Filed Pursuant to Rule 424(b)(1)
Registration No. 333-56083
PROSPECTUS
GLOBAL TECHNOVATIONS, INC.
901,683 Shares of Common Stock
This Prospectus relates to an aggregate of 901,683 shares of common stock, $.001
par value per share (the "Common Stock"), of Global Technovations, Inc.,
formerly known as Top Source Technologies, Inc. (the "Company") being offered
for sale by certain stockholders and warrantholders of the Company (the "Selling
Stockholders"). These shares consist of 378,300 shares acquired in connection
with the conversion of the outstanding 5% Series A Convertible Preferred Stock
(the "Series A Preferred"), and 523,383 shares issuable upon the exercise of
three classes of warrants (the "Warrants"). In May 1998, the Company sold to two
foreign purchasers (the "Purchasers"), which are two of the Selling
Stockholders, an aggregate of 1,000 shares of Series A Preferred for $1,000,000
(all of which has been converted or redeemed) and issued Warrants to purchase
250,000 shares of the Company's Common Stock ("Class A Warrants") to the
Purchasers and three other corporations designated by Intercontinental Holding
Company, Ltd., the Placement Agent. The Class A Warrants are exercisable at
$1.10 per share. In December 1998, the Company and the Purchasers modified the
Series A Preferred resulting in the Company issuing an additional 25,000
Warrants exercisable at approximately $.89 per share (the "Class B Warrants").
The Company restructured its outstanding $3,020,000 9% Convertible Notes (the
"Notes") and issued to certain noteholders warrants to purchase shares of the
Company's Common Stock ("Class C Warrants"). The Class C Warrants are
exercisable at approximately $1.78, which price was $1.00 above market on the
date of the agreement. The Series A Preferred and Warrants were issued to
accredited investors pursuant to exemptions from registration under Section 4(2)
of the Securities Act of 1933 (the "Securities Act") and Rule 506 thereunder.
The Company was required to register the underlying shares of Common Stock. See
"Description of Warrants".
In December 1999, the Company changed its name from Top Source
Technologies, Inc. to Global Technovations, Inc. in order to reflect its future
plans to expand its operations internationally. As of the date of this
Prospectus, the Company has no operations located outside of the United States
and has derived only minimal revenue from outside of the United States. See
"Risk Factors".
As of the date of this Prospectus, the Company's officers and directors
beneficially own approximately 5.61% of the Company's Common Stock. Based upon
information available to the Company, no stockholder beneficially owns 5% or
more of the Company's Common Stock. On March 2, 2000, the closing price of the
Company's Common Stock on the American Stock Exchange was approximately $1.69.
All of the shares of Common Stock are offered for the respective
accounts of the Selling Stockholders as listed in this Prospectus under "Selling
Stockholders". The Company will receive none of the proceeds from the sale of
the shares of Common Stock by the Selling Stockholders. However, the Company
will receive a maximum of approximately $739,372 in connection with the exercise
of the 523,383 Warrants, the underlying shares of which are covered by this
Prospectus. Such proceeds will be used for general corporate purposes. All of
the expenses of this offering, estimated at $50,000 will be borne by the
Company.
The Company has been advised by the Selling Stockholders that the
Common Stock may be offered and sold from time to time by or on behalf of the
Selling Stockholders, in or through transactions or distributions (including
crosses and block transactions) on the American Stock Exchange or in the
over-the-counter market at market prices prevailing at the time of sale, or at
negotiated prices, and in connection therewith commissions may be paid to
brokers. Brokers participating in such transactions may act as agents for the
Selling Stockholders. The Selling Stockholders, and any brokers participating in
this offering may be deemed to be "underwriters" within the meaning of the
Securities Act, and any commissions received by them may be deemed to be
underwriting compensation.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is April 3, 2000.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith to files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Such reports,
proxy statements and other information concerning the Company can be inspected
and copied at the Public Reference Room maintained by the Commission at Room
1024, 450 Fifth Street, N.W., Washington, D.C. 20549 and at the Commission's
regional offices at 500 West Madison Street, Suite 1400, Chicago, Illinois
60604-2511, and 7 World Trade Center, 13th Floor, New York, New York 10048.
Copies of this material may also be obtained at prescribed rates from the Public
Reference Section of the Commission, 450 Fifth Street N.W., Washington, D.C.
