**UNITED
        STATES**
 **SECURITIES
        AND EXCHANGE COMMISSION**
 **WASHINGTON,
        D.C. 20549**
 ____________________
 
 FORM
        10-KSB/A
 **(Amendment
        No. 1)**
 ____________________
 
 (Mark
        One)
 
 [X]
              ANNUAL
                  REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
                  ACT OF
                  1934
 For
        the
        fiscal year ended December 31, 2004
 
 
 [_]
              TRANSITION
                  REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
                  ACT OF
                  1934
 For
        the
        transition period from ___________ to __________
 
 Commission
        file number 000-29204
 
 **GLOBAL
        MATRECHS, INC.**
 (Exact
        Name of Registrant as Specified in its Charter)
 
 **Delaware**
              **58-2153309**(State
                  or other jurisdiction of
              (I.R.S.
                  Employer Identification No.)incorporation
                  of organization)
 
 **90
        Grove Street, Suite 201, Ridgefield, Connecticut 06877**
 (Address
        of principal executive offices)
 
 Issuer’s
        telephone number:   **(203)
        431-6665**
 
 Securities
        registered pursuant to Section 12(b) of the Exchange Act:
 
 **Name
                  of each exchange****Title
                  of Each Class**
              **on
                  which registered**Common
                  Stock, par value
              OTC
                  Bulletin Board$0.0001
                  per share
 
 Securities
        Registered pursuant to Section 12(g) of the Act:
 
 **None**
 (Title
        of
        class)
 
 Indicate
        by check mark 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.  x
        Yes  o
        No
 
 Check
        if
        there is no disclosure of delinquent filers in response to Item 405 of
        Regulation S-B is not 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.  o
 
 State
        issuer’s revenues for its most recent fiscal year. $620
 
 The
        aggregate market value of the voting and non-voting common equity held by
        non-affiliates of the issuer, based upon the average of the closing price
        for
        the Common Stock on May 6, 2005 as reported on the OTC Bulletin Board, was
        approximately $3,917,831. Determining whether or not any of our stockholders
        (other than directors and officers of the Company) are affiliates would require
        unreasonable effort and expense. We have therefore assumed that other than
        directors and officers of the Company, none of our stockholders is an
        affiliate.
  As
        of
        May 6, 2005, the issuer had outstanding 75,297,187 shares of common
        stock.
  
 
  TABLE
        OF CONTENTS
 
 PART
                  I
              
              3Item
                  1.
              BUSINESS
              3Item
                  2.
              PROPERTIES
              12Item
                  3.
              LEGAL
                  PROCEEDINGS
              12Item
                  4.
              SUBMISSION
                  OF MATTERS TO A VOTE OF SECURITY HOLDERS
              12PART
                  II
              
              13Item
                  5.
              MARKET
                  FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCK MATTERS
              13Item
                  6.
              MANAGEMENT’S
                  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS
              13Item
                  7.
              FINANCIAL
                  STATEMENTS
              28Item
                  8.
              CHANGES
                  IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING ANDFINANCIAL
                  DISCLOSURE
              52Item
                  8A.
              CONTROLS
                  AND PROCEDURES
              52PART
                  III
              
              53Item
                  9.
              DIRECTORS
                  AND EXECUTIVE OFFICERS OF THE REGISTRANT
              53Item
                  10.
              EXECUTIVE
                  COMPENSATION
              54Item
                  11.
              SECURITY
                  OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
              55Item
                  12.
              CERTAIN
                  RELATIONSHIPS AND RELATED TRANSACTIONS
              57Item
                  13.
              EXHIBITS
              58Item
                  14.
              PRINCIPAL
                  ACCOUNTING FEES AND SERVICES
              65SIGNATURES
              
              66
 
  
  **PART
        I**
 
 ITEM
        1.  BUSINESS
 
 FORWARD-LOOKING
        STATEMENTS
 
 This
        Form
        10-KSB contains certain statements, such as statements regarding Global
        Matrechs’ future plans, that constitute forward-looking statements within the
        meaning of Section 27A of the Securities Act of 1933, as amended, and Section
        21E of the Securities and Exchange Act of 1934, as amended, including certain
        statements contained under “Management’s Discussion and Analysis of Financial
        Condition and Results of Operations” concerning our expectations, beliefs,
        and/or strategies regarding increased future revenues and operations, and
        certain statements contained under “Business” concerning our future business
        plans. When used in this Form 10-KSB, the words “expects”,
“believes,”“intends,”“anticipates” and similar expressions are intended to
        identify forward-looking statements. Such statements are subject to certain
        risks and uncertainties that could cause actual results to differ materially
        from those projected or implied by such forward-looking statements. Such
        risks
        and uncertainties include those risks identified under the heading entitled
        “--Factors Affecting Future Performance” contained in “Item 6. Management’s
        Discussion and Analysis of Financial Condition and Results of Operations,” such
        as our ability to obtain additional financing, the commercial viability of
        the
        technologies that we license from Eurotech, our ability to market the
        technologies that we license from Eurotech, changes in the value and condition
        of our assets, the loss of key personnel, whether we are able to complete
        the
        proposed transactions described in this Form 10-KSB, a change in control
        of the
        Company or changes in financial markets and general economic
        conditions.
 
 RECENT
        DEVELOPMENTS
 
 NON-RELIANCE
        ON HISTORICAL FINANCIAL STATEMENTS
 
 On
        April
        15, 2005, the Company’s management, in consultation with the Company’s
        independent registered public accounting firm, concluded that the Company’s
        historical financial information related to fiscal 2001 through fiscal 2003
        and
        for the first three fiscal quarters of 2004 accounted incorrectly for certain
        convertible preferred stock instruments. As such, the management has concluded
        that the Company’s historical financial statements should no longer be relied
        upon. While the Company does not intend to amend its previously filed annual
        and
        quarterly reports covering the periods noted above, the Company has restated
        historical financial information for the periods required to be presented
        in
        this annual report on Form 10-KSB to reflect the correct accounting treatment.
        The Company has also included in this annual report on Form 10-KSB five years
        of
        restated financial information highlighting the differences resulting from
        the
        application of the change in accounting treatment to its historical financial
        statements and restated selected quarterly information for 2003 and
        2004.
 
 SECOND
        PURCHASE AGREEMENT WITH SOUTHRIDGE PARTNERS
 
 On
        January 31, 2005, we entered into a Second Securities Purchase Agreement
        with
        Southridge Partners LP, one of our existing investors, whereby we agreed
        to sell
        a convertible promissory note in the principal amount of $250,000 and warrant
        to
        purchase up to 10,000,000 shares of our common stock to Southridge in exchange
        for its $250,000 investment. Under the terms of this purchase agreement,
        Southridge may, at its option, and at any time prior to July 1, 2005, purchase
        an additional note in the principal amount of up to $1,500,000, and otherwise
        on
        substantially the same terms as the note issued on January 31,
        2005.
 
 The
        note
        is convertible, at the option of the holder, into shares of our common stock
        at
        a conversion price of $0.02 per share. Southridge may require us to repurchase
        some or all of its note if the market price of our common stock falls below
        $0.03 per share for ten (10) consecutive trading days, at a repurchase price
        equal to 140% of the principal amount of the note. In the event we default
        under
        the terms of the note, the entire outstanding principal (and any outstanding
        interest accrued thereon) shall become immediately due and payable, and the
        interest rate will rise to 18% per annum.
 
 We
        have
        secured the payment of the notes with a subordinated security interest in
        our
        accounts, general intangibles, inventories, and other collateral. In addition,
        in the event we propose to register securities under the Securities Act of
        1933,
        as amended, we are required to notify Southridge in advance of such registration
        and, at its request (subject to limited exceptions), include the shares of
        our
        common stock underlying the note and warrant on the registration statement
        filed
        in connection with such registration (and assume any expenses associated
        therewith).
 
 The
        warrant has an expiration date of January 31, 2010. It contains a cashless
        exercise provision whereby the holder may pay the exercise price associated
        with
        any exercise by having us withhold a number of shares otherwise issuable
        upon
        such exercise having a fair market value equal to the applicable aggregate
        exercise price. In the event such provision is used with respect to an exercise,
        we would receive no proceeds upon such exercise.
 
 3
  ENTRANCE
        INTO EXCHANGE AGREEMENT WITH WOODWARD LLC
 
 On
        January 31, 2005, we entered into an Exchange Agreement with Woodward LLC
        pursuant to which we acquired promissory notes, and have accordingly assumed
        all
        rights pertaining thereto, issued by Eurotech Ltd. The notes are currently
        in
        default and have an aggregate outstanding principal amount of $290,000. The
        notes carry a default annual interest rate of 18% and are past due in their
        entirety. In exchange for these notes, we issued to Woodward a promissory
        note
        in the principal amount of $250,000.
 
 Under
        the
        terms of the Exchange Agreement, in the event we propose to register securities
        under the Securities Act of 1933, as amended, we are required to notify Woodward
        in advance of such registration and, at its request (subject to limited
        exceptions), include the shares of our common stock underlying the note on
        the
        registration statement filed in connection with such registration, and assume
        any expenses associated therewith.
 
 SOUTHRIDGE
        EXERCISES OPTION TO PURCHASE ADDITIONAL NOTES AND WARRANTS
 
 On
        March
        2, 2005, Southridge Partners LP exercised its option to purchase an additional
        note and warrant under its Second Securities Purchase Agreement. In connection
        with such exercise, we issued to Southridge a convertible promissory note
        in the
        principal amount of $175,000 and a warrant to purchase up to 7,000,000 shares
        of
        our common stock in exchange for its $175,000 investment. The note is
        convertible, at the option of the holder, into shares of our common stock
        at a
        conversion price of $0.02 per share. Southridge may require us to repurchase
        some or all of its note if the market price of our common stock falls below
        $0.03 per share for ten (10) consecutive trading days, at a repurchase price
        equal to 140% of the principal amount of the note. In the event we default
        under
        the terms of the note, the entire outstanding principal (and any outstanding
        interest accrued thereon) shall become immediately due and payable, and the
        interest rate will rise to 18% per annum. The note matures on March 2,
        2007.
 
 SOUTHRIDGE
        EXERCISES OPTION TO PURCHASE ADDITIONAL NOTES AND WARRANTS
 
 On
        April
        11, 2005, Southridge Partners LP exercised its option to purchase an additional
        note and warrant pursuant to the Second Securities Purchase Agreement. In
        connection with such exercise, we issued to Southridge a convertible promissory
        note in the principal amount of $125,000 and a warrant to purchase up to
        5,000,000 shares of our common stock to Southridge in exchange for its $125,000
        investment. The note is convertible, at the option of the holder, into shares
        of
        our common stock at a conversion price of $0.02 per share. Southridge may
        require us to repurchase some, or all, of its note if the market price of
        our
        common stock falls below $0.03 per share for ten (10) consecutive trading
        days,
        at a repurchase price equal to 140% of the principal amount of the note.
        In the
        event we default under the terms of the note, the entire outstanding principal
        (and any outstanding interest accrued thereon) shall become immediately due
        and
        payable, and the interest rate will rise to 18% per annum. The note matures
        on
        April 11, 2007.
 
 DESCRIPTION
        OF BUSINESS
 
 The
        Company is currently operating in two major segments. These segments are
        defined
        as the Licensed Technologies Sector which consists of the marketing and sales
        of
        the technologies licensed from Eurotech and the Specialty Lighting subsidiary
        which consists of the design, development, manufacture and sales of specialty
        lighting and architectural products acquired in the merger with True To Form
        Ltd, Inc, acquired December 31, 2004. The Company is targeting the pursuit
        of
        the Homeland Securities market with both segments.
 
 On
        May
        22, 2003, we completed a transaction with Eurotech pursuant to which we now
        license EKOR, now called NuCap(TM), HNIPU, EMR/AC, Rad-X, Firesil, LEM and
        RBHM
        technologies from Eurotech. Currently, we are licensing the EKOR(TM), HNIPU,
        EMR/AC, Rad-X, Firesil, LEM and RBHM technologies from Eurotech, Ltd. We
        intend
        to use these licenses to derive revenue by partnering with other technology
        firms to sell raw materials to producers or to sublicense the technologies
        and
        collect royalties and/or licensing fees.
 
 On
        December 31, 2004 we acquired True To Form Ltd, Inc.. As a result of the
        merger,
        True To Form is now our wholly owned subsidiary. True To Form designs, develops,
        manufactures and sells specialty lighting products to targeted segments of
        the
        traditional lighting industry and has recently established a division that
        will
        focus on the homeland security market. True To Form markets high-end lighting
        and architectural products for both commercial and residential applications,
        including pendants, surface and ceiling luminaries, table and floor lamps,
        commercial down-lights, bath fixtures, and custom fixtures.
 
 The
        Company’s Internet related business was sold on May 31, 2004 to Tulix Systems,
        Inc. As a part of the sales agreement the Company acquired 15% equity ownership
        of Tulix. The Company is a minority stock holder in Tulix and exercises no
        management input or control of its operations.
 
 4
  HISTORY
 
 HomeCom
        Communications, Inc. (“HomeCom”), now Global Matrechs, Inc. (“Global Matrechs”),
        was organized in 1994 to provide complex web-based software applications
        and
        integration services to businesses seeking to take advantage of the Internet.
        Over time, the Company evolved into a Web design, financial applications
        and
        solutions provider to the financial services market, including banking,
        insurance, securities brokerage firms and other financially oriented web
        portals.
 
 On
        May
        31, 2004, the Company completed the sale of its remaining Internet business
        to
        Tulix Systems, Inc. (“Tulix”), a company in which Gia Bokuchava, Nino
        Doijashvili and Timothy R. Robinson, who were officers and directors of the
        Company, are officers, directors and founding shareholders. The Company recorded
        a loss on the sale of this business of $125,030 in the fourth quarter of
        2003
        and recorded an additional loss of $124,385 in the second quarter of 2004
        for
        adjustments to the closing as provided for in the closing documents. With
        the
        consummation of this Purchase Agreement, Global Matrechs has completely exited
        from all Internet-related enterprises.
 
 The
        Company currently operates in two distinct segments. The first segment consists
        of licenses, products, and services which find their origin in the technologies
        licensed from Eurotech. The second consists of the design, manufacture, and
        sales of specialty lighting and architectural fixtures acquired through the
        purchase of True To Form Ltd., Inc.
 
 The
        Company’s licensed technologies business commenced on May 22, 2003 upon the
        completion of its transaction with Eurotech, Ltd. (“Eurotech”). The Company had
        entered into a License and Exchange Agreement with Eurotech and, with respect
        to
        Articles V and VI thereof, Polymate, Ltd. and Greenfield Capital Partners
        LLC,
        on March 27, 2003 (as amended, the “Exchange Agreement”). In connection with the
        completion of the transaction, the Company entered into a License Agreement,
        dated May 22, 2003 with Eurotech (as amended, the “License Agreement”). Pursuant
        to the Exchange Agreement and the License Agreement, Eurotech has licensed
        to
        the Company its rights to EKOR(TM) (now called NuCap(TM)), HNIPU, Electro
        Magnetic Radiography/Acoustic Core (EMR/AC), Rad-X, Firesil, LEM and Rapidly
        Biodegradable Hydrophobic Material (RBHM) technologies, which are more fully
        described herein. In exchange for the licenses of these technologies, the
        Company (i) issued to Eurotech 11,250 shares of Series F Convertible Preferred
        Stock and 1,069 shares of Series G Convertible Preferred Stock, and (ii)
        agreed
        to pay Eurotech a royalty of seven percent (7%) on net sales generated by
        the
        licensed technologies and a royalty of four percent (4%) on net sales generated
        by products and services that are improvements on the licensed
        technologies.
 
 The
        License Agreement provides that the licenses granted to the Company thereunder
        will become terminable at the option of Eurotech (i) if the Company has not
        affected a commercial sale of any licensed technology or improved licensed
        technology by April 1, 2006, and (ii) in certain other circumstances. In
        connection with this transaction, we issued 1,500 shares of Series F Convertible
        Preferred Stock to Polymate and 750 shares of Series F Convertible Preferred
        Stock to Greenfield (Polymate was issued shares as partial consideration
        for
        Polymate’s agreement to modify its rights to receive royalties from Eurotech;
        Greenfield was issued shares as consideration for its acting as an advisor
        to
        the Company and participating in the negotiation of the transaction with
        Eurotech on behalf of the Company). The holders of the outstanding shares
        of
        Series F Preferred Stock cancelled their outstanding shares of Series F
        Preferred Stock in exchange for the right to receive shares of Series H
        Convertible Preferred Stock, which were issued to them on September 30,
        2003.
 
 We
        expanded our offerings when, on December 31, 2004, we acquired our subsidiary,
        True To Form Ltd. (“True To Form”), a company in the business of designing,
        developing, and manufacturing specialty lighting products. We acquired True
        To
        Form from its sole shareholder, Mark J. Allen, who is also a member of our
        board
        of directors. Mr. Allen will continue as the President of True To Form and
        was
        appointed Executive Vice President of the Company. The transaction was the
        result of arm’s length negotiations and was unanimously approved by the
        disinterested directors of the Company. The consideration was determined
        on the
        basis of these negotiations and the advice of our financial advisor, who
        is not
        affiliated with us or Mr. Allen.
 
 The
        consideration paid to Mr. Allen in the transaction consisted of:
 
 ·  the
        issuance by True To Form of a secured note in the initial principal amount
        of
        $500,000; and
 ·  the
        issuance to Mr. Allen by Global Matrechs of 10,000,000 shares of our common
        stock.
 
 The
        number of shares of common stock issued in the transaction is subject to
        adjustment based on the price of our common stock and the revenues of the
        acquired business on December 31, 2006. In general, assuming that True To
        Form
        generates gross revenues of at least $3,000,000 for the twelve months ended
        December 31, 2006, the value of the shares issued in the transaction (based
        on
        the average closing price of the shares for the five trading days ended on
        or
        prior to December 31, 2006) will be at least $2.5 million but no more than
        $3.5
        million. If the value is less than $2.5 million, we are obligated to issue
        additional shares or, at our option, make cash payments to make up the
        difference. If the value of the shares is greater than $3.5 million, any
        excess
        shares will be returned to us and retired or held as treasury stock. If True
        To
        Form does not meet the revenue target, the share consideration will be a
        minimum
        of $2.0 million and a maximum of $3.0 million.
 
 5
  Global
        Matrechs has provided True To Form with an initial working capital loan of
        approximately $200,000 and will enter into an employment agreement with Mr.
        Allen. In connection with the transaction, we have also issued a warrant
        to our
        financial advisor in the amount of 2,000,000 shares of common stock at an
        exercise price of $0.03 per share. The merger agreement provides that until
        the
        secured note is paid in full, Mr. Allen has the right to designate a majority
        of
        the directors of True To Form. The merger agreement also provides Mr. Allen
        with
        limited registration rights related to the share consideration.
 
 PRODUCTS
        AND SERVICES
 
 Licensed
        Technologies
 
 NUCAP(TM)
 
 NuCap(TM),
        formerly called EKOR(TM), was developed jointly by scientists at the I.V.
        Kurchatov Institute, or Kurchatov, and members of the Euro-Asian Physical
        Society, or EAPS, both based in Moscow, Russia. EKOR(TM) was the brand name
        for
        a family of materials designed for long-term isolation of hazardous and
        radioactive materials. As a silicon-based elastomer, NuCap(TM)’s adhesive
        properties allow it to stick to a wide variety of wet or dry surfaces and
        materials. When applied, NuCap(TM) materials surround and immobilize radioactive
        or hazardous debris ranging from fine dust to large pieces of equipment and,
        in
        combination with their fire-resistant and water- proof properties, prevent
        such
        debris from migrating by water or as air-borne particles. NuCap(TM) materials
        also possess other highly desirable performance characteristics such as chemical
        resistance, fire resistance, heat resistance, and resistance to environmental
        aging and degradation from radiation. In addition to its unique combination
        of
        performance characteristics, NuCap(TM) comes in multiple product forms and
        can
        be applied using specified methods for waste-coating and encapsulation. We
        believe that this allows NuCap(TM) to be used as a solution for a broad spectrum
        of nuclear and hazardous waste management problems.
 
 The
        NuCap(TM) product family’s performance characteristics and flexibility of form
        make it a tool for a broad spectrum of applications. There are currently
        five
        basic forms of NuCap(TM)
 
 1.
              Sealer
                  Plus, which can be sprayed to coat containers or cover contaminated
                  surfaces;
 
 2.
              Foam,
                  which is pumped in a range of densities to fill crevices, ducts
                  or
                  pipes;
 
 3.
              Grout,
                  applied in a pour and mix method, which can be used to make shapes
                  for
                  shielding or to macroencapsulate items to form an unleachable monolith
                  for
                  transportation or disposal;
 
 4.
              Matrix,
                  applied in a pour and mix method, which can be used to microencapsulate
                  radioactive or hazardous wastes to form an elastomeric monolith
                  for
                  transportation or disposal; and
 
 5.
              StoneStore,
                  applied in a pour and mix method, which can be used to microencapsulate
                  highly radioactive waste and will form a ceramic monolith for permanent
                  disposal. StoneStore is still in the research and development stage.
 
 In
        tests
        conducted at Kurchatov, NuCap(TM) has been shown to be highly resistant to
        radiation and structural degradation from exposure to radiation. It has also
        proven to be fire resistant, waterproof, and capable of being formulated
        in
        densities that display considerable structural strength and weight-bearing
        properties of 100 pounds per square inch.
 
 MARKETING
        OF NUCAP(TM)
 
 Eurotech
        described its efforts to market EKOR(TM) as it was called prior to our changing
        the name as well as the other technologies in its public filings. These
        descriptions are summarized in this report. NuCap(TM)’s acceptance into nuclear
        waste management has been slower than Eurotech anticipated. Eurotech has
        stated
        that it believes that significant technical issues remain, including those
        dealing with the residue from production of nuclear weapons and the disposal
        of
        nuclear fuel being discharged from nuclear power plants. With respect to
        residue
        from the production of nuclear weapons, the technical issues relate to the
        fact
        that the residue could take a number of forms (liquid, wet slurry, partially
        dried sludge, calcined salts, etc.) and have a variety of ph factors. The
        amount
        of waste that NuCap(TM) can effectively encapsulate differs depending on
        the
        form and ph factor of the waste. Thus, each project must be addressed
        separately, and sometimes we will need to develop the appropriate form of
        NuCap(TM) on a project-by-project basis. We do not believe, that this issue
        will
        be a significant obstacle for us, as we believe that the modification of
        NuCap(TM) is no longer as resource-intensive as previously expected and can
        be
        accomplished relatively efficiently, especially with our new manufacturing
        partners. For example, a sheet form of NuCap(TM) was recently developed by
        Global Matrechs for use in a project with INEEL. With respect to the technical
        issues that Eurotech had perceived with respect to the disposal of nuclear
        fuel
        being discharged from nuclear power plants, we do not intend to market NuCap(TM)
        for this purpose. We believe that NuCap(TM) is a
  6
  technologically
        advanced material that has properties that make it a superior cost effective
        and
        safer isolation technology even for some non-radioactive hazardous materials
        and
        a unique sealant for potential applications in the construction
        industry.
 
 In
        2001,
        Eurotech successfully replicated the formula for EKOR(TM) to make EKOR(TM)
        products in the United States. In March 2001, the EKOR(TM) family of products
        was presented to waste management professionals at the annual Waste Management
        Symposium in Tucson, Arizona. As a result of the interest generated at the
        symposium, Eurotech presented EKOR(TM) for use in a variety of applications
        at
        Department of Energy (“DOE”) sites to various waste management professionals.
        Specifically, Eurotech had discussions with the Savannah River Site (or SRS,
        near Aiken, South Carolina), Oak Ridge National Laboratory (or ORNL, in Oak
        Ridge, Tennessee), Fernald Closure Site (in Fernald, Ohio), Battelle Memorial
        Institute (or BMI, in Columbus, Ohio), Rocky Flats Environmental Testing
        Site
        (or RFETS, near Denver, Colorado), Los Alamos National Laboratory (or LANL,
        Los
        Alamos, New Mexico), Lawrence Livermore National Laboratory (or LLNL, Livermore,
        California), Hanford Reservation (Richland, Washington) and Idaho National
        Engineering & Environmental Laboratory (or INEEL, Idaho Falls, Idaho).
        Eurotech also had a number of meetings with DOE staff at their headquarters
        in
        Washington, D.C. and Germantown, Maryland. This included the introduction
        to
        companies doing project and management work at DOE and commercial sites,
        and had
        arranged demonstrations at the above mentioned facilities and at its production
        facility in California for staff from RFETS and ORNL. Early demonstrations
        of
        the Sealer product, as a solution that required mixing of a paste and catalyst
        and significant monitoring of specialized application equipment, revealed
        that
        the Sealer product needed further development to be more user-friendly. The
        Sealer product is a paste, with the consistency of thick brick mortar. While
        this thickness enables Sealer to be applied to vertical walls, tanks, drums,
        and
        ceilings, a sprayable version of Sealer, or even a thinner paste version
        that
        could be more easily applied, would be more user-friendly. To address this
        issue, Sealer Plus was developed, which Eurotech introduced in November 2001
        and
        initially demonstrated at BMI in January 2002. Sealer Plus is a low viscosity
        version of EKOR(TM). Sealer that can be sprayed with high-pressure paint
        spray
        equipment. We seek to further develop Sealer to make the Sealer more easily
        applied in a foam consistency, which we believe will make Sealer more
        user-friendly. The demonstration of EKOR(TM) Grout at INEEL enabled Eurotech
        to
        demonstrate its ability to operate in an underwater environment. INEEL has
        certain components that are being stored underwater because of their behavior
        when exposed to air. Global Matrechs has prepared specially-requested samples
        for further testing at INEEL and Hanford Where Global Matrechs had a successful
        demonstration in April of this year.
 
 During
        2002, NuCap(TM) was selected as an approved waste stabilization material
        at
        multiple DOE sites. This selection meant that NuCap(TM) had passed the
        applications testing necessary to be judged usable on specific forms of waste
        at
        specific sites. For example, Battelle Memorial Institute, Columbus, Ohio,
        under
        a site decommissioning contract from the DOE, applied NuCap(TM) within a
        series
        of reactor drain pipes to immobilize residual radioactive contamination,
        to
        protect workers, the public and the environment during facility sectioning
        and
        disposal. NuCap(TM) is being considered by the Pacific Northwest National
        Laboratory, a DOE national laboratory, to stabilize Alpha Dust in the H-Basin
        Fuel Pool, which could provide protection to workers during facility
        decommissioning. NuCap(TM) has been tested at the DOE Argonne National
        Laboratory to immobilize surrogate radioactive calcined waste and salts.
        Initial
        evaluations of NuCap(TM) is promising for applications in the area of High
        Level
        Waste Immobilization.
 
 During
        2003 and 2004, the Company manufactured a number of samples for potential
        customers in the European community. The Company is in the process of completing
        agreements with a commercial partner to manufacture, market and deliver
        NuCap(TM) to these potential customers.
 
 We
        intend
        to market NuCap(TM) for use in nuclear waste encapsulation and nuclear debris
        fixation for nuclear cleanup projects, nuclear facility decontamination and
        decommissionings, and nuclear waste transportation and disposal. As part
        of this
        strategy, we intend to seek affiliations and joint ventures with large prime
        contractors in the nuclear industry on a project by project basis. While
        we see
        opportunities for NuCap(TM) and our other technologies, however, we can offer
        no
        assurance that our efforts will be more successful, or as successful as
        Eurotech’s efforts.
 
 HNIPU
 
 HNIPU
        is
        a hybrid polyurethane that does not involve the toxic isocyanates utilized
        in
        the production of conventional polyurethane and that has lower permeability
        and
        greater chemical resistance qualities as compared to conventional polyurethane.
        We believe that these advanced characteristics, in addition to the potential
        reduced risk from the elimination of isocyanates in its production, make
        HNIPU
        superior to conventional polyurethanes in connection with their use in a
        number
        of industrial application contexts such as manufacturing automotive components,
        paints, foams, plastics and truck bed liners; aerospace sealants, industrial
        adhesives, coatings, flooring, glues; industrial equipment and machinery;
        and
        consumer goods such as appliances, footwear, furniture and plastic products.
        Because of HNIPU’s lower permeability and improved chemical resistance, we think
        that industrial paints and coatings are a potential target market for
        HNIPU.
 
 7
  MARKETING
        OF HNIPU
 
 On
        November 17, 2003, Global Matrechs entered into an agreement with Environmental
        Friendly Materials, GMBH (“EFM”), a German company, for the manufacture and sale
        of HNIPU for the European marketplace. EFM has been given non-exclusive license
        to manufacture and distribute HNIPU and intends to manufacture it at various
        locations across Europe. We have applied for approval to sell HNIPU in the
        United States from the EPA and if and when we are on their approved list
        of
        products we expect to complete another non-exclusive agreement for the North
        American territory.
 
 Because
        HNIPU represents a new class of polymer compounds closely related to
        polyurethanes, we expect that a variety of products will emerge from the
        development of variations and improvements to the existing HNIPU binders
        that
        have worldwide industrial applications. For this reason, we intend to seek
        to
        license HNIPU to large industrial polymer and chemical manufacturers who
        can
        sell the various HNIPU binders to international industrial manufacturers.
        The
        focus will be to transfer the existing binder product technologies under
        licensing agreements from the laboratory to the manufacturer. We intend to
        follow up on existing agreements, current evaluations, and active discussion
        for
        HNIPU binder production.
 
 EMR/AC
 
 Eurotech
        licensed certain rights to Acoustic Core and Electromagnetic Radiography
        for
        specific markets, consisting of (i) illicit material detection, (ii) above
        surface or subsurface nuclear or other hazardous material remediation, (iii)
        marine dredging sites (inland and ocean) and (iv) oil exploration, from Trylon
        Metrics, Inc. pursuant to an agreement dated July 2001, as amended in October
        2001. Eurotech licenses the illicit materials detection application to another
        company and licenses the remaining three applications to Global
        Matrechs.
 
 Both
        technologies use a non-contact inspection methodology that creates signals
        that
        are then interpreted by a digital analyzer that allows identification of
        elemental or compound materials from their empirically determined properties.
        Acoustic Core is used in applications that are predominately wet (i.e.,
        riverbeds, wetlands, etc.) and EMR is used in dry environments. Completed
        research and development studies have verified that Acoustic Core and EMR
        can
        identify materials by their acoustic or electromagnetic signatures, but the
        feature of these technologies that we believe is unique is their ability
        to map
        in three dimensions the existence of target materials at extremely low
        concentrations at depths of up to 300 feet. The capabilities of these
        technologies complement the NuCap(TM) product line by, for example, allowing
        tanks of waste to be monitored for leaks and the leaks, when discovered,
        targeted for repair. Acoustic Core and EMR may have applications in markets
        that
        involve subsurface evaluation, from contamination discovery and monitoring
        to
        resource discovery.
 
