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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 16, 1998
FILE NO. 333-48291
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------
GLOBAL INTELLICOM, INC.
(Exact Name of Registrant as specified in its charter)
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<S> <C>
NEVADA 13-3797104
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
</TABLE>
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747 THIRD AVENUE,
NEW YORK, NEW YORK 10017
(212) 750-3772
(Address, including zip code, and telephone number, including
area code, of Registrant's principal executive offices)
------------------------------
N. NORMAN MULLER, CHIEF EXECUTIVE OFFICER
C/O 747 THIRD AVENUE,
NEW YORK, NEW YORK 10017
(212) 750-3772
(Name, address, zip code, and telephone number, including area code, of agent of
service)
------------------------------
COPIES TO:
ANDREW J. GOODMAN, ESQ.
SEYMOUR H. BUCHOLZ, ESQ.
Rosner Bresler Goodman & Unterman, LLP
521 Fifth Avenue
New York, New York 10175
(212) 661-2150
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC: From time to time after the
effective date of this Registration Statement.
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 box. /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 delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
------------------------------
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
<S> <C> <C> <C> <C>
Common Stock, $0.01 par value 3,007,092(2)(6) $1.875 $5,638,298 $1,663.30
Common Stock, $0.01 par value 2,915,557(3)(6) 1.875 5,466,669 1,612.67
Common Stock, $0.01 par value 3,017,691(4)(6) 1.875 5,658,171 1,669.16
Common Stock, $0.01 par value 742,500(5) 1.875 1,392,188 410.70
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) based upon an average price of $1.875 of the Common
Stock on The Nasdaq SmallCap Market on May 27, 1998.
(2) Represents shares of Common Stock issuable upon conversion of outstanding 6%
Convertible Debentures of the Company and includes registration of 200% of
shares issuable on conversion of principal amount of such Debentures as
required under Company's registration agreement with holder of such
Debentures.
(3) Represents shares of Common Stock issuable upon conversion of outstanding
shares of Series 6, Series 7, Series 8 and Series 9 Convertible Preferred
Stock of the Company.
(4) Represents shares of Common Stock issuable upon exercise of various
outstanding warrants generally having exercise prices ranging from $1.50 to
$8.75 per share.
(5) Represents shares of Common Stock held by various persons.
(6) Also includes an indeterminate number of shares of Common Stock that may
become issuable to prevent dilution resulting from stock splits, stock
dividends and conversion price or exercise price adjustments, which are
included pursuant to Rule 416 under the Securities Act of 1933, as amended.
------------------------------
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 COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
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.
<PAGE>
PROSPECTUS SUBJECT TO COMPLETION, DATED JUNE 16, 1998
GLOBAL INTELLICOM, INC.
COMMON STOCK
- 3,007,092 SHARES ISSUABLE UPON CONVERSION OF 6% CONVERTIBLE DEBENTURES
- 2,915,557 SHARES ISSUABLE UPON CONVERSION OF SERIES 6, SERIES 7, SERIES 8
AND SERIES 9 CONVERTIBLE PREFERRED STOCK
- 3,017,691 SHARES ISSUABLE UPON EXERCISE OF CERTAIN WARRANTS AT EXERCISE
PRICES RANGING GENERALLY FROM $1.50 TO $8.75 PER SHARE (SEE BELOW)
- 742,500 SHARES HELD BY VARIOUS STOCKHOLDERS
This offering consists of the resale of 3,007,092 shares of Common Stock
("Common Stock") of Global Intellicom, Inc. (the "Company" of "Global") which
may be issued upon conversion of outstanding 6% Convertible Debentures held by
persons not deemed "affiliates" of the Company, as that term is defined under
the Securities Act of 1933 (the "Securities Act"); such persons are identified
under "Selling Stockholders". As required under the Company's registration
agreement with holder of such Debentures, such shares include 200% of the number
of shares which would actually be issuable upon the conversion of the principal
amount of such Debentures, assuming such conversion were to take place at a
price of $1.41 per share based on the provisions set forth in the Debenture
instrument.
This offering consists of the resale of 2,915,557 shares of Common Stock of
the Company which may be issued upon conversion of outstanding shares of the
Company's Series 6, Series 7, Series 8 and Series 9 Convertible Preferred Stock
held by persons not deemed "affiliates" of the Company, as that term is defined
under the Securities Act. Such persons are identified under "Selling
Stockholders."
This offering also consists of the resale a total of 2,466,941 shares of
Common Stock which are issuable upon the exercise of certain outstanding
warrants (collectively, the "Warrants" and individually a "Warrant") to purchase
shares of Common Stock by persons not deemed "affiliates" of the Company, as
that term is defined under the Securities Act, and a total of 550,750 shares
issuable upon the exercise of Warrants held by present and former officers and
directors of the Company. The exercise prices for such Warrants generally range
from $1.50 to $8.75 per share, except for one Warrant for the purchase of
120,000 shares of Common Stock which is exercisable at a discounted market
price. See "Selling Stockholders." If all such Warrants were exercised, the
aggregate proceeds from such exercise would be approximately $10,139,682 and, if
realized, will be added to the Company's working capital. See "Selling
Stockholders."
In addition, this offering consists of the resale of 342,500 shares of
Common Stock issued to persons not deemed an "affiliate" of the Company, as that
term is defined under the Securities Act, and 400,000 shares issued to two
persons, one of whom is an officer and director and the other of whom is a
director of the Company, both of whom have indicated to the Company that they do
not have a present intention of selling such shares or any shares purchasable
under the Warrants held by them. See "Selling Stockholders".
The persons holding (i) the Company's 6% Convertible Debentures, (ii) shares
of the Company's Series 6, Series 7, Series 8 and Series 9 Convertible Preferred
Stock, (iii) the Warrants and (iv) the shares of Common Stock referred to in the
preceding paragraph are referred to collectively as "Selling Stockholders" and
individually as a "Selling Stockholder." The shares of Common Stock being
registered for resale hereunder are sometimes referred to as the "Shares". The
Company will not receive any proceeds from the sale of shares by any Selling
Stockholder, other than proceeds from any exercise of Warrants.
The Company has been advised by the Selling Stockholders that there are no
underwriting arrangements with respect to the sale of the shares, and that such
shares will be sold from time to time in public sales in the over-the-counter
market at then prevailing prices or at prices related to the then current market
price or in private transactions at negotiated prices. The shares may be sold
through purchases by a broker or dealer as principal and resale by such broker
or dealer for its account pursuant to this Prospectus, or in ordinary brokerage
transactions and transactions in which the broker solicits purchasers. In
effecting sales, brokers or dealers engaged by the Selling Stockholders may
arrange for other brokers or dealers to participate. Brokers or dealers will
receive commissions or discounts from Selling Stockholders in amounts to be
negotiated immediately prior to the sale. Such brokers or dealers and any other
participating brokers or dealers may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. See "Selling
Stockholders" and "Plan of Distribution."
------------------------
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS" COMMENCING ON
PAGE 7.
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. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY
STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------
The Company has agreed to pay all expenses of registration in connection
with this offering. Any brokerage commissions, underwriting discounts or similar
expenses incurred in connection with sales of the Shares will be borne by the
Selling Stockholders making such sales. The aggregate proceeds to the Selling
Stockholders from the sale of the Shares will be the purchase price of the
Shares sold, less the aggregate brokerage commissions and underwriting
discounts, if any, and any other expenses of issuance and distribution not borne
by the Company.
The Common Stock being offered hereby by the Selling Stockholders has not
been registered for sale under the securities laws of any state or jurisdiction
as of the date of this Prospectus. Brokers or dealers effecting transactions in
the Common Stock should confirm the registration thereof under the securities
law of the state in which such transactions occur, or the existence of any
exemption from registration.
The Common Stock is listed for trading on the Nasdaq SmallCap Market. On May
27, 1998, the average sale price of the Common Stock on the Nasdaq SmallCap
Market was $1.875 per share.
The date of this Prospectus is June , 1998.
