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 September 30, 1997.
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 September 30, 1997, there were outstanding 7,502,345 shares of
Global Intellicom, Inc.'s common stock, par value $0.01 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 MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
-------------------------- ---------------------------
1996 1997 1996 1997
----------- ------------ ------------ ------------
<S> <C> <C> <C> <C>
NET SALES $ 7,543,090 $ 16,123,908 $ 13,594,877 $ 34,622,862
COST OF GOODS SOLD 6,351,018 13,630,611 11,448,748 30,121,945
----------- ------------ ------------ ------------
GROSS PROFIT 1,192,072 2,493,297 2,146,129 4,500,917
----------- ------------ ------------ ------------
OPERATING EXPENSES:
Selling, shipping and general
and administrative 1,251,079 1,630,020 3,400,756 4,507,053
Depreciation and amortization 32,034 26,000 56,112 61,504
Amortization of intangibles 22,201 216,790 66,601 370,676
----------- ------------ ------------ ------------
1,305,314 1,872,810 3,523,469 4,939,233
----------- ------------ ------------ ------------
OPERATING INCOME (LOSS) (113,242) 620,487 (1,377,340) (438,316)
OTHER EXPENSES-INTEREST (117,740) (332,491) (161,599) (570,190)
----------- ------------ ------------ ------------
EARNINGS (LOSS) BEFORE
INCOME TAX PROVISION (BENEFIT) (230,982) 287,996 (1,538,939) (1,008,506)
INCOME TAX PROVISION (BENEFIT) (92,393) 115,198 (615,576) (403,402)
----------- ------------ ------------ ------------
EARNINGS (LOSS) FROM CONTINUING
OPERATIONS (138,589) 172,798 (923,363) (605,104)
----------- ------------ ------------ ------------
DISCONTINUED OPERATIONS
Loss from agrregator operations of
subsidiary to be disposed of (net of
tax benefit of ($160,527), ($1,553,794),
($162,853) and ($1,816,316)) (240,790) (688,246) (244,279) (3,381,470)
Estimated loss on disposal of aggregator
operations net of tax benefit of ($139,875) (233,125)
----------- ------------ ------------ ------------
(240,790) (688,246) (244,279) (3,614,595)
----------- ------------ ------------ ------------
NET LOSS $ (379,379) $ (515,448) $ (1,167,642) $ (4,219,698)
=========== ============ ============ ============
NET EARNINGS (LOSS) PER COMMON SHARE
Earnings (loss) from continuing operations $ (0.05) $ 0.02 $ (0.29) $ (0.10)
Discontinued operations (0.08) (0.09) (0.08) (0.46)
----------- ------------ ------------ ------------
$ (0.12) $ (0.07) $ (0.37) $ (0.56)
=========== ============ ============ ============
WEIGHTED AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING 3,165,678 7,433,270 3,165,678 7,433,270
=========== ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
2
<PAGE>
GLOBAL INTELLICOM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND SEPTEMBER 30, 1997
ASSETS
December 31, September 30,
1996 1997
----------- -----------
(a) (Unaudited)
CURRENT ASSETS:
Cash $ 1,516,072 $ 165,671
Due from factor 887,428 906,390
Accounts receivable -- trade, less
allowance for doubtful accounts of
$168,343 and $224,402, respectively 4,756,739 650,040
Accounts receivable -- non-trade 322,054 1,235,350
Other receivables 250,409
Inventories 3,725,444 4,358,270
Notes receivable -- officers and stockholders 457,979 473,354
Note and loans receivable -- other 61,788 582,401
Due from ManTech Int'l 104,493
Prepaid expenses and other current assets 182,890 1,062,033
Deferred income taxes 690,476 3,050,069
Net assets of discontinued operations 1,742,308 1,335,983
----------- -----------
Total current assets 14,593,587 13,924,054
----------- -----------
PROPERTY AND EQUIPMENT -- net of accumulated
depreciation and amortization 1,154,511 1,268,793
----------- -----------
INTANGIBLE ASSETS -- net of accumulated
amortization 5,906,124 5,167,499
----------- -----------
OTHER ASSETS:
Deferred income taxes 493,832 493,832
Software development costs 220,347 62,011
Deferred costs 189,465 227,946
Other assets 28,594 32,698
----------- -----------
932,238 816,487
----------- -----------
$22,586,460 $21,176,833
=========== ===========
(a) The balance sheet at December 31, 1996 has been derived from audited
financial statements at that date.
