SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
Form 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996.
OR
(_) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 0-26684
GLOBAL INTELLICOM, INC.
--------------------------------------
(Exact name of registrant as specified in its charter.)
Nevada 13-3797104
------ ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
747 Third Avenue
New York, New York 10017
-------------------------------------- -----
(Address of principal executive offices) (Zip code)
(212)750-3772
--------------------------
Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such report(s), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [_]
As of August 15, 1996, there were outstanding 3,658,203 shares of
Global Intellicom, Inc.'s common stock, par value $0.1 per share (the "Common
Stock").
<PAGE>
PART I . FINANCIAL INFORMATION
Item 1. Financial Statements
GLOBAL INTELLICOM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE AND SIX-MONTH PERIODS ENDED JUNE 30, 1995 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
---------------------------- ---------------------------
1995 1996 1995 1996
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
NET SALES $ 6,641,461 $ 5,662,246 $ 14,661,019 $ 14,363,907
COST OF GOODS SOLD
5,955,284 4,889,969 13,326,879 12,220,476
------------ ------------ ------------ ------------
GROSS PROFIT 686,177 772,277 1,334,140 2,143,431
OPERATING EXPENSES:
Selling, shipping and general
and administrative 575,238 1,551,070 958,795 2,904,276
Depreciation and amortization 12,617 55,244 25,616 105,731
Amortization of intangibles 37,727 47,835 71,522 109,322
------------ ------------ ------------ ------------
625,582 1,654,149 1,055,933 3,119,329
------------ ------------ ------------ ------------
OPERATING INCOME 60,595 (881,872) 278,207 (975,898)
OTHER EXPENSES - INTEREST 63,319 180,463 134,920 337,874
------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE PROVISION FOR
INCOME TAXES (TAX BENEFITS) (2,724) (1,062,335) 143,287 (1,313,772)
PROVISION FOR INCOME TAXES (TAX BENEFITS) -- (424,935) -- (525,509)
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ (2,724) $ (637,400) $ 143,287 $ (788,263)
------------ ------------ ------------ ------------
NET INCOME (LOSS) PER COMMON SHARE $ (0.00) $ (0.20) $ 0.05 $ (0.25)
WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 3,130,000 3,158,203 3,130,000 3,149,631
</TABLE>
The accompanying notes are an integral part of these
condensed consolidated financial statements.
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<PAGE>
GLOBAL INTELLICOM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND JUNE 30, 1996
<TABLE>
<CAPTION>
ASSETS
December 31, June 30,
1995 1996
------------ ------------
(a) (Unaudited)
<S> <C> <C>
CURRENT ASSETS:
Cash $ 496,622 $ 259,948
Due from factor 446,424 371,001
Accounts receivable -- trade, less allowance for doubtful
accounts of $68,265 and $83,265, respectively 135,787 24,014
Accounts receivable -- non-trade 285,933 2,637,637
Other receivables 92,938 138,225
Inventories 4,666,842 2,085,435
Notes receivable --stockholders 419,680 262,369
Note and loans receivable -- other 81,315 87,015
Prepaid expenses and other current assets 322,087 376,747
Deferred income taxes 180,000 705,323
------------ ------------
Total current assets 7,127,628 6,947,714
------------ ------------
PROPERTY AND EQUIPMENT -- net of accumulated
depreciation and amortization 544,275 666,616
------------ ------------
INTANGIBLE ASSETS -- net of accumulated amortization 3,462,446 3,341,456
------------ ------------
OTHER ASSETS:
Deferred offering costs 125,389 344,280
Other assets 54,093 257,207
------------ ------------
179,482 601,487
------------ ------------
$ 11,313,831 $ 11,557,273
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Bridge loans $ -- $ 500,000
Notes payable--related party -- 200,000
Due to stockholders/directors -- 474,091
Due to financial institutions 4,994,135 4,623,851
Accounts payable -- trade 1,618,091 1,824,392
Accounts and note payable -- related party 445,700 222,675
Accounts payable -- related party -- 103,644
Due on acquisitions -- current portion 422,788 421,089
Current portion of capitalized lease obligations 89,700 117,786
Income taxes payable 149,103 149,103
Accrued expenses and other current liabilities 514,562 703,395
------------ ------------
Total current liabilities 8,234,079 9,340,026
------------ ------------
LONG-TERM LIABILITIES:
Capitalized lease obligations --net of current portion 221,873 244,010
Due on acquisitions -- net of current portion 447,522 312,182
Other liabilities 80,833 49,792
------------ ------------
750,228 605,984
------------ ------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY :
Preferred Stock -- $.01 par value:
Authorized -- 10,000,000 shares -- 1996
Issued and outstanding -- none -- 1996
Common stock -- $.01 par value:
Authorized -- 20,000,00 shares --1995 and 1996
Issued -- 3,158,203 shares -- 1995 and 1996 " 31,432 31,582
Common stock to be issued 181,753 206,753
Additional paid-in capital 2,013,224 2,058,074
Retained earnings (deficit) 111,999 (676,262)
Treasury stock, at cost (8,884) (8,884)
------------ ------------
Total stockholders' equity 2,329,524 1,611,263
------------ ------------
$ 11,313,831 $ 11,557,273
============ ============
</TABLE>
(a) The balance sheet at December 31, 1995 has been derived from the
audited financial statements at that date.
