SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported) August 18, 2000
GLOBAL TECHNOLOGIES, LTD.
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(Exact Name of Registrant as specified in its charter)
Delaware 0-25668 86-0970492
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
The Belgravia, 1811 Chestnut Street, Suite 120, Philadelphia, PA 19103
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(Address of Principal Executive Offices, including Zip Code)
(215) 972-8191
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(Registrant's telephone number, including area code)
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Former Name or Former Address, If Changed Since Last Report
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION ASSETS
TRANSFER OF INTEREST IN INTER LOTTO (UK) LIMITED AND TERMINATION OF OPERATING
AGREEMENTS
On August 18, 2000, Global Technologies, Ltd. ("Global") and its
wholly-owned United Kingdom subsidiaries, GlobalTech Holdings Limited
("GlobalTech Holdings") and GTL Management Limited ("GTL Management") entered
into a "Deed" with Inter Lotto (UK) Limited ("Inter Lotto"), a United Kingdom
company licensed pursuant to an External Lottery Manager's Certificate issued by
the Gaming Board for Great Britain ("ELMC License") to operate lotteries on
behalf of charities in Great Britain, and certain of its principals which, in
substance, constituted a settlement agreement providing for the disengagement of
Global and its subsidiaries from Inter Lotto and its operations by (i)
transferring back to the other principals of Inter Lotto all of the GlobalTech
Holdings' capital stock in Inter Lotto; (ii) payment to GTL Management of an
amount equal to the value added tax rebate to Inter Lotto, plus interest, less
an amount to be retained by Inter Lotto for salaries; (iii) termination of the
Operating Agreements between GTL Management and Inter Lotto, (iv) cooperative
arrangements for Global and its subsidiaries to assist in the operation of Inter
Lotto through the end of the year; and (v) termination of litigation and waiver
of all claims and releases.
In April, 1999, Global and certain of its wholly-owned United Kingdom
subsidiaries entered into an arrangement with Inter Lotto under which GlobalTech
Holdings purchased 27.5% of the outstanding capital stock of Inter Lotto and GTL
Management entered into an Operating Agreement with Inter Lotto to run Inter
Lotto's lotteries and gaming activities. Simultaneously, GTL Leasing Limited
("GTL Leasing"), an indirect wholly-owned United Kingdom subsidiary of Global,
purchased computer equipment, which it leased to GTL Management for use in such
lottery and gaming operations. GTL Management entered into a further operating
agreement with Inter Lotto on January 13, 2000. The lottery and gaming business
under these agreements began with an official "launch" on April 4, 2000.
The August 18, 2000 "Deed" effectively terminates the April, 1999 and
January, 2000 arrangements and provides for a total separation of Inter Lotto
and Global and its subsidiaries by the end of the year 2000. Under the "Deed",
GlobalTech Holdings transferred all of its stock in Inter Lotto to the other
principals of Inter Lotto, to become effective the date upon which Inter Lotto
and its representatives vacate Inter Lotto's Dover Street address, which is
required to occur by September 30, 2000. The "Deed" terminates the Operating
Agreements and provides that Inter Lotto and GTL Management will together do
whatever is necessary to manage the lottery operations through December 31,
2000, including the maintenance of Inter Lotto's ELMC License during such
period. In consideration for the transfer of stock in Inter Lotto by GlobalTech
Holdings, Inter Lotto and its principals have agreed not to engage in the
business of the Daily Number Game or any similar three (3) or four (4) digit
lottery games within the United Kingdom of Great Britain for a period of two (2)
years following August 18, 2000.
2
<PAGE>
The financial terms of the August 18, 2000 "Deed" provide for the
allocation of approximately (pound)970,000 in Value Added Tax rebates, with
Inter Lotto retaining (pound)220,000 (for the payment of back salaries which
were the subject of disputes between Global and certain other principals of
Inter Lotto) and paying to GTL Management the balance of approximately
(pound)750,000. GTL Management will be paid all revenues from Inter Lotto
lottery operations through December 31, 2000, after payment for prizes,
charities and sales commissions. Additionally, there are provisions for the
resolution for certain other outstanding debts and obligations.
The August 18, 2000 "Deed" also operates as a general settlement agreement
and includes waivers of all claims and releases, including the withdrawal of a
"winding up petition" calling for the dissolution of Inter Lotto, filed in court
by one or more of the other principals of Inter Lotto.
GTL Leasing retains ownership of the computer networking hardware,
software, terminals and other equipment which serves as the infrastructure of
the lottery operations conducted under Inter Lotto's ELMC License and managed by
GTL Management. Such lottery equipment is leased by GTL Leasing to GTL
Management. In addition, GTL Management remains obligated under the agreement
with International Lottery and Totalizator Systems, Inc. for certain facilities
management services and technological support in connection with such lottery
equipment, which Global, through Global Leasing, purchased from them. This
agreement requires that GTL Management pay International Lottery and Totalizator
Systems, Inc. $72,000 per week, plus additional amounts based on any terminals
in excess of 3,500 which are installed and a percentage of average daily sales.
