WWW.EXFILE.COM, INC. -- 14072 -- GLOBAL MATRECHS, INC. -- FORM 424(b)(3)
Filed
Pursuant to Rule 424(b)(3)
File
No. 333-126526
Prospectus
Supplement No. 2
(To
Prospectus dated October 25, 2005)
GLOBAL
MATRECHS, INC.
127,576,685 shares
of common stock of
This
prospectus supplement supplements the Prospectus dated October 25, 3005 relating
to the resale of 127,576,685 shares of our common stock. This prospectus
supplement should be read in conjunction with the prospectus.
Recent
Developments
Sale
of True to Form Limited
On
December 29, 2005, we entered into a Stock Purchase Agreement with Mark J.
Allen
and True to Form Limited, Inc. pursuant to which we sold 100 shares of common
stock of True to Form, representing all of its outstanding capital stock, to
Mr.
Allen. As a result of this sale, we no longer hold any equity interest in True
To Form.
We
acquired True To Form from its sole shareholder, Mr. Allen, who was, until
the
consummation of the transactions described in this supplement, a member of
our
board of directors and an Executive Vice President. The transactions
contemplated in the Stock Purchase Agreement were the result of arm’s length
negotiations and was approved by the disinterested member of our Board of
Directors. The consideration was determined on the basis of these negotiations
and consists of:
| · |
the
issuance by True To Form to us of the promissory note described
below;
|
| · |
the
cancellation of the promissory note issued to him by True to Form
in
connection with our purchase of True to Form, which was in the initial
principal amount of $500,000, and the cancellation of our guaranty
of the
amounts owed under that promissory note;
and
|
| · |
the
surrender by Mr. Allen of the 10,000,000 shares of our common stock
that
were issued to him as partial consideration for our purchase of True
to
Form on December 31, 2004 and the cancellation of all other equity
interest in Global Matrechs held by Mr.
Allen.
|
In
addition, we agreed to the cancellation of amounts owed under a note issued
by
us to True to Form for working capital purposes. The initial principal amount
of
the note was $200,000.
As
partial
consideration for the sale of True to Form to Mr. Allen, True to Form has issued
to us a promissory note in the initial principal amount of $250,000. The
promissory note accrues interest at an annual rate of one percent plus the
prime
rate as reported by a nationally recognized commercial bank. True to Form is
required to make quarterly payments equal to three percent of gross sales in
excess of $315,000, if any, for the quarter immediately preceding each such
payment. The note matures on January 1, 2011, at which point all principal
and
interest then outstanding on the note becomes immediately due and
payable.
Included
in the Stock Purchase Agreement is a general mutual release between Mr. Allen
and True to Form and us, with the exception of any claims arising in connection
with the transactions contemplated in the Stock Purchase Agreement. Further,
we,
Mark Allen, and True to Form agreed that each of the agreements entered into
on
or about December 31, 2004 relating to our acquisition of True to Form,
including an Agreement and Plan of Merger, a Security Agreement, a Pledge
Agreement, a Share Escrow Agreement, our Employment Agreement with Mr. Allen,
and a promissory note issued by us to True to Form for working capital purposes,
were terminated effective immediately and of no further force or
effect.
Departure
of Director
Effective
December 29, 2005, Mark J. Allen resigned from his positions as Executive Vice
President and Director of Global Matrechs, Inc. This action was not, to the
knowledge of any executive officer of the Company, because of a disagreement
on
any matter relating to the Company’s operations, policies or
practices.
Investing
in our common stock involves a high degree of risk.
See
Risk Factors beginning on page 7 of the Prospectus.
Neither
the Securities and Exchange Commission nor any state securities commission
has
approved or
disapproved
of these securities or passed on the adequacy or accuracy of this prospectus
supplement. Any representation
to
the contrary is a criminal offense.
The
date
of this prospectus supplement is January 6, 2006