 Both
        Acoustic Core and EMR have been tested at DOE sites (Oak Ridge and INEEL)
        on a
        variety of materials. Sandia National Laboratory conducted an in-depth
        evaluation of the science behind these technologies in 1999 and concluded
        that
        they provide a unique capability to identify and map in three dimensions
        low
        levels of material concentration at substantial depths. We believe that these
        products are more cost effective than other current methods. During the fourth
        quarter of 2001, Eurotech submitted several proposals to the DOE for evaluation
        of areas of potential contamination and to commercial entities being pressured
        by the EPA for potential subsurface contamination, but these technologies
        have
        not been selected for inclusion in currently funded programs to
        date.
 
 MARKETING
        OF EMR/AC
 
 In
        conjunction with the marketing of NuCap(TM), we intend to market EMR/AC(TM)
        to a
        variety of facilities requiring detection of nuclear waste contaminants and
        other environmentally hazardous substances in subsurface soil and ground
        water
        resulting from leaking storage tanks or toxic chemical spills. We are currently
        seeking a manufacturing partner for EMR/AC(TM), and we are waiting until
        we find
        such a partner to pursue our marketing strategy for EMR/AC(TM).
 
 RAD-X
 
 Rad-X
        is
        a technology intended for use as an interior fire-resistant fixative for
        equipment or facilities with contaminated surfaces. Rad-X differs from NuCap(TM)
        Sealer Plus in that it is not weather-resistant and does not have the chemical,
        radiation and aging resistance needed for long-term protection. Rad-X provides
        a
        low-cost fixative for surfaces that are scheduled for disassembly or
        dismantlement and need strong adhesion (glue-down of contaminated particles
        that
        could become airborne) and fire-resistance properties. Rad-X was first marketed
        in 2001.
 
 MARKETING
        OF RAD-X
 
 According
        to Eurotech’s public filings, Eurotech had invested less than $20,000 in the
        creation of the Rad-X product line. Rad-X was initially created for feasibility
        testing at DOE’s Rocky Flats Environmental Testing Site, or RFETS, and was
        delivered in late September 2001. Testing of Rad-X at other laboratories
        occurred in November 2001. This testing confirmed its fire and smoke resistance
        properties. We believe that Rad-X can satisfy proposed DOE fire/smoke criteria
        for certain specialized applications.
  8
  Eurotech
        has marketed Rad-X in connection with NuCap(TM) at DOE sites that performed
        decommissioning or hazardous material management in 2002, and if the opportunity
        arises, we will continue this strategy. We are currently seeking a manufacturing
        partner for Rad-X, and we are waiting until we find such a partner to pursue
        our
        marketing strategy for Rad-X.
 
 RAPIDLY
        BIODEGRADABLE HYDROPHOBIC MATERIAL (“RBHM”)
 
 RBHM
        is a
        new, hydrophobic (water resistant), strong, cheap, and completely biodegradable
        cellulose-based composite material. RBHM is intended to improve the properties
        of both paper and plastic packaging materials. The material can be used as
        a
        commodity in trade, industry, and agriculture for a wide range of applications.
        To date, most attempts to produce biodegradable products for consumers have
        focused on developing plastics that could biodegrade. RBHM takes a different
        approach - making cellulose-based material with the same physical properties
        as
        plastic, except the material biodegrades completely in the same time as regular
        paper bags. RBHM consists of cellulose (paper) and biodegradable organic
        additives. Biodegradation of RBHM occurs in wet soil through normal enzymatic
        action of various microorganisms - fungi and bacteria. We believe that the
        main
        advantages of RBHM are:
 
 ·
              Strength.
                  RBHM’s strength characteristics, especially combined with low elongation
                  and acquired water resistance of the material, make RBHM unique
                  and
                  desirable for packaging
                  applications.
 
 ·
              Water
                  Resistance. RBHM keeps water resistance for one week. Most of the
                  existing
                  biodegradable packaging products are not hydrophobic at all and
                  will fail
                  if wetted during use.
 
 ·
              Biodegradable
                  Nature. Enzymes begin breaking down RBHM in the presence of moisture
                  in
                  natural environments such as soil. Then microorganisms decompose
                  the
                  material with rapidly occurring metabolic reactions. RBHM is completely
                  converted into carbon dioxide, water, and biomass in two to three
                  months
                  in wet soil.
 
 ·
              Reproducible
                  Natural Raw Materials. RBHM uses cellulose, a widely available
                  and
                  renewable raw material.
 
 ·
              Relatively
                  Low Cost. The main obstacle to widespread use of biodegradable
                  polymers
                  has been cost. Biodegradable polymers are traditionally significantly
                  more
                  expensive than commodity polymers. The high costs involved in the
                  production of biodegradable polymers means that they cannot compete
                  favorably with conventional polymers. This high cost has deterred
                  the
                  widespread adoption of biodegradable plastics in major consumer
                  applications. At an additional cost of less than 10%, and sometimes
                  less
                  depending on the type of material treated, materials treated with
                  RBHM
                  provide plastic-like performance and are biodegradable.
 
 We
        believe that there is a large number of potential applications for a technology
        like RBHM. Because RBHM can be applied on sheets, films and fibers, it is
        suitable for a range of single-use products, including, among others, grocery
        and waste bags, the top, and back sheets of disposable diapers, and disposable
        eating utensils.
 
 MARKETING
        OF RBHM
 
 Eurotech
        had marketed RBHM through its web site during 2001 and 2002. We are currently
        seeking a manufacturing partner for RBHM, and we are waiting until we find
        such
        a partner to pursue our marketing strategy for RBHM, which will be through
        our
        website.
 
 LIQUID
        EBONITE MATERIAL (“LEM”)
 
 LEM
        is a
        synthetic liquid rubber with enhanced mechanical, permeability and
        anti-corrosive qualities as compared to conventional sheet rubber coverings.
        In
        laboratory testing, coverings made with LEM, as compared to conventional
        sheet
        rubber coverings, have displayed greater resistance to harsh chemicals such
        as
        acids, alkalis and benzene, and have been successfully applied to intricate
        and
        complex surfaces such as sieve meshing. Based on the physical and chemical
        properties of LEM, and on the basis of such tests, we believe that LEM coverings
        are capable of providing superior protection to small-diameter piping and
        to the
        intricate parts of pumps, fans, and centrifuge rotors. LEM can be applied
        to
        form surface coverings using standard coating techniques, including spraying
        and
        dipping.
 
 MARKETING
        OF LEM
 
 Eurotech
        had marketed LEM through its web site during 2001 and 2002. We are currently
        seeking a manufacturing partner for LEM, and we are waiting until we find
        such a
        partner to pursue our marketing strategy for LEM, which will be through our
        website.
 
 9
  FIRESIL(TM)
        - FIRE PROTECTION ORGANOMINERAL COATING - FIRE-STOP FOR RESIDENTIAL AND
        COMMERCIAL APPLICATION
 
 Firesil(TM)
        is an environmentally compatible fire-stop material with good adhesion
        properties to hydrophilic and hydrophobic surfaces and exhibits strong fire
        resistance, thermostability, and water resistance characteristics.
 
 MARKETING
        OF FIRESIL(TM)
 
 We
        intend
        to market Firesil(TM) directly to corporations that are prospective candidates
        for sub-licensing the technology. Eurotech had Firesil(TM) tested by an
        accredited lab to ASTM protocol and it passed these tests. We are currently
        seeking a manufacturing partner for Firesil(TM), and will wait until we find
        such a partner to pursue a marketing strategy for Firesil(TM).
 
 COMPETITION
 
 The
        licensed technologies are targeted at highly competitive markets. Due to
        the
        nature and size of some of the markets and some of the projects for which
        the
        licensed technologies may be applicable, there are sometimes other competitors
        who may have significantly greater name recognition and greater financial
        and
        other resources than we do. Many of these competitors also have technologies
        that are very competitive with the licensed technologies. For example, NuCap(TM)
        is a composite material based on a silicone polymer that is different from
        other
        silicones produced by manufacturers such as GE Silicones and Dow Corning,
        but
        the products produced by those manufacturers compete with NuCap(TM). As another
        example, some of the major producers of polyurethanes used in coatings and
        finishes, sealants and adhesives, which products may compete with the HNIPU
        technology, include Akzo Nobel, Dow Chemical and Kansai.
 
 INTELLECTUAL
        PROPERTY RIGHTS
 
 GENERAL
 
 Many
        entities, including some developing technologies similar to ours, now have
        and
        may in the future obtain patents and other intellectual property rights that
        cover or affect products or services directly or indirectly related to the
        technologies that we license from Eurotech. In general, if a court determines
        that one or more of the licensed technologies infringes on intellectual property
        held by others, we would be required to cease infringing on intellectual
        property held by others, we would be required to cease developing or marketing
        those products or to obtain licenses to develop and market those products
        from
        the holders of the intellectual property, or to redesign those products in
        such
        a way as to avoid infringing the patent claims. If a competitor holds
        intellectual property rights, the entity might be predisposed to exercise
        its
        right to prohibit our use of its intellectual property in our products and
        services, thus impacting our competitive position.
 
 There
        can
        be no assurance that we are aware of all patents and other intellectual property
        rights that the licensed technologies may potentially infringe. In addition,
        patent applications in the United States are confidential until the Patent
        and
        Trademark Office issues a patent and, accordingly, we cannot evaluate the
        extent
        to which the licensed technologies may infringe claims contained in pending
        patent applications. Further, it is often not possible to determine definitively
        whether a claim of infringement is valid, absent protracted litigation, which
        we
        may not have the resources to pursue.
 
 We
        cannot
        estimate the extent to which we may be required in the future to obtain licenses
        with respect to patents held by others and the availability and cost of any
        such
        licenses. Those costs, and their impact on our financial position, could
        be
        material. Damages in patent infringement cases can also include a tripling
        of
        actual damages in certain cases. To the extent that we are required to pay
        royalties to third parties to whom we are not currently making payments,
        these
        increased costs of doing business could negatively affect our liquidity and
        operating results.
 
 In
        addition, there may be entities developing and marketing technologies which
        infringe on patents and intellectual property rights held by us. Patent
        infringement claims are protracted and costly. We may not have the resources
        to
        adequately protect our intellectual property. Any expenditures to pursue
        intellectual property rights by us could negatively affect us.
 
 NUCAP(TM)
        INTELLECTUAL PROPERTY RIGHTS
 
 The
        Euro-Asian Physical Society (EAPS) has patented EKOR(TM) in the U.S., Russia,
        and other industrialized countries. On March 23, 1999, the U.S. Patent and
        Trademark Office issued to EAPS Patent No. 5,886,060 on the process for
        manufacturing one of the EKOR(TM) compound variants. Pursuant to sub-license
        agreement, Eurotech became the exclusive global licensee of all right, title
        and
        interest (inclusive of all patent and other intellectual property rights
        now or
        in the future) in EKOR(TM). We are a licensee of Eurotech and have renamed
        the
        product NuCap(TM). We do not know if additional proprietary technology that
        we
        have developed relating to NuCap(TM) will prove patentable. We have applied
        for
        trademark protection for the mark “NuCap” with the U.S. Patent and Trademark
        Office.
 
 10
  HNIPU
        INTELLECTUAL PROPERTY RIGHTS
 
 U.S.
        Patent Number 6120905 for HNIPU network polymers and composites formed there
        from was issued on September 19, 2000. Patents for this technology have also
        been issued in Europe (EP 1088021, PCT WO 9965969) and Australia (4441099).
        These patents have been assigned to Eurotech. The method of synthesis of
        cyclocarbonates and nonisocyanate or hybrid nonisocyanate network polyurethanes
        is patent applied for in the United States, which application has been assigned
        to Eurotech. We are a licensee of Eurotech. As a regular part of our business
        activities, we intend to submit patent applications to protect our developed
        intellectual property, improvements and extensions, although we do not know
        whether any technologies that we develop will be patentable.
 
 EMR/AC
        INTELLECTUAL PROPERTY RIGHTS
 
 U.S.
        Patent Number 4,922,467 for Acoustic Detection Apparatus (Acoustic Core)
        was
        issued to David Caulfield on May 1, 1990 and subsequently assigned to Ocean
        Data
        Equipment Corporation. This patent was significantly improved, for which
        U.S.
        Patent Number 6,545,945 was issued on April 8, 2003. Electromagnetic Radiography
        technology has been protected under trade secret laws. The worldwide exclusive
        licensing rights to these technologies for the detection of nuclear and
        hazardous materials at nuclear remediation and marine dredging sites, and
        for
        oil exploration, were obtained by Eurotech and, except to the extent related
        to
        the illicit materials detection application of these technologies, were
        subsequently licensed to Global Matrechs.
 
 RAD-X
        INTELLECTUAL PROPERTY RIGHTS
 
 Eurotech
        had protected its interest in Rad-X by treating the formulation as proprietary
        property and entering into confidentiality agreements with its
        partners.
 
 RBHM
        INTELLECTUAL PROPERTY RIGHTS
 
 Rademate,
        an entity in which Eurotech is an investor, was issued U.S. Patent #6294265
        for
“Hydrophobic biodegradable cellulose-containing material” for RBHM on September
        25, 2001. Rademate has one application with the Israeli Patent Office (126306),
        dated September 23, 1998, which is pending. Eurotech has licensed to us the
        intellectual property rights that it has in RBHM.
 
 LEM
        INTELLECTUAL PROPERTY RIGHTS
 
 Eurotech
        has acquired the intellectual property rights associated with U.S. Patent
        #6303683 (issued October 16, 2001) for Liquid Ebonite mixtures and coatings,
        and
        concretes formed therefrom and an application filed under the Patent Cooperation
        Treaty (PCT/US99/16883) on July 26,1999 by Dr. Igor Figovsky, the inventor
        of
        these technologies. We are a licensee of Eurotech.
 
 FIRESIL(TM)
        INTELLECTUAL PROPERTY RIGHTS
 
 Eurotech
        acquired the formula for Firesil(TM) from Dr. Figovsky, its inventor, in
        2000.
        Eurotech terminated previously initiated patent applications and has elected
        to
        protect this formula as a trade secret. Eurotech owns the federally registered
        trademark “Firesil”. We are a licensee of Eurotech.
 
 GOVERNMENT
        REGULATION
  The
        use
        of NuCap(TM) is subject to U.S. environmental safety laws and regulations
        pertaining to the safe use and containment of hazardous and nuclear waste.
        Based
        on the results of tests conducted by Eurotech, we believe that the NuCap(TM)
        compounds meet current applicable regulations for safe use, containment and
        storage of hazardous and nuclear materials. It is, however, possible that
        more
        stringent or different standards may be adopted or applied in the future
        that
        might influence the intended use for NuCap(TM) and it is also possible that
        the
        standards, if adopted or applied, may materially increase the cost to us
        of
        using NuCap(TM) compounds or prevent their use altogether. We are not aware
        of
        any other U.S. or foreign laws or regulations that significantly hinder the
        marketing, sale, or use of NuCap(TM) based materials.
 
 The
        manufacture of HNIPU and operation of EMR/AC(TM) equipment is not expected
        to be
        impacted adversely by government regulations. HNIPU’s MSDS identifies the
        limited risks associated with the manufacture, handling and application of
        the
        non-isocyanate polyurethane. OSHA outlines operational regulations as related
        to
        acoustic frequencies and power levels as might be applied to EMR/AC(TM)
        operations. We have currently applied to the EPA for approval of HNIPU to
        be
        sold in the United States.
 
 The
        manufacture and use of HNIPU is subject to U.S. environmental safety laws
        and
        regulations pertaining to the safe use of chemicals and polymeric materials.
        While HNIPU does not use highly toxic compounds like isocyanates, it is still
        subject to governmental regulations, but based on preliminary assessments
        by
        Eurotech we believe that HNIPU compounds will meet current
  11
  and
        future regulations. If we are successful in licensing various HNIPU binders
        to
        chemical and polymer manufacturers, we expect that the licensees will bear
        the
        costs of applying for governmental approvals required for manufacturing and
        industrial usage. We are not aware of any other U.S. or foreign laws or
        regulations that significantly hinder the marketing, sale, or use of HNIPU
        based
        materials.
 
 Specialty
        Lighting
 
 True
        To
        Form designs, develops, manufactures and sells specialty lighting products
        to
        targeted segments of the traditional lighting industry and has recently
        established a division that will focus on the homeland security market. True
        To
        Form designs, manufactures and markets high-end lighting and architectural
        products for commercial, hospitality and residential applications, including
        pendants, surface and ceiling luminaries, table and floor lamps, commercial
        down-lights, bath fixtures, and custom fixtures.
  SALES
        AND
        MARKETING
 
 True
        To
        Form markets primarily to architects, interior designers, lighting consultants
        and high-end designer showrooms.
 
 CUSTOMERS
 
 The
        Company’s specialty fixtures subsidiary has recently worked on projects for Wynn
        Design and Development, The Mandalay Bay Group and the Luxor Hotel.
 
 Employees
 
 Global
        Matrechs (including True To Form) currently employs seven individuals and
        two
        full-time consultants.
 
 ITEM
        2.  PROPERTIES
 
 As
        of
        December 31, 2004 the Company occupied approximately 550 square feet in one
        office building in Ridgefield, Connecticut on a lease that goes through
        September 2006. With the acquisition of True To Form we have added approximately
        10,000 square feet of combined warehouse and offices.
 
 On
        June
        1, 2004 the Company was released from liability by Piedmont Ivy and Associates,
        the landlord, and Tulix Systems, Inc. for the approximately 7,000 square
        feet it
        had leased in Atlanta, Georgia. That lease, which had an expiration date
        of
        October 31, 2004, was transferred to, and assumed by Tulix Systems, Inc.
        as a
        part of the sale of the Internet Services Division.
 
 ITEM
        3.  LEGAL
        PROCEEDINGS
 
 On
        February 9, 2005 Global Matrechs, Inc, filed suit in the Supreme Court of
        the
        State of New York, County of New York against Eurotech, Ltd. for its failure
        to
        fulfill its obligations under the license agreement between the parties dated
        May 22, 2003. The suit also seeks the enforcement of the notes issued by
        Eurotech to Woodward, LLC which were assumed by Global Matrechs in the exchange
        agreement between Global Matrechs and Woodward on January 31, 2005. The
        complaint seeks damages totaling $672,677 plus interest and attorney’s fees
        which are yet to be determined.
 
 On
        April
        13, 2005 Carey Naddell, CEO of Eurotech, Ltd., filed suit against the Company
        for damages based upon an alleged breach of a written service agreement.
        The
        Company has responded and believes the action is without merit. We will
        diligently defend this action.
 
 We
        are
        not a party to any other material legal proceedings. From time to time, we
        are
        involved in various routine legal proceedings incidental to the conduct of
        our
        business.
 
 ITEM
        4.  SUBMISSION
        OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
 We
        did
        not submit any matters to a vote of security holders during the fourth quarter
        of 2004.
 
 12
 
 **PART
        II**
 
 ITEM
        5.  MARKET
        FOR REGISTRANT’S COMMON EQUITY AND RELATED STOCK MATTERS
 
 Our
        Common Stock has been quoted on the OTC Bulleting Board under the symbol
        GMTH
        (f/k/a HCOM) since December 8, 2000. Prior to that date it was quoted on
        the
        NASDAQ SmallCap Market. The following table shows for the periods indicated
        the
        range of high and low bid prices as quoted on the OTC Bulletin Board. The
        quotations reflect inter-dealer prices, without retail mark-up, mark-down,
        or
        commission and may not represent actual transactions.
 
 **HIGH**
              
              **LOW****2003**First
                  quarter
              
              $
              .100
              
              $
              .001Second
                  quarter
              
              
              .070
              
              
              .030Third
                  quarter
              
              
              .085
              
              
              .036Fourth
                  quarter
              
              
              .070
              
              
              .016**2004**First
                  quarter
              
              $
              .160
              
              $
              .040Second
                  quarter
              
              
              .150
              
              
              .060Third
                  quarter
              
              
              .140
              
              
              .040Fourth
                  quarter
              
              
              .080
              
              
              .030
 
 HOLDERS
        OF RECORD
 
 We
        had
        approximately 141 holders of record of our Common Stock as of May 6,
        2005.
 
 DIVIDENDS
 
 We
        have
        not paid any cash dividends on our capital stock to date and do not foresee
        that
        we will have earnings with which to pay dividends in the foreseeable future.
        Our
        board of directors would determine the amount of future dividends, if any,
        based
        upon our earnings, financial condition, capital requirements and other
        conditions.
 
 ITEM
                6.
              MANAGEMENT’S
                  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                  OPERATIONS
 
 SELECTED
        FINANCIAL DATA
 
 On
        April
        15, 2005, the Company’s management, in consultation with the Company’s
        independent registered public accounting firm, concluded that the Company’s
        historical financial information related to fiscal 2001 through fiscal 2003
        and
        for the first three fiscal quarters of 2004 accounted incorrectly for certain
        convertible preferred stock instruments. In lieu of amending our previously
        filed annual and quarterly reports covering these periods, the Company has
        restated its selected financial data for the five years ended December 31,
        2004
        and has restated its quarterly financial data for the 2003 and 2004 interim
        quarters to reflect the following changes:
 
 RESTATED
          FINANCIAL STATEMENTS
 
 The
          accompanying financial statements reflect the following
          restatements:
 
 Preferred
          Series
 
 When
          issued in 1999 and 2000, the Preferred Series B, C, D and E (among other
          provisions) were mandatorily convertible at predetermined dates and had
          floating
          conversion terms which resulted in a variable number of shares that could
          be
          issued if they were converted. Since the Company could not conclude that
          it had
          enough authorized and unissued shares to settle these Preferred Series
  13
  due
          to
          the absence of a cap on the number of shares that could be issued upon
          conversion (and thus the number of shares that could be issued was outside
          the
          control of the Company). Pursuant
          to Accounting Series Release No. 268 the
          Company has reclassified Preferred Series C, D, and E shares from equity
          to
          temporary equity at redemption value. When these series were issued, the
          redemption values were recorded in shareholders’ equity. Accordingly, as of June
          30, 2001, an adjustment of $4,441,595 was recorded as an adjustment to
          shareholders’ equity.
 
 Derivative
          Conversion Feature
 
 In
          November 2000, the FASB’s Emerging Issues Task Force (“EITF”) reached final
          consensuses on EITF Issue No. 00-19, “Determination of Whether Share Settlement
          is Within the Control of the Issuer.” EITF 00-19 addressed and clarified whether
          specific equity contract provisions or other circumstances cause these
          contracts
          to be within or outside the control of the issuer. Permanent equity contracts
          that were issued prior to September 20, 2000, and classified as permanent
          equity
          must meet certain criteria or be re-classified as assets, liabilities or
          temporary equity on June 30, 2001.
 
 EITF
          00-19 also required the application of FAS 133, “Accounting for Derivative
          Instruments and Hedging Activities,” and the bifurcation of the derivative
          conversion feature embedded in the Preferred shares. The fair value of
          derivative conversion feature as of June
          30,
          2001 was $1,043,650. Under EITF 00-19, the Company recorded a cumulative
          effect
          adjustment of $1,043,650 ($0.11 loss per basic and diluted per share) for
          the
          change in accounting principle.
 
 FAS
          150
 
 The
          terms
          of the above-mentioned Preferred Series contained an unconditional obligation
          whose value could be settled with a non-capped variable number of shares,
          and
          accordingly was subject to FAS 150, “Accounting for Certain Financial
          Instruments with Characteristics of both Liabilities and Equity,” effective as
          of July 1, 2003. This required that these shares be reported as current
          liabilities in the restated consolidated balance sheet. Preferred Series
          G stock
          was not subject to FAS 150, and had been reclassified as temporary equity
          in the
          restated financial statements. The Company had implemented FAS 150 in its
          original filing, reporting a cumulative effect of a change in accounting
          principle. In consideration of the implementation of EITF 00-19, the cumulative
          effect of a change in accounting principle impact in the accompanying restated
          financial statement is zero.
 
 On
          August
          14, 2004, the mandatory conversion rights of Series B, C, D and E Preferred
          Stock were terminated. At that time, these liabilities were reclassified
          to
          temporary equity.
 
 Subsequent
          Accounting
 
 All
          increases to the stated value of the above-mentioned Preferred Series are
          recorded as a deemed preferred stock dividend for periods prior to the
          implementation of FAS 150, and interest expense for all periods after the
          implementation of FAS 150.
 
 Waiver
          and Overaccrual of Penalties
 
 Effective
          March 13 and 14, 2003, the Company entered into an agreement with the holders
          of
          Series B, C, D and E Preferred shares which waived any amounts due and
          owing in
          respect of penalties resulting from the Company’s failure to have available a
          sufficient number of authorized shares of common stock for conversion and
          waived
          any default by the Company in respect of registration rights. Accordingly,
          the
          previously recorded accrued penalties were reversed during the quarter
          ended
          March 31, 2003, and recorded in the consolidated statement of operations
          as a
“recovery of deemed preferred stock dividend”.
 
 The
          Company had erroneously continued to accrue penalties. For the period March
          14,
          2003 (and March 13, 2003 for Series B) through June 30, 2003, these penalties
          were originally reported as a deemed preferred stock dividend of $159,596.
          The
          restated financial statements reflect the removal of these deemed preferred
          stock dividends. When the Company adopted FAS 150, effective July 1, 2003,
          all
          penalties were reported as interest expense. The restated financial statements
          reflect the removal of $718,183 of previously reported interest
          expense.
  14
 
 The
          following table summarizes these transactions:
 Series
                  
                  QUARTER
                    ENDED
                    3/03
                    (reversal
                      recovery
                    of
                      deemed
                    preferred
                      stock
                    dividend)
                  
                  QUARTER
                    ENDED
                    6/03
                    (removal
                    of
                      deemed
                    preferred
                      stock
                    dividend)
                  
                  QUARTER
                    ENDED
                    9/03
                    (removal
                    of
                      interest expense)
                  
                  QUARTER
                    ENDED
                    12/03
                    (removal
                    of
                      interest expense)
                  
                  QUARTER
                    ENDED
                    3/04
                    (removal
                    of
                      interest expense)
                  
                  QUARTER
                    ENDED
                    6/04
                    (removal
                    of
                      interest expense)
                  
                  QUARTER
                    ENDED
                    9/04
                    (removal
                    of
                      interest expense)
                  
                  TOTAL
                    INTEREST
                  
                  TOTALB
                  
                  $
                  43,720
                  
                  $
                  4,446
                  
                  $
                  4,446
                  
                  $
                  4,446
                  
                  $
                  4,446
                  
                  $
                  4,446
                  
                  $
                  2,223
                  
                  $
                  20,007
                  
                  $
                  68,173C
                  
                  
                  239,987
                  
                  
                  27,143
                  
                  
                  27,143
                  
                  
                  27,143
                  
                  
                  27,143
                  
                  
                  27,143
                  
                  
                  13,572
                  
                  
                  122,144
                  
                  
                  389,274D
                  
                  
                  4,131
                  
                  
                  387
                  
                  
                  387
                  
                  
                  387
                  
                  
                  387
                  
                  
                  387
                  
                  
                  194
                  
                  
                  1,742
                  
                  
                  6,260E
                  
                  
                  1,239,333
                  
                  
                  127,620
                  
                  
                  127,620
                  
                  
                  127,620
                  
                  
                  127,620
                  
                  
                  127,620
                  
                  
                  63,810
                  
                  
                  574,290
                  
                  
                  1,941,243TOTAL
                  
                  $
                  1,527,171
                  
                  $
                  159,596
                  
                  $
                  159,596
                  
                  $
                  159,596
                  
                  $
                  159,596
                  
                  $
                  159,596
                  
                  $
                  79,799
                  
                  $
                  718,183
                  
                  $
                  2,404,950
  Basic
          and Diluted Loss Per Share
 
 Basic
          and
          diluted net income (loss) per share applicable to common shareholders was
          calculated according to the provisions of Statement of Financial Accounting
          Standards No. 128, “Earnings per Share.” Due to the net loss position of the
          Company for each of the three years in the period ending December 31, 2004,
          the
          numerator and denominator was the same for both basic and diluted loss
          per
          share.
 
 Series
          B,
          C, D Preferred shares are included in the weighted average shares outstanding
          on
          a basic and diluted basis for the period commencing with the expiration
          of the
          mandatory conversion date and the date that the mandatory conversion was
          extended, as if the shares had been issued and outstanding because the
          Company
          could not conclude that it had enough authorized and unissued shares to
          settle
          these Preferred Series due to the absence of a cap on the number of shares
          that
          could be issued upon conversion, thus the number of shares that could be
          issued
          was outside the control of the Company. Series B Preferred shares had a
          mandatory conversion date of March 25, 2002. On March 13, 2003, the mandatory
          conversion date was extended to March 31, 2004. Series C Preferred shares
          had a
          mandatory conversion date of July 22, 2002 and on March 14, 2003, the mandatory
          conversion date was extended to March 31, 2004. Series D Preferred shares
          had a
          mandatory conversion date of September 28, 2002, and March 14, 2003, the
          mandatory conversion date was extended to March 31, 2004. Series E Preferred
          shares had a mandatory conversion date of April 14, 2003, and on March
          14, 2003
          was extended to March 31, 2004.
 
 During
          2002, 199,688,352 shares and during 2003, 16,820,981 shares that could
          be issued
          upon conversion of Convertible Preferred Shares were considered as outstanding
          common shares and included in the computation of basic and diluted earnings
          per
          share.
 
 Options
          and warrants to purchase 518,241 and 483,241 shares of common stock at
          December
          2002, 2003, and 2004, respectively were not included in the computation
          of
          dilutive earnings per share as their exercise would be
          anti-dilutive.
 
 Warrants
 
 The
          fair
          values of the warrants issued in connection with the convertible promissory
          notes (described in Note 13) were originally recorded as credits to additional
          paid-in capital $684,810, and debits to unamortized note discount (up to
          the
          amount of the proceeds received), and prepaid expense (representing the
          value of
          the warrants in excess of the proceeds received). Both the prepaid expense
          and
          unamortized discount were amortized to interest expense over the lives
          of the
          notes. In this amended filing, the accounting for the warrants has been
          restated
          to (a) expense the value of the warrants in excess of the proceeds received
          (i.e., write-off the prepaid expense), (b) reduce interest expense for
          the
          reversal of the amortization of the prepaid expense, (c) record the fair
          values
          of the warrants as a long-term liability, and (d) record the changes in
          the fair
          values of the warrants from their issue dates to the balance sheet date
          in
          current income under the caption “change in fair value of
          warrants.”
  15
 
 The
          fair
          value of warrants that were outstanding on and after the effective date
          of EITF
          00-19, were not considered material to the financial statements.
 