Global and its subsidiaries are currently investigating alternative
operating strategies for GTL Management and the use of its lottery equipment and
operating network following termination of the Inter Lotto lottery operations by
December 31, 2000. Such strategies include utilizing the network for operating
pools, lotteries and betting for established gaming companies, and to develop a
national linked bingo game in partnership with proprietary private clubs
throughout the United Kingdom. Global intends to have implemented an alternative
operating strategy by December 31, 2000, however, no assurance can be given that
it will be successful in doing so. If we are unable to successfully implement an
alternative operating strategy before the termination of Inter Lotto's lottery
operations, GTL Leasing's lottery equipment assets could be deemed impaired
under generally accepted accounting principals, as the carrying value of such
assets may not be fully recoverable in such event. Any "write down" of the value
of such assets due to such impairment could have a material adverse effect on
Global's financial condition.
3
<PAGE>
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(b) PRO FORMA FINANCIAL INFORMATION
The following pro forma unaudited financial information present
Global's pro forma unaudited condensed consolidated balance sheet as of
March 31, 2000 and Global's pro forma unaudited condensed consolidated
statements of operations for the eight month transition period ended June
30, 1999 ("Transition Period") and nine months ended March 31, 2000. The
pro forma unaudited financial information gives effect to the "Deed",
including (i) transferring back to the other principals of Inter Lotto all
of the GlobalTech Holdings' capital stock in Inter Lotto; (ii) payment to
GTL Management of an amount equal to the value added tax rebate to Inter
Lotto, plus interest, less an amount to be retained by Inter Lotto for
salaries; and (iii) termination of the Operating Agreement between GTL
Management and Inter Lotto. The pro forma adjustments were recorded as if
they had occurred, for purposes of the pro forma unaudited condensed
consolidated balance sheet, as of March 31, 2000 and, for the purposes of
the pro forma unaudited condensed consolidated statements of operations, as
of the beginning of the respective periods presented.
This pro forma unaudited financial information does not purport to
represent what Global's actual financial position and operating results
would have been had such events actually occurred on the aforementioned
dates. The pro forma unaudited financial information also does not purport
to serve as a forecast of Global's financial position or results of
operations for any future periods.
The pro forma adjustments are based upon currently available
information and upon certain assumptions that management believes are
reasonable in the circumstances. This pro forma financial information
should be read in conjunction with Global's audited consolidated financial
statements as of and for the Transition Period ended June 30, 1999
appearing in the Company's Form 10-KSB for fiscal 1999, and the unaudited
consolidated financial statements as of and for the nine months ended March
31, 2000 appearing in Global's Form 10-Q for the quarter then ended.
4
<PAGE>
GLOBAL TECHNOLOGIES, LTD.
AND SUBSIDIARIES
PROFORMA CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2000
UNAUDITED
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
ACTUAL DEBIT (CREDIT) PRO FORMA
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Assets (UNAUDITED)
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 1,030,549 $ 1,193,295 (1) $ 2,223,844
Restricted cash 463,405 463,405
Investments 93,024,088 93,024,088
Accounts receivable 21,087 21,087
Inventories 5,424,359 5,424,359
Prepaid expenses 708,518 708,518
Deferred tax asset 28,797,214 28,797,214
Other current assets 2,872,501 (1,542,831)(2) 1,329,670
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Total current assets 132,341,721 (349,536) 131,992,185
Investments 1,818,812 (818,812)(3) 1,000,000
Property and equipment 16,206,156 16,206,156
Intangible and other assets 8,000,709 8,000,709
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Total assets $ 158,367,398 $ (1,168,348) $ 157,199,050
============= ============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 3,468,809 $ $ 3,468,809
Accrued liabilities 6,044,928 6,044,928
Deferred revenue 2,108,152 2,108,152
Other current liabilities 297,986 297,986
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Total current liabilities 11,919,875 11,919,875
Non-current liabilities 1,945,765 1,945,765
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Total liabilities 13,865,640 13,865,640
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Minority interest 456,908 456,908
Stockholders' equity:
Series C 5% Convertible preferred stock 10 10
Class A common stock 104,722 104,722
Additional paid-in capital 126,815,873 126,815,873
Accumulated other comprehensive income:
Loss on foreign currency translation (196,695) (196,695)
Net unrealized gain (loss) on investments 89,962,703 89,962,703
Unrealized tax benefit of NOL carryforward 28,797,214 28,797,214
Accumulated deficit (101,438,977) 1,168,348 (4) (102,607,325)
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Total stockholders' equity 144,044,850 1,168,348 142,876,502
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Total liabilities and stockholders' equity $ 158,367,398 $ 1,168,348 $ 157,199,050
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</TABLE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED);
(1) To record receipt of Global's allocation of the Value Added Tax rebate.
(2) To record reciept of the total Value Added Tax rebate.
(3) To record sale of equity interest in Inter Lotto for nominal proceeds.
(4) To record loss on sale of equity interest in Inter Lotto and payment of
Inter Lotto's allocation of the Value Added Tax rebate.
