AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 16, 2001
REGISTRATION NO. 333-____
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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GLOBUS WIRELESS, LTD.
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(Exact name of small business issuer as specified in its charter)
NEVADA 4812 88-0228274
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(State or other jurisdiction of (Primary standard industrial (I.R.S. Employer
incorporation or organization) classification code number) Identification No.)
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1955 Moss Court
Kelowna, British Columbia
Canada V1Y 9L3
(250) 860-3130
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(Address, including zip code, and telephone number, including area
code, of Registrant's principal executive offices)
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Michael Morrison
Attorney at Law
1495 Ridgeview Drive, Suite 220
Reno, NV 89509
(250) 860-3130
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(Name and address, including zip code, and telephone number, including
area code, of agent for service)
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Copies to: Gregory Sichenzia, Esq.
Sichenzia, Ross & Friedman, LLP
135 West 50th Street, 20th Floor New York,
New York 10020 (250) 664-1200
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Approximate date of proposed sale to public:
As soon as practicable after this registration statement becomes effective.
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If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
--------------------------------
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<CAPTION>
CALCULATION OF REGISTRATION FEE
==================================== ================ ======================= ======================== ================
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PER SECURITY(1) PRICE(1) FEE
------------------------------------ ---------------- ----------------------- ------------------------ ----------------
<S> <C> <C> <C> <C>
Common Stock, no par value 1,978,022 $ 2.00 $3,956,044 $1,045
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Common stock, no par value,
underlying warrants 593,506 $ 2.30 $1,365,064 $ 361
------------------------------------ ---------------- ----------------------- ------------------------ ----------------
Common stock underlying the 12% 1,624,764 $1.8062 $2,934,649 $ 775
------------------------------------ ---------------- ----------------------- ------------------------ ----------------
Common stock, no par value 415,236 $1.9862 $ 824,742 $ 218
------------------------------------ ---------------- ----------------------- ------------------------ ----------------
TOTAL 4,611,528 $9,080,499 $2,401
==================================== ================ ======================= ======================== ================
(1) Estimated solely for the purpose of determining the registration fee.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not soliciting an offer to buy these securities
in any state where the offer or sale is not permitted.
PROSPECTUS
January _____, 2001
GLOBUS WIRELESS, LTD.
4,611,528 Shares of Common Stock
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This prospectus relates to the resale by the selling stockholders of up to
4,611,528 shares of our common stock. The selling stockholders may sell common
stock from time to time in the principal market on which the stock is traded at
the prevailing market price or in negotiated transactions. Please see the
"Selling Stockholders" section in this prospectus for a complete description of
all of the selling stockholders.
We will not receive any proceeds from the sale of shares by the selling
stockholders. However, we will receive proceeds upon the exercise of any
warrants that may be exercised by the selling stockholders and upon the sale of
shares of common stock to Torneaux Fund Ltd.
Our common stock is quoted on the Over-the-Counter Bulletin board under the
symbol "GBWL." On January ___, 2001, the closing price of our common stock was
$__ per share.
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This investment involves a high degree of risk. See the "Risk Factors" beginning
on page__.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is complete or accurate. Any representation to the contrary is a
criminal offense.
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<PAGE>
TABLE OF CONTENTS
Section Page Number
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Prospectus Summary................................................... 1
Risk Factors......................................................... 7
Use of Proceeds...................................................... 17
Dilution............................................................. 17
Price Range of Common Stock.......................................... 18
Dividend Policy...................................................... 19
Capitalization....................................................... 20
Selected Financial Data.............................................. 21
Management's Discussion and
Analysis of Financial Condition and Results of Operation......... 22
Business............................................................. 30
Management........................................................... 40
Summary Compensation Table........................................... 43
Security Ownership of Management and Certain Beneficial Owners....... 46
Description of Capital Stock......................................... 49
Selling Stockholders................................................. 52
Shares Eligible for Future Sale...................................... 54
Plan of Distribution................................................. 55
Experts.............................................................. 58
Legal Matters........................................................ 58
Index to Financial Statements........................................ 59
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
SEC utilizing a shelf registration process in accordance with a Registration
Rights Agreement dated as of October 6, 2000 between our company and Torneaux
Fund Ltd. and a Registration Rights Agreement dated as of December 29, 2000 by
and among our company and various investors. Under this process, the
stockholders named in the "Selling Stockholders" section of this prospectus, or
in any supplement to this prospectus, may sell the common stock described in
this prospectus from time to time. This prospectus provides you with a general
description of the common stock. Each time that selling stockholders want to
offer common stock and have provided us with a notice in accordance with the
terms of the Registration Rights Agreement, we will provide a prospectus
supplement that will contain specific information about the terms of that
offering. The prospectus supplement may also add, update or change information
contained in this prospectus. We have the right to suspend the use of this
prospectus in accordance with the Registration Rights Agreement. You should read
both this and any prospectus supplement together with any additional information
described under the heading "How to Obtain More Information about Globus
Wireless, Ltd."
<PAGE>
PROSPECTUS SUMMARY
Globus Wireless, Ltd.
Our business............ We research, design, manufacture, market, and
distribute wireless communication products.
Through design and engineering efforts at our
research and development center, Celltech Research
Inc., we market our proprietary Specific
Absorption Rate, or SAR, solutions to Original
Equipment Manufacturers or OEMs of wireless
communication devices. SAR is a measurement to
determine the amount of microwave radiation
absorbed by human tissue.
We recently acquired Edge Continental Inc., an
Ontario, Canada corporation. Edge Continental Inc.
is an international distributor of OEM wireless
phones and accessories, leading edge aftermarket
products, and certain proprietary design handset
accessories. Edge also provides clearinghouse
services for OEM and carrier overstocked products
for all wireless platforms.
Our products............ Through proprietary and trade secret processes, we
provide engineered solutions to wireless equipment
OEMs, to assist in their products achieving lower
SAR measures and enhanced performance, in
compliance with regulatory guidelines, for such
wireless communications products such as wireless
phones, laptops, personal digital assistants,
Family Service Radios, Marine and two-way radios.
Performance objectives include increased range,
clarity, battery life, fewer failed attempts, and
dropped calls.
In addition, we market and sell a full suite of
OEM handsets, OEM and aftermarket accessory
products, and certain wireless accessory product
proprietary to Globus. Included in our product
lines are name brand wireless phones, OEM and
aftermarket batteries, in-car hands free units,
walk & talk microphones, cigarette lighter
adapters, and a range of accessory products for
both high end and casual users.
Marketing............... We are marketed to OEMs worldwide as a solution
provider for OEMs in order to satisfy their
applicable government regulations, as well as
carrier client and consumer client performance
requirements. Celltech also serves as a testing
agency and filing center for OEMs and their
requirement to satisfy Federal Communication
Commission and Industry Canada regulations for
wireless communication devices.
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Additionally, we are marketed as an international
wireless products distribution engine, providing
products at several distributor levels,
domestically and internationally, including direct
from an OEM supply, to providing products under
value added dealer programs in North America.
Carriers are a key target market as the primary
buyers of OEM handsets and accessories for
bundling with airtime services and resale to
end-users.
Our industry............ We are members of a world wide wireless
communication technology and product industry.
Industry analysts such as the Yankee Group predict
that world wide production and sale of wireless
handsets will exceed 500 million units in 2001,
climbing to 1 billion units in 2003. By 2005,
wireless technology is forecasted to account for
50% of all global phone calls.
Our strategy............ o to become a leading provider
of technology solutions that
provide lower SARs for OEM
wireless products, without
affecting the desired
performance of the product.
o to become a major distributor
and supplier of quality OEM
handsets and OEM aftermarket
and proprietary wireless phone
accessories to carrier clients
and distributors globally and
dealers in North America.
o to secure new marketing,
manufacturing and technology
opportunities in the wireless
communication industry which
are synonymous with our
commitment to market products
which enhance performance,
reduce operating costs and/or
improve efficiency, and which
will provide us with earnings.
Our history............. We were incorporated in Nevada in June 1987 under
the name Daytona-Pacific Corporation. In October
1994, we acquired all of the assets of Globus
Cellular & User Protection Ltd. (B.C.). In August
1997, we changed our name to Globus Cellular, Ltd.
From 1994 to 1999, we were a development stage
company researching enhanced technologies for
cellular phones. In June 1999, a new executive
team was appointed to leverage a leadership
position in SAR research. In December 1999, our
name was changed to Globus Wireless Ltd., being
more indicative of our expertise, technologies and
new product lines applicable to most all industry
protocols and applications outside the
telecommunications industry.
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Our principal offices... We maintain executive offices at our research
center, located at 1955 Moss Court, Kelowna,
British Columbia, Canada V1Y 9L3 and our telephone
number is (250) 860-3130. We operate marketing,
sales and distribution centers in Markham,
Ontario, Canada; Los Angeles, California, USA;
Reno, Nevada, USA; and Seoul, Korea.
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The Offering
Registration rights.......... This prospectus is part of a registration
statement filed pursuant to two registration
rights agreements, relating to our common stock,
dated as of October 6, 2000 and December 29, 2000,
for the benefit of the owners of the common stock.
We have agreed to use our best efforts to keep the
registration statement effective until all the
shares have been sold or until the shares of
common stock may be sold pursuant to Rule 144 (k)
of the Securities Act of 1933. See "Registration
Rights" on page __.
Common stock outstanding
before this offering....... We have 13,050,954 shares of common stock
outstanding prior to this offering.
Common stock offered by the
selling stockholders....... 4,611,528 shares of common stock
Common stock outstanding
after this offering.......... Up to 17,662,482 shares, assuming the sale of all
of the shares registered in connection with the
common stock purchase agreement, exercise of all
warrants by the selling stockholders and
conversion of all 12% series A convertible
preferred stock.
Use of proceeds.............. We will not receive any proceeds from the sale of
securities by the selling stockholders.
Riskfactors.................. Investing in these securities involves a high
degree of risk and immediate and substantial
dilution of your investment. As an investor, you
should be able to bear a complete loss of your
investment. See "Risk Factors" and "Dilution" for
a more detailed discussion.
Forward-looking statements... This prospectus contains forward-looking
statements that address, among other things, our
expansion and acquisition strategy, business
development, use of proceeds, projected capital
expenditures, liquidity, and our development of
additional revenue sources. The forward-looking
statements are based on our current expectations
and are subject to risks, uncertainties and
assumptions. We base these forward-looking
statements on information currently available to
us, and we assume no obligation to update them.
Our actual results may differ materially from the
results anticipated in these forward-looking
statements, due to various factors.
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The 17,662,482 shares of common stock to be outstanding after this offering
excludes 1,626,833 options reserved and allotted, to members of the board of
directors, executive officers, senior management and key employees.
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Consolidated and Pro Forma Financial Data
The following summary of consolidated and pro forma financial data should
be read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the consolidated financial statements,
including the related notes. The consolidated statement of earnings for the
fiscal years ended October 31, 1998 and 1999 and the balance sheet data as at
1999 are derived from the audited consolidated financial statements of Globus
Wireless, Ltd., which have been audited by James E. Scheifley & Associates,
P.C., Certified Public Accountants. The pro forma consolidated statement of
operations for the fiscal year ended October 31, 1999 and pro forma balance
sheet data are derived from the audited financial statements of Edge Continental
Inc.which have been audited by KPMG LLP. The consolidated statement of earnings
for the nine months ended July 31, 1999 and 2000 and the balance sheet data as
at July 31, 1999 and 2000 are unaudited and have been prepared from our books
and records and reflect, in our opinion, all adjustments necessary for a fair
presentation of our financial position, results of operations, and cash flows,
as at and for the periods indicated therein. The selected interim financial data
presented below do not necessarily indicate the operating results or our
performance for the full year.
Consolidated Statement of Earnings:
Fiscal Year October 31, Nine Months Ended July 31,
----------------------- --------------------------
1998 1999 1999 1999 2000 2000
---- ---- ---- ---- ---- ----
Unaudited Unaudited Pro Forma(1)
Pro Forma(1)
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<S> <C> <C> <C> <C> <C> <C>
Revenues 10,129 3,171 5,986,606 -- 79,432 4,079,661
Operating Expenses:
Cost of Sales -- -- 5,551,492 -- 11,656 3,592,409
Research and development 67,685 70,745 70,745 36,932 154,132 154,132
General and administrative 687,003 795,204 1,181,765 617,768 967,568 1,427,245
Other expenses -- -- 97,654 -- -- 103,194
---------- ---------- ---------- ---------- ---------- ----------
Total Expenses 754,688 865,949 6,901,656 654,700 1,133,356 5,276,980
---------- ---------- ---------- ---------- ---------- ----------
(744,560) (862,778) (915,050) (654,700) (1,053,924) (1,197,319)
Interest (8,868) (18,441) (46,672) -- -- (96,284)
---------- ---------- ---------- ---------- ---------- ----------
Income / (Loss) Before Taxes (753,428) (844,337) (961,722) (654,700) (1,053,924) (1,293,603)
Taxes 2,340 -- -- 11,279 -- --
Income (loss) from continuing
operations (751,088) (844,337) (961,722) (643,421) (1,053,924) (1,293,603)
Income (loss) from
discontinued operation net of 13,252 -- -- 21,895 -- --
income taxes
Loss (737,836) (844,337) (961,722) (621,526) (1,053,924) (1,293,603)
Loss per Share (0.10) (0.10) (0.11) (0.09) (0.09) (0.11)
Consolidated Balance Sheet Data:
As at October 31, As at July 31,
----------------------------------------------------
1999 1999 2000 2000
---- ---- ---- ----
Unaudited Unaudited Pro Forma(1)
Total Current Assets 585,191 417,589 751,601 1,027,390
Property and equipment, at cost,
less accumulated depreciation 290,351 196,454 397,705 483,151
Other assets 16,111 20,410 14,847 1,772,899
Total Current Liabilities 141,226 323,623 80,342 1,426,229
Total Shareholders' Equity 750,427 310,829 1,083,811 1,857,211
-------------
(1) Gives effect to the acquisition of Edge Continental Inc.
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RISK FACTORS
Investing in our securities will provide you with an equity ownership
interest in Globus Wireless, Ltd. As one of our shareholders, your investment
will be subject to risks inherent in our business. If any of the following risks
actually occur, our business could be harmed. In that event, the trading price
of our shares might decline, and you could lose all or part of your investment.
You should carefully consider the following factors as well as other information
contained in this prospectus before deciding to invest in shares of our
securities. Additional risks that are not currently known to us or that we deem
immaterial may also harm us and the value of your investment. An investment in
our securities involves a high degree of risk.
We have a history of net losses and negative cash flow and may not be able to
satisfy our cash needs from operations.
Except for the 3rd quarter of 1996, and our most recent 4th quarter 2000,
we have never been profitable. We have experienced negative cash flow since
1994. Our accumulated deficit was approximately $5,398,815 at July 31, 2000. We
cannot project with certainty that losses will not continue in the short term as
we grow and integrate our businesses, and that losses will not continue in the
long term should we be unsuccessful in our business and integration efforts. We
cannot know when, if ever, net cash generated by our internal business
operations will support our growth and continued operations.
We will need substantial amounts of additional financing.
We anticipate that we will need substantial amounts of cash for:
o capital expenditures to build and enhance our business;
o operating expenses relating to our business, expansion and integration
efforts;
o potential acquisitions;
o debt service requirements; and
o other general corporate expenditures.
There is a probability that our cash needs will exceed our cash flows from
operating activities through 2001, which means we will have to seek out
additional financing. In addition, we may need to revise our business plan to
respond to competitive and other factors, so our need for cash may increase.
Other factors may adversely affect our access to additional financing, and we
may have to curtail our business if we cannot access additional financing.
Our access to additional funds also may be limited by:
o general market conditions that adversely affect the availability or
cost of financings;
o market conditions affecting the telecommunications industry in general
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o the terms of options and warrants issued to others, that may make
equity financings more difficult;
o the potential commercial opportunities and risks associated with
implementation of our business plan;
o the market's perception of our performance and assets; and
o the actual amount of cash we need to pursue our business strategy.
Funding for our capital needs is not assured, and we may have to curtail our
business if we cannot find adequate funding.
Except for our equity financing agreement with Torneaux, we currently have
no legally binding commitments or understandings with any third parties to
obtain any material amount of additional equity or debt financing. We cannot
assure you that we will be able to obtain any additional financing in the
amounts or at the times that we may require the financing or, if we do obtain
any financing, that it would be on acceptable terms. As a result, we cannot
assure you that we will have adequate capital to implement future expansions and
enhancements of our wireless technology, to maintain our current levels of
operation or to pursue strategic acquisitions. Our failure to obtain sufficient
additional financing could result in the delay or abandonment of some or all of
our development, expansion and expenditures, which could have an adverse effect
on us and on the value of our common stock.
The loss of any of our significant customers would likely have a material
adverse effect on our revenues.
There is a limited number of wireless handset OEMs globally that could
benefit with our proprietary SAR solution process, and a limited number of other
wireless device OEMs that may benefit. Additionally, until such time as we
undertake an expansion of research facilities at Celltech, there is a finite
number of OEM clients and products that can be processed in a given time. For
product distribution sales as of October 31, 2000, our dealer customer base was
approximately 900 clients, of which only 50% are considered regular clients, and
of which 40 accounted for approximately 65% of total accounts receivable. As we
continue to increase our customer base, we believe we will be less likely to be
dependent on a limited number of significant customers. We cannot assure you
that we will be less dependent on a limited number of significant customers in
the future, and the loss of any such significant customer, especially in the
initial integration period and until expanded facilities for Celltech are
completed, would likely have a material adverse effect on our revenues.
We have experienced significant growth in a short period of time and may have
trouble integrating acquired businesses and managing our expansion.
Since September 1, 2000, we have completed one acquisition and signed a
letter of intent to acquire another in the 1st Quarter of fiscal 2001.
Acquisitions may involve numerous risks, including difficulty in integrating
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operations, technologies, systems, and products and services of acquired
companies, diversion of management's attention and disruption of operations,
increased expenses and working capital requirements, entering markets in which
we have limited or no prior experience and where competitors in such markets
have stronger market positions and the potential loss of key employees and
customers of acquired companies. In addition, acquisitions may involve financial
risks, such as the potential liabilities of the acquired businesses, the
dilutive effect of the issuance of additional equity securities, the incurrence
of additional debt, the financial impact of transaction expenses and the
amortization of goodwill and other intangible assets involved in any
transactions that are accounted for using the purchase method of accounting, and
possible adverse tax and accounting effects.
We have a limited history of owning and operating our acquired businesses on a
consolidated basis, which could result in ineffective management of these
businesses.
There can be no assurance that we will be able to meet performance
expectations or successfully integrate our acquired businesses on a timely basis
without disrupting the quality and reliability of service to our customers or
diverting management resources. Our rapid growth has placed and will continue to
place a significant strain on management, our financial resources, and on our
information, operating and financial systems. If we are unable to manage this
growth effectively, it may have an adverse effect on our business, financial
condition and results of operations.
Our recent acquisition of Edge Continental may have an adverse effect on our
earnings.
We recently acquired Edge Continental Inc. Edge Continental is an
international distributor of OEM wireless phones and accessories, leading edge
aftermarket products, certain proprietary design handset accessories, and
provides clearinghouse services for OEM and carrier overstocked product, for all
wireless platforms. If we are unable to effectively integrate Edge Continental's
business into our existing business, and retain certain key employee expertise
in our organization, it may have an adverse effect on our earnings or revenue
growth.
Because Edge Continental has a limited operating history, we cannot assure that
we can successfully execute our business strategy.
We are relying heavily on the prospects of Edge Continental, and their
founders expertise, for our future revenue growth. In the years ended July 31,
1999 and 2000, Edge Continental had total revenues of $5,983,435 and $5,851,654,
respectively. Despite the revenues, Edge Continental still had losses for the
year ended July 31, 1999 and 2000 of $182 and $179,156, respectively, a result
of a strategy to pursue increased market share and building up of the business
clientele. If we are unable to successfully execute our now combined business
strategy, we would likely not achieve anticipated levels of revenue growth and
earnings from the operations that are expected to result in profitability.
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The loss of any of our key executives may have a material adverse effect upon
our operations.
Our success is dependent upon the expertise of the key members of our
management team, particularly our President and Chief Executive Officer, Bernard
Penner, Chief Financial & Operating Officer, Nicholas Wizinsky, Senior Vice
President Corporate Development, International & Carrier Sales, A. Cary
Tremblay, Senior Vice President Marketing & Sales, Wireless Devices, Gord Walsh,
Vice President Procurement & US Distribution, Victor Abuharoon (formerly Edge
Continental President), Vice President North American Dealer Distributor Sales,
Randy Aquino (formerly Edge Continental Vice President) and General Manager for
Celltech, Shawn McMillen. The loss of services from any of these individuals
would have a material adverse effect upon our operations. Our future success
also depends on our continuing ability to attract, train and retain highly
qualified technical, sales, marketing, development and managerial personnel. If
we are unable to hire such personnel on a timely basis, our business, operating
results and financial condition could be adversely affected.
