U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(Mark One)
/X/ 15, ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (No Fee Required) For the fiscal year ended December 31,
1999
/ / 15, TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 (No Fee Required)
For the transition period from _________ to _________
Commission file 02-69494
GLOBAL GOLD CORPORATION
(Name of small business issuer in its charter)
DELAWARE 13-3025550
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
734 FRANKLIN AVENUE, SUITE 383, GARDEN CITY, NEW YORK 11530-4525
(Address of principal executive offices) (Zip Code)
Issuer's telephone number (516) 773-8975
Securities registered under Section 12(b) of the Exchange Act:
Title of each class (Name of each exchange on which registered)
- ------------------------ --------------------------------------------
None
- ------------------------ --------------------------------------------
Securities registered under Section 12(g) of the Exchange Act:
None
- ------------------------------
(Title of Class)
<PAGE>
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes /X/ No / /.
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB /X/.
The issuer's revenues for its most recent fiscal year ending December 31, 1999
were $-0-.
The aggregate market value of the voting stock held by non-affiliates of the
Company computed by reference to the price at which the stock was sold, or the
average bid and asked prices of such stock, as of a specified date within the
past 60 days was $123,966(1).
As of December 31, 1999 there were 3,348,114 Shares of the registrant's Common
Stock outstanding (2) (3).
- ---------------
(1) The Company's Common Stock is not publicly traded. However, the Board
of Directors of the Company determined that the fair market value of
the Common Stock was $0.10 per share.
(2) This number is computed after taking into account the 1 for 10 reverse
split of the shares of Common Stock of the Company, effective as of
December 31, 1996 (the "Reverse Split").
(3) This number excludes 1,000,000 shares repurchased and recorded as
Treasury Stock.
ITEM 1 DESCRIPTION OF BUSINESS
(A) GENERAL OVERVIEW
The Company now holds 3,000,000 shares of common stock of First Dynasty
Mines, Ltd., a publicly traded Canadian corporation. The Company was
previously engaged in the development of a gold mining project in
Armenia, a member of the Commonwealth of Independent States. The
Company is currently in the pre-development stage and has not received
any revenues from mining activities as of December 31, 1999 other than
such shares of stock and cash previously paid by First Dynasty Mines,
Ltd. Prior thereto, the Company did not engage in any substantial
business activities, except as described in the section 1(D) entitled
"Prior History of the Company" in the annual reports previously filed
by the Company with the Securities and Exchange Commission ("SEC").
(B) ARMENIAN MINING PROJECT
In 1996, the Company acquired rights under a Joint Venture Agreement
with the Ministry of Industry of Armenia and Armgold, S.F., the
Armenian state enterprises, to provide capital and multistage financing
of the Armenian gold industry, which rights were finalized under
<PAGE>
the Second Armenian Gold Recovery Company Joint Venture Agreement dated
as of September 30, 1997.
As of January 31, 1997, the Company and Global Gold Armenia Limited,
the Company's wholly-owned Cayman Islands subsidiary ("GGA"), reached
an agreement with First Dynasty Mines, Ltd. ("First Dynasty"), a
Canadian public company whose shares are traded on the Toronto Stock
Exchange and on NASDAQ. Under such agreement, First Dynasty acquired
the right to acquire all of the stock of GGA, subject to certain
conditions, by advancing funds in stages necessary for the
implementation of the tailing project and the preparation of
engineering and business plan materials for the remaining Armenian
mining projects.
The Company, GGA and First Dynasty entered into a definitive agreement
dated May 13, 1997 reflecting the final agreement of the parties with
respect to the above project (the "FDM Agreement"). The parties
thereafter amended the FDM Agreement on July 24, 1998.
In connection with First Dynasty's purchase of the Company's remaining
20% interest in GGA, the Company received a certificate representing
special warrants to purchase 4,000,000 shares of First Dynasty common
stock. In September 1999, the warrants were exchanged for 4,000,000
shares of First Dynasty common stock.
For a further description of the background concerning the Armenian
mining project, an interested person can review the quarterly and
annual reports previously filed by the Company with the SEC.
(C) GEORGIAN MINING PROJECT
As of December 31, 1997, the Company abandoned its pursuit of any
mining project in Georgia.
For a further description of the background concerning the Georgian
mining project, an interested person can review the quarterly and
annual reports previously filed by the Company with the SEC.
(D) RECENT ACTIVITIES
(a) On October 13, 1999, the Company entered into a settlement
agreement with Eyre Resources, N.L. ("Eyre") and The
Parry-Beaumont Trust regarding the legal action brought by the
Company and the counterclaim asserted by Eyre and The
Parry-Beaumont Trust in 1998.
In the settlement, 600,000 shares of First Dynasty's common
shares acquired in connection with First Dynasty's purchase of
the Company's 20% interest in GGA were exchanged for 600,000
Common Shares of the Company held by Eyre and 400,000 common
shares of First Dynasty were exchanged for 400,000 Common
Shares of the Company held by The Parry-Beaumont Trust.
<PAGE>
(b) The Company's principal activity at present consists of holding
the remaining 3,000,000 shares of common stock of First Dynasty,
which is traded on the Toronto Stock Exchange and NASDAQ. The
closing price of a share of such common stock on December 31,
1999 was U.S. $0.06. As of December 31, 1999, First Dynasty had
146,237,008 shares of common stock issued and outstanding, and
warrants, options and convertible notes to purchase 41,740,000
shares of common stock outstanding on such date. Since there are
outstanding special warrants to purchase 31.6 million shares of
First Dynasty at prices ranging from $0.29 to $0.42 over the
period ending January 31, 2002, the shares purchasable thereunder
will, in the Company's view, pose an overhang on the trading
market and adversely affect any upward price movement in the
shares of the common stock of First Dynasty.
(c) Employees. As of December 31, 1999, the Company had one
consultant, who was in charge of the overall business of the
Company on a part-time basis, and one consultant who is
principally involved in overseeing the Company's proposed mining
activities on a part-time basis, and one independent contractor
who provides administrative and clerical services on a part-time
basis.
(E) SPECIAL CONSIDERATIONS
The following risk factors should be considered in connection with an
evaluation of the business of the Company:
No Prior Operating History; Failure to File Reports with the SEC
The Company was incorporated on February 21, 1980, and closed a public
offering of the Common Stock in January 1981. Several months after the
closing of such offering, the Company withdrew the listing of the
Common Stock for trading on NASDAQ. After the consummation of the
public offering, the Company failed to file any further annual or
periodic reports required under the Exchange Act. While the Company
filed its Form 10- QSB commencing with the quarter ended March 31, 1995
and each quarter thereafter through and including September 30, 1999
and filed audited financial statements with the Form 10-KSB for
calendar year 1994 covering calendar years 1987, 1988, 1989, 1990,
1992, 1993 and 1994, and for calendar years 1995, 1996, 1997 and 1998
with the Form 10-KSB filed for each such year, there can be no
assurance that the SEC might not assert claims against the Company.
Development Stage Company
Since the Company never engaged in the active conduct of a trade or
business, it has not generated any revenues to date, with the exception
of interest income and the 3,000,000 shares of First Dynasty common
stock and cash received from such source under the FDM Agreement, as
amended. The Company may encounter problems, delays, expenses and
difficulties typically encountered in the development stage, many of
which may be outside of the Company's control.
<PAGE>
Need for Additional Cash
The Company needs additional funds if it is to conduct any operations
in the foreseeable future, none of which is contemplated at present.
Moreover, there can be no assurance that any financing for any future
projects will be available for such purposes or that such financing, if
available, would be on terms favorable or acceptable to the Company.
Competition
There is intense competition in the mining industry. If the Company
does engage in any future mining activities, it will be competing with
larger mining companies, many of which have substantially greater
financial strength, capital, marketing and personnel resources than
those possessed by the Company.
Need for Key Personnel
The Company presently only has one officer intimately familiar with the
operation of mining projects or the development of such projects. While
the Company does not believe the loss of its president or any other
director or officer of the Company will materially and adversely affect
its long-term business prospects, the loss of any of the Company's
senior personnel might potentially adversely affect the Company until a
suitable replacement could be found.
