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FILED PURSUANT TO RULE 424(b)(3)
REGISTRATION FILE NUMBER 333-39425
PROSPECTUS
GLOBALDIGITALCOMMERCE.COM, INC.
1,150,000 shares of common stock
This prospectus relates to our offering of up to 1,150,000 shares of common
stock issuable upon exercise of outstanding redeemable warrants that were
issued in our initial public offering. Each of the warrants entitles the holder
to purchase one share of common stock for $2.00. Subject to earlier redemption,
the warrants are exercisable until February 24, 2003.
We may redeem the warrants for $.01 per warrant, on not less than 30 days'
written notice, if the last sale price of our common stock is at least $3.00
per share for 20 consecutive business days ending on the third day prior to the
date on which we give notice of the redemption.
Our common stock and the warrants are traded on the OTC Bulletin Board under
the symbols "GDXX/GDXX.OB" and "GDXXW/GDXXW.OB," respectively. On November 8,
2000, the last reported sales prices of the common stock and warrants were
$0.23 and $0.01, respectively.
Investing in our common stock involves a high degree of risk. See "Risk
Factors" beginning on page 2.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or determined if
this prospectus is truthful or complete. Any representation to the contrary is
a criminal offense.
This prospectus is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state where the offer or
sale is not permitted.
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Maximum
Solicitation Agent
Price to Public Fee Proceeds to Us
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Per Share............................. $2.00 $0.08 $1.92
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We have agreed to pay to Gilford Securities Incorporated, the underwriter of
our initial public offering, a fee of 4% of the exercise price of the warrants
in the event of any exercise of the warrants pursuant to solicitation by
Gilford under stated conditions. See "Plan of Distribution."
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The date of this prospectus is November 10, 2000.
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SUMMARY TABLE OF CONTENTS
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Prospectus Summary......................................................... 1
Risk Factors............................................................... 2
The Warrants............................................................... 6
Use of Proceeds............................................................ 6
Plan of Distribution....................................................... 6
Legal Matters.............................................................. 7
Experts.................................................................... 7
Where You Can Find More Information........................................ 7
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You should rely only on the information contained in this document or in the
documents to which we have referred you. We have not authorized anyone to
provide you with information that is different. This document may only be used
where it is legal to sell these securities.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements in this prospectus constitute forward-looking
statements, including those relating to our expectations of future acquisitions
and the potential benefit of those acquisitions. In some cases, you can
identify forward-looking statements by terms such as may, will, should, expect,
plan, intend, forecast, anticipate, believe, estimate, predict, potential,
continue or the negative of these terms or other comparable terminology. The
forward-looking statements contained in this prospectus involve known and
unknown risks, uncertainties and situations that may cause our actual results,
level of activity, performance or achievements to be materially different from
any future results, levels of activity, performance or achievements expressed
or implied by these statements. These factors include those listed under "Risk
Factors" and elsewhere in this prospectus.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. You should not place undue reliance on
these forward-looking statements.
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PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information appearing elsewhere in this prospectus, including information under
"Risks Factors." The shares we are offering involve a high degree of risk and
investors should carefully consider the information set forth in "Risk
Factors."
The Company
Our business strategy envisions a multi-phased roll-up transaction, with
each phase being comprised of a merger with one or more privately-held
companies which provide synergistic business to business e-commerce and
information technology services and solutions, as well as a capital infusion
from an external source. Our efforts are currently focused on identifying and
evaluating potential merger and acquisition targets.
Through the first quarter of 1999, we were focusing our efforts on Y2K
business opportunities. At the end of the first quarter of 1999, we
reorganized, changing our primary business focus to the Internet and business
to business e-commerce. As a result of this strategic realignment, we completed
our Y2K related contracts, closed our four regional offices, and eliminated
approximately 14 positions. We currently have no ongoing client engagements or
sales and marketing activities.
We were formed as a limited liability company in California in September
1996 under the name Challenge 2000 International, LLC. We reorganized as a
Delaware corporation in September 1997 and changed our name to C2i Solutions,
Inc. In December 1999, we changed our name to GlobalDigitalCommerce.com, Inc.
Our principal executive offices are located at 10650 Scripps Ranch Boulevard,
Suite 210, San Diego, California 92131 and our telephone number is (858) 790-
1212.