Intense competition in the market for communications equipment could prevent us
from increasing or sustaining revenues or achieving or sustaining profitability.
The market for wireless communications equipment is rapidly evolving and
highly competitive. Increased competition is likely to result in price
reductions, shorter product life cycles, reduced gross margins, longer sales
cycles and loss of market share, any of which would harm our business. As a
provider of design and engineered solutions we compete with other test labs
globally and the in-house research and development efforts of the OEMs. We
expect our competitors and the OEMs to continue to improve the engineering
expertise and performance of product and to introduce new products or new
technologies that may supplant or provide lower cost alternatives to our
solutions. To be competitive, we must continue to invest significant resources
in research and development on SAR solutions, as well as significant resources
in sales, marketing and customer support of our product distribution businesses.
We cannot be sure that we will have sufficient resources to make these
investments or that we will be able to make the technological advances or secure
new products for distribution necessary to be competitive. As a result, we may
not be able to compete effectively against our competitors.
If we are not able to identify, develop, assemble, market or support our
products successfully or respond effectively to technological changes or product
announcements by competitors, we may not remain competitive.
Rapidly changing technology and new product introductions characterize the
markets for our products. Accordingly, we believe that our future success will
depend on our ability to enhance our existing products and to develop or procure
and introduce in a timely fashion new products that achieve market acceptance.
We cannot assure you that we will be able to identify, develop, procure,
assemble, market or support our products successfully or that we will be able to
respond effectively to technological changes or product announcements by
competitors.
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Our efforts to keep pace with technological change may be unsuccessful, which
could adversely affect operating results and the value of your investment.
Our solutions based technology could become obsolete. We rely on an
engineering solutions technology and certain trade secret processes applicable
for most radio frequency emitting devices but that may not be compatible with,
and may compete with, newer forms of wireless communication technology now in
development.
Competition among these differing technologies can:
o segment the user markets, which could reduce demand for specific
technologies, including our technology; and
o adversely affect market acceptance of our services.
We cannot assure you that our solutions based wireless technology will
successfully compete with the other solutions or product enhancements that may
later be developed. Further, new wireless technology and product may develop
that will cause our existing technology to be obsolete or otherwise impair
market acceptance of our technology.
Our success is dependent on the continued development of the emerging wireless
market.
The market for wireless technology has only recently begun to develop and
is rapidly evolving. Because this market is new, it is difficult to predict its
potential size or future growth rate. Our success in generating revenue in this
emerging market will depend, among other things, on the growth of this market.
If the market for wireless technology fails to develop or develops more slowly
than expected, or if our systems do not achieve widespread market acceptance in
this market, our business would be significantly harmed.
We will face challenges to our business if our target market adopts alternate
standards for wireless transmission, or if our systems fail to comply with
evolving industry standards and government regulations.
Wireless technology is extremely complex, and products must adhere to a
continually changing set of standards and compliance requirements. Currently,
our solutions based technology is designed to assist OEMs in satisfying FCC and
IC regulations. Regulatory guidelines, as well as the protocol definitions for
radio frequency transmission, however, are established by governments and
industry standards organizations over which we have no direct influence. We have
invested substantial amounts of engineering resources into developing a
solutions based technology and trade secret processes that assist OEMs in
achieving compliance to these standards. Should government regulators or these
industry organizations change the regulations or standards for radio frequency
transmission or its associated technology, or if government or these industry
organizations introduce new and substantially different regulations and
standards for data transmission, we may not be able to introduce systems in a
timely manner that meet these new and evolving regulations and standards. If we
fail to introduce systems that meet new and evolving data transmission
regulations and standards, our business would be significantly harmed.
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Additionally, our business may be indirectly harmed by legal challenges to the
safety of certain wireless industry technologies, potentially reducing or
limiting potential numbers of clients for our technology.
A majority of service providers that use wireless technologies are emerging
companies with unproven business models.
Many of our distribution customers for handsets are service providers that
are using wireless technologies to attract and retain new end-user customers.
Many of the wireless equipment OEMs providing product to the service providers,
and those utilizing our solutions expertise, are emerging companies with a
limited degree of success in the wireless industry. The wireless market is
intensely competitive, and OEM handset market has become increasingly
competitive at all levels in recent years, primarily as a result of increased
competition among the service providers that are typically forced to reduce the
monthly access charges they impose upon their subscribers in order to attract
and retain additional subscribers. The reduction in monthly access charges
reduces the amount of capital available for service providers to invest in their
purchasing of new handset models. Both service providers and handset OEMs may
therefore become under-capitalized and may not be able to remain in business for
a substantial period of time. The failure or loss of both the OEMs and the
service providers as customers would significantly harm our business.
Additionally, a number of suppliers for our distribution business are smaller
and new organizations that may be under capitalized and therefore unable to meet
our long term supply needs. In our distribution supply businesses, there are
significant numbers of dealer organizations that are relatively small,
especially in the US markets where wireless distribution markets tend to be more
fragmented, and these organizations may also be under-capitalize. Both the SAR
solutions business and distribution business rely heavily on successful sales
and marketing to or supply from foreign firms, and most of the firms are
emerging companies, with unproven business models.
Because of intense competition, we may not be able to recruit or retain
qualified personnel.
Our growth in operations has placed significant demands on our management,
engineering staff and facilities. Continued growth will require us to hire more
engineering, manufacturing, sales and administrative personnel. We may not be
able to attract and retain the necessary qualified personnel to accomplish our
business objectives and we may experience constraints that could harm our
ability to satisfy customer demand in a timely fashion or to support our
customers and operations. We have at times experienced, and continue to
experience, difficulty in recruiting qualified personnel, especially on the
technical side of the business where competition in the RF industry is intense
and unlikely to abate in the next decade. Recruiting qualified personnel is an
intensely competitive and time-consuming process. We will need to train new
sales and marketing personnel before they achieve full productivity. The design
and engineering of SAR solutions utilizing our proprietary technology can be
complex. Accordingly, we need highly trained professional services, both
technical and business. We cannot be certain that we will be able to
successfully attract and retain additional qualified personnel. In addition,
recently hired employees may not successfully integrate into our management
team. The inability to attract and retain qualified personnel or to assimilate
them into our business could significantly harm our business.
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<PAGE>
Risks Related To This Offering and Our Common Stock
---------------------------------------------------
Our commitments to issue additional common stock may adversely affect the market
price of our common stock and may impair our ability to raise capital.
We currently have outstanding commitments in various forms such as
warrants, options, and convertible securities to issue a substantial number of
new shares of our common stock. The shares subject to these issuance
commitments, to some degree, will be issued in transactions registered with the
Securities and Exchange Commission and thus will be freely tradable. In many
other instances, these shares are subject to grants of registration rights that,
if and when exercised, would result in those shares becoming freely tradable. An
increase in the number of shares of our common stock that will become available
for sale in the public market may adversely affect the market price of our
common stock and, as a result, could impair our ability to raise additional
capital through the sale of our equity securities or convertible securities.
The potential issuance of 2,571,528 shares of our common stock in connection
with the Torneaux Fund, Ltd. equity financing agreement may dilute your
investment in our common stock
On October 6, 2000, we entered into an equity financing agreement with
Torneaux Fund, Ltd., an institutional investor, under which Torneaux may
purchase up to 2,571,528 shares of our common stock. The equity line established
by the agreement permits Torneaux, at our request, to invest up to between $3.6
million and $18.0 million in our common stock periodically over a 15-month
period based upon a discount to the current market price of our common stock.
Subject to the conditions in the agreement, the timing and number of shares to
be sold is at our option. Torneaux's holding in Globus shall at no time exceed
9.99%. The aggregate issuances of these shares may have the effect of further
diluting the proportionate equity interest and voting power of holders of our
common stock, including investors in this offering.
We may experience variability in our operating results, which could negatively
impact the price of our shares.
Our annual and quarterly results have fluctuated in the past, especially in
the most recent fiscal year. The reasons for these fluctuations may similarly
affect us in the future, or our results may fluctuate for newer reasons than
previously experienced. Prospective investors should not rely on results of
operations in any past period to indicate what our results will be for any
future period. Our operating results may fluctuate in the future as a result of
many factors, including:
o variations in the timing and volume of customer orders;
o introduction and market acceptance of our new products;
o changes in demand for our existing products;
o the accuracy of our forecasts of future requirements;
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<PAGE>
o changes in government regulations, and or industry standards,
concerning SAR and other regulated measures of performance for
wireless devices;
o changes in competitive and economic conditions generally or in our
markets; and
o the timing of, and the price we pay for, acquisitions and related
integration costs.
Any of these factors or a combination of these factors could have a
material adverse effect on our business, financial condition and results of
operations.
We may need additional capital that could dilute the ownership interest of
investors.
We require substantial working capital to fund our business. If we raise
additional funds through the issuance of equity, equity-related or convertible
debt securities, these securities may have rights, preferences or privileges
senior to those of the rights of holders of our common stock may experience
additional dilution. We cannot predict whether additional financing will be
available to us on favorable terms when required, or at all. Since our
inception, we have experienced negative cash flow from operations for all but
two quarters since 1996, and expect to experience significant negative cash flow
from operations in the immediate future as we grow, expand and integrate our
businesses. The issuance of additional common stock by our management, may have
the effect of further diluting the proportionate equity interest and voting
power of holders of our common stock, including investors in this offering.
14
<PAGE>
THE OFFERING
Common Stock Purchase Agreement
Of the shares of common stock being registered for resale by the selling
stockholders, 2,571,58 shares are being registered in connection with our common
stock purchase agreement with Torneaux Fund Ltd.
On October 6, 2000, we entered into a common stock purchase agreement and
related agreements with Torneaux Fund Ltd., a private equity fund organized
under the laws of the Bahamas. Subject to the fulfillment of certain conditions,
the agreements provide us with a facility through which we may sell shares of
our common stock, at our option, to Torneaux Fund Ltd. periodically over a
15-month period. Our ability to request a draw down under the common stock
purchase agreement is subject to the continued effectiveness of a resale
registration statement filed with the Securities and Exchange Commission to
cover the shares to be issued. The amount of common stock to be sold at each
draw down will not be less than $200,000 nor more than $1.0 million. We have
agreed to sell our shares to Torneaux Fund Ltd. at a price equal to the then
current market price of our common stock during the draw down period, less a
discount of between 7.0% and 9.0% specifically determined based upon a formula
related to the then current market price of the stock. The number of shares that
we may sell to Torneaux Fund Ltd. varies depending on certain factors, including
the market price of the common stock and the then current ownership interest of
our common stock by Torneaux Fund Ltd. We have also agreed to issue to Torneaux
Fund Ltd. warrants to purchase up to 30% of the number of shares of common stock
being purchased at the time of each draw down. Torneaux Fund Ltd. will either
resell its shares of our common stock in the open market, resell its shares of
our common stock to other investors in negotiated transactions or hold shares of
our common stock in its portfolio. This prospectus covers the resale by Torneaux
Fund Ltd. of common stock purchased by Torneaux Fund Ltd. and issuable upon
exercise of the related warrants either in the open market or to other
investors.
12% Series A Convertible Preferred Stock
Of the shares being registered, 2,040,000 shares of common stock are being
registered for resale upon conversion of our outstanding 12% series A
convertible preferred stock and warrants held by preferred stockholders.
On December 29, 2000, we issued an aggregate of 1,500 shares for our 12%
series A convertible preferred stock in a private placement to accredited
investors. Holders of the 12% series A convertible preferred stock are entitled
to voluntary and mandatory conversion and redemption of their shares under
certain circumstances. At any time on or after April 28, 2001, each share of 12%
series A convertible preferred stock shall be convertible into the number of
shares of our common stock equal to the accrued dollar value of each 12% series
A convertible preferred share, $1,000 plus accrued and unpaid dividends on such
share, divided by the lesser of 1.8062 or eighty percent (80%) of the average of
the three lowest closing bid prices of our shares of common stock during the
twenty consecutive trading days immediately preceding the date of such
conversion, subject to certain readjustments. In addition, each share of our 12%
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<PAGE>
series A convertible preferred stock shall automatically convert into shares of
our common stock on December 29, 2003, in the same manner of conversion as
described in the immediately preceding sentence. Upon the occurrence of certain
major transactions or triggering events, each holder may require us to redeem
their shares of 12% series A convertible preferred stock at a price equal to
125% of the liquidation value of such shares at that time. Our failure to effect
any voluntary or mandatory conversion or redemption of shares of 12% series A
convertible preferred stock may result in the payment of liquidated damages to
the holders. This prospectus covers the resale of the shares of common stock
underlying the shares of preferred stock and warrants issued in the private
placement.
16
<PAGE>
USE OF PROCEEDS
This prospectus relates to shares of our common stock that may be offered
and sold from time to time by the selling stockholders of our company. There
will be no proceeds to our company from the sale of shares of common stock in
this offering.
DILUTION
Since this offering is being made solely by the selling stockholders and
none of the proceeds will be paid to our company, our net tangible book value
will be unaffected by this offering.
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<PAGE>
MARKET FOR COMMON EQUITY AND RELATED STOCK MATTERS
Our common stock trades on the NASD Over-The-Counter Market under the
symbol "GBWL". Trading of our common stock began on September 19, 1995. The
following table sets forth the range of high and low bid quotations for our
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.
PERIOD HIGH LOW
------ ---- ---
Year Ended October 31, 1998:
First Quarter........... .656 .656
Second Quarter.......... .531 .500
Third Quarter........... .375 .375
Fourth Quarter.......... .250 .250
Year Ended October 31, 1999:
First Quarter........... .343 .218
Second Quarter.......... 1.656 .562
Third Quarter........... 3.250 1.218
Fourth Quarter.......... 2.625 1.968
Year Ended October 31, 2000:
First Quarter........... 2.687 1.250
Second Quarter.......... 10.125 2.000
Third Quarter........... 4.937 2.875
Fourth Quarter.......... 6.00 2.093
The approximate number of holders of record of our common stock, $.001 par
value, as of October 31, 1999, was 298. As of October 31, 2000 there were 271
holders of record.
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<PAGE>
DIVIDEND POLICY
Holders of our common stock are entitled to receive such dividends as
may be declared by our board of directors. No dividends on our common stock have
ever been paid, and we do not anticipate that dividends will be paid on our
common stock in the next fiscal year.
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<PAGE>
<TABLE>
<CAPTION>
CAPITALIZATION
The following table summarizes our long-term obligations and
capitalization as of October 31, 1999. The information in the table should be
read in conjunction with the more detailed combined financial statements and
notes presented elsewhere in this prospectus.
Nine Months Ended Fiscal Year Ended
July 31, 2000 October 31, 1999
------------- ----------------
<S> <C> <C>
Subscriptions for common stock................ - 382,627
Stockholders' equity:
Common stock 12,224 11,080
Additional paid-in capital................. 6,490,465 4,714,212
Accumulated other comprehensive income (20,063) (12,601)
Deficit.................................... (5,398,815) (4,344,891)
----------- -----------
Net shareholders' equity................... 1,083,811 367,800
--------- -------
Total capitalization....................... 1,083,811 750,427
========= =======
Additional Information About Financial Presentation
Options and Warrants. Unless this prospectus indicates otherwise, all
information presented in this prospectus assumes no exercise of warrants or
options outstanding.
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</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Consolidated and Pro Forma Financial Data
The following summary of consolidated and pro forma financial data should
be read in conjunction with "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and the consolidated financial statements,
including the related notes. The consolidated statement of earnings for the
fiscal years ended October 31, 1998 and 1999 and the balance sheet data as at
1999 are derived from the audited consolidated financial statements of Globus
Wireless, Ltd., which have been audited by James E. Scheifley & Associates,
P.C., Certified Public Accountants. The pro forma consolidated statement of
operations for the fiscal year ended October 31, 1999 and pro forma balance
sheet data are derived from the audited financial statements of Edge Continental
Inc., which have been audited by KPMG LLP. The consolidated statement of
operations for the nine months ended July 31, 1999 and 2000 and the balance
sheet data as at July 31, 1999 and 2000 are unaudited and have been prepared
from our books and records and reflect, in our opinion, all adjustments
necessary for a fair presentation of our financial position, results of
operations, and cash flows, as at and for the periods indicated therein. The
selected interim financial data presented below do not necessarily indicate the
operating results or our performance for the full year.
Consolidated Statement of Earnings:
Fiscal Year October 31, Nine Months Ended July 31,
----------------------- --------------------------
1998 1999 1999 1999 2000 2000
---------- ---------- ---------- ---------- ---------- ----------
Pro Forma(1) Unaudited Unaudited Pro Forma(1)
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Revenues 10,129 3,171 5,986,606 -- 79,432 4,079,661
Operating Expenses:
Cost of Sales -- -- 5,551,492 -- 11,656 3,592,409
Research and development 67,685 70,745 70,745 36,932 154,132 154,132
General and administrative 687,003 795,204 1,181,765 617,768 967,568 1,427,245
Other expenses -- -- 97,654 -- -- 103,194
---------- ---------- ---------- ---------- ---------- ----------
Total Expenses 754,688 865,949 6,901,656 654,700 1,133,356 5,276,980
---------- ---------- ---------- ---------- ---------- ----------
(744,560) (862,778) (915,050) (654,700) (1,053,924) (1,197,319)
Interest (8,868) (18,441) (46,672) -- -- (96,284)
---------- ---------- ---------- ---------- ---------- ----------
Income / (Loss) Before Taxes (753,428) (844,337) (961,722) (654,700) (1,053,924) (1,293,603)
Taxes 2,340 -- -- 11,279 -- --
Income (loss) from continuing
operations (751,088) (844,337) (961,722) (643,421) (1,053,924) (1,293,603)
Income (loss) from
discontinued operation net of 13,252 -- -- 21,895 -- --
income taxes
Loss (737,836) (844,337) (961,722) (621,526) (1,053,924) (1,293,603)
Loss per Share (0.10) (0.10) (0.11) (0.09) (0.09) (0.11)
Consolidated Balance Sheet Data:
As at October 31, As at July 31,
----------------------------------------------------
1999 1999 2000 2000
---- ---- ---- ----
Unaudited Unaudited Pro Forma(1)
Total Current Assets 585,191 417,589 751,601 1,027,390
Property and equipment, at cost,
less accumulated depreciation 290,351 196,454 397,705 483,151
Other assets 16,111 20,410 14,847 1,772,899
Total Current Liabilities 141,226 323,623 80,342 1,426,229
Total Shareholders' Equity 750,427 310,829 1,083,811 1,857,211
-------------
(1) Gives effect to the acquisition of Edge Continental Inc.
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</TABLE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our financial condition and results of
operations should be read in conjunction with the financial statements and notes
thereto included elsewhere in this prospectus. This document contains certain
forward-looking statements including, among others, anticipated trends in our
financial condition and results of operations and our business strategy. These
forward-looking statements are based largely on our current expectations and are
subject to a number of risks and uncertainties. Actual results could differ
materially from these forward-looking statements. Important factors to consider
in evaluating such forward-looking statements include (i) changes in external
competitive market factors or in our internal budgeting process which might
impact trends in the our results of operations; (ii) unanticipated working
capital or other cash requirements; (iii) changes in the our business strategy
or an inability to execute its strategy due to unanticipated changes in the
industries in which we operates; and (iv) various competitive factors that may
prevent the us from competing successfully in the marketplace.
Nine Months Ended July 31, 2000 As Compared To The Nine Months Ended July 31,
1999
Revenues. Revenues for the nine months ended July 31, 2000 increased to
$79,432 from nil for the nine months ended July 31, 1999. This increase was
primarily attributable to our June 1999 change in management and direction of
Globus, with a focus shift from research to marketing and sales of proprietary
wireless solution technologies and accessory products.
General and Administrative Expenses. General and administrative expenses
for the nine months ended July 31, 2000 increased 57% to $967,568 from $617,718
for the nine months ended July 31, 1999. This increase was directly attributable
to the shift in business strategy from research and development to the marketing
of our wireless proprietary technologies, products and testing services, and
offset by the cancellation of license fees paid under prior management in 1999.
Research and Development. Research and development costs for the nine
months ended July 31, 2000 increased 317% to $154,132 from $36,932 for the nine
months ended July 31, 1999. This increase was primarily due to continued
investment in equipment at and expansion of services provided by Celltech
Research Inc., our research and development arm.