The accompanying notes are an integral part of
these condensed consolidated financial statements.
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<PAGE>
GLOBAL INTELLICOM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1995 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
Six months ended
June 30,
--------------------------
1995 1996
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income: $ 143,287 (788,263)
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 25,616 105,731
Amortization of intangibles 71,522 109,322
Loss on disposition of property and equipment 5,983 --
Other amortization -- 47,157
Deferred income taxes -- (525,323)
Common stock issuance for services 45,000
Changes in assets and liabilities:
Due from factor (583,210) 75,423
Accounts receivable -- trade 1,542,492 111,773
Accounts receivable -- non-trade (696,480) (2,351,704)
Inventories 330,228 2,581,407
Other receivables -- (45,287)
Notes and loan receivable -- other 12,992 (5,700)
Prepaid expenses and other (96,097) (54,660)
Other assets (77,472) --
Accounts payable trade (105,886) 206,301
Accounts and note payable -- related party -- (252,618)
Accounts payable -- related party -- 24,441
Accrued expenses and other 195,759 142,792
----------- -----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 768,734 (574,208)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Payments of deferred closing costs 210,276) --
Payments of acquisition costs -- (148,303)
Loans to stockholders (127,131) --
Repayment of loans by stockholders -- 157,311
Payments of other intangibles (360,138) (222,131)
Purchases of property and equipment -- (105,860)
----------- -----------
NET CASH USED IN INVESTING ACTIVITIES (697,545) (318,983)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contributions 335,780 --
Deferred offering costs -- (99,688)
Loans from stockholders/directors -- 474,091
Proceeds from bridge loan -- 500,000
Proceeds from notes payable--related party -- 200,000
Advances on line of credit -- net (179,022) --
Due to financial institutions -- net (253,148) (370,284)
Payments on capitalized lease obligations (4,994) (47,602)
----------- -----------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES (101,384) 656,517
----------- -----------
NET CHANGE IN CASH (30,195) (236,674)
CASH -- at beginning of year 36,267 496,622
----------- -----------
CASH -- at end of period $ 6,072 $ 259,948
=========== ===========
</TABLE>
The accompanying notes are an integral part of
these condensed consolidated financial statements.
