December 31, 1999
U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-KSB (Mark One) /X/ 15, 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, 1999 / / 15, 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 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 734 FRANKLIN AVENUE, SUITE 383, GARDEN CITY, NEW YORK 11530-4525 (Address of principal executive offices) (Zip Code) Issuer's telephone number (516) 773-8975 Securities registered under Section 12(b) of the Exchange Act: Title of each class (Name of each exchange on which registered) ------------------------ -------------------------------------------- None ------------------------ -------------------------------------------- Securities registered under Section 12(g) of the Exchange Act: None ------------------------------ (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 /X/ 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, 1999 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 $123,966(1). As of December 31, 1999 there were 3,348,114 Shares of the registrant's Common Stock outstanding (2) (3). --------------- (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"). (3) This number excludes 1,000,000 shares repurchased and recorded as Treasury Stock. ITEM 1 DESCRIPTION OF BUSINESS (A) 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. The Company is currently in the pre-development stage and has not received any revenues from mining activities as of December 31, 1999 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"). (B) 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. (C) GEORGIAN MINING PROJECT As of December 31, 1997, the Company abandoned its pursuit of any mining project in 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. (D) 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 shares acquired in connection with First Dynasty's purchase of the Company's 20% interest in GGA were exchanged for 600,000 Common Shares of the Company held by Eyre and 400,000 common shares of First Dynasty were exchanged for 400,000 Common Shares of the Company held by The Parry-Beaumont Trust. (b) 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, 1999 was U.S. $0.06. As of December 31, 1999, First Dynasty had 146,237,008 shares of common stock issued and outstanding, and warrants, options and convertible notes to purchase 41,740,000 shares of common stock outstanding on such date. Since there are outstanding special warrants to purchase 31.6 million shares of First Dynasty at prices ranging from $0.29 to $0.42 over the period ending January 31, 2002, the shares purchasable thereunder will, in the Company's view, pose an overhang on the trading market and adversely affect any upward price movement in the shares of the common stock of First Dynasty. (c) Employees. As of December 31, 1999, 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, and one independent contractor who provides administrative and clerical services on a part-time basis. (E) 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, 1999 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 and 1998 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. However, 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 1,108,451 and 1,000,000 shares respectively, or a total of 2,108,451 shares, out of the 3,348,114 shares of the Company's Common Stock issued and outstanding as of December 31, 1999. If Messrs. Gallagher and Garrison act in concert, they control 63% of the issued and outstanding 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 common shares of First Dynasty were exchanged for 600,000 Common Shares of the Company held by Eyre and 400,000 common shares of First Dynasty were exchanged for 400,000 shares of the Company 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 Common Stock is not publicly traded on any market. (b) As of December 31, 1999, there were approximately 1,100 holders of record of the Company's Common Stock. (c) The Company did not pay or declare any cash dividends on its common stock during its last two fiscal years ended December 31, 1998 and December 31, 1999. (d) As of December 31, 1999, the Company was prohibited from paying any dividends on its common stock due to its negative equity position. (e) 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, 1999, the Company's total assets were $181,432, of which $1,432 consisted of cash or cash equivalents. The Company's plan of operation for calendar year 2000 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 areas. The Company needs financing to meet its anticipated monthly administrative expenses of $3,000 (exclusive of accrued officers' compensation), plus additional amounts for legal and accounting costs. Prior to the commencement of the litigation described in Part I, Item 3 hereof, the Company anticipated that it might obtain additional financing in 1999 from the holders of its Warrants. Pursuant to the Offering of $500,000 principal amount of the Convertible Notes of the Company, the Company issued Warrants to purchase 4,000,000 shares of its Common Stock. By virtue of the Reverse Split, the Warrants were converted into Warrants to purchase 400,000 shares of the Company's Common Stock at an exercise price of $0.50 per share and the expiration date extended until December 31, 1997. On December 31, 1997, the Company amended the Warrants to reduce the exercise price to $0.125 per share and to extend the expiration date until December 31, 1999, and recently extended the expiration date until December 31, 2000. If the Warrants were exercised in full, the Company would receive $50,000 in gross proceeds. However, the Company does not believe that the Warrants will be exercised under existing circumstances, 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 through the exercise of the Warrants (which the Company considers highly remote), 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 2000 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 2000. 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, 1999 (by Feldman Sherb Horowitz & Co., P.C.) and December 31, 1998 (by Marks Shron & Company, LLP) 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 For the year ended December 31, 1999, Feldman Sherb Horowitz & Co., P.C. replaced Marks Shron & Company, LLP as accountants.