercise price of $.87
per share. During August, 1998 the Company's board of directors
authorized a limited time discount of the exercise price to
warrant holders wishing to exercise all or part of their
outstanding warrants. The exercise price was discounted to $.31
per share due to the Company's need for additional equity capital
and a decline in the fair value of its common stock. Warrant
holders who exercised during the discount period were awarded "B"
warrants exercisable at $.53 per share for one year on a one
warrant for one share purchased basis.
Additionally during 1998, the Company issued an aggregate of
310,055 shares of its common stock to individuals or entities
that had provided goods or services to the Company during the
year. The shares were valued at the fair value of the common
stock issued at the date the issuance was authorized by the board
of directors. The aggregate value of the goods and services
provided to the Company was $264,967.
No dividends have been declared since the inception of the
Company nor does the Company anticipate that dividends will be
declared in the ensuing fiscal year.
As of October 31, 1999, the Company had outstanding options to
purchase and aggregate of 12,121 shares of its common stock by
officers and directors at an exercise price of $.165. The
options were granted during the years ended October 31, 1995 and
1996.
Also at October 31, 1999 the Company had options to purchase an
aggregate of 250,000 shares of common stock at $.85 per share and
300,000 shares of common stock at $3.00 per share that were
granted in connection with the employment contracts described in
Note 3. Additionally, the Company awarded two members of its
Board of Directors options to purchase an aggregate of 43,332
shares of common stock at $1.0625 per share.
During the year ended October 31, 1997 the Company established a
non-statutory stock option plan to benefit employees, officers,
directors, consultants and others providing services to the
<PAGE>29
Company. The Company has reserved 500,000 shares of common stock
for issuance in connection with option grants made pursuant to
the plan.
The purchase price for shares granted under the plan shall not be
less than 85% of the fair market value of the stock on the grant
date. No shares have been granted under the plan as of the date
of these financial statements.
The weighted average fair value at the date of grant for warrants
and options granted during 1999 and 1998 was $.12 and $ .12 per
option. The fair value of the options at the date of grant was
estimated using the Black-Scholes model with assumptions as
follows:
Stock based compensation costs would have increased pretax losses
by approximately $113,800 and $28,000 in 1999 and 1998 ($.01 and
$.00 per share) if the fair value of the warrants granted had
been recognized as compensation expense.
<PAGE>30
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, the Company has duly caused this
Report to be signed on its behalf by the undersigned duly authorized
person.
Date: April 21, 2000 Globus Cellular Wireless, Ltd.
/s/ Bernard Penner
------------------------------------
By: Bernard Penner, President
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this report has been signed below by the following persons on
behalf of the Company and in the capacities and on the dates indicated.
/s/ Bernard Penner 4/21/00
- ------------------------------ Date:
Bernard Penner
President, CEO and Director
/s/ Nicholas Wizinsky 4/21/00
- ------------------------------ Date:
Nicholas Wizinsky
Secretary/Treasurer and COO
/s/ Jerome W. Cwiertnia 4/21/00
- ------------------------------ Date:
Jerome W. Cwiertnia
Director
/s/ Anthony Dyck 4/21/00
- ------------------------------ Date:
Anthony Dyck
Director
/s/ Hans Schroth 4/21/00
- ------------------------------ Date:
Hans Schroth
Director
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