Failure to Satisfy NASDAQ Listing Rules
Without increases in assets and capital surplus, the Company may not be
eligible to have its securities traded on NASDAQ. Moreover, regulations
issued by NASDAQ have increased the thresholds that have to be met in
order for a security to be traded initially on the NASDAQ Small Cap and
National Markets, which may adversely affect the Company's ability to
have its Common Stock traded on the NASDAQ Small Cap or National
Markets. Furthermore, the Company could experience difficulties in
commencing the trading of its securities on NASDAQ. If the Company is
unable to have its securities traded on NASDAQ, its securities will
continue to be eligible for trading on the OTC Bulletin Board, although
the market for shares of the Company's Common Stock may be reduced, and
hence, the liquidity of the shares of Common Stock and/or the Warrants
may be reduced. However, recent regulations adopted for the trading of
securities may adversely affect the eligibility of the Company's Common
Stock for trading on the OTC electronic bulletin board.
No Dividends
The Company currently anticipates that it will retain all of its future
earnings, if any, for use in its operations and does not anticipate
paying any cash dividends in the near term future. There can be no
assurance that the Company will pay cash dividends at any time, or that
the failure to pay dividends for periods of time will not adversely
affect the market price for the Company's Common Stock.
Control of the Company
<PAGE>
Drury J. Gallagher, the Chairman and Chief Executive Officer, and
Robert A. Garrison, the President and Chief Operating Officer,
currently own 1,108,451 and 1,000,000 shares respectively, or a total
of 2,108,451 shares, out of the 3,348,114 shares of the Company's
Common Stock issued and outstanding as of December 31, 1999. If Messrs.
Gallagher and Garrison act in concert, they control 63% of the issued
and outstanding Common Stock of the Company and they will be able to
effectively determine the vote on any matter being voted on by the
Company's stockholders, including the election of directors and any
merger, sale of assets or other change in control of the Company.
ITEM 2. DESCRIPTION OF PROPERTIES
The Company currently maintains a shared office in Garden City, New
York.
ITEM 3. LEGAL PROCEEDINGS
Except as noted below, there is no material pending legal proceeding to
which the Company is a party or to which any of its properties is
subject.
In January 1998, the Company brought an action against Eyre, the
Parry-Beaumont Trust and Kevin Parry, individually, in the United
States District Court for the Southern District of New York, seeking
damages in excess of $81,000,000 arising out of the alleged fraud
committed by the defendants.
The defendants denied such claims and asserted counterclaims against
the Company seeking damages in an undetermined amount against the
Company and seeking a declaratory judgment voiding the Second
Restructuring Agreement. In addition, Eyre and the Parry-Beaumont Trust
brought a third-party complaint against Drury J. Gallagher and Robert
A. Garrison, individually, seeking, among other things, damages in
excess of $75,000 and directing Messrs. Gallagher and Garrison to
return the 2,000,000 shares of the Company's Common Stock issued to
them by the Company in January 1997.
A settlement was agreed to on October 13, 1999. In the settlement,
600,000 common shares of First Dynasty were exchanged for 600,000
Common Shares of the Company held by Eyre and 400,000 common shares of
First Dynasty were exchanged for 400,000 shares of the Company held by
the Parry-Beaumont Trust.
Outstanding warrants held by Eyre and the Parry-Beaumont Trust were
canceled.
On October 4, 1999, Penn Med Consultants, Inc. ("PennMed"), Drury J.
Gallagher ("Gallagher") and other officers of PennMed entered into a
Settlement Agreement of a Civil False Claims Act lawsuit with the
United States of America, the Office of Inspector General of the United
States Department of Health and Human Services, the Pennsylvania
Department of Public Welfare and qui tam relators. The Settlement
Agreement ended an investigation into allegedly fraudulent
administrative expenses which adversely affected reimbursement from the
Medicare and Pennsylvania Medicaid programs by PennMed.
<PAGE>
Under the Settlement Agreement, PennMed, Gallagher and the other
PennMed officers agreed to pay the Federal Government and the
Pennsylvania Department of Public Welfare a restitution amount and
PennMed agreed to adhere to a comprehensive compliance program without
any admission of wrongdoing on behalf of the defendants. In addition,
Gallagher agreed to exclusion, for a period of five years, from
participation in the Medicare, Medicaid and all other federal and
Pennsylvania state health care programs, including managed care
programs. Such exclusion has national affect and also applies to other
federal procurement and non-procurement programs. Gallagher waived his
right under any statute or regulation to payment from Medicare,
Medicaid, TRICARE, the Veterans Administration or the Federal Employee
Health Benefit Program administered by the Office of Personnel
Management during the subject exclusion. PennMed continues to operate
the nursing home business previously conducted by it.
The Company was never a defendant in such action and was not a party to
the Settlement Agreement which concluded the investigation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
(a) The Company's Common Stock is not publicly traded on any market.
(b) As of December 31, 1999, there were approximately 1,100
holders of record of the Company's Common Stock.
(c) The Company did not pay or declare any cash dividends on its
common stock during its last two fiscal years ended December
31, 1998 and December 31, 1999.
(d) As of December 31, 1999, the Company was prohibited from
paying any dividends on its common stock due to its negative
equity position.
(e) The Company's transfer agent is American Registrar and
Transfer Company, with offices at 342 E. 900 South, Salt Lake
City, Utah 84111, having a telephone number of (801) 363-9065.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
As of December 31, 1999, the Company's total assets were $181,432, of
which $1,432 consisted of cash or cash equivalents.
<PAGE>
The Company's plan of operation for calendar year 2000 is:
(a) to hold the 3,000,000 shares of First Dynasty common stock for
investment purposes thereafter; and
(b) investigate other investment opportunities in the mineral
development and production areas.
The Company needs financing to meet its anticipated monthly
administrative expenses of $3,000 (exclusive of accrued officers'
compensation), plus additional amounts for legal and accounting costs.
Prior to the commencement of the litigation described in Part I, Item 3
hereof, the Company anticipated that it might obtain additional
financing in 1999 from the holders of its Warrants. Pursuant to the
Offering of $500,000 principal amount of the Convertible Notes of the
Company, the Company issued Warrants to purchase 4,000,000 shares of
its Common Stock. By virtue of the Reverse Split, the Warrants were
converted into Warrants to purchase 400,000 shares of the Company's
Common Stock at an exercise price of $0.50 per share and the expiration
date extended until December 31, 1997. On December 31, 1997, the
Company amended the Warrants to reduce the exercise price to $0.125 per
share and to extend the expiration date until December 31, 1999, and
recently extended the expiration date until December 31, 2000. If the
Warrants were exercised in full, the Company would receive $50,000 in
gross proceeds. However, the Company does not believe that the Warrants
will be exercised under existing circumstances, thus it does not
anticipate that any amount thereof will be exercised, although there
can be no assurance of such result.
In the event that no contemplated financing is obtained through the
exercise of the Warrants (which the Company considers highly remote),
the Company does not have sufficient financial resources to meet its
obligations.
The Company does not intend to engage in any research and development
during 2000 and does not expect to purchase or sell any plant or
significant equipment.
The Company does not expect to hire any additional full-time employees
in 2000.
ITEM 7. FINANCIAL STATEMENTS
The audited financial statements, notes thereto and reports of
independent certified public accountants thereon for the fiscal years
of the Company ended December 31, 1999 (by Feldman Sherb Horowitz &
Co., P.C.) and December 31, 1998 (by Marks Shron & Company, LLP) are
attached hereto as a part of, and at the end of, this report.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
<PAGE>
For the year ended December 31, 1999, Feldman Sherb Horowitz & Co.,
P.C. replaced Marks Shron & Company, LLP as accountants.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
The directors and executive officers of the Company are as follows:
Name Age Officer
Drury J. Gallagher 61 Chairman, Chief Executive Officer,
Treasurer and Director
Robert A. Garrison 58 President, Chief Operating Officer,
Secretary and Director
Each director is elected for a period of one year at the Company's
annual meeting of stockholders and serves until his successor is duly
elected and qualified. Each director who is not a full-time employee of
the Company receives no remuneration for his services as a director.