The accompanying notes are an integral part of these condensed consolidated
financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
December 31, September 30,
1996 1997
(a) (Unaudited)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Due to financial institution $ 363,291 $ 4,727,891
Accounts payable -- trade 4,039,695 6,384,934
Accounts and note payable -- related party 81,778
Customer deposits 881,100 83,612
Notes payable -- officers and stockholders 216,076
Due on acquisitions -- current portion 847,172 641,011
Current portion of capitalized lease obligations 135,159 133,686
Notes payable 404,852
Income and other taxes payable 254,751 455,808
Accrued expenses and other current liabilities 1,611,587 1,020,620
Net liabilities of discontinued operations 1,827,337
------------ -----------
Total current liabilities 10,662,798 13,447,562
------------ -----------
LONG-TERM LIABILITIES:
Capitalized lease obligations --net of current portion 169,854 86,335
Due on acquisitions -- net of current portion 2,109,886 2,435,749
Other liabilities 18,750 18,750
------------ -----------
2,298,490 2,540,834
------------ -----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY :
Preferred Stock -- $.01 par value:
Authorized -- 10,000,000 shares
Issued and outstanding -- 378,500 shares - 1996 3,785 --
350,000 shares - 1996 -- 3,500
Common stock -- $.01 par value:
Authorized -- 20,000,00 shares
Issued and outstanding -- 6,880,830 shares - 1996 68,808 --
7,497,345 shares - 1997 -- 74,706
Common stock to be issued 95,873 95,873
Additional paid-in capital 10,438,979 10,431,453
Retained earnings (deficit) (973,389) (5,408,211)
Treasury stock, at cost (8,884) (8,884)
------------ -----------
Total stockholders' equity 9,625,172 5,188,437
------------ -----------
$22,586,460 $21,176,833
=========== ===========
</TABLE>
(a) The balance sheet at December 31, 1996 has been derived from audited
financial statements at that date.
The accompanying notes are an integral part of these
condensed consolidated financial statements.
4
<PAGE>
GLOBAL INTELLICOM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
Nine months ended
September 30,
--------------------------
1996 1997
------------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss: $ (923,364) $ (605,104)
Net loss from discontinued operations (244,279) (3,614,595)
Adjustments to reconcile net loss to net cash
provided by (used by) operating activities:
Depreciation and amortization 178,591 344,738
Amortization of intangibles 157,158 753,293
Deferred income taxes (958,962) (2,362,239)
Imputed interest on ManTech acquisition 44,011
Amortization of deferred costs 54,000
Changes in assets and liabilities:
Due from factor (1,884,728) (18,962)
Accounts receivable -- trade (4,143,760) 4,106,699
Accounts receivable -- non-trade (2,582,844) (913,296)
Inventories (2,915,221) (632,826)
Other receivables 92,938 250,409
Notes and loan receivable -- other (11,851) (520,613)
Prepaid expenses and other (19,922) (879,143)
Accounts payable trade 5,984,059 2,345,239
Accounts and note payable -- related party 28,391
Customer deposits (797,488)
Accrued expenses and other 52,345 (590,967)
Income taxes payable (116,970) 201,057
Discontinued operations - net (591,364) (1,551,014)
------------ -----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (7,899,783) (4,386,801)
------------ -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Loans to stockholders (119,023) (178,552)
Payments, reduction of other intangibles (1,828,459) 930
Purchases of property and equipment (965,049) (359,020)
------------ -----------
NET CASH USED IN INVESTING ACTIVITIES (2,912,531) (536,642)
------------ -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contributions 7,035,172 (1,913)
Deferred offering costs (256,215)
Due to financial institutions -- net 1,828,911 4,364,600
Payments on notes payable -- stockholders (52,899)
Proceeds (payments) on notes payable - NCR 613,170 (404,852)
Proceeds (payments) on note payable - related party 200,000 (81,778)
Proceeds from note payable - Mantech 1,882,732
Payment of dividends (165,124)
Payments on capitalized lease obligations (3,197) (84,992)
------------ -----------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES 11,300,573 3,733,166
------------ -----------
NET CHANGE IN CASH 488,259 (1,350,401)
CASH -- at beginning of year 496,622 1,516,072
============ ===========
CASH -- at end of period $ 984,881 $ 165,671
============ ===========
</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
<PAGE>
GLOBAL INTELLICOM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
A. Basis of Presentation
The condensed consolidated balance sheet as of December 31, 1996 has
been condensed from the audited consolidated balance sheet at that date. The
accompanying unaudited condensed consolidated financial statements of 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 normal recurring adjustments
and adjustments necessitated by the discontinuance of the operations of Speech
Solutions and the aggregator operations of the Company's Nevcor subsidiary as
referred to in Note C below, necessary to present fairly the Company's financial
position as of December 31, 1996 and September 30, 1997, its results of
operations for the three-month and nine-month periods ended September 30, 1997
and 1996 and cash flows for the nine-month periods ended September 30, 1997 and
1996. The Company's interim results of operations are not necessarily indicative
of what may be expected for the full year.