The Offering
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Maximum Shares Issuable Upon
Exercise of Warrants............ 1,150,000 shares of Common Stock
Exercise Price................... $2.00 per share (subject to adjustment)
February 24, 2003 (subject to earlier
Expiration Date.................. redemption)
Redemption Rights................ We may redeem the warrants for $0.01 per
warrant, on not less than 30 days written
notice, if the last sale price of our
common stock is at least $3.00 for 20
consecutive business days ending on the
third day prior to the date on which we
give notice of redemption.
OTC Bulletin Board Symbol........ GDXX/GDXX.OB
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RISK FACTORS
In addition to the other information in this prospectus, you should consider
the following risk factors before deciding to purchase shares of our common
stock. This prospectus contains forward-looking statements which involve risks
and uncertainties. Our actual results may differ significantly from the results
discussed in the forward-looking statements. Factors that might cause such
differences include, but are not limited to, those discussed below.
We have a Limited Operating History and Limited Experience in Internet and E-
Commerce Solutions
We were founded in September 1996, have a limited operating history and are
in the development stage. We have limited experience in providing internet or
business to business e-commerce solutions. Our operations to date have not
produced significant revenues and our decision to refocus on acquisitions means
that we will not produce any revenues at least until we are able to complete an
acquisition. We may not generate any significant future revenues from the sale
of our services or products after any such acquisition.
We Have a History of Operating Losses and Need Additional Financing to Continue
Operations
We have experienced significant operating losses since our inception in
September 1996. As of September 30, 2000, our accumulated deficit was
$7,334,757. We expect that we will continue to incur operating losses at least
until we complete one or more acquisitions with operations sufficient to offset
our corporate expense. The auditor's report on our financial statements
contains an assumption about our ability to continue as a going concern. We
believe that our existing capital resources will enable us to fund our
operations only until approximately January 31, 2001. We will be required to
obtain additional capital to continue our operations beyond that time. We have
no commitments for any future funding, and we may not be able to obtain
additional capital in the future. If we are unable to obtain the necessary
capital, we will be required to significantly curtail our activities or cease
operations. Additionally, while a reduction of operations could prolong our
ability to operate, that reduction would adversely affect our ability to
implement our acquisition strategy.
We Need to Develop New Products and Services and Will Experience Risks
Associated with Potential Unspecified Acquisitions
To date, we have generated substantially all of our revenues from our now
terminated Y2K related activities. As a result of our changed focus, we are
pursuing business opportunities in the Internet and business to business e-
commerce market through mergers and acquisitions, although no specific
acquisitions are ready to be completed or are subject to any binding
acquisition agreements. Any such future acquisitions would be accompanied by
risks encountered in acquisitions of companies. These risks include, among
other things:
. The assumption of unforeseen liabilities;
. The difficulty of assimilating the operations and personnel of the
acquired companies;
. Our potential inability to maximize our financial and strategic position
by the incorporation of acquired business into our business;
. The difficulty of maintaining uniform standards, controls, procedures and
policies;
. The potential loss of key employees of the acquiring or acquired
companies; and
. The impairment of relationships with employees, consultants, customers,
and suppliers as a result of changes in management.
We may not be able to complete any acquisitions, and if an acquisition does
occur it may either materially and adversely affect us or may not enhance our
business. If we proceed with one or more significant
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acquisitions, we will likely use a substantial portion of our available cash to
consummate those transactions. Alternatively, we might issue equity securities
as consideration for an acquisition that might result in significant dilution
of our existing stockholders' ownership interest. We may also issue debt
securities to finance an acquisition, which might reduce the book value and
earnings per share of our common stock. Any business acquisitions will likely
involve the recognition of significant goodwill and intangible assets on our
balance sheet and, as a result, would result in substantial charges against our
reported future operating results. Depending on the size, consideration and
structure chosen, we may be able to consummate one or more acquisitions without
obtaining stockholder approval.
We Do Not Have Any Current Revenue Expectations or Follow-On Business
As a result of our decision not to pursue additional Y2K projects, we
currently have no ongoing projects or expectations of future projects from our
previous customers. Our lack of any current revenue generating client
relationships will have a material adverse effect on our business, financial
condition and results of operations. We will not have any revenues at least
until we complete an acquisition.
We Depend on Our Key Personnel, Many of Whom Are Inexperienced in the
Transactions We are Contemplating
Our success will, to a large extent, depend upon the continued services of
our executive officers. These personnel have limited experience at managing a
business like ours or in evaluating potential strategic alternatives. If we
lost the services of any of these executive officers, it could materially and
adversely affect us. Our employment agreements with our key personnel may be
terminated by either party, with or without cause, with the exception of our
agreement with Mr. Whalen. Mr. Whalen's employment agreement, which expires in
May 2002, limits our ability to terminate him, except for cause, and provides
for six months severance pay, unless Mr. Whalen voluntarily resigns his
position.