Officers are appointed by the Board of Directors.
The Board of Directors has not appointed any audit, compensation or any
other committee. Instead, the Board acts as a whole in all matters.
Mr. Gallagher has served as a director since 1981 and as Chairman,
President and Treasurer of the Company from 1982 until February 1, 1997
and as Chairman, Chief Executive Officer and Treasurer since that date.
Mr. Garrison has served as a director and Vice President of the Company
from June 26, 1995 until February 1, 1997 and became the President,
Chief Operating Officer and Secretary on February 1, 1997.
ITEM 10. EXECUTIVE COMPENSATION
(a) The summary compensation table shown below indicates the cash
or accrued compensation paid by the Company as well as other
compensation paid or accrued to the Chairman and Chief
Executive Officer (the Company's chief executive officer) and
the next highest compensated executive officer at December 31,
1999 for services rendered in all capacities during calendar
years 1999, 1998, 1997 and 1996:
<PAGE>
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Name and Other Annual Restricted Underlying LTIP All Other
Principal Position Year Salary Bonus Compensation Stock Awards Options/SARs(#) Payout Compensation
- ------------------ ----- -------- ------ -------------- ------------- ---------------- ------ -------------
<S> <C> <C> <C> <C> <C> <C>
Drury J. Gallagher, 1999 $ -0- -0- -0- -0- -0- -0- -0-
Chairman, Chief 1998 $112,500 -0- -0- -0- -0- -0- -0-
Executive Officer 1997 $125,000 -0- -0- -0- -0- -0- -0-
and Treasurer 1996 $100,000 -0- -0- -0- 250,000 shares -0- -0-
(the Company's Chief
Executive Officer)
Robert A. Garrison, 1999 $ -0- -0- -0- -0- -0- -0- -0-
President, Chief 1998 $ -0- -0- -0- -0- -0- -0-
Operating Officer 1997 $ 13,333 -0- -0- -0- -0- -0- -0-
and Secretary 1996 $100,000 -0- -0- -0- 250,000 shares -0- -0-
</TABLE>
(b) Stock Options and Awards
The Company has no options or awards outstanding under the
1995 Stock Option Plan, and the Company made no grants or
awards thereunder during the year ended December 31, 1999.
(c) 1995 Stock Option Plan
The Company adopted the 1995 Stock Option Plan under which a
maximum of 500,000 shares of Common Stock may be issued
(subject to adjustment for stock splits, dividends and the
like).
For a description of the terms of the 1995 Stock Option Plan,
and the tax consequences thereunder, an interested person can
review the annual reports previously filed by the Company with
the SEC.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
(a) Set forth below is information as of December 31, 1999
pertaining to ownership of the Company's Common Stock,
determined in accordance with Rule 13(d)(3) under the
Securities and Exchange Act of 1934, by persons known to the
Company who own more than 5% of the Company's Common Stock:
Name and Address of Number of
Title of Class Beneficial Owner Shares(1) Percent of Class
- ---------------- ------------------- ----------- ----------------
Common Drury J. Gallagher 1,132,451(2) 33.8
107 Eakins Road
Manhasset, NY 11030
Common Robert A. Garrison 1,000,000(3) 29.9
44 Lords Highway East
Weston, CT 06883
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1) For purposes of this table, a person or group is deemed to have beneficial
<PAGE>
ownership of any shares which such person has the
right to acquire within 60 days after December 31,
1999. For purposes of calculating the percentage of
outstanding shares held by each person named herein,
any shares which such person has the right to acquire
within 60 days after December 31, 1999 are deemed to
be outstanding, but not for the purpose of
calculating the percentage ownership of any other
person.
(2) This amount includes 24,000 shares of common stock
issuable upon the exercise of the Warrants acquired
by Mr. Gallagher pursuant to the Offering. See Item
12(A) hereof for a description pertaining to the
acquisition of 1,000,000 shares of the Company's
Common Stock by Mr. Gallagher.
Mr. Gallagher disclaims any beneficial interestin the
20,000 shares of the Company's Common Stock and
40,000 shares of Common Stock issuable upon the
exercise of the Warrants acquired by Francis L.
Gallagher, Jr.(Mr.Gallagher's brother), as Trustee of
the Drury J. Gallagher Trust F/B/O Children dated
March 1, 1985.
(3) See Item 12(A) hereof for a description pertaining to
the acquisition of 1,000,000 shares of the Company's
Common Stock by Mr. Garrison.
(b) Set forth below is information as of December 31, 1999
pertaining to ownership of the Company's Common Stock by all
directors and executive officers of the Company:
Name and Address of Number of
Title of Class Beneficial Owner Shares(1) Percent of Class
-------------- ------------------- ----------- ----------------
Common Drury J. Gallagher 1,132,451(2) 33.8(2)
107 Eakins Road
Manhasset, NY 11030
Common Robert A. Garrison 1,000,000(3) 29.9(3)
44 Lords Highway East
Weston, CT 06883
---------------- ----------
Total 2,132,451 63.7
(b) As of December 31, 1999, except as described in Item 12
hereof, there were no arrangements in effect which may result
in a change of control of the Company, after taking into
account the effects of the Restructuring Agreements discussed
above.
- ------------------
(1) For purposes of this table, a person or group is
deemed to have beneficial ownership of any shares
which such person has the right to acquire within 60
days after December 31, 1999. For purposes of
calculating the percentage of
<PAGE>
outstanding shares held by each person named herein,
any shares which such person has the right to acquire
within 60 days after December 31, 1999 are deemed to
be outstanding, but not for the purpose of
calculating the percentage ownership of any other
person.
(2) This amount includes 24,000 shares of common stock
issuable upon the exercise of the Warrants acquired
by Mr. Gallagher pursuant to the Offering. See Item
12(A) hereof for a description pertaining to the
acquisition of 1,000,000 shares of the Company's
Common Stock by Mr. Gallagher.
Mr. Gallagher disclaims any beneficial interest in
the 20,000 shares of the Company's Common Stock and
40,000 shares of Common Stock issuable upon the
exercise of the Warrants acquired by Francis L.
Gallagher, Jr.(Mr.Gallagher's brother), as Trustee of
the Drury J. Gallagher Trust F/B/O Children dated
March 1, 1985.
(3) See Item 12(A) hereof for a description pertaining to
the acquisition of 1,000,000 shares of the Company's
Common Stock by Mr. Garrison.
ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
(A) Transactions with Officers
On January 3, 1997, the Board of Directors of the Company
approved the transfer of 1,000,000 shares of its Common Stock
(computed after the Reverse Split) to each of Messrs.
Gallagher and Garrison in exchange for (a) in Mr. Gallagher's
case, the cancellation of $100,000 in accrued salary and the
cancellation of his stock options and stock appreciation
rights (the "SARs") which, under certain circumstances, could
have resulted in the issuance to him of up to 37,500 shares of
the Company's Common Stock (computed after the Reverse Split),
and (b) in Mr. Garrison's case, the cancellation of $100,000
of accrued salary, the cancellation of his options to buy
75,000 shares of the Company's Common Stock and the
cancellation of his SARs. The Company made such transfers to
reward each of them for their efforts to secure financing for
the Company and/or the Armenian mining project, for
maintaining the Company's existence in the face of the
Company's potential insolvency, and to increase their
proprietary stake as the day-to-day management of the Company
at the request of prospective investment banking firms and
potential investors with whom the Company was then seeking to
obtain funding.
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K
1. The following documents are filed as part of this report:
Financial Statements of the Company, including reports of
independent certified public accountants, Balance Sheets,
Statements of Income, Statements of Stockholders Equity,
Statements of Cash Flow and Notes to Financial Statements: as
at and for the periods ended December 31, 1999 and December
31, 1998.
