<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 MARCH 31, 1998, 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.)
<TABLE>
<S> <C>
NEVADA 13-3797104
(State or other jurisdiction of (I.R.S. Employer
incorporation of organization) Identification No.)
747 THIRD AVENUE 10017
NEW YORK, NEW YORK
(Address of principal executive offices) (Zip code)
</TABLE>
(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 May 15, 1998, there were outstanding 7,952,345 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 ENDED MARCH 31, 1997 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
--------------------------
<S> <C> <C>
1997 1998
------------ ------------
NET SALES............................................................................. $ 7,931,441 $ 9,328,025
COST OF GOODS SOLD.................................................................... 7,336,134 6,160,631
------------ ------------
GROSS PROFIT.......................................................................... 595,307 3,167,394
OPERATING EXPENSES:
Selling, shipping and general and administrative...................................... 2,389,244 2,792,310
Depreciation and amortization......................................................... 44,677 82,687
Amortization of intangibles........................................................... 27,161 106,849
------------ ------------
2,461,082 2,981,846
------------ ------------
OPERATING INCOME (LOSS)............................................................... (1,865,775) 185,548
OTHER INCOME (EXPENSES)............................................................... 103,687 (50,270)
------------ ------------
INCOME (LOSS) BEFORE INCOME TAX BENEFITS.............................................. (1,969,462) 135,278
INCOME TAX BENEFITS................................................................... 748,000 445,889
------------ ------------
INCOME (LOSS) FROM CONTINUING OPERATIONS.............................................. (1,221,462) 581,167
INCOME (LOSS) FROM DISCONTINUED OPERATIONS............................................ (447,545) $ (45,000)
------------ ------------
NET INCOME (LOSS)..................................................................... (1,669,007) 536,167
------------ ------------
------------ ------------
NET INCOME (LOSS) PER COMMON SHARE.................................................... $ (0.23) $ 0.06
------------ ------------
------------ ------------
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING.................................. 7,335,524 7,952,345
------------ ------------
------------ ------------
</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, 1997 AND MARCH 31, 1998
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1997 1998
------------- -------------
<S> <C> <C>
(A) (UNAUDITED)
ASSETS
CURRENT ASSETS:
Cash............................................................................. $ 138,469 $ 75,791
Due from factor Accounts receivable--trade, less allowance for doubtful accounts
of $290,582 and $0, respectively............................................... 3,684,106 3,905,885
Accounts receivable--non-trade................................................... 268,815 222,484
Other receivables................................................................ 206,770 465,405
Inventories...................................................................... 3,001,519 2,908,568
Notes receivable--officers and stockholders...................................... 50,643
Note and loans receivable--other................................................. 40,113 40,883
Prepaid expenses and other current assets........................................ 624,322 778,704
Deferred income taxes............................................................ 630,000 1,130,000
Current Assets of discontinued operations........................................ 32,884 32,885
------------- -------------
Total current assets......................................................... 8,626,998 9,611,248
------------- -------------
PROPERTY AND EQUIPMENT--net of accumulated depreciation and amortization........... 1,326,058 1,332,821
------------- -------------
INTANGIBLE ASSETS--net of accumulated amortization................................. 5,542,385 5,431,813
------------- -------------
OTHER ASSETS:
Deferred income taxes............................................................ 2,645,000 2,883,329
Deferred costs................................................................... 707,106 782,106
Other assets..................................................................... 34,058 33,330
Other assets discontinued operations............................................. 53,362 83,362
------------- -------------
3,439,526 3,782,127
------------- -------------
$ 18,934,967 $ 20,158,009
------------- -------------
------------- -------------
</TABLE>
3
<PAGE>
GLOBAL INTELLICOM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND MARCH 31, 1998
<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
1997 1998
------------- -------------
(A) (UNAUDITED)
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Due to financial institution....................................................... $ 4,153,645 $ 5,395,239
Notes payable--bank................................................................ 50,000 50,000
Accounts payable--trade............................................................ 7,883,413 4,816,317
Accounts and note payable--related party........................................... --
Customer deposits.................................................................. 21,578 49,091
Notes payable--officers and stockholders........................................... 132,677 126,136
Aacquisition indebtedness--current portion......................................... 581,823 581,823
Current portion of capitalized lease obligations................................... 147,615 147,695
Income taxes payable............................................................... 238,534 560,974
Accrued expenses and other current liabilities..................................... 1,976,510 1,675,738
Current liabilities of discontinued operations..................................... 224,758 224,758
------------- -------------
Total current liabilities 15,410,553 13,627,768
------------- -------------
LONG-TERM LIABILITIES:
Acquisition indebetness--net of current portion.................................. 1,545,261 1,581,234