Depreciation and Amortization. Depreciation and amortization for the nine
months ended July 31, 2000 increased to $51,142 from $49,133 for nine months
ended July 31, 1999. This increase was primarily due growth in operations at
Celltech and Globus Wireless Canada.
Net Losses. Net losses for the nine months ended July 31, 2000 increased to
$1,053,924 or $0.09 per share as compared to $621,526, or $0.09 per share for
the nine months ended 1999. This increase was primarily due to an aggressive
growth program to market globally our proprietary SAR solution technologies
directly to OEMs, and to the expansion of our wireless devices distribution
businesses.
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<PAGE>
Year Ended October 31, 1999 As Compared To The Year Ended October 31, 1998
Revenues. We did not receive any sales revenue for the years ended 1999 and
1998.
General and Administrative Expenses. General and administrative expenses
for the year ended October 31, 1999 increased 15.7% to $795,204 from $687,003
for the year ended October 31, 1998.
Research and Development. Research and development costs for the year ended
October 31, 1999 increased 4.09% to $70,455 from $67,685 for the year ended
October 31, 1998. This increase was primarily due to the continuing development
of our proprietary antennae technologies and opening of Celltech labs.
Depreciation and Amortization. Depreciation and amortization for the year
ended October 31, 1999 increased to $49,133 from $16,496 for year ended October
31, 1998. This increase was primarily due to a growth in operations at Celltech
and Globus Wireless Canada.
Net Losses. Net losses for the year ended October 31, 1999 increased to
$844,837 or $0.10 per share as compared to $737,836, or $0.10 per share for year
ended October 31, 1998. This increase was primarily due to a rapid growth in our
company and a refocusing of objectives following a change in management in June
1999, and commitment to aggressively leverage our leadership position in SAR
research, marketing direct to OEMs.
We 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. Salary
and license costs and expenses converted to officer loans were $56,624.
For the year ended October 31, 1999, we experienced an increase 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, we 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.
Plan Of Operation
Since the commencement of fiscal 2000, we have initiated the following
actions and strategies with regards to the on-going advancement of our business
opportunities through to end of the 3rd quarter 2000:
1. In July 2000, we received our first analyst report recommendation by
Christopher Moore, CFA, Senior Vice President, Director of Research,
Coleman Investment Banking, New York, with a Speculative-Buy rating
and 12-month price target of $11. In November 2000 Mr. Moore had
indicated he was expecting to undertake a follow-up report in early
2001.
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<PAGE>
2. In June 2000, we announced we had signed a milestone agreement with
Hyundai Electronics Company, to supply Hyundai with a custom
engineered SAR solution for Hyundai's latest state-of the-art single
band dual mode wireless cell phone. The open-ended agreement
guarantees a minimum order size of 500,000 units. By year end 2000, we
had yet to be informed when Hyundai will manufacture the handset and
utilize the SAR solution of Globus.
3. In June 2000, we secured the services of Ben Hewson, CA, to serve as
Financial Controller, bringing over 13 years experience in both public
and private accounting, including 7 years as an auditor for BDO
Dunwoody and Ernst & Young. In November 2000 Mr. Hewson was named
Corporate Controller for all Globus Wireless companies and operating
divisions.
4. Also in June, we commenced testing and compliance programs for several
manufacturers of non-cellular phone devices as the issue of SAR became
a major engineering factor for all RF emitting devices in both the US
and Canada.
5. In May of 2000, we announced the appointment of Coleman & Company
Securities Ltd., of New York, NY, as our investment bank and financial
advisor, and to raise the investment profile of Globus through their
networks in the United States and abroad, to have a key role in
efforts to secure additional capital to support growth in the
marketing of our proprietary technologies and wireless communication
products, and to provide expertise in strategic planning and in
evaluation of potential business acquisitions within our industry. By
year end 2000, we had elected to terminate this relationship and seek
new investment banking partners, a consequence of internal changes at
Coleman and our dissatisfaction with the overall performance of
Coleman. We are confident we will secure new investment banking
partners early 2001.
6. Also in May 2000, we announced that Jonathan Hughes had joined our
organization as Project Manager for Celltech Research, providing an
extensive knowledge of US and Canadian government agency standards,
procedures, requirements and regulations for Electro Magnetic
Compatibility and Radio Frequency exposure compliance and equipment
approval of wireless devices.
7. In April 2000, we secured the services of Gord Walsh, as Vice
President Marketing & Sales Wireless Devices (Accessories), bringing
over 20 years wireless industry sales experience to Globus. In
September 2000 Mr. Walsh was named Senior Vice President Marketing &
Sales, Wireless Devices Dealer Distribution.
8. From February through April 2000, we undertook and completed two OEM
prototype antenna design programs; also in the second quarter of
fiscal 2000, Celltech earned testing service revenues from other
cellular telephone OEMs as well as completed its first compliance
testing program for a FRS OEM.
9. In January and February 2000, launched the Globus Accessory Line at
the CES and CTIA trade shows. This product line would later in the
year evolve into a full Dealer Program sold through our Wireless
Devices Division.
10. In December 1999, we also announced a research partnership with Auden
concerning ceramic embedded antenna technology.
11. Also in December 1999, we 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. We asserted that Dr. Paul Bickert breached fiduciary
24
<PAGE>
duties as a director and president of Globus when a license and other
agreements were improperly executed by him in his personal capacity.
In addition to confirmation of ownership of patent rights, we seek
unspecified damages including a full accounting of all monies paid by
Globus to Dr. Paul Bickert and for an order that he repay us all
monies received in breach of his fiduciary duties and all monies
received without proper authorization of Globus. On the advice of
counsel, we believe our claims to be meritorious. In connection with
the lawsuit, we had ceased all accruals of technology lease payments
for that particular technology, retroactive to fiscal year end 1997.
We do not anticipate a resolution in the matter until at least fiscal
2001.
During the 4th Quarter of fiscal year 2000, we announced several major strategic
initiatives and our efforts were directed toward the following:
1. In November 2000 we moved to secure additional distribution resources
in the US, and effective December 1, 2000 we commenced setup of a new
47,000 square foot Marketing, Procurement & Distribution Center in
Garden Grove, California. This operations base will be the primary US
sales and distribution center for all OEM handset and accessory
product, as well as aftermarket product and our proprietary accessory
product, and is scheduled to open February 1, 2001.
2. On November 14, 2000, we announced we acquired 100% of all of the
issued and outstanding shares in Edge Continental Inc, a wireless
products distribution company, for a combination of shares, cash and
debt totaling $2.55 million. The effective date of the acquisition was
September 1, 2000. Edge Continental is an international distributor of
wireless phones and OEM accessories for all wireless platforms. With
the acquisition, our Wireless Devices Product Distribution Group gains
a substantial revenue stream and diverse client base, including
carriers, distributors, dealers, agents and retailers. Past President
for Edge Mr. Victor Abuharoon was named Vice President US Procurement
& Distribution, and former Vice President Mr. Randy Aquino was named
Vice President Dealer Distribution (North America).
3. On October 24, 2000, we announced the appointment of Norm Hawkins to
the Board of Directors. Mr. Hawkins was a founding shareholder and
Director for Lenbrook Inc., an electronics and communication
conglomerate, serving as Vice President Business Development and Vice
President Sales & Marketing, as well as having managed the Wireless
Group and Energy Systems Division at Lenbrook. Mr. Hawkins was
instrumental in the creation of Clearnet Inc. a major PCS carrier in
Canada with 2400 employees and recently acquired by Teleus for $6.6
billion. His extensive knowledge and networks in the wireless industry
will greatly assist our growth strategy.
4. Requiring product for our distribution channels, on October 18, 2000,
we concluded a $40.0 million product distribution agreement with Aztec
Components Inc. of California. The agreement calls for the Company to
purchase from Aztec up to 730,000 Motorola OEM analog handsets during
fiscal 2001, effectively subcontracting from Aztec their distribution
agreement with Motorola. In the initial six weeks over 25% of the
agreement had been fulfilled.
5. On October 6, 2000, we announced a Letter of Intent had been signed to
acquire PCI Marketing & Communications Inc., owners of the
ShopWireless brand ShopWireless.Com, an accomplished direct to
consumer marketing company and established electronics on-line
25
<PAGE>
retailer. The acquisition was to initially be completed in early
November and has now been set for mid-January. Total acquisition cost
is projected at $3.2 million, based on a 100% vending of ShopWireless
on an equity swap basis. We are projecting that ShopWireless.Com will
provide $5.5-7.0 million in revenues during fiscal 2001. The
acquisition will complete our distribution chain by directly linking
products from OEMs through our distribution channels to the end
consumer.
6. Throughout the 4th Quarter of fiscal 2000, we continued to leverage
our leadership position in SAR research, and expanded marketing
efforts to securing OEM SAR solution sales contracts utilizing
proprietary designs and our in-house expertise in solving SAR issues.
An initial sale of our proprietary SAR solution to Hyundai
Electronics, announced earlier in the 3rd quarter, has not yet been
fulfilled as Hyundai and we have been notified that Hyundai will
continue to delay the launch of the phone model that we have developed
a solution for; however, based on current negotiations with several
OEMs, we are anticipating securing new SAR solution sales early in
2001.
7. Testing and FCC filing sales at Celltech Research were up
significantly in the 4th Quarter, as we moved in to testing of other
products besides handsets, such as wireless laptops, PDAs, FRS and
marine radios. As a result of growing demand for testing and filing
services, and the anticipated increase in OEM SAR solution business,
we are planning a major expansion of Celltech in the 3rd quarter of
fiscal 2001.
8. In September, we launched a revamped corporate website and proven B2B
e-commerce sales program, in support of a comprehensive value-added
North American dealer program, an industry first program, concluding
efforts of a six-month period of test marketing for the product line
and the distribution systems;
9. During the 4th Quarter we increased sales of wireless devices in
general, via securing of new distributors and dealers for the Globus
Wireless Devices Product Group, increased substantially as a result of
the acquisition of Edge Continental and the addition of OEM handset
and accessory product business, all supported by a B2B value-added
dealer program focused primarily on markets in the USA and Canada.
Additionally, we will look to secure both new wireless product
opportunities, and anticipate the announcement of several exclusive
OEM product distribution agreements in early 2001;
10. Examining and securing potential business opportunities for Globus
within the wireless industry, securing the necessary capital for
growth through a series of finance related activities.
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Marketing of our expertise in providing SAR solutions for wireless phone
manufacturers is our first priority. To the extent that our resources permit, we
will continue to be focused primarily on OEM SAR solution sales and on expansion
of marketing efforts for a growing range of wireless products, including new
business opportunities in this area. We are also undertaking to make commitments
for product and market research in to polymer lithium ion battery technology,
having identified such technology as the next generation battery technology for
wireless devices and believing it will, as a form of purer power, have
implications with respect to the measure of SARs in RF-emitting devices.
We currently have thirty-three employees and officers in our Kelowna,
Markham and Seoul operations, and will initially staff the California operation
with five to seven employees. Our monthly salary costs for all operations and
subsidiaries is projected at $98,000, including California operations. Prior to
the acquisition of Edge Continental, for the three months ended July 31, 2000,
our average monthly cash expenses, inclusive of salary costs, were approximately
$77,380. A significant amount of the monthly expenses are for corporate
development, including marketing, travel and professional fees.
We may have to secure additional capital to meet our on-going requirements
and to meet our stated objectives throughout the fiscal year ending October 31,
2001. We are in the process of identifying potential investors in conjunction
with efforts from current finance partners, and will look to have secured new
investment banking in early 2001. Based on our success in raising private
placement financing in the past, we expect that we will be able to complete
financings as required for growth and operations. We are also in the process of
reviewing opportunities for both long-term equity programs as well as debt
financing beyond commitments to suppliers and with the recent acquisition of
Edge Continental. Any significant capital expenses or increases in operating
costs will be dependent on our ability to raise additional capital, debt
financing or generate revenue from sales of our products or services.
Historically, we have not generated sufficient revenue from sales of our
products or solutions and testing services to sustain operations, and have only
recently had the availability to market to OEMs our proprietary solutions and
products. Furthermore, we only recently, in the 4th Quarter of fiscal 2000,
realized significant revenues from our new and various distribution channels for
our Wireless Devices Product Group. As a result of the recent acquisition of
Edge Continental, and aggressive growth strategies for all operations for fiscal
2001, our plans call for the generating of significant sales revenue by fiscal
year end, and we are anticipating to be in a position to self-finance some of
the expansion plans, beyond any equity or debt financing, as well as contribute
to our bottom line as of the final quarter of fiscal 2001.
Capital Resources and Liquidity
Our 1994 acquisition of the assets of Globus Cellular & User Protection
Ltd. (B.C.), was the genesis of starting a new business in the wireless
technology industry.
Our initial product was promoted actively in the marketplace until December
1994. In early 1995, we moved towards research of new antennae technologies. In
1996, final inventories of the original shielding product were sold at a
discount in a one-time sale.
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For the year ended October 31, 1999, we purchased equipment valued at
$277,582 resulting in cash flows used in investing activities of $277,582.
For the year ended October 31, 1998, we purchased equipment valued at
$41,193 resulting in cash flows from used in investing activities of $41,193.
For the year ended October 31, 1999, we sold shares of our common stock for
$1,402,763 cash and received advances from an officer of $14,975. For the year
ended October 31, 1999, we repaid notes payable of $769 and officer loans of
$150,812. As a result, we had net cash provided by financing activities of
$1,266,157.
For the year ended October 31, 1998, we sold common stock for $98,900 cash
and received advances from an officer of $2,714. For the year ended October 31,
1999, we repaid notes payable of $142 and officer loans of $167,221. As a
result, we had net cash used in financing activities of $65,749.
During the year ended October 31, 1999, we issued 223,424 shares of our
common stock pursuant to the exercising of options granted in 1999 to officers,
paid by way of repayable loans and promissory notes totaling $68,198.
On October 6, 2000, we entered into an equity financing agreement with
Torneaux Fund, Ltd., an institutional investor, under which Torneaux may
purchase up to 2,571,406 shares of our common stock. The equity line established
by the agreement permits Torneaux, at our request, to invest up to between $3.6
million and $18.0 million in our common stock periodically over a 15-month
period based upon a discount to the current market price of our common stock.
Subject to the conditions in the agreement, the timing and number of shares to
be sold is at our option. Torneaux's holding in Globus shall at no time exceed
9.99%.
On October 18, 2000, we entered into an Agreement for Sale of Manufactured
Goods, with Aztec Components, Inc., a California corporation. The term begins at
signing and continues through October 31, 2001. The agreement is for the sale of
analog phone devices. We signed a Corporate Acknowledgment & Guaranty, in
respect of a $3,000,000 credit received by us from Aztec and the $5,000,000
promissory note referred to below.
On October 18, 2000, we issued a convertible promissory note to Aztec in
the amount of $5,000,000. The promissory note becomes due if we fail to pay sums
owed under the Agreement for Sale of Manufactured Goods referred to above. If
the promissory note becomes due and payable, it may be converted into our common
stock at a conversion rate equal to 75% of the average trading price of our
common stock for the ten day period prior to the holder's election to convert
the note
On October 31, 2000, we and Victor Abuharoon and Randolph Ryan Aquino,
completed a Share Purchase Agreement that is effective September 1, 2000.
Pursuant to the Share Purchase Agreement and subject to the terms and conditions
set forth therein, we acquired 100% of all of the issued and outstanding shares
in the capital of Edge Continental Inc., a corporation incorporated under the
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laws of Ontario, for Cdn.$1,000,000 and 300,000 shares of restricted common
stock of Globus. In addition, the shares issued have an eleven-month bleed-out
provision. The Cdn.$1,000,000 purchase price will be paid in 4 equal
installments, the first Cdn.$250,000 payment was made on October 31, 2000 the
second payment was made on January 2, 2001 and will be followed by similar
payments on March 31, 2001, and June 30, 2001.
On December 29, 2000, we completed a private placement of 1,500 units,
consisting of one share of our series A convertible preferred stock and warrants
to purchase approximately 276 shares of our common stock, for a total purchase
price of $1,500,000. This sale was made pursuant to the terms of a Stock
Purchase Agreement dated December 29, 2000 between Globus and various investors.
No dividends have been declared since our inception nor do we anticipate
that dividends will be declared in the ensuing fiscal year.
Management believes that cash expected to be generated from operations and
existing financial arrangements will be sufficient for us to meet our capital
expenditures and working capital needs for the next twelve months. Our future
liquidity and cash requirements will depend on a wide range of factors,
including the level of business in existing operations and possible
acquisitions.
Commitments & Contingencies
Following the change in management in June 1999, we entered into employment
contracts with our four senior officers. Two of the agreements were entered into
in the forth quarter fiscal 1999, and a third agreement was renewed in the first
quarter of 2000. A fourth officer's agreement was entered into in the second
quarter of 2000. Each of the agreements called for increases in our commitment,
subject to certain performance criteria being achieved. The agreements currently
provide for monthly payments aggregating $22,000 in total. The agreements are
expected to continue in force until terminated by either party. See "Employment
Agreements" for more details.
During fiscal year 2000, we made additional significant commitments,
including:
o Appointment of KPMG LLP as our new independent auditors, confirmed by
o stockholders at an Annual Meeting on August 17, 2000.
o Appointment of Sichenzia Ross & Friedman, LLP, New York, NY, as our US
securities counsel
o Appointment of Hayden Communications Inc., South Carolina, and Market
Pathways Financial Relations, California, to assist in implementing a
national investor relations program.
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BUSINESS
Overview
Globus Wireless, Ltd., with its wholly-owned subsidiaries Celltech Research
Inc., and Globus Wireless Canada Ltd., is engaged in the research, design,
manufacture, marketing and distribution of wireless communication products. We
have three primary objectives:
o to become a leading provider of technology solutions that provide
lower SARs for OEM wireless products, without affecting and if
not enhancing desired performance of the product.
o to become a major distributor and supplier of quality OEM
handsets and OEM, aftermarket and proprietary wireless phone
accessories, to carrier clients and distributors globally and
dealers in North America.
o to secure new marketing, manufacturing and technology
opportunities in the wireless communication industry which are
synonymous with our commitment to market products which enhance
performance, reduce operating costs and/or improve efficiency,
and which will provide us with significant earnings.
We maintain corporate offices as well as head offices for Globus Wireless
Canada and our research center, Celltech Research, at 1955 Moss Court, Kelowna,
British Columbia, Canada V1Y 9L3. Our registered offices in the United State are
Ste 220 - 1495 Ridgeview Reno, NV. We operate marketing, sales and distribution
centers in Los Angeles, CA., Reno, NV; Markham, Ontario, Canada; and Seoul,
Korea.
Our common shares currently are traded on the NASD Over-The-Counter market
under the trading symbol "GBWL."
In this prospectus, unless otherwise specified or the context otherwise
requires, references to "we", "our" and "Globus" includes a reference to our
subsidiaries which we beneficially own a majority of the outstanding voting
shares. Our subsidiaries and the percentage of voting shares that we
beneficially own are as follows:
Name of Subsidiary (Jurisdiction) Ownership
--------------------------------- ---------
Celltech Research, British Columbia 100%
Globus Wireless Canada, Ltd., Federal 100%
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History
We were incorporated on June 10, 1987, pursuant to the laws of the State of
Nevada under the name Daytona-Pacific Corporation. On October 18, 1994, we
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 this acquisition of wireless technology, we then changed our name to
Globus Cellular & User Protection Ltd. In August 1997, we changed our name to
Globus Cellular, Ltd. On December 9, 1999, we changed our name to Globus
Wireless, Ltd., the name being more indicative of our expertise, technologies
and new product lines.
In June 1999, we had a change in our management following the resignation
of the President and CEO. Our board of directors subsequently appointed a new
executive group to manage Globus. 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 later was named Chief Financial Officer, and Mr. Cary Tremblay was appointed
Vice President--Marketing & Sales, moving to Senior Vice President Corporate
Development, International & Carrier Sales in September 2000. The decision was
made by the board of directors to move Globus forward from being a development
company to an operational concern with proven product, manufacturing
capabilities, marketing and sales revenue and profitability. In April 2000, Mr.
Gord Walsh joined the executive group and serves as Senior Vice President
Marketing & Sales, Wireless Devices Dealer Distribution.
Globus, with Celltech serving as our SAR solutions center , continues to
research new applications for its SAR solutions technologies, having expanded
usage from wireless phones to a full range of RF emitting devices such as
wireless laptops, PDA's, marine, FRS and two-way radio. We are also looking to
develop new antennae technology platforms, compatible with our SAR solutions
technologies, to meet the changing requirements of wireless communication
devices. In further support of our efforts to be industry leaders in SAR
research, Globus has commenced a program to examine opportunities in polymer
lithium ion (PLi) battery technology, not only because of the demand for better
power sources but also because better power sources have a direct relationship
on SARs emitted from RF-emitting devices.