Our Directors and Officers Can Greatly Influence Decisions Made by Our
Stockholders
Our directors and officers currently control approximately 45% of the voting
power and therefore have close to the number of votes required to elect all of
our directors. As a result, the directors and officers will be able to
significantly influence our business affairs. In addition, our directors and
officers will have a substantial portion of all the votes required to amend our
Certificate of Incorporation and Bylaws or to approve fundamental corporate
transactions involving us, including any required acceptance or rejection of
any proposals relating to a merger or an acquisition.
Our Shares Are Illiquid
Due to our continuing losses, and our inability to raise sufficient
additional equity, we failed to meet the requirements for continued listing of
our stock on the NASDAQ SmallCap Market and our securities were delisted from
the NASDAQ SmallCap Market. Our securities are currently traded on the OTC
Bulletin Board and may become subject to the regulations applicable to penny
stocks. Investors may find it more difficult to obtain timely and accurate
quotes and execute trades in our securities and the liquidity of our securities
may be impaired. Before our securities can be listed on the NASDAQ SmallCap
Market, we will need to satisfy the more stringent initial listing requirements
(which require, among other things, net tangible assets of $4 million and a
minimum bid price of $4.00 per share). We may not be able to meet these
requirements.
The SEC has adopted regulations which define a "penny stock" to be an equity
security that has a market price (as defined in the regulations) less than
$5.00 per share or with an exercise price of less than $5.00 per share, subject
to certain exceptions. For any transaction involving a penny stock, unless
exempt, the rules require delivery, prior to any transaction in a penny stock,
of a disclosure schedule prepared by the SEC relating to the penny stock
market. These rules also require disclosure about current quotations for the
securities and about commissions payable to both the broker-dealer and the
registered representative. Finally,
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broker-dealers must send monthly statements to purchasers of penny stocks
disclosing recent price information for the penny stock held in the account and
information on the limited market in penny stocks. If our shares were subject
to the rules on penny stocks, the market liquidity for these shares would be
adversely affected.
Risks Associated with International Expansion
A key component of our strategy is expansion into international markets. We
have very limited previous experience in operating outside of the United States
and we may not be able to successfully market, sell and deliver our products
and services in the international marketplace. In addition to this uncertainty,
there are risks inherent in doing business on an international level,
including:
. More diverse, complex, unfamiliar and unexpectedly changing regulatory
requirements;
. Export restrictions, export controls, tariffs and other trade barriers
including cultural and structural impediments to trade;
. Difficulties in staffing and managing foreign operations;
. Longer payment cycles;
. Problems in collecting accounts receivable;
. Political instability;
. Fluctuations in currency exchange rates; and
. Potential adverse tax consequences that could adversely affect our
international operations.
Any of these factors could have a material adverse effect on our business,
financial conditions and results of operations.
Purchasers Will Suffer Immediate and Substantial Dilution
The exercise price of the warrants is substantially higher than the tangible
book value per share of our common stock. Investors purchasing shares through
exercise of a warrant will therefore incur immediate, substantial dilution. To
the extent that other outstanding warrants or stock options are exercised,
there will be further dilution.
Potential Adverse Effect of Redemption of Warrants
We may redeem the warrants, at a redemption price of $.01 per warrant, upon
at least 30 days' notice if the last sale price of the common stock is at least
$3.00 per share for 20 consecutive business days ending on the third day prior
to the date on which we give the redemption notice. If we initiate the process
of redeeming the warrants this could pressure the holders to:
. Exercise the warrants and pay the exercise price at a time when it may be
disadvantageous for the holders to do so;
. Sell the warrants at the then current market price when they might
otherwise wish to hold the warrants; or
. Accept the redemption price, which, at the time the warrants are called
for redemption, is likely to be substantially less that the market value
of the warrants.
Lack of qualification or registration of the shares under all applicable
state securities laws may mean that we would be unable to issue securities upon
exercise of the warrants by some holders, including at the time when the
warrants are called for redemption.
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Current Prospectus and State Registration Required to Exercise Warrants
Warrant holders will only be able to exercise the warrants if:
. A current prospectus under the Securities Act of 1933, as amended,
relating to the securities underlying the warrants is then in effect; and
. Such securities are qualified for sale or exempt from qualification under
the applicable securities laws of the states in which the various warrant
holders reside.