-4-
<PAGE>
GLOBAL INTELLICOM, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1995 AND 1996
(Unaudited)
<TABLE>
<CAPTION>
Six months ended
June 30,
----------------------
1995 1996
--------- ---------
<S> <C> <C>
SCHEDULE OF NON-CASH ACTIVITIES:
Accrued deferred debt costs -- notes payable -- related party $ -- $ 29,595
Offset of note receivable from purchase of business 36,748 --
Accrued acquisition costs -- 11,264
Accrued deferred offering costs -- 94,203
Purchase of property and equipment by capital leases -- 97,825
Common stock to be issued -- notes payable -- related party -- 25,000
Due to seller pursuant to asset purchase agreement 94,238 --
Due to accounts payable-related party 134,799 --
Increase in goodwill thereon (265,785) --
Common stock issuance for services -- 45,000
--------- ---------
$ -- $ 302,887
========= =========
SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Purchase of property and equipment $(103,958) $ --
Capitalized lease obligation theron 103,958 --
--------- ---------
$ -- $ --
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid for interest $ 128,364 $ 288,539
Cash paid for income taxes 600 705
</TABLE>
-5-
<PAGE>
GLOBAL INTELLICOM. INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
A. Unaudited Financial Statements
The accompanying unaudited condensed consolidated financial
statements of the Global Intellicom, Inc. (the "Company") have been prepared in
accordance with Rule 10-01 of Regulation S-X and, therefore, do not include all
information and footnotes necessary for a fair presentation of financial
position, results of operations and cash flows in conformity with generally
accepted accounting principles. In the opinion of the Company, however, the
accompanying financial statements contain all adjustments, which include only
normal recurring adjustments, necessary to present fairly the Company's
financial position as of December 31, 1995 and June 30, 1996, its results of
operations for the six month periods ended June 30, 1996 and 1995 and cash flows
for the three month periods ended June 30, 1996 and 1995. The Company's interim
results of operations are not necessarily indicative of what may be expected for
the full year.
B. Inventories
Inventories, consisting solely of finished goods are valued at the
lower of cost (first-in, first-out) or market.
C. Debt
On January 26, 1996, in order to meet short term cash requirements,
the Company borrowed $200,000 from a limited partnership whose general partner
is a corporation controlled by a Director and Stockholder of the Company. The
loan ("Bridge Loan") is evidenced by a promissory note bearing interest at 6%
per annum and is due and payable on August 1, 1996, the date has been extended
by agreement to October 31, 1996. The note is convertible, upon the occurrence
of an event of default thereunder, at the sole discretion of the borrower at a
rate of $3.50 per share of unregistered common stock. The note is collateralized
by the common stock of NATCOM.
During the months of April and May, 1996, four directors and one
shareholder advanced approximately $500,000 to the Company, to meet short term
cash requirements, in return for one-year promissory note at 10% and a total of
28,020 warrants, exercisable over two years at $5.25 per share.
On June 26, 1996, the Company issued a 90-day $500,000 convertible
subordinated promissory note to Inabata America Corporation ("Inabata Note").
The Inabata Note bears interest at 2% per month which is payable on the 1st day
of each month commencing August 1, 1996. The Inabata Note may be converted into
common stock at the option of the payee on or before the maturity date and for a
period of 15 business days thereafter at the exercise price equal to the lesser
of (a) the closing price per share for the Company's common stock quoted on
NASDAQ with respect to "small cap. companies" on June 26, 1996, or (b) a
discount of 25% off the bid price per share of the Company's common stock quoted
with respect to "small cap. companies" on the date of conversion.
-6-
<PAGE>
D. Subsequent Events
On July 9, 1996 the Company entered into an Offshore Subscription
Agreement pursuant to which Signature Equities Agency, GmbH, a broker located in
Dusseldorf, Germany sold 140,000 shares of the Company's common stock at $2.475
per share.
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
-------------------------------------------------------------------
On September 28, 1995 Global Intellicom, Inc. (the "Company")
purchased all of the issued and outstanding stock of National Computer
Resources, Inc. ("NATCOM") and as such NATCOM's results of operations for 1996
have been included in the accompanying condensed consolidated statement of
operations.
The following discussion and analysis compares the operating results
of the Company for both the six and three months ended June 30, 1996, with the
six and three months ended June 30, 1995. Also included is a discussion and
analysis of the Company's financial condition and liquidity as of June 30, 1996.
THE SIX MONTHS ENDED JUNE 30, 1996 (UNAUDITED) AS COMPARED WITH THE SIX MONTHS
ENDED JUNE 30, 1995 (UNAUDITED).
Net Sales. Net sales decreased 2.0% to $14,363,907 in the first six
months of 1996 from $14,661,019 in the first six months of 1995, or a $297,112
decrease. The net sales of NATCOM was $1,362,949 in the first six months of
1996. Net sales decreased primarily due to model changes from a primary
supplier.