Capitalized lease obligations--net of current portion............................ 86,854 84,737
Other liabilities of discontinued operations
------------- -------------
1,632,115 1,665,971
------------- -------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY :
Preferred Stock--$.01 par value:
Authorized--10,000,000 shares
Issued and outstanding--351,985 shares--1997................................... 3,520 3,548
354,735 shares--1998..................................... --
Common stock--$.01 par value:
Authorized--20,000,000 shares
Issued and outstanding--7,497,345 shares--1997................................. 74,973 75,778
7,947,345 shares--1998................................... --
Common stock to be issued...................................................... 417,188 417,188
Additional paid-in capital..................................................... 12,003,524 14,469,497
Retained earnings (deficit) (10,598,022) (10,092,856)
Treasury stock, at cost (8,884) (8,884)
------------- -------------
Total stockholders' equity 1,892,299 4,864,270
------------- -------------
$ 18,934,967 $ 20,158,009
------------- -------------
------------- -------------
</TABLE>
4
<PAGE>
GLOBAL INTELLICOM, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1997 AND 1998
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
----------------------
1997 1998
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income (Loss): $(1,669,007) $ 536,167
Adjustments to reconcile net loss to net cash provided by (used by) operating
activities:
Depreciation and amortization........................................................ 44,677 82,687
Amortization of intangibles.......................................................... 27,161 106,849
Deferred income taxes................................................................ (748,000) (445,889)
Imputed interest on ManTech acquisition.............................................. 44,011 --
Deferred costs....................................................................... 54,000
Changes in assets and liabilities:
Due from factor.................................................................... 297,809 1,234,828
Accounts receivable--trade......................................................... 3,566,742 (221,779)
Accounts receivable--non-trade..................................................... (326,668) 46,331
Inventories........................................................................ 422,510 92,951
Other receivables.................................................................. (39,504) (258,635)
Notes and loan receivable--other................................................... -- (770)
Prepaid expenses and other......................................................... 8,115 (154,382)
Other deferred costs............................................................... (20,100) (74,272)
Accounts payable trade............................................................. (1,191,190) (3,067,099)
Accounts and note payable--related party........................................... -- --
Customer deposits.................................................................. (828,152) 27,513
Accounts payable--related party.................................................... -- --
Accrued expenses and other......................................................... (229,884) (300,772)
Discontinued Operations............................................................ (170,307) (30,007)
Income taxes payable............................................................... (98,895) --
---------- ----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES...................................... (856,682) (2,426,309)
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Loans to stockholders.................................................................. (52,265) (57,184)
Notes and loans receivable............................................................. (9,000) --
Software development costs............................................................. (158,640) --
Payments of other intangibles.......................................................... (11,974) 3,723
Purchases of property and equipment.................................................... (121,242) (89,450)
---------- ----------
NET CASH USED IN INVESTING ACTIVITIES.................................................... (353,121) (142,911)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Capital contributions.................................................................. 2,466,000
Deferred offering costs................................................................ -- --
Proceeds from notes payable--related party............................................. -- --
Due to financial institutions--net..................................................... 421,141 6,766
Payments on notes payable--related party............................................... (81,778) --
Payments on notes payable--stockholders................................................ (33,076) --
Payments on notes payable.............................................................. (166,584) --
Payments on due on acquisitions........................................................ (74,560) 35,973
Payments on capitalized lease obligations.............................................. (36,311) (2,197)
---------- ----------
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES...................................... 28,832 2,506,542
---------- ----------
NET CHANGE IN CASH....................................................................... (1,180,971) (62,678)
CASH--at beginning of period............................................................. 1,516,072 138,469
---------- ----------
CASH--at end of period................................................................... $ 335,101 $ 75,791
---------- ----------
---------- ----------
</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, 1997 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 notes
usually presented with audited financial statements. 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, necessary to present fairly the
Company's financial position as of December 31, 1997 and March 31, 1998, its
results of operations for the three-month periods ended March 31, 1998 and 1997
and cash flows for the three-month periods ended March 31, 1998 and 1997. The
Company's interim results of operations are not necessarily indicative of what
may be expected for the full year.