<PAGE>
2. The Exhibits which are listed on the Exhibit Index attached hereto.
3. No reports on Form 8-K were filed by the registrant during the
last quarter of the period covered by this report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
GLOBAL GOLD CORPORATION
(Registrant)
BY: /S/ DRURY J. GALLAGHER
Drury J. Gallagher,
Chairman, Chief Executive
Officer and Treasurer
Dated: May 15, 2000
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
NAME TITLE DATE
- ---- ----- ----
/S/ DRURY J. GALLAGHER Chairman, Chief Executive Officer, May 15 ___, 2000
- ---------------------- Treasurer and Director (Principal
Drury J. Gallagher Executive and Financial Officer
/S/ ROBERT A. GARRISON President, Chief Operating May 15, 2000
- ---------------------- Officer, Secretary and Director
Robert A. Garrison
<PAGE>
GLOBAL GOLD CORPORATION
(A Development Stage Company)
Financial Statements
December 31, 1999
PAGE
Independent Auditors' Reports F-1 - F-2
Balance Sheet - as of December 31, 1999 F-3
Statements of Income and (Loss) - for the years ended
December 31, 1999 and 1998 and the development stage period
January 1, 1995 through December 31, 1999 F-4
Statement of Changes in Stockholders Equity - for the
years ended December 31, 1999 and 1998 and the
development stage period January 1, 1995 through
December 31, 1999 F-5 - F-6
Statements of Cash Flows - for the years ended
December 31, 1999 and 1998 and the development stage
period January 1, 1995 through December 31, 1999 F-7 - F-8
Notes to Financial Statements F-9 - F-14
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors and Stockholders
Global Gold Corporation
We have audited the accompanying balance sheet of Global Gold
Corporation (A Development Stage Company) as of December 31, 1999 and
the related statements of operations, shareholders' deficit and cash
flows for the year ended December 31, 1999 and for the period from
January 1, 1995 (inception of development stage) through December 31,
1999. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.
We conducted our audit in accordance with generally accepted
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes
examining on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above
present fairly, the financial position of Global Gold Corporation (A
Development Stage Company) as of December 31, 1999 and the results of
its operations and its cash flows for the year ended December 31, 1999
and for the period from January 1, 1995 (inception of development
stage) through December 31, 1999 in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As
discussed in Note 4 to the financial statements, the Company incurred
significant losses since inception. This raises substantial doubt about
the Company's ability to continue as a going concern. Management's
plans with respect to these matters are also described in Note 4 to the
financial statements. The accompanying financial statements do not
include any adjustments that might result should the Company be unable
to continue as a going concern.
/s/ Feldman Sherb Horowitz & Co., P.C.
Feldman Sherb Horowitz & Co., P.C.
Certified Public Accountants
New York, New York
April 20, 2000
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
of Global Gold Corporation
We have audited the balance sheet (not presented herein) of Global Gold
Corporation (a development stage company) as of December 31, 1998, and the
related statements of income and (loss), stockholders' equity, and cash flows
for the year ended December 31, 1998 and the development stage period January 1,
1995 through December 31, 1998. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, based on our audits, the financial statements referred to above
present fairly, in all material respects, the financial position of Global Gold
Corporation as of December 31, 1998, and the results of its operations and its
cash flows for the year ended December 31, 1998 and the development stage period
January 1, 1995 through December 31, 1998, in conformity with generally accepted
accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 4 to the
financial statements, management must secure significant additional investor
and/or lender financing and ultimately must commence profitable operations.
These matters raise substantial doubt about the Company's ability to continue as
a going concern. The financial statements do not include any adjustments that
might result from the outcome of these uncertainties.
MARKS SHRON & COMPANY LLP
Great Neck, New York
March 25, 1999
F-2
<PAGE>
GLOBAL GOLD CORPORATION
(A Development Stage Company)
Balance Sheet
December 31, 1999
ASSETS
CASH $ 1,432
------------
OTHER ASSETS
Investment in First Dynasty Mines, Ltd.
COMMON SHARES 180,000
TOTAL ASSETS $ 181,432
==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
ACCOUNTS PAYABLE AND ACCRUED EXPENSES $ 210,458
----------
STOCKHOLDERS' DEFICIT - EXHIBIT C
Common stock $0.001 par, 100,000,000 shares authorized
4,348,114 shares issued and outstanding 4,348
Paid in capital - dormant period 3,236,602
Paid in capital - development stage 1,493,223
Deficit - dormant period (2,907,648)
Deficit - development stage (1,779,551)
Unrealized loss on securities (16,000)
Total 30,974
DEDUCT COST OF TREASURY STOCK - 1,000,000 SHARES ( 60,000)
-----------
STOCKHOLDERS' DEFICIT ( 29,026)
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 181,432
===========
See Independent Auditors' Report and Notes to the Financial Statements
F-3
<PAGE>
<TABLE>
<CAPTION>
GLOBAL GOLD CORPORATION
(A Development Stage Company)
Statements of Income and (Loss)
For the For the January 1, 1995
Year Ended Year Ended (development stage
DECEMBER 31, 1999 DECEMBER 31, 1998 THROUGH DECEMBER 31, 1999)
----------------- ----------------- --------------------------
REVENUE $ - $ - $ -
---------------- ----------------- ----------------
<S> <C> <C> <C>
EXPENSES
Officers' compensation - 112,500 550,834
Legal 63,093 73,761 605,203
Accounting and auditing 8,000 22,500 131,448
Transfer agent and securities fees - - 12,446
Proxy costs - - 26,555
Rent - ( 18,000) 54,000
Office expense 22,107 29,758 145,097
TRAVEL - 92 43,234
------------- ------------ ------------
OPERATING LOSS ( 93,200) ( 220,611) ( 1,568,817)
OTHER INCOME (EXPENSES)
Interest and royalty income 49 817 5,428
Organization costs - - ( 4,800)
Interest Expense - (601) ( 15,422)
Provision for bad debts - - ( 325,000)
Write-off investment in Georgia
mining interests - - ( 135,723)
Gain on sale of interest in
Global Gold Armenia - 255,999 268,874
INCOME/(LOSS) BEFORE
INCOME TAXES ( 93,151) 35,604 ( 1,775,460)
INCOME TAXES ( 675) ( 660) ( 4,091)
----------- ----------- --------------
NET INCOME/(LOSS) $(93,826) $ 34,944 $(1,779,551)
=========== ============ ===============
NET INCOME/(LOSS)
PER SHARE BASIC
AND DILUTED $( .033) $ .008
========== ==========
NET LOSS $(93,826) $ (1,779,551)
OTHER COMPREHENSIVE
LOSS, NET OF TAX
Unrealized lost on available-
FOR-SALE SECURITIES ( 16,000) - ( 16,000)
---------- ---------- ------------
COMPREHENSIVE LOSS $(109,826) $ - $ (1,795,551)
=========== ========== ============
See Independent Auditors' Report and Notes to the Financial Statements
</TABLE>
F-4
<PAGE>
<TABLE>
<CAPTION>
GLOBAL GOLD CORPORATION
(A Development Stage Company)
Statement of Changes in Stockholders' Equity
Paid-In Paid-In
Issued and Capital Deficit Deficit Capital Treasury Unrealized
Outstanding Common (Dormant (Dormant (Development (Development Stock Loss on
Shares Stock Period) Period) Stage) Stage) (At Cost) Security Total
----------- ------- ---------- ----------- ----------- ----------- ---------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Stockholders' equity
December 31, 1994 898,074 $89,807 $3,147,693 $(2,907,648) $ - $ - $ - - $329,852
Net Loss January 1-
December 31, 1995 _ - - - (361,345) - - - (361,345)
Adjustment re: restatement
of par value - ( 88,909) 88,909 - - - - - -
Eyre acquisition 1,000,000 1,000 - - - 849,000 - - 850,000
Proceeds through
private offering 200,000 200 - - - 421,373 - - 421,573
