2001 Annual Report 10-KSB
December 31, 2001
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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
(Mark One)
/X/ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (No Fee Required) For the fiscal year ended December 31, 2001
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 (No Fee Required)
For the transition period from _________ to _________
Commission file 02-69494
GLOBAL GOLD CORPORATION
(Name of small business issuer in its charter)
Delaware 13-3025550
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
734 Franklin Avenue, Suite 383, Garden City, New York 11530-4525
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number (516) 627-2388
Securities registered under Section 12(b) of the Exchange Act:
Title of each class (Name of each exchange on which registered)
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None
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Securities registered under Section 12(g) of the Exchange Act:
None
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(Title of Class)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes / / No / /.
Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB /X/.
The issuer's revenues for its most recent fiscal year ending December 31, 2001
were $-0-.
The aggregate market value of the voting stock held by non-affiliates of the
Company computed by reference to the price at which the stock was sold, or the
average bid and asked prices of such stock, as of a specified date within the
past 60 days was $125,966(1).
As of December 31, 2001 there were 4,368,114 Shares of the registrant's Common
Stock outstanding (2).
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(1) The Company's Common Stock is not publicly traded. However, the Board of
Directors of the Company determined that the fair market value of the
Common Stock was $0.10 per share.
(2) This number is computed after taking into account the 1 for 10 reverse
split of the shares of Common Stock of the Company, effective as of
December 31, 1996 (the "Reverse Split").
ITEM 1 DESCRIPTION OF BUSINESS
(1) GENERAL OVERVIEW
The Company now holds 3,000,000 shares of common stock of First Dynasty
Mines, Ltd., a publicly traded Canadian corporation. The Company was
previously engaged in the development of a gold mining project in
Armenia, a member of the Commonwealth of Independent States and has
pursued various mining and other business opportunities thereafter, but
without consummating any such transactions. The Company is currently in
the pre-development stage and has not received any revenues from mining
activities as of December 31, 2001 other than such shares of stock and
cash previously paid by First Dynasty Mines, Ltd. Prior thereto, the
Company did not engage in any substantial business activities, except
as described in the section 1(D) entitled "Prior History of the
Company" in the annual reports previously filed by the Company with the
Securities and Exchange Commission ("SEC").
(2) ARMENIAN MINING PROJECT
In 1996, the Company acquired rights under a Joint Venture Agreement
with the Ministry of Industry of Armenia and Armgold, S.F., the
Armenian state enterprises, to provide capital and multistage financing
of the Armenian gold industry, which rights were finalized under the
Second Armenian Gold Recovery Company Joint Venture Agreement dated as
of September 30, 1997.
As of January 31, 1997, the Company and Global Gold Armenia Limited,
the Company's wholly-owned Cayman Islands subsidiary ("GGA"), reached
an agreement with First Dynasty Mines, Ltd. ("First Dynasty"), a
Canadian public company whose shares are traded on the Toronto Stock
Exchange and on NASDAQ. Under such agreement, First Dynasty acquired
the right to acquire all of the stock of GGA, subject to certain
conditions, by advancing funds in stages necessary for the
implementation of the tailing project and the preparation of
engineering and business plan materials for the remaining Armenian
mining projects.
The Company, GGA and First Dynasty entered into a definitive agreement
dated May 13, 1997 reflecting the final agreement of the parties with
respect to the above project (the "FDM Agreement"). The parties
thereafter amended the FDM Agreement on July 24, 1998.
In connection with First Dynasty's purchase of the Company's remaining
20% interest in GGA, the Company received a certificate representing
special warrants to purchase 4,000,000 shares of First Dynasty common
stock. In September 1999, the warrants were exchanged for 4,000,000
shares of First Dynasty common stock.
For a further description of the background concerning the Armenian
mining project, an interested person can review the quarterly and
annual reports previously filed by the Company with the SEC.