Gross Profit. Gross profit increased to $2,143,431 in the first six
months of 1996 from $1,334,140 in the first six months 1995. The gross profit
percentage increased to 14.9% from 9.1%. This improvement is primarily due to
gross profits generated by NATCOM.
Operating Expenses. Operating expenses increased to $2,904,276 in the
first six months of 1996 from $958,795 in the first six months of 1995, or an
increase of $1,945,481. The operating expenses of NATCOM was $772,939. The
remaining increase of $1,172,542 is due to the following items. There was an
increase in salaries and related payroll expenses to support the Company's
future growth plans. Rent expense increases reflects the Company's move to newer
and larger facilities consisting of a warehouse, a configuration center and
operating offices in West Chester, Pennsylvania and executive offices in New
York City. In addition, factor fees of $112,724 were incurred. Depreciation and
amortization expenses increased as a result of the AMCOM Business Centers Corp.
and NATCOM acquisitions.
Other Expenses. Other expenses, principally interest expense
increased to $337,874 in the first six months of 1996 from $134,920 in the first
six months of 1995. The increase is primarily the result of two factors: (i)
increased interest expense and; (ii) the amortization of deferred debts costs.
Interest expense increased due to increase in the level of outstanding
indebtedness with both the Company's factor and financial institution.
-7-
<PAGE>
Net Income (Loss). Net loss was ($788,263) in the first six months of
1996 as compared to net income of $143,287 in the first six months of 1995. As a
result of the factors discussed above net loss per share amounted to $(0.25) per
share in the first six months of 1996 as compared to net income per share of
$0.05 in the first six months of 1995. The per share calculation as of June 30,
1996 and 1995 are based upon weighted average shares outstanding, of 3,149,631
and 3,130,000, respectively.
THE QUARTER ENDED JUNE 30, 1996 (UNAUDITED) AS COMPARED WITH THE QUARTER ENDED
JUNE 30, 1995 (UNAUDITED).
Net Sales. Net sales decreased 14.7% to $5,662,246 for the quarter
ended June 30, 1996 from $6,641,461 for the quarter ended June 30, 1995, or a
$979,215 decrease. The net sales of NATCOM was $573,237 for the quarter ended
June 30, 1996. Net sales decreased primarily due to model changes from a primary
supplier.
Gross Profit. Gross profit increased to $772,277 for the quarter
ended June 30, 1996 from $686,177 for the quarter ended June 30, 1995. The gross
profit percentage increased to 13.6% from 10.3%. This improvement is primarily
due to gross profits generated by NATCOM.
Operating Expenses. Operating expenses increased to $1,551,070 for
the quarter ended June 30, 1996 from $575,238 for the quarter ended June 30,
1995, or an increase of $975,832. The operating expenses of NATCOM was $426,005.
The remaining increase of $549,827 is due to the following items. There was an
increase in salaries and related payroll expenses to support the Company's
future growth plans. Rent expense increases reflects the Company's move to newer
and larger facilities consisting of a warehouse, a configuration center and
operating offices in West Chester, Pennsylvania and executive offices in New
York City. In addition, factor fees of $56,040 were incurred. Depreciation and
amortization expenses increased as a result of the AMCOM Business Centers Corp.
acquisition.
Other Expenses. Other expenses, principally interest expense
increased to $180,463 for the quarter ended June 30, 1996 from $63,319 for the
quarter ended June 30, 1995. The increase is primarily the result of two
factors: (i) increased interest expense and; (ii) the amortization of deferred
debts costs. Interest expense increased due to increase in the level of
outstanding indebtedness with both the Company's factor and financial
institution.
Net (Loss). Net loss increased to ($637,400) for the quarter ended
June 30, 1996 from ($2,724) for the quarter ended June 30, 1995. As a result of
the factors discussed above net loss per share increased to $(0.20) per share
for the quarter ended June 30, 1996 from ($0.00) per share for the quarter ended
June 30, 1995. The per share calculation as of June 30, 1996 and 1995 are based
upon weighted average shares outstanding, of 3,158,203 and 3,130,000,
respectively.
