As filed with the Securities and Exchange Commission on April 14, 2000
Registration No. 333-32772
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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GLOBAL TECHNOLOGIES, LTD.
(Exact Name of Registrant as specified in its Charter)
Delaware 86-0970492
(State or other jurisdiction (I.R.S. Employer
of incorporation) Identification Number)
The Belgravia, 1811 Chestnut Street, Suite 120, Philadelphia, PA 19103
(215) 972-8191
(Address, including Zip Code, and Telephone Number, including Area Code,
of Registrant's Principal Executive Offices)
S. Lance Silver, General Counsel
The Belgravia, 1811 Chestnut Street, Suite 120, Philadelphia, PA 19103
Telephone: (215) 972-8191
(Name and Address, including Zip Code and Telephone Number,
including Area Code, of Agent for Service)
Copies of all communications to:
Richard P. Jaffe, Esquire
Mesirov Gelman Jaffe Cramer & Jamieson, LLP
1735 Market Street, 38th Floor
Philadelphia, PA 19103-7598
Telephone: (215) 994-1046 Telefax: (215) 994-1111
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APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: As soon as practicable
after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following: [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If the delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the SEC acting pursuant to said Section 8(a), may
determine.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED APRIL 14, 2000
PROSPECTUS
GLOBAL TECHNOLOGIES, LTD.
1,850,232 SHARES
CLASS A COMMON STOCK
This Prospectus relates to the offer for sale from time to time of up to
1,850,232 shares of Class A Common Stock, par value $0.01 per share, of Global
Technologies, Ltd., a Delaware corporation, by some of our stockholders who, in
some cases, hold Series C Convertible Preferred Stock and warrants of the
company. Although we would receive certain benefits from the conversion of the
Series C Convertible Preferred Stock and possibly receive exercise proceeds from
the exercise of the warrants, we will not receive any of the proceeds from the
resale of these shares by the selling stockholders. For more information on the
selling stockholders, the Series C Convertible Preferred Stock and the warrants,
please see "Selling Security Holders" beginning on Page 22.
Global's Class A Common Stock is traded on the Nasdaq National Market under
the symbol "GTLL." The closing sale price of our Class A Common Stock as
reported by the Nasdaq National Market on April 7, 2000 was $13.125 per share.
PLEASE SEE "RISK FACTORS" BEGINNING ON PAGE 6 FOR A DISCUSSION OF CERTAIN
FACTORS YOU SHOULD CONSIDER IN CONNECTION WITH ANY DECISION TO PURCHASE SHARES
IN THIS OFFERING.
The selling stockholders may sell the shares of Class A Common Stock
described in this prospectus in public or private transactions, on or off the
Nasdaq National Market, at prevailing market prices, or at privately negotiated
prices. The selling stockholders may sell shares directly to purchasers or
through brokers or dealers. Brokers or dealers may receive compensation in the
form of discounts, concessions or commissions from the selling stockholders. For
more information on how the shares may be distributed, please see "Plan of
Distribution" beginning on Page 25.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED ON THE
ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is _____________, 2000.
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TABLE OF CONTENTS
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS............................. 4
AN OVERVIEW OF OUR BUSINESS................................................. 5
RISK FACTORS................................................................ 6
RISKS PARTICULAR TO GLOBAL.................................................. 6
RISKS PARTICULAR TO OUR PARTNER COMPANIES................................... 16
USE OF PROCEEDS............................................................. 22
SELLING SECURITY HOLDERS.................................................... 22
PLAN OF DISTRIBUTION........................................................ 25
DISCLOSURE OF THE SEC'S POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES................................................ 27
EXPERTS..................................................................... 27
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Throughout this prospectus, "Global Technologies," "Global," "we," "us,"
and "our," and other possessive and other derivations thereof, refer to Global
Technologies, Ltd. and its consolidated subsidiaries, unless the context
otherwise requires. All trademarks and trade names appearing in this prospectus
are the property of Global, unless otherwise indicated.
This prospectus is part of a registration statement we filed with the SEC.
Global may amend or supplement this prospectus from time to time by filing
amendments or supplements as required. Please read this entire prospectus and
any amendments or supplements carefully before making your investment decision
to purchase shares in this offering. You should rely only on the information
provided in, and incorporated by reference into, this prospectus. You should not
assume that the information in this prospectus is accurate as of any date other
than the date on the front of the document. We have authorized no one to provide
you with different information. We are not making an offer of these securities
in any state where the offer is not permitted.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any such documents that we have
filed. You may do so at the Commission's public reference room, Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. These documents
are also available at the following Regional Office: 7 World Trade Center, Suite
1300, New York, New York 10048. Please call the Commission at 1-800-SEC-0330 for
further information on the public reference rooms.
Our SEC filings are also available to the public on the Commission's web
site at http://www.sec.gov. Our web site can be found at http://www.gtll.com.
INCORPORATION OF DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" into this registration
statement some of the information we have already filed with the SEC. As a
result, we can disclose important information to you by referring you to those
documents. These incorporated documents contain important business and financial
information about us that is not contained in or delivered with this prospectus.
The information incorporated by reference is considered to be part of this
prospectus. Moreover, later information filed with the SEC by us in the future
will update and supersede this information and similarly, be considered to be a
part of this prospectus. We incorporate by reference the documents listed below,
all filings made by us with the SEC under Section 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 after the date of the initial registration
statement, as amended, and prior to effectiveness of the registration statement,
and any future filings made by us with the SEC under Section 13(a), 13(c), 14 or
15(d) of the Securities Exchange Act of 1934:
* Our Annual Report on Form 10-KSB for the fiscal year ended October 31,
1998.
* Our Quarterly Report on Form 10-QSB for the fiscal quarter ended
January 31, 1999.
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* Our Current Report on Form 8-K filed on June 1, 1999.
* Our Quarterly Report on Form 10-QSB for the fiscal quarter ended April
30, 1999.
* Our Amended Current Report on Form 8-K filed on August 2, 1999.
* Our Definitive Proxy Statement filed August 17, 1999.
* Our Current Report on Form 8-K filed on August 31, 1999.
* Our Definitive Proxy Statement filed September 16, 1999.
* Our Transition Report on Form 10-KSB for the transition period ended
June 30, 1999.
* Our Quarterly Report on Form 10-QSB for the fiscal quarter ended
September 30, 1999.
* Our Quarterly Report on Form 10-QSB for the fiscal quarter ended
December 31, 1999.
* Our Two Amended Quarterly Reports on Form 10-QSB for the fiscal
quarter ended December 31, 1999.
* Our Current Report on Form 8-K filed on February 28, 2000.
* The description of the Class A Common Stock as set forth in Global's
registration statement on Form 8-A filed with the SEC on December 31,
1994, as amended by Global's registration statement on Form 8-A/A
filed with the SEC on March 8, 1995, and any other amendments or
reports thereto filed with the SEC for the purpose of updating such
description.
We will provide, without charge, to each person to whom a prospectus is
delivered, a copy of these documents that are incorporated by reference into,
but not delivered with, this prospectus. You may request a copy of these filings
by writing or telephoning us at the following address:
S. Lance Silver, General Counsel
Global Technologies, Ltd.
The Belgravia, 1811 Chestnut Street, Suite 120
Philadelphia, PA 19103
Telephone number: 215-972-8191
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
This prospectus, and certain information incorporated herein by reference,
include "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. This Act provides a "safe harbor" for
forward-looking statements to encourage companies to provide prospective
information about themselves so long as they identify these statements as
forward-looking and provide meaningful cautionary statements identifying
important factors that could cause actual results to differ from the projected
results.
All statements other than statements of historical fact we make in this
prospectus or in any document incorporated by reference are forward-looking. In
particular, the statements herein, and in the incorporated information,
regarding our future results of operations or financial
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position are forward-looking statements. In some cases, you can identify
forward-looking statements by terminology such as "may," "will," "should,"
"expect," "plan," "anticipate," "believe," "estimate," "predict," "potential,"
or "continue" or the negative of such terms or other comparable terminology.
Forward-looking statements reflect our current expectations and are
inherently uncertain. For these statements, we claim the protection of the safe
harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995. You should understand that future events, in
addition to those discussed elsewhere in this prospectus, particularly under
"Risk Factors," and also in other filings made by us with the Securities and
Exchange Commission, could affect our future operations and cause our results to
differ materially from those expressed in our forward-looking statements. The
cautionary statements made in this prospectus and in the incorporated
information should be read as being applicable to all related forward-looking
statements contained in this prospectus and the incorporated information.
AN OVERVIEW OF OUR BUSINESS
We are a technology incubator that invests in, develops and manages
emerging growth companies in the e-commerce, Internet, networking solutions,
information and entertainment systems, telecommunications and gaming industries.