----------- ------- ---------- ----------- ----------- ----------- ---------- --------- ---------
Stockholders' equity
December 31, 1995 2,098,074 2,098 3,236,602 (2,907,648) ( 361,345 1,270,373 - - 1,240,080
Net loss January 1-
December 31, 1996 - - - - ( 668,577) - - - (668,577)
Warrants exercised 40 - - - - 100 - - 100
----------- ------- ---------- ----------- ----------- ----------- ---------- --------- ---------
Stockholders' equity
December 31, 1996 -
(Carried forward) 2,098,114 $ 2,098 $3,236,602 $(2,907,648) $(1,029,922) $1,270,473 $ - $ - $ 571,603
----------- ------- ---------- ----------- ----------- ----------- ---------- --------- ---------
</TABLE>
See Independent Auditors' Report and Notes to the Financial Statements
F-5
<PAGE>
<TABLE>
<CAPTION>
GLOBAL GOLD CORPORATION
(A Development Stage Company)
Statement of Changes in Stockholders' Equity
Paid-In Paid-In
Issued and Capital Deficit Deficit Capital Treasury Unrealized
Outstanding Common (Dormant (Dormant (Development (Development Stock Loss on
Shares Stock Period) Period) Stage) Stage) (At Cost) Security Total
----------- ------- ---------- ------------ ----------- ----------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Stockholders' equity
December 31, 1996-
(Brought forward) 2,098,114 $2,098 $3,236,602 $(2,907,648) $(1,029,922) $1,270,473 $ - $ - $571,603
--------- ------ ---------- ------------ ---------- ---------- -------- ------ ---------
Net Loss January 1-
December 31, 1997 - - - - ( 690,747) - - - (690,747)
Issuance of Common Stock 2,250,000 2,250 - - - 222,750 - - 225,000
Shareholders' equity
December 31, 1997 4,348,114 $4,348 $3,236,602 $(2,907,648) $(1,720,669) $1,493,223 - - $105,856
--------- ------ ---------- --------- --------- --------- --------- ------- --------
Net loss January 1-
December 31, 1998 - - - - 34,944 - - - 34,944
Stockholders' deficit
December 31, 1998 4,348,114 $4,348 $3,236,602 $(2,907,648) $(1,685,725) $1,493,223 - - $140,800
---------- ------ ---------- ------------ ------------ ---------- --------- ------ ---------
Net loss
January 1-
December 31, 1999 - - - - ( 93,826) - - - (93,826)
Changes in unrealized
loss on securities
available-for-sale - - - - - - - (16,000) (16,000)
Purchase of Treasury
Stock - - - - - - (60,000) - (60,000)
---------- ------ ---------- ------------ ------------ ---------- --------- ------ ---------
Stockholders' deficit
December 31, 1999 4,348,114 $4,348 $3,236,602 $(2,907,648) $(1,795,551) $1,493,223 $(60,000) $(16,000)$(29,026)
========= ====== ========= =========== ============ =========== ========= ======== ========
</TABLE>
In 1997 the Company issued 2,000,000 Common Shares in exchange for $200,000 in
accrued salaries and additional consideration. Also, 250,000 Common Shares were
issued as a finder's fee in connection with the First Dynasty financing.
In 1999 the Company exchanged 1,000,000 Common Shares of First Dynasty Mines
Ltd. with a market value of $60,000 for 1,000,000 Common Shares of Global Gold
Corporation.
See Independent Auditors' Report and Notes to the Financial Statements
F-6
<PAGE>
<TABLE>
<CAPTION>
GLOBAL GOLD CORPORATION
(A Development Stage Company)
Statements of Cash Flows
For the For the January 1, 1995
Year Ended Year Ended (development
December 31, December 31, stage through
1999 1998 December 31, 1999
-------------------- ------------------- -------------------------
CASH FLOWS FROM
DEVELOPMENT STAGE
ACTIVITIES:
<S> <C> <C> <C>
Net Income/(Loss) $(93,826) $ 34,944 $(1,779,551)
Adjustments to reconcile net income/
loss) to net cash used in operating
activities:
Increase (decrease) in:
Provision for bad debt included
in net loss - - 325,000
Write-off of mining investment
in Georgia - - 135,723
Organization costs - - ( 9,601)
Gain on sale of Armenia mining
interests - (255,999) ( 268,874)
Accounts receivable and deposits 33,347 ( 33,501) ( 154)
Accounts payable, accrued
expenses and miscellaneous 37,288 12,835 307,061
--------- --------- ---------
Net cash used in development
STAGE ACTIVITIES ( 23,191) (241,721) (1,290,396)
--------- --------- ----------
CASH FLOW FROM INVESTING ACTIVITIES:
Proceeds from sale of Armenia
mining interests (net of Note
Receivable) - - 1,891,155
Collection of Note Receivables - 200,000 -
Investment in certain mining
interests - net of financing - - ( 153,494)
Deferred - mining interests - - ( 878,858)
---------- ---------- ------------
Net cash provided by investing
Activities - 200,000 858,803
---------- ---------- ------------
</TABLE>
See Independent Auditors' Report and Notes to the Financial Statements
F-7
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
CASH FLOW FROM FINANCING ACTIVITIES:
Net proceeds from private
placement offering - - 421,573
WARRANTS EXERCISED - - 100
------------ ---------- -----------
Net cash provided by financing
ACTIVITIES - - 421,673
------------ ---------- -----------
NET DECREASE
IN CASH ( 23,191) ( 41,721) ( 9,920)
CASH - BEGINNING 24,623 66,344 11,352
------------ ---------- -----------
CASH - END $ 1,432 $ 24,623 $ 1,432
============ ========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION
INCOME TAXES PAID $ 675 $ 66 $ 2,683
=========== ========== ============
INTEREST PAID $ - $ 601 $ 15,422
=========== ========== ============
</TABLE>
In 1995 the Company issued 1,000,000 shares of Common Stock for certain mining
interests, with an estimated value of $850,000 (Note 4). In 1997 the Company
issued 2,000,000 common shares in exchange for $200,000 in accrued salaries and
additional consideration. Also, 250,000 common shares were issued as a finder's
fee in connection with the First Dynasty financing.
In 1998 the Company exchanged its interest in Global Gold Armenia Limited for
4,000,000 First Dynasty Special Warrants exchangeable at no cost into 4,000,000
shares of common stock of First Dynasty Mines Ltd. (Note 14).
In 1999 the Company exchanged 1,000,000 common shares of First Dynasty for
1,000,000 Common Shares of Global Gold Corporation (Note 13).
See Independent Auditors' Report and Notes to the Financial Statements
F-8
<PAGE>
GLOBAL GOLD CORPORATION
(A Development Stage Company)
Notes to Financial Statements
December 31, 1999
NOTE 1: ORGANIZATION (AS A DEVELOPMENT STAGE COMPANY) AND
ACCOUNTING POLICIES
Global Gold Corporation (the "Company") was incorporated as
Triad Energy Corporation in the State of Delaware on February
21, 1980 and, as further described hereafter, had no operating
or development stage history from its inception until January
1, 1995. During 1995, the Company changed its name from Triad
Energy Corporation to Global Gold Corporation to pursue
certain gold and copper mining rights in the former Soviet
Republics of Armenia and Georgia. As part of the plan to
acquire the mining interests and raise venture capital, the
Company increased the number of shares authorized to be issued
from ten million to one hundred million, and commenced a
private placement offering to raise $500,000.
During 1995, the Company formed certain wholly-owned foreign
subsidiaries. Any reference in these statements to the Company
may also include one, some or all of the subsidiaries. All
intercompany transactions were eliminated. The Company
currently maintains a shared office in Garden City, New York.
NOTE 2: USE OF ESTIMATES
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the balance sheet date, and also the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
NOTE 3: COMPREHENSIVE INCOME
The Company has adopted Statement of Financial Accounting
Standards No. 130 ("SFAS 130") "Reporting Comprehensive
Income". Comprehensive income is comprised of net income
(loss) and all changes to the statements of stockholders'
equity, except those due to investments by stockholders,
changes in paid-in capital and distribution to owners.
F-9
<PAGE>
NOTE 4: DEVELOPMENT STAGE COMPANY
The Company may encounter problems, delays, expenses and
difficulties typically encountered in the development stage,
many of which may be outside of the Company's control.