FINANCIAL CONDITION AND LIQUIDITY
All of the Company's subsidiaries have entered into factoring
agreements with Century Business Credit Corporation ("Century") whereby the
subsidiaries sell to Century their trade receivables, without recourse, provided
Century approves the customers credit. The term of the
-8-
<PAGE>
factoring agreements are one year, with automatic renewals from year to year,
unless terminated earlier.
Two of the Company's subsidiaries, Amcom Business Centers Corp.
("AMCOM") and Vircom, Inc. ("VIRCOM") have entered into a Loan and Securities
Agreement as amended ("Loan Agreement") with Finova Capital Corp. ("Financial
Institution") which as amended provides for an $8,000,000 inventory
floorplanning credit line. The Company has a verbal agreement with the Financial
Institution regarding the Company's payment of its undercollateralization of the
inventory floorplanning loan which amounts to $345,000 as of the date of its
filing. The Company is being charged 3% above prime on the outstanding balance.
The Company's capitalization as of June 30, 1996 consisted of
$1,611,263 of stockholder's equity, $700,000 bridge loans and $4,623,851 of
borrowings under the inventory floorplanning loan. Operating activities provided
net cash of ($574,208) in the first six months of 1996. Net loss was ($788,263).
Accounts receivable-non-trade increased ($2,351,704), inventory decreased
$2,581,407 and accounts payable trade increased $206,301. Investing activities
used cash of ($318,983). Net repayment of loans from stockholders was $157,311.
The Company incurred costs related to acquisitions in the amount of ($222,131).
Purchase of property and equipment amounted to ($105,860). Financing activities
provided cash of $656,717. The Company incurred deferred offering costs of
($99,688) offset by an increase of $200,000 as a result of a notes
payable--related party. Net borrowings from the Financial Institution decreased
by ($370,284).
For the six months ended June 30, 1996 two of the Company's customers
accounted for approximately 32.7% of net sales. The Company considers its
business relationships with these two companies to be good, however, the loss of
any of these accounts or a significant reduction in the purchases by these
accounts could have an adverse impact on the Company's financial results.
AMCOM has derived approximately (83.2%) of its net sales during six
months ended June 30, 1996 from the sale of products supplied by four vendors.
One vendor, NEC Technologies ("NEC"), accounted for 79.8% of AMCOM's net sales
for the six months ended June 30, 1996. The loss of any of these key vendors,
and in particular NEC, could have a material adverse impact. In addition, the
Company's dependence on NEC could result in significant decrease in net sales if
NEC is not able to fill the Company's orders for products on a timely basis. The
Company has become an authorized reseller for other vendors. This reduces the
Company's dependence on NEC.
The Company does not have significant commitments for capital
expenditures as of June 30, 1996 and no significant commitments are anticipated
for the remainder of the 1996 calendar year.
The Company has commitments to make contractual payments in
accordance with certain agreements. In accordance with the agreements relating
to the acquisition of AMCOM the Company has to pay the following amounts: (i)
$142,000 on April 18, 1996 which was paid and; (ii) a total contingent payment
based upon 1/2% of net sales (as defined) beginning April 1996, payable
quarterly during 1996 with the first quarterly payment due July 15, 1996 and
commencing January 1, 1997 monthly thereafter. The acquisition of NATCOM
requires the Company to make the following payments: (i) $100,000 at closing
which was paid; (ii) $50,000 due six months after the Closing date which was
paid;(iii) $150,000 due one year after the Closing Date; (iv) $79,000 due at the
end of next seven quarters following the one year anniversary of the Closing
Date; and (v) $80,000 following the
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<PAGE>
three year anniversary due September 28, 1998. In March 1996 the purchase price
was amended to include $48,678 representing amounts payable for 1995 in
accordance with certain employment and/or consulting agreements. The payments
may be subject to certain adjustments for prior income taxes due by the sellers.
In connection with the February 16, 1996 settlement agreement with the Company's
former outside corporate counsel the Company agreed to pay $464,000 in full
satisfaction of outside legal costs as follows: (i) $150,000 upon signing of the
Agreement which was paid and; (ii) $314,000 promissory note payable as follows
$75,000 on May 25, 1996, which was paid, August 25, 1996 and November 25, 1996
and $89,000 on December 31, 1996.