 In
          addition, in the financial statements included with this annual report
          on Form
          10-KSB, we have provided restated financial information for each of the
          affected
          periods presented. The following selected financial data of Global Matrechs,
          Inc. should be read in conjunction with the financial statements and related
          notes, as well as the other portions of this section.
 
 
  16
 Global
                      Matrech’s, Inc.Selected
                    Quarterly Financial Data (Unaudited)2004MARCH
                    31,
                
                JUNE
                    30,
                
                SEPTEMBER
                    30,filed
                    5/11/05
                  10KSB
                restated
                
                filed
                    5/11/05
                  10KSB
                restated
                
                filed
                    5/11/05
                  10KSB
                restatedSelected
                    Balance Sheet Data:Total
                    assets
                1,220,218
                1,220,218
                
                941,694
                941,694
                
                888,136
                888,136Accounts
                    payable and accrued expenses
                529,455
                529,455
                
                393,316
                393,316
                
                376,941
                376,941Notes
                    payable, current
                364,000
                364,000
                
                
                —
                
                380,851
                380,851Convertible
                    preferred stock
                5,596,453
                5,596,453
                
                5,670,865
                5,670,865
                
                
                —Derivative
                    conversion feature - convertible preferred stock
                9,432
                1,142,323
                
                9,584
                1,107,450
                
                
                1,159,869Total
                    current liabilities
                6,499,340
                7,632,231
                
                6,073,765
                7,171,631
                
                757,792
                1,917,661Notes
                    payable
                —
                —
                
                477,500
                477,500
                
                
                —Convertible
                    preferred stock
                —
                —
                
                —
                —
                
                —
                —Total
                    liabilities
                6,499,340
                7,632,231
                
                6,551,265
                7,649,131
                
                757,792
                1,917,661Temporary
                    equity
                1,069,000
                1,069,000
                
                1,069,000
                1,069,000
                
                6,802,698
                6,802,698Common
                    and preferred stock
                1,635
                1,635
                
                1,635
                1,635
                
                1,243
                1,243Treasury
                    stock
                (8,659)
                (8,659)
                
                (8,659)
                (8,659)
                
                (327,484)
                (327,484)Additional
                    paid in capital
                20,264,189
                19,183,057
                
                20,324,189
                19,243,209
                
                20,970,571
                19,882,586Accumulated
                    deficit
                (26,605,287)
                (26,618,595)
                
                (26,995,736)
                (26,960,712)
                
                (27,316,684)
                (27,371,379)Total
                    stockholders' deficit
                (6,348,122)
                (7,442,562)
                
                (6,678,571)
                (7,724,527)
                
                (6,672,354)
                (7,815,034)Total
                    liabilities and stockholders' deficit
                1,220,218
                1,258,669
                
                941,694
                993,604
                
                888,136
                905,325Revenues
                620
                620
                
                —
                —
                
                —
                —Income
                    (loss) from operations
                (311,815)
                (311,815)
                
                (231,996)
                (231,996)
                
                (203,176)
                (203,176)Other
                    income (expense)
                (82,212)
                (82,212)
                
                (85,091)
                (85,091)
                
                (117,620)
                (117,620)Change
                    in fair value of derivative conversion feature
                (152)
                (13,460)
                
                (151)
                34,873
                
                (152)
                (54,847)Income
                    (loss) on disposal or discontinued operations
                43,189
                43,189
                
                (73,211)
                (73,211)
                
                —
                —Net
                    income (loss)
                (350,990)
                (364,298)
                
                (390,449)
                (355,425)
                
                (320,948)
                (375,643)Basic
                    and diluted earnings per share
                (0.02)
                (0.02)
                
                (0.03)
                (0.02)
                
                (0.02)
                (0.03)Weighted
                    number of shares outstanding
                14,999,157
                14,999,157
                
                14,999,157
                14,999,157
                
                14,999,157
                14,999,157
  17
  Global
        Matrechs, Inc.
 Selected
        Quarterly Financial Data (Unaudited)
 2003MARCH
                    31
                
                JUNE
                    30,
                
                SEPTEMBER
                    30,filed
                    5/11/05
                  10KSB
                restated
                
                filed
                    5/11/05
                  10KSB
                restated
                
                filed
                    5/11/05
                  10KSB
                restatedSelected
                    Balance Sheet Data:Total
                    assets
                499,610
                499,610
                
                1,461,129
                1,461,129
                
                1,412,861
                1,412,861Accounts
                    payable and accrued expenses
                434,231
                434,231
                
                358,596
                358,596
                
                336,172
                336,172Notes
                    payable, current
                —
                —
                
                100,000
                100,000
                
                175,000
                175,000Convertible
                    preferred stock
                —
                —
                
                —
                —
                
                5,447,629
                5,447,629Derivative
                    conversion feature - convertible preferred stock
                8,824
                1,817,604
                
                8,976
                1,216,200
                
                9,128
                1,157,359Total
                    current liabilities
                443,055
                2,251,835
                
                467,572
                1,674,796
                
                5,967,929
                7,116,160Notes
                    payable
                —
                —
                
                —
                —
                
                —
                —Convertible
                    preferred stock
                —
                —
                
                —
                —
                
                1,069,000
                1,069,000Total
                    liabilities
                443,055
                2,251,835
                
                467,572
                1,674,796
                
                7,036,929
                8,185,160Temporary
                    equity
                5,298,805
                5,298,805
                
                6,442,217
                6,442,217
                
                —
                —Common
                    and preferred stock
                1,500
                1,500
                
                1,500
                1,500
                
                1,635
                1,635Treasury
                    stock
                (8,659)
                (8,659)
                
                (8,659)
                (8,659)
                
                (8,659)
                (8,659)Additional
                    paid in capital
                20,421,514
                19,339,775
                
                20,264,324
                19,182,735
                
                20,264,190
                19,182,753Accumulated
                    deficit
                (25,656,605)
                (26,416,952)
                
                (25,705,825)
                (25,104,269)
                
                (25,881,234)
                (25,822,242)Total
                    stockholders' deficit
                (5,242,250)
                (7,084,336)
                
                (5,448,660)
                (5,928,693)
                
                (5,624,068)
                (6,646,513)Total
                    liabilities and stockholders' deficit
                499,610
                466,304
                
                1,461,129
                2,188,320
                
                1,412,861
                1,538,647—
                
                
                —
                
                
                —Revenues
                406,522
                406,522
                
                411,218
                411,218
                
                410,005
                410,005Income
                    (loss) from continuing operations
                69,532
                69,532
                
                (67,353)
                (67,353)
                
                (98,119)
                (98,119)Other
                    income (expense)
                70,191
                70,191
                
                18,285
                18,285
                
                (77,138)
                (77,138)Change
                    in fair value of derivative conversion feature
                (151)
                (760,498)
                
                (152)
                601,404
                
                (152)
                58,840Cumulative
                    effect of change in accounting principle
                —
                —
                
                —
                —
                
                —
                —Net
                    income (loss)
                139,572
                (620,775)
                
                (49,220)
                552,336
                
                (175,409)
                (116,417)Deemed
                    preferred stock dividend
                (91,581)
                (91,581)
                
                (157,178)
                (157,178)
                
                —
                —Recovery
                    of deemed preferred stock dividend
                1,527,171
                1,527,171
                
                —
                —
                
                —
                —Net
                    income (loss) applicable to common shareholders
                1,575,162
                814,815
                
                (206,398)
                395,158
                
                (175,409)
                (116,417)Basic
                    earnings per share
                0.11
                0.00
                
                (0.01)
                0.03
                
                (0.01)
                (0.01)Weighted
                    number of shares outstanding-basic
                14,999,156
                284,874,235
                
                14,999,156
                14,999,156
                
                14,999,156
                14,999,156Diluted
                    earnings per share
                0.01
                0.00
                
                (0.01)
                0.03
                
                (0.01)
                (0.01)Weighted
                    number of common shares outstanding-diluted
                284,874,235
                284,874,235
                
                14,999,156
                14,999,156
                
                14,999,156
                14,999,156
 
  18
   Global
        Matrechs, Inc.
 Selected
        Financial Data (Unaudited)
 Year
                        ended December 31,2000
                    
                    2001
                    
                    2002
                    
                    2003
                    
                    2004filed
                      5/11/05
                      10KSB
                    
                    restated
                    
                    filed
                      5/11/05
                      10KSB
                    
                    restated
                    
                    filed
                      5/11/05
                      10KSB
                    
                    restated
                    
                    filed
                      5/11/05
                      10KSB
                    
                    restatedStatement
                        of Operations Data:Revenues
                    
                    —
                    
                    —
                    
                    —
                    
                    —
                    
                    —
                    
                    8,246
                    
                    8,246
                    
                    620
                    
                    620Cost
                        of Revenues
                    
                    —
                    
                    —
                    
                    —
                    
                    —
                    
                    —
                    
                    8,731
                    
                    8,731
                    
                    558
                    
                    558Gross
                        Profit (loss)
                    
                    —
                    
                    —
                    
                    —
                    
                    —
                    
                    —
                    
                    (485
                    )
                    (485
                    )
                    62
                    
                    62Operating
                        expenses:General
                        and administrative
                    
                    
                    1,192,406
                    
                    
                    286,949
                    
                    
                    286,949
                    
                    
                    187,449
                    
                    
                    187,449
                    
                    
                    325,281
                    
                    
                    325,281
                    
                    
                    1,273,929
                    
                    
                    1,273,929Depreciation
                        and amortization
                    
                    
                    1,605,345
                    
                    
                    —
                    
                    
                    —
                    
                    
                    —
                    
                    
                    —
                    
                    
                    115,059
                    
                    
                    115,059
                    
                    
                    197,244
                    
                    
                    197,244Asset
                        impairment
                    
                    
                    1,436,078
                    
                    
                    493,905
                    
                    
                    493,905
                    
                    
                    52,584
                    
                    
                    52,584
                    
                    
                    —
                    
                    
                    —
                    
                    
                    —
                    
                    
                    —Total
                        operating expenses
                    
                    
                    4,233,829
                    
                    
                    780,851
                    
                    
                    780,851
                    
                    
                    240,033
                    
                    
                    240,033
                    
                    
                    440,340
                    
                    
                    440,340
                    
                    
                    1,471,173
                    
                    
                    1,471,173Operating
                        loss
                    
                    
                    (4,233,829
                    )
                    
                    (780,851
                    )
                    
                    (
                        780,851
                    )
                    
                    (
                        240,033
                    )
                    
                    (240,033
                    )
                    
                    (440,825
                    )
                    
                    (440,825
                    )
                    
                    (1,471,111
                    )
                    
                    (1,471,111
                    )Other
                        expenses (income):Interest
                        expense (income)
                    
                    
                    (5,981
                    )
                    
                    —
                    
                    
                    —
                    
                    
                    —
                    
                    
                    —
                    
                    
                    159,492
                    
                    
                    160,099
                    
                    
                    1,340,868
                    
                    
                    1,621,520Change
                        in fair value of derivative conversion feature
                    
                    
                    —
                    
                    
                    —
                    
                    
                    (125,980
                    )
                    
                    491
                    
                    
                    92,674
                    
                    
                    607
                    
                    
                    98,678
                    
                    
                    455
                    
                    
                    29,534Change
                        in fair value of warrants
                    
                    
                    
                    
                    
                    
                    
                    
                    —
                    
                    
                    
                    
                    
                    —
                    
                    
                    
                    
                    
                    —
                    
                    
                    —
                    
                    
                    57,637Other
                        expense (income), net
                    
                    
                    (90,793
                    )
                    
                    (146,362
                    )
                    
                    (146,362
                    )
                    
                    (26,637
                    )
                    
                    (26,146
                    )
                    
                    (91,826
                    )
                    
                    (91,826
                    )
                    
                    (211,395
                    )
                    
                    (211,395
                    )Loss
                        from continuing operations before income taxes
                    
                    
                    (4,137,055
                    )
                    
                    (634,489
                    )
                    
                    (508,509
                    )
                    
                    (213,887
                    )
                    
                    (306,561
                    )
                    
                    (509,098
                    )
                    
                    (607,776
                    )
                    
                    (2,601,039
                    )
                    
                    (2,968,407
                    )Income
                        tax provision (benefit)
                    
                    
                    —
                    
                    
                    —
                    
                    
                    —
                    
                    
                    —
                    
                    
                    —
                    
                    
                    —
                    
                    
                    —
                    
                    
                    —
                    
                    
                    —Loss
                        from continuing operations
                    
                    
                    (4,137,055
                    )
                    
                    (634,489
                    )
                    
                    (508,509
                    )
                    
                    (213,887
                    )
                    
                    (306,561
                    )
                    
                    (509,098
                    )
                    
                    (607,776
                    )
                    
                    (2,601,039
                    )
                    
                    (2,968,407
                    )Gain
                        (loss) from discontinued operations
                    
                    
                    (2,223,295
                    )
                    
                    (212,515
                    )
                    
                    (212,515
                    )
                    
                    118,001
                    
                    
                    118,001
                    
                    
                    176,008
                    
                    
                    176,008
                    
                    
                    94,363
                    
                    
                    94,363Cumulative
                        effect of change in accounting principle
                    
                    
                    —
                    
                    
                    —
                    
                    
                    —
                    
                    
                    —
                    
                    
                    —
                    
                    
                    —
                    
                    
                    —
                    
                    
                    —
                    
                    
                    —Gain
                        (loss) on disposal of business segment
                    
                    
                    (3,000,377
                    )
                    
                    394,453
                    
                    
                    394,453
                    
                    
                    —
                    
                    
                    —
                    
                    
                    (125,030
                    )
                    
                    (125,030
                    )
                    
                    (124,385
                    )
                    
                    (124,385
                    )Net
                        loss
                    
                    
                    (9,360,727
                    )
                    
                    (452,461
                    )
                    
                    (326,571
                    )
                    
                    (95,886
                    )
                    
                    (188,560
                    )
                    
                    (458,120
                    )
                    
                    (556,798
                    )
                    
                    (2,631,061
                    )
                    
                    (2,998,429
                    )Deemed
                        preferred stock dividend
                    
                    
                    (1,526,728
                    )
                    
                    (2,150,368
                    )
                    
                    (2,150,368
                    )
                    
                    (1,004,681
                    )
                    
                    (1,004,681
                    )
                    
                    (248,759
                    )
                    
                    (248,759
                    )
                    
                    —
                    
                    
                    —Recovery
                        of deemed preferred stock dividend
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    
                    1,527,171
                    
                    
                    1,527,171
                    
                    
                    —
                    
                    
                    —Net
                        loss applicable to common shareholders
                    
                    
                    (10,887,455
                    )
                    
                    (2,602,829
                    )
                    
                    (2,476,939
                    )
                    
                    (1,100,567
                    )
                    
                    (1,193,241
                    )
                    
                    820,292
                    
                    
                    721,614
                    
                    
                    (2,631,061
                    )
                    
                    (2,998,429
                    )Net
                        income (loss) per common shareBasicContinuing
                        operations
                    
                    
                    (0.66
                    )
                    
                    (0.28
                    )
                    
                    (0.27
                    )
                    
                    (0.08
                    )
                    
                    (0.01
                    )
                    
                    0.05
                    
                    
                    0.02
                    
                    
                    (0.15
                    )
                    
                    (0.18
                    )Cumulative
                        effect of change in accounting principle
                    
                    
                    0.00Discontinued
                        operations
                    
                    
                    (0.61
                    )
                    
                    0.02
                    
                    
                    0.02
                    
                    
                    0.01
                    
                    
                    0.01
                    
                    
                    0.00
                    
                    
                    0.00
                    
                    
                    (0.00
                    )
                    
                    (0.00
                    )Total
                    
                    
                    (1.27
                    )
                    
                    (0.26
                    )
                    
                    (0.25
                    )
                    
                    (0.07
                    )
                    
                    (0.01
                    )
                    
                    0.05
                    
                    
                    0.02
                    
                    
                    (0.16
                    )
                    
                    (0.18
                    )Weighted
                        average common shares outstanding
                    
                    
                    8,549,693
                    
                    
                    9,869,074
                    
                    
                    9,869,074
                    
                    
                    14,999,157
                    
                    
                    214,687,508
                    
                    
                    14,999,157
                    
                    
                    31,820,137
                    
                    
                    16,790,165
                    
                    
                    16,790,165Diluted
                        Continuing operations
                    
                    
                    (0.66
                    )
                    
                    (0.28
                    )
                    
                    (0.27
                    )
                    
                    (0.01
                    )
                    
                    (0.01
                    )
                    
                    0.02
                    
                    
                    0.02
                    
                    
                    (0.16
                    )
                    
                    (0.18
                    )Cumulative
                        effect of change in accounting principle
                    
                    
                    0.00
                    
                    
                    0.00
                    
                    
                    0.00
                    
                    
                    
                    
                    
                    0.00
                    
                    
                    
                    
                    
                    0.00
                    
                    
                    
                    
                    
                    0.00Discontinued
                        operations
                    
                    
                    (0.61
                    )
                    
                    0.02
                    
                    
                    0.02
                    
                    
                    0.01
                    
                    
                    0.01
                    
                    
                    0.00
                    
                    
                    0.00
                    
                    
                    (0.00
                    )
                    
                    0.00Total
                    
                    
                    (1.27
                    )
                    
                    (0.26
                    )
                    
                    (0.25
                    )
                    
                    (0.01
                    )
                    
                    (0.01
                    )
                    
                    0.03
                    
                    
                    0.02
                    
                    
                    (0.16
                    )
                    
                    (0.18
                    )Weighted
                        average common and convertible shares outstanding
                    
                    
                    8,549,693
                    
                    
                    9,869,074
                    
                    
                    9,869,074
                    
                    
                    214,687,508
                    
                    
                    214,687,508
                    
                    
                    31,820,137
                    
                    
                    31,820,137
                    
                    
                    16,790,165
                    
                    
                    16,790,165
  19
  Balance
                    Sheet Data:Working
                    capital (deficit)
                
                
                (823,406
                )
                
                (968,336
                )
                
                (968,336
                )
                
                (1,714,241
                )
                
                (1,714,241
                )
                
                (5,932,177
                )
                
                (7,060,705
                )
                
                (1,574,634
                )
                
                (2,780,402
                )Total
                    assets
                
                
                2,528,973
                
                
                665,391
                
                
                665,391
                
                
                507,554
                
                
                507,554
                
                
                1,350,281
                
                
                1,350,281
                
                
                3,115,073
                
                
                2,834,876Long-term
                    liabilities
                
                
                357,757
                
                
                -
                
                
                940,847
                
                
                -
                
                
                1,057,106
                
                
                -
                
                
                -
                
                
                415,302
                
                
                1,157,750Total
                    liabilities
                
                
                2,298,013
                
                
                1,541,306
                
                
                2,482,153
                
                
                2,117,742
                
                
                3,174,848
                
                
                6,278,413
                
                
                7,434,198
                
                
                2,753,736
                
                
                4,547,047Convertible
                    preferred stock
                
                
                251,750
                
                
                4,840,932
                
                
                4,840,932
                
                
                5,207,224
                
                
                5,207,224
                
                
                1,069,000
                
                
                6,591,041
                
                
                6,128,223
                
                
                6,128,223Stockholders'
                    equity (deficit)
                
                
                (20,790
                )
                
                (5,716,847
                )
                
                (6,657,696
                )
                
                (6,817,412
                )
                
                (7,874,518
                )
                
                (5,997,132
                )
                
                (7,152,917
                )
                
                (5,766,886
                )
                
                (7,840,394
                )
 GLOBAL
        MATRECHS, INC.
 CONSOLIDATED
        STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
 For
        Each
        of the Three Years in the Period Ended December 31, 2004
 
 Preferred
              
              Common
              
              
              
              AdditionalTreasury
              
              Paid-In
              
              Accumulated
              
              Stockholders’Shares
              
              Amount
              
              Shares
              
              Amount
              
              Stock
              
              Capital
              
              Deficit
              
              DeficitBalance,
                  December 31, 2001, as issued
              
              
              198
              
              $
              3
              
              
              14,999,157
              
              $
              1,500
              
              $
              (8,659
              )
              $
              24,587,964
              
              $
              (25,700,291
              )
              $
              (1,119,483
              )Adjustments
                  to opening balances
              
              
              (198
              )
              
              (3
              )
              
              
              
              
              
              
              
              
              
              
              (4,620,540
              )
              
              917,670
              
              
              (5,538,213
              )Balance,
                  December 31, 2001, as restated
              
              
              —
              
              
              —
              
              
              14,999,157
              
              
              1,500
              
              
              (8,659
              )
              
              19,990,603
              
              
              (25,700,291
              )
              
              (5,716,847
              )Guaranteed
                  return to Series B, C, D and E
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (297,948
              )
              
              
              
              
              (297,948
              )preferred
                  stockholders
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (91,928
              )
              
              
              
              
              (91,928
              )Amortization
                  of beneficial conversion feature to Series E preferred
                  stockholders
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (638,387
              )
              
              
              
              
              (638,387
              )Penalties
                  on preferred stockNet
                  loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (188,560
              )
              
              (188,560
              )(8,659
              )
              
              18,939,161
              
              
              (27,363,319
              )
              
              (7,874,519
              )Balance,
                  December 31, 2002
              
              
              —
              
              
              —
              
              
              14,999,157
              
              
              1,500
              
              
              
              
              
              (135
              )
              
              
              
              
              —Issuance
                  of Series H preferred stock
              
              
              13,500
              
              
              135Guaranteed
                  return to Series B, C, D and E
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (148,824
              )
              
              
              
              
              (148,824
              )preferred
                  stockholdersAmortization
                  of beneficial conversion feature to Series E and G preferred
                  stockholders
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (99,947
              )
              
              
              
              
              (99,947
              )Recovery
                  of deemed preferred stock dividend
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              1,527,171
              
              
              
              
              
              1,527,171Net
                  loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (556,798
              )
              
              (556,798
              )Balance,
                  December 31, 2003
              
              
              13,500
              
              
              135
              
              
              14,999,157
              
              
              1,500
              
              
              (8,659
              )
              
              20,217,426
              
              
              (27,353,319
              )
              
              (7,152,917
              )Issuance
                  of Series I preferred stock
              
              
              490
              
              
              5
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              5Receipt
                  of Treasury stock
              
              
              
              
              
              
              
              
              (4,905,000
              )
              
              (490
              )
              
              (318,825
              )
              
              319,312
              
              
              
              
              
              (3
              )Issuance
                  of Common Stock
              
              
              
              
              
              
              
              
              2,151,081
              
              
              215
              
              
              
              
              
              104,850
              
              
              
              
              
              105,065Beneficial
                  Conversion feature on promissory notes, net of expenses
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              526,459
              
              
              
              
              
              526,459Issuance
                  of warrants for services rendered
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              258,942
              
              
              
              
              
              258,942Conversion
                  of Series H preferred stock to common stock
              
              
              (150
              )
              
              (2
              )
              
              1,500,000
              
              
              150
              
              
              
              
              
              (135
              )
              
              
              
              
              —Conversion
                  of temporary equity to common Stock
              
              
              
              
              
              
              
              
              22,150,193
              
              
              2,215
              
              
              
              
              
              818,269
              
              
              
              
              
              820,484Acquisition
                  of True To Form Ltd.
              
              
              
              
              
              
              
              
              10,000,000
              
              
              1,000
              
              
              
              
              
              599,000
              
              
              
              
              
              600,000Net
                  loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (2,998,429
              )
              
              (2,998,429
              )Balance,
                  December 31, 2004
              
              
              13,840
              
              $
              138
              
              
              45,895,431
              
              $
              4,590
              
              $
              (327,484
              )
              $
              22,844,110
              
              $
              (30,361,748
              )
              $
              (7,840,394
              )
  20
  CRITICAL
        ACCOUNTING POLICIES. This section discusses certain critical accounting policies
        that we consider important to our financial condition and results of operations,
        and that required significant judgment and estimates on the part of management
        in application. Our significant accounting policies, including the critical
        accounting policies discussed in this section, are summarized in the notes
        to
        the accompanying consolidated financial statements.
 
 Revenue
        Recognition
 
 Revenue
        from the sale of products related to our licensed technology is recognized
        upon
        shipment of the product provided that title passes, the price is fixed or
        determinable and collection of the receivable is probable.
 
 Use
        of
        Estimates
 
 The
        preparation of financial statements in conformity with generally accepted
        accounting principles requires management to make estimates and assumptions
        that
        affect the reported amounts of assets and liabilities and disclosure of
        contingent assets and liabilities at the date of the financial statements
        and
        the reported amounts of revenue and expenses during the reporting period.
        Actual
        results could differ from those estimates.
 
 GENERAL
 
 Except
        for historical information contained herein, some matters discussed in this
        report constitute forward-looking statements within the meaning of Section
        27A
        of the Securities Act of 1933, as amended, and Section 21E of the Securities
        Exchange Act of 1934, as amended. Forward looking statements include, but
        may
        not be limited to, those statements regarding the Company’s expectations,
        beliefs, intentions, or strategies regarding the future. All forward-looking
        statements included in this document are based on information available to
        the
        Company on the date hereof, and the Company assumes no obligation to update
        any
        such forward-looking statements. The Company notes that a variety of risk
        factors could cause the Company’s actual results and experience to differ
        materially from the anticipated results or other expectations expressed in
        the
        Company’s forward-looking statements including, among other things, our ability
        to obtain additional financing, the commercial viability of the technologies
        that we license from Eurotech, our ability to market these technologies,
        and
        other factors discussed in this report and in our other securities
        filings.
 
 On
        May
        31, 2004, the Company completed the sale of its remaining Internet business
        to
        Tulix Systems, Inc. (“Tulix”), a company in which Gia Bokuchava, Nino
        Doijashvili and Timothy R. Robinson, who were officers and directors of the
        Company, are officers, directors and founding shareholders. With the
        consummation of this Purchase Agreement the Company has completely exited
        from
        all Internet related enterprises.
 
 The
        Company is currently operating in two major segments. These segments are
        defined
        as the Licensed Technologies Division, which consists of the marketing of
        the
        technologies licensed from Eurotech, and the Specialty Lighting Division,
        which
        consists of the design, development, manufacture and sales of specialty lighting
        and architectural products acquired in the merger with True To Form, Limited.
        The Company is targeting the pursuit of the Homeland Securities market with
        both
        segments.
 
 On
        May
        22, 2003, we completed a transaction with Eurotech pursuant to which we now
        license NuCap(TM) (formerly called EKOR(TM)), HNIPU, EMR/AC, Rad-X, Firesil,
        LEM
        and RBHM technologies from Eurotech. We intend to use these licenses to derive
        revenue by partnering with other technology firms to sell raw materials to
        producers or to sublicense the technologies and collect royalties and/or
        licensing fees.
 
 On
        December 31, 2004 we acquired True To Form, Limited. As a result of the merger,
        True To Form is now our wholly owned subsidiary. True To Form designs, develops,
        manufactures and sells specialty lighting products to targeted segments of
        the
        traditional lighting industry and has recently established a division that
        will
        focus on the homeland security market. True To Form markets “high-end” lighting
        and architectural products for both commercial and residential applications,
        including pendants, surface and ceiling luminaries, table and floor lamps,
        commercial down-lights, bath fixtures, and custom fixtures.
 
 Our
        revenues and operating results have varied substantially from period-to-period,
        and should not be relied upon as an indication of future results.
 
  21
 RESULTS
          OF OPERATIONS
 
 YEAR
          ENDED DECEMBER 31, 2003 AS COMPARED TO YEAR ENDED DECEMBER 31, 2004
 
 LICENSED
          TECHNOLOGIES
 REVENUES.
        Revenues for the Licensed Technologies division were $620 for the year ending
        December 31, 2004. These consisted of the sale of samples of EKOR(TM) and
        HNIPU
        and were recognized upon shipment of the materials. Revenues for the year
        ending
        December 31, 2003 were $8,246 which consisted of $7,801 for the sale of RAD-X
        and $445 for the sale of EKOR(TM).
 
 COST
        OF
        REVENUES. Cost of revenues includes costs of raw materials including handling
        and freight charges. Costs of revenues were $558 and $8,731 for the years
        ending
        December 31, 2004 and 2003, respectively. This represents a 90% cost in 2004
        and
        a 105% cost in 2003.
 
 GROSS
        PROFIT. December 31, 2004 saw a gross profit of $62 whereas gross losses
        for the
        year ending December 31, 2003 were $485. The losses were a result of product
        cost and handling exceeding the value of revenue generated.
 
 SALES
        AND
        MARKETING. There were no such expenditures in 2004 or 2003. As of the end
        of
        2004 there have been no expenditures for sales and marketing related to the
        Licensed Technologies Division.
 
 PRODUCT
        DEVELOPMENT. There were no such expenditures in 2004 or 2003. As of the end
        of
        2004 there have been no expenditures for product development related to the
        Licensed Technologies Division.
 
 GENERAL
        AND ADMINISTRATIVE. General and administrative expenses include salaries
        for
        administrative personnel, insurance and other administrative expenses, as
        well
        as expenses associated with maintaining the corporation’s records and reporting
        in compliance with its status as a public corporation. General and
        administrative expenses increased from $325,281 in 2003 to $1,273,929 in
        2004.
        The General and administrative costs for 2003 represent a partial year, whereas
        the 291% increase in expenditures for 2004 represent the cost of a full years
        operations. Much of the increase is the cost of professional services for
        legal
        and promotional firms.
 
 DEPRECIATION
        AND AMORTIZATION. Amortization was $197,244 in the year ending December 31,
        2004
        and $115,059 in the year ending December 31, 2003. The 71.4% increase is
        due to
        a full year of amortization of the value of the licensed technologies, and
        the
        amortization of the beneficial conversion features of the loans taken during
        the
        second and third quarter.
 
 INTEREST
        EXPENSE. Interest expense for the year ending December 31, 2004 consisted
        of
        $34,072 in interest expense on various loans, $212,617 in interest charges
        on
        the Series B, C, D and E preferred stock, $1,030,646 of amortization of
        beneficial conversion feature associated with various convertible loans and
        $344,185 of interest expense related to the amortization of warrants associated
        with various convertible loans. Interest expense for the year ending December
        31, 2003 consisted of $10,668 in interest expense on the notes related to
        the
        Licensed Technologies Division, $149,431 in interest charges on the Series
        B, C,
        D and E preferred stock.
 
 OTHER
        INCOME. Other income for the years ending December 31, 2004 and 2003 was
        $211,395 and $91,826 respectively. This income predominantly consists of
        the
        settlement of accrued expenses which were settled for less than the amount
        which
        had been estimated.
 
 OTHER
        EXPENSES. Other expenses for the year ending December 31, 2004 consisted
        of
        $29,534 due to the change in fair value of the derivative conversion feature
        and
        $57,637 due to the change in fair value of our warrants. Other expenses for
        the
        year ending December 31, 2003 consisted of $98,678 due to the change in fair
        value of the derivative conversion feature.
 