B. Capital Stock
During the three month period ended September 30, 1997, in
connection with the ASDI acquisition (described below) the Company created a
Series 5 Convertible Preferred Stock (the "Series 5 Stock"). The Series 5 Stock,
which pays dividends at an annual rate of 6%, consists of 785 shares of
preferred stock with a liquidation preference of $1,000 per share. The Series 5
Stock is convertible any time after one year from the date of issuance. The
Series 5 Stock is convertible into the Company's common stock at $10 per share
of common stock.
C. Discontinuance of Operations
On August 7, 1997, the Company adopted a plan to dispose of the
aggregator business of its Nevcor subsidiary substantially due to the decision
by its major vendor to eliminate its two-tier distribution system. The assets of
the subsidiary consist primarily of amounts due from factor and inventory. The
excess of liabilities, estimated disposal losses and anticipated losses during
the phase-out period have been classified separately as a current liability in
the accompanying balance sheet.
On August 31, 1997, the Company adopted a plan to discontinue
funding of Speech Solutions, Inc. The decision to discontinue Speech Solutions
was based on management's conclusion that the ratio of capital requirements to
revenue for a software
6
<PAGE>
developer such as Speech Solutions were incompatible with the overall focus of
the Company's system integration, sales and manufacturing subsidiaries. The
Company is currently exploring the possibility of a sale or other disposition of
Speech Solutions.
The balance sheet as at December 31, 1996, the statement of
operations for the six and three month periods ended September 30, 1996
(unaudited) and the statement of cash flows for the nine months ended September
30, 1996 (unaudited) have been restated. Operating results of the discontinued
operations are shown separately in the accompanying statement of operations.
Net sales of discontinued operations for the nine months ended
September 30, 1997 and 1996 were $9,204,796 and $10,388,438 respectively
(unaudited) and $949,626 and $2,076,318 for the three months ended September
30, 1997 and 1996, respectively (unaudited). These amounts are not included in
net sales in the accompanying statement of operations.
ITEM 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following discussion and analysis compares the operating results
of the Company's continuing operations for the three months and the nine months
ended September 30, 1997, which include the operations of Global-InSync, Inc.
("InSync") and Speech Solutions, Inc. ("Speech Solutions") acquired in the last
quarter of 1996, with the three months and the nine months ended September 30,
1996. Also included is a discussion and analysis of the Company's financial
condition and liquidity as of September 30, 1997. The information and
comparative data presented herein reflect the elimination of Speech Solutions
and of Nevcor's aggregator operations.
The Quarter Ended September 30, 1997 (Unaudited) As Compared With The Quarter
Ended September 30, 1996 (Unaudited).
Net Sales. Net sales from continuing operations increased by
$8,580,818 (114%) from $7,543,090 to $16,123,908 in the quarter ended September
30, 1997. Of this amount, the net sales increase of Global-InSync for the
quarter ended September 30, 1997 was $3,907,582, followed by $2,882,268,
attributable to Vircom TG and Natcom.
Gross Profit. The Company's gross profit for the quarter ended
September 30, 1997 increased to $2,493,298 from $1,192,072, a 109% increase.
Overall gross profit as a percentage of net sales for the quarters ended
September 30, 1997 and September 30, 1996 was essentially unchanged. The
increase in gross profit dollars was a result of the additional sales volume.