20549. The Commission maintains a World Wide Web site that contains reports,
proxy statements and other information regarding registrants including the
Company that file electronically with the Commission. The address of the site is
http:\\www.sec.gov. Reports, proxy statements and other information concerning
the Company can also be inspected at the offices of the American Stock Exchange,
Inc., 86 Trinity Place, New York, New York 10006.
The Company has filed with the Commission a Registration Statement
under the Securities Act with respect to the Common Stock offered by this
Prospectus. This Prospectus does not contain all the information set forth in
the Registration Statement certain parts of which are omitted in accordance with
the rules of the Commission. For further information with respect to the Company
and the Common Stock offered hereby, reference is made to the Registration
Statement including the exhibits. Statements contained in this Prospectus as to
the contents of any contract or other document are not necessarily complete and,
where the contract or other document has been filed as an exhibit to the
Registration Statement, each such statement is qualified in all respects by
reference to the applicable document filed with the Commission.
The Company will provide without charge to each person, including any
beneficial owner, to whom a copy of this Prospectus is delivered, upon written
or oral request of such person, a copy of any or all of the information that has
been incorporated by reference in this Prospectus (other than exhibits).
Requests should be directed to the Company at its principal executive offices,
7108 Fairway Drive, Suite 200, Palm Beach Gardens, Florida, 33418-3757, (561)
775-5756.
<PAGE>
DOCUMENTS INCORPORATED BY REFERENCE
On October 6, 1992, the Company's change of domicile merger from
Colorado to Delaware became effective. Top Source, Inc., a Colorado corporation
merged into its wholly-owned subsidiary Top Source Technologies, Inc., formerly
known as Top Source, Inc., a Delaware corporation. The specifics of the merger
are described in the Form 8-B filed with the Commission on November 14, 1992,
which is specifically incorporated by reference into this Prospectus. As a
result of the change of domicile merger, the Form 8-A, which is incorporated by
reference herein, was filed with the Commission by the Company's predecessor,
Top Source, Inc., a Colorado corporation.
The following documents filed with the Commission are hereby
specifically incorporated by reference into this Prospectus:
(a) The Company's annual report on Form 10-K, for the fiscal year ended
September 30, 1999;
(b) The Company's quarterly report on Form 10-Q for the quarter ended December
31, 1999;
(c) The Company's proxy statement filed January 28, 2000 pursuant to Section 14
of the Exchange Act;
(d) Report on Form 8-K filed on October 15, 1999, as amended on December 13,
1999.
(e) The description of the Company's Common Stock filed by the Company
predecessor, Top Source, Inc., a Colorado corporation, which is contained
in the Registration Statement on Form 8-A filed on March 12, 1992, File No.
1-11046, including any amendments or reports filed for the purpose of
updating such description;
(f) The description of the Company's change of domicile merger which is
contained in the Registration Statement on Form 8-B filed on November 14,
1992 and any amendments and reports thereto; and
All other reports filed by the Company pursuant to Section 13(a) or 15(d) of the
Exchange Act since the filing of the Form 10-Q for the quarter ended December
31, 1999.
In addition, all documents subsequently filed by the Company pursuant
to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the
termination of the offering made by this Prospectus shall be deemed to be
incorporated by reference into this Prospectus. Any statement contained in a
document incorporated or deemed to be incorporated by reference in this
Prospectus shall be deemed to be modified or superseded for purposes of this
Prospectus to the extent that a statement contained in this Prospectus or in any
other subsequently filed document which also is or is deemed to be incorporated
by reference in this Prospectus or in a supplement hereto modifies or supersedes
such statement. Any statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
<PAGE>
RISK FACTORS
The shares of Common Stock of the Company involve a high degree of
risk, including, but not necessarily limited to the risk factors described
below. Each prospective investor should carefully consider the following risk
factors inherent in and affecting the business of the Company and this offering
before making an investment decision. All statements, trend analysis and other
information contained in this Prospectus relating to the Company's ability to
complete the development of new products, its ability to consummate any
acquisitions, On-Site Analysis, Inc. ("OSA, Inc."), formerly known as Top Source
Instruments, Inc., future operating results, the ability of the Company to
achieve profitability, marketability of the Company's on-site oil analyzer
("OSA-II"), the strategic alliance formed with Flying J, Inc. ("Flying J"), the
strategic alliance with Speedco, Inc. ("Speedco"), and the potential revenues
which may arise therefrom, the ability of the Company to enter into additional
strategic alliances or develop new technologies and the Company's future
compliance with debt covenants as well as other statements including words such
as "seek", "anticipate", "believe", "plan", "estimate", "expect", "intend" and
other similar expressions constitute forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. Readers are
cautioned not to place undue reliance on these forward-looking statements, which
speak only as of the date of this Prospectus. Some or all of the results
anticipated by these forward-looking statements may not occur since these
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those contemplated in such forward-looking
statements. Such risks and uncertainties include those identified in this "Risk
Factors" section as well as the following: the Company's ability to market
OSA-IIs and new products it is developing; the acceptance of the OSA-II
technology by the marketplace; a general tendency of large corporations not to
change from known technology to emerging new technology; the reliability of the
OSA-II technology over an extended period of time; the Company's ability to
attract additional strategic partners for OSA-II and its proposed new hair-care
system; and other matters which may increase the Company's current losses.