<PAGE>
TABLE OF CONTENTS
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PAGE
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Available information...................................................................................... 2
Incorporation of Certain Documents by Reference............................................................ 2
The Company................................................................................................ 4
Risk Factors............................................................................................... 6
Use of Proceeds............................................................................................ 9
Selling Stockholders....................................................................................... 10
Plan of Distribution....................................................................................... 15
Certain transactions....................................................................................... 16
Legal Matters.............................................................................................. 17
Experts.................................................................................................... 17
</TABLE>
No dealer, salesperson or other person has been authorized to give any
information or to make any representations not contained in this Prospectus or
incorporated by reference to this Prospectus, and, if given or made, such
information or representations must not be relied upon as having been authorized
by the Company or by the Selling Stockholders. This Prospectus does not
constitute an offer to sell, or a solicitation of an offer to buy, the
securities offered hereby in any jurisdiction to any person to whom it is
unlawful to make such offer or solicitation in such jurisdiction. The delivery
of this Prospectus at any time does not imply that the information contained
herein is correct as of any time subsequent to its date.
AVAILABLE INFORMATION
The Company is subject to the informational and reporting requirements of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"). In
accordance therewith, the Company files reports and other information with the
Securities and Exchange Commission (the "Commission"). Reports, proxy statements
and other information filed by the Company can be inspected and copied at the
public reference facilities maintained by the Commission at Room 1024, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Regional Offices of the
Commission at 7 World Trade Center, New York, New York 10048, and Northwestern
Atrium Center, 500 West Madison Street, Chicago, Illinois 60621. Copies of such
material may be obtained from the Public Reference Section of the Commission at
prescribed rates by writing to the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, or from the Commission's web site at http://www.sec.gov.
The Common Stock is traded on the Nasdaq SmallCap Market, and reports and other
information concerning the Company may also be inspected and copied at The
Nasdaq Stock Market, Inc. at 1735 K Street, N.W., Washington, D.C. 20006.
The Company has filed with the Commission a Registration Statement on Form
S-3 under the Securities Act with respect to the Common Stock offered hereby.
This Prospectus does not contain all the information set forth in the
Registration Statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. For further information, reference
is made to the Registration Statement, copies of which can be obtained from the
Public Reference Section of the Commission at Room 1024, 450 Fifth Street, N.W.,
Washington, D.C. 20549, upon payment of the fees prescribed by the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Incorporated herein by reference are the following documents filed by the
Company with the Commission (File No. 0-26684) under the Exchange Act:
(1) The Company's Annual Report on Form 10-K for its fiscal year ended December
31, 1997, filed April 24, 1998, amended and supplemented by its Form 10-K/A
Report filed April 30, 1998;
2
<PAGE>
(2) The Company's Annual Report on Form 10-K for its fiscal year ended December
31, 1996;
(3) The Company's Proxy Statement dated April 16, 1997;
(4) The Company's Report on Form 10-Q for the period ended March 31, 1998, filed
May 21, 1998;
(5) The Company's Reports on Form 10-Q for the periods ended March 31, 1997,
June 30, 1997 and September 30, 1997;
(6) The Company's Report on Form 8-K dated May 14, 1998;
(7) The Company's Report on Form 8-K dated February 27, 1998;
(8) The Company's Registration Statement on Form 8-A, filed August 29, 1995,
which incorporates a description of the Common Stock set forth in the
Company's Registration Statement on Form S-1, File No. 33-93098, effective
September 1, 1995.
All documents filed by the Company with the Commission pursuant to Sections
13, 14 and 15(d) of the Exchange Act subsequent hereto, but prior to the
termination of this offering, shall be deemed to be incorporated herein by
reference and to be a part hereof from their respective dates of filing. Any
statement contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus, to the extent that a statement which also is or
is deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owners, to whom a copy of this Prospectus is delivered, upon the
written and oral request of any such person, a copy of any or all of the
documents referred to above which have been incorporated into this Prospectus by
reference (other than the exhibits to such documents). Requests for such copies
should be directed to Johan de Muinck Keizer, Vice President and General
Counsel, Global Intellicom, Inc., 747 Third Avenue, New York, New York 10017,
telephone (212) 750-3772.
3
<PAGE>
THE COMPANY
GENERAL
Global Intellicom, Inc. (together with its subsidiaries, "Global" or the
"Company") provides system integration and information technology services and
assembles and supplies build-to-suit computer equipment for a wide range of
customers, including corporate clients, governmental entities, institutions,
professional users and resellers.
The Company's subsidiaries and operations have been consolidated into two
distinct divisions, a Systems Integration Group, and a production division which
assembles and markets custom-built servers, workstations and personal computers.
The Systems Integration Group, which includes the Company's Vircom, Vircom TG,
Nevcor TG, Natcom and Natcom Automated Solutions units, acts as a value-added
reseller and provides a range of information technology consulting services,
including systems integration, internal and external linking of networks,
installation of new applications, assistance with non-compatible operating
systems and architectures, and design and support services for enterprise-wide
client server computer systems. The production division assembles, supplies and
supports state-of-the-art, custom-built network products, including servers,
workstations and personal computers, and markets them to large corporate and
institutional customers and to systems integrators and value-added resellers.
COMPANY HISTORY
Global was incorporated in September, 1994, and became a publicly-owned
company through a distribution of its shares under a registration statement
declared effective by the Securities and Exchange Commission on September 1,
1995. The Company's shares were listed for trading on the Nasdaq SmallCap Market
in May, 1996.
The Company has grown both through acquisitions and through internal
expansion. The aggregator operations of Nevcor were discontinued in late 1997,
but the Company's distribution of brand-name products as a value-added reseller
continues in the Systems Integration Group and, despite the discontinuance of
the aggregator business, Global's revenues have continued to increase.
Effective as of December 31, 1997, the Company negotiated the termination of
various agreements under which it acquired its Natcom subsidiary in 1995, and
accepted the resignation of Natcom's President, Frederick Smith.
The consolidation of Global's operations into two divisions recognizes that
a narrower focus in products, services and markets is necessary to sustain
expansion in sales, and that such narrower focus is expected to prove more
profitable in the long term than pursuit of the wholesale distribution of
computer products at every market level.
SYSTEMS INTEGRATION GROUP
The Systems Integration Group functions as a value-added reseller, adding
computer hardware and software and other peripheral equipment to basic computer
system components furnished for the corporate, government, education, and
professional end-user. The Group can offer products from major brand-name
suppliers such as Compaq, IBM, Digital, Hewlett-Packard, NCR, Sun MicroSystems,
Microsoft and Novell, under distributor or reseller agreements between the
Company and such suppliers.
In addition, the Systems Integration Group offers systems integration
services for both local area and wide area networks. Services include analysis
of needs, system configuration, installation of fiber optic, wireless or
conventional network circuitry, network integration, software loading, testing
of system components, training of network personnel and system maintenance.
By furnishing such a range of services, Global believes it can combine the
elements needed to offer a complete system or, in the Company's view, a "total
solution" to meet client needs. Global's management
4
<PAGE>
believes that selling complete systems rather than separate components can
generate repeat business and more loyal customers, and is more likely to yield
higher margins. Moreover, the ability to provide diversified system integration
is expected to position the Company to meet additional information system needs
of larger, multi-divisional organizations.
On March 9, 1998, the Company formed CableCo, Inc. as a wholly-owned
subsidiary of Vircom, TG. CableCo will install fiber optic, conventional and
wireless circuitry for computer network projects serviced by the Systems
Integration Group.
The Systems Integration Group has also begun to develop, from its client
base and various professional contacts, a database of potential information
technology candidates for full and part-time placement. The Group intends to
offer its clients fee-based access to this database.
To date, the Systems Integration Group has developed a diversified customer
base which includes such large corporate and governmental users as ABC Capital
Cities, Lockheed Martin, Lucent Technologies, PNC Bank, Smith Barney,
Westinghouse, IKEA, Saturn, Shared Medical Systems, the Federal Aviation
Administration and the U.S. Coast Guard.
PRODUCTION DIVISION
Through its production division, Global In-Sync, the Company markets its own
state-of-the art, Pentium-Registered Trademark--class, customized servers,
workstations and personal computers, built to individual customer specifications
in the Company's facilities in Springfield, Virginia. Custom-built In-Sync
products are particularly suited for situations where standard models of
name-brand equipment are either not cost-effective, are not flexible enough to
fill a particular client need, or are not available in quantity on a stringent
delivery schedule.