 DISCONTINUED
        OPERATIONS. The company recorded net income of $94,363 and $176,008 in the
        years
        ending December 31, 2004 and 2003, respectively, for its discontinued Internet
        Services unit. The decrease was due to the sale of the internet unit closing
        on
        May 31, 2004, less than half-way through the year.
 
 YEAR
        ENDED DECEMBER 31, 2002 AS COMPARED TO YEAR ENDED DECEMBER 31, 2003
 
 REVENUES.
        Revenues for the Licensed Technologies division were $8,246 for the year
        ending
        December 31, 2003. Revenues consisted of $7,801 for the sale of RAD-X and
        $445
        for the sale of EKOR(TM). The Licensed Technologies unit did not begin operation
        until the first quarter of 2003.
 
 COST
        OF
        REVENUES. Cost of revenues includes costs of raw materials including handling
        and freight charges. Costs of revenues were $8,731 for the year ending December
        31, 2003. The Licensed Technologies unit did not begin operation until the
        first
        quarter of 2003.
 
 GROSS
        PROFIT. Gross losses for the year ending December 31, 2003 were $485. These
        losses were a result of product cost and handling exceeding the value of
        revenue
        generated. The Licensed Technologies unit did not begin operation until the
        first quarter of 2003.
 
 22
  SALES
        AND
        MARKETING. The Company ceased all sales and marketing efforts related to
        our
        Internet Services Division in 2001. There were no such expenditures in 2002
        or
        2003. As of the end of 2003 there have been no expenditures for sales and
        marketing related to the Licensed Technologies Division.
 
 PRODUCT
        DEVELOPMENT. The Company ceased all product development efforts related to
        our
        Internet Services Division in 2001. There were no such expenditures in 2002
        or
        2003. As of the end of 2003 there have been no expenditures for product
        development related to the Licensed Technologies Division.
 
 GENERAL
        AND ADMINISTRATIVE. General and administrative expenses include salaries
        for
        administrative personnel, insurance and other administrative expenses, as
        well
        as expenses associated with maintaining the corporation’s records and reporting
        in compliance with its status as a public corporation. General and
        administrative expenses increased from $187,449 in 2002 to $325,281 in 2003.
        The
        increase is due to the additional expenses associated with the launch of
        the
        Licensed Technologies Division.
 
 DEPRECIATION
        AND AMORTIZATION. With the write down of the carrying value of all fixed
        assets
        in the fourth quarter of 2000, the Company has suspended depreciation of
        its
        remaining assets in anticipation of a sale. Amortization expense of $115,059,
        which represents seven months of amortization of the intangible Licensed
        Technologies, was recognized in the year ending December 31, 2003.
 
 INTEREST
        EXPENSE. Interest expense for the year ending December 31, 2003 consisted
        of
        $10,668 in interest expense on the notes related to the Licensed Technologies
        Division, $149,431 in interest charges on the Series B, C, D and E preferred
        stock.
 
 OTHER
        INCOME. Other income for the year ending December 31, 2003 consisted of $4,597
        in interest earned on money market accounts, $18,388 in the reversal of accruals
        related to defaults on the lease for our Atlanta offices during the first
        quarter of 2001, and $68,841 in the reversal of accruals related to defaults
        on
        leases of capital equipment during the third quarter of 2001 which were resolved
        at a lower cost than estimated.
 
 OTHER
        EXPENSES. Other expenses for the year ending December 31, 2003 consisted
        of
        $98,678 due to the change in fair value of the derivative conversion feature.
        Other expenses for the year ending December 31, 2002 consisted of $92,674
        due to
        the change in fair value of the derivative conversation feature.
 
 DISCONTINUED
        OPERATIONS. The company recorded net income of $176,008 in the year ending
        December 31, 2003 for its discontinued Internet Services unit. This compares
        to
        net income of $118,001 in the year ending December 31, 2002. This increase
        of
        $58,007 was due primarily to growth in hosting revenue due to Roadrunner,
        and
        reductions in the cost of internet network services.
 
 OFF-BALANCE
        SHEET ARRANGEMENTS
 
 We
        have
        no significant off-balance sheet arrangements that have or are reasonably
        likely
        to have a current or future effect on our financial condition, changes in
        financial condition, revenues or expenses, results of operations, liquidity,
        capital expenditures or capital resources that is material to
        stockholders.
 
 LIQUIDITY
        AND CAPITAL RESOURCES
 
 GENERAL
 
 Our
        sources of capital are extremely limited. We have incurred operating losses
        since inception and as of December 31, 2004, we had an accumulated deficit
        of
        $30,361,748 and a working capital deficit of $2,780,402.
 
 On
        September 30, 2003, we entered into a private equity credit agreement with
        Brittany Capital Management LLC under which we had an option to issue and
        sell
        to Brittany up to $10,000,000 of our common stock over three years. In
        connection with this agreement, we filed a registration statement on Form
        SB-2
        with the Securities Exchange Commission to register 25,651,000 shares of
        our
        common stock for resale by Brittany and Econ Investor Relations. However,
        the
        registration statement was not declared effective by the Securities and Exchange
        Commission. In December 2004, the private equity credit agreement terminated
        in
        accordance with its terms, and we withdrew the registration
        statement.
 
 In
        June
        2004 we entered into a second exchange agreement with Brittany to acquire
        certain of their shares of our common stock at a price of $0.10 per share.
        On
        September 22, 2004, we issued 490.5 shares of our Series I convertible preferred
        stock to Brittany in exchange for Brittany’s surrender of 4,905,000 shares of
        our common stock. In addition Brittany agreed to loan us $100,000 under a
        convertible note. As of December 31, 2004 we had borrowed $75,000 under this
        agreement.
 
 23
  On
        October 19, 2004, we entered into a securities purchase agreement with
        Southridge Partners LP. Southridge purchased a nonnegotiable 2% secured
        convertible promissory note in the principal amount of $250,000 and we issued
        it
        a warrant to purchase 10,000,000 shares of our common stock. On October 21,
        2004, we entered into a securities purchase agreement with Dean M. DeNuccio.
        Mr.
        DeNuccio purchased a nonnegotiable 2% secured convertible promissory note
        in the
        principal amount of $25,000 and we issued to Mr. DeNuccio a warrant to purchase
        1,000,000 shares of our common stock. On November 5, 2004, we entered into
        a
        securities purchase agreement with Colonial Fund, LLC. Colonial purchased
        a
        nonnegotiable 2% secured convertible promissory note in the principal amount
        of
        $50,000 and we issued it a warrant to purchase 2,000,000 shares of our common
        stock.
 
 Each
        of
        these promissory notes are convertible into shares of our common stock at
        a
        conversion price of $0.02 and each of the warrants are exercisable for $0.025
        per share of our common stock. The promissory notes mature in two years and
        the
        warrants expire in five years. Should our common stock fall below $0.03 cents
        for ten consecutive trading days, any holder of these notes may force prepayment
        at 140% of the principle amount plus interest. Conversion and exercise rights
        are restricted in that any of these note or warrant holders may not at any
        time
        have beneficial ownership of more than 4.999% of the total number of issued
        and
        outstanding shares of our common stock.
 
 On
        October 22, 2004 and November 5, 2004, Global Matrechs, Inc.,entered into
        securities purchase agreements with Dean M. DeNuccio and Colonial Fund LLC
        relating to the private placement of 2% secured convertible promissory notes
        in
        the aggregate principal amount of $75,000 with a maturity of two (2) years
        and
        warrants to purchase 3,000,000 shares of its common stock at an exercise
        price
        of $0.025 per share, which expire in five years in exchange for aggregate
        consideration equal to the principal amount of the Notes. The Company received
        approximately $70,000 in proceeds after deducting offering
        expenses.
 
 The
        Notes
        are convertible, at the option of the holders, into shares of common stock
        of
        the Company at a conversion price of $0.02 per share. Each Purchaser may
        require
        the Company to repurchase some or all of its Note if the market price of
        the
        common stock of the Company falls below $0.03 per share for ten (10) consecutive
        trading days, at a repurchase price equal to 140% of the principal amount
        of the
        Note.
 
 On
        December 3, 2004, the Company and Deer Creek Fund, LLC entered into a securities
        purchase agreement relating to the private placement of a 2% secured convertible
        promissory notes in the aggregate principal amount of $50,000 with a maturity
        of
        two (2) years and a warrant to purchase 2,000,000 shares of its common stock
        at
        an exercise price of $0.025 per share, which expires in five years. The Company
        has received approximately $45,000 in net proceeds after deducting offering
        expenses.
 
 The
        Note
        is convertible, at the option of the holder, into shares of common stock
        of the
        Company at a conversion price of $0.02 per share. The holder of the Note
        may
        require the Company to repurchase some or all of its Note if the market price
        of
        the common stock of the Company falls below $0.03 per share for ten (10)
        consecutive trading days, at a repurchase price equal to 140% of the principal
        amount being repurchased.
 
 We
        can
        provide no assurance that the financing sources described above, or any other
        financing that we may obtain in the future (if we are able to obtain financing
        from any other sources, and we can provide no assurances that we will be
        able to
        obtain any such financing), will enable us to sustain our operations. The
        aforementioned factors raise substantial doubt about our ability to continue
        as
        a going concern. The financial statements included herein have been prepared
        assuming we are a going concern and do not include any adjustments that might
        result should we be unable to continue as a going concern.
 
 RECENTLY
        ISSUED ACCOUNTING STANDARDS
 
 See
        Note
        1 to Notes to Consolidated Financial Statements for a complete discussion
        of
        recently issued accounting standards and their expected impact on our
        consolidated financial statements.
 
 FACTORS
        AFFECTING FUTURE PERFORMANCE
  **Our
          business, as currently constituted, has limited operating history. Therefore,
          we
          may not be able to accurately forecast future results and operating losses
          in
          future periods could be greater than expected.**
 
 On
        May
        31, 2004, the Company completed the sale of its remaining Internet business,
        which had been in operation since 1994, to Tulix Systems, Inc. (“Tulix”), a
        company in which Gia Bokuchava, Nino Doijashvili and Timothy R. Robinson,
        who
        were officers and directors of the Company, are officers, directors and founding
        shareholders. We did not begin to focus on our licensed technologies business
        until May 22, 2003 when we completed a transaction with Eurotech, Ltd. Thus,
        our
        current business has a limited operating history. As a result, it is difficult
        to accurately forecast our revenues and we lack meaningful historical financial
        data upon which to base planned operating expenses. We may be unable to adjust
        our spending in a timely enough manner to
  24
  compensate
        for any unexpected revenue shortfall. Conversely, we might not be able to
        respond effectively to an unexpected increase in sales activities, should
        one
        occur. This inability could cause our net losses in a given quarter to be
        greater than expected.
 **We
          have a history of operating losses, and there is no assurance that we will
          achieve profitability in the future.**
 
 We
        have a
        history of operating losses. If we continue to experience operating losses,
        an
        investment in our common stock is at risk of being lost. We cannot predict
        when,
        or if, we will ever achieve profitability. As of December 31, 2004, we had
        an
        accumulated deficit of approximately $30,361,748 .
  **We
          have a going-concern qualification in the report by our registered independent
          public accounting firm for our financial statements for the year ended
          december
          31, 2004, which may make capital raising more difficult and may require
          us to
          scale back or cease operations, putting our investors’ funds at
          risk.**
 
 The
        report of our registered independent public accounting firm dated May 10,
        2005
        includes a going-concern qualification, which indicates an absence of obvious
        or
        reasonably assured sources of future funding that will be required by us
        to
        maintain ongoing operations. If we are unable to obtain additional funding,
        we
        may not be able to continue operations. To date, we have funded our operations
        through sales of equity and issuances of debt. Additionally, as of December
        31,
        2004, we had an accumulated deficit of approximately $30,361,748 and a working
        capital deficiency of $2,780,402. We may be unable to meet our future
        obligations unless additional funding sources are obtained.
  **We
              may be unable to obtain additional capital required to fund our operations
              and
              finance our growth.**
 The
        continued development of our current technologies or acquisitions of new
        technologies will require additional capital. We
        incurred net losses of $556,798 and $2,998,429 for the years ended December
        31,
        2003 and December 31, 2004, respectively. We may be
        unable to obtain additional funds in a timely manner or on acceptable terms,
        which would render us unable to fund our operations or expand our business.
        If
        we are unable to obtain capital when needed, we may have to restructure our
        business or delay or abandon our development and expansion plans. Although
        we
        have been successful in the past in obtaining financing for working capital
        and
        capital expenditures, we will have ongoing capital needs as we expand our
        business. If we raise additional funds through the sale of equity or convertible
        securities, your ownership percentage of our common stock will be reduced.
        In
        addition, these transactions may dilute the value of our common stock. We
        may
        have to issue securities that have rights, preferences and privileges senior
        to
        our common stock. The terms of any additional indebtedness may include
        restrictive financial and operating covenants that would limit our ability
        to
        compete and expand.
  **The
          management of our finances and the quality and timeliness of our financial
          reporting may be adversely affected if we are unable to increase the size
          and
          capabilities of our internal administrative and finance function as our
          business
          grows.**
 
 We
        have
        engaged an outside accounting firm (other than our independent registered
        public
        accounting firm) to provide financial management and accounting services
        on a
        temporary basis. If we are unable to continue to obtain sufficient financial
        management and accounting services on a cost-effective basis, our ability
        to
        effectively manage our finances and the quality and timeliness of our financial
        reporting could be adversely affected.
 **If
          we fail to realize some or all of the of the anticipated benefits from
          our
          acquisition of true to form, our business will
          suffer.**
 
 Our
        combined company may fail to realize some or all of the anticipated benefits
        and
        synergies of the transaction as a result of, among other things, lower than
        expected revenues for True To Form, unanticipated costs, deterioration in
        the
        U.S. economy as a whole or the commercial lighting industry in particular,
        and
        other factors. In addition, the integration of True to Form’s business and
        operations with those of Global Matrechs may take longer than anticipated,
        may
        be more costly than anticipated and may have unanticipated adverse effects
        on
        Global Matrechs existing strategic focus.
 **We
          face intense competition, which could result in lower revenues and higher
          research and development expenditures and could adversely affect our results
          of
          operations.**
 
 If
        we do
        not develop or acquire new and enhanced products, or if we are not able to
        invest adequately in our research and development activities, our business,
        financial condition and results of operations could be negatively impacted.
        Many
        of our competitors have significantly more cash and resources than we have.
        Our
        competitors may introduce products that are competitively
  25
  priced,
        have increased performance or functionality, or incorporate technological
        advances that we have not yet developed or implemented. To remain competitive,
        we must continue to develop, market and sell new and enhanced systems and
        products at competitive prices, which will require significant research and
        development expenditures.
 **If
          we cannot effectively manage our growth, our business may
          suffer.**
 
 Recently,
        we have expanded our operations to pursue existing and potential new market
        opportunities. This growth has placed, and is expected to continue to place,
        a
        strain on our personnel, management, financial and other resources. To manage
        our growth effectively, we must, among other things:
 
 ·
              successfully
                  attract, train, motivate and manage a larger number of employees
                  for sales
                  and customer support activities;
 ·
              control
                  working capital requirements; and
 ·
              improve
                  the efficiency of our operating, administrative, financial and
                  accounting
                  systems, procedures and controls.
 
 If
        we
        fail to manage our growth properly, we may incur unnecessary expenses and
        the
        efficiency of our operations may decline.
 **We
          may be unable to hire and retain the skilled personnel we need to expand
          our
          operations.**
 
 To
        meet
        our growth objectives, we must attract and retain highly skilled technical,
        operational, managerial and sales and marketing personnel. If we fail to
        attract
        and retain the necessary personnel, we may be unable to achieve our business
        objectives and may lose our competitive position, which could lead to a
        significant decline in net sales. We face significant competition for these
        skilled professionals from other companies, research and academic institutions,
        government entities and other organizations.
 **Our
          success depends on the services of our executive officers and key
          employees.**
 
 We
        depend
        upon the continued services of our senior management for our continued success.
        The loss of any member of senior management could have a serious negative
        impact
        upon our business and operating results. We can provide no assurances that
        we
        will be able to retain our senior management or other key
        personnel.
 **Our
          business may suffer if we cannot protect our proprietary
          technology.**
 
 Our
        ability to compete depends significantly upon our trade secrets and our other
        proprietary technology. The steps we have taken to protect our technology
        may be
        inadequate to prevent others from using what we regard as our technology
        to
        compete with us. Existing trade secrets, copyright and trademark laws offer
        only
        limited protection. In addition, the laws of some foreign countries do not
        protect our proprietary technology to the same extent as the laws of the
        United
        States, which could increase the likelihood of misappropriation. Furthermore,
        other companies could independently develop similar or superior technology
        without violating our intellectual property rights. Any misappropriation
        of our
        technology or the development of competing technology could seriously harm
        our
        competitive position, which could lead to a substantial reduction in net
        sales.
 
 If
        we
        resort to legal proceedings to enforce our intellectual property rights,
        the
        proceedings could be burdensome, disruptive and expensive, distract the
        attention of management, and there can be no assurance that we would
        prevail.
 **Claims
          by others that we infringe their intellectual property rights could harm
          our
          business and financial condition.**
 
 Our
        industries are characterized by the existence of a large number of patents
        and
        frequent claims and related litigation regarding patent and other intellectual
        property rights. We cannot be certain that our products do not and will not
        infringe issued patents, patents that may be issued in the future, or other
        intellectual property rights of others.
 
 We
        do not
        conduct exhaustive patent searches to determine whether the technology used
        in
        our products infringes patents held by third parties. In addition, product
        development is inherently uncertain in a rapidly evolving technological
        environment in which there may be numerous patent applications pending, many
        of
        which are confidential when filed, with regard to similar
        technologies.
 
 We
        may
        face claims by third parties that our products or technology infringe their
        patents or other intellectual property rights. Any claim of infringement
        could
        cause us to incur substantial costs defending against the claim, even if
        the
        claim is invalid, and could distract the attention of our management. If
        any of
        our products are found to violate third-party proprietary rights, we may
        be
        required to pay substantial damages. In addition, we may be required to
        re-engineer our products or obtain licenses from third parties to continue
        to
        offer our products. Any efforts to re-engineer our products or obtain licenses
        on commercially reasonable terms may not
  26
  be
        successful, which would prevent us from selling our products, and, in any
        case,
        could substantially increase our costs and have a material adverse effect
        on our
        business, financial condition and results of operations.
 **New
          corporate governance requirements are likely to increase our costs and
          make it
          more difficult to attract qualified directors.**
 
 We
        face
        new corporate governance requirements under the Sarbanes-Oxley Act of 2002,
        as
        well as rules adopted by the SEC. We expect that these laws, rules and
        regulations will increase our legal and financial compliance costs and make
        some
        activities more difficult, time-consuming and costly. We also expect that
        these
        new requirements will make it more difficult and more expensive for us to
        obtain
        director and officer liability insurance. We may be required to accept reduced
        coverage or incur significantly higher costs to obtain coverage. These new
        requirements are also likely to make it more difficult for us to attract
        and
        retain qualified individuals to serve as members of our board of directors
        or
        committees of the board, particularly the audit committee.
  **We
          are not subject to the same corporate governance standards as listed companies,
          including without limitation, the requirement that we have a majority of
          independent directors.**
 
 Registered
        exchanges and the Nasdaq National Market have enhanced corporate governance
        requirements that apply to issuers that list their securities on those markets.
        Our common stock is quoted on the OTC Bulletin Board which does not have
        comparable requirements. For instance, we are not required to have any
        independent directors or to adopt a code of ethics.
 
 Currently,
        we have no independent directors and therefore management has significant
        influence over decisions made on behalf of the stockholders. In certain
        circumstances, management may not have the same interests as the stockholders
        and conflicts of interest may arise.
 
 Furthermore,
        certain relationships with our officers, directors and affiliates may also
        involve inherent conflicts of interest. We do not have a policy to resolve
        conflicts of interest. Notwithstanding the exercise of their fiduciary duties
        as
        directors and executive officers and any other duties that they may have
        to us
        or our other stockholders in general, these persons may have interests different
        than yours.
  27
  ITEM
        7.
        FINANCIAL STATEMENTS
 
 INDEX
        TO
        CONSOLIDATED FINANCIAL STATEMENTS
 
 
 PageReport
                  of Independent Registered Public Accounting Firm
              29Consolidated
                  Balance Sheets as of December 31, 2003 and 2004
              30Consolidated
                  Statements of Operations for each of the ThreeYears
                  in the Period Ended December 31, 2004
              31Consolidated
                  Statements of Changes in Stockholders’ Equity (Deficit)for
                  each of the Three Years in the Period Ended December 31,
                  2004
              32Consolidated
                  Statements of Cash Flows for Each of the ThreeYears
                  in the Period Ended December 31, 2004
              33Notes
                  to Consolidated Financial Statements
              34
 
  28
  REPORT
        OF
        INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Board
        of
        Directors
 Global
        Matrechs, Inc.
 
 We
        have
        audited the accompanying consolidated balance sheets of Global Matrechs,
        Inc.
        and subsidiaries as of December 31, 2004 and 2003 and the related statements
        of
        operations, stockholders’ equity (deficit) and cash flows for the years ended
        December 31, 2004, 2003 and 2002. These financial statements are the
        responsibility of the Company’s management. Our responsibility is to express an
        opinion on these financial statements based on our audits.
 
 We
        conducted our audits in accordance with the standards of the Public Company
        Accounting Oversight Board (United States). Those standards require that
        we plan
        and perform the audits to obtain reasonable assurance about whether the
        financial statements are free of material misstatement. An audit includes
        examining on a test basis, evidence supporting the amount and disclosures
        in the
        consolidated financial statements. An audit also includes assessing the
        accounting principles used and significant estimates made by management,
        as well
        as evaluating the overall financial statement presentation. We believe that
        our
        audits provide a reasonable basis for our opinion.
 
 In
        our
        opinion, the consolidated financial statements referred to above present
        fairly,
        in all material respects, the financial position of Global Matrechs, Inc.
        and
        subsidiaries as of December 31, 2004 and 2003 and the results of its operations
        and its cash flows for the years ended December 31, 2004, 2003 and 2002 in
        conformity with accounting principles generally accepted in the United States
        of
        America.
 
 The
        accompanying financial statements have been prepared assuming that the Company
        will continue as a going concern. As discussed in Note 1 to the financial
        statements, the Company has experienced recurring losses and negative cash
        flows
        since its inception and has an accumulated deficit. The Company is dependent
        on
        continued financing from investors to sustain its activities and there is
        no
        assurance that such financing will be available. These factors raise substantial
        doubt about the Company’s ability to continue as a going concern. Management’s
        plans in regard to these matters are also described in Note 1.
  The
        consolidated financials for the years 2004, 2003 and 2001 have been restated
        (see Note 1).
 
 
 /S/
                  Sherb & Co., LLPSherb
                  & Co., LLPCERTIFIED
                    PUBLIC ACCOUNTANTS
 NEW
        YORK,
        NEW YORK
 MAY
        10,
        2005
  29
  **GLOBAL
        MATRECHS, INC.**
 **CONSOLIDATED
        BALANCE SHEETS**
 **December
                      31,****2003**
                    **Restated**
                  
                  
                  **2004**
                    **Restated****ASSETS**CURRENT
                      ASSETS:Cash
                      and cash equivalents
                  
                  $
                  71,818
                  
                  $
                  131,470Accounts
                      receivable, net
                  
                  
                  274,418
                  
                  
                  94,551Prepaid
                      expenses
                  
                  
                  27,257
                  
                  
                  242,110Inventory
                  
                  
                  —
                  
                  
                  67,906Loan
                      to Tulix
                  
                  
                  —
                  
                  
                  72,858Total
                      current assets
                  
                  
                  373,493
                  
                  
                  608,895Fixed
                      Assets
                  
                  
                  105,624
                  
                  
                  28,430Deposits
                  
                  
                  —
                  
                  
                  2,575Investment
                      in Tulix
                  
                  
                  —
                  
                  
                  51,949Intangible
                      Assets
                  
                  
                  986,223
                  
                  
                  986,223Less:
                      Accumulated Amortization
                  
                  
                  (115,059
                  )
                  
                  (312,304
                  )Goodwill
                  
                  
                  —
                  
                  
                  1,469,108Intangibles,
                      net
                  
                  
                  871,164
                  
                  
                  2,143,027Total
                      assets
                  
                  $
                  1,350,281
                  
                  $
                  2,834,876**LIABILITIES
                      AND STOCKHOLDERS’ DEFICIT**
  CURRENT
                            LIABILITIES:Accounts
                            payable and accrued expenses
                        
                        $
                        501,372
                        
                        $
                        574,236Loans
                            payable
                        
                        
                        —
                        
                        
                        182,784Due
                            to officer
                        
                        
                        —
                        
                        
                        147,309Current
                            maturities of long-term debt
                        
                        
                        —
                        
                        
                        106,860Convertible
                            loans payable - net of discount
                        
                        
                        255,000
                        
                        
                        1,327,245Convertible
                            preferred stock
                        
                        
                        5,522,041
                        
                        
                        —Derivative
                            conversion feature - convertible preferred stock
                        
                        
                        1,155,785
                        
                        
                        1,050,863TOTAL
                            CURRENT LIABILITIES
                        
                        
                        7,434,198
                        
                        
                        3,389,297Warrant
                            liability
                        
                        
                        —
                        
                        
                        742,448Long
                            term debt-net of current maturities
                        
                        
                        —
                        
                        
                        415,302TOTAL
                            LIABILITIES
                        
                        
                        7,434,198
                        
                        
                        4,547,047Convertible
                            preferred stock
                        
                        
                        —
                        
                        
                        6,128,223STOCKHOLDERS’
                            DEFICIT:Common
                            stock, $.0001 par value, 300,000,000 shares authorized
                            and 45,895,431
                            shares issued and outstanding at December 31, 2004 and
                            15,000,000 shares
                            authorized, 14,999,156 shares issued and outstanding
                            at December 31, 2003
                        
                        
                        1,500
                        
                        
                        4,590Preferred
                            stock, Series H, $.01 par value, 13,500 shares authorized,
                            13,350 shares
                            issued and outstanding at December 31, 2004 and 13,500
                            shares authorized
                            and 13,500 shares issued and outstanding at December
                            31, 2003,
                            convertible, participating, $13,350,000 liquidation value
                            at December 31,
                            2004 and $13,500,000 liquidation value at December 31,
                            2003
                        
                        
                        135
                        
                        
                        133Preferred
                            stock, Series I, $.01 par value, 13,500 shares authorized,
                            13,500 shares
                            issued and outstanding at December 31, 2004 and December
                            31, 2003,
                            convertible, participating, $13,500,000 liquidation value
                            at December 31,
                            2004 and December 31, 2003
                        
                        
                        —
                        
                        
                        5Treasury
                            Stock
                        
                        
                        (8,659
                        )
                        
                        (327,484
                        )Additional
                            Paid in Capital
                        
                        
                        20,217,426
                        
                        
                        22,844,110Accumulated
                            deficit
                        
                        
                        (27,363,319
                        )
                        
                        (30,361,748
                        )Total
                            stockholders’ deficit
                        
                        
                        (7,152,917
                        )
                        
                        (7,840,394
                        )Total
                            liabilities and stockholders’ deficit
                        
                        $
                        1,350,281
                        
                        $
                        2,834,876
 The
        accompanying notes are an integral part of these consolidated financial
        statements.
  30
  **GLOBAL
        MATRECHS, INC.**
 **CONSOLIDATED
        STATEMENT OF OPERATIONS**
 
 **Year
                  Ended December 31,****2002**
                **restated**
              
              **2003**
                **restated**
              
              **2004**
                **restated**Revenues
              
              $
              —
              
              $
              8,246
              
              $
              620Total
                  Cost of Sales
              
              
              —
              
              
              8,731
              
              
              558Gross
                  profit
              
              
              —
              
              
              (485
              )
              
              62Operating
                  expenses:Sales
                  and MarketingProduct
                  DevelopmentGeneral
                  and Administrative
              
              
              187,449
              
              
              325,281
              
              
              1,273,929Depreciation
                  and Amortization
              
              
              —
              
              
              115,059
              
              
              197,244Asset
                  Impairment Charge
              
              
              52,584
              
              
              —
              
              
              —Total
                  Operating Expenses
              
              
              240,033
              
              
              440,340
              
              
              1,471,173Operating
                  loss
              
              
              (240,033
              )
              
              (440,825
              )
              
              (1,471,111
              )Other
                  expenses (income):Interest
                  Expense
              
              
              
              
              
              160,099
              
              
              1,621,520Change
                  in fair value of derivative conversion feature
              
              
              92,674
              
              
              98,678
              
              
              29,534Change
                  in fair value of warrants
              
              
              —
              
              
              
              
              
              57,637Other
                  expense (income), net
              
              
              (26,146)
              
              
              (91,826)
              
              
              (211,395)Total
                  other expenses (income)
              
              
              66,528
              
              
              166,951
              
              
              1,497,296Income
                  (loss) from continuing operations before income taxes
              
              
              (306,561
              )
              
              (607,776
              )
              
              (2,968,407
              )Income
                  tax provision (benefit)Loss
                  from continuing operations
              
              
              (306,561
              )
              
              (607,776
              )
              
              (2,968,407
              )Income
                  from discontinued operations
              
              
              118,001
              
              
              176,008
              
              
              94,363Gain
                  (loss) on disposal of business segment
              
              
              —
              
              
              (125,030
              )
              
              (124,385
              )Net
                  income (loss)
              
              
              (188,560
              )
              
              (556,798
              )
              
              (2,998,429
              )Recovery
                  of deemed preferred stock dividend
              
              
              —
              
              
              1,527,171
              
              
              —Deemed
                  preferred stock dividend
              
              
              (1,004,681
              )
              
              (248,759)
              
              
              —Net
                  income (loss) applicable to common shareholders
              
              $
              (1,193,241
              )
              $
              721,614
              
              $
              (2,998,429)Net
                  income (loss) per share - basic and dilutedContinuing
                  operations
              
              $
              (0.01
              )
              $
              0.02
              
              $
              (0.18
              )Discontinued
                  operations
              
              
              (0.00)
              
              
              0.00
              
              
              (0.00
              )Net
                  income (loss) per share - basic and diluted
              
              $
              (0.01
              )
              $
              0.02
              
              $
              (0.18
              )Weighted
                  average common shares outstanding
              
              
              214,687,508
              
              
              31,820,137
              
              
              16,790,165
 
 The
        accompanying notes are an integral part of these consolidated financial
        statements.
  31
  GLOBAL
        MATRECHS, INC.
 CONSOLIDATED
        STATEMENTS OF CHANGES IN STOCKHOLDER’S DEFICIT
 
 PREFERRED
              
              COMMON
              
              
              