Historical Losses. Since inception, the Company has never reported
income from operations. As of December 31, 1999, the Company had a retained
earnings deficit of $26,232,043. The Company has provided cash to support its
operations from the income generated by Top Source Automotive, Inc. ("TSA"), the
recent sale of substantially all of the assets of TSA and related assets, the
sale of the assets of United Testing Group, Inc. in 1996, the sale of securities
pursuant to private placements and the exercise of stock options and warrants
and from borrowings from institutional and private lenders. During the last
three years, the Company has shifted its primary focus toward the sale of its
OSA-II, which the Company completed developing about in the summer of 1998.
Previously, the Company generated only limited revenues from the sale and lease
of its first generation on-site oil analyzers ("OSA-Is"). Revenue for OSA, Inc.
for the year ended September 30, 1999 was $1,389,678. The identifiable assets
relating to the oil analysis services segment were approximately $5,683,000,
which includes the net value of the capitalized database of $1,862,000 at
September 30, 1999. In order to achieve profitability, for which no assurances
can be given, the Company is relying upon its ability to market and sell OSA-IIs
in sufficient numbers to pay the Company's substantial fixed and other expenses.
The Company believes that its marketing efforts will be successful. However, if
the Company is unable to meet its goals or to have the necessary resources to
sustain its marketing activities it could have a material adverse effect on the
Company's business, the carrying value of the above listed assets, and the
financial condition of the Company. The Company will continue to evaluate the
success of the new marketing efforts as well as the carrying value of the
related assets. There can be no assurances that the Company will be profitable
from operations in the future.
Reliance on On-Site Oil Analyzer. As the result of the TSA sale, the
Company currently is only generating revenue from the sale of the OSA-II.
Because the Company is relying upon one product, there is a substantially
increased degree of risk to investors with only limited capital and no other
current revenue producing assets beyond the OSA-II. The Company must develop a
profitable business model in order to remain operational over the long term.
Development of OSA-II. The Company completed the development of the new
OSA-II and in August 1998 completed the assembly of and shipped the first seven
OSA-IIs. However, as with the development of any new product, unforeseen delays
occur and problems may be discovered. Sophisticated computer software and
complex machines often encounter developmental difficulties or "bugs" which only
become apparent subsequent to widespread commercial use. For example, as part of
this continued internal improvement of the OSA-II, OSA, Inc. has upgraded the
technology of all OSA-IIs previously sold or leased. The cost to OSA, Inc. was
approximately $150,000. Problems which may arise in the operation of the OSA-IIs
could have a material adverse effect upon the Company's future operations.
Inability to Market OSA-IIs. The Company has devoted substantial
resources and different approaches to marketing the OSA-Is and OSA-IIs. Although
the Company's marketing efforts over the last several years have increased the
number of OSAs being used, the Company has only received orders for tests or
leases of multiple machines from seven companies. Without the receipt of
numerous orders for multiple OSA-IIs and the generation of revenue by end-users
it is not likely that the Company can profitably market and sell OSA-IIs.