In-Sync products and associated warranty and repair services are distributed
primarily through third-party value-added resellers and systems integrators who,
in turn, sell the products and various services to commercial enterprises and
governmental users. A major customer of the division is Lockheed Martin, sales
to which accounted for more than 20.8% of the Company's revenues in 1996 and
22.0% of revenues from continuing operations in 1997.
In-Sync is one of only two certified build-to-order suppliers of workstation
products for the General Services Administration.
COMPANY FACILITIES
The Company's facility for the assembly of its network products consists of
a 52,000 square foot plant in Springfield, Virginia, and is occupied under a
lease expiring in 2001. The Systems Integration Group's principal office and
warehouse is located in Exton, Pennsylvania, under a lease expiring in 2004, and
the Company also maintains office facilities in Florida, Indiana, New Jersey and
New York. The Company's executive offices are at 747 Third Avenue, New York, New
York 10017, and are occupied under a lease expiring in 2005.
EMPLOYEES
As of May 15, 1998, the Company had approximately 123 full-time employees,
including persons employed in sales and marketing, production and assembly,
technical support roles, purchasing and warehouse functions, and executive,
administrative, and finance positions. None of Global's employees are covered by
collective bargaining agreements. Global considers its relations with its
employees to be good.
5
<PAGE>
COMPETITION
Competition in the distribution and integration of computer systems and
equipment remains intense. The Company's competitors in systems integration
services include national, regional and local distributors, resellers and
integrators, most of which are privately held, and, accordingly, information on
their size and business is not readily available, although the Company believes
there are a significant number of competitors having substantially greater
resources than Global. Competitors in the production of custom-built servers,
workstations and personal computers include Compaq, Comp USA, Dell, Gateway and
Hewlett-Packard.
Key competitive factors in the wholesale distribution industry include
product line selection and quality, availability, prompt delivery, pricing and
technical support. While a number of national and regional distributors and
integrators of computer equipment may have substantially greater financial
resources and larger staffs than the Company, the Company views its emphasis on
service and technical support, and its offering of total systems and total
solutions for customers, as a competitive strength.
RISK FACTORS
The Shares offered hereby involve significant risks. In addition to the
other information contained or incorporated by reference in this Prospectus, the
following factors should be considered carefully in evaluating the Company and
its business before purchasing the Common Stock offered by this Prospectus. The
following is not intended as, and should not be considered, an exclusive list of
relevant factors.
OPERATING LOSSES. As reflected in the Company's audited financial
statements for 1997, the Company had an operating loss of ($1,255,085) on net
sales of $51,235,126, a loss from continuing operations of ($2,302,808) after
income tax credits, and a loss from discontinued operations of ($7,133,152)
after income tax benefit, resulting in an aggregate net loss of ($9,435,960) or
($1.29) per share for the year. For 1996, the Company's audited financial
statements reflect an operating loss of ($927,027) on net sales of $28,054,341,
a loss from continuing operations of ($706,493) after income tax credits, and a
loss from discontinued operations of ($378,895) after income tax benefit,
resulting in an aggregate net loss of ($1,085,388) or ($0.33) for the year. For
the quarter ended March 31, 1998, the Company's unaudited interim financial
statements reflect operating income of $185,548 on net sales of $9,328,025,
compared with an operating loss of ($1,865,775) on net sales of $7,931,441 for
the comparable 1997 quarter. First quarter net income was $536,167 or $0.06 per
share after an income tax benefit of $445,889, compared with a net loss of
($1,669,007) or ($0.23) per share after income tax benefit of $748,000 in the
first quarter of 1997.
While the Company has consolidated its subsidiaries and has been taking
steps to reduce overhead, staffing and other costs, there is no assurance that
these and other measures being implemented will prove successful and that the
Company will be able to achieve and sustain profitable operations.
COMPLIANCE WITH NASDAQ LISTING REQUIREMENTS. The Company's Common Stock is
currently quoted on the NASDAQ SmallCap Market. As previously reported, the
Company was recently notified by NASDAQ that it does not presently meet NASDAQ's
minimum requirements with regard to net tangible assets, market capitalization
or net income. The Company was notified of an initial NASDAQ staff determination
on June 9, 1998 to proceed with a delisting decision, but the Company is
entitled to an immediate hearing on such action, and, under applicable NASDAQ
rules, the staff recommendation will be stayed pending a final NASDAQ
determination. While management firmly believes that the Company will be able to
demonstrate, at such hearing, its ability to achieve compliance with NASDAQ
continued listing requirements within a reasonable time frame, there can be no
assurance (i) that the Company will prevail at the hearing, (ii) that it will
thereafter be able to obtain a further postponement of any delisting action or
(iii) that the Company will achieve compliance with NASDAQ's continued listing
requirements. The NASDAQ SmallCap Market provides brokers and others with
immediate access to the best bid and asked prices and other information
concerning the Common Stock, on a real-time basis during each trading day. If
the Company should be unable to meet NASDAQ listing requirements, the
information
6
<PAGE>
generated through the NASDAQ SmallCap Market would cease to be available,
trading in the Common Stock would have to be reported in another form of
over-the-counter market, such as the OTC Bulletin Board Service or the pink
sheets, and stockholders might find it more difficult to obtain timely, accurate
quotations as to the price of the Common Stock and, accordingly, may have more
difficulty in effecting transactions in the Common Stock. In addition, if the
Common Stock were to become delisted from quotation on the Nasdaq SmallCap
Market and the trading price of the Common Stock were to be below $5.00 per
share thereafter, trading in the Common Stock would become subject to the
provisions of the penny stock rules promulgated under the Securities Exchange
Act of 1934 (the "Exchange Act"), which require additional disclosure by
broker-dealers who sell such penny stocks to customers other than established
customers and accredited investors. Such rules also require broker-dealers to
make special suitability determinations and to receive customers' written
consents prior to completing transactions, and the additional burdens imposed on
broker-dealers by such requirements may discourage them from effecting
transactions in the Common Stock, which could adversely affect the market price
and limit the market liquidity of the Common Stock.
GOING CONCERN. The Company expects to proceed as a going concern, which
contemplates the continuity of operations and the realization of assets and
satisfaction of liabilities in the ordinary course of business. The Company's
audited Consolidated Financial Statements have been prepared on the assumption
that the Company will continue as a going concern. However, the the Company's
recurring operating losses and a working capital deficiency raise substantial
doubt about the Company's ability to continue as a going concern, and Note 1 to
the Consolidated Financial Statements indicates that the continuation of the
Company's going concern basis will be dependent on the realization of a
management plan for the restructuring of operations, the reduction of overhead,
the obtaining of additional financing and the achieving of profitable operations
and sufficient cash flow to meet current obligations. While management believes
that such plan is attainable, there can be no assurance that such plan will be
realized as contemplated or that the Company will achieve profitable operations.
Prospective investors are urged to review the Report of the Company's auditors
dated April 14, 1998 and the Consolidated Financial Statements and the Notes
thereto included in the Company's Report on Form 10-K for the year ended
December 31, 1997, which has been incorporated herein by reference.
DEPENDENCE ON RECEIVABLES AND FLOOR PLAN FINANCING. The Company has a
factoring facility with Century Business Credit Corporation ("Century"), under
which Century purchases, on an uncommitted basis, receivables from the Company.
Such receivables financing facility is important to the Company's liquidity and
enables the Company to better manage its cash flow. The Company also has had a
floor planning financing arrangement with Finova Capital Corporation ("Finova"),
which was used primarily for the discontinued aggregator business. The Company
views its relationship with Century as important and beneficial to the Company's
operations, and has been phasing out its relationship with Finova. While any
loss of the relationship with Century is not anticipated, there can be no
assurance that the Company will continue indefinitely to have access to the
Century financing facility, and any loss of such facility in the future would
have a materially adverse effect on the Company's business. In the event of any
such loss, the Company would be required to obtain replacement receivables
financing, but there can be no assurance that such replacement financing would
be available.
CUSTOMER CONCENTRATION. The Company's largest customer, Lockheed Martin,
accounted for 20.8% of the Company's revenues in 1996 and 22.0% of revenues from
continuing operations in 1997. The Company has no long-term commitments for
continuing orders from such customer, and there can be no assurance that the
Company will be able to maintain or increase the current level of sales derived
from this or any other customers or attract additional customers. The loss of
such customer could have a materially adverse affect on the Company's business,
financial condition and results of operation.