We currently hold common stock and convertible preferred stock representing
approximately 81% of the outstanding common stock of The Network Connection,
Inc. on a fully converted basis. The Network Connection is publicly-traded on
the Nasdaq SmallCap Market under the ticker symbol "TNCX." The Network
Connection designs, manufactures, markets, installs and maintains advanced,
high-end, high-performance computer servers and interactive, broad-band
information and entertainment systems, including the procurement and provision
of the content available through these systems. The Network Connection's systems
are marketed primarily to hotel and time-share properties (InnView(TM)), cruise
lines (CruiseView(TM)), educational systems (EduView(R)) and corporate training
departments, and long-haul passenger train manufacturers and operators
(TrainView(TM)).
We also hold convertible preferred stock and common stock representing
approximately 15% of the outstanding common stock of U.S. Wireless Corporation
on a fully converted basis. U.S. Wireless is publicly-traded on the Nasdaq
SmallCap Market under the ticker symbol "USWC." U.S. Wireless has developed
proprietary network-based wireless location technology designed to enable
wireless carriers and others to provide their customers with location-based
services and applications. These services include enhanced 411 and 911 services,
live navigation assistance, asset and vehicle tracking, intelligent
transportation systems, location sensitive billing and network management
systems. U.S. Wireless' RadioCamera(TM) location system is a geographic location
system that pinpoints the locations of mobile telephone subscribers within a
wireless network. The RadioCamera(TM) system measures the radio frequency
pattern or the phase (i.e., the timing and the amplitude path) of all the radio
frequency signals from a caller to a single cell site.
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We also hold 27.5% of Inter Lotto (UK) Limited, a United Kingdom company
that is licensed to operate lotteries on behalf of charities in Great Britain.
GTL Management Limited, an indirect, wholly-owned subsidiary of Global, has an
exclusive contract with Inter Lotto to provide management services in connection
with the operation of these lotteries. The UK lottery, called "The Daily
Number," was officially launched on April 4, 2000. Currently, Daily Number
lottery tickets are available through a network of approximately 3,000 terminals
located in the Northeast and Northwest regions of Great Britain, encompassing
the Manchester, Liverpool and Yorkshire areas, which terminals are expected to
increase to 3,500 during April 2000. In addition, we plan to utilize the
Internet as a vehicle for lottery play for UK residents and product sales
beginning in the second half of calendar year 2000. As such, we have contracted
with eLottery, a subsidiary of eLot Inc., a publicly-held corporation trading on
the Nasdaq National Market, to initiate web-based sales of lottery play through
a secure Internet interface with the lottery system by late June of 2000.
Our other holdings include an approximately 4% equity interest in
Shop4Cash.com, Inc., a privately held, cash-incentive, Internet shopping portal
with a growing base of approximately 250 affiliated merchants, and a 24.5%
equity interest in Donativos S.A. de C.V., a company that has developed and is
operating a gaming center in Monterrey, Mexico. We are currently assessing exit
strategies with respect to the Donativos investment.
RISK FACTORS
Making an investment in the Class A Common Stock of Global Technologies,
Ltd. is highly speculative and involves a high degree of risk. Before making an
investment, you should be aware of the following risk factors and should review
carefully the financial and other information about Global provided or
incorporated into this prospectus.
RISKS PARTICULAR TO GLOBAL
WE PLAN TO SELL OR FURTHER BORROW AGAINST SOME OF OUR INVESTMENTS TO MEET OUR
FINANCIAL OBLIGATIONS OVER THE NEXT 90 DAYS AND THERE IS RISK THAT WE MAY NOT BE
ABLE TO DO SO AT TIMES OR PRICES NECESSARY TO MEET THESE OBLIGATIONS.
As of April 7, 2000, we had a purchase commitment of approximately $5.4
million for the purchase of the hardware and software that will serve as the
network operating center of the on-line lottery system that we are currently
developing in the United Kingdom. The amount of this commitment includes the
cost to us of the 3,500 terminals being installed during Phase I of the project
(see below), the vast majority of which have been installed in the retail
outlets where lottery players will be able to purchase lottery tickets. We also
have obligations for approximately an additional $2.6 million to other vendors,
primarily advertising and promotional firms, in connection with our lottery
project.
We are also obligated to lend The Network Connection up to $5.0 million
pursuant to a revolving credit facility agreement. As of April 7, 2000, The
Network Connection had drawn $1,580,000 against this line of credit. The Network
Connection has recently received
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orders to install its InnView(TM) interactive information and entertainment
system in three hotels. Absent alternative sources of financing for The Network
Connection, it will likely continue to draw on the credit facility to finance
the production of some or all of the equipment necessary for such installations,
as well as to cover other commitments and operating expenses.
The lottery purchase commitment and related expenses, together with
projected draws under The Network Connection credit facility and other operating
expenses, exceed currently available cash and cash equivalents, and short-term
investments , which were $5.9 million, and currently remaining available credit
under the line of credit with Merrill Lynch, which was $2.0 million, each as of
April 7, 2000.
Although we recently obtained $10.0 million in equity financing from the
issuance of our Series C Convertible Preferred Stock , and obtained a $10
million line of credit facility with Merrill Lynch, which has been secured with
a pledge of one million of our shares of common stock of U.S. Wireless, we plan
to sell or further borrow against some of our investments to cover our financial
obligations and to finance further development and expansion of the lottery
project. We provide no assurance that we will be able to sell or borrow against
these assets at the planned times or for the prices necessary to meet these
obligations or planned development of the lottery project in a timely manner.
Failure to do so may prevent or delay further development and expansion of our
lottery project beyond the initial approximately 3,500 terminals in Northeast
and Northwest Great Britain or cause us to default under the credit facility to
The Network Connection . Such failure, delay or default would have a material
adverse effect on our lottery project, The Network Connection and our financial
condition, and may subject us to legal liability.
ALL OR A PORTION OF THE PLEDGED COLLATERAL, CONSISTING OF ONE MILLION OF OUR
SHARES OF COMMON STOCK OF U.S. WIRELESS CORPORATION, WHICH WE HAVE PLEDGED TO
SECURE THE MERRILL LYNCH CREDIT FACILITY, MAY BE LIQUIDATED TO SATISFY OUR
OBLIGATIONS TO MERRILL LYNCH AND COULD ALSO RESULT IN ADVERSE TAX CONSEQUENCES.
On April 5, 2000, we entered into a line of credit facility with Merrill
Lynch in which Merrill Lynch agreed to advance up to $10 million based upon a
percentage of the value of securities pledged as collateral to secure amounts
drawn under the line of credit. Principal amounts borrowed under the line,
together with accrued interest at an annual rate equal to the London Inter-bank
Offer Rate (LIBOR) plus 1.25%, are payable upon demand by Merrill Lynch. As of
April 7, 2000, we have borrowed $8 million under the Merrill Lynch line of
credit facility. To secure such borrowing, we have pledged 1,000,000 of our
shares of common stock of U.S. Wireless to Merrill Lynch.
If the amount owed under the Merrill Lynch credit facility at any time
exceeds 40% of the market value of the shares of U.S. Wireless pledged to
Merrill Lynch, we will be subject to a maintenance call which would require us
to pledge additional securities which are acceptable to Merrill Lynch as
collateral or require us to reduce the outstanding balance owed under the
Merrill Lynch credit facility through payment in cash. We provide no assurance
that
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we would have sufficient additional collateral or funds necessary to pay
outstanding amounts owed under the Merrill Lynch credit facility in the event of
a maintenance call or upon demand for payment by Merrill Lynch, the failure of
either of which would result in the liquidation of our shares of U.S. Wireless
pledged to Merrill Lynch to satisfy outstanding obligations under the Merrill
Lynch credit facility, adverse tax consequences resulting from such liquidation,
and a material adverse effect on our financial condition.
OUR PARTNER COMPANIES ARE GROWING RAPIDLY AND WE MAY HAVE DIFFICULTY ASSISTING
THEM MANAGE THEIR GROWTH.
Our partner companies have grown, and we expect them to continue to grow
rapidly. This growth requires our partner companies to:
* hire new employees;
* aggressively advertise and promote their products and services;
* modify and expand the current array of products and services offered;
and
* push product into new markets where we believe that significant market
share and profitability may be achieved.
Such growth is placing a strain on the limited resources of our partner
companies and the limited resources we can allocate to assist them. The funds
required to support this growth may require us to forego acquisition
opportunities that would otherwise be consistent with our business strategy of
investing in, developing and managing emerging growth companies in the
e-commerce, Internet, networking solutions, information and entertainment
systems, telecommunications and gaming industries.
WE ARE A DEFENDANT IN A MULTI-DISTRICT CLASS ACTION LAWSUIT THAT IF DECIDED
ADVERSELY TO US COULD RESULT IN A LOSS OF OUR ASSETS.