We may not be able to maintain the effectiveness of a current prospectus
covering the shares underlying the warrants. Also we may not be eligible for
exemptions from registration or qualification requirements of those states in
which warrant holders reside. The value of the warrants may be greatly reduced
if a current prospectus, covering the shares issuable upon the exercise of the
warrants, is not kept effective or if such securities are not qualified, or
exempt from qualification, in the states in which the warrant holders reside.
Sales of Additional Shares in the Public Market May Affect Stock Prices
Almost all of our outstanding shares are freely tradable, subject in certain
instances to the volume limitations of Rule 144. The sale, or availability for
sale, of substantial amounts of common stock in the public market could
adversely affect the prevailing market price of the common stock and could
impair our ability to raise additional capital through the sale of its equity
securities.
We Do Not Anticipate Paying Dividends On The Shares
We have never paid any cash dividends on our common stock. We anticipate
that any future earnings will be retained for use in the business or for other
corporate purposes, and we do not anticipate that cash dividends will be paid.
Forward-Looking Statements
This Prospectus contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Securities
Exchange Act of 1934, as amended, including, but not limited to, statements
regarding:
. Our need for additional financing.
. Our goals regarding acquisitions and the potential benefits of any
acquisitions;
. Our ability to raise the funds needed to continue operations;
These statements are subject to risks and uncertainties, including those set
forth under this caption, and actual results could differ materially from those
expressed or implied in these statements. All forward-looking statements
included in this prospectus are made as of the date hereof, and we assume no
obligation to update any such forward-looking statement or reason why actual
results might differ.
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THE WARRANTS
The holder of each of the warrants is entitled, upon payment of the current
exercise price of $2.00, to purchase one share of common stock. Unless
previously redeemed, the warrants are exercisable at any time until February
24, 2003 as long as at such time a current prospectus relating to the
underlying common stock is in effect and the underlying shares of common stock
are qualified for sale or exempt from qualification under applicable state
securities laws.
Redemption. We may redeem the warrants on not less than 30 days written
notice, at a price of $.01 per Warrant, if the closing bid price of our common
stock is at least $3.00 per share for any 20 consecutive business days ending
on the third day prior to the date on which we give the redemption notice. In
the event of a redemption, warrant holders will automatically forfeit their
rights to exercise their warrants unless the warrants are exercised before 5:00
p.m., New York City time on the business day immediately prior to the date set
for redemption. If we redeem any warrants, we must redeem all of the
outstanding warrants.
General. The warrants may be exercised upon surrender of the warrant
certificate(s) on or prior to the earlier of their expiration or the redemption
date at the offices of our warrant agent (American Stock Transfer & Trust
Company) with the form of "Election to Purchase" on the reverse side of the
certificate(s) filled out and executed as indicated. The completed warrant
certificates must be accompanied by payment (in the form of certified or
cashier's check payable to the order of GDCC) of the full exercise price for
the number of warrants being exercised.
The warrants contain provisions that protect the holders against dilution by
adjustment of the exercise price in the event of stock dividends, stock splits,
mergers, sale of substantially all of our assets, and for other extraordinary
events. These adjustments enable the warrant holders to obtain the same or
equivalent rights which they would have obtained if the warrants had been
exercised prior to the event.
We are not required to issue fractional shares of common stock, and in lieu
thereof we will make a cash payment based upon the current market value of such
fractional shares. A warrant holder has no rights as a stockholder unless and
until the holder exercises the warrant.
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USE OF PROCEEDS
Assuming that all warrants are exercised, we anticipate that the net
proceeds from the sale of the 1,150,000 shares offered by this prospectus will
be approximately $2.1 million after deducting solicitation agent fees and
estimated offering expenses payable by us. We expect that net proceeds will be
utilized for sales and marketing, working capital and other general corporate
purposes. A portion of the proceeds may also be used to acquire or invest in
complementary businesses. We have no present commitments or agreements with
respect to any acquisition of other businesses. Pending utilization, we intend
to invest the net proceeds of this offering in short-term, investment-grade,
interest-bearing investments.