Globus and Globus Wireless Canada collectively provide an international
distribution engine providing product at several distributor levels,
domestically and internationally, direct from an OEM supply, as well providing
product under value added dealer programs in North America.
Principal Products
Our original wireless industry product was a shielding device, sold as an
aftermarket add-on for cellular phones. In late 1994, we abandoned this
shielding technology because of low market acceptance and performance factors,
in favor of research into new antenna technologies.
From 1995 to 1999, we were 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
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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, our research and testing capabilities have been developed
in-house and with the assistance of Canada's National Research Counsel,
providing grant monies as well as assisting us in our relationship with the
Department of Physics of Okanagan College University in British Columbia.
Various research efforts were led by Dr. Dan Murray, 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 our various
research efforts resulted in a multi-part SAR solutions technology, that can
utilize a Globus designed or an OEM designed antenna, and that could meet the
specifications required by original equipment manufacturers or OEMs and would
assist the OEMs in meeting the US Federal Communications Commission and Industry
Canada regulations.
Today, with Celltech labs providing Globus on-going research, design
advancements and unique testing capabilities, we now have garnered significant
interest in our SAR solutions technology and processes from a number of
international handset and other RF-device OEMs. Due to the competitive nature of
the wireless industry, until such time as we announce a purchase commitment for
a Globus-designed SAR solution, all design and research efforts with OEMs are
held confidential, and testing contracts are not disclosed.
Our new international product distribution engine, resulting with the
acquisition of Edge Continental and its merging into the Globus Product
Distribution Group, has provided us with the means to move products, OEM,
aftermarket or our design, both ways through the distribution channel. It is
anticipated that in addition to continuing to distribute and sell an array of
OEM handsets and accessory product, we will be successful in marketing efforts
to OEMs to include Globus proprietary product in their handset bundles. When an
OEM launches an new handset, they frequently source suppliers for all required
accessories that are bundled with the handset.
Competition
We are not aware of any direct competition for our 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, we have established certain expertise in antenna
design and research, particularly in the areas of low radiation and high
performance, through our wholly-owned subsidiary Celltech Research. There are
other testing labs, operating for the sole purpose of generating testing only
revenues; however, to our knowledge there is no other testing center like
Celltech where solutions are provided to the OEMs. Most of the OEMs do have some
type of internal testing lab organization, but with the exception of a few
larger OEMs, most contract out testing of the product to FCC/IC regulations (or
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other regulatory bodies in other parts of the world). We have yet to test an OEM
handset that satisfies regulations the first time testing is undertaken on a
particular RF-emitting product.
Our commitment to design and engineer low radiation high performance
solutions for RF-emitting devices was brought about by growing concerns over
specific absorption rates or SAR levels being experienced by users of wireless
phones. An SAR is 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, coupled with increased consumer
demand for better all-round performance. We have thus positioned and marketed as
a solution provider, providing testing results and FCC filing services as well
as 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
our 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. To
date we have expended over $750,000 in upgrading the research and testing
equipment at Celltech labs, and will look to increase our investment in fiscal
2001 with a major expansion of facilities and equipment, to service the growing
number of clients.
With the recent acquisition of Edge Continental and its combining with the
Globus Wireless Devices Product Distribution Group, we now have an international
distribution engine servicing OEM, distributor, dealer and retail clientele. Our
focus markets include North America, South America, Latin America and in Korea.
We now have a diverse product offering from OEM handsets and accessories, to
high quality aftermarket accessories, to our own proprietary design accessory
product. There are competitors to the product line in these and other world
markets. Each of our products have a proven track record in North American,
European or Asian marketplaces. Competition with similar products, if any, would
be on the basis of price, performance, quality of the products and delivery time
to the end-customer. It is the latter factor, the ability to fulfill quickly,
that has become of increasing importance in the highly competitive wireless
industry market and we are confident, with distribution centers in California,
Ontario, Seoul and Western Canada, we can satisfy market demands to deliver
quality product on time. Certain products, such as the Voyager Battery provide
an exclusive technology leadership position. The 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.
Patents & Trade Secrets
Since 1995, we have incurred significant expenses in patenting fees for an
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
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various states of pendency in several other jurisdictions. In December 1999, we
filed a statement of claim in the British Columbia Supreme Court, against Paul
Bickert, former president and director of the Company, including allegations
that he breached fiduciary duties as a director and officer, and requests for
confirmation of our ownership of the patented technology and for unspecified
damages against Mr. Bickert. A trial date has been set for April of 2002. We
believe that our Statement of Claim has merit.
We have not yet used this patented antenna technology in any of our SAR
solutions. This patented technology does not appear to have had any effect on
our ability to market successfully our new SAR solution processes to OEMs, which
are being developed in response to specific OEM designs, may require use of the
an OEM's current antenna design, and are not connected to the patented
technology.
With supporting efforts and facilities at Celltech, we will continue filing
for patent protection of new antennae designs should we deem such action to be
in our best interests. Our policy is 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. With respect to our proprietary SAR solutions
processes, we have instead elected to protect these and our how-to knowledge
under an internal trade-secret policy. OEM clients are provided only with an
end-solution and do not participate in research efforts to resolve SAR and
performance issues on their particular handset or other device. Key employees
and senior management knowledgeable in the trade secret processes utilized are
under non-competition non-disclosure agreements and full disclosure is limited
to senior-most persons in the organization.
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.
The primary objective of our research and development division, Celltech,
is to assist OEMs with their product compliance to Federal Communications
Commission guidelines for SAR and Effective Radiated Power emissions,
simultaneously providing real-world performance enhancing solutions as demanded
from the marketplace.
Since opening Celltech labs in September 1999, we have received growing
recognition from OEMs for the unique services now offered, and we are forging a
leadership position as a wireless solution provider.
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Having now a global distribution engine for wireless products allows us to
expand upon our SAR solution OEM relationships, both on the buying and selling
side, as well as allowing us to capitalize on strategic alliances and
opportunities with large retail chains, service providers and the wireless
dealer organizations in this market segment.
In July 1999, we reached an exclusive agreement with 2001 Technology Inc.
of Taipei, R.O.C., for distribution of an extensive aftermarket products line,
already proven in Europe with $15 million in sales per annum. The agreement
significantly reduced our own development costs and time to market. Launch of
this line commenced in Las Vegas at Consumer Electronic Show in January 2000 and
the Cellular Telephone Industry Association show in New Orleans in February
2000. A comprehensive online dealer e-commerce program was established to
support marketing efforts. In August the line became the foundation for the
start-up of Globus Wireless Devices Product Distribution Group, and several new
OEM products were added, including a new polymer lithium ion battery product
line from UltraLife Battery in New Jersey.
In September 2000, integration efforts commenced with Edge Continental and
their product base of OEM handsets and accessories, as well as a proprietary
design CLA product frequently utilized in OEM handset bundles. The acquisition
of Edge Continental also brought with it an established customer base of over
1,100 dealers and distributors, and the marketing expertise of the two
principals, who are now serving in senior management positions in the North
American Dealer Program and U.S. Marketing, Procurement & Distribution Center in
California.
In mid October 2000, we entered in to a $40 million handset distribution
agreement for certain Motorola handset product and to date have distributed
175,000 of 730,000 handsets committed to in the next 12 months. Additionally, we
acquired over $3.1 million in accessories at discounts to market. Together, the
agreements led to the opening of the new California distribution center, to be
operational February 1, 2001, to better serve major west coast and Asian
markets.
In late January 2001, we are to close an acquisition that will provide us
with an opportunity for direct retail distribution. On October 4, 2000, we
announced a Letter of Intent had been signed to acquire PCI Marketing &
Communications Inc., owners of the ShopWireless brand ShopWireless.Com, an
accomplished direct to consumer marketing company and established electronics
on-line retailer. We are projecting that ShopWireless.Com will provide $5.5-7.0
million in revenues during fiscal 2001. The acquisition will complete our
distribution chain by directly linking products from OEMs through our
distribution channels to the end consumer.
In fiscal year 2001 we will continue to explore new market, product and
technology opportunities in the industry, and leverage established and building
relationships in our various distribution channels.
Manufacturing
Our manufacturing needs in support of the various products sold by us are
nominal.
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In 1999, we decided to outsource manufacturing of antennae product in order
to focus on the design and engineering of SAR solutions, antennae and other
wireless technologies. In late 1999, we announced our agreement with Auden
Technology of Pa-Te City, R.O.C., 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 our antenna design processes,
technologies and wireless engineering services into their manufacturing
processes. This agreement positions us 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
products are to be shipped directly to the OEMs, many of which are also based in
the Far East.
To date we have not required use of Auden's manufacturing expertise for our
OEM clients, thus far instead with an OEM's current antenna vendors as we seek
to provide SAR and performance solutions. We are as well exploring opportunities
to contract manufacture in North America and in Korea.
The vast majority of products moved by our distribution businesses are
manufactured by internationally recognized OEMs, with whom we have reached
certain supply agreements. Product for which we have certain exclusive
distribution rights and/or proprietary design rights to, including our Voyager
and CLA products, are contracted out to reputable and established manufacturers.
Research & Development
Design and engineering of antenna technologies have been the primary focus
of our 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. For the year ended October
31, 1999, we expensed approximately $70,745 in research & development. As of
July 31, 2000, we have expensed $154,132 in research and development.
The opening of Celltech in 1999 provides us with the opportunity to serve
as a full service testing and 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 our SAR solution marketing goals and potential business
to be derived, and the demand is such that we will in fiscal 2001, look to
expand our research center facilities to service a growing number of clients.
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Employees
We have thirty-three full time employees in operations and research,
and will add an additional five to seven employees with the opening of or new
U.S. Marketing, Procurement & Distribution Center in California.
Environmental Regulations
According to federal environmental regulators, US and Canada, our SAR
solutions technologies and processes, 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 our products are
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. Our SAR solutions 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.
Various products in the Wireless Devices Product Group are tested and in
compliance with their respective standards in the applicable jurisdiction,
otherwise it is our policy not to distribute non-standard or non-complying
product. Likewise with OEM handsets sold by us, it is our policy not to
distribute any handset product which does not have an FCC ID number, signifying
its compliance with applicable FCC regulations and irregardless of whether or
not the market sold in to is regulated.
Liability Insurance; Indemnification
We have a comprehensive and global insurance policy providing for general
liability, fire, and other loss types, as well to protect against liabilities
arising out of the negligence of our officers and directors and/or deficiencies
in any of our business operations. We presently pay $45,000 annually for
$10,000,000 coverage. There is no assurance, however that such insurance
coverage would be adequate to satisfy any potential claims made against us, our
officers and directors, or resulting losses that may arise in our business
operations or with loss of products. Any such liability that might arise could
be substantial and may exceed the assets of Globus. Our articles of
incorporation and by-laws provide for indemnification of our 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.
LEGAL PROCEEDINGS
From time to time we are subject to litigation incidental to our business
including possible product liability claims. Such claims, if successful, could
exceed applicable insurance coverage. We are not currently a party to any legal
proceedings that we consider to be material.
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DESCRITPION OF PROPERTY
We currently lease approximately 6,000 square feet in Kelowna, British
Columbia for $2,467 per month. This facility currently houses executive offices,
western sales, distribution, technical and administrative offices for Globus
Wireless Canada, and lab facilities for Celltech Research Labs. Eastern sales,
distribution, technical and administrative offices for Globus Wireless Canada
are located in a 7,000 square feet facility in Markham, Ontario, at a cost of
$5000 per month.
On December 1, 2000, Globus Wireless, Ltd. subleased approximately 45,000
square feet in Garden Grove, California, for $19,744 per month, to serve as US
Marketing, Procurement & Distribution Center. We have rented approximately
22,000 to a US based sales agent for Globus for a monthly fee of $9,872. This
facility will house marketing and carrier and international distribution sales
center, procurement, as well as executive offices for the US market. Also in the
U.S., in September 2000, we contracted a distribution center Reno, Nevada in
support of our dealer programs in the U.S.
In September 2000 the Company opened a marketing & procurement branch in
Seoul, Korea.
The following sets forth additional information concerning our facilities:
Approximate Number of
Location Expiration Date of Lease Square Feet
1955 Moss Court
Kelowna, British Columbia
Canada, V1Y 9L3 April 20, 2002 6,000
Unit 113 - 550 Alden Road
Markham, Ontario, Canada December 28, 2002 7,500
7375 Chapman Avenue
Garden Grove, California March 31, 2002 45,000
6F Younghwa Bldg. 42-4
Chamwon, seacho
Seoul, Korea Monthly 1,000
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HOW TO OBTAIN MORE INFORMATION ABOUT GLOBUS WIRELESS, LTD.
We are subject to the informational requirements of the Securities Exchange
Act of 1934, and in accordance therewith file reports, proxy or information
statements and other information with the Securities and Exchange Commission.
Such reports, proxy statements and other information can be inspected and copied
at the public reference facilities maintained by the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as at the
following regional offices: Seven World Trade Center, New York, New York 10048,
and Citicorp Center, 500 W. Madison Street, Suite 1400, Chicago, Illinois 60661.
Copies of such material can be obtained from the Public Reference Section of the
Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.20549, at
prescribed rates. In addition, the Commission maintains a web site that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the Commission. The address of the
Commission's web site is http://www.sec.gov.
Globus has filed with the Commission, a registration statement on Form SB-2
under the Securities Act of 1933 with respect to the shares of common stock
being offered by its selling shareholders. As permitted by the rules and
regulations of the Commission, this prospectus does not contain all the
information set forth in the registration statement and the exhibits and
schedules thereto. For further information with respect to our common stock
offered by the selling shareholders, reference is made to the registration
statement, and such exhibits and schedules. A copy of the registration
statement, and the exhibits and schedules thereto, may be inspected without
charge at the public reference facilities maintained by the Commission at the
addresses set forth above, and copies of all or any part of the registration
statement may be obtained from such offices upon payment of the fees prescribed
by the Commission. In addition, the registration statement may be accessed at
the Commission's web site. Statements contained in this prospectus as to the
contents of any contract or other document are not necessarily complete and, in
each instance, reference is made to the copy of such contract or document filed
as an exhibit to the registration statement, each such statement being qualified
in all respects by such reference.
39
<PAGE>
MANAGEMENT
Executive Officers, Directors, And Key Employees
The executive officers, directors and key employees of the Company and
their ages and positions with the Globus as of December 1, 2000 are as follows:
NAME AGE POSITION/TERM
---- --- -------------
Bernard Penner 40 President, CEO and Chairman, June 1999 -
Present
Nicholas Wizinsky 39 CFO/COO, Secretary and Treasurer, October
1998 - Present
A. Cary Tremblay 43 Sr. Vice President Corporate Development,
International & Carrier Sales, July 1999
- Present
Gord Walsh 45 Sr. Vice President Marketing & Sales,
Wireless Devices, April 2000 - Present
Victor Abuharoon 30 Vice President US Marketing Procurement &
Distribution, September 2000 - Present
Randy Aquino 30 Vice President Dealer Distribution,
September 2000 - Present
Shawn McMillen 39 General Manager, Celltech Research Inc.,
September 1999 to Present
Jerome W. Cwiertnia, CPA 60 Director, April 1997 - Present
Anthony Dyck 55 Director, June 1999 - Present
Hans Schroth 56 Director, June 1999 - Present
Norman D. Hawkins 63 Director, November 2000 - Present
All directors will serve on the board until our next annual meeting of the
shareholders, or until their successors have been duly elected and qualified
Background of Directors & Officers
Bernard 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.
Nicolas Wizinsky was General Manager from August 1997 to October 1998, was
first appointed Chief Operations Officer in November 1998, and was re-appointed
as Secretary/Treasurer and Chief Financial Officer by the Board in July 1999,
and named Chief Financial Officer in August 2000. 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.
40
<PAGE>
A. Cary Tremblay was appointed Vice President Marketing & Sales in July
1999 and was in September 2000 named Senior Vice President Corporate
Development, International & Carrier Sales. 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 bringing new products to market. From
1994 to 1997 Mr. Tremblay served as Senior Vice President of ComTec
Communications, a chain of cellular retail stores.
Gord Walsh was appointed Vice President Accessory Sales in April 2000 and
was in September 2000 named Senior Vice President Marketing & Sales, Wireless
Devices. Mr. Walsh joined Globus after a 19-year career at Lenbrook Industries
Ltd., were he served in several capacities including Director Sales & marketing
for the Wireless Business Systems Group. From 1977-79 he worked for AGT Mobile
Communications was instrumental in the launch of mobile phone service in Western
Canada.
Victor Abuharoon was appointed Vice President US Marketing Procurement &
Distribution in September 2000, and was the former President and principal of
Edge Continental Inc. since its inception in 1997. Mr. Abuharoon has been
successfully active in sales in the wireless industry since 1994. He brings to
Globus an extensive sales and distribution network in both North America and
internationally.
Randy Aquino was appointed Vice President Dealer Distribution in September
2000, and was the former Vice President and principal of Edge Continental Inc.
since its inception in 1997. Mr. Aquino has been successfully active in sales in
the wireless industry since 1993, and provides Globus an extensive knowledge of
dealer sales in North America.
Jerome W. 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. Mr. Cwiertnia is Chairman for
the Audit and Compensation Committees.
Anthony 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. Mr. Dyck
serves as well on the Audit & Compensation Committees.
Hans 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
41
<PAGE>
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. Mr.
Schroth serves as well on the Audit & Compensation Committees.
Norm Hawkins was appointed to the Board on November 1, 2000. Currently Mr.
Hawkins is semi-retired, serving as a consultant for the wireless industry,
after a distinguished twenty-seven year career in the industry. From 1993-97 Mr.
Hawkins served as President & CEO for Allen Telecom Canada Inc. In 1978, he was
a founding shareholder of Lenbrook Inc., and served in several Vice President
capacities as served as a Director for Lenbrook until 1993. He successfully
introduced the LTR radio technology in to Canada, which would later became the
foundation for Clearnet Communications, a PCS carrier, recently acquired by
Telus for $6.6 billion, the largest telecommunications acquisition in Canadian
history. Mr. Hawkins also brings to the Board telecommunications contract
experience in Asia.
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.
42
<PAGE>
<TABLE>
<CAPTION>
EXECUTIVE COMPENSATION
The following table sets forth certain information regarding compensation
we paid to our Chief Executive Officer and our other executive officers whose
income exceeded $100,000 for our last fiscal year ended October 31, 1999 (the
"Named Officers").
Summary compensation table
===================================================================================================================================
Annual Compensation Long-Term Compensation Awards
------------------------------------ ------------------------------------------------
Awards Payouts
----------- ----------
Securities Restricted
Under Shares or
Other Annual Options Restricted LTIP All Other
Name and Principal Salary Bonus Compensation Granted Share Units Payouts Compensation
Position Year ($) ($) ($) # ($) ($) ($)
-------------------------- ------- ---------- ---------- ---------------- ----------- ------------------ ---------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Bernard D. Penner 1999 $25,000 Nil Nil $400,000 Nil Nil Nil
President & CEO
-------------------------- ------- ---------- ---------- ---------------- ----------- ------------------ ---------- ---------------
Nick G. Wizinky COO, 1999 $40,000 Nil Nil Nil Nil Nil Nil
Secretary and
Treasurer
-------------------------- ------- ---------- ---------- ---------------- ----------- ------------------ ---------- ---------------
A. Cary Tremblay, Vice 1999 $33,333 Nil Nil $325,000 Nil Nil Nil
President Marketing
& Sales
===================================================================================================================================
Aggregate Options Exercised During the Most Recently Completed Financial
Year and Financial Year-End Option Values. The following table sets out certain
information relating to options exercised by the Named Officer during the most
recent financial year and the value of unexercised in-the-money options held by
such person as of October 31, 1999:
============================================================================================================================
Securities Aggregate Value Unexercised Options at Value of Unexercised
Acquired on FY-End in-the-Money Options at FY-End
Exercise Realized (#) ($)
Name (#) ($) Exercisable/Unexercisable Exercisable/Unexercisable
---------------------------- --------------- ------------------ --------------------------- --------------------------------
Bernard D. Penner Nil Nil 50,000/350,000 $112,500
---------------------------- --------------- ------------------ --------------------------- --------------------------------
Nick Wizinsky 100,000 $25,000. Nil Nil
---------------------------- --------------- ------------------ --------------------------- --------------------------------
A. Cary Tremblay 33,334 $28,334. 0/291,666 Nil
---------------------------- --------------- ------------------ --------------------------- --------------------------------
------------
(1) Represents presently exercisableoptions to purchase 50,000 shares of common
stock at $.85 per shares and unexercisable options to purchase 150,000
shares of common stock at $.85 per share, and unexercisable options to
purchase 200,000 shares of common stock at $3.00 per share.