The business strategy under former management was the development,
assembly, installation and operation of computer-based, in-flight entertainment
networks that provided passengers the opportunity to view movies, play computer
games and gamble (where legally permissible) through an in-seat video
touch-screen. The main contract with respect to that entertainment network was
with Swissair. On September 2, 1998, Swissair flight 111 crashed. The aircraft
involved in the crash was a McDonnell Douglas MD-11 equipped with the
entertainment network developed by former management. A large number of claims
have been filed by the families of the victims of the crash. These claims have
been consolidated into a multi-district class action litigation in which we,
together with Swissair, Boeing, DuPont and a number of other companies, are a
defendant. Our aviation insurer is defending us in the action. We have $10.0
million in insurance coverage related to the action. We also have an umbrella
policy for an additional $10.0 million in coverage; however, we are currently
litigating the applicability of this policy to the action. If we do not settle
the multi-district litigation within our policy limits, or if we are found
liable for an amount in excess of these limits, our business would be adversely
affected. If found liable for an amount substantially in excess of the limits of
our coverage, we could lose all of our assets.
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WE HAVE A LIMITED OPERATING HISTORY UPON WHICH YOU MAY EVALUATE US.
We were formed in February 1994. Until May 1998, we were engaged in the
business of development, assembly, installation and operation of computer-based,
in-flight entertainment networks, at which time former management decided to
exit that business and to pursue opportunities in the dry-cleaning industry. In
September 1998, the former board of directors of Global was removed from office
and replaced by our current board. The current board then appointed a new
management team and put together our current business strategy of investing in,
developing and managing emerging growth companies in the e-commerce, Internet,
networking solutions, information and entertainment systems, telecommunications
and gaming industries.
We have a limited operating history under our new business strategy and new
management on which you will be able to evaluate our business and prospects.
Each of our partner companies is in the early stage of its development. Our
business and prospects must be considered in light of the risk, expense and
difficulties frequently encountered by companies in early stages of development,
particularly companies in new and rapidly evolving markets such as e-commerce,
Internet, networking solutions and telecommunications. If we are unable to
effectively allocate our resources and help grow existing partner companies, we
may be unable to execute our business strategy and our stock price may be
adversely affected.
OUR BUSINESS DEPENDS ENTIRELY ON THE PERFORMANCE OF OUR PARTNER COMPANIES, WHICH
IS UNCERTAIN.
We own interests in and help our partner companies operate their respective
businesses. Each of our partner companies is engaged in a different operating
business, and consequently is subject to a set of risks particular to its
business. Material risks relating to our partner companies are set forth below
under "Risks Particular to our Partner Companies." If our partner companies do
not succeed, the value of our investments in such companies and our stock price
could decline.
Our $32.6 million in total assets as of December 31, 1999 included
approximately $27.5 million of assets of our consolidated subsidiaries and
investments in our other partner companies. The carrying value of our partner
company ownership interests includes our original acquisition cost and the
effect of accounting for certain of our partner companies under the equity
method of accounting. The carrying value of our partner companies will be
impaired and decrease if one or more of our partner companies do not succeed.
The carrying value of our partner companies is not marked to market. As such, a
decline in the market value of one of our publicly-traded partner companies may
impact our financial position by not more than the carrying value of the partner
company. However, such a decline would likely affect our stock price.
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WE HAVE A HISTORY OF LOSSES AND EXPECT CONTINUED LOSSES IN THE FORESEEABLE
FUTURE.
For the quarter ended December 31, 1999 we lost approximately $6 million.
For the quarter ended September 30, 1999 we lost approximately $0.5 million.
This loss included a profit from the approximately $5.3 million sale by The
Network Connection of 195 Cheetah(TM) multimedia video servers to schools in
Georgia. Without the effect of this gain on our net results we would have
incurred significantly greater losses for that quarter. We changed our fiscal
year end from October 31 to June 30. For the eight-month transition period ended
June 30, 1999 we lost $2.4 million. In addition, under prior management, we
incurred net losses of $7.3 million in 1998 and $51 million in 1997. Excluding
the effect of any future non-operating gains, we expect to continue to incur
losses for the foreseeable future and, if we ever have profits, we may not be
able to sustain them.
We expect to have a significant net loss for the quarter ended March 31,
2000. Our expenses will increase as we continue to implement our business model.
Specifically, expenses will increase:
* in the event we hire additional employees and lease more office space
to broaden our partner company support capabilities.
* in connection with the continued development of our UK lottery
project, which will require significant expenditures for the hiring of
additional qualified management personnel to operate and grow the
lottery, for progress payments under the purchase agreement for the
equipment that comprises the infrastructure of the lottery, and for
the advertising and promotion of the lottery.
* with respect to The Network Connection, in the event that it continues
to draw on the credit facility for funds to hire additional management
personnel and to finance production and installation of its systems
and other operating expenses.
* as we explore acquisition opportunities and alliances with other
companies.
* as we facilitate business arrangements among our partner companies.
Expenses are also expected to increase due to the potential effect of
goodwill amortization and other charges resulting from potential future
acquisitions. If any of these and other expenses are not accompanied by
increased revenue, our losses will be greater than we anticipate.
OUR REVENUES ARE SUBSTANTIALLY DEPENDENT ON OUR OPERATING SUBSIDIARIES.
Our consolidated financial statements include our accounts and the accounts
of our wholly-owned subsidiaries:
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* GlobalTech Holdings Limited
* GTL Management Limited
* Interactive Flight Technologies (Gibraltar) Limited
* GTL Lottoco, Inc.
* GTL Subco, Inc.
* GTL Investments
* GTL Leasing Limited
* Lottery Sales Company Limited
* MTJ Corp.
and our majority-owned and controlled subsidiary, The Network Connection, and
its wholly-owned subsidiary TNCi UK Limited. The ownership interest of minority
shareholders in The Network Connection are recorded as "minority interest" on
our condensed consolidated financial statements. We generally would not
consolidate with our results of operations the results of operations of a
partner company in which we held less than a 50% voting interest and otherwise
did not maintain management control.
For the quarters ended December 31 and September 30, 1999, the revenues of
The Network Connection represented 100% of our total revenues, and for the
eight-month transition period ended June 30, 1999, revenues from The Network
Connection represented approximately 61% of our revenues.
At April 7, 2000, we owned approximately 81% of the aggregate voting
interests of The Network Connection. If our voting ownership of any of our
operating subsidiaries, particularly The Network Connection, were to decrease
below 50% and we did not maintain management control, we would most likely not
continue to consolidate their results of operations with our results of
operations. While this would affect our earnings per share only to the extent of
our ownership change, the presentation of our consolidated statement of
operations and balance sheet would change dramatically. In addition,
fluctuations and decreases in the revenues of any of our subsidiaries,
particularly The Network Connection, will have a correlative effect on our
revenues.
WE MAY NOT HAVE OPPORTUNITIES TO ACQUIRE INTERESTS IN ADDITIONAL COMPANIES.
We may be unable to identify companies that complement our strategy. Even
if we identify a company that complements our strategy, we may be unable to
acquire an interest in the company for many reasons, including:
* failure to agree on the terms of the acquisition;
* incompatibility between our management and management of the company;
* competition from other potential acquirers; and
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* lack of capital resources needed to acquire an interest in the
company.
If we cannot acquire interests in additional companies, our strategy to
build a network of technology partner companies that will enhance stockholder
value may not succeed.
WE MAY BE UNABLE TO MANAGE NEWLY ACQUIRED PARTNER COMPANIES.
We plan to continue to acquire interests in e-commerce, Internet,
telecommunications, networking solutions and gaming companies to complement our
business strategy. Any additional acquisitions will likely place strain on our
limited resources and our ability to manage our partner companies. Risks related
to future acquisitions include:
* disruption in our ongoing support of our partner companies,
distracting our management and other resources and making it difficult
to maintain our standards, controls and procedures;
* acquisition of interests in companies in markets in which we have
little experience; and
* increased debt or issuance of equity securities to fund future
acquisitions, which may be dilutive to existing shareholders.
OUR SUCCESS DEPENDS UPON OUR SENIOR MANAGEMENT AND THE KEY PERSONNEL OF OUR
PARTNER COMPANIES.
Our success depends upon the continued employment of and performance by our
senior management, particularly our Chairman and Chief Executive Officer, Irwin
L. Gross, and the key personnel of our partner companies. It could have a
material adverse effect on us if our senior management team do not continue
their relationships with us, or if our partner companies are unable to hire and
retain a sufficient number of qualified management, professional, technical and
marketing personnel.
THE MARKET PRICE FOR OUR STOCK IS AND WILL LIKELY CONTINUE TO BE VOLATILE.
The market price for our stock has been volatile and has fluctuated
significantly to date. The trading price of our stock is likely to continue to
be highly volatile. In addition, the stock market in general and the market for
technology companies in particular, have experienced extreme price and volume
fluctuations. These broad market and industry factors may materially and
adversely affect the market price of our common stock, regardless of our actual
operating performance. In the past, following periods of volatility in the
market price of a company's securities, securities class-action litigation has
often been instituted against such companies. Such litigation, if instituted,
could result in substantial costs and a diversion of management's attention and
resources, which would have a material adverse effect on our business, financial
condition and results of operations.