Plan of Distribution
The warrants were issued as part of our initial public offering. We have
agreed, to pay to Gilford a fee of 4% of the exercise price for any exercise of
the warrants resulting from a solicitation by Gilford, a portion of which may
be reallowed to any dealer who is a member of the NASD who solicited the
exercise (which may also be Gilford) for each warrant exercise, if:
. The market price of our common stock at the time of exercise is higher
than the exercise price of the warrants; and,
. The exercise of the warrants is solicited by a member of the National
Association of Securities Dealers, Inc. as designated in writing on the
subscription form on the back of the warrant certificate, and,
. The warrants are not held in any discretionary account; and,
. Disclosure of compensation arrangements was made both at the time of our
initial public offering and in documents provided to holders of the
warrants at the time of the exercise; and,
. The solicitation of exercise of the warrants was not in violation of
Regulation M promulgated under the Securities Exchange Act.
We have agreed not to solicit warrant exercises other than through Gilford.
We have also agreed to indemnify Gilford against certain liabilities, including
liabilities under the Securities Act, or to contribute to payments that Gilford
may be required to make in respect thereof.
We have agreed, until February 13, 2003, to recommend and use our best
efforts to elect a designee of Gilford, at the option of Gilford, either as a
director or as a non-voting advisor to our Board of Directors. If Gilford's
designee is elected, the designee will receive the same compensation paid to
our other non-management directors for board attendance, and will be entitled
to receive reimbursement for reasonable costs incurred in attending board
meetings. To the extent permitted by law, we will indemnify Gilford and its
designee for the actions of such designee as our director. If we maintain a
liability insurance policy affording coverage for the acts of our officers and
directors, we will include Gilford and its designee as an insured under such
policy. Gilford has not exercised its right to designate a member of our Board
of Directors.
Regulation M promulgated under the Securities Exchange Act may prohibit
Gilford from engaging in any market making activities with regard to our
securities for the period from five business days (or such other applicable
period as Regulation M may provide) prior to any solicitation by Gilford of the
exercise of the warrants until the later of the termination of such
solicitation activity or the termination (by waiver or otherwise) of any right
that Gilford may have to receive a fee for the exercise of warrants following
such solicitation. As a result, Gilford may be unable to provide a market for
our securities during certain periods while the warrants are exercisable.
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LEGAL MATTERS
The validity of the shares offered hereby has been passed upon by Gray Cary
Ware & Freidenrich LLP, San Diego, California.
EXPERTS
Our financial statements appearing in our Annual Report (Form 10-KSB) for
the year ended December 31, 1999, have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon included therein and
incorporated herein by reference. Such financial statements are incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
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WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form S-3, of which this prospectus is a part, under the Securities
Act with respect to the shares of common stock offered hereby. This prospectus
does not contain all of the information included in the registration statement.
Statements contained in this prospectus concerning the provisions of any
document are not necessarily complete. You should refer to the copy of these
documents filed as an exhibit to the registration statement or otherwise filed
by us with the SEC for a more complete understanding of the matter involved.
Each statement in this prospectus concerning these documents is qualified in
its entirety by such reference.
We are also subject to the informational requirements of the Securities
Exchange Act of 1934. Under the Exchange Act, we file reports, proxy statements
and other information with the SEC. The registration statement, including the
attached exhibits and schedules, may be inspected and copied at the following
public reference facilities maintained by the SEC:
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450 Fifth Street, N.W. 7 World Trade Center 500 West Madison Street
Room 1024, Judiciary Plaza Suite 1300 Suite 1400
Washington, D.C. 20549 New York, NY 10048 Chicago, IL 60661-2511
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Please call the SEC at 1-800-SEC-0330 for further information about the
public reference rooms. The SEC maintains a web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the SEC. Copies of the registration statement and
the reports, proxy and information statements and other information that we
file with the SEC may be obtained from the SEC's Internet address at
http://www.sec.gov.
The SEC allows us to "incorporate by reference" into the prospectus the
information we have filed with them. The information incorporated by reference
is an important part of this prospectus and the information that we file
subsequently with the SEC will automatically update this prospectus. The
information incorporated by reference is considered to be part of this
prospectus. We incorporate by reference the documents listed below and any
filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934, as amended, after the initial filing of the
registration statement that contains this prospectus and prior to the time that
we sell all the securities offered by this prospectus:
. our annual report on Form 10-KSB for the fiscal year ended December 31,
1999, and
. the description of our common stock contained in our Registration
Statement of Firm 8-A filed under Section 12 of the Exchange Act,
including any amendment or report updating such description.
You may request a copy of these documents, at no cost, by writing or
telephoning us at the following address:
GlobalDigitalCommerce.com, Inc.
Attention: Investor Relations
10650 Scripps Ranch Boulevard, Suite 210
San Diego, CA 92131
(858) 790-1212
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