              ADDITIONALTREASURY
              
              PAID-IN
              
              ACCUMULATED
              
              STOCKHOLDERS’SHARES
              
              AMOUNT
              
              SHARES
              
              AMOUNT
              
              STOCK
              
              CAPITAL
              
              DEFICIT
              
              DEFICITBalance,
                  December 31, 2001, as issued
              
              
              198
              
              $
              3
              
              
              14,999,157
              
              $
              1,500
              
              $
              (8,659
              )
              $
              24,587,964
              
              $
              (25,700,291
              )
              $
              (1,119,483
              )Adjustments
                  to opening balances
              
              
              (198
              )
              
              (3
              )
              
              
              
              
              
              
              
              
              
              
              (4,620,540
              )
              
              (917,670
              )
              
              (5,538,213
              )Balance,
                  December 31, 2001, asrestated
              
              
              —
              
              
              —
              
              
              14,999,157
              
              
              1,500
              
              
              (8,659
              )
              
              19,967,424
              
              
              (26,617,961)
              )
              
              (6,657,696
              )Guaranteed
                  return to Series B, C, Dand
                  E preferred stockholders
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (297,948
              )
              
              
              
              
              (297,948
              )Amortization
                  of beneficialconversion
                  feature to Series Epreferred
                  stockholders
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (91,928
              )
              
              
              
              
              (91,928
              )Penalties
                  on preferred stock
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (638,387
              )
              
              
              
              
              (638,387
              )Net
                  loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (188,560
              )
              
              (188,560
              )Balance,
                  December 31, 2002, asrestated
              
              
              —
              
              
              —
              
              
              14,999,157
              
              
              1,500
              
              
              (8,659
              )
              
              18,939,161
              
              
              (26,806,521
              )
              
              (7,874,519
              )Issuance
                  of Series H preferred stock
              
              
              13,500
              
              
              135
              
              
              
              
              
              
              
              
              
              
              
              (135
              )
              
              —Guaranteed
                  return to Series B, C, Dand
                  E preferred stockholders
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (148,824
              )
              
              
              
              
              (148,824
              )Amortization
                  of beneficialconversion
                  feature to Series E and GPreferred
                  stockholders
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (99,947
              )
              
              
              
              
              (99,947
              )Recovery
                  of deemed preferred stockdividend
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              1,527,171
              
              
              
              
              
              1,527,171Net
                  loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (556,798
              )
              
              (556,798
              )Balance,
                  December 31, 2003, asrestated
              
              
              13,500
              
              
              135
              
              
              14,999,157
              
              
              1,500
              
              
              (8,659
              )
              
              20,217,426
              
              
              (27,363,319
              )
              
              (7,152,917
              )Issuance
                  of Series I preferred stock
              
              
              490
              
              
              5
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              5Receipt
                  of Treasury stock
              
              
              
              
              
              
              
              
              (4,905,000
              )
              
              (490
              )
              
              (318,825
              )
              
              319,312
              
              
              
              
              
              (3
              )Issuance
                  of Common Stock
              
              
              
              
              
              
              
              
              2,151,081
              
              
              215
              
              
              
              
              
              104,850
              
              
              
              
              
              105,065Beneficial
                  Conversion Feature onpromissory
                  notes, net of expenses
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              526,459
              
              
              
              
              
              526,459Conversion
                  of temporary equity tocommon
                  shares
              
              
              
              
              
              
              
              
              22,150,193
              
              
              2,215
              
              
              
              
              
              818,269
              
              
              
              
              
              820,484Issuance
                  of warrants for servicesRendered
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              258,942
              
              
              
              
              
              258,942Conversion
                  of Series H Stock
              
              
              (150
              )
              
              (2
              )
              
              1,500,000
              
              
              150
              
              
              
              
              
              (148
              )
              
              
              
              
              —Purchase
                  of True To Form
              
              
              
              
              
              
              
              
              10,000,000
              
              
              1,000
              
              
              
              
              
              599,000
              
              
              
              
              
              600,000Net
                  loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (2,998,429
              )
              
              (2,998,429
              )Balance,
                  December 31, 2004
              
              
              13,840
              
              
              138
              
              
              45,895,431
              
              
              4,590
              
              
              (327,484
              )
              
              22,844,110
              
              
              (30,361,748
              )
              
              (7,840,394
 
 The
        accompanying notes are an integral part of these consolidated financial
        statements.
  32
  **GLOBAL
        MATRECHS, INC.**
 **CONSOLIDATED
        STATEMENTS OF CASH FLOWS**
  Years
                  ended December 31,2002
              
              2003
              
              2004restated
              
              restated
              
              restatedCASH
                  FLOWS FROM OPERATING ACTIVITIES:Net
                  loss
              
              $
              (188,560
              )
              $
              (556,798
              )
              $
              (2,998,429
              )Adjustments
                  to reconcile net loss to cash used in operating
                  activities:Depreciation
                  and amortization
              
              
              —
              
              
              115,059
              
              
              197,244Write
                  down of investment, fixed assets and intangibles
              
              
              52,584
              
              
              —
              
              
              —Provision
                  for (recovery of) bad debts
              
              
              (24,813
              )
              
              3,499
              
              
              (47,232
              )Deferred
                  rent expense
              
              
              (5,480
              )
              
              —
              
              
              —Loss
                  (gain) on sale of division
              
              
              —
              
              
              (125,030
              )
              
              124,385Change
                  in fair value of warrants
              
              
              —
              
              
              —
              
              
              57,639Change
                  in fair value of conversion feature
              
              
              92,674
              
              
              98,678
              
              
              29,534Increase
                  in stated value of additional paid in capital for convertible preferred
                  stock and convertible notes payable
              
              
              —
              
              
              148,824
              
              
              1,920,245Change
                  in operating assets and liabilities:Accounts
                  receivable
              
              
              (64,202
              )
              
              (34,758
              )
              
              321,650Prepaid
                  expenses
              
              
              (20,358
              )
              
              (6,899
              )
              
              65,344Accounts
                  payable and accrued expenses
              
              
              (56,471
              )
              
              35,830
              
              
              (137,453
              )Net
                  cash used in operating activities
              
              
              (214,626
              )
              
              (321,595
              )
              
              (467,073
              )CASH
                  FLOWS FROM INVESTING ACTIVITIES:Purchase
                  of furniture, fixture and equipment
              
              
              (38,378
              )
              
              (21,929
              )
              
              —Loan
                  to related party
              
              
              —
              
              
              —
              
              
              (71,225
              )Net
                  cash used in investing activities
              
              
              (38,378
              )
              
              (21,929
              )
              
              (71,225
              )CASH
                  FLOWS FROM FINANCING ACTIVITIES:Proceeds
                  from issuance of notes payable
              
              
              —
              
              
              255,000
              
              
              597,950Net
                  cash provided by financing activities
              
              
              —
              
              
              255,000
              
              
              597,950NET
                  INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
              
              
              (253,004
              )
              
              (88,524
              )
              
              59,652CASH
                  AND CASH EQUIVALENTS, beginning of year
              
              
              413,346
              
              
              160,342
              
              
              71,818CASH
                  AND CASH EQUIVALENTS, end of year
              
              $
              160,342
              
              $
              71,818
              
              $
              131,470
  The
        accompanying notes are an integral part of these consolidated financial
        statements.
  33
  1.
        SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
 DESCRIPTION
        OF BUSINESS AND BASIS OF PRESENTATION--GOING CONCERN
 
 On
        May
        31, 2004, the Company completed the sale of its remaining Internet business
        to
        Tulix Systems, Inc. (“Tulix”), a company in which Gia Bokuchava, Nino
        Doijashvili and Timothy R. Robinson, who were officers and directors of the
        Company, are officers, directors and founding shareholders. With the
        consummation of this Purchase Agreement the Company has completely exited
        from
        all Internet related enterprises. This segment is treated as a discontinued
        operation in all periods presented.
 
 The
        Company is currently operating in two major segments. These segments are
        defined
        as the Licensed Technologies Division which consists of the marketing of
        the
        technologies licensed from Eurotech and the Specialty Lighting Division which
        consists of the design, development, manufacture and sales of specialty lighting
        and architectural products acquired in the merger with True To Form,
        Limited.
 
 On
        May
        22, 2003, we completed a transaction with Eurotech pursuant to which we now
        license NuCapTM, HNIPU, EMR/AC, Rad-X, Firesil, LEM and RBHM technologies from
        Eurotech. Currently, we are licensing the EKOR, HNIPU, EMR/AC, Rad-X, Firesil,
        LEM and RBHM technologies from Eurotech, Ltd. We intend to use these licenses
        to
        derive revenue by partnering with other technology firms to sell raw materials
        to producers or to sublicense the technologies and collect royalties and/or
        licensing fees.
 
 On
        December 31, 2004 we acquired True To Form, Limited. As a result of the merger,
        True To Form is now our wholly owned subsidiary. True To Form designs, develops,
        manufactures and sells specialty lighting products to targeted segments of
        the
        traditional lighting industry and has recently established a division that
        will
        focus on the homeland security market. True To Form markets “high-end” lighting
        and architectural products for both commercial and residential applications,
        including pendants, surface and ceiling luminaries, table and floor lamps,
        commercial down-lights, bath fixtures, and custom fixtures
 
 The
        Company’s financial statements are prepared using generally accepted accounting
        principles applicable to a going concern which contemplate the realization
        of
        assets and liquidation of liabilities in the normal course of business. The
        Company has incurred significant losses since its incorporation, resulting
        in an
        accumulated deficit at December 31, 2004 of approximately $30.3 million.
        The
        Company continues to experience negative cash flows from operations and is
        dependent on continued financing from investors to sustain its activities.
        There
        is no assurance that such financing will be available. These factors raise
        substantial doubt about the Company’s ability to continue as a going
        concern.
  RESTATED
        FINANCIAL STATEMENTS
 
 The
        accompanying financial statements reflect the following
        restatements:
 
 Preferred
        Series
 
 When
        issued in 1999 and 2000, the Preferred Series B, C, D and E (among other
        provisions) were mandatorily convertible at predetermined dates and had floating
        conversion terms which resulted in a variable number of shares that could
        be
        issued if they were converted. Since the Company could not conclude that
        it had
        enough authorized and unissued shares to settle these Preferred Series due
        to
        the absence of a cap on the number of shares that could be issued upon
        conversion (and thus the number of shares that could be issued was outside
        the
        control of the Company). Pursuant
        to Accounting Series Release No. 268 the
        Company has reclassified Preferred Series C, D, and E shares from equity
        to
        temporary equity at redemption value. When these series were issued, the
        redemption values were recorded in shareholders’ equity. Accordingly, as of June
        30, 2001, an adjustment of $4,441,595 was recorded as an adjustment to
        shareholders’ equity.
 
 Derivative
        Conversion Feature
 
 In
        November 2000, the FASB’s Emerging Issues Task Force (“EITF”) reached final
        consensuses on EITF Issue No. 00-19, “Determination of Whether Share Settlement
        is Within the Control of the Issuer.” EITF 00-19 addressed and clarified whether
        specific equity contract provisions or other circumstances cause these contracts
        to be within or outside the control of the issuer. Permanent equity contracts
        that were issued prior to September 20, 2000, and classified as permanent
        equity
        must meet certain criteria or be re-classified as assets, liabilities or
        temporary equity on June 30, 2001.
 
 EITF
        00-19 also required the application of FAS 133, “Accounting for Derivative
        Instruments and Hedging Activities,” and the bifurcation of the derivative
        conversion feature embedded in the Preferred shares. The fair value of
        derivative conversion feature as of
  34
  June
        30,
        2001 was $1,043,650. Under EITF 00-19, the Company recorded a cumulative
        effect
        adjustment of $1,043,650 ($0.11 loss per basic and diluted per share) for
        the
        change in accounting principle.
 
 FAS
        150
 
 The
        terms
        of the above-mentioned Preferred Series contained an unconditional obligation
        whose value could be settled with a non-capped variable number of shares,
        and
        accordingly was subject to FAS 150, “Accounting for Certain Financial
        Instruments with Characteristics of both Liabilities and Equity,” effective as
        of July 1, 2003. This required that these shares be reported as current
        liabilities in the restated consolidated balance sheet. Preferred Series
        G stock
        was not subject to FAS 150, and had been reclassified as temporary equity
        in the
        restated financial statements. The Company had implemented FAS 150 in its
        original filing, reporting a cumulative effect of a change in accounting
        principle. In consideration of the implementation of EITF 00-19, the cumulative
        effect of a change in accounting principle impact in the accompanying restated
        financial statement is zero.
 
 On
        August
        14, 2004, the mandatory conversion rights of Series B, C, D and E Preferred
        Stock were terminated. At that time, these liabilities were reclassified
        to
        temporary equity.
 
 Subsequent
        Accounting
 
 All
        increases to the stated value of the above-mentioned Preferred Series are
        recorded as a deemed preferred stock dividend for periods prior to the
        implementation of FAS 150, and interest expense for all periods after the
        implementation of FAS 150.
 
 Waiver
        and Overaccrual of Penalties
 
 Effective
        March 13 and 14, 2003, the Company entered into an agreement with the holders
        of
        Series B, C, D and E Preferred shares which waived any amounts due and owing
        in
        respect of penalties resulting from the Company’s failure to have available a
        sufficient number of authorized shares of common stock for conversion and
        waived
        any default by the Company in respect of registration rights. Accordingly,
        the
        previously recorded accrued penalties were reversed during the quarter ended
        March 31, 2003, and recorded in the consolidated statement of operations
        as a
“recovery of deemed preferred stock dividend”.
 
 The
        Company had erroneously continued to accrue penalties. For the period March
        14,
        2003 (and March 13, 2003 for Series B) through June 30, 2003, these penalties
        were originally reported as a deemed preferred stock dividend of $159,596.
        The
        restated financial statements reflect the removal of these deemed preferred
        stock dividends. When the Company adopted FAS 150, effective July 1, 2003,
        all
        penalties were reported as interest expense. The restated financial statements
        reflect the removal of $718,183 of previously reported interest
        expense.
 
 The
        following table summarizes these transactions:
 Series
                
                QUARTER
                  ENDED
                  3/03
                  (reversal
                    recovery
                  of
                    deemed
                  preferred
                    stock
                  dividend)
                
                QUARTER
                  ENDED
                  6/03
                  (removal
                  of
                    deemed
                  preferred
                    stock
                  dividend)
                
                QUARTER
                  ENDED
                  9/03
                  (removal
                  of
                    interest expense)
                
                QUARTER
                  ENDED
                  12/03
                  (removal
                  of
                    interest expense)
                
                QUARTER
                  ENDED
                  3/04
                  (removal
                  of
                    interest expense)
                
                QUARTER
                  ENDED
                  6/04
                  (removal
                  of
                    interest expense)
                
                QUARTER
                  ENDED
                  9/04
                  (removal
                  of
                    interest expense)
                
                TOTAL
                  INTEREST
                
                TOTALB
                
                $
                43,720
                
                $
                4,446
                
                $
                4,446
                
                $
                4,446
                
                $
                4,446
                
                $
                4,446
                
                $
                2,223
                
                $
                20,007
                
                $
                68,173C
                
                
                239,987
                
                
                27,143
                
                
                27,143
                
                
                27,143
                
                
                27,143
                
                
                27,143
                
                
                13,572
                
                
                122,144
                
                
                389,274D
                
                
                4,131
                
                
                387
                
                
                387
                
                
                387
                
                
                387
                
                
                387
                
                
                194
                
                
                1,742
                
                
                6,260E
                
                
                1,239,333
                
                
                127,620
                
                
                127,620
                
                
                127,620
                
                
                127,620
                
                
                127,620
                
                
                63,810
                
                
                574,290
                
                
                1,941,243TOTAL
                
                $
                1,527,171
                
                $
                159,596
                
                $
                159,596
                
                $
                159,596
                
                $
                159,596
                
                $
                159,596
                
                $
                79,799
                
                $
                718,183
                
                $
                2,404,950
 35
  Basic
        and Diluted Loss Per Share
 
 Basic
        and
        diluted net income (loss) per share applicable to common shareholders was
        calculated according to the provisions of Statement of Financial Accounting
        Standards No. 128, “Earnings per Share.” Due to the net loss position of the
        Company for each of the three years in the period ending December 31, 2004,
        the
        numerator and denominator was the same for both basic and diluted loss per
        share.
 
 Series
        B,
        C, D Preferred shares are included in the weighted average shares outstanding
        on
        a basic and diluted basis for the period commencing with the expiration of
        the
        mandatory conversion date and the date that the mandatory conversion was
        extended, as if the shares had been issued and outstanding because the Company
        could not conclude that it had enough authorized and unissued shares to settle
        these Preferred Series due to the absence of a cap on the number of shares
        that
        could be issued upon conversion, thus the number of shares that could be
        issued
        was outside the control of the Company. Series B Preferred shares had a
        mandatory conversion date of March 25, 2002. On March 13, 2003, the mandatory
        conversion date was extended to March 31, 2004. Series C Preferred shares
        had a
        mandatory conversion date of July 22, 2002 and on March 14, 2003, the mandatory
        conversion date was extended to March 31, 2004. Series D Preferred shares
        had a
        mandatory conversion date of September 28, 2002, and March 14, 2003, the
        mandatory conversion date was extended to March 31, 2004. Series E Preferred
        shares had a mandatory conversion date of April 14, 2003, and on March 14,
        2003
        was extended to March 31, 2004.
 
 During
        2002, 199,688,352 shares and during 2003, 16,820,981 shares that could be
        issued
        upon conversion of Convertible Preferred Shares were considered as outstanding
        common shares and included in the computation of basic and diluted earnings
        per
        share.
 
 Options
        and warrants to purchase 518,241 and 483,241 shares of common stock at December
        2002, 2003, and 2004, respectively were not included in the computation of
        dilutive earnings per share as their exercise would be
        anti-dilutive.
 
 Warrants
 
 The
        fair
        values of the warrants issued in connection with the convertible promissory
        notes (described in Note 13) were originally recorded as credits to additional
        paid-in capital $684,810, and debits to unamortized note discount (up to
        the
        amount of the proceeds received), and prepaid expense (representing the value
        of
        the warrants in excess of the proceeds received). Both the prepaid expense
        and
        unamortized discount were amortized to interest expense over the lives of
        the
        notes. In this amended filing, the accounting for the warrants has been restated
        to (a) expense the value of the warrants in excess of the proceeds received
        (i.e., write-off the prepaid expense), (b) reduce interest expense for the
        reversal of the amortization of the prepaid expense, (c) record the fair
        values
        of the warrants as a long-term liability, and (d) record the changes in the
        fair
        values of the warrants from their issue dates to the balance sheet date in
        current income under the caption “change in fair value of
        warrants.”
 
 The
        fair
        value of warrants that were outstanding on and after the effective date of
        EITF
        00-19, were not considered material to the financial statements.
 
 In
        addition, in the financial statements included with this annual report on
        Form
        10-KSB, we have provided restated financial information for each of the affected
        periods presented. The following selected financial data of Global Matrechs,
        Inc. should be read in conjunction with the financial statements and related
        notes, as well as the other portions of this section.
 
 ASSET
        IMPAIRMENT
 
 The
        Company evaluates the recoverability and carrying value of its long-lived
        assets
        at each balance sheet date, based on guidance in SFAS No. 144, Accounting
        for
        the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed
        Of.
        Among other factors considered in such evaluation is the historical and
        projected operating performance of business operations, the operating
        environment and business strategy, competitive information and market trends.
        The Company recognized a charge of $52,584 during the year ending December
        31,
        2002 for asset impairment.
 
 INTANGIBLE
        ASSETS
 
 Intangible
        assets represent the technologies licensed from Eurotech and the Goodwill
        recognized in the purchase of True To Form, Ltd. The licenses were valued
        at
        $986,223 and are being amortized on a straight line basis over five years.
        The
        current intangible balance for the licenses is $673,919 which represents
        the
        original valuation less $312,304 amortized through December 31,
        2004.
 
 The
        Goodwill for True To Form was valued at $1,469,108. Acquired goodwill is
        considered to have an indefinite life pursuant to Statement of Financial
        Accounting Standards No. SFAS 142, “Goodwill and Other Intangible Assets,” and
        accordingly is not amortized but subject to periodic impairment
        tests.
  36
  PRINCIPLES
        OF CONSOLIDATION
 
 The
        consolidated financial statements include the accounts of the Company and
        its
        wholly owned subsidiaries, subsequent to acquisition, after the elimination
        of
        all significant intercompany accounts and transactions.
 
 USE
        OF
        ESTIMATES
 
 The
        preparation of financial statements in conformity with generally accepted
        accounting principles requires management to make estimates and assumptions
        that
        affect the reported amounts of assets and liabilities and disclosure of
        contingent assets and liabilities at the date of the financial statements
        and
        the reported amounts of revenue and expenses during the reporting period.
        Actual
        results could differ from those estimates.
 
 CASH
        FLOWS, CASH AND CASH EQUIVALENTS
 
 For
        purposes of the statements of cash flows, management considers all highly
        liquid
        investments with a maturity of three months or less when purchased to be
        cash
        equivalents.
 
 Interest
        paid during 2004 and 2003 were $0 and $0 respectively. Income taxes paid
        during
        2004 and 2003 were $0 and $0 respectively.
 
 During
        the year ending December 31, 2004, the Company entered into the following
        non-cash investing and financing transactions:
 
 Exchange
                  of warrants for services rendered
              $258,942Issuance
                  of common stock for services rendered
              104,850Acquisition
                  of True To Form Ltd, Inc.
              1,469,108Conversion
                  of preferred stock to common stock
              818,269
 
 ACCOUNTS
        RECEIVABLE, NET
 
 Accounts
        receivable are shown net of the allowance for doubtful accounts.
 
 ALLOWANCE
        FOR DOUBTFUL ACCOUNTS
 THREE
        YEARS ENDING ON DECEMBER 31,
 Description
              Balance
                      atBeginning ofPeriod
              Additions(Reductions)Charged
                          toCosts andExpenses
              Deductions(A/R
                        Written offto Bad Debt)
              Balance
                      atEnd ofPeriodYear
                  ending December 31, 2002
              (68,546)
              (21,113)
              45,926
              (43,733)Year
                  ending December 31, 2003
              (43,733)
              (10,479)
              6,980
              (47,232)Year
                  ending December 31, 2004
              (47,232)
              (72,782)
              120,014
              —
 
 FURNITURE,
        FIXTURES AND EQUIPMENT, NET
 
 Furniture,
        fixtures and equipment are recorded at cost less accumulated depreciation,
        which
        is computed using the straight-line method over the estimated useful lives
        of
        the related assets. Furniture and fixtures are depreciated over a 5 year
        life;
        computer equipment is depreciated over a 3 year life. Assets recorded under
        capital leases are amortized over the shorter of their useful lives or the
        term
        of the related leases using the straight-line method. Maintenance and repairs
        are charged to expense as incurred. Upon sale, retirement or other disposition
        of these assets, the cost and the related accumulated depreciation are removed
        from the respective accounts and any gain or loss on the disposition is included
        in income.
 
 FAIR
        VALUE OF FINANCIAL INSTRUMENTS
 
 The
        carrying amounts of the Company’s financial instruments approximates fair
        value.
 
 37
  REVENUE
        RECOGNITION
 
 Revenue
        from the sale of products related to our licensed technology is recognized
        upon
        shipment of the product provided that title passes, the price is fixed or
        determinable and collection of the receivable is probable.
 
 ADVERTISING
        EXPENSES
 
 Advertising
        costs are expensed when incurred. No advertising expenses were incurred for
        the
        years ended December 31, 2002, 2003 or 2004.
 
 INCOME
        TAXES
 
 The
        Company accounts for income taxes using the asset and liability method as
        described by Statement of Financial Accounting Standards No. 109, Accounting
        For
        Income Taxes (“SFAS No. 109”).
 
 Under
        SFAS 109 the liability method is used in accounting for income taxes. Under
        this
        method, deferred tax assets and liabilities are determined based on differences
        between financial reporting and tax bases of assets and liabilities and are
        measured using the enacted tax rates and laws that will be in effect when
        the
        differences are expected to reverse.
 
 The
        Company provides a valuation allowance for deferred tax assets which are
        determined by management to be below the threshold for realization established
        by SFAS 109.
 
 BASIC
        AND
        DILUTED LOSS PER SHARE
 
 Basic
        and
        diluted loss per share are calculated according to the provisions of FAS
        128.
        Due to the net loss position of the Company for each of the three years in
        the
        period ending December 31, 2004, the numerator and denominator are the same
        for
        both basic and diluted loss per share.
 
 FAS
        128
        provides for an as-if converted method when there is the absence of a cap
        on the
        number of shares that could be issued upon conversion. Series B, C, D Preferred
        shares are included in the weighted average shares outstanding on a basic
        and
        diluted basis for the period commencing with the expiration of the mandatory
        conversion date and the date that the mandatory conversion was extended,
        as if
        the shares had been issued because the Company could not conclude that it
        had
        enough authorized and unissued shares to settle these Preferred Series due
        to
        the absence of a cap on the number of shares that could be issued upon
        conversion (and thus the number of shares that could be issued was outside
        the
        control of the Company).
 
 The
        table
        below illustrates the calculation of the loss per share amounts attributable
        to
        continuing and discontinued operations applicable to common
        shareholders.
 
 Years
                  ended December 31,2002
              2003
              2004restated
              restated
              restatedNet
                  loss from continuing operations
              (306,561)
              (607,776)
              (2,968,407)Less:
                  Deemed preferred stock dividend
              (1,004,681)
              (248,759)
              —Add:
                  Recovery of preferred stock dividend
              
              1,527,171
              —Income
                  (loss) from continuing operations
                applicable
                  to common shareholders
              (1,311,242)
              670,636
              (2,968,407)Income
                  (loss) from discontinued operations
              118,001
              50,978
              (30,477)Net
                  loss applicable to common shareholders
              (1,193,241)
              721,614
              (2,998,429)Net
                  income(loss) per share - basic and diluted:Continuing
                  operations
              $(0.00)
              $0.02
              $(0.18)Discontinued
                  operations
              (0.00)
              0.00
              (0.00)Net
                  income (loss) per share - basic
              $0.00
              $0.02
              $(0.18)Weighted
                  average common shares outstanding
                -
                  basicand
                  diluted
              214,687,508
              31,820,137
              16,790,165
  38
  The
        Company has not declared or paid any dividends to the shareholders of the
        Preferred Stock. However, the Preferred Stock possesses conversion rights
        (the
“Beneficial Conversion Feature”) that are analogous to dividends. Accordingly,
        the Beneficial Conversion Feature has been accounted for as a Deemed Preferred
        Stock Dividend. (See footnotes 7, 8, 9 and 10).
 
 RECENTLY
        ISSUED ACCOUNTING STANDARDS
 
 In
        December 2004, the FASB issued FASB Statement No. 123R, “Share-Based Payment, an
        Amendment of FASB Statement No. 123” (“FAS No. 123R”). FAS No. 123R requires
        companies to recognize in the statement of operations the grant-date fair
        value
        of stock options and other equity-based compensation issued to employees.
        FAS
        No. 123R is effective beginning in the Company’s second quarter of fiscal 2006.
        The Company is in process of evaluating the impact of this pronouncement
        on its
        financial position.
 
 In
        December 2004, the FASB issued SFAS Statement No. 153, “Exchanges of Nonmonetary
        Assets.” The Statement is an amendment of APB Opinion No. 29 to eliminate the
        exception for nonmonetary exchanges of similar productive assets and replaces
        it
        with a general exception for exchanges of nonmonetary assets that do not
        have
        commercial substance. The Company believes that the adoption of this standard
        will have no material impact on its financial statements.
 
 In
        March
        2004, the Emerging Issues Task Force (“EITF”) reached a consensus on Issue No.
        03-1, “The Meaning of Other-Than-Temporary Impairment and its Application to
        Certain Investments.” The EITF reached a consensus about the criteria that
        should be used to determine when an investment is considered impaired, whether
        that impairment is other-than-temporary, and the measurement of an impairment
        loss and how that criteria should be applied to investments accounted for
        under
        SFAS No. 115, “ACCOUNTING IN CERTAIN INVESTMENTS IN DEBT AND EQUITY SECURITIES.”
        EITF 03-01 also included accounting considerations subsequent to the recognition
        of an other-than-temporary impairment and requires certain disclosures about
        unrealized losses that have not been recognized as other-than-temporary
        impairments. Additionally, EITF 03-01 includes new disclosure requirements
        for
        investments that are deemed to be temporarily impaired. In September 2004,
        the
        Financial Accounting Standards Board (FASB) delayed the accounting provisions
        of
        EITF 03-01; however the disclosure requirements remain effective for annual
        reports ending after June 15, 2004. The Company believes that the adoption
        of
        this standard will have no material impact on its financial
        statements.
 
 In
        December 2003, the FASB issued Interpretation No. 46 (as revised),
“Consolidation of Variable Interest Entities.” Implementation of the provisions
        of FIN 46 is effective for the first reporting period after March 15, 2004.
        FIN
        46 requires the consolidation of entities that are controlled by a company
        through interests other than voting interests. Under the requirements of
        this
        interpretation, an entity that maintains a majority of the risks or reward
        associated with VIEs , also known as Special Purpose Entities, is viewed
        to be
        effectively in the same position as the parent in a parent-subsidiary
        relationship. The Company has determined that it has not created or entered
        into
        any VIEs that would require consolidation. The Company believes the adoption
        of
        the provisions of FIN 46 in the first quarter of 2004 will have no impact
        on its
        results of operations, cash flows or financial position.
 
 In
        April
        2003, the FASB issued Statement No. 149, “Amendment of Statement No. 133 on
        Derivative Instruments and Hedging Activities” (SFAS No. 149). This Statement
        amends and clarifies financial accounting and reporting for derivative
        instruments, including certain derivative instruments embedded in other
        contracts and for hedging activities under SFAS No. 133. The provisions of
        this
        Statement are effective for all derivatives and hedging activity that the
        Company enters into after June 30, 2003. The adoption of this Statement had
        no
        impact on the Company’s results of operations, cash flows or financial position.
 
 In
        July
        2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit
        or Disposal Activities” (SFAS No. 146), which addresses the recognition,
        measurement, and reporting of costs associated with exit or disposal activities
        and supercedes EITF No. 94-3, “Liability Recognition for Certain Employee
        Termination Benefits and Other Costs to Exit an Activity (including Certain
        Costs Incurred in a Restructuring)” (EITF 94-3). The fundamental difference
        between SFAS No. 146 and EITF 94-3 is the requirement that a liability for
        a
        cost associated with an exit or disposal activity be recognized when the
        liability is incurred rather than at the date an entity commits to an exit
        plan,
        which by itself, does not create an obligation that meets the definition
        of a
        liability. SFAS No. 146 also requires that the initial measurement of a
        liability be recorded at fair value. The provisions of this statement are
        effective for exit or disposal activities that are initiated after December
        31,
        2002, with an early application encouraged. The adoption of this statement
        had
        no impact on the Company’s results of operations, cash flows or financial
        position.
 