Management must also be successful in securing additional
investor and/or lender financing. The Company expects to incur
operating losses for the near term and, in any event, until
such time as it derives substantial revenues from its
investment in First Dynasty Mines Ltd. or other future
projects.
NOTE 5: ACQUISITION OF ARMENIAN MINING INTEREST FROM EYRE
Pursuant to the Asset Purchase Agreement dated June 1995, the
Company acquired from Eyre Resources N.L., an Australian
corporation, all of its potential interest in its Armenian
gold mining project (Note 6) and all of Eyre's potential
interest in its Georgia gold and copper mining project (Note
7).
In January 1998, the Company brought an action against Eyre,
the Parry-Beaumont Trust, a Singapore trust, and Kevin Parry,
individually, in the United States District Court for the
Southern District of New York, seeking damages in excess of
$81,000,000 arising out of the alleged fraud committed by the
defendants.
The defendants denied such claims and asserted counterclaims
against the Company and Drury J.Gallagher, Chairman and Robert
A. Garrison, President.
A settlement was agreed to on October 13, 1999. In the
settlement, 1,000,000 common shares of First Dynasty Mines
Ltd. that were received in exchange for the investment in
Global Gold Armenia Limited were exchanged for 1,000,000
Common Shares of Global Gold Corporation; 600,000 held by Eyre
and 400,000 held by the Parry-Beaumont Trust. All outstanding
Warrants held by Eyre and the Parry-Beaumont Trust were
canceled.
NOTE 6: THE ARMENIAN JOINT VENTURE AGREEMENT
On February 2, 1996, the Company and Armgold, a division of
the Ministry of Industry of the Government of the Republic of
Armenia, initialed a Joint Venture Agreement (the "Venture")
entitled the Armenian Gold Recovery Company ("AGRC").
The first stage of the project for extraction of gold from
tailings began operations at an official dedication ceremony
on February 25, 1998.
F-10
<PAGE>
An agreement to contribute the Zod and Meghradzor mines to the
Venture was signed on September 30, 1997 and approved by the
Armenian government on June 25, 1998 based on a feasibility
study prepared by a joint venture between Kilborn-SNC Lavalin
and CMPS&F, and submitted on June 8, 1998.
An agreement was entered into with First Dynasty Mines Ltd. on
July 24, 1998, transferring the Company's interest in AGRC in
exchange for 4,000,000 Special Warrants exchangeable at no
cost into common shares of First Dynasty. As of September 30,
1998 the Company recognized a gain of $268,874 in the
exchange.
NOTE 7: THE GEORGIAN AGREEMENT
The Company also acquired from Eyre rights under a Foundation
Agreement dated April 22, 1995 (including a Charter for a
joint venture company) with R.C.P.A. Madneuli, a Georgian
state enterprise, in connection with carrying out certain
mining activities on the Madneuli deposit. The Company was
subsequently advised that the application for the license
required to be filed with the Georgian government had not been
filed, and it had no definitive agreement granting it fixed
rights to mining production or processing in Georgia.
The Company thereafter learned that the Georgian government
was planning to privatize the development of the Madneuli mine
through a public bidding process which was slated to end on
April 15, 1997. Since the structure of the Madneuli mining
project under the public tender differed markedly from that
contemplated under the Asset Purchase Agreement between the
Company and Eyre dated as of June 30, 1995, the Company
decided not to submit a bid for the development of the
Madneuli mining project. As of December 31, 1997, the Company
wrote off its investment in the Georgian mining property
resulting in a loss of $135,723.
NOTE 8: NOTES RECEIVABLE
The Company holds a note receivable from Jet-Line
Environmental Services, Inc. for $300,000 bearing interest at
prime plus 2.0%.
Jet-Line had defaulted on prior balloon payment obligations
and was in default of its current interest requirements.
The Company has been notified by the Business Loan Center, who
made a U.S. Small Business Administration guaranteed loan to
Jet-Line of $550,000 in 1994, that it would liquidate the
Jet-Line assets, as to which it held a senior security
interest. The Company thereafter unsuccessfully disputed the
Business Loan Center's position as a senior secured creditor
in late 1997. After determining that, among other things, the
value of the assets held by it as collateral was negligible,
the Company decided to write off the Jet-Line loan as
worthless.
F-11
<PAGE>
NOTE 9: CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM
Pursuant to a Private Placement Offering (the "Offering")
dated May 17, 1995, as amended, the Company issued $500,000 of
10% Convertible Notes due December 31, 1996. Expenses in
connection with the Offering were $78,427.
Each $1,000 Convertible Note entitled the holder to 400 shares
of common stock and warrants to purchase 800 shares of common
stock at an adjusted exercise price of $.50 per share at any
time before December 31, 1998. The exercise price was
subsequently reduced to $.125 per share to reflect the current
market valuation as determined by management and the exercise
date was extended to December 31, 1999. The exercise date was
further extended to December 31, 2000.
In accordance with the Offering, interest was not payable on
the Convertible Notes so long as they were converted to equity
within a specified time frame. After the December 1, 1995 Eyre
closing, the entire $500,000 of Convertible Notes were
exchanged for 200,000 shares of Common Stock after the Reverse
Split.
NOTE 10: OFFICERS' COMPENSATION, INCENTIVE STOCK OPTIONS AND STOCK
APPRECIATION RIGHTS
Management presently consists of Mr. Drury J. Gallagher and
Mr. Robert A. Garrison. Mr. Gallagher had been President of
the Company and a stockholder since 1981; he is currently
Chairman of the Company. Mr. Garrison was hired in April 1995
to oversee mining and related financing activities, and is
currently President. Messrs. Gallagher and Garrison entered
into employment agreements with the Company effective July 1,
1995.
On January 3, 1997, the Board of Directors of the Company
approved the issuance of 1,000,000 shares of its common stock
to each of Messrs. Gallagher and Garrison in exchange for
$100,000 in accrued salary each plus cancellations of stock
options and stock appreciation rights (the "SARs") and
personal guarantees up to $500,000. As of December 31, 1999,
accrued salary of $162,500 was due to Mr. Gallagher.
F-12
<PAGE>
NOTE 11: NON-UNITED STATES WHOLLY-OWNED SUBSIDIARIES/INCOME TAX
MATTERS
On November 29, 1995, the Company formed Global Gold Armenia
Limited and Global Gold Georgia Limited, which were
respectively assigned the Armenian and Georgian mining rights
from Eyre at the closing on December 1, 1995 (Note 6). The two
subsidiaries are Cayman Island entities which were granted a
twenty year tax exemption from any law of that jurisdiction
which hereafter imposes any tax to be levied on profits,
income, gains or appreciation, commencing December 19, 1995.
The Company experienced net operating losses since inception.
Since the Company is a development stage company and its
ability to obtain future earnings is uncertain, no deferred
tax asset has been recorded.
NOTE 12: NET INCOME/(LOSS) PER SHARE
Net income/(loss) per share is computed using the weighted
average number of shares outstanding during the period. Common
stock equivalents have not been included in the diluted
earnings per share since the effect would be antidilutive.
NOTE 13: REVERSE STOCK SPLIT
The Company filed its Certificate of Amendment to the
Certificate of Incorporation with respect to a 1 for 10
reverse split with the Delaware Secretary of State on December
31, 1996. Such step was taken by the written consent of the
holders of a majority of the Company's issued and outstanding
shares of common stock. By virtue of the reverse split, each
stockholder's number of shares of common stock became
one-tenth of the number previously held.
All share and per share data in this report have been restated
to reflect the reverse stock split, unless otherwise noted.
NOTE 14: TREASURY STOCK
As part of the settlement with Eyre and the Parry-Beaumont
Trust, 1,000,000 common shares of First Dynasty Mined Ltd.
with a market value of $60,000 on October 13, 1999 were
exchanged for 1,000,000 previously issued and outstanding
common shares of Global Gold Corporation held by Eyre
(600,000) and the Parry-Beaumont Trust (400,000).
F-13
<PAGE>
NOTE 15: FIRST DYNASTY MINES LTD.
The Company, GGA and First Dynasty, a Canadian public company,
entered into a preliminary agreement dated January 27, 1997,
whereby First Dynasty agreed to advance funds in stages
necessary for the development of the Armenian mining projects.