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FLUCTUATIONS IN OUR QUARTERLY RESULTS WILL LIKELY CAUSE FLUCTUATIONS IN OUR
STOCK PRICE.
We expect that our quarterly results will fluctuate significantly due to
many factors, including:
* the operating results of our operating subsidiaries;
* changes in equity, losses or income and amortization of goodwill
related to the acquisition or divestiture of interests in partner
companies;
* changes in our methods of accounting for our partner company
interests, which may result from changes in our ownership percentages
of our partner companies;
* sales of equity securities by our partner companies, which could cause
us to recognize gains or losses under applicable accounting rules;
* the pace of development or a decline in growth of the markets in which
our partner companies operate and competition with respect to the
technologies, products and services offered by our partner companies;
* exchange rate fluctuations, to the extent that we generate revenues
from foreign operations;
* intense competition from other potential acquirers of prospective
partner companies, which could increase our cost of acquiring
interests in additional companies; and
* our ability effectively to manage our growth and the growth of our
partner companies.
If our operating results in one or more quarters do not meet securities
analysts' or your expectations, the price of our stock could decrease. In
addition, we expect that the price of our common stock will fluctuate in
response to announcements by us or our competitors with respect to acquisitions,
divestitures and other corporate developments.
WE MAY HAVE TO BUY, SELL OR RETAIN ASSETS WHEN WE WOULD OTHERWISE NOT WISH TO IN
ORDER TO AVOID REGISTRATION UNDER THE INVESTMENT COMPANY ACT OF 1940.
Generally, a company may be required to register under the Investment
Company Act and comply with significant restrictions if its investment
securities exceed 40% of the company's total assets, or if it holds itself out
as being primarily engaged in the business of investing, reinvesting or trading
in securities. A company is generally not required to register under the
Investment Company Act if less than 45% of its total assets consist of, and less
than 45% of its net income is derived from, securities (other than government
securities and securities of majority-owned subsidiaries and companies primarily
controlled by it).
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We believe that we are not an investment company, as that term is defined
under the Investment Company Act, because our non-operating subsidiaries make up
less than 45% of our total assets and net income. It is not feasible for us to
register as an investment company because the Investment Company Act regulations
are inconsistent with our strategy of acquiring interests in, developing,
operating and managing our partner companies. As the values of our currently
held investment and non-investment securities change, and if we acquire
additional investment securities, it is possible that we could be subject to
regulation under the Investment Company Act. If that were to happen, we could
ask for exemptive relief from the Securities and Exchange Commission. We are
also able to rely once every three years on a one-year temporary exemption from
the registration requirements of the Investment Company Act. If we were not able
to obtain exemptive relief and the one-year temporary exemption were no longer
available, we might need to take certain actions to avoid regulation under the
Investment Company Act. We might be compelled to acquire additional income or
loss generating assets that we might not otherwise have acquired, be forced to
forego opportunities to acquire interests in companies that would be important
to our strategy or be forced to forego the sale of minority interests we would
otherwise want to sell. In addition, we might need to sell some assets
considered to be investment securities, including interests in partner
companies. Any of these actions could adversely affect our business.
WE MAY BE UNABLE TO OBTAIN MAXIMUM VALUE FOR OUR PARTNER COMPANY INTERESTS.
We have significant positions in our partner companies. While we do not
anticipate selling significant portions of our investments in our partner
companies in the foreseeable future, if we were to divest all or part of an
investment in a partner company, we may not receive maximum value for this
position. For partner companies with publicly-traded stock, we may be unable to
sell our interest, or portions thereof, at then-quoted market prices.
Furthermore, for those partner companies that do not have publicly-traded stock,
the realizable value of our interests may ultimately prove to be lower than the
carrying value currently reflected in our consolidated financial statements.
OUR GLOBAL PRESENCE EXPOSES US TO CULTURAL DIFFERENCES, CURRENCY FLUCTUATIONS
AND POLITICAL INSTABILITY.
We have invested in foreign operations and may consider additional projects
outside the United States. Our international presence exposes us to several
risks, including the following:
* CULTURAL DIFFERENCES. In transacting business in foreign countries, we
seek to partner with entities from those countries and to hire
professional consultants to help us determine whether products and
services we propose to offer will be accepted by the people who live
there. This process does not, however, ensure acceptance. Our failure
to choose acceptable products and services to offer abroad will have
an adverse effect on our business.
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* CURRENCY FLUCTUATIONS. When we purchase interests in non-United States
partner companies for cash, we will likely have to pay for the
interests using the currency of the country where the prospective
partner company is located. Similarly, although it is our intention to
act as a long-term partner to our partner companies, if we sold an
interest in a non-United States partner company we might receive
foreign currency. To the extent that we transact in foreign
currencies, fluctuations in the relative value of these currencies and
the United States dollar may adversely impact our financial results.
* COMPLIANCE WITH LAWS. We are subject to the laws of the UK, with
respect to our lottery project, and of Mexico, with respect to our
entertainment center project, and may become subject to the laws and
regulations of other foreign countries in the future. These laws are
different than those of the United States and we are less familiar
with them. We must go to the expense of hiring legal counsel in each
foreign country in which we operate to comply with their laws and
regulations. The laws of these foreign countries may change at any
time, which would likely require us to incur additional legal expenses
to comply with such changes, or could even force us to discontinue
operations.
* POLITICAL INSTABILITY. We have, and may in the future purchase,
interests in foreign partner companies that are located, or transact
business in, parts of the world that experience political instability.
Political instability may have an adverse impact on the subject
country's economy, and may limit or eliminate a partner company's
ability to conduct business.
IF WE DO NOT HAVE ENOUGH SHARES AUTHORIZED OR DO NOT OBTAIN SHAREHOLDER APPROVAL
FOR THE ISSUANCE OF CLASS A COMMON STOCK UPON CONVERSION OF OUR SERIES C
CONVERTIBLE PREFERRED STOCK IN EXCESS OF 19.999% OF OUR OUTSTANDING CLASS A
COMMON STOCK, WE MAY BE FORCED TO REDEEM THE SERIES C CONVERTIBLE PREFERRED
STOCK FROM THE HOLDERS.
Pursuant to the terms of the convertible preferred stock purchase agreement
that we entered to with Advantage Fund II Ltd. and Koch Investment Group Ltd. on
February 16, 2000, in the event of a "triggering event," as defined in the
Certificate of Designations, relating to the Series C Convertible Preferred
Stock, such as if we do not have enough shares of Class A Common Stock
authorized for issuance upon conversion of the Preferred Stock or do not obtain
shareholder approval for the issuance of Class A Common Stock upon conversion of
our Series C Convertible Preferred Stock held by these investors in excess of
19.999% of the outstanding shares of Class A Common Stock immediately prior to
consummation of the sale of the Series C Convertible Preferred Stock as required
under the Nasdaq listing rules and regulations, we may be forced to redeem the
Series C Convertible Preferred Stock from them. We may not have the resources
available to do so. As of April 7, 2000 the Series C Convertible Preferred Stock
represented only approximately 5% of our common stock on a fully converted
basis. If we were
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required to redeem the Series C Convertible Preferred Stock, it could have a
material adverse effect on our business.
WE FACE GENERAL RISKS RELATED TO DOING BUSINESS THAT ARE BEYOND OUR CONTROL.
Our success will depend in part on certain factors that are beyond our
control and that cannot clearly be predicted at this time. These factors include
general economic conditions, both nationally and internationally, changes in tax
laws, fluctuating operating expenses, changes in governmental regulations,
changes in technology, and trade laws.
RISKS PARTICULAR TO OUR PARTNER COMPANIES
FLUCTUATION IN THE PRICE OF THE COMMON STOCK OF OUR PUBLICLY-TRADED PARTNER
COMPANIES COULD AFFECT THE PRICE OF OUR STOCK.
The Network Connection and U.S. Wireless are our two publicly-traded
partner companies. The price of their common stock has been highly volatile. The
market value of our holdings in these partner companies changes with these
fluctuations. Fluctuations in the price of The Network Connection's and U.S.
Wireless' common stock are likely to affect the price of our Class A Common
Stock.
THE NETWORK CONNECTION. The price of The Network Connection's common stock
may fluctuate in response to announcements by it or its competitors regarding
sales of products and services, product enhancements and other corporate
developments. The Network Connection's results of operations, and accordingly
the price of its common stock, may be adversely affected by the following
factors:
* the company's ability to implement its new business strategy, which
requires obtaining and expending a great deal of capital to develop
compelling content and new applications for its interactive
entertainment and information technologies, and to penetrate new
markets;
* the company's ability to integrate, retain and manage the new
management team that it has put in place to lead it in the
implementation of its new business strategy;
* the company's ability to generate revenues from the markets in which
it is currently operating, such as the education, cruise ship and
hotel markets, and to do so on a profitable basis;
* the company's ability to procure and provide desirable content through
its interactive entertainment and information systems; and
* the company's ability to negotiate more favorable terms with Carnival
Cruise Lines for the installation and operation of its CruiseView(TM)
system pursuant to the existing contract with Carnival.