 STOCK
        BASED COMPENSATION
 
 The
        Company applies the intrinsic value method, Accounting Principles Board Opinion
        No. 25, “Accounting for Stock Issued to Employees” (APB No. 25), in accounting
        for employee stock-based compensation arrangements. The Company has included
  39
  the
        pro-forma disclosures required under SFAS No. 123, “Accounting for Stock-Based
        Compensation”. Non-employee stock compensation arrangements are accounted for
        under FAS 123 and EITF 96-18, “Accounting for Equity Instruments that are Issued
        to Other than Employees, or in Conjunction with Selling Goods or
        Services.”
 
 Based
        on
        calculations using the Black-Scholes option-pricing model, the weighted average
        grant date fair value of options and warrants was $0, $0 and $0 in 2002,
        2003
        and 2004, respectively. The fair value has been estimated using the following
        assumptions used for grants in 2002, 2003 and 2004, respectively: no dividend
        yield for all periods; an expected life of 5 years for all periods; volatility
        of 110%, 110% and 110%; and weighted average risk free interest rates was
        not
        applicable.
 
 The
        pro
        forma impact on the Company’s net loss per share had compensation cost for all
        of the Company’s stock-based compensation plans been recorded at the date of
        grant based on the method prescribed by SFAS No. 123 is shown
        below:
 
 FOR
                  THE THREE YEARSENDED
                  DECEMBER 31,2002
              2003
              2004RESTATED
              RESTATED
              RESTATEDLoss
                  applicable to common shareholders:As
                  reported
              $1,193,241
              $721,614
              $(2,998,429)Pro
                  forma
              $(1,362,950)
              $628,473
              $(3,013,329)Basic
                  and diluted income (loss) per share:As
                  reported
              $(0.00)
              $0.02
              $(0.18)Pro
                  forma
              $(0.00)
              $0.02
              $(0.18)
 
 OTHER
        MATTERS
 
 Certain
        prior year amounts have been reclassified to conform to current year
        presentation.
 
 2.
        FURNITURE, FIXTURES AND EQUIPMENT, NET
 
 Furniture,
        fixtures and equipment, net, are comprised of the following as of:
 
 DECEMBER
                  31,2003
              
              2004Furniture
                  and fixtures
              
              $
              7,199
              
              $
              7,199Computer
                  equipment
              
              
              8,548
              
              
              8,548Vehicles
              
              
              32,160
              
              
              32,16047,907
              
              
              47,907Less:
                  accumulated depreciation and amortization
              
              
              11,236
              
              
              19,47736,361
              
              
              28,430Fixed
                  assets held for sale (Tulix)
              
              
              105,624
              
              
              —$
              142,295
              
              $
              28,430
 
 3.
        INTANGIBLE ASSETS
 
 Intangible
        assets consist of the following:
 
 DECEMBER
                  31,
                2004Licensed
                  technology rights:Basis
              
              $
              986,223Amortization
                  to date
              
              
              (312,304
              )Subtotal
              
              
              673,919True
                  To Form Goodwill:Basis
              
              
              1,469,108Total
              
              $
              2,143,027
 
 40
 
 Intangible
        assets represent the technologies licensed from Eurotech and the Goodwill
        recognized in the purchase of True To Form, Inc. The licenses were valued
        at
        $986,223 and are being amortized on a straight line basis over five years.
        The
        current intangible balance for the licenses is $673,919 which represents
        the
        original valuation less $312,304 amortized through December 31, 2004. The
        Goodwill for True To Form was valued at $1,469,108. Acquired goodwill is
        considered to have an indefinite life pursuant to Statement of Financial
        Accounting Standards No. SFAS 142, “Goodwill and Other Intangible Assets,” and
        accordingly is not amortized but subject to periodic impairment
        tests.
 
 4.
        SEGMENT INFORMATION
 
 On
        May
        31, 2004, the Company completed the sale of its remaining Internet business
        to
        Tulix Systems, Inc. (“Tulix”), a company in which Gia Bokuchava, Nino
        Doijashvili and Timothy R. Robinson, who were officers and directors of the
        Company, are officers, directors and founding shareholders. With the
        consummation of this Purchase Agreement the Company has completely exited
        from
        all Internet related enterprises. This segment is treated as a discontinued
        operation in all periods presented.
 
 The
        Company is currently operating in two major segments. These segments are
        defined
        as the Licensed Technologies Division which consists of the marketing of
        the
        technologies licensed from and the Specialty Lighting Division which consists
        of
        the design, development, manufacture and sales of specialty lighting and
        architectural products acquired in the merger with True To Form, Limited.
        The
        Company will commence reporting the income statement of True To Form the
        first
        quarter of 2005.
 
 5.
        COMMITMENTS AND CONTINGENCIES
 
 FACILITIES
        LEASES:
 
 As
        of
        December 31, 2004 the Company occupied approximately 550 square feet in one
        office building in Ridgefield, Connecticut on a lease that goes through
        September 2006. With the acquisition of True To Form we have added approximately
        10,000 sq feet combined warehouse and offices. True to Form leases its warehouse
        and administrative offices located in Braintree, Massachusetts under a lease
        arrangement, which provides for, among other things, monthly base rental
        payments of approximately $3,500 through February 28, 2005 plus real estate
        taxes and insurance. The total rent expense under this arrangement was $61,063
        and $58,850 for the years ended December 31, 2004 and 2003
        respectively.
 
 Commencing
        in July 2003 and ending in July 2004 True to Form contracted for additional
        warehouse and light manufacturing space located in Sylmar, California under
        a
        lease, which provides for, among other things, monthly rental payments of
        approximately $875. The total lease expense under this arrangement for the
        year
        ended December 31, 2003 was $8,450. As of July 16, 2004 the Company had not
        renewed the lease but was continuing to occupy the space on a month to month
        basis.
 
 As
        of
        March 26, 2004 we occupy approximately 7,000 square feet in one office building
        in Atlanta, Georgia under a lease expiring in October 2004. This facility
        serves
        as our headquarters and computer center. We have abandoned an office in New
        York
        City where we used to occupy approximately 3,400 square feet under a lease
        that
        expired in January 2003. On June 1, 2004 the Company was released from liability
        by Piedmont Ivy and Associates, the landlord, and Tulix Systems, Inc. for
        the
        approximately 7,000 square feet it had leased in Atlanta, Georgia. That lease,
        which had an expiration date of October 31, 2004, was transferred to, and
        assumed by Tulix Systems, Inc. as a part of the sale of the Internet Services
        Division.
 
 As
        of
        December 31, 2003 we have an accrual for real estate disposition liabilities
        of
        approximately $81,317, which we believe will be sufficient to settle all
        obligations related to the closing and abandonment of our offices in New
        York.
 
 Rental
        expense under operating leases was approximately $157,772, $177,825 and $
        49,776
        for the years ended December 31, 2002, 2003 and 2004 respectively.
 
 OPERATING
        LEASES:
 
 The
        Company has entered into various operating leases for equipment, which expire
        at
        different times through May 2006; these leases call for, among other things,
        monthly rental payment of approximately $407.
 
 The
        total
        equipment lease expense for the years ended December 31, 2004 and 2003 was
        $5,547 and $8,751, respectively.
  41
  The
        minimum future rental payments, in the aggregate, under non-cancelable facility
        and operating leases having remaining terms in excess of one year as of December
        31, 2004 are as follows:
 
 
 Year
                  EndingDecember
                  31,
              
              Amount2005
              
              $
              4,8842006
              
              
              2,035$
              6,919
 
 LEGAL
        PROCEEDINGS:
 
 On
        February 9, 2005 Global Matrechs, Inc, filed suit in the Supreme Court of
        the
        State of New York, County of New York against Eurotech, Ltd. For its failure
        to
        fulfill its obligations under the license agreement between the parties dated
        May 22, 2003. The suit also seeks the enforcement of the notes issued by
        Eurotech to Woodward, LLC which were assumed by Global Matrechs in the exchange
        agreement between Global Matrechs and Woodward on January 31, 2005. The
        complaint seeks damages totaling $672,677 plus interest and attorney’s fees
        which are yet to be determined.
 
 On
        April
        13, 2005 Carey Naddell, CEO of Eurotech, Ltd., filed suit against the Company
        for damages based upon an alleged breach of a written service agreement.
        The
        Company has responded and feels at this time there is no merit to this action.
        We will diligently defend this action.
 
 OTHER:
 
 Various
        legal proceedings may arise in the normal course of business. Additionally,
        the
        Company’s software and equipment are vulnerable to computer viruses or similar
        disruptive problems caused by customers or other Internet users. Computer
        viruses or problems caused by third parties could lead to interruptions,
        delays
        or cessation in service to the Company’s customers. Moreover, customers of the
        Company could use computer files and information stored on or transmitted
        to Web
        server computers maintained by the Company to engage in illegal activities
        that
        may be unknown or undetectable by the Company, including fraud and
        misrepresentation, and unauthorized access to computer systems of others.
        Furthermore, inappropriate use of the Internet by third parties could also
        jeopardize the security of customers’ confidential information that is stored in
        the Company’s computer systems. Any such actions could subject the Company to
        liability to third parties. The Company does not have errors and omissions,
        product liability or other insurance to protect against risks caused by computer
        viruses or other misuse of software or equipment by third parties. Although
        the
        Company attempts to limit its liability to customers for these types of risks
        through contractual provisions, there can be no assurance that these provisions
        will be enforceable. Management does not believe that there are currently
        any
        asserted or unasserted claims that will have a material adverse effect on
        the
        financial position, results of operations or cash flows of the
        Company.
 
 6.
        EQUITY
        AND CONVERTIBLE DEBT TRANSACTIONS
 
 In
        May
        2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial
        Instruments with Characteristics of Both Liabilities and Equity.” SFAS No. 150
        establishes standards for classification and measurement in the statement
        of
        financial position of certain financial instruments with characteristics
        of both
        liabilities and equity. It requires classification of a financial instrument
        that is within its scope as a liability (or an asset in some circumstances).
        SFAS No. 150 is effective for financial instruments entered into or modified
        after May 31, 2003 and, otherwise is effective at the beginning of the first
        interim period beginning after June 15, 2003. For financial instruments created
        before the issuance date of this statement, transition shall be achieved
        by
        reporting the cumulative effect of a change in accounting principle by initially
        measuring the financial instrument at fair value.
 
 Since
        the
        Series B, C, D, E and G Preferred Stock represent financial instruments that
        embody unconditional obligations that will be settled with a variable number
        of
        the Company’s common equity shares, based on a fixed monetary amount that was
        known at inception, the Company reclassified its Series B, C, D, and E Preferred
        Stock as a liability and initially reported a loss of $802,730 as a cumulative
        effect of a change in accounting principle in the 2003 financial statements,
        beginning with the reporting period July 1, 2003 (the effective date of FAS
        150). The restated financial statements reflected the adoption of EITF No.
        00-19, effective as of June 30, 2001. With the adoption of EITF No. 00-19,
        the
        adoption of FAS 150 did not require a cumulative effect of a change in
        accounting principle.
 
 On
        August
        14, 2004, the mandatory conversion rights of Series B, C D and E Preferred
        Stock
        were terminated. At that time, these liabilities were reclassified to temporary
        equity.
 
 42
  In
        accordance with the terms of the private placement agreements underlying
        our
        Series B, C, D, E, and G Preferred Stock, penalties accrue at the rate of
        2% per
        30 day period of the outstanding purchase price of the unregistered securities.
        Prior to the adoption of SFAS No. 150, these penalties were recorded as deemed
        dividends in the amounts of $637,572, $638,387 and $319,194 for the years
        ended
        December 31, 2001, 2002 and 2003 respectively. Since the adoption of SFAS
        No.
        150, and for the period from July 1, 2003 until December 31, 2003, the Company
        has recorded $319,194 in interest expense related to the penalty and $150,273
        in
        interest expense related to the required increase in stated value as called
        for
        in the conversion rate calculation of the Series B, C, D and E Preferred
        stock.
        On March 13, 2003 the holders of Series B, and on March 14, 2003, the holder
        of
        Series C, D and E preferred stock waived all penalties incurred.
 
 Accordingly,
        the previously recorded accrued penalties were reversed during the quarter
        ended
        March 31, 2003, and recorded in the consolidated statement of operations
        as a
“recovery of deemed preferred stock dividend” of $1,527,171.
 
 The
        Company had erroneously continued to accrue penalties. For the period March
        14,
        2003 (and March 13, 2003 for Series B) through June 30, 2003, these penalties
        were originally reported as a deemed preferred stock dividend of $159,596.
        The
        restated financial statements reflect the removal of these deemed preferred
        stock dividends. When the Company adopted FAS 150, effective July 1, 2003,
        all
        penalties were reported as interest expense. The restated financial statements
        reflect the removal of $718,183 of previously reported interest
        expense.
 
 During
        2004, the Company entered into a series of promissory notes, which are
        convertible into common shares, and have cashless warrants. See Note 13 to
        the
        financial statements.
 
 7.
        ISSUANCE OF SERIES B PREFERRED STOCK
 
 The
        Company issued Series B Preferred Stock totaling $2,500,000 on March 25,
        1999
        (the “Issuance Date”). The Series B Preferred Stock investors were issued 125
        shares of preferred stock, having a stated value of $20,000 per share, and
        225,000 warrants to purchase common stock at $5.70 per share. The Company
        paid
        offering costs of $216,250 cash plus 25,000 warrants to purchase common stock
        at
        $5.70 per share, resulting in net proceeds to the Company of $2,283,750 for
        the
        preferred shares and warrants.
 
 The
        Series B Preferred Stock bears no dividends and is convertible at the option
        of
        the holder at the earlier of 90 days after issuance or the effective date
        of a
        registration statement covering the shares. The warrants are exercisable
        at any
        time and expire five years from the date of issuance.
 
 The
        Series B Preferred Stock is convertible into common stock at a conversion
        price
        equal to the lower of (a) the average of the closing price for four consecutive
        trading days in the twenty-five consecutive trading days ending one day prior
        to
        the conversion date ($4.86 at the Issuance date) and (b) $5.23. The number
        of
        common shares into which the Series B Preferred Stock is convertible is
        determined by dividing the stated value of the Series B Preferred Stock,
        increased by 5% annually, by the conversion price. As the Series B Preferred
        Stock was to be automatically convertible on March 24, 2002, the most beneficial
        conversion ratio was determined to include the additional common shares
        attributable to the 5% annual increase for the three year period ending in
        2002.
        After adjustment for this additional benefit the $4.86 conversion price is
        reduced to $4.23, the most beneficial conversion price at the Issuance
        Date.
 
 In
        determining the accounting for the beneficial conversion feature, the Company
        first allocated the net proceeds of $2,283,750 to the preferred stock and
        the
        warrants based on their relative fair values at the Issuance Date, resulting
        in
        $1,766,217 assigned to the preferred stock and $517,533 assigned to the warrants
        as of March 24, 1999. The Company then allocated $899,284 of the Series B
        net
        proceeds to additional paid in capital for the beneficial conversion feature.
        The beneficial conversion feature will be recognized as a deemed dividend
        to the
        preferred shareholders over the minimum period in which the preferred
        shareholders can realize that return. Approximately $18,000 and $2,672 of
        the
        beneficial conversion was amortized in 2000 and 2001, respectively. During
        1999,
        10 shares of Series B Preferred Stock were converted into 63,317 shares of
        common stock. During 2000, 97.19 shares of Series B Preferred Stock were
        converted into 902,307 shares of common stock. During 2004, 5.36 share of
        Series
        B Preferred Stock were converted into 5,598,298 shares of common
        stock.
 
 The
        Company has the option to redeem the Series B Preferred Stock after 110 days
        for
        120% of face value. Additionally, if the Company has issued common stock
        upon
        conversion of the Series B Preferred Stock such that 19.99% of the common
        stock
        outstanding is held by the preferred shareholders, the Company must obtain
        approval of the shareholders before any more preferred shares can be converted.
        If such approval is not obtained within 60 days of notice, the preferred
        shareholders may require the Company to repurchase the remaining Series B
        Preferred Stock at 120% of face value. Historically the Series B Preferred
        Stock
        was presented outside of permanent equity as the outcome of the shareholder
        vote, and possible redemption, was outside of the control of the
        Company.
 
 43
  In
        March
        of 2002, the outstanding shares of our Series B preferred stock were scheduled
        to convert automatically into shares of common stock, pursuant to the
        Certificate of Designations governing our Series B preferred stock; however,
        because we did not have a sufficient number of authorized shares of Common
        Stock
        available for issuance upon conversion of these shares of Series B preferred
        stock, no shares of Series B preferred stock were converted. On March 13,
        2003,
        the holders of Series B preferred stock waived all penalties that were accruing
        as a result of the Company’s inability to convert the shares to common stock in
        March of 2002. On August 14, 2004, all mandatory conversion rights were
        terminated.
 
 The
        restatement of the historical financial statements reflects the adoption
        of EITF
        No. 00-19 effective as of June 30, 2001. The adoption of EITF No. 00-19 recorded
        Series B preferred stock at redemption value. This resulted in an increase
        to
        the deemed dividend to Series B preferred stockholders in 2001, 2002 and
        2003 of
        $153,757, 17,810 and $8,910, respectively.
 
 Accordingly,
        the previously recorded accrued penalties were reversed during the quarter
        ended
        March 31, 2003, and recorded in the consolidated statement of operations
        as a
“recovery of deemed preferred stock dividend” of $43,720.
 
 The
        Company had erroneously continued to accrue penalties. For the period March
        13,
        2003 through June 30, 2003, these penalties were originally reported as a
        deemed
        preferred stock dividend of $4,446. The restated financial statements reflect
        the removal of these deemed preferred stock dividends. When the Company adopted
        FAS 150, effective July 1, 2003, all penalties were reported as interest
        expense. The restated financial statements reflect the removal of $20,007
        of
        previously reported interest expense.
 
 8.
        ISSUANCE OF SERIES C PREFERRED STOCK
 
 On
        July
        28, 1999, the Company completed a private placement of $3,500,000 principal
        amount of the Company’s Series C Convertible Preferred Stock, par value $.01 per
        share (the “Series C Preferred Stock”) and warrants to acquire up to 59,574
        shares of Common Stock (the “Series C Preferred Warrants”). The Series C
        Preferred Stock has an initial stated value of $20,000 per share, which stated
        value increases at the rate of 6% per year (such stated value, as increased
        from
        time to time, is referred to as the “Series C Stated Value”). Each Series C
        Preferred Share is convertible, from and after 120 days following the date
        of
        issuance, at the option of the holder, into such number of shares of Common
        Stock as is determined by dividing the Series C Stated Value by the lesser
        of
        (a) $5.875, and (b) 82.5% of the average of the closing bid prices for the
        five
        trading days preceding the date of conversion. Any Series C Preferred Stock
        issued and outstanding on July 22, 2002 to automatically be converted into
        Common Stock at the conversion price then in effect.
 
 In
        determining the accounting for the beneficial conversion feature, the Company
        first allocated the net proceeds of $3,323,748 to the preferred stock and
        the
        warrants based on their relative fair values at the Issuance Date, resulting
        in
        $3,170,904 assigned to the preferred stock and $152,844 assigned to the warrants
        as of July 27, 1999. The Company then allocated $1,678,505 of the Series
        C net
        proceeds to additional paid in capital for the beneficial conversion feature.
        The beneficial conversion feature will be recognized as a deemed dividend
        to the
        preferred shareholders over the minimum period in which the preferred
        shareholders can realize that return. Approximately $72,000 and $190 of the
        beneficial conversion was amortized in 2000 and 2001, respectively. During
        1999,
        37.5 shares of Series C Preferred Stock were converted into 281,460 shares
        of
        common stock. During 2000, 45.4 shares of Series C Preferred Stock were
        converted in to 802,056 shares of common stock. During 2001, 1.63 shares
        of
        Series C Preferred Stock was converted into 5,640,000 shares of Common Stock.
        During 2004, 20.38 share of Series C Preferred Stock were converted into
        15,626,358 shares of common stock.
 
 The
        Company has the right, in its sole discretion, to redeem, from time to time,
        any
        or all of the Series C Preferred Stock; provided that certain conditions
        are
        met, including the availability of cash, credit or standby underwriting
        facilities available to fund the redemption at 120% of the original purchase
        price.
 
 In
        July
        2002, the outstanding shares of our Series C preferred stock were scheduled
        to
        convert automatically into shares of common stock, pursuant to the Certificate
        of Designations governing our Series C preferred stock; however, because
        we did
        not have a sufficient number of authorized shares of common stock available
        for
        issuance upon conversion of these shares of Series C preferred stock, no
        shares
        of Series C preferred stock were converted. On March 14, 2003, the holder
        of
        Series C preferred stock waived all penalties that were accruing as a result
        of
        the Company’s inability to convert the shares to common stock in July of 2002.
        On August 14, 2004, all mandatory conversion rights were
        terminated.
 
 The
        Series C Preferred Warrants expired on July 27, 2004 and had an exercise
        price
        of $7.34 per share, subject to adjustment under certain
        circumstances.
 
 The
        restatement of the historical financial statements reflects the adoption
        of EITF
        No. 00-19 effective as of June 30, 2001. The adoption of EITF No. 00-19 recorded
        Series C preferred stock at redemption value. This resulted in an increase
        to
        the deemed dividend to Series C preferred stockholders in 2001, 2002 and
        2003 of
        $565,585, 108,429 and $54,064, respectively.
 
 44
  Accordingly,
        the previously recorded accrued penalties were reversed during the quarter
        ended
        March 31, 2003, and recorded in the consolidated statement of operations
        as a
“recovery of deemed preferred stock dividend” of $239,987.
 
 The
        Company had erroneously continued to accrue penalties. For the period March
        14,
        2003 through June 30, 2003, these penalties were originally reported as a
        deemed
        preferred stock dividend of $27,143. The restated financial statements reflect
        the removal of these deemed preferred stock dividends. When the Company adopted
        FAS 150, effective July 1, 2003, all penalties were reported as interest
        expense. The restated financial statements reflect the removal of $122,144
        of
        previously reported interest expense.
 
 9.
        ISSUANCE OF SERIES D PREFERRED STOCK
 
 On
        September 28, 1999, the Company completed a private placement of $1,500,000
        principal amount of the Company’s Series D Convertible Preferred Stock, par
        value $.01 per share (the “Series D Preferred Stock”) and warrants to acquire up
        to 25,000 shares of Common Stock (the “Series D Preferred Warrants”). The Series
        D Preferred Stock has an initial stated value of $20,000 per share, which
        stated
        value increases at the rate of 6% per year (such stated value, as increased
        from
        time to time, is referred to as the “Series D Stated Value”). Each Series D
        Preferred Share is convertible, from and after 120 days following the date
        of
        issuance, at the option of the holder, into such number of shares of Common
        Stock as is determined by dividing the Series D Stated Value by the lesser
        of
        (a) $5.875, and (b) 82.5% of the average of the closing bid prices for the
        five
        trading days preceding the date of conversion. Any Series D Preferred Stock
        issued and outstanding on September 22, 2002 was to automatically be converted
        into Common Stock at the conversion price then in effect.
 
 In
        determining the accounting for the beneficial conversion feature, the Company
        first allocated the net proceeds of $1,423,750 to the preferred stock and
        the
        warrants based on their relative fair values at the Issuance Date, resulting
        in
        $1,387,477 assigned to the preferred stock and $36,273 assigned to the warrants
        as of September 28, 1999. The Company then allocated $642,084 of the Series
        D
        net proceeds to additional paid in capital for the beneficial conversion
        feature. The beneficial conversion feature will be recognized as a deemed
        dividend to the preferred shareholders over the minimum period in which the
        preferred shareholders can realize that return. Approximately $280,000 and
        $281,000 of the beneficial conversion was amortized in 1999 and 2000,
        respectively. During 2000, 73.7 shares of Series D Preferred Stock were
        converted into 589,573 shares of common stock. During 2004, .98 shares of
        Series
        D Preferred Stock were converted into 965,538 shares of common
        stock.
 
 The
        right
        of the holders of the Series D Preferred Stock to convert their shares is
        also
        subject to the following restrictions: (i) during the period beginning on
        the
        issuance date through the following 90 days, each holder may not convert
        more
        than 25% of the Series D Preferred Stock purchased by such holder; (ii) during
        the period beginning on the issuance date through the following 120 days,
        each
        holder may not convert more than 50% of the Series D Preferred Stock purchased
        by such holder; and (iii) during the period beginning on the issuance date
        through the following 150 days, each holder may not convert more than 75%
        of the
        Series D Preferred Stock purchased by such holder. At any time after the
        issuance date, the Company shall have the right, in its sole discretion,
        to
        redeem, from time.
 
 In
        September 2002, the outstanding shares of our Series D preferred stock were
        scheduled to convert automatically into shares of common stock, pursuant
        to the
        Certificate of Designations governing our Series D preferred stock; however,
        because we did not have a sufficient number of authorized shares of common
        stock
        available for issuance upon conversion of these shares of Series D preferred
        stock, no shares of Series D preferred stock were converted. . On March 14,
        2003, the holder of Series D preferred stock waived all penalties that were
        accruing as a result of the Company’s inability to convert the shares to common
        stock in September of 2002. On August 14, 2004, all mandatory conversion
        rights
        were terminated.
 
 The
        restatement of the historical financial statements reflects the adoption
        of EITF
        No. 00-19 effective as of June 30, 2001. The adoption of EITF No. 00-19 recorded
        Series D preferred stock at redemption value. This resulted in an increase
        to
        the deemed dividend to Series C preferred stockholders in 2001, 2002 and
        2003 of
        $87,139, 1,550 and $775, respectively.
 
 Accordingly,
        the previously recorded accrued penalties were reversed during the quarter
        ended
        March 31, 2003, and recorded in the consolidated statement of operations
        as a
“recovery of deemed preferred stock dividend” of $4,131.
 
 The
        Company had erroneously continued to accrue penalties. For the period March
        14,
        2003 through June 30, 2003, these penalties were originally reported as a
        deemed
        preferred stock dividend of $387. The restated financial statements reflect
        the
        removal of these deemed preferred stock dividends. When the Company adopted
        FAS
        150, effective July 1, 2003, all penalties were reported as interest expense.
        The restated financial statements reflect the removal of $1,742 of previously
        reported interest expense.
 
 45
  10.
        ISSUANCE OF SERIES E PREFERRED STOCK
 
 On
        April
        14, 2000, the Company completed a private placement of $2,127,000 principal
        amount of the Company’s Series E Convertible Preferred Stock, par value $.01 per
        share (the “Series E Preferred Stock”) and warrants to acquire 66,667 shares of
        common stock (the “Series E Preferred Warrants”). The Series E Preferred Stock
        has an initial stated value of $20,000 per share, which stated value increases
        at the rate of 8% per year. Each Series E Preferred Share is convertible
        120
        days following the date of issuance, at the option of the holder, into such
        number of shares of common stock as is determined by dividing the Series
        E
        Stated Value by the lesser of (a) $3.53, or (b) 82.5% of the average of the
        closing bid prices for the five trading days preceding the date of conversion.
        Any Series E Preferred Stock issued and outstanding on April 14, 2003 were
        to
        automatically be converted into Common Stock at the conversion price then
        in
        effect. These provisions have now been waived by the holders of the Series
        E
        preferred stock (see note 15).
 
 Pursuant
        to certain registration rights granted to the investors in the private
        placement, we are obligated to file a registration statement under the
        Securities Act of 1933 with respect to a minimum of 1,808,293 shares of common
        stock issuable upon conversion of the Series E Preferred Stock and exercise
        of
        the Series E Preferred Warrants. The Company is obligated to pay penalties
        if
        the Registration Statement is not filed and/or declared effective within
        the
        specified time periods. As of March 13, 2003, penalties were waived to the
        Series E Preferred Stock holders. On August 14, 2004, all mandatory conversion
        rights were terminated.
 
 At
        any
        time after the issuance date, the Company shall have the right, in its sole
        discretion, to redeem, from time to time, any or all of the Series E Preferred
        Stock; provided that certain conditions are met, including the availability
        of
        cash, credit or standby underwriting facilities available to fund the
        redemption. The redemption price will be calculated as (i) 105% of the original
        purchase price for the first 30 days following the issuance date; (ii) 110%
        of
        the original purchase price for the next 90 days thereafter and (iii) 120%
        of
        the original purchase price after 120 days from the issuance date.
 
 In
        determining the accounting for the beneficial conversion feature, the Company
        first allocated the net proceeds of $1,855,426 to the Series E Preferred
        Stock
        and the Series E Preferred Warrants based on their relative fair values at
        the
        issuance date, resulting in $1,791,211 assigned to the Series E Preferred
        Stock
        and $64,215 assigned to the Series E Preferred Warrants as of April 14, 2000.
        The Company then allocated $1,059,347 of the Series E Preferred Stock net
        proceeds to additional paid in capital for the beneficial conversion feature.
        The beneficial conversion feature will be recognized as a deemed dividend
        to the
        preferred shareholders over the minimum period in which the preferred
        shareholders can realize that return. $1,058,656 had been amortized as of
        December 31, 2003.
 
 The
        Series E Preferred Warrants expired on April 14, 2005 and had an exercise
        price
        of $3.35 per share, subject to adjustment under certain
        circumstances.
 
 The
        restatement of the historical financial statements reflects the adoption
        of EITF
        No. 00-19 effective as of June 30, 2001. The adoption of EITF No. 00-19 recorded
        Series D preferred stock at redemption value. This resulted in an increase
        to
        the deemed dividend to Series C preferred stockholders in 2001, 2002 and
        2003 of
        $626,927, 170,160 and $85,080, respectively.
 
 Accordingly,
        the previously recorded accrued penalties were reversed during the quarter
        ended
        March 31, 2003, and recorded in the consolidated statement of operations
        as a
“recovery of deemed preferred stock dividend” of $1,239,333.
 
 The
        Company had erroneously continued to accrue penalties. For the period March
        14,
        2003 through June 30, 2003, these penalties were originally reported as a
        deemed
        preferred stock dividend of $127,620. The restated financial statements reflect
        the removal of these deemed preferred stock dividends. When the Company adopted
        FAS 150, effective July 1, 2003, all penalties were reported as interest
        expense. The restated financial statements reflect the removal of $574,290
        of
        previously reported interest expense.
 
 11.
        EUROTECH TRANSACTION AND ISSUANCE OF SERIES F, G AND H PREFERRED
        STOCK
 
 On
        May
        22, 2003, the Company entered into a License and Exchange Agreement with
        Eurotech. Under the provisions of that agreement the Company issued two series
        of preferred stock in consideration for the licensing arrangement.
 