B. CAPITAL STOCK
In the quarter ended March 31, 1998, the Company received net proceeds
aggregating $2,466,000 from the sale, in private placement financings, of Series
6, Series 7 and Series 8 Preferred Stock. The proceeds from such financings were
used for the carrying of inventory and receivables and for other working capital
purposes.
As provided in the Certificates of Designation for the Series 6 and Series 7
Convertible Preferred Stock, such shares have a liquidation preference of $1,000
each, are non-voting and carry a dividend of $50.00 per year, payable
semi-annually. At the election of the Company, dividends may be paid in shares
of Common Stock, priced at the five-day average closing bid price of Common
Stock prior to the dividend record date. Shares of Series 6 and Series 7
Preferred Stock are convertible into Common Stock immediately prior to
conversion. The Company may call such shares for redemption at a price equal to
133% of the liquidation preference of the shares. The Company is obligated to
register for public sale the shares of Common Stock issuable to holders of
Series 6 and Series 7 Convertible Preferred Stock, and has filed with the
Securities and Exchange Commission a pending registration statement in which
such shares, along with other securities, are included.
Series 8 Preferred shares are non-voting, have a liquidation preference of
$1,000 each, and carry a 5% dividend payable in cash or in shares of Common
Stock at the election of the Company. Shares of Series 8 Preferred Stock are
convertible into Common Stock at a 25% discount to the five-day average closing
bid price per share. Series 8 shares are callable at the option of the Company
at a redemption price equal to 133% of their liquidation preference. Holders of
Series 8 Preferred shares will have registration rights similar to those granted
to holders of Series 6 and Series 7 Convertible Preferred Stock.
The Company has the right to elect to deem the Offerings of Series 6, 7 and
8 Convertible Preferred Stock to, and any conversion of such Preferred Stock
into Common Stock by, qualified foreign investors as issued pursuant to
Regulation S of the Securities and Exchange Commission should the pending
registration of the shares issuable on conversion of the Preferred Stock not
become effective within 90 days of the closing of the sale of the Convertible
Preferred Stock, provided that the issues otherwise qualify for a registration
exemption under Regulation S.
6
<PAGE>
GLOBAL INTELLICOM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
C. SUBSEQUENT EVENTS
On April 30, 1998, the Company concluded the sale of $2 million principal
amount of its 6% Convertible Debentures to a private institutional investor (the
"Debentures") from which it received net proceeds of $1,780,000. The shares of
Common Stock underlying the Debentures are to be included in an amendment to the
Company's currently pending Registration Statement. The Debentures bear interest
at 6% per annum and are convertible into Common Stock on the earlier of 90 days
from purchase or the date upon which the Company's pending S-3 Registration
Statement is declared effective. The Debentures are convertible at the lower of
110% of the average closing bid price on the five days prior to closing, or 80%
of the average of the five lowest closing bid prices during the 25 day period
prior to conversion. In connection with the Debenture sale, the Company issued
to the purchaser 377,358 five-year warrants to purchase its common stock at an
exercise price of $2.24, and 60,000 warrants to a finder on the same terms.
On April 27, 1998, the Company received a letter from the NASDAQ Stock
Market, Inc. notifying the Company that it no longer met NASDAQ continued
listing requirements and requesting that the Company submit a plan for achieving
compliance. On May 11, 1998, the Company submitted such a plan to NASDAQ and
will supplement same with a more detailed plan by May 30, 1998. There can be no
assurance that the Company's plan will be acceptable to NASDAQ or that the plan
will be realized as contemplated.
D. DISCONTINUANCE OF OPERATIONS
The statement of operations and the statement of cash flows for the three
months ended March 31, 1997 (unaudited) have been restated. Net income (loss)
from the discontinued operations is shown separately in the accompanying
statement of operations.
Net sales of discontinued operations for the three months ended March 31,
1998 and 1997 were $ - 0 - and $3,175,289 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 ended March 31, 1998, which
include the operations of Natcom Automated Solution, Inc. acquired in the third
quarter of 1997, with the three months ended March 31, 1997. Also included is a
discussion and analysis of the Company's financial condition and liquidity as of
March 31, 1998. The information and comparative data presented herein reflect
the discontinuance and elimination of Speech Solutions and of Nevcor's
aggregator operations.
THE QUARTER ENDED MARCH 31, 1998 (UNAUDITED) AS COMPARED WITH THE QUARTER
ENDED MARCH 31, 1997 (UNAUDITED).