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U.S. WIRELESS. U.S. Wireless currently has no revenues because it is in the
process of developing networks to support its proprietary wireless location
technology, RadioCamera(TM), which is designed to enable wireless carriers and
others to provide their customers with location-based services and applications.
The company developed its RadioCamera(TM) technology to capitalize on the market
that it expects to develop in response to the Federal Communication Commission's
mandate which requires geolocation of mobile phone subscribers dialing 911. The
price of U.S. Wireless' common stock may be adversely affected by the following
factors:
* additional mandates or other legislation or regulation negatively
affecting the FCC mandate;
* the development of the market for wireless location technologies,
which currently is almost completely dependent upon the FCC mandate;
* results of the testing of its RadioCamera(TM)wireless
location-technology;
* the company's ability to build out a nationwide network to allow for
use of the RadioCamera (TM) system on a nationwide basis (which will
require substantial capital commitment); and developing additional
applications and offerings of value-added services in connection with
the RadioCamera(TM) technology;
* the level of acceptance of the company's RadioCamera(TM) technology as
a solution to the FCC mandate and of any additional services the
company develops for use in connection with that technology;
* announcements by the company or its competitors with respect to system
and service enhancements, strategic and other agreements, and other
corporate developments;
* competitors' abilities to develop and implement their systems in
response to the FCC mandate, and the level of acceptance of
competitors' systems, in the event that any are developed and
implemented; and
* the company's ability to obtain the financing necessary for it to
carry out its business plan.
An additional factor that may affect the volatility of the stock price of
either of our publicly-traded partner companies is the extent to which there are
outstanding shares available for resale and derivative securities outstanding
that could convert to shares available for resale. The sale of a significant
number of shares of either of our publicly-traded partner companies into the
market could cause a decrease in the price per share of that partner company.
THE NETWORK CONNECTION HAS A HISTORY OF LOSSES AND EXPECTS CONTINUED LOSSES.
The Network Connection generated revenues of $11.1 million and $18.8
million for the fiscal years ended October 31, 1997 and 1998, respectively, and
realized net losses for those years of $53.2 million and $7.2 million,
respectively. For the eight-month transition period ended June 30, 1999, The
Network Connection generated revenues of $0.9 million, and realized
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net income of $2.3 million (this net income was due entirely to reversal of
prior accruals). For the six months ended December 31, 1999, The Network
Connection generated revenues of $5.7 million on which it realized a net loss of
$1.4 million. Almost all of the revenues generated came from the sale of 195
Cheetah(R) video servers in connection with the Georgia Metropolitan Regional
Education Services Agency (MRESA) Net 2000 project. Without these sales, The
Network Connection would have had a loss of $3.4 million for the six months
ended December 31, 1999. As of December 31, 1999, The Network Connection's
accumulated deficit was $84.4 million and working capital was $1.9 million.
Prior management of The Network Connection entered into an agreement with
Carnival Cruise Lines which obligates The Network Connection to install
CruiseView(TM) systems on all ships designated by Carnival through December
2002. The Network Connection has already installed systems on two Carnival
ships. The cost of building and installing CruiseView(TM) systems on Carnival
ships pursuant to that agreement may exceed the revenue The Network Connection
can earn under the agreement. Revenue is derived from up-front payments received
by The Network Connection when it installs the system and payments received
thereafter through a revenue share agreement. If Carnival requests that The
Network Connection build and install CruiseView(TM) systems on additional ships
under the agreement, The Network Connection could lose money, which would have a
negative effect on its working capital. The Network Connection is currently
endeavoring to renegotiate the terms of the agreement with Carnival, but gives
no assurance that it will be successful in doing so. In January, 2000 The
Network Connection received notice from Carnival that it desires that The
Network Connection install a CruiseView(TM) system on a third Carnival ship;
however, The Network Connection has not yet received the required deposit and
has not taken any action toward the third ship installation.
The Network Connection has received only three orders for installation of
its InnView(TM) system.
We do not believe that The Network Connection's sales to date are
sufficient to determine whether there is meaningful demand for its products. The
Network Connection intends to continue to devote significant resources to its
sales and marketing efforts in an effort to promote interest in its products.
There is no assurance that The Network Connection will be successful with these
efforts or that significant market demand for its products will ever develop.
MANY OF OUR PARTNER COMPANIES OPERATE IN MARKETS CHARACTERIZED BY RAPID
TECHNOLOGICAL CHANGE.
The markets in which many of our partner companies operate are
characterized by rapid technological change, frequent new product and service
introductions and evolving industry standards. Significant technological changes
could render their existing technologies, products and services obsolete. Growth
and intense competition in the networking solutions, telecommunications and
e-commerce markets exacerbate these conditions. If our technology-oriented
partner companies are unable to successfully respond to these developments or do
not respond in a cost-effective way, our business, financial condition and
operating results could be
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adversely affected. To be successful, these partner companies must adapt to
their rapidly changing markets by continually improving the responsiveness,
services and features of their products and services and by developing new
features to meet the needs of their customers. Our success will depend, in part,
on the abilities of our partner companies to enhance their existing products and
services and develop new offerings and technology that address the needs of
their customers. Our technology-oriented partner companies will also need to
respond to technological advances and emerging industry standards in a
cost-effective and timely manner.
OUR TECHNOLOGY ORIENTED PARTNER COMPANIES' PRODUCTS COULD EXPERIENCE TECHNICAL
DIFFICULTIES.
The products of our technology-oriented partner companies are highly
specialized and involve intricate technologies and electronic components that
may be subject to technical difficulties. These technical difficulties could
occur at any time as a result of component malfunction or some other reason.
Although our technology oriented partner companies generally utilize quality
control procedures and test products before marketing them, there is no
assurance that all defects will be identified. We believe that reliability will
be an important consideration for customers of our partner companies. Failure to
detect and prevent defects and design flaws in the products of these partner
companies could adversely affect our business, financial condition and operating
results.
THE SUCCESS OF OUR TECHNOLOGY-ORIENTED PARTNER COMPANIES IS DEPENDENT TO A LARGE
DEGREE ON THE ACCEPTANCE OF E-COMMERCE AS A MEANS OF DOING BUSINESS.
The success of our technology-oriented partner companies is dependent on
the continued growth of intranets and the Internet as media for commercial
transactions. The development of the e-commerce market is in its early stages.
If widespread commercial acceptance of e-commerce and use of the Internet does
not continue to develop, or if intranets and the Internet do not develop as
effective media for providing products and services, our technology-oriented
partner companies may not succeed.
A number of factors could impede acceptance of e-commerce and the Internet
as a medium for doing business, including:
* the unwillingness of businesses to shift from traditional processes to
intranet-based and/or Internet-based processes;
* the failure to continue the development of the necessary network
infrastructure for substantial growth in usage of the Internet;
* increased government regulation or taxation may adversely affect the
viability of intranets and the Internet as media for commercial
transactions; and
* the growth in bandwidth may not keep pace with the growth in on-line
traffic, which could result in slower response times for the users of
intranet-based and Internet-based commercial transactions.
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THE UK LOTTERY PROJECT IS A START-UP VENTURE, HAS GENERATED NO REVENUES, IS
BASED ON A GAME NEVER TRIED IN THE UK, AND MUST GENERATE SUFFICIENT CASH FLOW TO
PAY A LARGE WEEKLY CONTRACTUAL OBLIGATION.
Our UK lottery project is a start-up venture. It began operations on March
27, 2000, and was officially launched on April 4, 2000 in conjunction with the
start of a media campaign. The UK lottery project has generated only minimal
revenues to date, and we do not expect that it will generate any meaningful
revenues until late in the first half of calendar year 2000, nor can we give any
assurance that it ever will. Our partner companies involved in the lottery
project are in the process of completing installation of the 3,500 terminals
that complete Phase I of the project, promoting the lottery and redistributing
unproductive terminals to other retail outlets in an effort to maximize ticket
sales. The lottery business and its prospects, therefore, must be considered in
light of the risk, expense and difficulties frequently encountered by companies
in early stages of development. In addition, the game on which the lottery is
based has never been offered in the UK. We therefore have no basis on which to
determine the level of acceptance, if any, that the game will achieve. If our
lottery partner companies are unsuccessful in carrying out any post-launch
tasks, or, in the event that the lottery does not achieve a significant degree
of acceptance, the business of our lottery partner companies would be materially
adversely affected, which, in turn, would have a material adverse effect on our
business.