(3) GEORGIAN MINING PROJECT
As of December 31, 1997, the Company abandoned its pursuit of any
mining project in the country of Georgia.
For a further description of the background concerning the Georgian
mining project, an interested person can review the quarterly and
annual reports previously filed by the Company with the SEC.
(4) RECENT ACTIVITIES
(a) On October 13, 1999, the Company entered into a settlement
agreement with Eyre Resources, N.L. ("Eyre") and The
Parry-Beaumont Trust regarding the legal action brought by the
Company and the counterclaim asserted by Eyre and The
Parry-Beaumont Trust in 1998.
In the settlement, 600,000 shares of First Dynasty's common stock
acquired in connection with First Dynasty's purchase of the
Company's 20% interest in GGA were exchanged for 600,000 shares
of the Company's Common Stock held by Eyre and 400,000 shares of
the Company's Common Stock of First Dynasty were exchanged for
400,000 shares of the Common Stock of the Company held by The
Parry-Beaumont Trust.
(b) On March 15, 2000, the Company issued 1,000,000 restricted shares
of its Common Stock out of its treasury to the Company's Chairman
and Chief Executive Officer Drury J. Gallagher, for accrued
salary of $162,500 or $0.1625 per share. Also, 20,000 shares of
the Company's Common Stock were distributed in settlement of
obligations owed by the defendants on the Eyre Resources lawsuit.
(c) On October 31, 2000, the Company issued warrants to purchase, for
$0.005 per share subject thereto, 130,000 shares of Common Stock
of the Corporation at an exercise price of $0.25 for each share
of Common Stock of the Corporation subject to each warrant,
expiring on October 31, 2003, to certain persons in consideration
of their prior or current association with the Corporation. On
such date, the Company issued warrants to purchase 100,000 shares
of the Common Stock of the Company at an exercise price of $0.25
per share subject to each warrant, expiring on October 31, 2003,
to each of Drury J. Gallagher and Robert A. Garrison, the
Company's President, in consideration of their prior services to
the Company.
(d) The Company's principal activity at present consists of holding
the remaining 3,000,000 shares of common stock of First Dynasty,
which is traded on the Toronto Stock Exchange and NASDAQ. The
closing price of a share of such common stock on December 31,
2001 was U.S. $0.025. As of December 31, 2001, First Dynasty had
146,237,008 shares of common stock issued and outstanding.
(e) Employees. As of December 31, 2001, the Company had one
consultant, who was in charge of the overall business of the
Company on a part-time basis, and one consultant who is
principally involved in overseeing the Company's proposed mining
activities on a part-time basis.
(5) SPECIAL CONSIDERATIONS
The following risk factors should be considered in connection with an
evaluation of the business of the Company:
No Prior Operating History; Failure to File Reports with the SEC
The Company was incorporated on February 21, 1980, and closed a public
offering of the Common Stock in January 1981. Several months after the
closing of such offering, the Company withdrew the listing of the
Common Stock for trading on NASDAQ. After the consummation of the
public offering, the Company failed to file any further annual or
periodic reports required under the Exchange Act. While the Company
filed its Form 10-QSB commencing with the quarter ended March 31, 1995
and each quarter thereafter through and including September 30, 2001
and filed audited financial statements with the Form 10-KSB for
calendar year 1994 covering calendar years 1987, 1988, 1989, 1990,
1992, 1993 and 1994, and for calendar years 1995, 1996, 1997, 1998,
1999 and 2000 with the Form 10-KSB filed for each such year, there can
be no assurance that the SEC might not assert claims against the
Company.
Development Stage Company
Since the Company never engaged in the active conduct of a trade or
business, it has not generated any revenues to date, with the exception
of interest income and the 3,000,000 shares of First Dynasty common
stock and cash received from such source under the FDM Agreement, as
amended. The Company may encounter problems, delays, expenses and
difficulties typically encountered in the development stage, many of
which may be outside of the Company's control.