NEED FOR ADDITIONAL FINANCING; WORKING CAPITAL DEFICIT. From December, 1997
through March 31, 1998, the Company sold shares of Series 6, Series 7 and Series
8 Convertible Preferred Stock to investors in
7
<PAGE>
private placements, receiving net proceeds of $3,546,000 from the financing. In
addition, on April 30, 1998 the Company sold $2,000,000 principal amount of its
6% Convertible Debentures to an institutional investor. Proceeds from the sale
of the Preferred Stock and Debentures were used for carrying inventory and
receivables and increasing working capital. (For a description of the Series 6,
7 and 8 Convertible Preferred Stock and the 6% Convertible Debentures, see the
Company's Report on Form 8-K dated May 14, 1998 and its Report on Form 10-Q for
the period ended March 31, 1998, both of which are incorporated by reference in
this Prospectus.) As a result of the Company's losses from continuing and
discontinued operations in 1997, the Company had a working capital deficit of
$($4,016,520) as of March 31, 1998, before taking into account the sale of the
6% Convertible Debentures. The Company anticipates that it will need additional
equity or debt financing to sustain its present operating levels, but there is
no assurance that such financing will be available on terms acceptable to the
Company, or on any terms. The Company's business and operations would be
materially and adversely affected if it is unable to obtain a level of financing
and working capital commensurate with the level of its revenues.
EFFECT OF ADDITIONAL SHARES TRADED. The Shares included in the registration
statement of which this Prospectus forms a part have not been previously
registered and available for public sale by the Selling Stockholders. Assuming,
at the date of this Prospectus, (i) that all of the 6% Convertible Debentures
were to be converted into shares of Common Stock, (ii) that all shares of Series
6, Series 7, Series 8 and Series 9 Convertible Preferred Stock were to be
converted into shares of Common Stock on the basis of a market price equal to
the May 27, 1998 average price of $1.875 per share, and (iii) that all Warrants
were to be exercised, regardless of the fact that the exercise prices of the
Warrants are higher than such average price (except in the case of one Warrant
for the purchase of 120,000 shares exercisable at a discounted market price),
there would be a total of 15,308,761 shares of Common Stock outstanding, the
shares of Common Stock issuable upon conversion of the 6% Convertible Debentures
would represent 9.3%, the shares of Common Stock issuable upon such conversion
of Series 6, Series 7, Series 8 and Series 9 Preferred Stock would represent
19.1%, the shares issuable upon such exercise of Warrants would represent 19.7%,
respectively, of the total shares of Common Stock to be then outstanding after
such conversion and such exercise, and such shares would be available for public
sale. Future sales of significant numbers of shares of Common Stock in the
public market, especially if such shares are sold at the same time, could have a
depressive effect on the prevailing market price of the Common Stock and also
could impair the Company's ability to raise capital through subsequent offerings
of securities. Assuming that all Warrants were exercised at their stated
exercise prices, the Company would realize aggregate proceeds of approximately
$10,139,682 from such exercise.
COMPETITIVE NATURE OF BUSINESS. Competition in the integration, supply and
servicing of computer systems and equipment is intense. The Company's
competitors include national, regional and local integrators, distributors and
resellers. Most of these competitors are privately held, and, accordingly,
information on their size and business is not readily available, although the
Company believes there are a significant number of competitors having
substantially greater resources than Global. Key competitive factors include
quality, availability and prompt delivery of services and equipment, pricing and
technical support. While a number of national and regional distributors and
integrators of computer equipment may have substantially greater financial
resources and larger staffs than the Company, the Company views its emphasis on
service and technical support, and its offering of total systems and total
solutions for customers, as a competitive strength.
TECHNOLOGICAL CHANGE AND PRODUCT OBSOLESCENCE. The microcomputer industry
is characterized by rapid product improvement and technological change which
result in relatively short product life cycles and rapid product obsolescence.
Although such change and short product life cycles may result in an increased
desire on the part of certain customers to upgrade their computer installations,
thereby presenting new marketing opportunities, such rapid product changes also
introduce elements of uncertainty in the furnishing of services and products.
While the Company has stock rotation privileges and price protection rights in
its major vendor agreements, there is no assurance that the Company will always
be
8
<PAGE>
able to dispose of any inventory of older products at a profit. Also, there can
be no assurance that unforeseen new product developments will not affect the
Company adversely.
MANAGEMENT AND OTHER KEY PERSONNEL. The Company's future success depends on
the Company's ability to attract, retain and motivate key managerial,
information technology and marketing personnel. There is presently substantial
competition for the services of experienced and skilled managerial, information
technology and marketing personnel, and there can be no assurance that the
Company will be able to obtain the services of such personnel on a consistent
basis in the future. The inability to attract, retain and motivate key
managerial, information technology and marketing personnel in the future could
have a material adverse effect on the Company's business, financial position and
results of operations.
VOLATILITY OF SHARE PRICE. The trading price of Global Common Stock has
been in the past and may in the future be subject to wide fluctuations in
response to variations in operating results, announcements of technological
innovations or new products by the Company, its suppliers or competitors, and
other events or factors. In addition, the NASDAQ and other stock markets have
recently experienced large price and volume fluctuations, which often have been
unrelated to the operating performance of specific companies or market sectors,
such as the stock market's reactions to instabilities in certain Asian
economies. These broad market fluctuations may also adversely affect the market
price of the Common Stock.
LACK OF DIVIDENDS. The Company has not paid any cash dividends on the
Global Common Stock and it is not anticipated that it will do so in the
foreseeable future. Also, the existence of classes of outstanding preferred
stock means that holders of preferred shares will receive the dividends to which
they are entitled before any dividends may be paid to holders of Common Stock.
PREFERRED STOCK PROVISIONS; ANTI-TAKEOVER MEASURES. The Board of Directors
has authority to issue up to 10,000,000 shares of preferred stock and to fix the
rights, preferences, privileges and limitations, including voting rights, of the
preferred stock without further vote or action by the Company's stockholders.
The rights of the holders of Global Common Stock will be subject to, and may be
adversely affected by, the rights of the holders of any preferred stock that may
be issued. The Company presently has four outstanding classes of Preferred
Stock, two of which were issued in connection with the acquisition of
subsidiaries by the Company, and the holders of such preferred stock have rights
to receive dividends prior to the payment of any dividends to holders of Common
Stock. Preferred stock may continue to be issued in connection with future
acquisitions and for other corporate purposes, such as financing, and could also
have the effect of making it more difficult for a third party to acquire a
majority of the outstanding voting stock of the Company or obtain a change in
control of the Board of Directors of the Company.
FORWARD-LOOKING INFORMATION IS SUBJECT TO RISK AND UNCERTAINTY. Certain
statements contained or incorporated by reference in this Prospectus constitute
estimates of future performance or other forward-looking statements. Such
forward-looking statements involve known and unknown risks, uncertainties and
other important factors that could cause the actual results, performance or
achievements of the Company to differ materially from any future results,
performance or achievements expressed or implied by such forward-looking
statements. Such risks, uncertainties and other important factors include, among
other things, Global's success in implementing its respective business strategy,
including success in arranging financing where required; competition; general
economic and business conditions; and other factors referenced in this
Prospectus. These forward-looking statements speak only as of the date of this
Prospectus.
USE OF PROCEEDS
The Shares being offered hereby are for the account of the Selling
Stockholders. Accordingly, the Company will not receive any of the proceeds from
the sale of the Shares by the Selling Stockholders. See "Selling Stockholders."
9
<PAGE>
If and when any of the Warrants listed in the table under "Selling
Stockholders" is exercised, the Company will receive, as payment for the
purchase of shares issuable thereunder, the exercise price set forth in the
applicable Warrant. If received, such payment will be added to the Company's
working capital. Since the Warrants generally have exercise prices substantially
above the current market price of the Common Stock (which averaged $1.875 per
share on the Nasdaq SmallCap Market on May 27, 1998), the Company does not
anticipate the present exercise of a substantial number of Warrants. If all of
the Warrants were to be exercised, the aggregate payments to the Company from
such exercise would be approximately $10,139,682.