Additionally, GTL Management Limited, a subsidiary of ours, entered into an
agreement with International Lottery and Totalizator Systems, Inc. pursuant to
which International Lottery and Totalizator Systems will provide certain
facilities management services and technological support in connection with the
networking hardware, software and terminals that we (through another subsidiary)
purchased from them and that will serve as the infrastructure of the lottery.
This agreement requires that we pay them $72,000 per week, plus additional
amounts based on any terminals in excess of 3,500 being installed and a
percentage of average daily sales. This obligation commenced on March 27, 2000
with the sale of the first ticket in connection with the lottery. The inability
of the lottery to generate revenues sufficient to cover this obligation would
adversely affect the business of our lottery partner companies.
WE HAVE WRITTEN OFF OUR LOAN TO OUR MEXICAN ENTERTAINMENT CENTER PARTNER COMPANY
AND MAY NOT RECEIVE ANY VALUE FOR THE SLOT MACHINES USED AT THE CENTER.
We provided funding to Donativos S.A. de C.V., the entity through which the
Mexican gaming center operation is carried out, in the form of a loan of
approximately $1.6 million to develop the center. We also purchased
approximately $900,000 worth of slot machines, which we in turn leased to
Donativos for use in the center. To date, we have received no payments on the
loan or in connection with the lease. In addition, our relationship with the
majority shareholder of Donativos, a Mexican national, has broken down. We have
written off our loan to Donativos and we are currently seeking to sell our 24.5%
equity interest in that company. It is unlikely that we will be able to find a
buyer for our equity interest in Donativos,
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and, if we do, very likely that any amount we receive for the interest will be
far less than the amount of our investment. Additionally, we have become aware
that the Loteria Nacionale, the governmental agency that granted the majority
shareholder of Donativos the license to run the entertainment center, is
scrutinizing the business. If the Loteria takes away the license or otherwise
shuts down the entertainment center, it would be extremely unlikely that we will
be able to find a buyer for our equity interest in Donativos, if at all. A
closure would also make it more difficult for us to repossess our slot machines,
an action that we are currently considering. If we decide to repossess the slot
machines, we may not be successful in doing so. In addition, the process of
repossession may require costly litigation in Mexico. Furthermore, in the event
that we are successful in repossessing the slot machines, the value, if any, we
could receive from selling them would be less than what we paid for them.
ALL OF OUR PARTNER COMPANIES COULD BE ADVERSELY AFFECTED BY COMPETITION IN THE
MARKETS IN WHICH THEY OPERATE.
The markets in which our partner companies operate are highly competitive.
Many of the competitors of our partner companies have longer operating histories
and significantly greater financial, technical, marketing and other resources
than they do. These competitors are therefore able to respond more quickly and
efficiently to new or changing opportunities, technologies and customer
requirements. For instance, with respect to our UK lottery project, the National
Lottery of the United Kingdom has been operating a weekly lottery for at least
five years and is extremely well funded. The National Lottery does not currently
operate a lottery game similar to the lottery we expect to offer, but it would
have a distinct competitive advantage if it chose and received the necessary
regulatory approval to do so. If our partner companies' products and services do
not achieve a significant level of acceptance in the marketplace, or their
competitors develop products and services rendering theirs obsolete, our partner
companies, and, in turn, we, would be adversely affected.
INTELLECTUAL PROPERTY ISSUES, GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES THAT
COULD AFFECT OUR PARTNER COMPANIES.
* INTELLECTUAL PROPERTY. Our partner companies utilize certain
proprietary technologies and other intellectual property that are
valuable to them. They protect this intellectual property in a variety
of ways, such as through patent, trademark and copyright law. U.S.
Wireless has filed 14 patent applications with the Patent & Trademark
Office and has received notices of allowance for two of these
applications. There is no assurance that any of the remaining patents
will be granted. In addition, our partner companies rely on
confidentiality agreements with key employees to prevent disclosure of
important intellectual property to third parties. There is no
assurance that any of these protections will prove sufficient to
prevent third parties from using our partner companies' intellectual
property either through legal or illegal means. Use by third parties
of intellectual property of one of our partner companies could
adversely affect that partner company's business. In addition, we give
no assurance that any particular aspect of any of our partner
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companies' intellectual property will not be claimed to infringe the
intellectual property rights of a third party. Intellectual property
infringement litigation for or against any of our partner companies
would likely have an adverse effect on that partner company's
business.
* GOVERNMENT REGULATION AND LEGAL UNCERTAINTIES. Our partner companies
are subject, both directly or indirectly, to various laws and
governmental regulations relating to their businesses. Our partner
companies that operate abroad are subject to the laws and regulations
of foreign countries with which we are not familiar. We believe that
our partner companies maintain compliance with these laws and
regulations, and that, while there is expense incurred in doing so,
these laws and regulations do not have a material impact on the
operations of our partner companies; however, as a result of rapid
technology growth and other related factors, laws and regulations may
be adopted which significantly impact our partner companies'
businesses, and, in turn, our business.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the Class A Common Stock
offered pursuant to this prospectus by the selling stockholders. We may receive
exercise proceeds from the issuance of shares to the selling stockholders upon
exercise of the warrants held by certain of the selling stockholders, which
proceeds would be used for general working capital.
SELLING SECURITY HOLDERS
RECENT FINANCING.
On February 16, 2000, Advantage Fund II Ltd. and Koch Investment Group Ltd.
purchased an aggregate of $10,000,000 of Series C 5% Convertible Preferred Stock
and warrants from Global Technologies in a private placement transaction.
Advantage and Koch received 600 and 400 shares, respectively, of preferred stock
which may be converted into our Class A Common Stock. In addition, Advantage
received warrants to acquire 60,555 shares of our Class A Common Stock and Koch
received warrants to acquire 40,370 shares of our Class A Common Stock.
The warrants issued to Advantage and Koch are exercisable at $17.748 and
expire on February 15, 2005. The preferred stock carries a 5% cumulative
dividend payable quarterly in cash or Class A Common Stock. As of the date of
this prospectus, the preferred stock is convertible into shares of our Class A
Common Stock at $17.748 per share. On or about November 17, 2000, and each three
months thereafter while shares of the preferred stock are outstanding, the
conversion price will reset in accordance with the formula set forth in the
Certificate of Designations, Rights, Preferences and Limitations of Series C 5%
Convertible Preferred Stock of Global. The conversion price is also subject to
adjustment pursuant to the anti-dilution provisions set forth in such
certificate.
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As long as our Class A Common Stock is listed for trading on Nasdaq, we may
not issue on conversion of the preferred stock more than 19.999% of the
outstanding Class A Common Stock immediately prior to the sale of the preferred
stock without obtaining prior stockholder approval in order to comply with
Nasdaq listing requirements. As an inducement to purchase the preferred stock,
Irwin L. Gross, our Chairman and Chief Executive Officer, irrevocably agreed to
vote his shares in favor such approval, if necessary. Mr. Gross currently owns
approximately 20% of the outstanding shares of Class A Common Stock.
Any shares of preferred stock outstanding three years from the funding date
automatically convert into shares of Class A Common Stock at the then applicable
conversion price. The preferred stock is redeemable under certain circumstances
in which case additional warrants would be issued to the holders of the
preferred stock.
In addition, each holder of the preferred stock may not convert its
securities into shares of our common stock if after the conversion, such holder,
together with any of its affiliates, would beneficially own over 4.999% of the
outstanding shares of our common stock. This restriction may be waived by each
holder on not less than 61 days' notice to us.
Since the number of shares of our common stock issuable upon conversion of
the preferred stock will change based upon fluctuations of the market price of
our common stock prior to a conversion, the actual number of shares of our
common stock that will be issued under the preferred stock, and consequently the
number of shares of our common stock that will be beneficially owned by
Advantage or Koch cannot be determined at this time. Because of this fluctuating
characteristic, we agreed to register a number of shares of our common stock
that exceeds the number of our shares of common stock currently beneficially
owned by Advantage or Koch. The number of shares of our common stock listed in
the table below as being beneficially owned by Advantage and Koch includes the
shares of our common stock that are issuable to each of them, subject to the
4.999% limitation, upon conversion of their preferred stock and exercise of
their warrants. However, the 4.999% limitation would not prevent Advantage or
Koch from acquiring and selling in excess of 4.999% of our common stock through
a series of conversions and sales under the preferred stock and acquisitions and
sales under the warrants.
Genesee International Inc., of which Mr. Donald R. Morken is the
controlling stockholder, has voting and investment power over the securities
beneficially owned by Advantage. Koch Industries, Inc., of which Messrs. Charles
Koch and David Koch are controlling stockholders, have voting and investment
power over the securities beneficially owned by Koch.
In connection with the February 2000 financing, designees of Reedland
Capital Partners, a division of Financial West Group, received warrants to
purchase an aggregate of 50,000 shares of our common stock at $17.835 per share
for Reedland Capital Partners' role as sales agent. The 50,000 shares are also
being offered to the public by means of this prospectus.