7
<PAGE>
Operating Expenses. Operating expenses for the quarter ended
September 30, 1997 rose to $1,872,810 from $1,305,314, a 44% increase. The
increase of $567,496 in operating expenses is attributable to the addition of
ASDI, and the creation of the Vircom TG business.
Provision For Income Tax. Income taxes were $115,198 for the quarter
ended September 30, 1997, compared to a benefit of $92,393 for the same period
in 1996.
Net Income (Loss) Per Common Share. As a result of the factors
discussed above, the net profit from continuing operations for the quarter ended
September 30, 1997 was $172,798 and net earnings per share were $.02, as
compared to a net loss of ($138,589) and net loss per common share of ($.05)
from continuing operations for the same period in 1996.
The Nine months Ended September 30, 1997 (Unaudited) As Compared With The
Nine months Ended September 30, 1996 (Unaudited).
Net Sales. Net sales from continuing operations increased by
$21,027,985 (155%) from $13,594,877 to $34,622,862 in the first nine months of
1997. Of this increase, InSync contributed $13,216,647, followed by $6,020,370
attributable to Vircom TG and Natcom.
Gross Profit. The Company's gross profit for the first nine months
of 1997 increased to $4,500,918 from $2,146,129, a 109% increase. Overall gross
profit as a percentage of net sales for the first nine months ending September
30, 1997 and 1996 amounted to 13% and 16%, respectively. The increase in gross
profit dollars was a result of the increase in sales volume. The decrease in
gross profit margins was as a result of the transition from the computer
distribution to the value added systems integration business.
Operating Expenses. Operating expenses for the first nine months of
1997 rose to $4,939,233 from $3,523,469 for the same period in 1996, a 40%
increase. Of these expenses, Global-InSync which was part of the Company for
only one month during the first nine months of 1996, contributed $2,008,962. A
decrease of $593,198 was due primarily to a reduction in expenses of the parent.
Provision For Income Tax Credits. The benefit for income taxes was
$403,402 for the first nine months of 1997, compared to a benefit of $615,576
for the same period in 1996. The deferred tax benefit is based on deferred tax
assets which are considered realizable.
Net Income (Loss) Per Common Share. As a result of the factors
discussed above, the net loss from continuing operations for the nine months of
1997 was ($605,104) and net loss per share was ($.10), as compared to a net loss
of ($923,363) and net loss per common share of ($.29) from continuing operations
for the same period in 1996.
8
<PAGE>
Financial Condition And Liquidity
The Company's cash balance as of September 30, 1997 was $165,671 and
its working capital amounted to $476,492. Net cash used in operating activities
during the nine months ended September 30, 1997 was $4,386,801. The decrease in
the Company's cash position and cash flow is a result of the nine month loss
from continuing operations of $605,104 and the loss for the same period from
discontinued operations in the amount of $3,614,595.
Effective July 1, 1997, the Company acquired Automated Systems
Development of Indiana, Inc. ("ASDI") through the merger of ASDI into a newly
created subsidiary of Natcom; Natcom Automated Systems, Inc. ("New ASDI"). The
consideration for the merger consisted of 785 shares of the Company's Series 5
Preferred Stock, a $20,000 cash payment to the two former shareholders of ASDI
and an earn-out based on future gross profits. New ASDI, located in
Indianapolis, Indiana, is a full service systems integrator, providing modular
products (hardware and software) that can be customized under a building block
concept according to its customers' needs. In addition to installation, New ASDI
provides full product support, training and maintenance and will assist Natcom
in updating its proprietary School Administration software. The company believes
that the synergies between Natcom and New ASDI operations will allow both
companies to expand their services, products and customer base.
Effective August 15, 1997 the Company will be winding down its
relationship with Finova Capital Corp. ("Financial Institution") which has
provided the Nevcor, Vircom TG and Natcom subsidiaries with an $8,000,000
inventory floorplanning credit line. This floor plan and credit line was
primarily established to support the now discontinued aggregator business. The
Company's intention is to phase out the credit line completely by the end of the
year. Depending on its requirements, the Company may seek to replace Finova with
another commercial lender.
The Company does not have significant commitments for capital
expenditures as of September 30, 1997 and no significant commitments are
anticipated for the remainder of the 1997 calendar year.