Liquidity Considerations. With the recent TSA sale, the Company
believes it has sufficient liquidity until the end of calendar 2000. However,
the Company is currently considering utilizing its existing cash resources in
order to make acquisitions of complimentary technology or enter into business
relationships with third parties that can provide products or services useful to
OSA, Inc.'s existing customer base. To the extent that the Company uses cash for
any proposed acquisitions rather than its securities, this could effect the
Company's future liquidity. In any event, until the Company achieves
profitability or acquires a profitable business it will be dependent upon
obtaining additional financing in order to remain operational. There can be no
assurances that the Company can complete any financing and meet its working
capital needs in the future.
Failure to Make Acquisitions. The Company has recently announced that
it is actively seeking to make one or more acquisitions of profitable businesses
this year. No acquisitions are imminent nor are any probable as of the date of
this Prospectus. At the present time, the Company has not entered into any
letters of intent to do so, although it is engaged in discussions to acquire a
much larger corporation. Whether the Company will be able to consummate this
acquisition or others in which the Company is currently engaged in preliminary
discussions, is subject to a number of important risks and uncertainties. The
Company may not be able to reach an agreement on business terms with any
potential acquisition candidates. Additionally, there may be due diligence or
contractual issues, which arise which preclude the Company from closing any
acquisitions. Because the Company intends to primarily finance any acquisition
of any other businesses with debt rather than use its common stock in order to
minimize dilution, its ability to obtain the necessary financing will turn in
part upon the financial condition of any targets, the nature of any target's
assets, the industry in which the target operates, the profitability of any
proposed acquisition targets and the condition of the financing markets at the
time. To the extent that interest rates rise appreciably, this may impair the
potential profitability of a proposed acquisition because of the debt service
involved. The ability to obtain financing may also depend upon the Company being
able to secure subordinated convertible debt. This may be a difficult obstacle
because of the Company's current financial condition and lack of profitability.
There can be no assurances that the Company will successfully complete any
acquisitions.
Difficulties of Absorbing Acquisitions. If the Company is successful in
acquiring any other businesses, it could have difficulty in integrating the
acquired corporation's personnel and operations with its own. In addition, the
key personnel of the acquired business may not be willing to work for the
Company. Regardless of whether the Company is successful in making one or more
acquisitions, the negotiations may disrupt its on-going business, distract its
management and employees, increase its expenses and adversely effects its future
results of operations.
Lack of Global Operations. Although the Company changed its name in
December 1999 to Global Technovations, Inc., the Company has no operations
located outside of the United States. While it plans to do so in the future, the
possibility that the Company will do so within the next 12 months is very
remote. Moreover, to date the Company has only generated minimal revenue from
sales to customers located outside of the United States. There can be no
assurances that the Company will be able to expand its operations outside of the
United States or generate material revenue from sales to customers located
outside of the United States.
Potential Impact of Conversion of Preferred Stock. The Company has
outstanding $3,500,000 of Series B Convertible Preferred Stock ("Series B
Preferred"). The Series B Preferred converts at a floating rate but not until
January 1, 2001. The beneficial owner of the Series B Preferred is a director of
the Company. The following impact may result from the conversion of Series B
Preferred:
o The lower the price of the Common Stock, the more shares will be issued
upon conversion of the Series B Preferred.
o Conversion and sale of some shares increases the supply available for sale,
which could further depress the market price. This could have an escalating
effect and result in a further depression of the price of the Common Stock.
o The significant downward pressure on the price of the Common Stock could
encourage short sales by the selling stockholders or others, which would
further depress the market price for the Common Stock.
o The conversion of the Series B Preferred may result in substantial dilution
to existing stockholders since the holders may ultimately convert their
shares into a very large number of shares of Common Stock if such Common
Stock trades at lower prices at the times of conversion.
Potential Future Dilution. The following tables set forth certain
information if all outstanding Series B Preferred was converted and Warrants
exercised as of March 9, 2000. The times of convertibility and exercisability
vary. See "Recent Developments " and "Description of Warrants" for information
as to the first dates of convertibility and exercisability.