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SELLING STOCKHOLDERS.
The following table sets forth for each selling stockholder (i) the name of
the selling stockholder, (ii) the number of shares of our Class A Common Stock
owned by the selling stockholder before the offering (in some cases, as noted in
the footnotes to the table, some or all shares underlie convertible preferred
stock or warrants held by the selling stockholder), (iii) the number of shares
of our Class A Common Stock offered by the selling stockholder under this
prospectus, (iv) the number of shares of our Class A Common Stock that will be
owned by the selling stockholder assuming that all shares of our Class A Common
Stock registered hereby on that stockholder's behalf are sold, and (v) the
percentage of our outstanding shares of Class A Common Stock that those
remaining shares will represent. Each of the selling stockholders is a party to
an agreement by which we agreed to register their shares of our Class A Common
Stock. Registration of these shares enables the selling stockholders to sell the
shares from time to time in any manner described in "Plan of Distribution"
below, but does not necessarily mean that the selling stockholders will sell all
or any of the shares.
<TABLE>
<CAPTION>
PERCENTAGE OF
OUTSTANDING CLASS
NUMBER OF SHARES NUMBER OF SHARES A COMMON STOCK
BENEFICIALLY BENEFICIALLY BENEFICIALLY
OWNED BEFORE NUMBER OF SHARES TO OWNED AFTER OWNED AFTER
NAME OF SELLING STOCKHOLDER OFFERING BE SOLD IN OFFERING OFFERING OFFERING (2)
--------------------------- -------- ------------------- -------- ------------
<S> <C> <C> <C> <C>
Advantage Fund II, Ltd. (1)(3) 533,614 841,551 -0- *
Koch Investment Group Ltd. (1)(3) 533,614 561,034 -0- *
Sven Joesting (4) 22,500 22,500 -0- *
The Shaar Fund, Ltd. (5) 131,250 131,250 -0- *
Emden Consulting Corp. (6) 37,500 37,500 -0- *
Waterton Group, LLC (6) 37,500 37,500 -0- *
D.H. Blair Investment Banking
Corporation (7) 37,650 17,850 19,800 *
Stanley S. Arkin (7) 124 124 -0- *
Hyman L. Schaffer (7) 16 16 -0- *
Jeffrey M. Kaplan (7) 16 16 -0- *
Howard J. Kaplan (7) 10 10 -0- *
Mark S. Cohen (7) 10 10 -0- *
Robin Breittner (7) 379 379 -0- *
Brian L. Frank (7) 394 394 -0- *
Rachel Family Partnership (7)(11) 86,189 34,340 51,849 *
Gitel Family Partnership (7) 34,338 34,338 -0- *
Alfred S. Palagonia (7) 28,570 28,570 -0- *
Martin A. Bell (7)(9) 21,000 21,000 -0- *
Alison D. Brown (7) 300 300 -0- *
J. Morton Davis (7) 40,324 17,850 22,474 *
David Nachamie (7) 500 500 -0- *
Michael Siciliano (7) 500 500 -0- *
Brian A. Wasserman (7)(10) 10,500 10,500 -0- *
Kenton E. Wood (7) 2,000 2,000 -0- *
Steven R. Monte (7) 200 200 -0- *
Robert K. Schacter(8) 34,000 34,000 -0- *
Thomas J. Griesel(8) 8,500 8,500 -0- *
</TABLE>
24
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Financial West Group(8) 2,500 2,500 -0- *
Donald & Co. Securities, Inc. 1,500 1,500 -0- *
Andrew Reiser 3,000 3,000 -0- *
Edward F. Duffy 500 500 -0- *
</TABLE>
- ----------
* Less than 1%
(1) Pursuant to the terms of our recent financing with Advantage and Koch, we
are obligated to include in the registration statement covering this
prospectus such number of shares of Class A Common Stock equal to the sum
of (i) 200% of the number of shares of Class A Common Stock issuable upon
conversion in full of the Series C Convertible Preferred Stock, assuming
for such purposes that such preferred shares are outstanding for three
years and that such conversion occurred on March 17, 2000, the date of
filing of this registration statement with the Commission, and (ii) the
number of shares of Class A Common Stock issuable upon exercise in full of
the callable warrants held by such selling stockholders.
(2) Percentages are based on 10,533,654 shares of Class A Common Stock
outstanding as of April 7, 2000.
(3) The number of shares beneficially owned by Advantage and Koch respectively
represent the number of shares underlying their warrants (60,555 and 40,370
shares, respectively) plus the number of shares underlying their Series C
Convertible Preferred Stock. Advantage and Koch may not convert their
Series C Convertible Preferred Stock if doing so would cause them to
beneficially own more than 4.999% of the outstanding shares of common stock
on a fully converted basis. For a more detailed discussion of this
restriction, please read about our "Recent Financing" above.
(4) Sven Joesting was issued his shares of our Class A Common Stock on July 28,
1999 as a fee for investment banking services provided to us.
(5) The Shaar Fund, Ltd. owns warrants exercisable for 131,250 shares of our
Class A Common Stock at an exercise price of $2.00 per share. These
warrants expire on May 10, 2004.
(6) Each of Emden Consulting Corp. and Waterton Group, LLC owns warrants
exercisable for 37,500 shares of our Class A Common Stock at an exercise
price of $5.25 per share. These warrants expire on December 23, 2004. Each
of Emden and Waterton was issued these warrants in consideration of certain
financial advisory services provided to us.
(7) Each stockholder was issued shares upon the exercise of Unit Purchase
Options issued on March 6, 1995 in connection with the public offering of
2,800,000 Units. Each Unit consisted of one share Class A Common Stock and
two warrants exercisable into Class A Common Stock. The shares have
registration rights, and have not previously been registered.
(8) Designees of Reedland Capital Partners, which received warrants exercisable
for an aggregate of 50,000 shares of our Class A Common Stock at an
exercise price of $17.835 per share in consideration of certain financial
advisory services provided to us. These warrants expire on February 15,
2005.
(9) Mr. Bell disclaims beneficial ownership of 375,000 shares of Class A Common
Stock owned by First Lawrence Corp. of which he is an officer and minority
shareholder.
(10) Mr. Wasserman disclaims beneficial ownership of 375,000 shares of Class A
Common Stock owned by First Lawrence Corp. of which he is a minority
shareholder.
(11) Includes 51,849 shares reported in the Schedule 13G (Amendment No. 2) of
Ruki Renov filed October 25, 1999, as adjusted for our 3:2 stock dividend,
upon which we have relied in making this disclosure. Mrs. Renov controls
the Rachel Family Partnership.
PLAN OF DISTRIBUTION
The selling stockholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of Class A Common Stock on any
25
<PAGE>
stock exchange, market or trading facility on which the shares are traded or in
private transactions. These sales may be at fixed or negotiated prices. The
selling stockholders may use any one or more of the following methods when
selling shares:
* ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
* block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
* purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
* an exchange distribution in accordance with the rules of the
applicable exchange;
* privately negotiated transactions;
* broker-dealers may agree with the selling stockholders to sell a
specified number of such shares at a stipulated price per share;
* a combination of any such methods of sale; and
* any other method permitted pursuant to applicable law.
The selling stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
Broker-dealers engaged by the selling stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The selling stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
The selling stockholders and any broker-dealers or agents that are involved
in selling the shares may be deemed to be "underwriters" within the meaning of
the Securities Act of 1933 in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
We are required to pay all fees and expenses incident to the registration
of the shares, including up to $7,500 of the fees and disbursements of counsel
to the selling stockholders. We have agreed to indemnify the selling
stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
26
<PAGE>
DISCLOSURE OF THE SEC'S POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Our bylaws provide that we will indemnify our directors, officers,
employees and agents to the fullest extent permitted by Delaware law. In
addition, our certificate of incorporation provides that, to the fullest extent
permitted by Delaware law, our directors will not be liable for monetary damages
for breach of the directors' fiduciary duty to us and our stockholders. This
provision of the certificate of incorporation does not eliminate the duty of
care. In appropriate circumstances, equitable remedies such as an injunction or
other forms of non-monetary relief are available under Delaware law. This
provision also does not affect a director's responsibilities under any other
laws, such as the federal securities laws.
Each director will continue to be subject to liability for:
* breach of the director's duty of loyalty to us;
* acts or omissions not in good faith or involving intentional
misconduct;
* knowing violations of law;
* any transaction from which the director derived an improper personal
benefit;
* improper transactions between the director and us; and
* improper distributions to stockholders and improper loans to directors
and officers.
In addition to the protections provided by our bylaws and certificate of
incorporation, we have entered into employment agreements with certain of our
executive officers that provide them with indemnity against expenses and losses
incurred in connection with certain with certain claims brought against them. We
maintain approximately $20.0 million of coverage under a directors' and
officers' liability insurance policy.