On August 7, 1997, the Company adopted a plan to dispose of the
aggregator business of its Nevcor subsidiary due to the decision by NEC
Technologies Group, Inc. ("NEC") to eliminate its two-tier system of
distribution. NEC product accounted for approximately 70% of the Company's
Nevcor subsidiary's net sales, for the nine months ended September 30, 1997. The
reporting of the NEC sales has been eliminated as a result of the discontinuance
of these operations. The Company has sought to offset the effect of the
discontinued operations by increasing its presence in higher margin areas of the
reseller and systems integration business, support services (i.e. cabling and
break/fix operations) and diversifying its product line. The Company has become
an authorized reseller for other vendors and has added the InSync line, in an
ongoing effort to reduce its dependence on any single supplier. In light of the
discontinuance of Nevcor's aggregator operation, Nevcor is expected to increase
its overall gross margin.
9
<PAGE>
Management further expects to be able to minimize the effect of the
discontinuance of Nevcor's aggregator business by increasing the value added
systems integration business at its other and new subsidiaries.
In July of 1997, to further expand its focus on higher margin
reseller, systems integration and services, and to diminish its reliance on NEC
product and the lower margin aggregator business, the Company created two new
subsidiaries: Vircom Technologies Group, Inc. ("Vircom TG"), with locations in
West Chester, Pittsburgh and Fort Washington, PA and Vircom Technologies Group
of New England, Inc. with a location in Shelton, CT. In contrast to the
Company's original Amcom (now Nevcor) and Vircom subsidiaries, the Vircom TG
companies are full service value added resellers and systems integrators which
provide, in addition to sales, break-fix services, cabling, design and
installation and on-site engineering. The Vircom TG companies also sell to a
broader market, selling to a variety of smaller (Fortune 2000) companies.
Since inception, the Company has been actively engaged in making
acquisitions, as a result of which the Company has the commitments described
below.
As previously reported, Nevcor and Vircom are required to make
certain contingent payments relating to the acquisition of Amcom (Nevcor). The
amount of the payments required in connection therewith is presently in dispute
in litigation as described below.
The acquisition of Natcom requires the Company to make the following
future payments: $79,000 due at the end of each of the six quarters following
September 28, 1996; and $80,000 due September 28, 1998, subject to available
earnings before taxes. In March 1997, the purchase price was further increased
to include $212,658, payable in six monthly installments of $35,443, commencing
in July 1997, as well as certain payments payable based on achieving certain
sales goals. These payments have been subjected to certain adjustments for prior
income taxes payable by the sellers.
Future commitments for the Company's prior acquisition of the InSync
business include a promissory note, guaranteed by the Company, for $1,486,084,
(the "First Note") bearing interest at 9% per annum and a second promissory
note, guaranteed by the Company, for $470,000 ("the Second Note"). Under the
terms of the First Note, interest did not accrue until March 16, 1997. Payments
under the First Note are to be made 45 days after the close of each fiscal
quarter, commencing with the quarter ended June 30, 1997, in the amount of 2% of
InSync's net sales. If, at the end of each subsequent 12-month period beginning
with the 12 months ending June 30, 1998, the sum of the quarterly Note payments
is less than the interest accrued over the previous four quarters, plus 10% of
the original principal amount, an adjustment payment will be made to cover any
shortfall. The Second Note contains substantially the same terms as the First
Note, except that payments do not commence until the earlier of December 31,
2001, or upon payment in full of the First Note.
Future commitments to the former shareholders of ASDI include an
earn-out payment equal to 4% of the first $1.5 million in gross revenue achieved
by New ASDI, 3% of
10
<PAGE>
gross revenue in excess of $1.5 million and 2% of any gross revenue over $3
million. The ASDI earn-out payments are to be made 45 days after the close of
each quarter and are subject to available EBIT.
If after 5 years the aggregate earn-out payments total less than
$600,000, the payments will be extended by the earlier of an additional 3 years
or until the payments total $600,000.