<TABLE>
<S> <C> <C> <C>
- ---------------------------------- -------------------------- --------------------------- ---------------------------
Amount Outstanding ($ or No. of Shares of Common
No. of Shares) Assumed Bid Price of Stock Issuable
Class of Security Common Stock
- ---------------------------------- -------------------------- --------------------------- ---------------------------
- --------------------------------- --------------------------- -------------------------- ----------------------------
Series B Preferred $3,500,000 $1.50 2,734,375
$1.00 4,117,647
$.875 4,729,729
$.60 6,862,745
$.40 10,294,117
- --------------------------------- --------------------------- -------------------------- ----------------------------
Class A Warrants 250,000 250,000
Class B Warrants 25,000 N/A 25,000
Class C Warrants 248,383 242,383
Class D Warrants 350,000 350,000
Class E Warrants 50,000 50,000
Class F Warrants 50,000 50,000
Class G Warrants 100,000 100,000
Class H Warrants 250,000 250,000
- --------------------------------- --------------------------- -------------------------- ----------------------------
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
No. of Shares of Common Stock Issuable Upon
Conversion of
Series B Percentage of
Preferred and Each Assumed Price of Outstanding
Class of Warrants Common Stock Shares
- ---------------------------------------------------------------- ----------------------- ------------------------
- ---------------------------------------------------------------- ----------------------- ------------------------
4,057,758 $1.50 12%
5,441,030 $1.00 15%
6,053,112 $.875 17%
8,186,128 $.60 22%
11,617,500 $.40 28%
- ---------------------------------------------------------------- ----------------------- ------------------------
</TABLE>
Possible Loss of Stock Exchange Listing.
The Company's Common Stock is traded on the American Stock Exchange
(the "Amex"). Section 713 of the Amex Company Guide requires stockholder
approval of any transaction involving the sale or issuance of Common Stock (or
securities convertible into Common Stock) equals 20% or more of outstanding
Common Stock and the price is less than the greater of (i) book value, or (ii)
market value. The Company did not obtain approval of its stockholders to issue
the Series B Preferred. The Company's goal is to redeem the Series B Preferred
prior to the end of calendar 2000 since the Series B Preferred cannot be
converted until January 1, 2001. If the Company cannot meet this objective, the
Company shall use its best efforts to obtain stockholder approval of the
issuance of the Common Stock prior to the conversion. As reflected in the first
chart in the above risk factor, conversion of the Series B Preferred at a price
of approximately $.69, would most likely involve a transaction relating to the
issuance of 20% or more of the Common Stock of the Company. In addition to
Section 713, the Amex has the authority under Section 1003 of the Amex Company
Guide to delist a security. Since they have broad authority, while certain
guidelines are provided, the Amex may delist a security even if none of the
guidelines are violated. Section 1003(f)(v) permits delisting if the Common
Stock has been "selling for a substantial period of time at a low price per
share..." if the Company fails to effect a reverse split. There can be no
assurances that the Amex will not delist the Company's Common Stock. If it does
so, the market will be far less liquid. In turn, this can further depress the
price of the Company's Common Stock.
Changing Technology; Competitive Factors. The OSAs represent a
technological breakthrough affecting the oil analysis industry. Oil analysis is
a 50-year old technology, which is widely used for diagnostic and preventative
maintenance programs for equipment by various industries. Essentially, the OSAs
analyze oil at the end user's location thereby avoiding the need to send
petroleum samples to a central laboratory. The OSAs utilize complex computer
software. In general, the computer industry is subject to rapid and
significantly changing technology including potential introduction of new
products and technologies, which may have a material adverse impact upon the
Company's ability to market and sell OSA-IIs. Although the Company believes that
it has a significant advantage over potential competitors as a result of its
experience over a five-year period with the OSA technology, no assurances can be
given that either a comparable or more advanced on-site oil analyzer will not be
developed in the future by one or more third parties.
Patents and Proprietary Information. Historically, the Company
generated almost all of its revenue from products subject to patents and patent
applications exclusively licensed to the Company. The Company has obtained
patents covering various features of the OSA-Is, which are applicable to the
OSA-IIs. The Company has applied for additional patents covering various
features of the OSA-IIs. In addition, steps have been taken to protect trade
secrets through appropriate confidentiality agreements. There can be no
assurances that the patent applications for the OSA-II will be granted. The
failure by the Company to obtain patents and protect its respective trade
secrets could have a material adverse effect on the Company by increasing the
likelihood of competition. In addition, other companies may independently
develop equivalent or superior technologies and may obtain patent or similar
rights with respect to them. Although the Company believes that the software for
the OSA-Is and OSA-IIs has been independently developed by it, and that such
technology does not infringe on the patents or violate the proprietary rights of
others, there can be no assurances that the Company will not be determined to
infringe upon the patents or proprietary rights of others, or that patents or
proprietary rights of others will not have a material adverse effect on the
ability of the Company to commercialize the OSA-IIs. Patent and technology
disputes are common with high technology products and services.