SELLING STOCKHOLDERS
The following table sets forth certain information with respect to the
Selling Stockholders. The number of Shares that may actually be sold by the
Selling Stockholders will be determined by such Selling Stockholders, and may
depend upon a number of factors, including, among other things, the market price
of the Common Stock from time to time. The table below sets forth information as
of May 27, 1998, concerning the beneficial ownership of Shares held by the
Selling Stockholders, including separately tabulated information concerning (i)
shares of Common Stock issuable upon conversion of the 6% Convertible
Debentures, (ii) shares of Common Stock issuable upon conversion of Series 6,
Series 7, Series 8 and Series 9 Convertible Preferred Stock; (iii) shares of
Common Stock held by Company directors, a Company employee and others; and (iv)
Warrants held by directors and employees of the Company and by other Selling
Stockholders.
10
<PAGE>
<TABLE>
<CAPTION>
SHARES OF
COMMON STOCK
SHARES OF COMMON OFFERED SHARES OF COMMON
STOCK OWNED IN THE STOCK OWNED
BEFORE OFFERING OFFERING AFTER OFFERING(3)
-------------------------- -------------- ---------------------
NAME OF STOCKHOLDER NUMBER(1) PERCENT(2) NUMBER NUMBER PERCENT
- ----------------------------------------------- ------------- ----------- -------------- ---------- ---------
<S> <C> <C> <C> <C> <C>
6% CONVERTIBLE DEBENTURES
JNC Opportunity Fund Ltd.(4)................... 1,423,168 9.3 3,007,092(5)
PREFERRED STOCK
SERIES 6
Augustine Fund, L.P............................ 142,222 0.9 142,222
Bronia GMbH.................................... 711,111 4.6 711,111
Thomson Kernaghan & Co., Ltd................... 711,111 4.6 711,111
SERIES 7
Suaro, Ltd..................................... 142,222 0.9 142,222
Frederick Lenz................................. 71,111 0.5 71,111
Jimmy Dean Dowda............................... 35,556 0.2 35,556
Rida Holdings.................................. 142,222 0.9 142,222
James Skalko................................... 35,556 0.2 35,556
Bruce Knox..................................... 35,556 0.2 35,556
Louise Nilsdotter.............................. 106,667 0.6 106,667
Spratt Family Trust............................ 71,111 0.5 71,111
Arnold Zousmer................................. 355,556 2.3 355,556
Colbennett LLC................................. 17,778 0.1 17,778
SERIES 8
Congregation Beth Mordechai.................... 142,222 0.9 142,222
Dale N. Steen.................................. 17,778 0.1 17,778
Accessible Development......................... 71,111 0.5 71,111
SERIES 9
N. Normal Muller............................... 106,667(6) 0.7 106,667(6)
--------------
Total Shares from Conversion of Preferred
Stock...................................... 2,915,555 2,915,555
--------------
2,915,555
ISSUED COMMON STOCK
MANAGEMENT AND EMPLOYEE STOCK
David A. Mortman (7)........................... 502,617 3.3 300,000(8)
Wayne M. Rogers (7)............................ 797,593 5.2 100,000(8)
Robert Grear (7)............................... 7,500 -- 7,500
OTHER STOCK
Liberty Capital Group.......................... 285,000 1.9 285,000
Cyn Del & Co., Inc............................. 50,000 0.3 50,000
------------- --------------
Total Issued Shares........................ 742,500 742,500
</TABLE>
<TABLE>
<CAPTION>
SHARES OF COMMON
SHARES OF COMMON STOCK OFFERED SHARES OF COMMON
STOCK OWNED IN THE OFFERING STOCK OWNED
BEFORE OFFERING ----------------------- AFTER OFFERING(3)
-------------------------- EXERCISE --------------------
NAME OF STOCKHOLDER NUMBER(1)(2) PERCENT(2) NUMBER PRICE NUMBER PERCENT
- -------------------------------------------------- ------------- ----------- ---------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
WARRANTS--MANAGEMENT (9)(10)
David Boim (9).................................... 7,500 -- 7,500 $ 1.99
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
SHARES OF COMMON
SHARES OF COMMON STOCK OFFERED SHARES OF COMMON
STOCK OWNED IN THE OFFERING STOCK OWNED
BEFORE OFFERING ----------------------- AFTER OFFERING(3)
-------------------------- EXERCISE --------------------
NAME OF STOCKHOLDER NUMBER(1)(2) PERCENT(2) NUMBER PRICE NUMBER PERCENT
- -------------------------------------------------- ------------- ----------- ---------- ----------- --------- ---------
Anthony Cucchi (20)............................... 45,000 0.3 45,000 $ 2.02
<S> <C> <C> <C> <C> <C> <C>
Johan de Muinck Keizer (11)....................... 20,000 0.1 20,000 $ 2.02
Howard Maidenbaum (21)............................ 50,000 0.3 50,000 $ 2.02
David A. Mortman.................................. 246,250 1.6 246,250 (12)
N. Norman Muller (22)............................. 70,000 0.5 70,000 $ 2.02
Wayne M. Rogers................................... 47,000 0.3 47,000 (13)
Anthony Russo..................................... 20,000 0.1 20,000 $ 2.02
Thomas Smith (23)................................. 45,000 0.3 45,000 $ 2.02
OTHER WARRANTS
Avonwood Capital Corp............................. 35,000 0.2 35,000 $ 3.00
Cooke Capital, Inc................................ 100,000 0.7 100,000 (14)
Cyn Del & Co., Inc................................ 300,000 2.0 300,000 (15)
Destler Services, Inc............................. 200,000 1.3 200,000 (16)
First National Bank Of Long Island................ 1,250 -- 1,250 $ 2.03
Glenn Michael Financial, Inc...................... 50,000 0.3 50,000 $ 2.00
JNC Opportunity Fund Ltd.......................... 377,358 2.5 377,358 $ 2.24
Liberty Capital Group............................. 700,000 4.6 700,000 (17)
MWW/ Strategic Communications, Inc................ 8,333 -- 8,333 $ 3.00
Carl Nurick....................................... 20,000 0.1 20,000 $ 2.00
Pacific Consulting Group.......................... 150,000 1.0 150,000 (18)
Willie Salet...................................... 35,000 0.2 35,000 $ 3.00
Perry Scherr...................................... 65,000 0.4 65,000 18(A)
Hobbs Melville Securities Corp.................... 120,000 0.8 120,000 (19)
Wharton Associates................................ 40,000 0.3 40,000 $ 4.00
Wharton Capital Partners, Ltd..................... 40,000 0.3 40,000 $ 2.24
Infusion Capital Partners, LLP.................... 225,000 1.5 225,000 $ 1.50
----------
Total Shares Issuable Upon Exercise of
Warrants.................................... 3,017,691 3,017,691
</TABLE>
- ------------------------
(1) In the case of information under "6% Convertible Debentures", represents
Shares issuable upon conversion of such Debentures and assumes all of such
Debentures, including accrued interest, are converted; in the case of
"Preferred Stock", represents Shares issuable upon conversion of Series 6,
Series 7, Series 8 and Series 9 Preferred Stock into Common Stock, and
assumes each holder converts all shares of Preferred Stock owned by such
holder; in the case of information under "Issued Common Stock", represents
Shares issued and currently issuable (shares issuable upon the exercise of
Warrants are separately listed below); in the case of "Warrants--Management"
and "Other Warrants", represents Warrants issued or presently issuable.
(2) The amounts and percentages indicated assume that (i) all 6% Convertible
Debentures (plus accrued interest) were converted into shares of Common
Stock in accordance with their terms immediately prior to the date of this
Prospectus, (ii) all shares of Series 6, 7, 8 and 9 Convertible Preferred
Stock were converted into shares of Common Stock immediately prior to the
date of this Prospectus (based on the average market price of Common Stock
on May 27, 1998), and that (iii) all Warrants were exercised and the shares
purchased thereunder were issued immediately prior to the date of this
Prospectus, resulting in a pro forma total of 15,308,761 shares of Common
Stock outstanding, instead of 7,952,345 shares actually outstanding
(including the pending issuance of 292,500 shares) as of May 27, 1998.
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<PAGE>
(3) Because the Selling Stockholders may sell all, some or none of the shares
held, and because the offering contemplated by this Prospectus is not being
underwritten, no estimate can be given as to the number of shares that will
be held by the Selling Stockholder upon or prior to termination of this
offering. However, for purposes of the above table, it is assumed that all
shares offered hereby will be sold. See "Plan of Distribution."