 On
        May
        22, 2003, the Company issued 13,500 shares of the Company’s Series F Convertible
        Preferred Stock, par value $.01 per share. Each Series F Share was convertible
        into 10,000 shares of common stock and has a stated value of $1,000 per share.
        The holders of the outstanding shares of Series F Preferred Stock have cancelled
        and surrendered their Series F Shares and have been subsequently issued shares
        of Series H Preferred Stock.
 
 On
        September 30, 2003, the Company issued 13,500 shares of the Company’s Series H
        Convertible Preferred Stock, par value $.01 per share. Each Series H Share
        is
        convertible into 10,000 shares of common stock and has a stated value of
        $1,000
        per share; provided, however, that no holder of Series H shares may convert
        Series H shares into shares of common stock if the aggregate
  46
  shares
        of
        common stock beneficially owned by such holder and its affiliates would exceed
        9.9% of the outstanding shares of common stock following such conversion
        (excluding, for purposes of the calculation, the unconverted Series H
        Shares).
 
 On
        May
        22, 2003, the Company issued 1,069 shares of the Company’s Series G Convertible
        Preferred Stock, par value $.01 per share. The Series G shares have a stated
        value of $1,000 per share. Each Series G Preferred Share is convertible,
        from
        and after 120 days following the date of issuance, at the option of the holder,
        into such number of shares of Common Stock as is determined by dividing $1,000
        per share by a number equal to 82.5% of the average of the closing bid prices
        for the five trading days preceding the date of conversion. No holder of
        Series
        G Shares may convert Series G Shares into shares of common stock if the
        aggregate shares of Common Stock beneficially owned by such holder and its
        affiliates would exceed 9.9% of the outstanding shares of Common Stock following
        such conversion (excluding, for purposes of the calculation, the unconverted
        Series G Shares). The Series G Preferred Stock has no mandatory conversion
        date.
        In determining the accounting for the beneficial conversion feature, the
        Company
        allocated $986,223 to the preferred stock based on its relative fair value
        at
        the Issuance Date. The Company then allocated $153,413 of the Series G value
        to
        additional paid in capital for the beneficial conversion feature. The beneficial
        conversion feature will be recognized as a deemed dividend to the preferred
        shareholders over the minimum period in which the preferred shareholders
        can
        realize that return beginning on the date when the shares are first convertible.
        During 2003, the beneficial conversion of $153,413 was amortized.
 
 12.
        ISSUANCE OF SERIES I PREFERRED STOCK
 
 In
        June,
        the Company entered into a second exchange agreement with Brittany to acquire
        5,640,000 shares of the Company’s common stock at $0.10 per share. On September
        24, 2004, Brittany received 490.5 shares of Series I convertible preferred
        stock, $0.01 par value per share, of the Company in exchange for 4,905,000
        shares of common stock of the Company. Each share of Series I preferred stock
        has a stated value of $100 and is convertible into 10,000 shares of common
        stock; provided, however, that a holder of Series I preferred stock may not
        convert their shares if the aggregate number of shares of common stock
        beneficially owned by the holder and its affiliates would exceed 9.9% of
        the
        outstanding shares of common stock following such conversion (excluding,
        for
        purposes of this calculation, the unconverted shares of Series I preferred
        stock). In addition, Brittany agreed to loan the Company up to $100,000 .
        As of
        December 31, 2004, the Company had borrowed $75,000. See note 13.
 
 13.
        ISSUANCE OF CONVERTIBLE PROMISSORY NOTES
 
 On
        June
        1, 2004, as part of the agreement to Issue Preferred Series I (see Note 12),
        the
        Company borrowed $75,000 from Brittany. Under the terms of the convertible
        promissory note, Brittany, at its option, can convert the note into 1,500,000
        shares of common stock at a price of $.05 per share or 80% of fair market
        value,
        at the time of conversion. The Company allocated $60,000 to the beneficial
        conversion feature, to be amortized over a period of twenty-four months;
        the
        period in which the holder can convert. During 2004, the Company amortized
        $17,500 of the beneficial conversion feature to interest expense.
 
 During
        September 2004, the Company restructured its borrowings from McNab into a
        convertible promissory note of $542,950. Under the terms of the convertible
        promissory note, McNab, at its option, can convert the note into shares of
        common stock at a price of $.05 per share or 80% of fair market value, at
        the
        time of conversion. The Company allocated $325,770 to the beneficial conversion
        feature, to be amortized over a period of twenty-four months; the term of
        the
        promissory note. During 2004, the Company amortized $81,443 of the beneficial
        conversion feature to interest expense.
 
 On
        October 19, 2004, we entered into a securities purchase agreement with
        Southridge Partners LP. Southridge purchased a nonnegotiable 2% secured
        convertible promissory note in the principal amount of $250,000 and we issued
        it
        a warrant to purchase 10,000,000 shares of our common stock. On October 21,
        2004, we entered into a securities purchase agreement with Dean M. DeNuccio.
        Mr.
        DeNuccio purchased a nonnegotiable 2% secured convertible promissory note
        in the
        principal amount of $25,000 and we issued to Mr. DeNuccio a warrant to purchase
        1,000,000 shares of our common stock. On November 5, 2004, we entered into
        a
        securities purchase agreement with Colonial Fund, LLC. Colonial purchased
        a
        nonnegotiable 2% secured convertible promissory note in the principal amount
        of
        $50,000 and we issued it a warrant to purchase 2,000,000 shares of our common
        stock.
 
 Each
        of
        these promissory notes are convertible into shares of our common stock at
        a
        conversion price of $0.02 and each of the warrants are exercisable for $0.025
        per share of our common stock. The promissory notes mature in two years and
        the
        warrants expire in five years. Should our common stock fall below $0.03 cents
        for ten consecutive trading days, any holder of these notes may force prepayment
        at 140% of the principle amount plus interest. Conversion and exercise rights
        are restricted in that any of these note or warrant holders may not at any
        time
        have beneficial ownership of more than 4.999% of the total number of issued
        and
        outstanding shares of our common stock.
 
 On
        October 22, 2004 and November 5, 2004, Global Matrechs, Inc., entered into
        securities purchase agreements with Dean M. DeNuccio and Colonial Fund LLC
        relating to the private placement of 2% secured convertible promissory notes
        in
        the aggregate principal amount of $75,000 with a maturity of two (2) years
        and
        warrants to purchase 3,000,000 shares of its common stock at an
  47
  exercise
        price of $0.025 per share, which expire in five years in exchange for aggregate
        consideration equal to the principal amount of the Notes. The Company received
        approximately $70,000 in proceeds after deducting offering expenses.
 
 The
        Notes
        are convertible, at the option of the holders, into shares of common stock
        of
        the Company at a conversion price of $0.02 per share. Each Purchaser may
        require
        the Company to repurchase some or all of its Note if the market price of
        the
        common stock of the Company falls below $0.03 per share for ten (10) consecutive
        trading days, at a repurchase price equal to 140% of the principal amount
        of the
        Note.
 
 On
        December 3, 2004, the Company and Deer Creek Fund, LLC entered into a securities
        purchase agreement relating to the private placement of a 2% secured convertible
        promissory notes in the aggregate principal amount of $50,000 with a maturity
        of
        two (2) years and a warrant to purchase 2,000,000 shares of its common stock
        at
        an exercise price of $0.025 per share, which expires in five years. The Company
        has received approximately $45,000 in net proceeds after deducting offering
        expenses.
 
 The
        Note
        is convertible, at the option of the holder, into shares of common stock
        of the
        Company at a conversion price of $0.02 per share. The holder of the Note
        may
        require the Company to repurchase some or all of its Note if the market price
        of
        the common stock of the Company falls below $0.03 per share for ten (10)
        consecutive trading days, at a repurchase price equal to 140% of the principal
        amount being repurchased.
 
 The
        beneficial conversion feature of these notes was valued at $912,500. Since
        the
        conversion is at the option of the holder, the value of the beneficial
        conversion feature was amortized to interest expense in full during
        2004.
 
 Each
        of
        the convertible notes issued on October 19, 2004, October 22, 2004, November
        5,
        2004 and December 3, 2004 contains a cashless warrant provision. The warrants
        expire 5 years from the date of the note. The cashless exercise provides
        that
        the holder may pay the exercise price associated with any exercise by having
        us
        withhold a number of shares otherwise issuable upon such exercise having
        a fair
        market value equal to the applicable aggregate exercise price. In the event
        such
        provision is used with respect to an exercise, the Company would receive
        no
        proceeds upon such exercise. The convertible notes carried 18,750,000 warrants,
        and were initially valued at $684,811. As of December 31, 2004, these warrants
        have been adjusted to their fair value of $742,448. During the year ended
        December 31, 2004, the fair value of the warrants increased by $57,637. Since
        the value of the warrants exceeds the proceeds received, the excess of $309,811
        has been charged to interest expense during the period.
 
 14.
        STOCK
        OPTION PLANS
 
 The
        Company’s Employee Stock Option Plan (the “Stock Option Plan”) was adopted by
        the Company’s stockholders in September 1996 and amended in 2005. Shares of
        common stock may be sold or awarded to officers, key employees and consultants.
        On March 3, 1999 at a Special Meeting of Stockholders, the Company’s
        stockholders approved an amendment to the Stock Option Plan which increased
        the
        number of shares reserved for issuance under the Stock Option Plan to 2,000,000
        and in 2005 to 15,000,000 shares. Options granted under the Stock Option
        Plan
        may be either (i) options intended to qualify as “incentive stock options” under
        Section 422 of the Internal Revenue Code or (ii) non-qualified stock
        options.
 
 The
        options granted to purchase shares under the Stock Option Plan. The options
        vest
        25% per year and expire ten years after the grant date. The exercise price
        of
        the options was at or above the fair market value of the stock on the grant
        date.
 
 The
        Company’s Non-Employee Directors’ Stock Option Plan (the “Directors’ Plan”) was
        adopted by the Company’s stockholders in September 1996. Shares of common stock
        may be sold or awarded to directors who are not officers or employees of
        the
        Company (“Non-Employee Directors”). The Company has reserved 300,000 shares of
        common stock for issuance under the Directors’ Plan.
 
 The
        Directors’ Plan provides for the automatic granting of an option to purchase
        10,000 shares of common stock to each Non-Employee Director who is first
        appointed or elected to the Board of Directors. Also, each Non-Employee Director
        is automatically granted an option to purchase 5,000 shares of common stock
        on
        the date of each annual meeting of the Company’s stockholders. Furthermore, the
        Directors’ Plan allows the Board of Directors to make extraordinary grants of
        options to Non-Employee Directors.
  Option
        activity under all of the stock option plans is summarized as
        follows:
  48
  YEAR
                  ENDED DECEMBER 31,2002
                  WEIGHT-AVERAGED
              
              2003
                  WEIGHT-AVERAGED
              
              2004
                  WEIGHT-AVERAGEDEXERCISE
              
              EXERCISE
              
              EXERCISESHARES
              PRICE
              SHARES
              PRICE
              SHARES
              PRICEOutstanding
                  at beginning of year
              791,644
              2.75
              389,085
              2.31
              387,419
              2.32GrantedExercisedForfeited
              (402,559)
              2.87
              (1,666)
              0.59Outstanding
                  at end of year
              389,085
              2.31
              387,419
              2.32
              387,419
              2.32Options
                  exercisable at year end
              239,081
              3.32
              329,419
              2.61
              387,419Shares
                  available for future grant
              1,610,915
              
              1,612,581
              
              1,612,581Weighted-average
                  fair value ofoptions
                  granted during this year at the shares’ fair value
              0.00
              
              0.00
              
              0.00
 
 The
        following table summarizes information about fixed options outstanding at
        December 31, 2004.
 
 WEIGHTED
                  AVERAGE REMAININGEXERCISE
                  PRICE
              SHARES
              CONTRACTUAL
                  LIFE$0.59
                  - 0.75
              231,095
              5.1$2.18
                  - 4.55
              95,687
              4.3$6.00
                  - 6.13
              60,637
              3.4387,419
              4.3
 
 15.
        ACQUISITIONS, DIVESTITURES AND DISCONTINUED OPERATIONS
 
 On
        May
        31, 2004, the Company completed the sale of its remaining Internet business
        to
        Tulix Systems, Inc. (“Tulix”), a company in which Gia Bokuchava, Nino
        Doijashvili and Timothy R. Robinson, who were officers and directors of the
        Company, are officers, directors and founding shareholders. The Company recorded
        a loss on the sale of this business of $125,030 in the fourth quarter of
        2003
        and recorded an additional loss of $124,385 in the second quarter of 2004
        for
        adjustments to the closing as provided for in the closing documents. With
        the
        consummation of this Purchase Agreement Global Matrechs has completely exited
        from all Internet related enterprises. The Company has removed the results
        of
        this discontinued operation from the continuing operations of the Company
        for
        all periods presented.
 
 On
        December 31, 2004 we acquired True To Form, Limited for total consideration
        of
        $1.1 million, consisting of $500,000 in notes to be held by True To Form
        and
        guaranteed by its assets and 10,000,000 shares of the Company’s common stock.
        The acquisition has been accounted for as a purchase transaction. The value
        of
        the shares was determined by using the average closing stock price of the
        two
        days before and after the public announcement of the transaction. The note
        is
        due in two payments with $100,000 due in 2005 and $400,000 due in 2010. The
        note
        accrues an interest rate of 8% per annum. The following table summarizes
        the
        estimated fair values of the assets acquired and liabilities assumed at the
        date
        of the acquisition of True To Form:
 
 Accounts
                  receivable
              
              $
              94,551Inventories
              
              
              67,906Property
                  and Equipment
              
              
              28,430Other
                  assets
              
              
              2,575Goodwill
              
              
              1,469,108Current
                  liabilities
              
              
              (399,959
              )Long-term
                  liabilities
              
              
              (162,611
              )$
              1,100,000
 
 49
  16.
        INCOME TAXES
 
 Deferred
        income taxes reflect the net tax effects of temporary differences between
        the
        carrying amounts of assets and liabilities for financial reporting purposes
        and
        the amounts used for income tax purposes. Significant components of the
        Company’s deferred tax assets and liabilities are as follows, as
        of:
 
 December
                  31,2002
              
              2003
              
              2004Temporary
                  differences:Allowance
                  for uncollectibles
              
              $
              17,000
              
              $
              19,000
              
              $
              —Capital
                  losses
              
              
              167,000
              
              
              167,000
              
              
              167,000Accrued
                  legal fees
              
              
              18,000
              
              
              19,000
              
              
              —Deferred
                  rent expense
              
              
              83,000
              
              
              33,000
              
              
              —Estimated
                  loss on segment disposal
              
              
              0
              
              
              50,000
              
              
              —Net
                  operating loss carryforward
              
              
              7,849,000
              
              
              8,001,000
              
              
              8,125,000Deferred
                  tax asset
              
              
              8,134,000
              
              
              8,289,000
              
              
              8,292,000Valuation
                  allowance
              
              
              (8,010,000
              )
              
              (8,083,000
              )
              
              (8,292,000
              )Net
                  deferred tax asset
              
              
              124,000
              
              
              206,000
              
              
              —Depreciation
              
              
              (124,000
              )
              
              (206,000
              )
              
              —Deferred
                  tax liability
              
              
              —
              
              
              —
              
              
              —Net
                  deferred tax asset (liability)
              
              $
              —
              
              $
              —
              
              $
              —
 
 At
        December 31, 2004, the Company had net operating loss carryforwards for income
        tax purposes of approximately $21 million which begin to expire in 2011.
        Realization of these assets is contingent on having future taxable earnings.
        In
        addition, certain stock transactions from 1997 through 2004 have resulted
        in
        ownership changes as defined in Internal Revenue Code Section 382. As a
        consequence of these ownership changes, the utilization of the Company’s net
        operating loss carryforwards is significantly limited. Based on the cumulative
        losses in recent years and the limitation on the use of the Company’s net
        operating losses, management believes that a full valuation allowance should
        be
        recorded against the deferred tax asset.
 
 The
        difference between the expected income tax benefit and the actual tax benefit
        computed by using the Federal statutory rate of 35% is as follows:
 
 Year
                  ended December 31,2003
              
              2004Expected
                  income tax (benefit) at statutory
              
              $
              (160,000
              )
              $
              (921,000
              )Federal
                  rate of 35%State
                  tax (benefit), net of Federal effect
              
              
              (23,000
              )
              
              (132,000
              )Permanent
                  differences
              
              
              46,000
              
              
              844,000Increase
                  in valuation allowance
              
              
              137,000
              
              
              209,000$
              —
              
              $
              —
 
 17.
        SUBSEQUENT EVENTS
 
 On
        January 31, 2005, we entered into a Second Securities Purchase Agreement
        with
        Southridge Partners LP, one of our existing investors, whereby we agreed
        to sell
        a convertible promissory note in the principal amount of $250,000 and warrant
        to
        purchase up to 10,000,000 shares of our common stock to Southridge in exchange
        for its $250,000 investment. Under the terms of this purchase agreement,
        Southridge may, at its option, and at any time prior to July 1, 2005, purchase
        an additional note in the principal amount of up to $1,500,000, and otherwise
        on
        substantially the same terms as the note issued on January 31,
        2005.
 
 50
  The
        note
        is convertible, at the option of the holder, into shares of our common stock
        at
        a conversion price of $0.02 per share. Southridge may require us to repurchase
        some or all of its note if the market price of our common stock falls below
        $0.03 per share for ten (10) consecutive trading days, at a repurchase price
        equal to 140% of the principal amount of the note. In the event we default
        under
        the terms of the note, the entire outstanding principal (and any outstanding
        interest accrued thereon) shall become immediately due and payable, and the
        interest rate will rise to 18% per annum.
 
 We
        have
        secured the payment of the notes with a subordinated security interest in
        our
        accounts, general intangibles, inventories, and other collateral. In addition,
        in the event we propose to register securities under the Securities Act of
        1933,
        as amended, we are required to notify Southridge in advance of such registration
        and, at its request (subject to limited exceptions), include the shares of
        our
        common stock underlying the note and warrant on the registration statement
        filed
        in connection with such registration (and assume any expenses associated
        therewith).
 
 The
        warrant has an expiration date of January 31, 2010. It contains a cashless
        exercise provision whereby the holder may pay the exercise price associated
        with
        any exercise by having us withhold a number of shares otherwise issuable
        upon
        such exercise having a fair market value equal to the applicable aggregate
        exercise price. In the event such provision is used with respect to an exercise,
        we would receive no proceeds upon such exercise.
 
 ENTRANCE
        INTO EXCHANGE AGREEMENT WITH WOODWARD LLC
 
 On
        January 31, 2005, we entered into an Exchange Agreement with Woodward LLC
        pursuant to which we acquired promissory notes, and have accordingly assumed
        all
        rights pertaining thereto, issued by Eurotech Ltd. The notes are currently
        in
        default and have an aggregate outstanding principal amount of $290,000. The
        notes carry a default annual interest rate of 18% and are past due in their
        entirety. In exchange for these notes, we issued to Woodward a promissory
        note
        in the principal amount of $250,000.
 
 Under
        the
        terms of the Exchange Agreement, in the event we propose to register securities
        under the Securities Act of 1933, as amended, we are required to notify Woodward
        in advance of such registration and, at its request (subject to limited
        exceptions), include the shares of our common stock underlying the note on
        the
        registration statement filed in connection with such registration, and assume
        any expenses associated therewith.
 
 SOUTHRIDGE
        EXERCISES OPTION TO PURCHASE ADDITIONAL NOTES AND WARRANTS
 
 On
        March
        2, 2005, Southridge Partners LP exercised its option to purchase an additional
        note and warrant under its Second Securities Purchase Agreement. In connection
        with such exercise, we issued to Southridge a convertible promissory note
        in the
        principal amount of $175,000 and a warrant to purchase up to 7,000,000 shares
        of
        our common stock in exchange for its $175,000 investment. The note is
        convertible, at the option of the holder, into shares of our common stock
        at a
        conversion price of $0.02 per share. Southridge may require us to repurchase
        some or all of its note if the market price of our common stock falls below
        $0.03 per share for ten (10) consecutive trading days, at a repurchase price
        equal to 140% of the principal amount of the note. In the event we default
        under
        the terms of the note, the entire outstanding principal (and any outstanding
        interest accrued thereon) shall become immediately due and payable, and the
        interest rate will rise to 18% per annum. The note matures on March 2,
        2007
 
 SOUTHRIDGE
        EXERCISES OPTION TO PURCHASE ADDITIONAL NOTES AND WARRANTS
 
 On
        April
        11, 2005, Southridge Partners LP exercised its option to purchase an additional
        note and warrant pursuant to the Second Securities Purchase Agreement. In
        connection with such exercise, we issued to Southridge a convertible promissory
        note in the principal amount of $125,000 and a warrant to purchase up to
        5,000,000 shares of our common stock to Southridge in exchange for its $125,000
        investment. The note is convertible, at the option of the holder, into shares
        of
        our common stock at a conversion price of $0.02 per share. Southridge may
        require us to repurchase some, or all, of its note if the market price of
        our
        common stock falls below $0.03 per share for ten (10) consecutive trading
        days,
        at a repurchase price equal to 140% of the principal amount of the note.
        In the
        event we default under the terms of the note, the entire outstanding principal
        (and any outstanding interest accrued thereon) shall become immediately due
        and
        payable, and the interest rate will rise to 18% per annum. The note matures
        on
        April 11, 2007.
 
 DECISION
        TO RESTATE FINANCIALS
 
 On
        April
        15, 2005, the Company’s management, in consultation with the Company’s
        independent registered public accounting firm, concluded that the Company’s
        historical financial information related to fiscal 2001 through fiscal 2003
        and
        for the first three fiscal quarters of 2004 accounted incorrectly for certain
        convertible preferred stock instruments. As such, the management has concluded
        that the Company’s historical financial statements should no longer be relied
        upon. While the Company does not intend to amend its previously filed annual
        and
        quarterly reports covering the periods noted above, the Company has restated
        historical financial information for the periods required to be presented
        in
        this annual report on Form 10-KSB to reflect the correct accounting
  51
  treatment.
        The Company has also included in this annual report on Form 10-KSB five years
        of
        restated financial information highlighting the differences resulting from
        the
        application of the change in accounting treatment to its historical financial
        statements and restated selected quarterly information for 2003 and
        2004.
 
 ITEM
        8.
        CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
        DISCLOSURE
 
 None.
 
 ITEM
        8A.
        CONTROLS AND PROCEDURES
 
 **Disclosure
        Controls and Procedures**  Our
        principal executive officer, who is also our principal financial officer,
        has
        concluded that our disclosure controls and procedures (as defined in
        Rule 13a-15(e) under the Securities Exchange Act of 1934, as
        amended
        (the “Exchange Act”)) were not effective as of December 31, 2004 based an
        evaluation of our disclosure controls and procedures, as further described
        below:
 
 ·
              Our
                  historical financial information related to fiscal 2001 through
                  fiscal
                  2003 and for the first three fiscal quarters of 2004 accounted
                  incorrectly
                  for certain convertible preferred stock instruments. As such, management
                  has concluded that our historical financial statements should no
                  longer be
                  relied upon.
 
 ·
              We
                  have restated historical financial information for the periods
                  required to
                  be presented in this annual report on Form 10-KSB for the year
                  ended
                  December 31, 2004, as amended, to reflect the correct accounting
                  treatment. We have also included in this report four years of restated
                  financial information highlighting the differences resulting from
                  the
                  application of the change in accounting treatment to its historical
                  financial statements.
 
 **Late
        Reports**
 
 Due
        to the significant commitment of
        Company time and resources required in connection with the review of our
        financial statements and the auditing of our 2004 financial statements, we
        did
        not timely file this annual report on Form 10-KSB or our quarterly report
        on
        Form 10-QSB for the quarter ended March 31, 2005.
 
 **Other
        Issues**
 
 The
        review also observed other issues
        that may have contributed to the misstatement. These issues relate to staffing,
        competence and segregation of duties in our accounting and financial reporting
        functions and insufficient analysis, documentation and review of the selection
        and application of generally accepted accounting principles to significant
        non-routine transactions. We plan to address these issues by hiring additional
        personnel promptly after we raise additional financing.
 
 **Remedial
        measures**
 
 Management
        believes that at this time,
        in light of the recent addition of an outside consultant to assist with some
        of
        the highly technical issues relating to its capital structure, the risks
        associated with a lack of segregation of duties and limited staff have been
        largely mitigated. Management believes that additional progress in strengthening
        its controls and procedures will continue through the end of fiscal year
        2005.
        Furthermore, management intends to hire an accounting professional to increase
        the our capabilities related to interpretive research into complex accounting
        issues promptly after we raise sufficient financing to permit it to do so.
        Finally, management will periodically reevaluate the situation, and as
        necessary, will put in place additional internal staff and controls to prevent
        a
        lack of discipline around policies and procedures in our administrative and
        financial matters.
  **Changes
        in Internal Control over Financial Reporting**
 
 As
        described above, management believes
        that our recent addition of an outside consultant to assist with some of
        the
        highly technical issues relating to our capital structure, we have significantly
        mitigated the risks associated with a lack of segregation of duties that
        had
        existed previously.
 
 
 
 52
 **PART
        III**
 
 ITEM
        9.
        DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
 
 IDENTIFICATION
        OF DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES
 
 The
        names
        and ages of the directors and executive officers of the Company as of December
        31, 2004 and certain information about them are set forth below.
 
 NAME
              AGE
              POSITIONMark
                  J. Allen
              42
              Director,
                  Executive Vice PresidentRandolph
                  Graves (1)
              64
              Director,
                  Vice PresidentMichael
                  Sheppard
              55
              Director,
                  President, Chief Executive Officer, Chief Operations Officer and
                  acting
                  Chief Financial Officer
 
 (1)
        Resigned effective May 16, 2005.
 
 BACKGROUND
        OF OUR DIRECTORS AND EXECUTIVE OFFICERS
 
 Randolph
        A. Graves, Jr., DSc. has been a member of our Board of Directors and served
        as
        Vice President of or Licensed Technology Division since May 2003. In addition,
        Dr. Graves is the Chief Financial Officer of Eurotech, Ltd., a position that
        he
        has held since November 2002. Prior to this Dr. Graveswas the Vice President
        for
        Technology, focusing on technology evaluation, acquisition strategy, and
        analysis of commercial competitiveness. Dr. Graves served as the Chairman
        and
        CEO of Eurotech from May 1995 until January 1998 and was a member of the
        Board
        of Directors from the date of Eurotech’s incorporation until January 1998, from
        February 1999 to July 2001, and has again served as a director since August
        2001
        to the present. He has also served in several other capacities for Eurotech
        over
        the past three years. Dr. Graves also serves as a director of DayStar
        Technologies, Inc. Dr. Graves has over thirty-five years experience with
        technology development, management and application. He served twenty-six
        years
        with NASA, finishing his career as a Senior Executive at NASA Headquarters.
        He
        has served on numerous managerial and technical panels and committees including
        a member of the White House’s Federal Coordinating Council on Science
        Engineering and Technology Subcommittee on High Performance Computing and
        as
        NASA’s member of NATO’s Advisory Group on Aerospace Research and Development
        Fluid Dynamics Panel. He is currently a member of George Washington University’s
        National Advisory Council for the School of Engineering Applied Science.
        Dr.
        Graves was awarded a Sloan Fellowship at Stanford University’s Graduate School
        of Business in 1982. He also received NASA’s Exceptional Performance Award for
        his managerial activities at NASA Headquarters. Dr. Graves has been a member
        of
        the Board since March 2003.
 
 Michael
        Sheppard has served as a Vice President of our Licensed Technology Division
        since May 2003 and in June was appointed President and CEO in June 2004.
        Mr.
        Sheppard was the COO and President of Technest Holdings, Inc. Mr. Sheppard
        joined Technest in 1997, and headed up the day-to-day strategy of Technest.
        He
        resigned from Technest in December 2002. Prior to joining Technest, Mr. Sheppard
        was the Chief Operating Officer of Freelinq Communications, a provider of
        real
        time video-on-demand via ATM/XDSL technology. Mr. Sheppard has also acted
        as the
        Chief Executive Officer and Chief Operating Officer of several early stage
        development companies, overseeing the development of a corporate infrastructure
        for each company. From 1980 to 1992, Mr. Sheppard served as the President
        of Lee
        America, a Westward Communications Company whose North American holdings
        included Panavision, Inc. Mr. Sheppard has an extensive background in the
        entertainment industry and received a BA and an MFA in film from New York
        University. Mr. Sheppard has been a member of the Board since November
        2001.
 
 Mark
        J.
        Allen has been a member of our Board of Directors since 2004 and has served
        as
        Executive Vice President since December 31, 2004. Mr. Allen is the Founder
        and
        President, True To Form Limited, now a wholly owned subsidiary of Global
        Matrechs. He conceived of True To Form, created its strategic plan, staffed
        organization and established its infrastructure. He
  53
  developed
        a national customer base including such accounts as Dunkin Donuts, TOGO’s
        Sandwich Shops,Papa Gino’s, Chick-Fil-A, Deangelos, Baskin Robbins, Swarovski
        Crystal Stores, Aramark, Steve Wynn Designs, Hard Rock Hotels, Kentucky Fried
        Chicken, and O’Charlies.
 
 CODE
        OF
        ETHICS
 We
        have
        not yet adopted a code of ethics that applies to our principal executive
        officer, principal financial officer, principal accounting officer, or
        controller, or other persons performing similar functions. We have been unable
        to adopt a code of ethics due to our limited financial resources and competing
        demands on our management.
 
 SECTION
        16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
 
 Section
        16(a) of the Securities Exchange Act of 1934 requires the officers, directors
        and persons who own more than ten percent of the Company’s stock, to file
        reports of ownership and changes of ownership with the Securities Exchange
        Commission (SEC). Officers, directors and greater than ten percent owners
        are
        required by SEC regulations to furnish the Company with copies of all Section
        16(a) forms they file.
 
 Based
        solely on its review of the copies of such forms received by it, the Company
        is
        not aware of any failure by its officers, directors, or greater than ten-percent
        owners to comply with all section 16(a) filing requirements applicable to
        them
        during the year ended December 31, 2004.
 
 However,
        we believe that during the year ended December 31, 2004, Michael Sheppard,
        Randolph Graves and Mark Allen should have filed initial reports under Section
        16(a) of the Securities Exchange Act of 1934. The reporting requirements
        are
        related solely to their elections and appointments, as applicable, as directors
        and/or officers of the Company.
 
 ITEM
        10.
        EXECUTIVE COMPENSATION
 
 COMPENSATION
        OF DIRECTORS
 
 Directors
        who are not employees of the Company are eligible to receive $1,000 per Board
        meeting attended, although we have never made any payments to our directors
        for
        attending meetings, are eligible to receive automatic grants of stock options
        under the Company’s Non-Employee Directors Stock Option Plan and may receive
        additional grants of options under such plan at the discretion of the
        Compensation Committee of the Board of Directors.
 