NET SALES. Net sales from continuing operations increased by $1,396,584
(17.6%) from $7,931,441 in the prior quarter to $9,328,025 in the quarter ended
March 31, 1998. The increase is attributable to increased sales efforts and
sales staff.
GROSS PROFIT. The Company's gross profit for the quarter ended March 31,
1998 increased to $3,167,394 from $595,307, a 432% increase. Overall gross
profit as a percentage of net sales for the quarters ended March 31, 1998 and
March 31, 1997 increased as a result of a variety of reasons, including
7
<PAGE>
GLOBAL INTELLICOM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
growth in higher margin sales of cabling, services and systems integration and a
discontinuance of lower margin computer equipment sales.
OPERATIVE INCOME. Operating income improved to $185,548 from an operating
loss of ($1,865,775) as the result of the increase in gross profit.
OPERATING EXPENSES. Operating expenses for the quarter ended March 31, 1998
rose to $2,981,846 from $2,461,082, a 21.2% increase. The increase of $520,764
in operating expenses is primarily attributable to the establishment of sales
offices and the acquisition of ASDI. In the second quarter expenses are being
significantly reduced through a decrease in staff.
PROVISION FOR INCOME TAX. The income tax benefit was $445,889 for the
quarter ended March 31, 1998, compared to a benefit of $748,000 for the same
period in 1997. The Company has determined to increase its deferred tax assets
by $500,000 as a result of the increased gross profit due to the discontinuance
of computer equipment sales. The Company anticipates that the increased gross
profits will provide income allowing it to utilize its deferred tax asset.
NET INCOME (LOSS) PER COMMON SHARE. As a result of the factors discussed
above, net income from continuing and discontinued operations for the quarter
ended March 31, 1998 was $536,167 and net income per share was $0.06 as compared
to a net loss of ($1,669,007) and net loss per share of ($0.23) for the same
period in 1997.
FINANCIAL CONDITION AND LIQUIDITY
The Company's cash balance as of March 31, 1998 was $75,791 and its working
capital deficit amounted to ($4,016,520). Net cash used in operating activities
during the three months ended March 31, 1998 was $2,426,339. The decrease in the
Company's cash position and cash flow is a result of cash used in a reduction of
accounts payable.
The Company does not have significant commitments for capital expenditures
as of March 31, 1998 and no significant commitments are anticipated for the
remainder of the 1998 calendar year.
Since inception, the Company has been actively engaged in making
acquisitions of related businesses. Under existing acquisition agreements, the
Company has a variety of commitments, as described below.
In accordance with the agreements relating to the acquisition of Nevcor, the
Company is required to pay a contingent payment based upon 1/2% of Nevcor and
Vircom's net sales, quarterly during 1996, and monthly after January 1, 1997.
The Company believes that no payments are required subsequent to the
discontinuance of Nevcor. (See "Legal Proceedings" in the Company's 1997 annual
report filed on Form 10-K.)
The acquisition and related employment agreements pursuant to which the
Company acquired Natcom in 1995 required the Company to make various installment
payments. Effective as of December 31, 1997, the Company negotiated the
termination of such agreements and accepted the resignation of Natcom's
President. The termination arrangements provide for a total payment to the
former Natcom shareholders of $177,000, which payment may be made by the
issuance of an aggregate of 85,500 shares of the Company's Common Stock. The
Company has also agreed to issue an aggregate of 150,000 shares of Common Stock
to certain former Natcom officers in consideration of such officer's entering
into binding non-compete agreements. The non-compete shares vest over a two-year
period and the non-competition agreements expire December 31, 1999.
8
<PAGE>
GLOBAL INTELLICOM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
Future commitments for the Company's 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 starts to accrue on 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 ended 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.
During the first quarter of 1998 and continuing into April of 1998, the
Company instituted various programs by which it has sharply reduced its
operating expenses. In implementing such programs, the Company has laid off
approximately 81 employees, reducing its work force from approximately 204 to
approximately 123. The Company has also relocated its Vircom TG subsidiary from
West Chester, PA to smaller more economical space in Exton, PA and is
negotiating the termination of its lease at the InSync premises and a move to
smaller, more economical space. In addition, the Company has restructured its
healthcare and benefit plans to allow its employees improved coverage at more
favorable rates to the Company.