(4) Includes 1,423,168 shares of Common Stock issuable upon conversion of the
Debentures held by JNC Opportunity Fund, Ltd. ("JNC") and as payment of
interest thereon in shares of Common Stock, at an assumed conversion price
of $1.41 per share (the "Debenture Shares"). Because the number of shares of
Common Stock issuable upon conversion of the Debentures and as payment of
interest thereon is dependent in part upon the market price of the Common
Stock prior to a conversion, the actual number of shares of Common Stock
that will be issued in respect of such conversions or interest payments, and
consequently the number of shares of Common Stock that will be beneficially
owned by JNC, will fluctuate daily and cannot be determined at this time.
However, JNC has contractually agreed to restrict its ability to convert
Debentures (and receive shares of Common Stock in payment of interest
thereon) and exercise the Warrants held by it as listed elsewhere in the
table to the extent that the number of shares of Common Stock held by it and
its affiliates after such conversion and/or exercise exceeds 4.999% of the
then issued and outstanding shares of Common Stock following such conversion
and/or exercise.
(5) Includes the shares of Common Stock issuable as payment of interest for a
period of two years on the Debentures, and 200% of the shares issuable on
conversion of the Debentures'. Because the number of shares of Common Stock
issuable upon conversion of the Debentures and as payment of interest
thereon is dependent in part upon the market price of the Common Stock prior
to a conversion, the actual number of shares of Common Stock that will be
issued in respect of such conversions or interest payments and,
consequently, offered for sale under this Registration Statement, cannot be
determined at this time. However, the Company has contractually agreed to
include herein 200% of the number of shares of Common Stock as would be
issuable upon conversion in full of the Debentures (plus payment of interest
thereon), assuming the conversion price therefore was $1.41.
(6) Represents shares of Preferred Stock being purchased by N. Norman Muller and
being transferred to the plaintiff in connection with the settlement of
certain litigation against Mr. Muller and others. See "Certain
Transactions."
(7) Mr. Mortman is President and Chief Operating Officer and a director, and
Mr. Rogers is a director; Mr. Grear is an employee.
(8) Represents shares of Common Stock issued to the named directors under
restricted stock agreements dated February 26, 1998, pursuant to which
ownership of such shares will vest in eight equal quarterly installments
over two years. Each such person has indicated to the Company in writing
that he has no present intention of selling any of such shares.
(9) N. Norman Muller is Chairman, Chief Executive Officer and a director; David
A. Mortman is President, Chief Operating Officer and a director; Howard
Maidenbaum is Executive Vice President and a director; Messrs. Rogers and
Smith are directors; Mr. Cucchi resigned as Vice Chairman and as a director
effective as of January 23, 1998; Mr. Russo manages the Systems Integration
Group; Mr. Boim is the former President of Global InSync.
(10) Represents only shares issuable upon exercise of the Warrants.
(11) Mr. Keizer is Vice President and General Counsel of the Company.
(12) David A. Mortman holds 245,000 Warrants exercisable at $2.02, and 1,250
Warrants exercisable at $5.25. Mr. Mortman has indicated he has no present
intention of selling shares purchasable under such Warrants.
13
<PAGE>
(13) Wayne M. Rogers holds 45,000 Warrants exercisable at $2.02, and 2,000
Warrants exercisable at $5.25. Mr. Rogers has indicated he has no present
intention of selling shares purchasable under such Warrants.
(14) Cooke Capital, Inc. holds 50,000 Warrants exercisable at $2.00 and 50,000
Warrants exercisable at $3.00.
(15) Cyn Del & Co., Inc. holds 150,000 Warrants exercisable at $2.75 and 150,000
Warrants exercisable at $4.00.
(16) Destler Services, Inc. holds 100,000 Warrants exercisable at $3.50 and
100,000 Warrants exercisable at $5.00.
(17) Liberty Capital Group holds 700,000 Warrants exercisable at various prices
ranging from $2.75 to $8.75.
(18) Pacific Consulting Group holds 50,000 Warrants exercisable at $3.00, 50,000
Warrants exercisable at $4.00 and 50,000 Warrants exercisable at $6.00
(18A)Perry Scherr holds 45,000 Warrants exercisable at $4.00 and 20,000 Warrants
exercisable at $2.24 per share.
(19) Hobbs Melville Securities Corp. holds 120,000 Warrants exercisable at a
price equal to the lesser of the closing price of Common Stock on June 26,
1996, or 75% of the bid price of the Common Stock on the exercise date.
(20) Anthony Cucchi also owns beneficially 27,593 shares of Common Stock, not
being included in this offering.
(21) In addition to the Warrants held by him, Howard Maidenbaum, his adult
children and a family corporation own beneficially 461,533 shares of Common
Stock, not being included in this offering.
(22) In addition to the Warrants held by him, N. Norman Muller's wife and a
corporation owned by his adult children own beneficially a total of 442,280
shares of Common Stock, not being included in this offering.
(23) In addition to the Warrants held by him, Thomas Smith and a corporation
controlled by him own beneficially a total of 265,000 shares of Common
Stock, not being included in this offering.
Additional information concerning the above listed Selling Stockholders may
be set forth from time to time in supplements to this Prospectus. See "Plan of
Distribution."
Pursuant to the terms of the Series 6 and Series 7 Convertible Preferred
Stock and the Warrants, the Company agreed to file the Registration Statement of
which this Prospectus forms a part for the purpose of registering the potential
resale of the shares obtainable by the holders of such Preferred stock and of
the Warrants.
In addition, the Company and the Selling Stockholders have agreed to
indemnify each other and certain affiliated parties from and against any losses
or claims arising out of, among other things, (1) untrue statement or alleged
untrue statement of a material fact or (2) any material omission, contained or
referred to in the Registration Statement. Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to directors,
officers or persons controlling the Company, pursuant to the foregoing
provisions, the Company has been informed that, in the opinion of the
Commission, such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
All of the registration and filing fees, printing expenses, blue sky fees,
if any, and fees and disbursements of counsel for the Company will be paid by
the Company; provided, however, that any underwriting discounts and/or selling
commissions, and the fees and disbursements of counsel to the respective Selling
Stockholders, will be borne by the respective Selling Stockholders.
Except for the persons listed under "Management and Employee Stock" and
under "Warrants-- Management" in the preceding table (and the notes thereto),
the Company does not believe that any of the
14
<PAGE>
Selling Stockholders has, or within the past three years has had, any position,
office or other material relationship with the Company or any of its
predecessors or affiliates.
PLAN OF DISTRIBUTION
Sales of all or a portion of the shares registered hereunder may be made
from time to time by the Selling Stockholders, or, subject to applicable law, by
pledgees, donees, distributees, transferees or other successors in interest.
Such sales may be made on the Nasdaq SmallCap Market, in another over-the-
counter market, on a national securities exchange (any of which may involve
crosses and block transactions), in privately negotiated transactions or
otherwise or in a combination of such transactions at prices and at terms then
prevailing or at prices related to the then current market price, or at
privately negotiated prices. In addition, any shares covered by this Prospectus
which qualify for sale pursuant to Section 4(1) of the Securities Act and Rule
144 promulgated thereunder may be sold under such provisions rather than
pursuant to this Prospectus. Without limiting the generality of the foregoing,
the shares may be sold, without limitation, in one or more of the following
types of transactions: (a) a block trade in which the broker-dealer so engaged
will attempt to sell the shares as agent but may position and resell a portion
of the block as principal to facilitate the transaction; (b) purchases by a
broker or dealer as principal and resale by such broker or dealer for its
account pursuant to this Prospectus; (c) ordinary brokerage transactions and
transactions in which the broker solicits purchasers; and (d) face-to-face
transactions between sellers and purchasers without a broker-dealer; (e) an
exchange distribution in accordance with the rules of such exchange; and (f) a
combination of any such methods of sale. In addition, a Selling Stockholder may
use this Prospectus to distribute the Shares in any other manner permitted under
applicable securities laws. In effecting sales, brokers or dealers engaged by
the Selling Stockholder may arrange for other brokers or dealers to participate
in the resales.