The Company and First Dynasty entered into a definitive
agreement dated May 13, 1997, reflecting the final agreement
of the parties with respect to the Armenian mining projects
(the "FDM Agreement").
The Company and GGA, in conjunction with First Dynasty,
negotiated for AGRC to develop the Zod and Meghradzor mines
and concluded the amended Armenian Joint Venture Agreement on
September 30, 1997. First Dynasty agreed to advance a maximum
of $24,510,000 under the FDM Agreement. All funds advanced by
First Dynasty will be advanced to GGA as debt, which is
convertible into stock of GGA at First Dynasty's option, or is
automatically converted into such stock under certain
circumstances, with $24,510,000 equal to 80% of the capital
stock of GGA. Upon obtaining 80% of the capital stock of GGA,
or upon making aggregate advances of $24,510,000, First
Dynasty would be entitled to acquire the remaining 20% of the
outstanding capital stock of GA within 18 months after making
such total advances, by issuance of 4,000,000 special
warrants.
On July 24, 1998, First Dynasty and the Company entered into
an agreement to accelerate the issuance of the 4,000,000
special warrants. The 4,000,000 special warrants are
exchangeable into 4,000,000 common shares of First Dynasty
Mines Ltd. at no cost within one year or with the public
offering of common shares, whichever comes first. The common
shares were valued at 13/64 on the Toronto Stock Exchange or
US$.128 on August 31, 1998. For reporting purposes, the shares
were discounted 50% for absence of a market for the warrants,
lack of trading volume and future dilution. In September 1999,
the warrants were exchanged for 4,000,000 shares of First
Dynasty Mines Ltd. common stock. As of December 31, 1999, the
common shares were valued at C$.0825 per share on the Toronto
Stock Exchange and US$.06 on the OTC Bulletin Board and have
been classified as available-for-sale securities on the
accompanying balance sheet. The Company will retain the right
until December 31, 2009 to elect to participate at a level of
up to twenty percent with First Dynasty or any of its
affiliates in any exploration project undertaken in Armenia.
In connection with the First Dynasty financing, the Company
paid a Finder's Fee of 125,000 shares of its common stock to
each of Walker Investments Ltd. and Alpine Holdings Ltd. at
$.10 per share which approximated fair market value as
determined by management at the time.
F-14
SETTLEMENT AGREEMENT
This Settlement Agreement entered into as of this 13th day of October,
1999 (the "Agreement"), by and among, Global Gold Corporation, a Delaware
corporation, having an address at 734 Franklin Avenue, Suite 383, Garden City,
New York 11530-4525 ("Global"), Drury J. Gallagher, an individual residing at
107 Eakins Road, Manhasset, New York 11030 ("Gallagher"), Robert A. Garrison, an
individual residing at 44 Lords Highway East, Weston, Connecticut 06883
("Garrison"), Eyre Resources, N.L., an Australian corporation, with offices at
Unit 1, 30 Mayfair Street, West Perth 6005, Western Australia ("Eyre"), Kevin
Parry, an individual residing at 107 Adelma Road, Dalkeith 6009, Western
Australia ("Parry"), and Jeffrey Beaumont and Cameron Parry, Trustees of the
Parry-Beaumont Trust, having an address at Unit 1, 30 Mayfair Street, West Perth
6005, Western Australia (the "Trust").
WHEREAS, Global commenced an action against Parry, Eyre and the Trust,
entitled GLOBAL GOLD CORPORATION V. KEVIN PARRY, EYRE RESOURCES, N.L. AND THE
PARRY-BEAUMONT TRUST, bearing Civil Action No. 98 Civ.0009 (JSM), (the
"Action"), in the United States District Court for the Southern District of New
York (the "Court"); and
WHEREAS, Parry, Eyre and the Trust asserted counterclaims against Global in
the Action; and
WHEREAS, Eyre and the Trust commenced a third-party action against
Gallagher and GARRISON, ENTITLED EYRE RESOURCES, N.L. AND THE PARRY-BEAUMONT
TRUST V. DRURY J. GALLAGHER AND ROBERT GARRISON, bearing Civil Action No. 98
Civ.0009 (JSM), (the "Third-Party Action"), in the Court; and
WHEREAS, the parties, upon the advice of their respective counsel, now
wish to settle and resolve all claims, counterclaims, controversies and disputes
among them that were, could have been or could otherwise hereafter have been,
raised in either the Action or the Third-Party Action on the terms set forth in
this Agreement;
NOW THEREFORE, it is agreed as follows:
1. Global will deliver to Robert M. Bursky, Esq., counsel to Eyre,
Parry and the Trust, a certificate for 600,000 shares of common stock of First
Dynasty Mines Ltd. registered in the name of Eyre Resources, N.L., and a
certificate for 400,000 shares of common stock of First Dynasty Mines Ltd.
registered in the name of Cameron Parry and Jeffrey Beaumont as Trustees of the
Trust, free and clear of any pledges, liens and encumbrances thereon, as soon as
practicable after the execution and delivery of this Agreement by all parties
hereto, but in no event later than October 26, 1999.
2. Eyre, the Trust and Parry represent that they never received the
originals of the certificates evidencing their ownership of 1,000,000 shares of
common stock of Global (the "Shares") and warrants to purchase 400,000 shares of
common stock of Global (the "Warrants"). Eyre, the Trust and Parry agree to
deliver a letter from Donald Kummerfeld in the form attached hereto as Exhibit
A, as soon as practicable after the execution and delivery of this Agreement by
1
<PAGE>
all parties hereto, but in no event later than October 19, 1999. Eyre, the Trust
and Parry agree that, by virtue of the execution and the delivery of this
Agreement, (i) Eyre, the Trust and Parry relinquish forever all right, title and
interest in and to the Shares and the Warrants, and any and all rights relating
thereto; (ii) this Agreement vests Global with all of Eyre's, the Trust's and
Parry's right, title and interest in and to the Shares and the Warrants; (iii)
the Shares and the Warrants are hereby canceled of record and are of no further
force and effect; (iv) Global's transfer agent may cancel the Shares and the
Warrants of record and issue any certificate of cancellation relating thereto;
(v) they will deliver the Shares and Warrants to Global if they obtain
possession of the original certificates therefor in the future; and (vi) they
will execute such other documents and take such further action as may be
necessary to vest Global with all right, title and interest in and to the Shares
and the Warrants.
3. Upon each counsel's sending of the written acknowledgments described
in Sections 4 and 5 hereof to the other counsel, each of Global, Gallagher and
Garrison, on the one hand, and Parry, Eyre and the trustees of the Trust, on the
other hand, hereby release one another, as well as their respective directors,
officers, shareholders, employees, agents, counsel, representatives, heirs,
successors and assigns, from any and all claims, contracts, agreement, causes of
action, demands, debts, bonds, reckonings and any other matter, cause or thing
arising at any time up to and including the date of this Agreement; provided,
however, that such releases shall not extend to any obligation expressly assumed
by any of the parties pursuant to the terms of this Agreement, including,
without limitation, under Section 7 hereof.
4. Upon the execution and delivery of four copies of this Agreement,
duly signed by the parties, to their respective counsel, such counsel to the
parties shall execute and deliver to one another duplicate originals of a
Stipulation of Dismissal dismissing the Action and the Third-Party Action in the
form attached hereto as Exhibit B. Each counsel shall hold one such duplicate
original of the Stipulation of Dismissal in escrow pending the respective
delivery of the stock certificates as provided for in Section 1 hereof and
Exhibit A as provided in Section 2. Upon counsels' written confirmation to one
another of the delivery of the certificates as provided in Section 1 and Exhibit
A as provided in Section 2, any party may file the Stipulation of Dismissal with
the Court without further notice.
5. Upon the execution and delivery of four copies of this Agreement
duly signed by the parties to their respective counsel, such counsel shall hold
all such executed copies of this Agreement in escrow pending the delivery of the
stock certificates as provided in Section 1 of this Agreement and Exhibit A as
provided in Section 2; and upon the receipt of the stock certificates described
in Section 1 and Exhibit A as provided in Section 2 hereof, the parties' counsel
will send written acknowledgment of the same to one another, whereupon this
Agreement shall be released from escrow and delivered to the parties.