(2) Assumes a fair market value of $2.25 per share of common stock, which was
the average price for our common stock on October 29, 1999.
43
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Options Granted During Most Recent Financial Year. The following table sets out
certain information relating to options granted during the most recent financial
year to the Named Executive Officer.
============================================================================================================================
Name Securities % of Total Exercise Per Market Value of Securities Expiration
Under Options Granted Underlying Options on the
Options to Employees in Security Date of the Grant Date
Granted Financial Year ($/Security) ($/Security)
-------------------------- -------------- ------------------- ----------------- ----------------------------- --------------
<S> <C> <C> <C> <C>
Bernard D. Penner 100,000 100% $0.85 $100,000
President & CEO
============================================================================================================================
Compensation of Directors
Our board of directors receive an honorarium of $12,000 per year, payable
in cash, S-8 stock at market, restricted stock of Globus 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 was paid by way of stock and
$8,000 in directors' fees has been paid by way of options reserved and allotted.
During fiscal 2000, $30,960 in director's fees were paid by way of stock options
reserved and allotted, with an exercise price at 85% of market. All officers and
directors are reimbursed for expenses incurred on our behalf.
We presently have no other pension, health, stock option, annuity, bonus,
insurance, profit sharing or other similar benefit plans; however, we may adopt
such plans in the future. We do not provide personal benefits for directors,
officers or employees, however, we may and are planning to adopt such plans in
the future.
Employment Agreements
Globus and Bernard D. Penner, President, CEO and Chairman, are parties to a
services agreement, first made in June 1999 which currently provides payments
aggregating $5,000 to $7,000 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, we entered into a services agreement with A. Cary Tremblay,
now Vice President Corporate Development, International & Carrier Sales
Marketing & Sales. In September 1999, we extended the agreement, and which
currently 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 February 1999, we entered in to a service agreement with Nick Wizinsky,
now Secretary Treasurer and Chief Financial and Operations Officer, and extended
it in February 2000, and which currently provides payments aggregating $4,432
per month. The current two-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.
44
</TABLE>
<PAGE>
In April 2000, we entered in to a service agreement with Gord Walsh, now
Senior Vice President Marketing & Sales, Wireless Devices, which currently
provides base payments aggregating $6,000 per month plus commissions. The
three-year agreement, which also provides for base 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 September 2000, we entered in to a service agreement with Victor
Abuharoon, Vice President U.S. Marketing, Procurement & Distribution, which
provides base payments aggregating $6,900 per month plus commissions. The
three-year agreement, which also provides for base 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 September 2000, we entered in to a service agreement with Randy Aquino,
Vice President Dealer Distribution, which provides base payments aggregating
$6,900 per month plus commissions. The three-year agreement, which also provides
for base 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.
With the exceptions of Bernard Penner having an $85,000 loan buyout, and
Gord Walsh having a six-month notice for termination, and payment of one month's
service fee per year of service for all others, 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.
45
<PAGE>
<TABLE>
<CAPTION>
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN BENEFICIAL OWNERS
The following table sets forth the beneficial ownership of Globus voting
securities as of the closing date of this offering by:
o each person known by us to beneficially own 5% or more of the
outstanding shares of our voting securities
o each of our directors
o our named executive officers
o all directors and executive officers as a group.
As of January 8, 2001, there were 12,879,954 shares of common stock issued and
outstanding. The information set forth in the table and accompanying footnotes
has been furnished by the named beneficial owners.
Number of Shares
Title of Class Identity of Person or Group Beneficially Owned(1) Percent of Class(2)
-------------- --------------------------- --------------------- -------------------
<S> <C> <C> <C>
Bernard D. Penner 647,956(2) 4.97%
Common Shares 1523 Lawrence Avenue
Kelowna, B.C., Canada
Jerome W. Cwiertnia 102,736(3) *
Common Shares 17 Montecito Drive
Corona del Mar, CA 92625
Anthony Dyck 590,278(4) 4.57%
Common Shares 8299 Okanagan Landing Road
Vernon, B.C., Canada
Hans Schroth 215,0296(5) *%
Common Shares 365 Clifton Place
Kelowna, B.C., Canada
Nick Wizinsky 171,840(6) *%
Common Shares 1160 Trevor Drive
Kelowna, B.C., Canada
Common Share All Officers and 1,451,384 Direct 16.72%
Directors as a Group 702,985 Indirect
* Less than 1%
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Unissued common shares subject
to options, warrants or other convertible securities currently exercisable
or convertible, or exercisable or convertible within 60 days, are deemed
outstanding for the purpose of computing the beneficial ownership of common
shares of the person holding such convertible security but are not deemed
outstanding for computing the beneficial ownership of common shares of any
other person.
46
</TABLE>
<PAGE>
(2) Includes (i) 276,341 shares owned directly, (ii) 121,522 shares held in the
name Mr. Penner's wife, Loretta Penner, (iii) 21,346 shares held in the
name of Burns Fry Ltd., in trust for Loretta Penner, 3GDJNT5, a Canadian
retirement account, (iv) 22,647 shares held in the name of Burns Fry Ltd.,
in trust for Bernie Penner #3GDFXT2, a Canadian retirement account, (v)
38,553 shares held by 488725 B.C. Ltd., a corporation controlled by Mr.
Penner, (vi) 17,547 shares held by Redline Contracting Ltd., a corporation
controlled by Mr. Penner, and (vii) 150, 000 options to purchase shares of
our common stock which are presently exercisable. Does not include 250,000
options that are not presently exercisable.
(3) Includes (i) 62,736 shares of common stock, and (ii) 40,000 options to
purchase shares of our common stock which options are presently
exercisable.
(4) Includes 527,778 shares of common stock held in the name of Mr. Dyck, in
trust for his family including his wife Patricia, and five members of their
immediate family, for which Mr. Dyck has full voting rights. Also includes
40,000 options to purchase shaers of our common stock which options are
presently exercisable.
(5) Includes (i) 550,278 shares of common stock, and (ii) 40,000 options to
purchase shares of our common stock which options are presently
exercisable.
(6) Includes (i) 90,696 shares owned directly, (ii) 63,000 shares held jointly
in the names of Ruth and Hans Schroth, which Mr. Schroth has shared voting
rights, and (iii) 61,333 options to purchase shares of our common stock
which options are presently exercisable .
(7) Includes (i) 10,000 shares held directly, (ii) 102,840 shares held jointly
in the names of Sharon and Nick Wizinsky, (ii) 2,500 shares held in a
Registered Education Savings Plan and Nick Wizinsky has shared voting
rights, (iv) 6,500 shares held by 532773 B.C. Ltd., a corporation
controlled by Mr. Wizinsky, and (v) 50,000 options to purchase shares of
our common stock which options are presently exercisable.
We do not know of any arrangements, the operation of which may, at a
subsequent date, result in a change in control of Globus.
47
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Prior to this offering, we entered into transactions and business
relationships with certain of our officers, directors and principal stockholders
or their affiliates. Except as discussed below, we believe that all of the
transactions were on terms no less favorable than we could have obtained from
independent third parties. Any future transactions between us and our officers,
directors or affiliates will be subject to approval by a majority of
disinterested directors or stockholders in accordance with Nevada.
From November 1, 1995 to October 31, 1996, we paid $18,800 to patent
attorneys for services in connection with patent applications filed on behalf of
Dr. Bickert for the antenna technology now in dispute. The sum of these amounts
was applied to reduce unpaid technology lease obligations due Dr. Bickert.
On April 23, 1999, Dr. Bickert, prior to his resignation, was issued
238,055 shares of our restricted stock as payment of $42,850 of outstanding
advances to Globus. During the fiscal year 1999, we repaid officer loans of
$150,812 to Dr. Bickert.
Between January and May 1999, and prior to Mr. Penner rejoining Globus in
June 1999, we hired and paid $74,820 to Redline Contracting Ltd., a company
controlled by Mr. Penner, for improvements to our new Celltech Research facility
and offices in Kelowna, B.C. We undertook a further $10,900 in improvements,
completed by this same company, following Mr. Penner's appointment. We believe
that such amounts for the services rendered are not in excess of their fair
market value.
48
<PAGE>
DESCRIPTION OF CAPITAL STOCK
Our authorized capital stock consists of 100,000,000 shares of common
stock, par value $.001 per share, of which 12,879,954 shares were issued and
outstanding as of the date hereof, and 2,000 shares of "blank check" preferred
stock, of which 1,500 have been issued as of January 12, 2001.
Common Stock
The holders of common stock are entitled to one vote for each share held of
record on all matters to be voted on by the shareholders. The holders of common
stock are entitled to receive dividends ratably, when, as and if declared by the
Board of Directors, out of funds legally available therefor. In the event of a
liquidation, dissolution or winding-up of Globus, the holders of common stock
are entitled to share equally and ratably in all assets remaining available for
distribution after payment of liabilities and after provision is made for each
class of stock, if any, having preference over the common stock.
The holders of shares of common stock, as such, have no conversion,
preemptive, or other subscription rights and there are no redemption provisions
applicable to the common stock. All of the outstanding shares of common stock
are, and the shares of common stock offered by the selling stockholders hereby,
when issued against the consideration set forth in this prospectus, will be,
validly issued, fully-paid and non-assessable.
Preferred Stock
General. Under our articles of incorporation, our board of directors is
authorized, subject to any limitations prescribed by the laws of the Nevada, but
without further action by our shareholders, to provide for the issuance of up to
20,000,000 shares of preferred stock in one or more series, to establish from
time to time the number of shares to be included in each such series, to fix the
designations, powers, preferences and rights of the shares of each such series
and any qualifications, limitations or restrictions thereof, and to increase or
decrease the number of shares of any such series (but not below the number of
shares of such series then outstanding) without any further vote or action by
the stockholders. Our board of directors may authorize and issue preferred stock
with voting or conversion rights that could adversely affect the voting power or
other rights of the holders of common stock. The issuance of preferred stock,
for example in connection with a shareholder right's plan, could have the effect
of making it more difficult for a third party to acquire, or of discouraging a
third party from acquiring, a majority of Globus's outstanding stock.
12% Series A Convertible Preferred Stock
The 12% series A convertible preferred stock has priority over the common
stock and all other classes and series of equity securities of our company in
the event of a liquidation of Globus. Holders of shares of the our 12% series A
convertible preferred stock are entitled to, among other things, a 12% quarterly
dividend based on the accrued value of such shares at the time of dividend,
which is payable at the option of the holders in cash or as an accrual to the
liquidation value of such shares.
49
<PAGE>
Holders of the 12% series A convertible preferred stock are entitled to
voluntary and mandatory conversion and redemption of their shares under certain
circumstances. At any time on or after April 28, 2001, each share of 12% series
A convertible preferred stock shall be convertible into the number of shares of
our common stock equal to the accrued dollar value of each 12% series A
convertible preferred share, $1,000 plus accrued and unpaid dividends on such
share, divided by the lesser of 1.8062 or eighty percent (80%) of the average of
the three lowest closing bid prices of our shares of common stock during the
twenty consecutive trading days immediately preceding the date of such
conversion, subject to certain readjustments. In addition, each share of our 12%
series A convertible preferred stock shall automatically convert into shares of
our common stock on December 29, 2003, in the same manner of conversion as
described in the immediately preceding sentence. Upon the occurrence of certain
major transactions or triggering events, each holder may require us to redeem
their shares of 12% series A convertible preferred stock at a price equal to
125% of the liquidation value of such shares at that time. Our failure to effect
any voluntary or mandatory conversion or redemption of shares of 12% series A
convertible preferred stock may result in the payment of liquidated damages to
the holders.
Holders of the 12% series A convertible preferred stock have class voting
rights, which require approval or consent of at least 75% of such holders before
we may:
o authorize, create, issue or increase the authorized or issued
amount of any class or series of our stock that ranks prior to
the 12% series A convertible preferred stock, with respect to the
distribution of assets on liquidation, dissolution or winding up;
o amend, alter or repeal the provisions of the 12% series A
convertible preferred stock, whether by merger, consolidation or
otherwise, so as to adversely affect any right, preference,
privilege or voting power of the 12% series A convertible
preferred stock;
o repurchase, redeem or pay dividends on shares of our lower
priority equity;
o amend our articles of incorporation or by-laws to affect any
right, preference, privilege or voting power of the 12% series A
convertible preferred stock, except that any creation and
issuance of another series of equity of lesser or equal priority
to the 12% series A convertible preferred stock is not deemed to
materially and adversely affect such rights, preferences
privileges or voting powers;
o effect any distribution with respect to our lower priority
equity; or
o reclassify our outstanding securities.
Outstanding Warrants and Options
As of October 31, 1999, there were 562,121 options to purchase shares of
our common stock at exercise prices between $0.165 and $3.00.
50
<PAGE>
Transfer Agent And Registrar
Nevada Agency & Trust Company, in Reno, Nevada, serves as transfer agent
and registrar for our common stock.
51
<PAGE>
SELLING STOCKSTOCKHOLDERS
We originally issued the common stock. We sold the common stock in a
transaction exempt from the registration requirements of the Securities Act of
1933 to persons reasonably believed by us to be "qualified institutional buyers"
(as defined in Rule 144A under the Securities Act) or other institutional
"accredited investors" as defined in Rule 501(a)(1), (2), (3) or (7) under the
Securities Act of 1933. Selling stockholders, including their transferees,
pledgees, donees or successors, may from time to time offer and sell any or all
of their common stock pursuant to this prospectus.
The following table sets forth information regarding the beneficial
ownership of the stockholders. The shares being offered by Torneaux Fund Ltd.
consist of shares of common stock that it may purchase from us pursuant to the
common stock purchase agreement, including upon exercise of warrants issued
pursuant to that agreement. For additional information about the stock purchase
agreement, please see the "Common Stock Purchase Agreement" subsection of "THE
OFFERING" section of this prospectus. The address of Torneaux Fund Ltd. c/o
Fortis Fund Services (Bahamas) Limited, Montegue Sterling Centre, East Bay
Street, P.O. Box SS-6238, Nassau, Bahamas.
Unless otherwise indicated, each of the selling stockholders intends to
sell the entire amount of the common stock beneficially owned by them. In
addition, unless otherwise indicated, none of the selling stockholders has had,
during the past three years, any position, office or other material relationship
with Globus Wireless, Ltd. Finally, unless otherwise indicated, each of the
selling stockholders will own less than 1% of the aggregate principal amount of
the outstanding common stock after the offering described in this prospectus.
The information contained in this paragraph and in the following table is based
solely on information obtained from the selling stockholders.
Name No. of Shares Offered
---- ---------------------
Torneaux Fund Ltd. (1) 2,571,428
The Keshet Fund L.P. (2) (3) 33,218
Keshet L.P. (2) (4) 174,399
Candid Investments Ltd. (2) (5) 207,618
Stonestreet Limited Partnership (2) (6) 207,618
Magellan International, Ltd. (2) (7) 207,618
Aspen International, Ltd. (2) (8) 207,618
Warwick Corporation, Ltd. (2) (9) 207,618
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<PAGE>
(1) On October 6, 2000, we entered into an equity financing agreement with
Torneaux Fund, Ltd., an institutional investor, under which Torneaux may
purchase up to 2,571,406 shares of our common stock. The 2,571, 406 shares
of common stock includes warrants to purchase 593,506 shares of our common
stock. In accordance with Rule 13d-3 under the Securities Exchange Act of
1934, Rhonda McDeigan-Eldridge may be deemed a control person of the shares
owned by such entity.
(2) Independent third party who invested in our January 2001 financing. In
connection with our January 2001 financing of $1,500,000, we issued 1,500
units, consisting of one share of our 12% series A convertible preferred
stock and warrants to purchase approximately 276 shares of our common
stock.
(3) Includes warrants to purchase 11,073 shares of our common stock at an
exercise price of $1.9862, which warrants are currently exercisable. In
accordance with Rule 13d-3 under the Securities Exchange Act of 1934, John
Clarke may be deemed a control person of the shares owned by such entity.
(4) Includes warrants to purchase 58,133 shares of our common stock at an
exercise price of $1.9862, which warrants are currently exercisable. In
accordance with Rule 13d-3 under the Securities Exchange Act of 1934, John
Clarke may be deemed a control person of the shares owned by such entity.
(5) Includes warrants to purchase 69,206 shares of our common stock at an
exercise price of $1.9862, which warrants are currently exercisable. In
accordance with Rule 13d-3 under the Securities Exchange Act of 1934, C. B.
Williams may be deemed a control person of the shares owned by such entity.
(6) Includes warrants to purchase 69,206 shares of our common stock at an
exercise price of $1.9862, which warrants are currently exercisable. In
accordance with Rule 13d-3 under the Securities Exchange Act of 1934,
Michael Finkelstein may be deemed a control person of the shares owned by
such entity.
(7) Includes warrants to purchase 69,206 shares of our common stock at an
exercise price of $1.9862, which warrants are currently exercisable. In
accordance with Rule 13d-3 under the Securities Exchange Act of 1934,
Anthony L. M. Inder Rieden may be deemed a control person of the shares
owned by such entity.
(8) Includes warrants to purchase 69,206 shares of our common stock at an
exercise price of $1.9862, which warrants are currently exercisable. In
accordance with Rule 13d-3 under the Securities Exchange Act of 1934,
Deirdre M. McCoy may be deemed a control person of the shares owned by such
entity.
(9) Includes warrants to purchase 69,206 shares of our common stock at an
exercise price of $1.9862, which warrants are currently exercisable. In
accordance with Rule 13d-3 under the Securities Exchange Act of 1934, Anna
Marie Lowe may be deemed a control person of the shares owned by such
entity.
53
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Shares Outstanding and Freely Tradable After Offering. Upon completion of
this offering, we will have approximately 17,662,482 shares of common stock
outstanding. The shares to be sold by the selling stockholders in this offering
will be freely tradable without restriction or limitation under the Securities
Act, except for any such shares held by "affiliates" of Globus, as such term is
defined under Rule 144 of the Securities Act, which shares will be subject to
the resale limitations under Rule 144.
Lock-up Agreements. In connection with our acquisition of Edge Continental
Inc., we issued 300,000 shares of restricted common stock pursuant to a Stock
Purchase Agreement, dated as of October 31, 2000. The parties to the Stock
Purchase Agreement agreed not to sell, transfer, or otherwise dispose of any
shares of our common stock owned by them for a one-year period ending on October
31, 2001. In addition, the shares are subject to a bleed-out plan for each of
the months in the 11 month period commencing on October 31, 2001.
Rule 144. In general, under Rule 144, as currently in effect, a person (or
persons whose shares are aggregated) who has beneficially owned shares for at
least one year, including an affiliate of us, would be entitled to sell, within
any three-month period, that number of shares that does not exceed the greater
of 1% of the then-outstanding shares of common stock (approximately 176,624
shares after this offering) or the average weekly trading volume in the common
stock during the four calendar weeks immediately preceding the date on which the
notice of sale is filed with the Commission, provided certain manner of sale and
notice requirements and requirements as to the availability of current public
information about us is satisfied. In addition, affiliates of ours must comply
with the restrictions and requirements of Rule 144, other than the one-year
holding period requirement, in order to sell shares of common stock. As defined
in Rule 144, an "affiliate" of an issuer is a person who, directly or
indirectly, through the use of one or more intermediaries controls, or is
controlled by, or is under common control with, such issuer. Under Rule 144(k),
a holder of "restricted securities" who is not deemed an affiliate of the issuer
and who has beneficially owned shares for at least two years would be entitled
to sell shares under Rule 144(k) without regard to the limitations described
above.
Effect of Substantial Sales on Market Price of Common Stock. We are unable
to estimate the number of shares that may be sold in the future by our existing
shareholders or the effect, if any, that such sales will have on the market
price of the common stock prevailing from time to time. Sales of substantial
amounts of common stock, or the prospect of such sales, could adversely affect
the market price of the common stock.
54
<PAGE>
PLAN OF DISTRIBUTION
The selling stockholders may, from time to time, sell all or a portion of
the shares of common stock on any market upon which the common stock may be
quoted, in privately negotiated transactions or otherwise, at fixed prices that
may be changed, at market prices prevailing at the time of sale, at prices
related to such market prices or at negotiated prices. The shares of common
stock may be sold by the selling stockholders by one or more of the following
methods, without limitation,
o block trades in which the broker or dealer so engaged will attempt to
sell the shares of common stock as agent but may position and resell a
portion of the block as principal to facilitate the transaction,
o purchases by broker or dealer as principal and resale by such broker
or dealer for its account pursuant to this prospectus,
o an exchange distribution in accordance with the rules of such
exchange,
o ordinary brokerage transactions and transactions in which the broker
solicits purchasers,
o privately negotiated transactions,
o market sales (both long and short to the extent permitted under the
federal securities laws), and
o a combination of any such methods of sale.
