SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 13D/A
Information to be Included in Statements Filed Pursuant to Rule
13d-1(a) and Amendments Thereto Filed Pursuant to Rule 13d-2(a)
(Amendment No. 2)*
THE NETWORK CONNECTION, INC.
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(Name of Issuer)
Common Stock par value $.001 per share
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(Title of Class of Securities)
64120Q103
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(CUSIP Number)
Richard P. Jaffe, Esquire
Mesirov Gelman Jaffe Cramer & Jamieson, LLP
1735 Market Street
Philadelphia, Pa 19103
(215) 994-1037
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
August 24, 1999, September 17, 1999 and December 27, 1999
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(Date of Event Which Requires Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(b)(3) or (4), check the following box
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
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* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 (the "Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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SCHEDULE 13D
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CUSIP NO. 64120Q103 PAGE 2 OF 6 PAGES
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1 NAMES OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Global Technologies, Ltd.
IRS ID No. 86-0970492
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEMS 2(d) OR 2(e) [ ]
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6 CITZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
23,437,903
NUMBER OF ---------------------------------------------------------
SHARES 8 SHARED VOTING POWER
BENEFICIALLY 0
OWNED BY ---------------------------------------------------------
EACH 9 SOLE DISPOSITIVE POWER
REPORTING 23,437,903
PERSON ---------------------------------------------------------
WITH 10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
23,437,903
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
80.9%
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14 TYPE OF REPORTING PERSON*
CO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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CUSIP NO. 64120Q103 PAGE 3 OF 6 PAGES
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ITEM 1. SECURITY AND ISSUER
Common Stock, par value $.001 per share, of The Network Connection, Inc.
(the "Company"), 222 N. 44th Street, Phoenix, AZ 85034.
ITEM 2. IDENTITY AND BACKGROUND
Name: Global Technologies, Ltd. ("GTL"), the successor by merger to
Interactive Flight Technologies, Inc. ("IFT")
State of Incorporation: Delaware
Principal Business: Interactive electronic entertainment devices, and
holding company
Address of Principal Business and Principal Office: 1811 Chestnut
Street, Suite 120, Philadelphia, PA 19103
Prior Criminal Convictions or Proceedings: None
Prior Civil (Securities) Convictions or Proceedings: None
ITEM 3. SOURCE AND AMOUNT OF FUNDS AND OTHER CONSIDERATION:
On August 24, 1999, the Board of Directors of IFT, the corporate
predecessor of GTL, approved the conversion into Company Common Stock of
the balance due under the Secured Promissory Note dated January 26,
1999, as amended (the "Secured Promissory Note"). The Board also
approved the conversion of the Series C 8% Convertible Preferred Stock
of the Company (the "Series C Stock") held by IFT into Company Common
Stock. Such conversions, to the extent they exceeded approximately one
million shares of the Company's Common Stock on August 24, 1999, was
contingent upon receiving approval by the Company's shareholders to
increase the authorized share capital of the Company. Such increase was
approved by the shareholders of the Company on September 17, 1999.
The principal amount and accrued interest due under the Secured
Promissory Note was convertible either into Common Stock, or into shares
of Series C Stock. GTL chose to convert such principal amount and
accrued interest directly into Company Common Stock. Pursuant to the
terms of the Secured Promissory Note, the number of shares of Company
Common Stock to be issued was calculated as if the amount due had first
been converted to Series C Stock (calculated without regard to any
insufficiency of authorized shares of Series C Stock) and such resulting
shares of Series C Stock, had, in turn, immediately been converted to
Common Stock at a conversion price per share equal to the lowest of (a)
$1.50, (b) 66.67% of the Average Price (as hereafter defined), (c) the
price per share at which the Company, after the date of the Seventh
Allonge to the Secured Promissory Note, issued and sold
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CUSIP NO. 64120Q103 PAGE 4 OF 6 PAGES
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any Company Common Stock, or (d) where coupled with the right of the
purchaser(s) thereof to demand that the Company register under the
Securities Act of 1933 any Company Common Stock (not theretofore
registered) for which any warrants or options may be exercised or any
convertible, exchangeable or exercisable securities may be converted
exercised or exchanged, (i) the exercise price of any such warrants or
options issued by the Company after the date of such Seventh Allonge, or
(ii) the conversion rate, exchange rate or exercise price, respectively,
of any such convertible, exchangeable or exercisable security issued by
the Company after the date of such Seventh Allonge, except for stock
option agreements or stock incentive agreements issued pursuant to
employee benefit plans. For purposes of the Secured Promissory Note, the
term "Average Price" per share of Company Common Stock meant the average
of the closing bid prices as reported on the Nasdaq Stock Market (or if
not then traded on such market, on such exchange or quotation system
where such shares are then traded) for the lowest five of the twenty
trading days immediately preceding the Conversion Date. Under the
Secured Promissory Note the conversion was effective on the date the
Company received the notice of conversion.