Broker-dealers may agree with the Selling Stockholders to sell a specified
number of such Shares at a stipulated price per share, and, to the extent such
broker-dealer is unable to do so acting as agent for a Selling Stockholders, to
purchase as principal any unsold Shares at the price required to fulfill the
broker-dealer commitment to the Selling Stockholders. Broker-dealers who acquire
Shares as principal may thereafter resell such Shares from time to time in
transactions (which may involve block transactions and sales to and through
other broker-dealers, including transactions of the nature described above) in
the over-the-counter market or otherwise at prices and on terms then prevailing
at the time of sale, at prices then related to the then-current market price or
in negotiated transactions and, in connection with such resales, may pay to or
receive from the purchasers of such Shares commissions as described above. The
Selling Stockholders may also sell the Shares in accordance with Rule 144 under
the Securities Act, rather than pursuant to this Prospectus.
In connection with distribution of the Shares or otherwise, the Selling
Stockholders may enter into hedging transactions with broker-dealers. In
connection with such transactions, broker-dealers may engage in short sales of
the shares registered hereunder in the course of hedging the positions they
assume with the Selling Stockholders. The Selling Stockholders may also enter
into option or other transactions with broker-dealers which require the delivery
to the broker-dealer of the shares registered hereunder, which the broker-dealer
may resell pursuant to this Prospectus. From time to time the Selling
Stockholders may pledge their Shares pursuant to the margin provisions of its
customer agreements with its brokers. Upon a default by the Selling
Stockholders, the broker may offer and sell the pledged Shares from time to
time.
Brokers, dealers or agents may receive compensation in the form of
commissions, discounts or concessions from the Selling Stockholders in amounts
to be negotiated in connection with the sale. Such brokers or dealers and any
other participating brokers or dealers may be deemed to be "underwriters" within
the meaning of the Securities Act in connection with such sales and any such
commission, discount or concession may be deemed to be underwriting discounts or
commissions under the Securities Act. Any dealer or brokerage firm participating
in any distribution of the shares may be required to deliver a copy of this
Prospectus, including any supplement to this Prospectus (the "Prospectus
Supplement"), to any person who purchases any of the shares from or through such
dealer or broker.
15
<PAGE>
The Company has advised the Selling Stockholders that, during such time as
they may be engaged in a distribution of the shares included herein, they are
required to comply with Regulation M promulgated under the Exchange Act. In
general, Regulation M precludes any Selling Stockholders, any affiliated
purchasers and any broker-dealer or other person who participates in such
distribution from bidding for or purchasing, or attempting to induce any person
to bid for or purchase, any security which is the subject of the distribution
until the entire distribution is complete. A "distribution" is defined in the
rules as an offering of securities that is distinguished from ordinary trading
activities and depends on the "magnitude of the offering and the presence of
special selling efforts and selling methods." Regulation M also prohibits any
bids or purchases made in order to stabilize the price of a security in
connection with the distribution of that security.
It is anticipated that the Selling Stockholders will offer the shares listed
in the table under "Selling Stockholders" from time to time, except that (i)
Messrs. Mortman and Rogers have indicated they do not intend to sell their
shares presently (see Notes 8,12 and 13 to the table) and (ii) the holders of
the Warrants may or may not choose to exercise such Warrants in order to
purchase the shares listed next to their respective names in the table,
depending on the relationship between the prevailing market price of the Common
Stock from time to time and the exercise prices of the various Warrants (see the
information with regard to exercise prices in the table under "Selling
Stockholders"). See "Risk Factors--Effect of Additional Shares Traded."
The Company is required to pay all fees and expenses incident to the
registration of the Shares, including fees and disbursements (not to exceed an
aggregate of $10,000) of counsel to certain of the Selling Stockholders. The
Company has agreed to indemnify the Selling Stockholders against certain losses,
claims, damages and liabilities, including liabilities under the Securities Act.
CERTAIN TRANSACTIONS
The Company's Board of Directors previously voted to indemnify certain of
the Company's officers and directors ("the Indemnitees") who were former
officers and/or directors of a company known as Communications and Entertainment
Corp. ("ComEnt"), for claims against the Indemnitees arising out of their prior
service on behalf of ComEnt, in the event that ComEnt failed to honor an
obligation it previously undertook to indemnify the Indemnitees with respect to
any such claims. Two claims within the scope of ComEnt's indemnification
obligation have been asserted against certain of the Indemnitees, but ComEnt has
declined to honor its obligations under its indemnification. Pursuant to the
action of the Company's directors in authorizing such indemnification, the
Company has paid certain legal fees and related expenses in connection with the
defense of such claims, which fees and expenses amounted to an aggregate of
$675,567 for the year ended December 31, 1997. The pending claims against
certain of the Indemnitees, and the status thereof, are:
A. An action in the United States District Court for the Central District
of California entitled DIANA PFANNEBECKER, INDIVIDUALLY AND ON BEHALF OF
ALL OTHERS SIMILARLY SITUATED PLAINTIFFS V. N. NORMAN MULLER, ET AL. From
information made available to the Company, it appears that this action
has been dismissed by the District Court, and an appeal to the United
States Court of Appeals for the Ninth Circuit from that dismissal is
presently pending.
B. An action pending in the California Superior Court, Los Angeles
County, entitled KRISHNA SHAH V. N. NORMAN MULLER, ET AL, (the "Shah
Action") in which a settlement agreement has been reached, as set forth
below.
The settlement arrangements in the Shah Action provide for the delivery of a
general release from the plaintiff in favor of both N. Norman Muller, the
Company's Chairman, and the Company (although the Company is not named as a
defendant in the Shah Action), and the delivery to the plaintiff of a promissory
note (the "Note") in the principal amount of $200,000 with interest at 9%. The
Note will provide for monthly installment payments of $8,333 beginning September
26, 1988 and continuing for a two-year period. In order to facilitate the
settlement and accommodate Mr. Muller, and because the Company will
16
<PAGE>
receive a release in the course of the settlement, the Company will issue the
Note as its direct obligation, but Mr. Muller will execute an indemnification
agreement and a reciprocal promissory note in favor of the Company, in which he
is undertaking to promptly reimburse the Company in the event it is required to
make any payment under the Note.
In addition, the Company is issuing to Mr. Muller, and Mr. Muller is
purchasing from the Company, 200 shares of a newly designated Series 9
Convertible Preferred Stock with a stated liquidation preference of $1,000 per
share, convertible into shares of Common Stock at the closing bid price per
share (and, if not listed on NASDAQ, at the lowest reported bid price) of Common
Stock on the day immediately prior to the date of conversion. Mr. Muller is
paying the Company the sum of $200,000 in the form of a promissory note for such
Series 9 shares, and intends to assign such shares to the plaintiff in the Shah
litigation in consideration of the cancellation of the Note and the delivery of
all Shah Action settlement documents. The resale of shares of Common Stock
issuable upon conversion of the Series 9 Preferred Stock is being included in
the shares of Common Stock offered pursuant to this Prospectus. See "Selling
Stockholders".
LEGAL MATTERS
Certain legal matters in connection with the securities being offered hereby
will be passed upon for the Company by Rosner Bresler Goodman & Unterman, LLP,
521 Fifth Avenue, New York, New York 10175.
EXPERTS
The consolidated financial statements of Global Intellicom, Inc. and
subsidiaries included in the Company's annual report on Form 10-K for the year
ended December 31, 1997 have been audited by Miller, Ellin & Company,
independent auditors, as indicated in their report dated April 14, 1998 with
respect thereto. Such financial statements are incorporated herein by reference
in reliance upon the report of said firm given upon their authority as experts
in accounting and auditing.
17
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the Company's estimates of the expenses to be
incurred by it in connection with the Common Stock being offered hereby:
<TABLE>
<S> <C>
SEC Registration Fee............................................ $5,355.83
Printing registration statement and other documents............. *6,000.00
Legal fees and expenses......................................... *15,000.00
Accounting fees and expenses.................................... *1,000.00
Miscellaneous expenses.......................................... *3,000.00
</TABLE>
- ------------------------
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Article Eighth of the Restated Certificate of Incorporation of the Company
contains the following provision which provides for the indemnification of
directors and officers of the Company:
EIGHTH: No director or officer of the Corporation shall have personal
liability to the Corporation or its stockholders for damages for breach
of fiduciary duty as a director or officer, except that this provision
shall not eliminate the liability of a director or officer for (a) acts
or omissions which involve intentional misconduct, fraud or a knowing
violation of law, or (b) the payment of distributions in violation of
Nevada General Corporation Law Section 78. 300. No amendment to or repeal
of this Article EIGHTH shall apply to or have any effect on the liability
or alleged liability of any director or officer of the Corporation for or
with respect to any acts or omissions of such director or officer
occurring prior to such amendment or repeal.