In effecting sales, brokers and dealers engaged by the selling stockholders
may arrange for other brokers or dealers to participate. Brokers or dealers may
receive commissions or discounts from the selling stockholders (or, if any such
broker-dealer acts as agent for the purchaser of such shares, from such
purchaser) in amounts to be negotiated which are not expected to exceed those
customary in the types of transactions involved. Broker-dealers may agree with
the selling stockholders to sell a specified number of such shares of common
stock at a stipulated price per share, and, to the extent such broker-dealer is
unable to do so acting as agent for the selling stockholders, to purchase as
principal any unsold shares of common stock at the price required to fulfill the
broker-dealer commitment to the selling stockholders. Broker-dealers who acquire
shares of common stock as principal may thereafter resell those shares of common
stock from time to time in transactions (which may involve block transactions
and sales to and through other broker-dealers, including transactions of the
nature described above) in the over-the-counter market or otherwise at prices
and on terms then prevailing at the time of sale, at prices then related to the
then-current market price or in negotiated transactions and, in connection with
such resales, may pay to or receive from the purchasers of such shares of common
stock commissions as described above. The selling stockholders may also sell the
shares of common stock in accordance with Rule 144 under the Securities Act,
subject to satisfaction of the requirements under the rule, rather than pursuant
to this prospectus.
55
<PAGE>
From time to time, the selling stockholders may pledge their shares of
common stock under the margin provisions of customer agreements. Upon default by
the selling stockholders, the broker may offer and sell the pledged shares of
common stock from time to time. Upon sales of the shares of common stock, the
selling stockholders intend to comply with the prospectus delivery requirements,
under the Securities Act, by delivering a prospectus to each purchaser in the
transaction. We intend to file any amendments or other necessary documents in
compliance with the Securities Act which may be required in the event a selling
stockholder defaults under any customer agreement with brokers.
To the extent required under the Securities Act, a supplemental prospectus
will be filed, disclosing, the name of any broker-dealers, the number of shares
of common stock involved, the price at which the common stock is to be sold, the
commissions paid or discounts or concessions allowed to such broker-dealers,
where applicable, that such broker-dealers did not conduct any investigation to
verify the information set out or incorporated by reference in this prospectus,
as supplemented, and other facts material to the transaction.
We and the selling stockholders will be subject to applicable provisions of
the Exchange Act and the rules and regulations under it, including, without
limitation, Rule 10b-5 and, insofar as the selling stockholders are distribution
participants and we, under certain circumstances, may be a distribution
participant, Regulation M. All of the foregoing may affect the marketability of
the common stock.
Torneaux Fund Ltd.
Torneaux Fund Ltd. may sell the common stock from time to time in
transactions on the OTC Bulletin Board, or any exchange where the common stock
is then listed, in negotiated transactions, or otherwise, or by a combination of
these methods, at fixed prices which may be changed, at market prices at the
time of sale, at prices related to market prices or at negotiated prices.
Torneaux Fund Ltd. may effect these transactions by selling the common stock to
or through broker-dealers, who may receive compensation in the form of
discounts, concessions or commissions from Torneaux Fund Ltd. or the purchasers
of common stock to or through broker-dealers, who may receive compensation in
the form of discounts, concessions or commissions from Torneaux Fund Ltd. or the
purchasers of common stock for whom the broker-dealer may act as an agent or to
whom it may sell the common stock as a principal, or both. The compensation to a
particular broker-dealer may be in excess of customary commissions.
Torneaux Fund Ltd. is an "underwriter" within the meaning of the Securities
Act in connection with the sale of the common stock offered hereby. Assuming
that we are in compliance with the conditions of the common stock purchase
agreement, Torneaux Fund Ltd. must accept draw downs of shares from us, subject
to maximum aggregate dollar amounts, during the 14 month term of the agreement.
Broker-dealers who act in connection with the sale of the common stock may also
be deemed to be underwriters. Profits on any resale of the common stock as a
principal by such broker-dealers may be deemed to be underwriting discounts and
commissions under the Securities Act. Any broker-dealer participating in such
56
<PAGE>
transactions as agent may receive commissions from Torneaux Fund Ltd. and, if
they act as agent for the purchaser of our common stock, from such purchaser.
Broker-dealers may agree with Torneaux Fund Ltd. to sell a specified number of
shares of our common stock at a stipulated price per share, and, to the extent
such a broker-dealer is unable to do so acting as agent for Torneaux Fund Ltd.,
to purchase as principal any unsold common stock at the price required to
fulfill the broker-dealer commitment to Torneaux Fund Ltd. Broker-dealers who
acquire common stock as principal may thereafter resell the common stock from
time to time in transactions (which may involve crosses and block transactions
and which may involve sales to and through other broker-dealers, including
transactions of the nature described above) in the over-the-counter market, in
negotiated transactions or otherwise, at market prices prevailing at the time of
sale or at negotiated prices, and in connection with such resales may pay to or
receive from the purchasers of such common stock commissions computed as
described above.
57
<PAGE>
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for
Globus by Sichenzia, Ross & Friedman LLP, New York, New York. Sichenzia, Ross &
Friedman LLP received 10,000 shares of common stock in connection with their
representation of Globus.
EXPERTS
Our financial statements as at October 31, 1998 and 1999 for the years
ended October 31, 1998 and 1999 have been included in this prospectus in
reliance on the report of James E. Scheifley & Associates, P.C., certified
public accountants, as given upon the authority of said firm as experts in
accounting and auditing.
The financial statements for Edge Continental Inc. as at July 31, 1999 and
2000 and for the years then ended have been included in this prospectus in
reliance on the report of KPMG, LLP given upon their authority as experts in
accounting and auditing.
Change in Registrant's Certifying Accountant
On April 26, 2000, we dismissed our former independent auditor, James E.
Scheifley & Associates, P.C., based on our agreement that such action is in the
best interests of both firms. Effective as of that date, we have engaged KPMG
LLP as our new independent auditor. The decision to end our relationship with
Scheifley & Associates and to engage KPMG was recommended by our independent
Audit Committee and unanimously approved by our board of directors on March 26,
2000.
Over the course of Scheifley & Associates' engagement, we and Scheifley &
Associates had no disagreements on any matter of accounting principles or
practices, financial statement disclosure, auditing scope or procedure, which
disagreement, if not resolved to the satisfaction of Scheifley & Associates,
would have caused it to make reference to the subject matter of the disagreement
in connection with any report or opinion it might have issued. Furthermore,
neither of Scheifley & Associates' reports on our financial statements for the
past two years contained an adverse opinion, disclaimer of opinion, or
modification or qualification of opinion.
58
<PAGE>
INDEX TO FINANCIAL STATEMENTS
UNAUDITED CONSOLIDATED PRO FORMA
FINANCIAL INFORMATION
Pro Forma Condensed Consolidated Financial Statements............... F-1
Pro Forma Consolidated Balance Sheet................................ F-2
Pro Forma Consolidated Statement of Operations
(Nine-months ended July 31, 2000).................................. F-3
Pro Forma Consolidated Statement of Operations
(Year ended October 31, 1999)...................................... F-4
GLOBUS WIRELESS, LTD.
UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(July 31, 2000 and 1999)
Consolidated Balance Sheets......................................... F-7
Consolidated Statements of Operations............................... F-8 - F-9
Consolidated Statements of Stockholders' Equity .................... F-10
Consolidated Statement of Cash Flows................................ F-11
Notes to Consolidated Financial Statements.......................... F-12
GLOBUS WIRELESS, LTD
CONSOLIDATED FINANCIAL STATEMENTS
(October 31, 1999 and 1998)
Report of James E. Schiefley & Associates, P.C., Certified
Public Accountant ................................................. F-15
Consolidated Balance Sheets ........................................ F-16
Consolidated Statements of Operations .............................. F-17
Consolidated Statements of Stockholders' Equity..................... F-18
Consolidated Statement of Cash Flows................................ F-19 - F-20
Notes to Consolidated Financial Statements.......................... F-21
EDGE CONTINENTAL INC.
CONSOLIDATED FINANCIAL STATEMENTS
Report of KPMG LLP, Independent Auditors ........................... F-28
Consolidated Balance Sheets ........................................ F-29
Consolidated Statements of Operations and Deficit................... F-30
Consolidated Statement of Cash Flows................................ F-31
Notes to Consolidated Financial Statements.......................... F-32
<PAGE>
GLOBUS WIRELESS LTD.
And subsidiaries
Unaudited pro forma consolidated and combined financial information
The following unaudited pro forma consolidated and combined financial
information gives effect to the acquisition of Edge Continental Inc. ("Edge") by
Globus Wireless Ltd. ("Globus"), which acquisition occurred on September 1,
2000. The acquisition of Edge will be accounted for under the purchase method in
accordance with APB Opinion No. 16.
Under the purchase method of accounting, the purchase price is allocated to the
assets acquired and liabilities assumed based on their estimated fair values.
Management has estimated that there is no material difference between the book
values and the fair values of Edge's net assets and, accordingly, the
transaction has been recorded at the net book values of Edge's net assets at
September 1, 2000. Goodwill will be amortized on a straight line basis over
fifteen years.
The unaudited pro forma consolidated balance sheet as at July 31, 2000 gives
effect to the acquisition as if it occurred on July 31, 2000. The Globus balance
sheet information was derived from its unaudited July 31, 2000 balance sheet.
The Edge balance sheet information was derived from its audited July 31, 2000
balance sheet. The unaudited pro forma combined statements of operations give
pro forma effect to the acquisition as if the transaction was consummated as of
November 1, 1998. The Globus and Edge fiscal year statement of operations was
derived from their audited statements of operations for the years ended October
31, 1999 and July 31, 1999, respectively. The Globus and Edge statement of
operations for the nine month period ended July 31, 2000 was derived from their
unaudited statements of operations.
The unaudited pro forma consolidated and combined financial information has been
prepared by management and is not necessarily indicative of the consolidated
financial position or combined results of operations in future periods or the
results that actually would have been realized had Globus and Edge been a
combined company during the specified periods. The unaudited pro forma
consolidated and combined financial information, including the notes thereto,
should be read in conjunction with the historical consolidated financial
statements of Globus included in its October 31, 1999 Form 10-KSB and September
30, 2000 Form 10-QSB filed April 20, 2000 and September 14, 2000, respectively,
with the Securities and Exchange Commission and the historical financial
statements of Edge included in this SB-2 registration statement.
F-1
<PAGE>
<TABLE>
<CAPTION>
GLOBUS WIRELESS LTD.
Unaudited Pro Forma Consolidated Balance Sheet
July 31, 2000
$ United States
---------------------------------------------------------------------------------------------------------------
Historical Pro Forma
Globus Edge Adjustments Consolidated
(note 2)
---------------------------------------------------------------------------------------------------------------
Assets
<S> <C> <C> <C> <C>
Current assets
Cash $ 429,739 $ 38,070 $ 806,994)(a) $ (339,185)
Marketable security 199,012 -- -- 199,012
Accounts receivable 54,291 399,878 -- 454,169
Loans and other advances 26,725 -- -- 26,725
Advances to shareholders -- 74,731 -- 74,731
Inventory 34,868 303,870 -- 338,738
Prepaid expenses and deposits 6,966 266,234 -- 273,200
----------- ----------- ----------- -----------
751,601 1,082,783 (806,994) 1,027,390
Capital assets 397,705 85,446 -- 483,151
Other assets 14,847 -- -- 14,847
Goodwill -- -- 1,758,052 (b) 1,758,052
----------- ----------- ----------- -----------
$ 1,164,153 $ 1,168,229 $ 951,058 $ 3,283,440
=========== =========== =========== ===========
Liabilities and Stockholders' Equity (Deficiency)
Current liabilities
Accounts payable and
accrued liabilities $ 28,499 $ 609,494 $ -- $ 637,993
Due to shareholder 51,843 -- -- 51,843
Advances from related parties -- 38,726 -- 38,726
Loans payable to related parties -- 697,667 -- 697,667
----------- ----------- ----------- -----------
80,342 1,345,887 -- 1,426,229
Stockholders' Equity (Deficiency)
Capital stock 12,224 13 300 (a) 12,524
(13)(c)
Additional paid in capital 6,490,465 -- 773,100 (a) 7,263,565
Deficit (5,398,815) (179,338) 179,338 (c) (5,398,815)
Cumulative translation adjustment (20,063) 1,667 (1,667)(c) (20,063)
----------- ----------- ----------- -----------
1,083,811 (177,658) 951,058 1,857,211
----------- ----------- ---------- -----------
$ 1,164,153 $ 1,168,229 $ 951,058 $ 3,283,440
=========== =========== ========== ===========
See accompanying notes to financial information.
On behalf of the Board:
-------------------------- Director
-------------------------- Director
F-2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GLOBUS WIRELESS LTD.
Unaudited Pro Forma Combined Statement of Operations
Nine months ended July 31, 2000
$ United States
------------------------------------------------------------------------------------------------
Historical Pro Forma
Globus Edge Adjustments Combined
(Note 4) (Note 2)
------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales $ 20,185 $ 4,000,229 $ -- $ 4,020,414
Cost of sales 11,656 3,580,753 -- 3,592,409
------------ ------------ ------------ ------------
8,529 419,476 -- 428,005
Engineering revenue 59,247 -- -- 59,247
------------ ------------ ------------ ------------
67,776 419,476 -- 487,252
Expenses
Amortization -- 15,292 87,902(d) 103,194
General and administrative 967,568 459,677 -- 1,427,245
Interest -- 96,284 -- 96,284
Research and development 154,132 -- -- 154,132
------------ ------------ ------------ ------------
1,121,700 571,253 87,902 1,780,855
------------ ------------ ------------ ------------
Loss $ (1,053,924) $ (151,777) $ (87,902) $ (1,243,603)
============ ============ ============ ============
Weighted average number of shares 11,815,206 12,115,206
Loss per share (note 3) $ (0.09) $ (0.11)
============ ============ ============ ============
See accompanying notes to financial information.
F-3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GLOBUS WIRELESS LTD.
Unaudited Pro Forma Combined Statement of Operations
$ United States
============================================================================================
Historical Pro Forma
Globus Edge Adjustments Combined
Year ended Year ended
October 31, July 31,
1999 1999 (Note 2)
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Sales $ -- $ 5,983,435 $ -- $ 5,983,435
Cost of sales -- 5,551,492 -- 5,551,492
------------ ----------- ----------- -----------
-- 431,943 -- 431,943
Other revenue 3,171 -- -- 3,171
------------ ----------- ----------- -----------
3,171 431,943 -- 435,114
Expenses
Amortization -- 2,601 117,203 (d) 119,804
General and administrative 795,204 386,561 -- 1,181,765
Interest 3,709 42,963 -- 46,672
Research and development 70,745 -- -- 70,745
------------ ----------- ----------- -----------
869,658 432,125 117,203 1,418,986
------------ ----------- ----------- -----------
Loss before other income (866,487) (182) (117,203) (983,872)
Other income 22,150 -- -- 22,150
------------ ----------- ----------- -----------
Loss $ (844,337) $ (182) $ (117,203) $ (961,722)
============ =========== =========== ===========
Weighted average number of shares 8,742,127 -- -- 9,042,127
Loss per share (note 3) $ (0.10) -- -- $ (0.11)
============ =========== =========== ===========
See accompanying notes to financial information.
F-4
</TABLE>
<PAGE>
GLOBUS WIRELESS LTD.
Notes to Unaudited Pro Forma Consolidated and Combined Financial Statements
$ United States
================================================================================
1. Basis of presentation:
These pro forma consolidated and combined financial statements have been
prepared in accordance with generally accepted accounting principles in the
United States.
Globus acquired Edge effective September 1, 2000 for a total purchase price
of $1,580,394 in a transaction accounted for as a purchase. Globus issued
300,000 shares of its common stock with a fair value of $773,400 and paid
cash consideration of $672,495 and direct acquisition costs of $134,499 for
all of the outstanding common stock of Edge. The common stock issued by
Globus was valued using Globus' average stock price on the date the
transaction was announced and the prices of the stock two days before and
after the announcement. The cash consideration is payable in increments of
$168,124 on October 31, 2000, December 31, 2000, March 31, 2001 and June
30, 2001. The cash consideration has not been discounted as any outstanding
consideration bears interest at 6% per annum.
The acquisition will be accounted for under the purchase method of
accounting in accordance with APB Opinion No. 16. Management has estimated
that there is no material difference between the book values and the fair
values of Edge's net assets. Accordingly, the book values of Edge's assets
and liabilities have been combined with the historical values of the assets
and liabilities of Globus in the unaudited pro forma consolidated financial
information.
The actual measurement and allocation of the purchase price will depend on
Edge's net assets on the closing date. Consequently, the actual measurement
and allocation of the purchase price could differ from that presented in
the unaudited pro forma consolidated balance sheet.
2. Pro forma adjustments:
The pro forma consolidated balance sheet gives effect to the following
transactions as if they had occurred on July 31, 2000:
(a) To reflect the issuance of 300,000 Globus common shares, cash
consideration of $672,495 and acquisition costs of $134,499 for an
aggregate purchase price of $1,580,394.
(b) To reflect the purchase price allocation. The purchase price
allocation is based on management's estimates of fair values of Edge's
tangible assets and liabilities. Management has determined that there
is no material difference between the book values and fair values of
Edge's net assets. Goodwill will be amortized on a straight-line basis
over fifteen years.
Purchase price is summarized as follows:
Common stock $ 773,400
Cash consideration 672,495
Acquisition costs 134,499
------------------------------------------------------------------
Total purchase price $ 1,580,394
==================================================================
F-5
<PAGE>
GLOBUS WIRELESS LTD.
Notes to Unaudited Pro Forma Combined Financial Statements (continued)
$ United States
================================================================================
2. Pro forma adjustments (continued):
Preliminary allocation of the purchase price is as follows:
Cash $ 38,070
Accounts receivable 399,878
Advances to shareholders 74,731
Inventory 303,870
Prepaid expenses and deposits 266,234
Capital assets 85,446
Accounts payable and accrued liabilities (609,494)
Due to related parties (38,726)
Loans payable to related parties (697,667)
Goodwill 1,758,052
------------------------------------------------------------------
Net assets acquired $ 1,580,394
==================================================================
(c) To reflect the elimination of the stockholders' deficiency of Edge
upon consummation of the transaction.
(d) To reflect amortization of goodwill.
3. Pro forma loss per share:
The unaudited pro forma combined loss per share is based upon the weighted
average number of outstanding shares of common stock of Globus during the
periods presented, plus the number of shares issued to consummate the
acquisition of Edge as if the acquisition occurred at the beginning of the
period presented.
4. Adjustments made to historical information:
The Edge statement of operations for the nine month period ended July 31,
2000 was derived from the statement of operations for the year ended July
31, 2000. The adjustments were as follows:
================================================================================
August 1,
Year ended 1999 to Nine months
July 31, October 31, ended July 31,
2000 1999 2000
--------------------------------------------------------------------------------
Sales $ 5,851,634 $(1,851,405) $ 4,000,229
Cost of sales (5,313,103) 1,732,350 (3,580,753)
Expenses (717,687) 146,434 (571,253)
---------------------------------------------------------------------------
Loss (179,156) $ 27,379 $ (151,777)
===========================================================================
F-6
<PAGE>
<TABLE>
<CAPTION>
GLOBUS WIRELESS LTD.
Consolidated Balance Sheets
$ United States
July 31, 2000 and October 31, 1999
====================================================================================
July 31, October 31,
2000 1999
(Unaudited - Prepared
by Management)
------------------------------------------------------------------------------------
Assets
<S> <C> <C>
Current Assets
Cash $ 429,739 $ 487,562
Marketable Security 199,012 --
Accounts receivable 54,291 35,197
Loans and other advances 26,725 --
Inventories 34,868 --
Prepaid expenses 6,966 62,432
----------- -----------
751,601 585,191
Property and equipment, net of accumulated depreciation 397,705 290,351
Other assets 14,847 16,111
----------- -----------
$ 1,164,153 $ 891,653
----------- -----------
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable and accrued liabilities $ 28,499 $ 88,262
Note payable -- 1,121
Due to shareholder 51,843 51,843
----------- -----------
80,342 141,226
Subscriptions for common stock -- 382,627
Stockholders' equity
Common stock 12,224 11,080
Additional paid in capital 6,490,465 4,714,212
Accumulated other comprehensive income (20,063) (12,601)
Deficit (5,398,815) (4,344,891)
----------- -----------
1,083,811 367,800
----------- -----------
$ 1,164,153 $ 891,653
----------- -----------
See accompanying notes to consolidated financial statements.