Based upon this formula, the conversion rate of the Series C Stock into
Common Stock of the Company was $.92533 per share of Common Stock.
The aggregate amount due under the Secured Promissory Note, including
principal and accrued interest, totaled $4,445,381. Accordingly, the
Secured Promissory Note was convertible into 4,802,377 shares of Company
Common Stock.
The 800 shares of Series C Stock, together with accrued but unpaid
dividends thereon, were convertible into 886,140 shares of Company
Common Stock under the same formula.
All of such conversion shares were issued by the Company on December 27,
1999.
ITEM 4. PURPOSE OF TRANSACTION:
IFT's purpose in engaging in this transaction was to increase IFT's
equity interest in the Company and to reduce the Company's debt to
equity ratio.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER:
(a) the following table sets forth the aggregate number and percentage
of outstanding shares of the Company's Common Stock beneficially owned
by the undersigned as of the date of this report:
Number of Shares Percentage of Outstanding Shares
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23,437,903 80.9%
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CUSIP NO. 64120Q103 PAGE 5 OF 6 PAGES
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In addition to the right to receive Company Common Stock based on the
conversion of the Secured Promissory Note and the Series C Stock as
referred to above, GTL also owns 2,495,400 Shares of the Company's
Series D Preferred Stock, which is convertible into 15,097,170 shares of
the Company's Common Stock, and 1,500 shares of the Company's Series B
Preferred Stock, which is convertible into 1,176,471 shares of the
Company's Common Stock (as of December 27, 1999). Upon the conversion of
all of the Series D Shares and all of the Series B Shares, GTL would be
the beneficial owner of 23,437,903 shares of the Company's Common Stock,
or 80.9% of what would be the then outstanding Common Stock of the
Company.
(b) Voting Power and Dispositive Power
Sole Power to Vote: 23,437,903
Shared Power to Vote: 0
Sole Power to Dispose: 23,437,903
Shared Power to Dispose: 0
In addition to the right to receive Company Common Stock based on the
conversion of the Secured Promissory Note and the Series C Stock as
referred to above, GTL also owns 2,495,400 Shares of the Company's
Series D Preferred Stock, which is convertible into 15,097,170 shares of
the Company's Common Stock, and 1,500 shares of the Company's Series B
Preferred Stock, which is convertible into 1,176,471 shares of the
Company's Common Stock (as of December 27, 1999). Upon the conversion of
all of the Series D Shares and all of the Series B Shares, GTL would be
the beneficial owner of 23,437,903 shares of the Company's Common Stock,
or 80.9% of what would be the then outstanding Common Stock of the
Company.
(c) the Following Table Reflects GTL's Transactions in the Company's
Stock in the Past 60 Days:
None other than as described in this Schedule 13D
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO
SECURITIES OF THE ISSUER:
None
ITEM 7. MATERIAL TO BE FILED AS EXHIBIT:
Amended and Restated Seventh Allonge to Secured Promissory Note dated as
of August 24, 1999.
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CUSIP NO. 64120Q103 PAGE 6 OF 6 PAGES
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated: February 23, 2000 GLOBAL TECHNOLOGIES, LTD.