In accordance with Section 78.751, Title 7 of the Nevada Revised Statutes,
Article Eighth of the Certificate of Incorporation of the Company eliminates the
personal liability of directors to the Company or its stockholders for monetary
damages for breach of fiduciary duty as a director with certain limited
exceptions set forth in Section 78.751, and Article Ninth of the Certificate of
Incorporation provides for indemnification of Company directors and officers
against any such liability. The Company may also obtain and maintain its own
insurance for the benefit of its directors and officers and the directors and
officers of its subsidiaries, insuring such persons against certain liabilities
including liabilities arising under the securities law.
Agreements between the Company and the purchasers of the Company's Series 6
and Series 7 Convertible Preferred Stock, and various Warrants and other
agreements, provide for reciprocal indemnification between the Company and its
controlling persons on the one hand, and the Selling Stockholders and their
respective controlling persons on the other hand, against certain liabilities in
connection with this offering, including liabilities under the Securities Act of
1933.
II-1
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
- --------- -------------------------------------------------------------------------------------------------
<C> <C> <S>
4.01 -- Certificate of Designation for Series 6 Convertible Preferred Stock(1)
4.02 -- Certificate of Designation for Series 7 Convertible Preferred Stock (1)
5.01 -- Opinion of Rosner Bresler Goodman & Unterman, LLP (2)
10.01 -- Form of Restricted Stock Agreements with David A. Mortman and Wayne M. Rogers (1)
23.01 -- Consent of Miller, Ellin & Company, LLP (2)
23.02 -- Consent of Rosner Bresler Goodman & Unterman, LLP (included in Exhibit 5.01 hereof)
24.01 -- Power of attorney (included in the signature page of Part II of this Registration Statement)
</TABLE>
- ------------------------
(1) Included with initial filing of Registration Statement.
(2) Replaces form included with initial filing of Registration Statement.
ITEM 17. UNDERTAKINGS.
The undersigned Company hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement 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.
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, as amended (the "Securities Act"), each such post-effective
amendment shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such 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 which remain unsold at the termination of the
offering.
(4) That, for purpose of determining any liability under the Securities Act,
each filing of the Company's annual report pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934, as amended, that is incorporated by
reference in the Registration Statement, shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers, and controlling persons of the Company
pursuant of Item 15 of the Registration Statement, or otherwise, the Company has
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the mater has
been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-2
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form S-3 and has duly caused this Amendment No.
1 to the Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on June
16, 1998.
GLOBAL INTELLICOM, INC.
BY: /S/ N. NORMAN MULLER
-----------------------------------------
N. Norman Muller
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints N. Norman Muller and David A. Mortman, and each
of them, will full power to act without the other, his true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution
for him and in his name, place and stead, in any and all capacities to sign any
and all amendments (including post-effective amendments) to this Registration
Statement, and to file the same, with all exhibits thereof, and the documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents, and each of them, full power and authority to
do and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents or any of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the dates stated.
SIGNATURE TITLE DATE
- ------------------------------ --------------------------- -------------------
Director, Chairman and
/s/ NORMAN MULLER Chief Executive Officer
- ------------------------------ (Principal Executive June 16, 1998
N. Norman Muller Officer)
/s/ DAVID A. MORTMAN Director, President and
- ------------------------------ Chief Operating Officer June 16, 1998
David A. Mortman
/s/ HOWARD MAIDENBAUM Director and Executive Vice
- ------------------------------ President June 16, 1998
Howard Maidenbaum
/s/ WAYNE M. ROGERS Director
- ------------------------------ June 16, 1998
Wayne M. Rogers
/s/ THOMAS W. SMITH Director
- ------------------------------ June 16, 1998
Thomas W. Smith
/s/ ROBERT L. OLSON Vice President, Finance
- ------------------------------ (Principal Accounting June 16, 1998
Robert L. Olson Officer)
II-3
<PAGE>
EXHIBIT 5.01
June 16, 1998
Global Intellicom, Inc.
747 Third Avenue
New York, New York 10017
Re: Registration Statement on Form S-3 under the Securities Act of 1933
-------------------------------------------------------------------
Gentlemen:
In our capacity as counsel to Global Intellicom, Inc., a Nevada corporation
(the "Company"), we have been asked to render this opinion in connection with a
Registration Statement on Form S-3 (the "Registration Statement), being filed
contemporaneously herewith by the Company with the Securities and Exchange
Commission under the Securities Act of 1933, as amended, covering an aggregate
of 9,682,840 shares (the "Shares") of Common Stock, $0.01 par value, which have
been included in the Registration Statement for the respective accounts of the
persons identified in the Registration Statement as Selling Stockholders.
The Shares include (i) 3,007,092 shares of Common Stock issuable upon
conversion (the "Debenture Shares") of the Company's 6% Convertible Debentures,
which number is calculated at an amount equal to 200% of the number of shares
actually issuable upon conversion of the principal amount thereof as provided
under applicable agreements, (ii) 2,915,557 shares of Common Stock issuable
upon conversion (the "Conversion Shares") of the Company's Series 6, Series 7,
Series 8 and Series 9 Convertible Preferred Stock, (iii) 3,017,691 shares of
Common Stock (the "Warrant Shares") issuable upon the exercise of certain
warrants ("Warrants") listed under "Selling Stockholders" in the Prospectus
included in the Registration Statement, and (iv) 742,500 shares of Common Stock
("Issued Shares") held by persons listed under "Issued Common Stock" in the
table included in "Selling Stockholders."
In that connection, we have examined the Certificate of Incorporation and
the By-Laws of the Company, both as amended to date, the Registration Statement,
corporate proceedings of the Company relating to the issuance of the Common
Stock and such other instruments and documents as we have deemed relevant under
the circumstances.
In making the aforesaid examinations, we have assumed the genuineness of
all signatures and the conformity to original documents of all copies furnished
to us as original or photostatic copies. We have also assumed that the
corporate records furnished to us by the Company
<PAGE>
include all corporate proceedings taken by the Company to date in connection
with the issuance of the Conversion Shares, the Warrant Shares and the Issued
Shares.
We are members of the bar of the State of New York, and have made such
examination of the laws of the State of New York and the laws of the United
States of America as we have deemed relevant to this opinion. To the extent the
laws of any jurisdiction other than the State of New York or the United States
of America are applicable to any of the foregoing opinions, we have assumed the
laws of such jurisdiction are identical to the laws of the State of New York.
Based upon and subject to the foregoing, we are of the opinion that:
A. The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Nevada.
B. The Debenture Shares, when duly issued in conversion of the 6%
Convertible Debentures, the Conversion Shares, when duly issued in
conversion of the Series 6, Series 7, Series 8 and Series 9
Convertible Preferred Stock, and the Warrant Shares, when duly issued
and paid for pursuant to the exercise of the Warrants, will be duly
and validly authorized and issued, fully paid and non-assessable.
C. The Issued Shares are duly and validly issued, fully paid and
non-assessable, except that any Issued Shares subject to a restricted
stock agreement between the holder thereof and the Company, as set
forth in the Prospectus, will be fully paid and non-assessable only to
the extent that the holder's rights therein are vested in accordance
with such restricted stock agreement.
We hereby consent to the use of our opinion as herein set forth as an
exhibit to the Registration Statement and to the use of our name under the
caption "Legal Matters" in the prospectus forming a part of the Registration
Statement.
Very truly yours,
ROSNER BRESLER GOODMAN &
UNTERMAN, LLP
By:
---------------------------
A Member of the Firm
-2-
<PAGE>
EXHIBIT 23.01
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3, Amendment No. 2, of our report dated April 14, 1998,
which appears on page F-3 of the Annual Report on Form 10-K of Global
Intellicom, Inc. and Subsidiaries for the years ended December 31, 1997, 1996
and 1995 and to the reference to our firm under the caption "Experts" in the
prospectus.
/s/ Miller, Ellin & Company, LLP
----------------------------------
MILLER, ELLIN & COMPANY, LLP
New York, New York
June 15, 1998