New Technologies and Other Considerations. In order to expand its
current product line, the Company is introducing and developing new products,
which are based on new technologies. This aspect of the Company's business
involves a number of special risks. Because of these risks, the Company will,
when appropriate, seek capital input and strategic partners to sell equity in
suitable products and technologies to these partners in order to reduce the
risks to investors. Also, the Company will seek to avoid substantial and
long-term expense associated with the necessary research and development. There
is the risk that the new products and technologies will not perform as expected
or be cost effective. Assuming successful research and development, there
remains the risks of being able to market the products and locate industry
partners or others able to manufacture the products according to stringent
quality control standards and in a viable economic manner. There can be no
assurances that the Company will be able to successfully complete development of
and successfully market these new products. Finally, there is the risk that
while the Company is seeking to commercialize a new technology, a competitor
will develop technologies, which are more commercially viable thereby reducing
the viability of the Company's products.
Anti-Takeover Considerations. The Company's Restated Certificate of
Incorporation (the "Certificate Provisions") contains various provisions
designed to deter a third party from launching a hostile takeover for the
Company. In addition, the Company has adopted a Shareholder Rights Plan (the
"Rights Plan"). In this Prospectus, the Certificate Provisions and the Rights
Plan are collectively referred to as the "Anti-Takeover Provisions". The
Certificate Provisions consist of: (i) empowering the Board of Directors (the
"Board"), without further action by the stockholders, to issue up to 5,000,000
shares of Preferred Stock in one or more series, with such designations,
preferences, special rights, qualifications, limitations and restrictions as the
Board may determine; (ii) establishing a classified Board whereby election of
the directors is staggered and each year approximately one-third of the
directors are elected for a three year term; (iii) making it difficult to remove
directors for "cause" by requiring a super-majority vote of either: (1) 75% of
the stockholders, or (2) 66-2/3% of the stockholders and the majority of the
"disinterested directors"; (iv) providing that stockholder action taken by
written consent in lieu of a meeting is prohibited unless such consent is signed
by the holders of at least two-thirds of the stock; and (v) restricting
stockholder nomination of directors to any stockholder with the power to vote at
least 15% of the outstanding voting securities of the Company who timely
complies with specific notice procedures. In connection with the Rights Plan,
the Board declared a dividend of one Preferred Stock Purchase Right (the
"Rights") for each outstanding share of the Company's Common Stock. The Rights
permit the holders (stockholders of the Company) to purchase Series A Junior
Preferred Stock. Holders of Rights have the right to acquire stock of the
Company or an "acquiring entity" at one-half of market value. The Rights only
become exercisable in the event, with certain exceptions, an acquiring party
accumulates 15 percent or more of the Company's voting stock. These Rights may
be redeemed by the Company at $.01 per Right prior to the close of business on
the 15th day after a public announcement that beneficial ownership of ownership
of 15% or more of the Company's voting stock has been accumulated by single
acquirer or group (with certain exceptions), under specified circumstances.
The Anti-Takeover Provisions generally make it more difficult or discourage
a proxy contest or the assumption of control by a holder of a substantial block
of the Company's Common Stock because it is more difficult to remove the
incumbent Board. Thus, the Anti-Takeover Proposals have the affect of: (i)
entrenching incumbent management, and (ii) discouraging a third party from
making a tender offer at a premium over the market price or otherwise attempting
to obtain control of the Company even though such an attempt could be desired by
a substantial member of the Company's stockholders. The Anti-Takeover Provisions
were not intended to prevent a takeover of the Company on terms, which are
beneficial to the stockholders and will not do so. They may, however, deter an
attempt to acquire the Company in a manner or on terms that the Board determines
not to be in the best interest of its stockholders.
Dependence on Key Personnel. The Company is currently dependent upon the
efforts of the key members of its management team consisting of Mr. William C.
Willis, Jr., the Company's President and Chief Executive Officer, and Mr. David
Natan, the Company's Vice President and Chief Financial Officer. In addition,
the Company is dependent upon Dr. John Coates, its Director of Technology, who
is in charge of the group, which developed the OSA-II. In the event that one or
more of these persons ceases to be employed by the Company, it may have a
material adverse effect upon the Company.