By: /s/ James W. Fox
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James W. Fox
AMENDED AND RESTATED
SEVENTH ALLONGE TO SECURED PROMISSORY NOTE
WHEREAS, the parties entered into a Seventh Allonge to Secured Promissory
Note dated August 24, 1999, attached to and forming a part of the Secured
Promissory Note, dated January 26, 1999, made by THE NETWORK CONNECTION, INC., a
Georgia corporation ("MAKER"), payable to the order of Interactive Flight
Technologies, Inc., a Delaware corporation, now known as Global Technologies,
Ltd. ("PAYEE"), in the original principal amount of $500,000 and in the
principal amount as of the date hereof of $3,122,757.
WHEREAS, the Seventh Allonge contained an inaccurate description of the
conversion calculation set forth in Paragraph 16;
WHEREAS, the parties now wish to amend and restate the Seventh Allonge to
correctly reflect the intent of the parties;
NOW THEREFORE, the parties agree that the Seventh Allonge is hereby amended
and restated to read in its entirety as follows:
ALLONGE, dated effective as of August 24, 1999, attached to and forming a
part of the Secured Promissory Note, dated January 26, 1999, as amended by the
Allonge to Secured Promissory Note dated January 29, 1999, the Second Allonge to
Secured Promissory Note dated March 19, 1999, the Third Allonge to Secured
Promissory Note dated March 24, 1999, the Fourth Allonge to Secured Promissory
Note dated May 10, 1999, the Fifth Allonge to Secured Promissory Note dated July
16, 1999, and the Sixth Allonge to Secured Promissory Note dated August 9, 1999
(collectively, the "NOTE"), made by THE NETWORK CONNECTION, INC., a Georgia
corporation ("MAKER"), payable to the order of GLOBAL TECHNOLOGIES, LTD., a
Delaware corporation ("PAYEE"), in the original principal amount of $500,000 and
in the principal amount as of the date hereof of $3,122,757.
1. In consideration of the payment by Payee of certain obligations of
Maker, the principal amount of the Note is hereby increased by One Million Two
Hundred Thousand Dollars ($1,200,000) to Four Million Three Hundred Twenty-Two
Thousand Seven Hundred Fifty Seven Dollars ($4,322,757). Accordingly, the first
paragraph of the Note is hereby amended as follows:
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FOR VALUE RECEIVED, the undersigned, The Network connection, Inc., a
Georgia corporation (the "MAKER"), hereby promises to pay to the order
of Interactive Flight Technologies, Inc., a Delaware corporation, its
successors and assigns (the "PAYEE"), the principal sum of Four
Million Three Hundred Twenty-Two Thousand Seven Hundred Fifty-Seven
Dollars ($4,322,757), together with interest on the outstanding
principal balance thereof accrued from the date hereof: (a) at the
fixed rate of 9.5% per annum in respect of all periods during which no
Event of Default (as such term is hereinafter defined) is continuing;
and (b) at the fixed rate of 12.5% in respect of all periods during
which any Event of Default is continuing. All payments of principal
and/or interest shall be paid in lawful money of the United States of
America in immediately available funds to an account designated by
Payee.