F-7
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GLOBUS WIRELESS LTD.
Consolidated Statements of Operations
$ United States
Three month periods ended July 31, 2000 and 1999
(Unaudited - Prepared by Management)
======================================================================================
2000 1999
--------------------------------------------------------------------------------------
<S> <C> <C>
Engineering revenue $ 19,684 $ --
Sale of accessories 9,473 --
Cost of sales 5,684 --
------------ ------------
3,789 --
------------ ------------
23,473 --
Expenses
Research and development 60,273 15,191
General and administrative 397,783 138,101
------------ ------------
458,056 153,292
------------ ------------
Loss from continuing operations, before income taxes (434,583) (153,292)
Income taxes -- 2,099
------------ ------------
Loss from continuing operations (434,583) (151,193)
Income from discontinued operation, net of income taxes -- 4,075
------------ ------------
Loss $ (434,583) $ (147,118)
============ ============
Weighted average number of shares 12,071,066 7,877,747
Basic loss per share $ (0.04) $ (0.02)
============ ============
Comprehensive loss
Loss $ (434,583) $ (147,118)
Foreign Currency Translation Adjustment (2,442) (24,325)
------------ ------------
Comprehensive loss $ (437,025) $ (171,443)
============ ============
See accompanying notes to consolidated financial statements.
F-8
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GLOBUS WIRELESS LTD.
Consolidated Statements of Operations
$ United States
Nine month periods ended July 31, 2000 and 1999
(Unaudited - Prepared by Management)
--------------------------------------------------------------------------------------
2000 1999
------------ ------------
<S> <C> <C>
Engineering revenue $ 59,247 $ --
Sale of accessories 20,185 --
Cost of sales 11,656 --
------------ ------------
8,529 --
------------ ------------
Expenses 67,776 --
Research and development 154,132 36,932
General and administrative 967,568 617,728
------------ ------------
1,121,700 654,700
------------ ------------
Loss from continuing operations, before income taxes (1,053,924) (654,700)
Income taxes -- 11,279
------------ ------------
Loss from continuing operations (1,053,924) (643,700)
Income from discontinued operation, net of income taxes -- 21,895
------------ ------------
Loss $ (1,053,924) $ (621,526)
Weighted average number of shares 11,815,206 7,344,342
Basic loss per share $ (0.09) $ (0.09)
============ ============
Comprehensive loss
Loss $ (1,053,924) $ (621,526)
Foreign currency translation adjustment (7,462) 19,290
------------ ------------
Comprehensive loss $ (1,061,386) $ (602,236)
============ ============
See accompanying notes to consolidated financial statements.
F-9
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
GLOBUS WIRELESS LTD.
Consolidated Statement of Stockholders' Equity
$ United States
Nine month period ended July 31, 2000
(Unaudited - Prepared by Management)
------------------------------------------------------------------------------------------------------------------
Additional Other Total
Capital Stock Paid -in Accumulated Comprehensive Shockholders
Shares Amount Capital Deficit Income Equity
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Balance, October 31, 1999 11,079,930 $ 11,080 $ 4,714,212 $(4,344,891) $ (12,601) $ 367,800
Issued for cash
(note 2) 712,358 712 1,325,905 -- -- 1,326,617
Issued for subscriptions
for common stock (note 2) 431,500 432 382,195 -- -- 382,627
Compensation cost of
options issued to
employees (note 3) -- -- 29,153 -- -- 29,153
Compensation cost of
warrants issued to non-
employees (note 4) -- -- 39,000 -- -- 39,000
Loss for the nine month
period ended July 31, 2000 -- -- -- (1,053,924) -- (1,053,924)
Foreign currency translation
adjustment -- -- -- -- (7,462) (7,462)
----------- ----------- ----------- ----------- ----------- -----------
Balance, July 31, 2000
(Unaudited) 12,223,788 $ 12,224 $ 6,490,465 $(5,398,815) $ (20,063) $ 1,083,811
=========== =========== =========== =========== =========== ===========
See accompanying notes to consolidated financial statements.
F-10
</TABLE>
<PAGE>
GLOBUS WIRELESS LTD.
Consolidated Statements of Cash Flows
$ United States
Nine month periods ended July 31, 2000 and 1999
(Unaudited - Prepared by Management)
--------------------------------------------------------------------------------
2000 1999
----------- -----------
Net cash flows used in operating activities $ (992,888) $ (303,405)
Cash flows from investing activities:
Purchase of equipment (157,232) (156,742)
Loans and other advances (26,725) --
Purchase of marketable security (199,012) --
----------- -----------
(382,969) (156,742)
Cash flows from financing activities:
Common stock issued for cash 1,326,617 872,955
Repayment of note payable (1,121) (833)
Increase in due to shareholder -- (143,830)
----------- -----------
1,325,496 728,292
Effect of exchange rate changes on cash balances (7,462) 19,290
----------- -----------
Increase (decrease) in cash (57,823) 287,435
Cash, beginning of period 487,562 31,673
----------- -----------
Cash, end of period $ 429,739 $ 319,108
=========== ===========
Supplementary information
Interest paid $ -- $ --
Income taxes paid -- --
=========== ===========
Non-cash financing activities (note 2)
See accompanying notes to consolidated financial statements.
F-11
<PAGE>
GLOBUS WIRELESS LTD.
Notes to Consolidated Financial Statements
$ United States
Nine month period ended July 31, 2000
(Unaudited - Prepared by Management)
--------------------------------------------------------------------------------
1. Significant accounting policies:
a) The accompanying financial statements as at July 31, 2000 and for the
three and nine month periods ended July 31, 2000 are unaudited;
however, in the opinion of management, all adjustments (consisting of
normal recurring items) necessary for the fair presentation of these
unaudited financial statements in conformity with generally accepted
accounting principles have been made.
b) The Company's subsidiary Celltech Research Inc., operates in Canada
and its operations are conducted in Canadian currency. However, the
functional currency has been determined to be United States dollars.
The method of translation applied is as follows:
i. Monetary assets and liabilities are translated at the rate of
exchange in effect at the balance sheet date, being US $1.00 per
Cdn $1.477 at July 31, 2000;
ii. Non-monetary assets and liabilities are translated at the
exchange rate in effect at the transaction date;
iii. Revenues and expenses are translated at the exchange rate in
effect at the transaction date; and
iv. The net adjustment arising from the translation is recorded as a
separate component of stockholders' equity called "Accumulated
other comprehensive income."
c) Basic loss per share
Basic loss per share has been calculated using the weighted average
number of common shares outstanding during the period. The effect of
stock options outstanding during the period have not been included in
the computation because to do so would be anti-dilutive.
2. Issuance of common stock:
During the nine month period ended July 31, 2000, the Company issued the
following common stock:
712,358 shares for cash proceeds of $1,326,647.
431,500 shares for $382,627 in share subscriptions received prior to
October 31, 1999.
As both the 431,500 shares referred to above, the stock options referred to
in note 3 and the notes referred to in note 4 b) were non-cash transactions
for the period ended July 31, 2000, they are not reflected in the statement
of cash flows.
F-12
<PAGE>
GLOBUS WIRELESS LTD.
Notes to Consolidated Financial Statements
$ United States
Nine month period ended July 31, 2000
(Unaudited - Prepared by Management)
--------------------------------------------------------------------------------
3. Stock options:
The Company applies APB Opinion No. 25 in accounting for employee stock
options whereby compensation cost is recorded only to the extent that the
market price exceeds the exercise price at the date of grant. Options
granted to non-employees are accounted for at their fair value at the date
of grant.
During the nine month period ended July 31, 2000, the Company granted
119,000 common share options with exercise prices fixed at 85% of the
market value of the Company's common shares at the grant date. Accordingly,
compensation cost of $29,153, representing the excess of the market price
over the exercise price of the options granted, has been included in the
determination of the loss for the period.
4. Contingencies:
a) Pursuant to a technology licensing agreement, the Company was required
to make periodic payments to an individual who is the Company's
founder, major stockholder and former President. Technology license
payments owing under the agreement have amounted to approximately
$240,000 at October 31, 1999 and $330,000 at July 31, 2000.
During 1999, the Company launched a lawsuit against its former
President for breach of his fiduciary duties. As part of its claims
against its former President, the Company contends that its
obligations under the agreement have been eliminated. Consequently, no
accrual for technology license payments has been made as at October
31, 1999 and July 31, 2000.
b) On May 8, 2000, the Company signed a letter of agreement with Coleman
and Company Securities Inc. to secure investors for the Company. In
consideration for these services, the Company is required to:
i. pay a monthly cash fee of $5,000;
ii. issue, within 30 days, 100,000 share purchase warrants with an
exercise price of $4.00 per share, exercisable for a period of 5
years; and
iii. issue, within 30 days, an additional 100,000 share purchase
warrants with an exercise price of $5.00 per share, exercisable
for a period of 5 years, vesting 20,000 warrants every 30 days
from the execution of the letter.
The fair value of $39,000 of these warrants has been determined using
the Black Scholes Method using an expected life of six months,
volatility factor of 25%, risk free rate of 5.5% and no assumed
dividend rate and has been included in the determination of the loss
for the period.
F-13
<PAGE>
GLOBUS WIRELESS LTD.
Notes to Consolidated Financial Statements
$ United States
Nine month period ended July 31, 2000
(Unaudited - Prepared by Management)
--------------------------------------------------------------------------------
5. Depreciation:
Depreciation for the nine month period ended July 31, 2000 was $51,142.
6. Subsequent Events:
a) Subsequent to July 31, 2000, the Company issued 40,000 common shares
for investor relations consulting services. The shares vest in
increments of 10,000 on August 1, 2000, November 1, 2000, February 1,
2001 and May 1, 2001. The fair value of the services to be received,
aggregating $120,000 is equivalent to the fair market value of the
shares issued.
b) Subsequent to July 31, 2000, the Company issued 93,833 common shares
for notes receivable, aggregating $184,854 from the exercise of
employee stock options. The notes receivable do not bear interest, are
due within 364 days and are secured by the common shares issued.
F-14
<PAGE>
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.
/s/ James E. Scheifley & Associates, P.C.
-----------------------------------------
James E. Scheifley & Associates, P.C.
Certified Public Accountants
Denver, Colorado
April 4, 2000
F-15
<PAGE>
Globus Wireless Ltd.
Balance Sheet
October 31, 1999
ASSETS
Current assets:
Cash $ 487,562
Accounts receivable, other 35,197
Prepaid expenses 62,432
-----------
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 4,721,710
Subscriptions to common stock 382,627
Foreign exchange adjustment (12,601)
(Deficit) (4,352,391)
-----------
750,427
-----------
$ 891,653
===========
See accompanying notes to financial statements.
F-16
<PAGE>
Globus Wireless Ltd.
Statements of Operations
Years Ended October 31, 1999 and 1998
1999 1998
Revenue: ----------- -----------
Sales $ -- $ --
Other income 3,171 10,129
----------- -----------
3,171 10,129
Other costs and expenses:
General and administrative 802,704 687,003
Research and development 70,745 67,685
----------- -----------
873,449 754,689
----------- -----------
Income (loss) from continuing operations (870,278) (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 (851,837) (753,428)
Provision for income taxes -- 2,340
----------- -----------
Income (loss) from continuing operations (851,837) (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) $ (851,837) $ (737,836)
Foreign exchange gain (loss) net of
income taxes (24,259) 26,058
----------- -----------
Comprehensive income (loss) $ (876,096) $ (711,778)
=========== ===========
See accompanying notes to financial statements.
F-17
<PAGE>
<TABLE>
<CAPTION>
Globus Wireless Ltd.
Statement of Changes in Stockholders' Equity
For the Periods Indicated
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 3,082 964,209 -- --
Compensation value of options -- 28,100
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
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 $ 11,080 $ 4,721,712 $ 382,627 $(4,344,891) $ (12,601)
=========== =========== =========== =========== =========== ===========
See accompanying notes to financial statements.
F-18
</TABLE>
<PAGE>
Globus Wireless Ltd.
Statements of Cash Flows
Years Ended October 31, 1999 and 1998
1999 1998
----------- -----------
Net income (loss) $ (851,837) $ (737,836)
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 49,133 16,446
Stock and options issued for services 126,141 150,630
Stock subscribed for lawsuit settlement 97,850
Conpensation 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 319,151 527,317
----------- -----------
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
=========== ===========
See accompanying notes to financial statements.
F-19
<PAGE>
Globus Cellular Ltd.
Statements of Cash Flows
Years Ended October 31, 1999 and 1998
1999 1998
-------- --------
Supplemental cash flow information:
Cash paid for interest $ 3,709 $ 8,868
Cash paid for income taxes $ -- $ --
Non-cash investing and financing activities:
Equipment finaqnced by note payable $ -- $ 1,984
Abandonment of leasehold improvements $ -- $ 4,518
Return of common stock by officer $ -- $169,875
Converstion of officer loan to stock $128,550 --
See accompanying notes to financial statements.
F-20
<PAGE>
Globus Wireless Ltd.
Notes to Financial Statements
Note 1. Business and Significant Accounting Policies
Business
The Company manufactures and distributes a cellular telephone radiation
shielding product which universally fits 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 also
developing advanced antenna designs that incorporate the Company's proprietary
shielding 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.
F-21
<PAGE>
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.
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.
F-22
<PAGE>
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 receivable, trade.
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 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.
F-23
<PAGE>
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.
F-24
<PAGE>
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 options to purchase its common stock held
by the stockholder.
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.
F-25
<PAGE>
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.
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.
F-26
<PAGE>
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 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.
F-27
<PAGE>
Auditors' Report to the stockholders
We have audited the accompanying balance sheets of Edge Continental Inc. as at
July 31, 2000 and 1999, and the statements of operations and deficit and cash
flows for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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 made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide 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 the Company as at July 31, 2000
and 1999 and the results of its operations and its cash flows for the years then
ended, in accordance with accounting principles generally accepted in the United
States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As shown in the financial statements,
the Company, to date, has cumulative losses since inception of $179,338. This
factor, among others, as discussed in Note 1 a), raises substantial doubt about
the Company's ability to continue as a going concern. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
signed "KPMG LLP"
Kelowna, Canada
November 24, 2000
F-28
<PAGE>
Edge Continental Inc.
Balance Sheets
$ United States
July 31, 2000 and 1999
Assets
2000 1999
----------- -----------
Current
Cash $ 38,070 $ 40,994
Accounts receivable (net of allowance
of $21,582, 1999 - $nil) 399,878 312,695
Advances to shareholders (note 2) 74,731 33,874
Inventory 303,870 427,538
Prepaid expenses and deposits on inventory 266,234 23,657
----------- -----------
1,082,783 838,758
Capital assets (note 3) 85,446 17,761
----------- -----------
$ 1,168,229 $ 856,519
=========== ===========
Liabilities and Shareholders' Deficiency
Current
Accounts payable and accrued liabilities $ 609,494 $ 328,413
Advances from related parties (note 4) 38,726 38,957
Loans payable to related parties (note 5) 697,667 489,278
----------- -----------
1,345,887 856,648
Shareholders' deficiency
Share capital (note 6) 13 13
Deficit (179,338) (182)
Cumulative translation adjustment 1,667 40
----------- -----------
(177,658) (129)
----------- -----------
Commitments (note 8)
$ 1,168,229 $ 856,519
=========== ===========
See accompanying notes to financial statements.
Approved by the Board:
, Director
-----------------------------------
, Director
-----------------------------------
F-29
<PAGE>
Edge Continental Inc.
Statements of Operations and Deficit
$ United States
Years ended July 31, 2000 and 1999
2000 1999
----------- -----------
Sales $ 5,851,634 $ 5,983,435
Cost of sales (5,313,103) (5,551,492)
----------- -----------
538,531 431,943
Expenses
Amortization 15,451 2,601
General and administrative 580,625 386,561
Interest 121,611 42,963
----------- -----------
717,687 432,125
----------- -----------
Loss (179,156) (182)
Shareholders' deficiency, beginning of year (182) --
----------- -----------
Shareholders' deficiency, end of year $ (179,338) $ (182)
=========== ===========
See accompanying notes to financial statements.
F-30
<PAGE>
Edge Continental Inc.
Statements of Cash Flows
$ United States
Years ended July 31, 2000 and 1999
2000 1999
--------- ---------
Cash provided by (used in):
Operating activities
Loss $(179,156) $ (182)
Item not involving cash:
Amortization 15,451 2,601
Changes in non-cash operating working capital
Accounts receivable (87,183) (312,695)
Inventory 123,668 (427,538)
Prepaid expenses and deposits on inventory (242,577) (23,657)
Accounts payable and accrued liabilities 281,081 328,413
--------- ---------
(88,716) (433,058)
Financing activities
Advances from (to) related parties (231) 38,957
Advances to shareholders (40,857) (33,874)
Shares issued for cash -- 13
Loans payable 208,389 489,278
--------- ---------
167,301 494,374
Investing activities
Purchase of capital assets (83,136) (20,362)
Translation adjustment 1,627 40
--------- ---------
(Decrease) increase in cash (2,924) 40,994
Cash, beginning of year 40,994 --
--------- ---------
Cash, end of year $ 38,070 $ 40,994
========= =========
Supplementary information
Interest paid $ 116,816 $ 40,078
Income taxes paid -- --
========= =========
See accompanying notes to financial statements.
F-31
<PAGE>
Edge Continental Inc.
Notes to Financial Statements
$ United States
Years ended July 31, 2000 and 1999
--------------------------------------------------------------------------------
The Company was incorporated under the laws of the Province of Ontario on April
7, 1998 and was inactive until October 1, 1998. The major activity of the
Company is the wholesale distribution of cellular phones and related accessories
in North America.
1. Accounting Policies:
(a) Basis of Presentation
These financial statements have been prepared on the going concern
basis, which assumes the realization of assets and liquidation of
liabilities in the normal course of business. As shown in the
financial statements, to date, the Company has an accumulated deficit
of $179,338. This factor, among others, raises substantial doubt about
the Company's ability to continue as a going concern. The Company's
ability to continue as a going concern is dependent on its ability to
generate future profitable operations and to receive continued
financial support from its shareholders and other investors. The
financial statements do not include any adjustments that might result
from the outcome of this uncertainty. Management of the company in
pursuing additional sources of financing (see note 9) and plans to
achieve profitable operations through increased future sales.
(b) Use of estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
(c) Inventory
Inventory is recorded at the lower of cost, determined on an average
cost basis, and net realizable value.
(d) Capital assets
Capital assets are recorded at cost. Amortization is provided annually
on a straight-line basis over the assets' estimated useful lives as
follows:
Computer equipment 5 years
Computer software 3 years
Furniture and fixtures 5 years
Leasehold improvements 3 years
F-32
<PAGE>
Edge Continental Inc.
Notes to Financial Statements
$ United States
Years ended July 31, 2000 and 1999
--------------------------------------------------------------------------------
1. Accounting Policies (continued):
(e) Revenue recognition
Revenue is recognized at the time of shipment of inventory when the
risks and rewards of ownership have transferred to the customer.
(f) Income taxes
Under the asset and liability method, future tax assets and
liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying
amounts of existing assets and liabilities and their respective tax
bases. Future tax assets and liabilities are measured using enacted or
substantively enacted tax rates expected to apply to taxable income in
the years in which those temporary differences are expected to be
recovered or settled. The effect on future tax assets and liabilities
of a change in tax rates is recognized in income in the period that
includes the enactment date. Although the Company has loss
carryforwards available, no amount has been reflected on the balance
sheet for deferred income taxes as any deferred income tax asset has
been fully offset by a valuation allowance.
(g) Translation of financial statements
These statements have been translated into United States dollars. The
method of translation applied is as follows:
i) Assets and liabilities are translated at the rate of exchange in
effect at the balance sheet date, being US $1.00 per Cdn $1.4870
at July 31, 2000 and US $1.00 per Cdn $1.5063 at July 31, 1999.
ii) Revenues and expenses are translated at the exchange rate in
effect at the transaction date.
iii) The net adjustment arising from the translation is recorded in a
separate component of shareholders' deficiency called "Cumulative
translation adjustment".
(h) Financial instruments
The fair values of cash, accounts receivable and accounts payable and
accrued liabilities approximate their carrying values due to the
relatively short period to maturity of these instruments. The fair
values of advances to/from shareholders and related parties and loans
payable to related parties are not determinable due to the related
party nature of the amounts and the absence of a trading market for
such instruments. The maximum credit risk exposure for all financial
assets is the carrying amount of that asset.