Competition. Competition in the oil analysis business is intense. With
regard to the OSA-II, while the Company is not aware of any other business that
markets and sells an on-site oil analysis instrument, the Company's oil analysis
subsidiary, OSA, Inc., competes with various oil analysis laboratories located
throughout the United States. These laboratories offer service through Federal
Express or other express delivery couriers and provides facsimile or other rapid
delivery of oil analysis reports to the customers.
RECENT DEVELOPMENTS
The Company recently announced that it is actively seeking to make one
or more acquisitions during the calendar year 2000. No acquisitions are
currently probable. The Company's aim is to acquire profitable businesses, which
either have complimentary technology or otherwise have technological competitive
advantages. As of the date of this Prospectus, the Company has not reached any
agreements including letters of intent to acquire any other business. It is
currently engaged in discussion to acquire a much larger corporation and has had
preliminary discussions with a number of other acquisition targets. No informal
or formal agreement has been reached with any other company. There can be no
assurances that the Company will acquire any businesses in the future. See "Risk
Factors."
While the Company expected that it would have reached an agreement with
Flying J, Inc. ("Flying J") regarding the sharing of research and development
costs for a self-service OSA-II unit by the end of March 2000, it has not done
so. Discussions with Flying J management are continuing with regard to the
sharing of research and development costs. Based upon discussions with Flying J
management, the Company believes that they will reach an agreement as to sharing
of costs during the quarter ended June 30, 2000.
SELLING STOCKHOLDERS
Table of Selling Stockholders
The following table sets forth information furnished by the Selling
Stockholders, with respect to the number of shares of the Company's Common
Stock, including the shares of Common Stock underlying the Warrants owned by
each Selling Stockholder on the date of this Prospectus, the shares offered
hereby, and the number and percentage of outstanding shares to be owned by each
Selling Stockholder after the offering. No Selling Stockholder has held any
position, office, or had a material relationship with the Company within the
past three years. The beneficial owners of Excalibur Limited Partnership,
Gundyco in Trust for RRSP 550-98866-19, H & H Securities Limited and
Intercontinental Holding Company, Ltd. and San Rafael Consulting Group are
William S. Hechter, Esq., Mark Schoom, William S. Hechter, Esq., and Gerry
Alexander, respectively. The Company believes Charles Ganz of Mellon Bank
exercises discretion to sell the Common Stock offered by the former noteholders.
For further information on the Warrants, See "Description of Warrants".
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
Selling Stockholders Ownership Prior Securities Being Ownership After Percentage Owned Percentage Owned
to Offering Offered Offering Before Offering After Offering
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
Excalibur Limited
Partnership 527,050(1) 527,050(1) -0- 1.74% 0%
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
Gundyco in Trust
for RRSP
550-98866-19 63,750(2) 63,750(2) -0- * 0%
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
H & H Securities
Limited 20,500(3) 20,500(3) -0- * 0%
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
Intercontinental
Holding Company, Ltd 21,000(4) 21,000(4) -0- * 0%
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
San Rafael
Consulting Group 21,000(5) 21,000(5) -0- * 0%
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
Certain Former
Noteholders 248,383(6) 248,383(6) -0- * 0%
- --------------------- ------------------ ------------------- ------------------ ------------------- ------------------
</TABLE>
* Less than 1%.
(1) Represents 378,300 shares remaining from conversion of Series A Preferred
and as dividends, and 131,250 and 17,500 shares underlying Class A and
Class B Warrants. Previously sold a total of 242,988 shares of Common
Stock under Rule 144 of the Securities Act.
(2) Represents 56,250 and 7,500 shares underlying Class A and Class B
Warrants. A total of 116,266 shares of Common Stock previously included
in a Preliminary Prospectus have been sold under Rule 144 of the
Securities Act.
(3) Represents shares of Common Stock underlying Class A Warrants.
(4) Represents shares of Common Stock underlying Class A Warrants.
(5) Represents shares of Common Stock underlying Class A Warrants.
(6) Represents 248,383 shares of Common Stock underlying Class C Warrants
held by former holders of $745,000 in principal of notes. The Company
redeemed their notes in December 1998 for $496,617 and issued one Class
C Warrant for each dollar of principal cancelled. The identity of the
former noteholders has been withheld in accordance with the policy of
the Commission's staff.