6. (a) Each of the signatories to this Agreement represents and
warrants to the other that he or it is duly authorized and fully empowered to
execute this Agreement on his or its own behalf and/or behalf of the entity for
whom he is acting as signatory.
(b) Global represents and warrants that it has 4,348,114 shares of
its common
2
<PAGE>
stock issued and outstanding on the date hereof, that it owns 4,000,000 shares
of common stock of First Dynasty Mines Ltd. and that it has no further rights to
any additional shares of stock of any class or kind of First Dynasty Mines Ltd.
under Global's Definitive Agreement with it.
(c) Each of Eyre, the Trust and Parry represents and warrants
that each has not transferred, sold, assigned, pledged, made a gift of,
hypothecated or otherwise disposed of the shares of common stock and the
warrants to purchase common stock of Global owned by any of them at any time
(other than the Warrants to Kummerfeld) and that such shares and warrants are
free and clear of any liens or encumbrances or any other rights thereto.
7. Each of Eyre, the Trust and Parry, jointly and severally,
unconditionally agrees to indemnify and hold Global, Gallagher and Garrison
harmless from and against any claim, damage, loss or expense of any of them by
reason of any claim of any person not a party to this Agreement arising out of
the transfer, sale, assignment, pledge, gift, hypothecation or any other form of
the disposition of the shares of stock of Global, and of any warrants to
purchase shares of stock of Global, owned by Eyre, the Trust and Parry,
including, without limitation, any claim by Donald Kummerfeld arising therefrom
or relating thereto.
8. This Agreement and the rights of the parties hereunder shall be
governed by and construed in accordance with the laws of the State of New York,
without regard to its conflicts of law principles. All parties hereto (i) agree
that any legal suit, action or proceeding arising out of or relating to this
Agreement shall be instituted only in a state court or federal court in the City
of New York, State of New York in the United States of America, (ii) waive any
objection which they may now or hereafter have to the laying of the venue of any
such suit, action or proceeding, and (iii) irrevocably submit to the exclusive
jurisdiction of the United States Southern District Court for the District of
New York, or any court of the State of New York in any such suit, action or
proceeding, but such consent shall not constitute a general appearance or be
available to any other person who is not a party to this Agreement. All parties
hereto agree that the mailing of any process in any suit, action or proceeding
in accordance with the notice provisions of this Agreement shall constitute
personal service thereof.
9. This Agreement and all the terms and provisions hereof shall be
binding upon and shall inure to the benefit of the parties and their respective
heirs, representatives, successors and assigns.
10. (a) This Agreement constitutes the sole and entire agreement by and
among the parties with respect to the subject matter hereof; supersedes any and
all prior agreements with respect thereto; and may not be changed, modified or
amended, except pursuant to a writing signed by each of the parties hereto or
their duly authorized representatives. The foregoing provision shall be strictly
construed and enforced, and shall not be subject to any claim or defense based
on waiver or estoppel or any other doctrine, legal or equitable, that might
otherwise apply so as to negate the effect thereof.
(b) In the event of a failure in the performance of any of the
terms and conditions in Sections 1 and 2 above, the aggrieved party may seek a
decree of specific performance of this Agreement or, not later than November 3,
1999, deem this Agreement to be null and void by causing a letter to such effect
to be sent to the non-performing party with a copy to his or its counsel.
3
<PAGE>
11. This Agreement may be executed in several counterparts, each of
which shall be deemed an original but all of which shall constitute one and the
same instrument. In addition, this Agreement may contain more than one
counterpart of the signature page and this Agreement may be executed by the
affixing of such signature pages executed by the parties to one copy of the
Agreement; all of such counterpart signature pages shall be read as though one,
and they shall have the same force and effect as though all of the signers had
signed a single signature page.
IN WITNESS WHEREOF, the undersigned have signed and delivered this
Agreement as of the date first above written.
- ---------------------------- -------------------------------
Drury J. Gallagher Kevin Parry
- ----------------------------
Robert Garrison THE PARRY-BEAUMONT TRUST
GLOBAL GOLD CORPORATION By:_____________________________
Cameron Parry, Trustee
By:______________________________ By:_____________________________
Robert Garrison, President Jeffrey Beaumont, Trustee
EYRE RESOURCES, N.L.
By:_____________________________
, Director
ESCROW AGREED TO:
- ----------------------------
Stephen R. Field, Esq.
- ---------------------------
Robert M. Bursky, Esq.
4
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 13th day of October, 1999, before me personally came DRURY J.
GALLAGHER, to me known, who, being duly sworn, did depose and say that he
resides at 107 Eakins Road, Manhasset, New York 11030, and is to me known to be
the person described in and who executed the foregoing instrument, and
acknowledged to me that he executed the same.
----------------------------------
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 13th day of October, 1999, before me personally came ROBERT
GARRISON, to me known, who, being duly sworn, did depose and say that he resides
at 44 Lords Highway East, Weston, Connecticut 06883, and is to me known to be
the person described in and who executed the foregoing instrument, and
acknowledged to me that he executed the same.
----------------------------------
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the 13th day of October, 1999, before me personally came KEVIN
PARRY, to me known, who, being duly sworn, did depose and say that he resides at
107 Adelma Road, Dalkeith 6009, Western Australia, and is to me known to be the
person described in and who executed the foregoing instrument, and acknowledged
to me that he executed the same.
----------------------------------
Notary Public
5
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this 13th day of October, 1999, before me personally came ROBERT
GARRISON, to me known, who being duly sworn, did depose and say that such person
resides at 44 Lords Highway East, Weston, Connecticut 06883, is the President of
GLOBAL GOLD CORPORATION, a Delaware corporation which is described in and which
executed the foregoing instrument, and being duly authorized signed such
person's name thereto on behalf of such corporation, and acknowledged it as the
act of such corporation.
-----------------------------
Notary Public
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this day of October, 1999, before me personally came
________________________, to me known, who being duly sworn, did depose and say
that such person resides at ________________________________, Australia, is the
Director of EYRE RESOURCES, N.L., an Australian corporation which is described
in and which executed the foregoing instrument, and being duly authorized signed
such person's name thereto on behalf of such corporation, and acknowledged it as
the act of such corporation.
-----------------------------
Notary Public
)
) ss.:
)
On this day of October, 1999, before me personally came CAMERON PARRY,
to me known, who being duly sworn, did depose and say that such person resides
at 107 Adelma Road, Dalkeith 6009, Western Australia, is the Trustee of THE
PARRY-BEAUMONT TRUST, which is described in and which executed the foregoing
instrument, and being duly authorized signed such person's name thereto on
behalf of such trust, and acknowledged it as the act of such trust.
-----------------------------
Notary Public
6
<PAGE>
)
) ss.:
)
On this day of October, 1999, before me personally came JEFFREY
BEAUMONT, to me known, who being duly sworn, did depose and say that such person
resides at 24 Illawong Drive, Donvale, 3111 Victoria, Australia, is the Trustee
of THE PARRY-BEAUMONT TRUST, which is described in and which executed the
foregoing instrument, and being duly authorized signed such person's name
thereto on behalf of such trust, and acknowledged it as the act of such trust.
-----------------------------
Notary Public
7
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
</LEGEND>
<CIK> 319671
<NAME> GLOBAL GOLD CORPORATION
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 1,432
<SECURITIES> 180,000
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 181,432
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 181,432
<CURRENT-LIABILITIES> 210,458
<BONDS> 0
0
0
<COMMON> 4,348
<OTHER-SE> (33,374)
<TOTAL-LIABILITY-AND-EQUITY> 181,432
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (109,200)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 49
<INCOME-PRETAX> (109,151)
<INCOME-TAX> 675
<INCOME-CONTINUING> (109,826)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (109,826)
<EPS-BASIC> (0.033)
<EPS-DILUTED> 0.0
</TABLE>