The Company anticipates increased revenues as a result of the NATCOM
acquisition and additional vendor relationships described above. The Company
believes gross profits measured as a percentage of net sales will increase to
the extent that the percentage of the Company's net sales from NATCOM increases,
which historically has a higher gross profit percentage than either of the
Company's other subsidiaries. The Company expects competitive pressure on gross
profit margins in the future. Competition is based on price, breadth of product
lines, product and credit availability, delivery time and the level and quality
of technical support services provided.
On January 26, 1996, in order to meet short term cash requirements,
the Company borrowed $200,000 from a limited partnership whose general partner
is a corporation controlled by a Director and Stockholder of the Company. The
loan ("Bridge Loan") is evidenced by a promissory note bearing interest at 6%
per annum and is due and payable on August 1, 1996, the date has been extended
by agreement to October 31, 1996. The note is convertible, upon the occurrence
of an event of default thereunder, at the sole discretion of the borrower at a
rate of $3.50 per share of unregistered common stock. The note is collateralized
by the common stock of NATCOM.
On April 5, 1996 the Company issued 15,000 shares to two directors of
the Company at $3.00 per share representing compensation for services rendered
in connection with obtaining future financing for the Company.
During the months of April and May, 1996, four directors and one
shareholder advanced approximately $500,000 to the Company, to meet short term
cash requirements, in return for one-year promissory note at 10% and a total of
28,020 warrants, exercisable over two years at $5.25 per share.
On June 26, 1996, the Company issued a 90-day $500,000 convertible
subordinated promissory note to Inabata America Corporation ("Inabata Note").
The Inabata Note bears interest at 2% per month which is payable on the 1st day
of each month commencing August 1, 1996. The Inabata Note may be converted into
common stock at the option of the payee on or before the maturity date and for a
period of 15 business days thereafter at the exercise price equal to the lesser
of (a) the closing price per share for the Company's common stock quoted on
NASDAQ with respect to "small cap. companies" on June 26, 1996, or (b) a
discount of 25% off the bid price per share of the Company's common stock quoted
with respect to "small cap. companies" on the date of conversion.
On July 9, 1996 the Company entered into an Offshore Subscription
Agreement pursuant to which Signature Equities Agency, GmbH, a broker located in
Dusseldorf, Germany, sold 140,000 shares of the Company's common stock at $2.475
per share amounting to gross proceeds of $346,500.
-10-
<PAGE>
The Company has agreed with the former NATCOM shareholders to
distribute 15,000 shares of its common stock to said shareholders in payment of
a balance of $47,873. due for the first quarter of 1996 under the NATCOM stock
purchase agreement, the Dilts, Smith and Bohs Employment Agreement and the Barry
Consulting Agreement.
The Company currently anticipates its 1996 results of operations,
existing financing, and vendor relationships will meet the Company's short-term
and long-term cash requirements. To the extent the Company's growth exceeds its
resources, the Company anticipates obtaining additional credit facilities. The
Company intends to grow internally and through strategic acquisitions. The
Company is currently evaluating potential acquisitions; however, there is no
assurance that the Company will conclude any such opportunities.
Should the Company's cash flow from operations be insufficient to
meet all of its requirements, the Company would seek additional capital through
the issuance of stock or debt in the public markets or some form of private
financing. The Company is presently considering various activities to raise
additional equity or convertible debt during the remainder of 1996 to: (i)
increase cash flow both short and long-term; (ii) fund the growth management
anticipates for 1996; and (iii) to provide funds, as necessary, for strategic
acquisitions.
Inflation. The impact of inflation on the Company's operations has
not been significant to date. There can be no assurance that a high rate of
inflation in the future would not have an adverse effect on the Company's
operations.
PART II. OTHER INFORMATION
Items 1 through 6 are not applicable.
-11-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
Date: August 19, 1996
GLOBAL INTELLICOM, INC.
By /s/ Howard Maidenbaum
------------------------
Howard Maidenbaum
Executive Vice President
By /s/ Anthony R. Cucchi
------------------------
Anthony R. Cucchi
President
-12-
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000946355
<NAME> GLOBAL INTELLICOM, INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 259,948
<SECURITIES> 0
<RECEIVABLES> 2,799,876
<ALLOWANCES> 83,265
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0
0
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</TABLE>