There is no pending litigation or proceeding involving a director or
officer as to which indemnification is being sought. We are not aware of any
pending or threatened litigation that may result in claims for indemnification
by any director or officer. Insofar as indemnification for liabilities arising
under the Securities Act of 1933 may be permitted to our directors, officers and
control persons pursuant to the foregoing provisions, or otherwise, we have been
advised that in the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act of 1933, and is, therefore,
unenforceable.
EXPERTS
The consolidated financial statements of Global Technologies, Ltd. as of
June 30, 1999 and October 31, 1998, and for the transition period ended June 30,
1999 and each of the years in the two year period ended October 31, 1998 have
been incorporated by reference in this prospectus in reliance upon the report of
KPMG LLP, independent certified public accountants, incorporated by reference
herein, and upon the authority of said firm as experts in accounting and
auditing.
27
<PAGE>
----------
No dealer, salesman 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 Global or the selling shareholders.
This prospectus does not constitute an offer to sell or a solicitation of an
offer to buy to any person in any jurisdiction in which such offer or
solicitation would be unlawful or to any person to whom it is unlawful. Neither
the delivery of this prospectus nor any offer or sale made hereunder shall,
under any circumstances, create any implication that there has been no change in
the affairs of Global or that information contained herein is correct as of any
time subsequent to the date hereof.
28
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The expenses of the offering, which are to be borne by Global, are
estimated as follows:
SEC registration fee $ 8,733.69
Legal services and expenses 25,000.00
Accounting services 18,000.00
Miscellaneous 5,000.00
----------
Total $56,733.69
==========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Under Section 145 of the Delaware General Corporation Law, we have broad
powers to indemnify our directors and officers against liabilities they may
incur in such capacities, including liabilities under the Securities Act.
Our Certificate of Incorporation provides for the elimination of liability
for monetary damages for breach of the directors' fiduciary duty of care to us
and our stockholders. These provisions do not eliminate the directors' duty of
care and, in appropriate circumstances, equitable remedies such as injunctive or
other forms of non-monetary relief will remain available under Delaware law. In
addition, each director will continue to be subject to liability for breach of
the director's duty of loyalty to us, for acts or omissions not in good faith or
involving intentional misconduct, for knowing violations of law, for any
transaction from which the director derived an improper personal benefit, and
for payment of dividends or approval of stock repurchases or redemptions that
are unlawful under Delaware law. The provision does not affect a director's
responsibilities under any other laws, such as the federal securities laws or
state or federal environmental laws.
In addition to the protections provided by our bylaws and certificate of
incorporation, we have entered into employment agreements with certain of our
executive officers that provide them with indemnity against expenses and losses
incurred in connection with certain claims brought against them. We maintain
approximately $20.0 million of coverage under a directors' and officers'
liability insurance policy.
ITEM 16. EXHIBITS
Exhibit No. Description
- ----------- -----------
4.1(4) Convertible Preferred Stock Purchase Agreement among Registrant
and the Investors signatory thereto, dated as of February 16,
2000
4.2(4) Certificate of Designations, Rights, Preferences and
Limitations of Series C
II-1
<PAGE>
Convertible Preferred Stock of Global Technologies, Ltd.
4.3(4) Callable Warrant issued to holders of Series C Convertible
Preferred Stock of Global Technologies, Ltd.
4.4(5) Registration Rights Agreement dated February 16, 2000 between
the Registrant and the Investors Signatory thereto, dated as of
February 16, 2000
4.5(1) Warrant Agreement, dated as of March 7, 1995 among the
Registrant, D.H. Blair Investment Banking Corp. and American
Stock Transfer & Trust Company
4.6(2) Amendment to March 7, 1995 Warrant Agreement entered into among
the Registrant, D.H. Blair Investment Banking Corp., and
American Stock Transfer & Trust Company
4.7(2) Warrant Agreement, dated as of October 24, 1996 among the
Registrant, D.H. Blair Investment Banking Corp. and American
Stock Transfer & Trust Company
4.8(2) Amendment to October 24, 1996 Warrant Agreement among the
Registrant, D.H. Blair Investment Banking Corp., and American
Stock Transfer & Trust Company
4.9(1) Form of Underwriter's Unit Purchase Option
4.10(3) Stock Purchase Warrant Issued to The Shaar Fund Ltd. dated May
10, 1999
4.11(3) Registration Rights Agreement dated May 6, 1999 between the
Registrant and The Shaar Fund Ltd.
5.1(6) Legal Opinion of Mesirov Gelman Jaffe Cramer & Jamieson, LLP
23.1(6) Consent of Mesirov Gelman Jaffe Cramer & Jamieson, LLP
(included in legal opinion filed as Exhibit 5.1)
23.2(6) Consent of KPMG LLP
- ----------
(1) Incorporated by reference from the Registrant's Registration Statement on
Form SB-2, Registration No. 33-86928.
(2) Incorporated by reference from the Registrant's Registration Statement on
Form S-3, Registration No. 333-14013.
(3) Incorporated by reference from the Registrant's Transition Report on Form
10-KSB for the transition period ended June 30, 1999, filed with the
Securities and Exchange Commission on October 28, 1999, File No. 0-25668.
(4) Incorporated by reference from the Registrant's Current Report on Form 8-K
dated February 16, 2000, filed with the Securities and Exchange Commission
on February 28, 2000, File No. 0-25668.
(5) Previously filed with this Registration Statement.
(6) Filed herewith.
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement (i) to include any
prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) to
reflect in the prospectus any facts or events arising after the effective date
of the Registration Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in
II-2
<PAGE>
the information set forth in the Registration Statement; (iii) to include any
material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement;
PROVIDED, HOWEVER, that clauses (1)(i) and (1)(ii) above do not apply if
the information required to be included in the post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of those securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered that remain unsold at the end of the
offering.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Philadelphia, Commonwealth of Pennsylvania on April 14, 2000.
GLOBAL TECHNOLOGIES, LTD.
Date: April 14, 2000 By: /s/ Irwin L. Gross
---------------------------------------
Irwin L. Gross, Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment
No. 1 to this Registration Statement has been signed by the following persons in
the capacities and on the dates indicated.
Date: Signature and Title
- ----- -------------------
April 14, 2000 /s/ Irwin L. Gross
-------------------------------------------
Irwin L. Gross, Chief Executive Officer
and Chairman of the Board of Directors
(principal executive officer)
April 14, 2000 /s/ Patrick J. Fodale
-------------------------------------------
Patrick J. Fodale, Vice President and
Chief Financial Officer (principal
financial and accounting officer)
April 14, 2000 /s/ James W. Fox
-------------------------------------------
James W. Fox, President, Chief Operating
Officer and Director
April 14, 2000 /s/ Charles T. Condy
-------------------------------------------
Charles T. Condy, Director
April 14, 2000 /s/ M. Moshe Porat
-------------------------------------------
M. Moshe Porat, Director
April 14, 2000 /s/ Stephen Schachman
-------------------------------------------
Stephen Schachman, Director
April 14, 2000
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Global Technologies, Ltd. Registration Statement on Form S-3
Dear Sir/Madam:
As counsel to Global Technologies, Ltd., a Delaware corporation (the
"Company"), we are familiar with the corporate proceedings relating to the
proposed registration on Form S-3, as amended (the "Registration Statement"),
which was initially filed with the Securities and Exchange Commission on or
about March 17, 2000, of 1,850,232 shares of the Company's Class A Common Stock,
par value $.01 per share (the "Shares"), which includes, without limitation,
shares to be issued upon the conversion of the Series C Convertible Preferred
Stock and exercise of the certain warrants of the Company (as more fully set
forth in the Registration Statement).
We have examined the Company's Certificate of Incorporation, as amended,
the Company's Bylaws, as amended, and related consents of and minutes of action
taken by the Board of Directors of the Company, and such other documents and
corporate records relating to the Company and the issuance and sale of the
shares, Series C Convertible Preferred Stock and warrants as we deemed
appropriate for purposes of rendering this opinion.
Based upon the foregoing, it is our opinion that:
1. The Shares currently issued and outstanding are validly issued, fully
paid and non-assessable; and
2. The remaining Shares, when issued and paid for upon due conversion of
the Series C Convertible Preferred Stock or due exercise of the
warrants in accordance with the terms of the Series C Convertible
Preferred Stock or warrants, as the case may be, will be validly
issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as Exhibit 5.1 of the
Registration Statement.
Very truly yours,
/s/ Mesirov Gelman Jaffe Cramer & Jamieson, LLP
-----------------------------------------------
INDEPENDENT AUDITORS' CONSENT
The Stockholders and Board of Directors
Global Technologies, Ltd.:
We consent to the use of our reports incorporated by reference herein and to the
reference to our firm under the heading "Experts" in the registration statement
on Form S-3.
/s/ KPMG LLP
Phoenix, Arizona
April 13, 2000