The Company had working capital deficits of ($6,783,555) and ($4,016,520) at
December 31, 1997 and March 31, 1998, respectively. Through the sale of
Convertible Preferred Stock during the first quarter, the Company has added net
financing proceeds of $2,466,000 to its working capital, supplemented by another
$1,780,000 of net proceeds from the sale of 6% Convertible Debentures on April
30. The Company anticipates that it may require additional equity or debt
financing to maintain present operating levels and to allow for growth. In
addition, as a result of internal restructuring, staff reductions and other
measures, the Company expects that continuing operations during the remainder of
1998 will generate net income and positive cash flow and will contribute to a
strengthening of the Company's working capital position and liquidity later in
the year. However, there can be no assurance that such additional financing will
be available, and that anticipated improvements in operating results and cash
flow will occur, If such events do not occur, the Company may not be able to
sustain its current operating levels, with the result that the Company's
financial condition, operations and prospects would be materially and adversely
affected.
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.
9
<PAGE>
GLOBAL INTELLICOM, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
(UNAUDITED)
PART II
OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS
Since January 1, 1998, the Company has been named as a defendant in the
following legal proceedings:
1. An action pending in the United States District Court for the
District of New Jersey, entitled GREEN TREE VENDOR V. GLOBAL INTELLICOM,
INC. ET AL., commenced on or about April 14, 1998, alleging payments due in
the amount of approximately $260,000 for leased equipment. The Company has
filed an answer in this action asserting that the claimed amount is not due
and, alternatively, that Global's records reflect that the amount owed, if
any, is far less than the amount demanded. The Company intends to defend
this action vigorously.
2. On or about April 15, 1998, Bell Micro Products, a supplier of the
Company's Global-InSync subsidiary, commenced an action in the United States
District Court for the Eastern District of Virginia against the Company and
Global-InSync, alleging payments due to Bell Micro in the amount of
$784,556.43. The Company has filed an answer and is actively attempting to
resolve this dispute.
3. An action pending on the Massachusetts District Court for the
District of Lawrence entitled SEEK SOLUTIONS V. NEVCOR TECHNOLOGIES GROUP,
INC. ET AL. in which the plaintiff alleges damages of approximately $40,000
as a result of Nevcor's refusal to accept return of certain computer hard
drives that had been altered subsequent to delivery to plaintiff. The
Company has retained local counsel to answer the complaint and assert
counterclaims. The Company believes the case to be meritless and will defend
same vigorously.
For a description of other pending litigation, reference is made to the
Company's Annual Report for the year ended December 31, 1997 on Form 10-K.
Items 2 through 5 are not applicable.
ITEM 6 EXHIBITS
(a) (11) Statement re computation of per share earnings
(a) (27) Financial Data Schedule
REPORTS ON FORM 8-K
1. On February 27, 1998, the Company filed a current report on Form 8-K
describing the terms of the sale under Reg. D of Series 6 and Series 7
Convertible Preferred Shares.
2. On May 14, 1998 the Company filed a current report on Form 8-K describing
the terms of the sale of $2 million of its convertible debentures, and reporting
on the Company's submission of a plan, at the request of the NASDAQ Stock
Market, Inc., to enable the Company to meet NASDAQ listing requirements.
10
<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.
<TABLE>
<S> <C> <C>
Date: May 20, 1998
GLOBAL INTELLICOM, INC.
By: /s/ ROBERT L. OLSON
----------------------------------------
Robert L. Olson
VICE PRESIDENT FINANCE
</TABLE>
11
<PAGE>
EXHIBIT 11
GLOBAL INTELLICOM, INC. AND SUBSIDIARIES
COMPUTATION OF INCOME (LOSS) PER COMMON SHARE
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------------
<S> <C> <C>
1997 1998
------------- ------------
INCOME (LOSS) PER COMMON SHARE
Net Income (Loss).................................................................... (1,669,007) 536,167
Less: Cumulative undeclared dividends on
Series 3 Convertible Preferred Stock............................................ 52,500 52,500
------------- ------------
Adjusted net loss.................................................................... $ (1,721,507) $ 483,667
------------- ------------
------------- ------------
SHARES:
Weights average number of common
shares outstanding........................................................... 7,335,524 7,952,345
------------- ------------
------------- ------------
INCOME (LOSS) PER COMMON SHARE....................................................... $ (0.23) $ 0.06
------------- ------------
------------- ------------
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
REGISTRANT'S UNAUDITED CONSOLIDATED BALANCE SHEET AS OF JUNE 30, 1997 AND
UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE SIX MONTHS THEN ENDED AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 75,791
<SECURITIES> 0
<RECEIVABLES> 3,905,885
<ALLOWANCES> 0
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75,778
0
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</TABLE>