DESCRIPTION OF WARRANTS
This Prospectus covers the public sale of the shares of Common Stock
underlying presently exercisable Class A, Class B and Class C Warrants. In March
2000, the Company voluntarily amended the Class A Warrants to make them all
exercisable. The Company received no consideration for doing so. The Company is
not obligated to and does not intend to file a registration statement covering
the public sale of shares of Common Stock underlying the Class D E, F, G and H
Warrants issued to the Mennen Trusts until January 1, 2001. The terms of the
various classes of Warrants are described below:
<TABLE>
<S> <C> <C> <C>
Class of Warrants Number of Warrants Exercise Price Expiration Date
A 250,000 $1.10 5/7/2001
- -----------------------------------------------------------------------------------------------------------
B 25,000 $ .89 11/16/2003
- ------------------------------------------------------------------------------------------------------------
C 248,383 $1.78 12/29/2003
- ------------------------------------------------------------------------------------------------------------
D 350,000 $1.94 11/17/2008
- ------------------------------------------------------------------------------------------------------------
E 50,000 $1.75 05/01/2009
- ------------------------------------------------------------------------------------------------------------
F 50,000 $2.00 01/13/2008
- ------------------------------------------------------------------------------------------------------------
G(1) 100,000 $.875 8/13/2009
- ------------------------------------------------------------------------------------------------------------
H 250,000 $2.38 10/27/2009
- ------------------------------------------------------------------------------------------------------------
(1) 50,000 are not exercisable until August 13, 2000.
</TABLE>
PLAN OF DISTRIBUTION
All of the shares of Common Stock are offered for sale by the Selling
Stockholders as listed in this Prospectus under "Selling Stockholders". The
Company will receive none of the proceeds from the sale of the shares of Common
Stock by the Selling Stockholders. However, the Company will receive a maximum
of approximately $739,372 in connection with the exercise of up to 250,000 Class
A 25,000 Class B and 248,383 Class C Warrants, the underlying shares of Common
Stock of which are covered by this Prospectus. Such proceeds will be used for
general corporate purposes.
The Company has been advised by the Selling Stockholders that the shares
of Common Stock may be offered and sold from time to time by or on behalf of the
Selling Stockholders, in or through transactions or distributions (including
crosses and block transactions) on the American Stock Exchange, or in the
over-the-counter market at market prices prevailing at the time of sale, or at
negotiated prices, and in connection therewith commissions may be paid to
brokers. Brokers participating in such transactions may act as agents for the
Selling Stockholders. The Selling Stockholders, and any brokers participating in
this offering may be deemed to be "underwriters" within the meaning of the
Securities Act, and any commissions received by them may be deemed to be
underwriting compensation.
LEGAL MATTERS
The legality of the securities to be offered hereby will be passed upon
for the Company by Michael Harris, P.A., 1645 Palm Beach Lakes Boulevard, West
Palm Beach, Florida 33401. Attorneys employed by that law firm are the
beneficial owners of 36,000 shares of Common Stock.
EXPERTS
The financial statements and schedules of Global Technovations, Inc.
incorporated by reference in this Prospectus and elsewhere in the registration
statement have been audited by Arthur Andersen LLP, independent certified public
accountants, as indicated in their report with respect thereto, and are
incorporated by reference herein in reliance upon the authority of said firm as
experts in accounting in giving said report.
<PAGE>
No dealer, salesperson or other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus, and, if given or made, such information or representations must not
be relied upon as having been authorized by the Company or any of the Selling
Stockholders. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any security other than the securities offered
by this Prospectus, or an offer to sell or a solicitation of an offer to buy any
securities by any person in any jurisdiction in which such offer or solicitation
would be unlawful. Neither the delivery of this Prospectus nor any sale made
hereunder shall, under any circumstances, imply that the information in this
Prospectus is correct as of any time subsequent to the date of this Prospectus.
TABLE OF CONTENTS
Page
Available Information....................... 3
Documents Incorporated by
Reference.................................. 4 GLOBAL TECHNOVATIONS, INC.
Risk Factors................................ 5 901,683 Shares
Recent Developments......................... 12 of
Selling Stockholders........................ 12 Common Stock
Description of Warrants.................... 13 ________________
Plan of Distribution........................ 14 Prospectus
Legal Matters............................... 15 ________________
Experts..................................... 15 April 3, 2000
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