The Company has experienced reduced cash flow in 1997 due to the
losses from discontinued operations in the first nine months of the year. The
Company expects that income and cash flow anticipated from continuing operations
(as demonstrated by the results of continuing operations in the three months
ended September 30, 1997) during the remainder of 1997, together with existing
financing arrangements and working capital, will be sufficient to fund the
Company's operations at existing levels. However, if Global's operating levels
and future growth exceed its financial resources, or if anticipated improvements
in operating results and cash flow do not occur, the Company will be required to
seek additional credit and financing facilities, either through institutional
financing or the issuance of debt or equity security in the private or public
market. There is no assurance that such credit or financing arrangements will be
available on acceptable terms if needed.
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
Item 1 Legal Proceedings
On or about October 30, 1996, Scott and Ellen Arch, the former
owners of the Company's Nevcor subsidiary, commenced an action against Nevcor,
the Company and two of the Company's directors as guarantors (the "Arch
Complaint"). The Arch Complaint stems from a dispute over the proper calculation
of certain state, local and federal income taxes incurred by the plaintiffs in
1994, which were included in the Nevcor purchase price. According to the
plaintiffs, they are due an additional payment of $93,449. Nevcor and the
Company believe that all sums due to the plaintiffs have been paid and are
defending the action vigorously.
On or about September 30, 1997 Grove Avenue Corporation, the entity
which in October of 1994 sold the assets from which the Nevcor and Vircom
subsidiaries were created to the Company (the "Acquisition"), filed an amended
complaint against the Company and its subsidiaries, seeking damages in excess of
$50,000 and certain injunctive relief as a result of the Company's non-payment
of certain installment payments allegedly due as a result of the Acquisition.
The Company believes that the discontinuance of the Nevcor business will
significantly alter the schedule of payments due under the Acquisition agreement
and is actively attempting to resolve this dispute.
11
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Items 2 through 5 are not applicable.
Item 6 Exhibits
(a)(11) Statement re computation of per share earnings
(a)(27) Financial Data Schedule
12
<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: November 14, 1997
GLOBAL INTELLICOM, INC.
By: /s/ Robert L. Olson
-------------------------
Robert L. Olson
Vice President Finance
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
--------------------- -----------------------
1996 1997 1996 1997
--------- --------- --------- -----------
<S> <C> <C> <C> <C>
EARNINGS (LOSS) PER COMMON SHARE
Earnings (loss) from continuing operations $(138,589) $ 172,798 $(923,363) $ (605,104)
Less: Cumulative undeclared dividend on
Series 3 Convertible Preferred Stock 52,500 157,500
--------- --------- --------- -----------
$(138,589) $ 120,298 $(923,363) $ (762,604)
========= ========= ========= ===========
Loss from discontinued operations $(240,790) $(688,246) $(244,279) $(3,614,595)
========= ========= ========= ===========
SHARES:
Weighted average number of common
shares outstanding 3,165,678 7,433,270 3,165,678 7,433,270
========= ========= ========= ===========
NET LOSS PER COMMON SHARE
Loss from continuing operations $ (0.05) $ 0.02 $ (0.29) $ (0.10)
Discontinued operations (0.08) (0.09) (0.08) (0.46)
--------- --------- --------- -----------
$ (0.12) $ (0.07) $ (0.37) $ (0.56)
========= ========= ========= ===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S UNAUDITED CONSOLIDTED BALANCE SHEET AS OF SEPTEMBER 30, 1997 AND
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS THEN ENDED
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 165,671
<SECURITIES> 0
<RECEIVABLES> 874,442
<ALLOWANCES> 224,402
<INVENTORY> 4,358,270
<CURRENT-ASSETS> 13,924,054
<PP&E> 1,962,044
<DEPRECIATION> 693,251
<TOTAL-ASSETS> 21,176,833
<CURRENT-LIABILITIES> 13,447,562
<BONDS> 0
<COMMON> 74,706
0
3,500
<OTHER-SE> 10,518,445
<TOTAL-LIABILITY-AND-EQUITY> 21,176,833
<SALES> 34,622,862
<TOTAL-REVENUES> 34,622,862
<CGS> 30,121,945
<TOTAL-COSTS> 4,939,233
<OTHER-EXPENSES> 432,180
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 570,190
<INCOME-PRETAX> (1,008,506)
<INCOME-TAX> (403,402)
<INCOME-CONTINUING> (605,104)
<DISCONTINUED> (3,614,595)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,219,698)
<EPS-PRIMARY> (0.56)
<EPS-DILUTED> (0.56)
</TABLE>