2. Paragraph 16 is hereby amended and restated in full to read as follows:
16. CONVERSION RIGHTS. Payee shall be entitled, at any time and from
time to time and in its sole discretion, to convert all or a portion of the
principal amount and accrued interest due under this Note into shares of
the Maker's Series C 8% Convertible Preferred Stock, $.01 par value, Stated
Value $1,000 per share (the "PREFERRED STOCK") or, at the option of Payee,
into the Maker's Common Stock (the "COMMON STOCK"). Any such conversion
into Preferred Stock shall be effected at the rate of one share of
Preferred Stock for each $1,000 due hereunder which Payee has elected to
convert (the "CONVERSION RATE"). If Payee elects to convert all or a
portion of the principal amount and accrued interest due under this Note
directly into the Common Stock, the number of shares to be issued shall be
calculated as if such amount had first been converted to Preferred Stock
hereunder (calculated without regard to any insufficiency of authorized
shares of Preferred Stock) and such resulting shares of Preferred Stock
had, in turn, immediately been converted to Common Stock at a conversion
price per share equal to the lowest of (a) $1.50, (b) 66.67% of the Average
Price (as hereafter defined), (c) the price per share at which the Maker,
after the date of this Allonge, issues and sells any Common Stock, or (d)
where coupled with the right of the purchaser(s) thereof to demand that the
Corporation register under the Securities Act of 1933 any Common Shares
(not theretofore registered) for which any warrants or options may be
exercised or any convertible, exchangeable or exercisable securities may be
converted, exercised or exchanged, (i) the exercise price of any such
warrants or options issued by the Maker after the date of this Allonge, or
(ii) the conversion rate, exchange rate or exercise price, respectively, of
any such convertible, exchangeable or exercisable security issued by the
Maker after the date of this Allonge, except for stock option agreements or
stock incentive agreements issued pursuant to employee benefit plans. For
purposes of this Paragraph 16, the term "Average Price" per share of Common
Stock means the average of the closing bid prices as reported on the Nasdaq
Stock Market (or if not then traded on such market, on such exchange or
quotation system where such shares are then traded) for the lowest five of
the twenty trading days immediately preceding the Conversion Date.
-2-
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Payee may elect to convert by delivering to Maker, by facsimile, telecopier
or other expedient means of transmission, a notice of conversion stating
(i) the principal amount and/or accrued interest to be converted, (ii) the
number of shares of Preferred Stock or Common Stock to be issued as a
result of such conversion; and (iii) the person(s) in whose name the
Preferred Stock or Common Stock is to be issued. The conversion of any
portion of this Note and the resulting issuance of Preferred Stock or
Common Stock shall be effective upon the date that Maker receives the
corresponding notice of conversion, and Maker shall deliver to Payee one or
more certificates evidencing such shares no later than five days following
such effective date. Upon a conversion of all amounts due hereunder, Payee
shall deliver the original Note (including all Allonges), marked "PAID," to
Maker no later than five days following the delivery to Maker of the
conversion notice. In the event of a conversion of less than all amounts
due hereunder, (A) no principal amount under the Note shall be deemed
converted unless and until all accrued interest under the Note shall be
first converted; and (B) the portion of the amounts due hereunder that are
so converted shall be deemed repaid. The parties shall mark on the grid
attached to the Fourth Allonge to Secured Promissory Note dated May 10,
1999 the facts related to such partial conversion and shall confirm the
accuracy of the entry by signing next to each such entry.
3. Any agreement to subordinate, or any subordination, of the indebtedness
represented by the Note to bank or finance company indebtedness, which may
heretofore have been given by Payee, is null and void and of no force or effect.
Maker represents and warrants to Payee that since execution of the Note, Payee
retains a first priority security interest in the Collateral granted by Maker to
Payee pursuant to that certain Security Agreement dated January 25, 1999 as
amended, ("SECURITY AGREEMENT"). The Maker's obligations under the Note, as
amended hereby, shall be and are deemed to be secured by the Collateral and
subject to the terms of the Security Agreement, all of which are confirmed and
ratified as of the date hereof, including, but not limited to, all of the
representations, warranties and covenants therein.
4. In all other respects, the Note is confirmed, ratified, and approved
and, as amended by this Amended and Restated Seventh Allonge, shall continue in
full force and effect.
IN WITNESS WHEREOF, Maker and Payee have caused this Amended and Restated
Seventh Allonge to be executed and delivered by their respective duly authorized
officers on this 10th day of December, 1999, to be effective as of the day and
year first above written.
THE NETWORK CONNECTION INC.
By: /s/ Morris C. Aaron
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Morris C. Aaron
Accepted and agreed to:
GLOBAL TECHNOLOGIES, LTD.
By: /s/ James W. Fox
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James W. Fox