F-33
<PAGE>
Edge Continental Inc.
Notes to Financial Statements
$ United States
Years ended July 31, 2000 and 1999
--------------------------------------------------------------------------------
2. Advances to shareholders:
Advances to shareholders are non-interest bearing, have no stated terms of
repayment and are unsecured.
3. Capital assets:
2000 Accumulated Net Book
---- Cost Amortization Value
-------- ------------ --------
Computer equipment $ 35,478 $ 8,085 $ 27,393
Computer software 28,193 4,228 23,965
Furniture and fixtures 33,102 5,067 28,035
Leasehold improvements 6,725 672 6,053
-------- -------- --------
$103,498 $ 18,052 $ 85,446
======== ======== ========
1999 Accumulated Net Book
---- Cost Amortization Value
------- ------------ --------
Computer equipment $ 9,652 $ 976 $ 8,676
Furniture and fixtures 10,710 1,625 9,085
------- ------- -------
$20,362 $ 2,601 $17,761
======= ======= =======
4. Advances from related parties:
Advances from related parties are non-interest bearing, have no stated
terms of repayment and are secured by a general security agreement over the
assets of the Company. The related parties are the spouses of the
shareholders.
F-34
<PAGE>
Edge Continental Inc.
Notes to Financial Statements
$ United States
Years ended July 31, 2000 and 1999
--------------------------------------------------------------------------------
5. Loans payable to related parties:
The Company has loans payable at the following rates and terms:
2000 1999
-------- --------
Note payable, due on demand, interest payable
monthly at prime less 1%, secured by a general
security agreement over the assets of the Company $ 23,357 $ --
Note payable, due on demand, non-interest bearing,
secured by a general security agreement over the
assets of the Company 235,373 132,775
Note payable, due on demand, interest
payable monthly at 13.5%, unsecured -- 33,194
Notes payable, due on demand,
interest payable monthly at 20%, unsecured 127,572 26,555
Notes payable, due on demand, interest payable
monthly at 20%, secured by a general security
agreement over the assets of the Company 297,915 260,240
Notes payable, due on demand, interest payable
monthly at 11%, secured by a general security
agreement over the assets of the Company 13,450 13,278
Note payable, due on demand, interest payable
monthly at 12%, secured by a general security
agreement over the assets of the Company -- 23,236
-------- --------
$697,667 $489,278
======== ========
All of the above amounts are payable to related parties who are immediate
family members of the shareholders except for $67,048 (1999 - $nil) of the
unsecured loans payable bearing interest at 20%.
During the year ended July 31, 2000, the Company paid interest of $79,348
(1999 - $40,078) on the loans payable to related parties.
F-35
<PAGE>
Edge Continental Inc.
Notes to Financial Statements
$ United States
Years ended July 31, 2000 and 1999
--------------------------------------------------------------------------------
6. Share capital:
Shares Amount
------ ------
Authorized:
Unlimited number of common shares
Issued:
Common shares issued for cash at
CDN $0.10 per share 2,000 $ 13
----- -----
Balance, July 31, 2000 and 1999 2,000 $ 13
===== =====
7. Income taxes:
As at July 31, 2000, the Company has the following amounts available to
reduce future years' income for Canadian income tax purposes, the tax
effect of which has not been recorded in the accounts:
Non-capital losses carried forward available until the year:
2006 $ 144
2007 185,907
Amounts deducted for accounting purposes in
excess of those deducted for income tax purposes 10,288
--------
$196,339
========
No amount has been recorded for the above amounts as any tax asset has been
fully offset by a valuation allowance.
8. Commitments:
The Company is committed to payments under operating leases for equipment,
vehicles and buildings over the next five years as follows:
2001 - $103,976; 2002 - $97,594; 2003 - $38,866; 2004 - $2,422; 2005 -
$2,169.
9. Subsequent Events:
(a) On September 1, 2000 the Company's shareholders entered into a share
purchase agreement under which all of the shareholders will exchange
all of their shares of the Company for 300,000 common shares of Globus
Wireless Ltd., the shares of which are listed and posted for trading
on the NASD OTC bulletin board, and cash consideration totaling
$672,495. This proposed transaction is subject to both shareholder and
regulatory approval.
F-36
<PAGE>
Edge Continental Inc.
Notes to Financial Statements
$ United States
Years ended July 31, 2000 and 1999
--------------------------------------------------------------------------------
(b) Subsequent to July 31, 2000, the Company received $81,196 from a
related party in exchange for a promissory note. The note bears
interest at 36% per annum, is demand in nature and is secured by a
general security agreement over the assets of the Company.
(c) On August 31, 2000, the Company received $33,625 from a related party
in exchange for a non-interest bearing promissory note and
subsequently renegotiated this note and the $235,373 non-interest
bearing note outstanding at July 31, 2000. The new note, aggregating
$268,998, bears interest at 37.34% and is secured by a general
security agreement over the assets of the Company.
10. Related party transactions:
General and administrative expense includes commissions of $47,603 (1999 -
$10,763) paid to related parties.
11. Differences between Canadian and United States generally accepted
accounting principles:
In accordance with Statement of Financial Accounting Standards No. 130, the
Company is required to disclose comprehensive income. Comprehensive income
for each of the years ended July 31, 2000 and 1999 is:
2000 1999
--------- ---------
Loss $(179,156) $ (182)
Translation adjustment 1,627 40
--------- ---------
Comprehensive loss $(177,529) $ (142)
========= =========
F-37
<PAGE>
================================================================================
4,611,528 SHARES OF
COMMON STOCK
GLOBUS WIRELES, LTD.
-----------------
PROSPECTUS
-----------------
THE DATE OF THIS PROSPECTUS IS
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Subsection 1 of Section 78.7302 of Chapter 78 of the Nevada General
Corporation Law ("NGCL") provides that a corporation may indemnify any person
who was or is a party, or is threatened to be made a party, to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (except in an action brought by or on behalf of
the corporation) if that person is or was a director, officer, employee or agent
of the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation or enterprise,
against expenses, including attorneys' fees, judgments, fines and amounts paid
in settlement actually and reasonably incurred by that person in connection with
such action, suit or proceeding, if that person acted in good faith and in a
manner which that person reasonably believed to be in, or not opposed to, the
best interests of the corporation, and, with respect to any criminal action or
proceedings, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, alone, does not
create a presumption that the person did not act in good faith and in a manner
which the person reasonably believed to be in, or not opposed to, the best
interests of the corporation, and that, with respect to any criminal action or
proceeding, the person had reasonable cause to believe his action was unlawful.
Subsection 2 of Section 78.7502 of the NGCL provides that a corporation may
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit brought by or on behalf
of the corporation to procure a judgment in its favor because the person acted
in any of the capacities set forth above, against expenses, including amounts
paid in settlement and attorneys' fees, actually and reasonably incurred by that
person in connection with the defense or settlement of such action or suit, if
the person acted in accordance with the standard set forth above, except that no
indemnification may be made in respect of any claim, issue or matter as to which
such person shall have been adjudged by a court of competent jurisdiction after
exhaustion of all appeals therefrom to be liable to the corporation or for
amounts paid in settlement to the corporation unless and only to the extent that
the court in which such action or suit was brought or other court of competent
jurisdiction determines that, in view of all the circumstances of the case, such
person is fairly and reasonably entitled to indemnity for such expenses as the
court deems proper.
Section 78.751 of the NGCL provides that unless indemnification is ordered
by a court, the determination to provide indemnification must be made by the
stockholders, by a majority vote of a quorum of the board of directors who were
not parties to the action, suit or proceeding, or in specified circumstances by
independent legal counsel in a written opinion. In addition, the articles of
incorporation, bylaws or an agreement made by the corporation may provide for
the payment of the expenses of a director or officer of the expenses of
defending an action as incurred upon receipt of an undertaking to repay the
amount if it is ultimately determined by a court of competent jurisdiction that
the person is not entitled to indemnification. Section 78.751 of the NGCL
further provides that, to the extent a director or officer of a corporation has
been successful on the merits or otherwise in the defense of any action, suit or
proceeding referred to in subsection (1) and (2), or in the defense of any
claim, issue or matter therein, that person shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by that
person in connection therewith; that indemnification provided for by Section
78.751 of the NGCL shall not be deemed exclusive of any other rights to which
the indemnified party may be entitled and that the scope of indemnification
shall continue as to directors, officers, employees or agents who have ceased to
hold such positions, and to their heirs, executors and administrators.
II-1
<PAGE>
Finally, Section 78.752 of the NGCL provides that a corporation may
purchase and maintain insurance on behalf of a director, officer, employee or
agent of the corporation against any liability asserted against him or incurred
by him in any such capacity or arising out of his status as such whether or not
the corporation would have the authority to indemnify him against such
liabilities and expenses.
The Registrant's bylaws provide for indemnification of officer, directors
and others to the fullest extent permitted by the laws of the State of Nevada.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses in connection with
the issuance and distribution of the securities offered hereby.
SEC registration fee...............................................$ 2,401
Accountants' fees and expenses..................................... 45,000
Legal fees......................................................... 75,000
Transfer agent's and warrant agent's fees and expenses............. 500
-------
Total..............................................................$122,901
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
On January 15, 2001, we issued 43,000 shares of our common stock to Al
Stober Construction Ltd. and 43,000 shares of our common stock to Oscar Krueger
for services rendered.
In January 2001, we issued 9,000 shares of our common stock Cede Capital
Inc. for services rendered.
In January 2001, we issued 10,000 shares of our common stock to Sichenzia,
Ross & Friedman LLP for services rendered.
In December 2000, we issued 30,000 shares of our common stock to
Intercoastal for services rendered.
On November 15, 2000, nine employees of former Edge Continental Inc.
received 35,000 shares of our common stock as an employee bonus.
On November 15, 2000, Shawn McMillen exercised his options for 59,000
shares of our common stock.
On October 27, 2000, we issued 100,000 shares of our common stock for
$300,000 to Jeremie Dyck.
On September 21, 2000, we issued 40,000 shares of our common stock for
$108,000 to Ben Liang.
II-2
<PAGE>
On August 18, 2000, Marleen Knoblick exercised her options for 1,000 shares
of our common stock.
On August 18, 2000, Kerry McIntyre exercised her options for 2,000 shares
of our common stock.
On August 18, 2000, Pat D'Easum exercised her options for 6,000 shares of
our common stock.
On August 18, 2000, Lynda Newitt exercised her options for 6,500 shares of
our common stock.
On August 18, 2000, Kari O'Rourke exercised her options for 7,500 shares of
our common stock.
On August 18, 2000, A Cary Tremblay exercised his options for 33,333 shares
of our common stock.
On August 18, 2000, Gord Walsh exercised his options for 20,000 shares of
our common stock.
On August 18, 2000, Nick Wizinsky exercised his options for 10,000 shares
of our common stock.
On August 18, 2000, Ben Hewson exercised his options for 7,500 shares of
our common stock.
On August 1, 2000, Hayden Communications received 40,000 shares of our
common stock for services rendered.
On July 31, 2000, we issued 36,244 shares of our common stock for $70,313
to Dr. Gerald Haas.
On July 31, 2000, we issued 102,457 shares of our common stock for $293,480
to Jill Twerdun.
On July 18, 2000, we issued 55,382 shares of our common stock for $109,989
to Gordon Miller.
On July 18, 2000, we issued 35,000 shares of our common stock for $69,510
to Konrad Komitsch.
On May 8, 2000, we issued 32,000 shares of our common stock for $104,640 to
Jeremie Dyck.
On April 21, 2000, Tony Dyck, exercised his options for 21,333 shares of
our common stock.
On April 21, 2000, we issued 41,900 shares of our common stock for $155,449
to Mark Twerdun.
On April 21, 2000, Ron Armstrong, exercised his options for 12,122 shares
of our common stock.
On April 21, 2000, we issued 37,155 shares of our common stock for $132,272
to Wolfgang Jastram.
On February 18, 2000, we issued 100,000 shares of our common stock for
$174,400 to Gordon Miller.
On February 18, 2000, we issued 100,000 shares of our common stock for
$164,000 to Ben Liang and Clement Law.
II-3
<PAGE>
On February 10, 2000, we issued 79,208 shares of our common stock for
$100,000 to Haery J Park.
On December 2, 1999, we issued 30,487 shares of our common stock for
$49,999 Gerald Haas.
On December 2, 1999, ABW Trading NFC Service received 47,500 shares of our
common stock as a compensation for a legal settlement.
On November 18, 1999, Patrick Tymiak exercised his warrants for 6,250
shares of our common stock.
On November 18, 1999, various investors exercised their warrants for
377,750 shares of our common stock.
On September 23, 1999, IV Point Management Co. exercised options for
100,000 shares of our common stock.
On September 23, 1999, Bernard Penner exercised his options for 90,090
shares of our common stock.
On September 23, 1999, Cutting Edge Inc. exercised options for 500,000
shares of our common stock.
On September 23, 1999, A Cary Tremblay exercised his options for 33,334
shares of our common stock.
On August 12, 1999, we issued 50,000 shares of our common stock for $72,650
to Rudy Streu.
On August 12, 1999, we issued 46,000 shares of our common stock for $66,838
to Hans Schroth.
On July 30, 1999, 8 subscribers exercised their warrants for 188,374 shares
of our common stock.
On July 30, 1999, Tony Dyck exercised his options for 250,000 shares of our
common stock.
On July 30, 1999, we issued 56,000 shares of our common stock for $28,000
to Shirley Lynch.
On July 30, 1999, we issued 30,000 shares of our common stock for $15,000
to Neil Postance.
On July 30, 1999, we issued 384,000 shares of our common stock for
Cdn.$288,000 to Dave Wodar.
On June 1, 1999, we issued 227,778 shares of our common stock for
Cdn.$82,000 to Tony Dyck.
On May 19, 1999, Virgin Capital Management exercised warrants for 30,000
shares of our common stock.
On April 30, 1999, we issued 1,069,767 shares of our common stock for
Cdn.$460,000 to Deborah Bayne.
On April 26, 1999, 31 subscribers exercised warrants for 459,250 of our
common stock.
II-4
<PAGE>
On April 23, 1999, Bishop & Company received 15,000 shares of our common
stock as legal fees.
On April 23, 1999, Taylor Bickert received 79,352 shares of our common
stock as a Bickert loan repayment.
On April 23, 1999, Charity Pender received 79,352 shares of our common
stock as a Bickert loan repayment.
On April 23, 1999, Natalie Bickert received 79,351 shares of our common
stock as a Bickert loan repayment.
On March 29, 1999, Neil Postance received 100,000 shares of our common
stock as a stock subscription.
On March 29, 1999, Excalibur International received 100,000 shares of our
common stock as a stock subscription.
On March 29, 1999, RBC Dominion exercised Bickert options for 23,256 shares
of our common stock.
On March 29, 1999, Chester Edwards exercised Bickert options for 58,136
shares of our common stock.
On March 29, 1999, Ralph Warkentin received 1,000 shares of our common
stock as leasehold renovations.
On March 29, 1999, Redline Contracting received 28,972 shares of our common
stock as leasehold renovations.
On March 16, 1999, Vantage Point Capital received 6,600 shares of our
common stock as an investor relations consulting.
On February 8, 1999, Lynda Newitt received 11,042 shares of our common
stock as an administration.
On January 15, 1999, Mike Olexa received 13,905 shares of our common stock
as a video production.
On January 15, 1999, Lynda Newitt received 10,753 shares of our common
stock as a compensation for consulting.
On September 15, 1998, 12 subscribers exercised warrants for 156,343 shares
of our common stock.
On July 31, 1998, Shawn McMillen received 10,000 shares of our common stock
for services provided.
On February 9, 1998, Shawn McMillen received 10,000 shares of our common
stock for services provided.
II-5
<PAGE>
On February 9, 1998, Dr. Paul Bickert received 30,000 shares of our common
stock for services provided.
On January 28, 1998, Robert Shultz received 6,000 shares of our common
stock for services provided.
January 28, 1998, Ken Blawatt received 6,000 shares of our common stock for
services provided.
January 28, 1998, John Ryan received 7,500 shares of our common stock for
services provided.
On January 23, 1998, Tingle & Associates exercised Bickert options for
50,000 shares of our common stock.
Through November 21, 1997 to December 8, 1997, 37 subscribers received
542,100 shares of our common stock as a Private Placement.
On November 19, 1997, Dr. P. Bickert received 12,500 shares of our common
stock for services provided.
On November 5, 1997, Shawn McMillen received 10,000 shares of our common
stock for services provided.
Except as otherwise disclosed, each of the foregoing issuances of securities was
made in reliance on Section 4(2) of the Securities Act of 1933, as amended.
II-6
<PAGE>
ITEM 27. EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------ -----------
2.1 Common Stock Purchase Agreement with Torneaux Fund dated October 6,
2000
2.2 Series A Convertible Preferred Stock Purchase Agreement with various
investors dated December 29, 2001
2.3 Share Purchase Agreement with the vendor of Edge Continental, Inc.,
dated as of September 1, 2000 (1)
3.1 Articles of Incorporation of the Company(2)
3.2 Bylaws of the Company(3)
4.1 Specimen Stock Certificate of the Company(4)
4.2 Certificate of Designation
4.3 Registration Rights Agreement dated October 6, 2000
4.4 Registration Rights Agreement dated December 29, 2001
5.1 Opinion of Sichenzia, Ross & Friedman, LLP*
10.1 Form of Employment Agreement with Bernard Penner*
10.5 Form of Employment Agreement with Nick Wizinsky*
10.6 Form of Employment Agreement with A. Cary Tremblay*
10.7 Lease of company's research facility
10.9 Agency Agreement with Bullet Distribution dated October 18, 2000*
10.10 Agreement for the Sale of Manufactured Goods with Aztec Components,
dated October 18, 2000
10.11 Secured Convertible Promissory Note issued to Aztec, dated October 18,
2000
10.12 Security Agreement with Aztec, dated October 18, 2000
16.1 Letter on Change in Certifying Accountant(5)
21.1 List of Subsidiaries
23.1 Consent of Sichenzia, Ross & Friedman, LLP (included in Exhibit 5.1)**
23.2 Consent of KPMG LLP
23.3 Consent of James E. Schiefley & Associates. P.C.
27.1 Financial Data Schedule for Globus
27.2 Financial Data Schedule for Edge Continental, Inc.
* To be filed by amendment.
(1) Incorporated by referenced to the Form 8-K filed by Globus on November
14, 2000.
(2) Incorporated by referenced to the Form 10-SB File # 0-25614.
(3) Incorporated by referenced to the Form 10-SB File # 0-25614.
(4) Incorporated by referenced to the Form 10-SB File # 0-25614.
(5) Incorporated by referenced to the Form 8-K/A filed by Globus on
November 7, 2000.
II-7
<PAGE>
ITEM 28. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file a post-effective amendment to this Registration Statement during any
period in which offers or sales are being made:
(i) to include any Prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the Prospectus any facts or events arising after the
effective date of the Registration Statement (or the most recent post-
effective amendment thereof) which, individually, or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering
range may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) ((S)230.424(b) of this Chapter) if,
in the aggregate, the changes in volume and price represent no more
than a 20% change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
Registration Statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement of
any material change to such information in the Registration Statement.
(2) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of this
offering.
(3) To provide to the Underwriters at the closing specified in the underwriting
agreement certificates in such denominations and registered in such names as
required by the Underwriter to permit prompt delivery to each purchaser.
(4) That, for the purpose of determining any liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new Registration
Statement relating to the securities offered therein, and this offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(5) That, insofar as indemnification for liabilities arising from the Securities
Act may be permitted to directors, officers, and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(6) That, for purposes of determining any liability under the Securities Act,
the information omitted from the form of Prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
Prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or Rule
497(h) under the Securities Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
II-8
<PAGE>
SIGNATURES
In accordance the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirement for filing on Form SB-2 and authorized this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Kelowna in the province of British Columbia, Canada
on January 16, 2001.
GLOBUS WIRELESS, LTD.
By: /s/ Bernard Penner
---------------------------------------------
Bernard Penner, Chief Executive Officer
In accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following persons on behalf
of the Company in the capacities and on the dates indicated.
SIGNATURE CAPACITY DATE
--------- --------- ----
By: /s/ Nick Wizinsky Chief Financial Officer January 16, 2001
------------------------------
Nick Wizinsky
By: /s/ Jerome W. Cwiertnia Director January 16, 2001
------------------------------
Jerome W. Cwiertnia
By: /s/ Anthony Dyck Director January 16, 2001
------------------------------
Anthony Dyck
By: /s/ Hans Schroth Director January 16, 2001
-----------------------------
Hans Schroth