Need for Additional Cash
The Company needs additional funds if it is to conduct any operations
in the foreseeable future, none of which is contemplated at present.
Moreover, there can be no assurance that any financing for any future
projects will be available for such purposes or that such financing, if
available, would be on terms favorable or acceptable to the Company.
Competition
There is intense competition in the mining industry. If the Company
does engage in any future mining activities, it will be competing with
larger mining companies, many of which have substantially greater
financial strength, capital, marketing and personnel resources than
those possessed by the Company.
Need for Key Personnel
The Company presently only has one officer intimately familiar with the
operation of mining projects or the development of such projects. While
the Company does not believe the loss of its president or any other
director or officer of the Company will materially and adversely affect
its long-term business prospects, the loss of any of the Company's
senior personnel might potentially adversely affect the Company until a
suitable replacement could be found.
Failure to Satisfy NASDAQ Listing Rules
Without increases in assets and capital surplus, the Company may not be
eligible to have its securities traded on NASDAQ. Moreover, regulations
issued by NASDAQ have increased the thresholds that have to be met in
order for a security to be traded initially on the NASDAQ Small Cap and
National Markets, which may adversely affect the Company's ability to
have its Common Stock traded on the NASDAQ Small Cap or National
Markets. Furthermore, the Company could experience difficulties in
commencing the trading of its securities on NASDAQ. If the Company is
unable to have its securities traded on NASDAQ, its securities will
continue to be eligible for trading on the OTC Bulletin Board, although
the market for shares of the Company's Common Stock may be reduced, and
hence, the liquidity of the shares of Common Stock and/or the Warrants
may be reduced. Moreover, recent regulations adopted for the trading of
securities may adversely affect the eligibility of the Company's Common
Stock for trading on the OTC electronic bulletin board.
No Dividends
The Company currently anticipates that it will retain all of its future
earnings, if any, for use in its operations and does not anticipate
paying any cash dividends in the near term future. There can be no
assurance that the Company will pay cash dividends at any time, or that
the failure to pay dividends for periods of time will not adversely
affect the market price for the Company's Common Stock.
Control of the Company
Drury J. Gallagher, the Chairman and Chief Executive Officer, and
Robert A. Garrison, the President and Chief Operating Officer,
currently own 2,108,451 and 1,000,000 shares respectively, or a total
of 3,108,451 shares, out of the 4,368,114 shares of the Company's
Common Stock issued and outstanding as of December 31, 2001. If Messrs.
Gallagher and Garrison act in concert, they control 71% of the issued
and outstanding shares of Common Stock of the Company and they will be
able to effectively determine the vote on any matter being voted on by
the Company's stockholders, including the election of directors and any
merger, sale of assets or other change in control of the Company.
ITEM 2. DESCRIPTION OF PROPERTIES
The Company currently maintains a shared office in Garden City, New
York.
ITEM 3. LEGAL PROCEEDINGS
Except as noted below, there is no material pending legal proceeding to
which the Company is a party or to which any of its properties is
subject.
In January 1998, the Company brought an action against Eyre, the
Parry-Beaumont Trust and Kevin Parry, individually, in the United
States District Court for the Southern District of New York, seeking
damages in excess of $81,000,000 arising out of the alleged fraud
committed by the defendants.
The defendants denied such claims and asserted counterclaims against
the Company seeking damages in an undetermined amount against the
Company and seeking a declaratory judgment voiding the Second
Restructuring Agreement. In addition, Eyre and the Parry-Beaumont Trust
brought a third-party complaint against Drury J. Gallagher and Robert
A. Garrison, individually, seeking, among other things, damages in
excess of $75,000 and directing Messrs. Gallagher and Garrison to
return the 2,000,000 shares of the Company's Common Stock issued to
them by the Company in January 1997.