5
<PAGE>
GLOBAL TECHNOLOGIES, LTD.
AND SUBSIDIARIES
PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED MARCH 31, 2000
UNAUDITED
<TABLE>
<CAPTION>
PRO FORMA
ACTUAL ADJUSTMENTS PRO FORMA
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(UNAUDITED)
<S> <C> <C> <C>
Revenue:
Equipment sales $ 5,597,909 $ $ 5,597,909
Service income 59,827 59,827
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5,657,736 5,657,736
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COSTS AND EXPENSES:
Cost of equipment sales 3,680,584 3,680,584
Cost of service income 36,292 36,292
General and administrative expenses 14,346,353 (6,332,093)(1) 8,014,260
Non-cash compensation expense 916,612 916,612
Expenses associated with investments 1,656,587 1,656,587
Depreciation and amortization expense 1,023,172 1,023,172
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21,659,600 (6,332,093) 15,327,507
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Operating loss (16,001,864) 6,332,093 (9,669,771)
OTHER:
Interest expense (54,120) (54,120)
Interest income 573,639 573,639
Equity in loss of nonconsolidated affiliates (1,120,776) 1,036,125(2) (84,651)
Other income (expense) (19,697) (19,697)
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NET LOSS BEFORE MINORITY INTEREST AND
PREFERRED STOCK DIVIDEND (16,622,818) 7,368,218 (9,254,600)
Minority interest 811,739 811,739
Cummulative dividend on preferred stock (61,644) (61,644)
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NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS $(15,872,723) $ 7,368,218 $ (8,524,202)
============ ============ ============
BASIC AND DILUTED NET LOSS PER SHARE OF COMMON STOCK $ (1.66) $ (0.89)
WEIGHTED AVERAGE SHARES OUTSTANDING 9,550,955 9,550,955
</TABLE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED);
(1) To eliminate the expenses associated with the launch of the lottery
operations which were advanced to Inter Lotto under the Operating
Agreement, but reserved for (and expensed) by Global.
(2) To eliminate Global's portion of the loss of Inter Lotto for the period.
6
<PAGE>
GLOBAL TECHNOLOGIES, LTD.
AND SUBSIDIARIES
PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE TRANSITION ENDED JUNE 30, 1999
UNAUDITED
<TABLE>
<CAPTION>
PRO FORMA
ACTUAL ADJUSTMENTS PRO FORMA
------------- -------------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Revenue:
Equipment sales $ 875,957 $ $ 875,957
Service income 706,504 706,504
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1,582,461 -- 1,582,461
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COSTS AND EXPENSES:
Cost of equipment sales 1,517,323 1,517,323
Cost of service income 445,585 445,585
General and administrative expenses 6,718,905 6,718,905
Special Charges 2,485,660 2,485,660
Expenses associated with investments 550,000 550,000
Reversal of warranty, maintenance and
commission accruals (7,151,393) (7,151,393)
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4,566,080 4,566,080
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Operating loss (2,983,619) -- (2,983,619)
OTHER:
Interest expense (74,684) (74,684)
Interest income 1,060,229 1,060,229
Equity in loss of nonconsolidated affiliates (195,704) 167,492(1) (28,212)
Gain on sale of assets 133,396 133,396
Other income (expense) 61,252 61,252
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NET LOSS BEFORE MINORITY INTEREST AND
PREFERRED STOCK DIVIDEND (1,999,130) 167,492 (1,831,638)
Minority interest (376,705) (376,705)
Cummulative dividend on preferred stock (33,333) (33,333)
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NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS $(2,409,168) $ 167,492 $(2,180,424)
=========== =========== ===========
BASIC AND DILUTED NET LOSS PER SHARE OF COMMON STOCK $ (0.44) $ (0.40)
WEIGHTED AVERAGE SHARES OUTSTANDING 5,416,124 5,416,124
</TABLE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS (UNAUDITED);
(1) To eliminate Global's portion of the loss of Inter Lotto for the period.
7
<PAGE>
(c) EXHIBITS
2.1 Deed, dated August 18, 2000, relating to the transfer of stock in
Inter Lotto (UK) Limited and the termination of the Operating
Agreements, by and among Inter Lotto (UK) Limited, GTL Management
Limited, Global Technologies, Ltd., GlobalTech Holdings Limited,
The Right Honourable The Lord Mancroft, Roy Fisher, and Douglas
Smith.
8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GLOBAL TECHNOLOGIES, LTD.
Dated: September 5, 2000 By: /s/ Irwin L. Gross
------------------------------------
Name: Irwin L. Gross
Title: Chairman and Chief Executive
Officers
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<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description
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2.1 Deed, dated August 18, 2000, relating to the transfer
of stock in Inter Lotto (UK) Limited and the
termination of the Operating Agreements, by and among
Inter Lotto (UK) Limited, GTL Management Limited,
Global Technologies, Ltd., GlobalTech Holdings
Limited, The Right Honourable The Lord Mancroft, Roy
Fisher, and Douglas Smith.