A settlement was agreed to on October 13, 1999. In the settlement,
600,000 shares of common stock of First Dynasty were exchanged for
600,000 shares of Common Stock of the Company held by Eyre and 400,000
common shares of First Dynasty were exchanged for 400,000 shares of the
Company's Common Stock held by the Parry-Beaumont Trust.
Outstanding warrants held by Eyre and the Parry-Beaumont Trust were
canceled.
On October 4, 1999, Penn Med Consultants, Inc. ("PennMed"), Drury J.
Gallagher ("Gallagher") and other officers of PennMed entered into a
Settlement Agreement of a Civil False Claims Act lawsuit with the
United States of America, the Office of Inspector General of the United
States Department of Health and Human Services, the Pennsylvania
Department of Public Welfare and qui tam relators. The Settlement
Agreement ended an investigation into allegedly fraudulent
administrative expenses which adversely affected reimbursement from the
Medicare and Pennsylvania Medicaid programs by PennMed. Under the
Settlement Agreement, PennMed, Gallagher and the other PennMed officers
agreed to pay the Federal Government and the Pennsylvania Department of
Public Welfare a restitution amount and PennMed agreed to adhere to a
comprehensive compliance program without any admission of wrongdoing on
behalf of the defendants. In addition, Gallagher agreed to exclusion,
for a period of five years, from participation in the Medicare,
Medicaid and all other federal and Pennsylvania state health care
programs, including managed care programs. Such exclusion has national
affect and also applies to other federal procurement and
non-procurement programs. Gallagher waived his right under any statute
or regulation to payment from Medicare, Medicaid, TRICARE, the Veterans
Administration or the Federal Employee Health Benefit Program
administered by the Office of Personnel Management during the subject
exclusion. PennMed continues to operate the nursing home business
previously conducted by it.
The Company was never a defendant in such action and was not a party to
the Settlement Agreement which concluded the investigation.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) The Company's shares of Common Stock are not publicly traded on any
market.
(b) As of December 31, 2001, there were approximately 1,100 holders of
record of shares of the Company's Common Stock.
(c) The Company did not pay or declare any cash dividends on its shares of
Common Stock during its last two fiscal years ended December 31, 2000
and December 31, 2001.
(d) The Company's transfer agent is American Registrar and Transfer
Company, with offices at 342 E. 900 South, Salt Lake City, Utah 84111,
having a telephone number of (801) 363-9065.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
As of December 31, 2001, the Company's total assets were $88,880, of
which $13,880 consisted of cash or cash equivalents.
The Company's plan of operation for calendar year 2002 is:
(a) to hold the 3,000,000 shares of First Dynasty common
stock for investment purposes thereafter; and
(b) investigate other investment opportunities in the mineral
development and production and other areas.
The Company needs financing to meet its anticipated monthly
administrative expenses of $3,000 (exclusive of officers'
compensation), plus additional amounts for legal and accounting
costs. The Company considered that it might obtain additional
financing in 2001 from the holders of its Warrants to purchase
330,000 shares of Common Stock of the Company at an exercise price of
$0.25 per share, which expire on October 31, 2003. If the Warrants
were exercised in full, the Company would receive $82,500 in gross
proceeds. However, the Company does not believe that the Warrants
will be exercised under existing circumstances, and thus it does not
anticipate that any amount thereof will be exercised, although there
can be no assurance of such result.
In the event that no contemplated financing is obtained, the Company
does not have sufficient financial resources to meet its obligations.
The Company does not intend to engage in any research and development
during 2002 and does not expect to purchase or sell any plant or
significant equipment.
The Company does not expect to hire any additional full-time
employees in 2002.
ITEM 7. FINANCIAL STATEMENTS
The audited financial statements, notes thereto and reports of
independent certified public accountants thereon for the fiscal years
of the Company ended December 31, 2001 and December 31, 2000 (by
Feldman Sherb & Co., P.C.) are attached hereto as a part of,
and at the end of, this report.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
NOT APPLICABLE