 EXECUTIVE
        COMPENSATION
 
 The
        following table sets forth the total compensation paid or accrued by the
        Company
        in 2004 to its Chief Executive Officer and each executive officer of the
        Company
        whose total annual salary and bonus exceeded $100,000 (each, a “Named Executive
        Officer”):
 
 SUMMARY
        COMPENSATION TABLE
 
 ANNUAL
                    COMPENSATION
                LONG
                    TERM COMPENSATIONNUMBER
                    OFSECURITIESPOSITION
                YEAR
                SALARY
                BONUS(1)
                OTHER
                    ANNUAL
                  COMPENSATION
                UNDERLYING
                    OPTION
                ALL
                    OTHER COMPENSATIONMichael
                    Sheppard
                2004
                158,000President,
                    Chief Executive
                2003
                119,000Officer,
                    Chief Operations
                2002
                0Officer
                    and action ChiefFinancial
                    OfficerRandolph
                    Graves, Vice
                2004
                0President
                2003
                02002
                0Mark
                    J. Allen,
                2004
                0Executive
                    Vice
                2003
                0President
                    (2)
                2002
                0
  54
 Gia
                    Bokuchava (3)
                2004
                56,250Chief
                    Technical Officer
                2003
                111,2502002
                105,000Timothy
                    R. Robinson (3)
                2004
                56,250
                40,0002003
                135,0002002
                135,000
 
 (1)
        Each
        of the Company’s executive officers also is eligible to receive cash bonuses to
        be awarded at the discretion of the Compensation Committee of the Board of
        Directors.
 
 (2)
        Resigned effective May 16, 2005.
 
 (3)
        Resigned effective May 31, 2004
 
 No
        options were granted to or exercised by named executive officers in 2004.
        No
        executive officers held any options at December 31, 2004.
 
 EMPLOYMENT
        CONTRACTS AND COMPENSATION POLICY
 
 Pursuant
        to the Tulix Agreement, Mr. Robinson, Mr. Bokuchava, and Ms. Doijashvili,
        on the
        one hand, and Global Matrechs, on the other hand, have agreed to release
        one
        another from all claims arising out of the three executives’ respective
        employment with or separation from Global Matrechs, other than Global Matrechs
        claims arising out of the Tulix Agreement or arising out of any fraud, willful
        misconduct or criminal act. As such, the Company does not intend to pursue
        any
        claims against Mr. Robinson, Mr. Bokuchava or Ms. Doijashvili relating to
        the
        non-solicitation or non-competition provisions of their employment agreements.
        In addition, the Company does not believe that these individuals will be
        in
        competition with the Company, given that Tulix and the Company will operate
        in
        different industries.
 
 Principal
        employees of the Company, including executive officers, are required to sign
        an
        agreement with the Company (i) restricting the ability of the employee to
        compete with the Company during his or her employment and for a period of
        eighteen months thereafter, (ii) restricting solicitation of customers and
        employees following employment with the Company, and (iii) providing for
        ownership and assignment of intellectual property rights to the
        Company.
 
 There
        were no changes to the Company’s executive compensation policies in
        2004.
 
 ITEM
        11.
        SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
 The
        following table presents information as of December 31, 2004:
 
 
 EQUITY
        COMPENSATION PLAN INFORMATION
 
 NUMBER
                  OF SECURITIESREMAINING
                  AVAILABLE FORFUTURE
                  ISSUANCENUMBER
                  OF SECURITIES
              WEIGHTED-AVERAGE
              UNDER
                  EQUITY COMPENSATIONTO
                  BE ISSUED UPON
              EXERCISE
                  PRICE OF
              PLANS
                  (EXCLUDINGEXERCISE
                  OF
              OUTSTANDING
              SECURITIESOUTSTANDING
                  OPTIONS,
              OPTIONS,
                  WARRANTS
              REFLECTED
                  INPLAN
                  CATEGORY
              WARRANTS
                  AND RIGHTS
              AND
                  RIGHTS
              COLUMN
                  (A))(a)
              (b)
              (c)Equity
                  Compensation Plansapproved
                  by securityholders
              329,419
              $2.61
              1,612,581Equity
                  Compensation Plansnot
                  approved bysecurity
                  holders
              N/A
              N/A
              N/ATotal
              329,419
              $2.61
              1,612,581
 
 55
 
 BENEFICIAL
        OWNERSHIP OF COMMON STOCK
 
 At
        the
        close of business on May 6, 2005, there were issued and outstanding 75,297,187
        shares of our common stock. The following table provides information regarding
        beneficial ownership of our common stock as of May 6, 2005 by:
 
 ·
              Each
                  person known by us to be the beneficial owner of more than five
                  percent of
                  our common stock;
 
 ·
              Each
                  of our directors;
 
 ·
              Each
                  executive officer named in the summary compensation table (including
                  one
                  former executive officer); and
 
 ·
              All
                  of our current directors and executive officers as a
                  group.
 
 The
        persons named in this table have sole voting and investment power with respect
        to the shares listed, except as otherwise indicated. The inclusion of shares
        listed as beneficially owned does not constitute an admission of beneficial
        ownership. Shares beneficially owned include shares that may be purchased
        through the exercise of options that vest within 60 days of May 6, 2005,
        and
        shares issuable upon conversion of preferred stock, subject to ownership
        limitations set forth in the applicable preferred stock
        designations.
 
 AMOUNT
                  AND NATURE OF
              PERCENT
                  OFNAME
                  OF BENEFICIAL OWNER (1)
              BENEFICIAL
                  OWNERSHIP
              CLASS
                  (2)Woodward,
                  LLC
              8,273,498
              9.9%(3)c/o
                  Navigator Management Ltd.,P.O.
                  Box 972 Road Town,British
                  Virgin Islands.Polymate,
                  Ltd.
              8,273,498
              9.9%(4)B’nai
                  Brith 16Haifa,
                  IsraelGreenfield
                  Capital Partners LLC
              8,273,498
              9.9%(4)90
                  Grove Street, Suite 206Ridgefield,
                  Connecticut 06877Eurotech,
                  Ltd.
              8,273,498
              9.9%(4)10306
                  Eaton Place, Suite 220Fairfax,
                  Virginia 22030Brittany
                  Capital Management
              4,905,000
              6.5%Cumberland
                  House,#27
                  Cumberland Street,P.O.
                  Box N-10818, Nassau,New
                  Providence Island, The BahamasMichael
                  Sheppard
              0
              *Randolph
                  Graves
              0
              *George
                  Bokuchava, Phd (5)
              64,559
              *Timothy
                  Robinson (6)
              50,668
              *Nino
                  Doijashvili (7)
              150,000
              *Mark
                  J. Allen
              10,000,000
              13.3%Current
                  Directors and Executive Officers
              10,000,000
              13.3%
 *
        Less
        than 1%.
 
 (1)
        Except as otherwise noted, the address of each named beneficial owner is
        c/o
        Global Matrechs, Inc., 90 Grove Street Suite 202 Ridgefield, CT
 06877.
 
 (2)
        Unless otherwise indicated below, the persons and entities named in the table
        have sole voting and sole investment power with respect to all shares of
        Common
        Stock beneficially owned, subject to community property laws where applicable.
        Shares of
  56
  Common
        Stock subject to options that are currently exercisable or exercisable within
        sixty days of following the date of this Report are deemed to be outstanding
        and
        to be beneficially owned by the person holding such options for the purpose
        of
        computing the percentage ownership of such person but are not treated as
        outstanding for the purpose of computing the percentage ownership of any
        other
        person.
 
 (3)
        Includes shares of common stock issuable upon conversion of Series G Preferred
        Stock. The Certificate of Designations for the Series G preferred stock
        prohibits any holder of Series G preferred stock from converting shares
        of
 Series
        G
        preferred stock into shares of common stock if such conversion would result
        in
        the Series G holder beneficially owning more than 9.9% of the outstanding
        shares
        of common stock, calculated in accordance with Rule 13d-3 promulgated under
        the
        Exchange Act.
 
 (4)
        Includes shares of common stock issuable upon conversion of Series H Preferred
        Stock. The Certificate of Designations for the Series H preferred stock
        prohibits any holder of Series H preferred stock from converting shares of
        Series H preferred stock into shares of common stock if such conversion would
        result in the Series H holder beneficially owning more than 9.9% of the
        outstanding shares of common stock, calculated in accordance with Rule 13d-3
        promulgated under the Exchange Act.
 
 (5)
        Includes 25,000 shares of Common Stock issuable upon the exercise of options
        outstanding at a weighted average exercise price of $4.48 per
        share.
 
 (6)
        Includes 46,428 shares of Common Stock issuable upon exercise of options
        outstanding at a weighted average exercise price of $0.59.
 
 (7)
        Includes 150,000 shares of Common Stock issuable upon the exercise of options
        outstanding at an exercise price of $0.75.
 
 CHANGES
        IN CONTROL
 
 The
        Company is not aware of any arrangements that could result in a change in
        control of the Company.
 
 ITEM
        12.
        CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
 TRANSACTIONS
        WITH MANAGEMENT AND OTHERS
 
 We
        have
        closed an agreement with Tulix to sell substantially all of the assets used
        in
        our hosting and web site maintenance business to Tulix. Timothy R. Robinson,
        Gia
        Bokuchava and Nino Doijashvili, who were officers and directors of both HomeCom
        and Tulix, own all of the outstanding stock of Tulix.
 
 We
        have
        also closed the transactions contemplated by the Exchange Agreement and entered
        into the License Agreement with Eurotech. Dr. Graves (and formerly, Mr.
        Hahnfeldt), who was appointed to serve on the Board of Directors of HomeCom
        and
        as an officer of our new Licensed Technologies Division in connection with
        the
        transactions between HomeCom and Eurotech, is an officer, director and
        shareholder of Eurotech.
 
 We
        entered into a Private Equity Credit Agreement with Brittany Capital Management
        LLC which, at the time, beneficially owned 5,640,000 shares of our common
        stock,
        representing approximately 37.6% of the outstanding shares of our common
        stock.
        The Private Equity Credit Agreement has since terminated in accordance with
        its
        terms. In June 2004, the Company entered into a second exchange agreement
        with
        Brittany to acquire 5,640,000 shares of the Company’s common stock at $0.10 per
        share. On September 24, 2004, Brittany received 490.5 shares of Series I
        convertible preferred stock, $0.01 par value per share, of the Company in
        exchange for 4,905,000 shares of common stock of the Company. Each share
        of
        Series I preferred stock has a stated value of $100 and is convertible into
        10,000 shares of common stock; provided, however, that a holder of Series
        I
        preferred stock may not convert their shares if the aggregate number of shares
        of common stock beneficially owned by the holder and its affiliates would
        exceed
        9.9% of the outstanding shares of common stock following such conversion
        (excluding, for purposes of this calculation, the unconverted shares of Series
        I
        preferred stock). In addition, Brittany agreed to loan the Company up to
        $100,000. As of December 31, 2004, the Company had borrowed
        $75,000.
 
 We
        have
        issued a Secured Promissory Note to McNab LLC, which owns the outstanding
        shares
        of our Series C, Series D, and Series E preferred stock. See “Item 6.
        Management’s Discussion and Analysis of Financial Condition and Results of
        Operations - Liquidity and Capital Resources,” for a summary of our arrangement
        with McNab LLC.
 
 On
        December 31, 2004, we entered into an Agreement and Plan of Merger with True
        To
        Form, and Mark J. Allen, the sole stockholder of True To Form. Whereby we
        acquired True To Form. Mr. Allen was at the time, and remains, a member of
        our
        board of directors. The consideration paid to Mr. Allen in the transaction
        consisted of:
  57
  ·
              the
                  issuance by True To Form of a secured note in the initial principal
                  amount
                  of $500,000; and
 
 ·
              the
                  issuance to Mr. Allen by Global Matrechs of 10,000,000 shares of
                  our
                  common stock.
 
 The
        number of shares of common stock issued in the transaction is subject to
        adjustment based on the price of our common stock and the revenues of the
        acquired business on December 31, 2006. In general, assuming that True To
        Form
        generates gross revenues of at least $3,000,000 for the twelve months ended
        December 31, 2006, the value of the shares issued in the transaction (based
        on
        the average closing price of the shares for the five trading days ended on
        or
        prior to December 31, 2006) will be at least $2.5 million but no more than
        $3.5
        million. If the value is less than $2.5 million, we are obligated to issue
        additional shares or, at our option, make cash payments to make up the
        difference. If the value of the shares is greater than $3.5 million, any
        excess
        shares will be returned to us and retired or held as treasury stock. If True
        To
        Form does not meet the revenue target, the share consideration will be a
        minimum
        of $2.0 million and a maximum of $3.0 million.
 
 In
        June
        2004, the Company entered into a second exchange agreement with Brittany
        to
        acquire 5,640,000 shares of the Company’s common stock at $0.10 per share. On
        September 24, 2004, Brittany received 490.5 shares of Series I convertible
        preferred stock, $0.01 par value per share, of the Company in exchange for
        4,905,000 shares of common stock of the Company. Each share of Series I
        preferred stock has a stated value of $100 and is convertible into 10,000
        shares
        of common stock; provided, however, that a holder of Series I preferred stock
        may not convert their shares if the aggregate number of shares of common
        stock
        beneficially owned by the holder and its affiliates would exceed 9.9% of
        the
        outstanding shares of common stock following such conversion (excluding,
        for
        purposes of this calculation, the unconverted shares of Series I preferred
        stock). In addition, Brittany agreed to loan the Company up to $100,000 .
        As of
        December 31, 2004, the Company had borrowed $75,000.
 
 ITEM
        13.
        EXHIBITS.
 
 Exhibit       Description
 
 2.1
              Asset
                  Purchase Agreement, dated January 31,2001, for the Acquisition
                  of Certain
                  Assets of HomeCom Communications, Inc., InsureRate, Inc. and FIMI
                  Securities, Inc. by Digital Insurance, Inc. (Incorporated byreference
                  to
                  Exhibit 2.1 of the Registrant’s Annual Report on Form 10-K for the year
                  ended December 31, 2000, as filed with the Commission on April
                  12,
                  2001.)
 
 2.2
              Asset
                  Purchase Agreement by and between Netzee, Inc. and HomeCom Communications,
                  Inc. dated as of March 15, 2001. (Incorporated by reference to
                  Exhibit 2.2
                  of the Registrant’s Annual Report on Form 10-K for the year ended December
                  31, 2000, as filed with the Commission on April 12,
                  2001.)
 
 2.3
              Asset
                  Purchase Agreement by and between HomeCom Communications, Inc.
                  and Tulix
                  Systems, Inc., dated March 24, 2003. (Incorporated by reference
                  to Exhibit
                  2.3 of the Registrant’s Annual Report on Form 10-K for the year ended
                  December 31, 2002, as filed with the Commission on April 15,
                  2003.)
 
 2.4
              License
                  and Exchange Agreement, dated March 27, 2003, by and among HomeCom
                  Communications, Inc., Eurotech, Ltd. and, with respect to Articles
                  V and
                  VI thereof, Polymate, Ltd. and Greenfield Capital Partners LLC.
                  (Incorporated by reference to Exhibit 2.4 of the Registrant’s Annual
                  Report on Form 10-K for the year ended December 31, 2002, as filed
                  with
                  the Commission on April 15, 2003.)
 
 2.5
              Amendment
                  No. 1 to License and Exchange Agreement, effective as of June 27,
                  2003, by
                  and among HomeCom Communications, Inc., Eurotech, Ltd., and, solely
                  with
                  respect to Article V and Article XI of the License and Exchange
                  Agreement,
                  Polymate, Ltd. and Greendfield Capital Partners LLC. (Incorporated
                  herein
                  by reference to Exhibit 10.6 of Form 10-Q of the Registrant for
                  the
                  quarter ended June 30, 2003, as filed with the Commission on September
                  25,
                  2003.)
 
 2.6
              Agreement
                  and plan of merger (Incorporated herein by reference to Exhibit
                  2.1 of
                  Form 8-K of the Registrant as filed with the Commission on January
                  6,
                  2005.)
 
 3.1
              Restated
                  Certificate of Incorporation of the Registrant. (Incorporated herein
                  by
                  reference to exhibit of the same number in the Form S-1 Registration
                  Statement of the Registrant (Registration No.
                  333-12219).)
 
 3.2
              Restated
                  Bylaws of the Registrant. (Incorporated herein by reference to
                  exhibit of
                  the same number in the Form S-1 Registration Statement of the Registrant
                  (Registration No. 333-12219).)
 
 3.3
              Certificate
                  of Designation of Series A Convertible Preferred stock. (Incorporated
                  herein by reference to exhibit of the same number in the Form S-1/A
                  Registration Statement of the Registrant (Registration No.
                  333-42599).)
 
 58
 3.4
              Certificate
                  of Designation of Series B Convertible Preferred Stock. (Incorporated
                  herein by reference to Exhibit 10.49 in the Form 10-K of the Registrant
                  filed with the Commission on March 31,
                  1999.)
 
 3.5
              Certificate
                  of Designation of Series C Convertible Preferred Stock. (Incorporated
                  herein by reference to exhibit of the same number in the Form S-1
                  Registration Statement of the Registrant (Registration No.
                  333-88491).)
 
 3.6
              Certificate
                  of Designation of Series D Convertible Preferred Stock. (Incorporated
                  herein by reference to exhibit of the same number in the Form S-1
                  Registration Statement of the Registrant (Registration No.
                  333-88491).)
 
 3.7
              Certificate
                  of Designation of Series E Convertible Preferred Stock. (Incorporated
                  herein by reference to exhibit of the same number in the Form S-3
                  Registration Statement of the Registrant (Registration No.
                  333-38326).)
 
 3.8
              Certificate
                  of Designation of Series F Convertible Preferred Stock. (Incorporated
                  by
                  reference to Exhibit 3.8 of the Registrant’s Annual Report on Form 10-K
                  for the year ended December 31, 2002, as filed with the Commission
                  on
                  April 15, 2003.)
 
 3.9
              Certificate
                  of Designation of Series G Convertible Preferred Stock. (Incorporated
                  by
                  reference to Exhibit 3.9 of the Registrant’s Annual Report on Form 10-K
                  for the year ended December 31, 2002, as filed with the Commission
                  on
                  April 15, 2003.)
 
 3.10
              Certificate
                  of Designation of Series H Convertible Preferred Stock. (Incorporated
                  herein by reference to Exhibit 3.1 of Form 10-Q of the Registrant
                  for the
                  quarter ended September 30, 2003, as filed with the Commission
                  on October
                  29, 2003.)
 
 3.11
              Certificate
                  of Amendment of Amended and Restated Certificate of Incorporation
                  of
                  HomeCom Communications, Inc., as filed with the Secretary of State
                  of
                  Delaware on June 14, 2004 (Incorporated herein by reference to
                  Exhibit 3.1
                  of Form 8-K of the Registrant as filed with the Commission on June
                  15,
                  2004).
 
 3.12
              Certificate
                  of Amendment of Certificate of Designations, Preferences and Rights
                  of
                  Series B Convertible Preferred Stock of HomeCom Communications,
                  Inc.
                  (Incorporated herein by reference to Exhibit 3.2 of Form 8-K of
                  the
                  Registrant as filed with the Commission on June 15,
                  2004.)
 
 3.13
              Certificate
                  of Amendment of Certificate of Designations, Preferences and Rights
                  of
                  Series C Convertible Preferred Stock of HomeCom Communications,
                  Inc.
                  (Incorporated herein by reference to Exhibit 3.3 of Form 8-K of
                  the
                  Registrant as filed with the Commission on June 15,
                  2004.)
 
 3.14
              Certificate
                  of Amendment of Certificate of Designations, Preferences and Rights
                  of
                  Series D Convertible Preferred Stock of HomeCom Communications,
                  Inc.
                  (Incorporated herein by reference to Exhibit 3.4 of Form 8-K of
                  the
                  Registrant as filed with the Commission on June 15,
                  2004.)
 
 3.15
              Certificate
                  of Amendment of Certificate of Designations, Preferences and Rights
                  of
                  Series E Convertible Preferred Stock of HomeCom Communications,
                  Inc.
                  (Incorporated herein by reference to Exhibit 3.5 of Form 8-K of
                  the
                  Registrant as filed with the Commission on June 15,
                  2004.)
 
 3.16
              Certificate
                  of designations, preferences and rights of Series I Convertible
                  Preferred
                  Stock (Incorporated herein by reference to Exhibit 3.1 of Form
                  10-Q of the
                  Registrant as filed with the Commission on August 16,
                  2004.)
 
 4.1
              See
                  Exhibits 3.1 and 3.2 for provisions of the Restated Certificate
                  of
                  Incorporation and Bylaws of the Registrant defining rights of the
                  holders
                  of Common Stock of the Registrant. (Incorporated herein by reference
                  to
                  exhibit of the same number in the Form S-1 Registration Statement
                  of the
                  Registrant (Registration No.
                  333-12219).)
 
 4.2
              Specimen
                  Stock Certificate. (Incorporated herein by reference to exhibit
                  of the
                  same number in the Form S-1 Registration Statement of the Registrant
                  (Registration No. 333-12219).)
 
 4.3
              Form
                  of Warrant. (Incorporated herein by reference to exhibit of the
                  same
                  number in the Form S-1 Registration Statement of the Registrant
                  (Registration No. 333-12219).)
 
 4.4
              2%
                  Secured Convertible Promissory Note dated October 19, 2004 issued
                  to
                  Southridge Partners LP (Incorporated herein by reference to Exhibit
                  4.1 of
                  Form 8-K of the Registrant as filed with the Commission on October
                  18,
                  2004.)
 
 59
 4.5
              Common
                  Stock Purchase Warrant dated October 19, 2004 issued to Southridge
                  Partners LP (Incorporated herein by reference to Exhibit 99.2 of
                  Form 8-K
                  of the Registrant as filed with the Commission on October 18,
                  2004.)
 
 4.6
              Form
                  of 2% Secured Convertible Promissory Note (Incorporated herein
                  by
                  reference to Exhibit 4.1 of Form 8-K of the Registrant as filed
                  with the
                  Commission on November 4, 2004.)
 
 4.7
              Form
                  of Common Stock Purchase Warrant (Incorporated herein by reference
                  to
                  Exhibit 99.2 of Form 8-K of the Registrant as filed with the Commission
                  on
                  November 4, 2004.)
 
 4.8
              2%
                  Secured Convertible Promissory Note dated December 3, 2004 issued
                  to Deer
                  Creek Fund, LLC (Incorporated herein by reference to Exhibit 99.1
                  of Form
                  8-K of the Registrant as filed with the Commission on December
                  8,
                  2004.)
 
 4.9
              Common
                  Stock Purchase Warrant dated December 3, 2004 issued to Deer Creek
                  Fund,
                  LLC (Incorporated herein by reference to Exhibit 99.2 of Form 8-K
                  of the
                  Registrant as filed with the Commission on December 8,
                  2004.)
 
 4.10
              Form
                  of Warrants issued to Trilogy Capital Partners, Inc. (Incorporated
                  herein
                  by reference to Exhibit 99.2 of Form 8-K of the Registrant as filed
                  with
                  the Commission on December 22,
                  2004.)
 
 4.11
              Form
                  of Warrants issued to Consultant (Incorporated herein by reference
                  to
                  Exhibit 99.1 of Form 8-K of the Registrant as filed with the Commission
                  on
                  December 29, 2004.)
 
 4.12
              Common
                  Stock Purchase Warrant issued to Southridge Partners LP (Incorporated
                  herein by reference to Exhibit 4.1 of Form 8-K of the Registrant
                  as filed
                  with the Commission on February 4,
                  2005.)
 
 4.13
              Nonnegotiable
                  2% Secured Convertible Promissory Note issued to Woodward LLC
                  (Incorporated herein by reference to Exhibit 10.4 of Form 8-K of
                  the
                  Registrant as filed with the Commission on February 4,
                  2005.)
 
 4.14
              Common
                  Stock Purchase Warrant issued to Southridge Partners LP (Incorporated
                  herein by reference to Exhibit 4.1 of Form 8-K of the Registrant
                  as filed
                  with the Commission on March 7,
                  2005.)
 
 4.15
              Nonnegotiable
                  2% Secured Convertible Promissory Note issued to Southridge Partners
                  LP
                  (Incorporated herein by reference to Exhibit 4.2 of Form 8-K of
                  the
                  Registrant as filed with the Commission on March 7,
                  2005.)
 
 4.16
              Common
                  Stock Purchase Warrant issued to Southridge Partners LP (Incorporated
                  herein by reference to Exhibit 4.1 of Form 8-K of the Registrant
                  as filed
                  with the Commission on April 15,
                  2005.)
 
 4.17
              Nonnegotiable
                  2% Secured Convertible Promissory Note issued to Southridge Partners
                  LP
                  (Incorporated herein by reference to Exhibit 4.2 of Form 8-K of
                  the
                  Registrant as filed with the Commission on April 15,
                  2005.)
 
 10.1
              HomeCom
                  Communications, Inc. Stock Option Plan and form of Stock Option
                  Certificate. (Incorporated herein by reference to exhibit of the
                  same
                  number in the Form S-1 Registration Statement of the Registrant
                  (Registration No. 333-12219).) (1)
 
 10.2
              HomeCom
                  Communications, Inc. Non-Employee Directors Stock Option Plan and
                  form of
                  Stock Option Certificate. (Incorporated herein by reference to
                  exhibit of
                  the same number in the Form S-1 Registration Statement of the Registrant
                  (Registration No. 333-12219).) (1)
 
 10.3
              Form
                  of Employment Agreement entered into between the Registrant and
                  each of
                  its executive officers except Harvey W. Sax. (Incorporated herein
                  by
                  reference to Exhibit 10.4 of the Form S-1 Registration Statement
                  of the
                  Registrant (Registration No. 333-12219).)
                  (1)
 
 10.4
              Lease
                  Agreement between Property Georgia OBJLW One Corporation and the
                  Registrant dated January 22, 1996. (Incorporated herein by reference
                  to
                  Exhibit 10.5 of the Form S-1 Registration Statement of the Registrant
                  (Registration No. 333-12219).)
 
 10.5
              Form
                  of Warrant to purchase 200,000 shares of Common Stock at an exercise
                  price
                  of $4.00 per share issued by the Registrant to First Granite Securities,
                  Inc. (Incorporated herein by reference to Exhibit 10.24 of the
                  Form S-1
                  Registration Statement of the Registrant (Registration No.
                  333-42599).)
 
 60
 10.6
              Form
                  of Warrant to purchase 200,000 shares of Common Stock at an exercise
                  price
                  of $6.00 per share issued by the Registrant to First Granite Securities,
                  Inc. (Incorporated herein by reference to Exhibit 10.25 of the
                  Form S-1
                  Registration Statement of the Registrant (Registration No.
                  333-42599).)
 
 10.7
              Form
                  of Securities Purchase Agreement between the Registrant, Sovereign
                  Partners, L.P. and Dominion Capital Fund, LTD. dated as of December
                  23,
                  1997. (Incorporated herein by reference to Exhibit 10.26 of the
                  Form S-1/A
                  Registration Statement of the Registrant (Registration No.
                  333-42599).)
 
 10.8
              Form
                  of Registration Rights Agreement between the Registrant, Sovereign
                  Partners, L.P. and Dominion Capital Fund, LTD. dated as of December
                  23,
                  1997. (Incorporated herein by reference to Exhibit 10.27 of the
                  Form S-1/A
                  Registration Statement of the Registrant (Registration No.
                  333-42599).)
 
 10.9
              Form
                  of Warrant to purchase 18,750 shares of Common Stock issued by
                  the
                  Registrant to Sovereign Partners, L.P. (Incorporated herein by
                  reference
                  to Exhibit 10.28 of the Form S-1/A Registration Statement of the
                  Registrant (Registration No.
                  333-42599).)
 
 10.10
              Form
                  of Warrant to purchase 56,250 shares of Common Stock issued by
                  the
                  Registrant to Dominion Capital Fund, LTD. (Incorporated herein
                  by
                  reference to Exhibit 10.29 of the Form S-1/A Registration Statement
                  of the
                  Registrant (Registration No.
                  333-42599).)
 
 10.11
              Form
                  of Warrant to purchase 25,000 shares of Common Stock for an aggregate
                  purchase price of $92,500 by the Registrant to Hamilton Dorsey
                  Alston
                  Company. (Incorporated herein by reference to Exhibit 10.34 of
                  the Form
                  S-1/A Registration Statement of the Registrant (Registration No.
                  333-42599).)
 
 10.12
              Form
                  of Warrant to purchase 50,000 shares of Common Stock issued by
                  the
                  Registrant to The Malachi Group, Inc. (Incorporated herein by reference
                  to
                  Exhibit 10.37 of the Form S-1 Registration Statement of the Registrant
                  filed (Registration No.
                  333-45383).)
 
 10.13
              Letter
                  Agreement, dated April 17, 1998 by and among Sovereign Partners,
                  L.P.,
                  Dominion Capital Fund and HomeCom. (Incorporated herein by reference
                  to
                  Exhibit 10 of the Form 8-K of the Registrant filed with the Commission
                  on
                  April 28, 1998.)
 
 10.14
              Securities
                  Purchase Agreement dated as of March 25, 1999 by and among HomeCom
                  Communications, Inc. and CPR (USA), Inc., Liberty View Funds, L.P.,
                  and
                  Liberty View Fund, L.L.C. (Incorporated herein by reference to
                  Exhibit
                  10.50 of the Form 10-K of the Registrant filed with the Commission
                  on
                  March 31, 1999.)
 
 10.15
              Registration
                  Rights Agreement dated as of March 25, 1999 by and among HomeCom
                  Communications, Inc. and CPR (USA), Inc., Liberty View Funds, L.P.,
                  and
                  Liberty View Fund, L.L.C. (Incorporated herein by reference to
                  Exhibit
                  10.51 of the Form 10-K of the Registrant filed with the Commission
                  on
                  March 31, 1999.)
 
 10.16
              Transfer
                  Agent Instructions dated as of March 25, 1999. (Incorporated herein
                  by
                  reference to Exhibit 10.52 of the Form 10-K of the Registrant filed
                  with
                  the Commission on March 31, 1999.)
 
 10.17
              Transfer
                  Agent Legal Opinion dated as of March 25, 1999. (Incorporated herein
                  by
                  reference to Exhibit 10.53 of the Form 10-K of the Registrant filed
                  with
                  the Commission on March 31, 1999.)
 
 10.18
              Warrant
                  Agreement, dated as of March 25, 1999, by and among CPR (USA),
                  Inc. and
                  HomeCom Communications, Inc. (Incorporated herein by reference
                  to Exhibit
                  10.55 of the Registration Statement on Form S-3 of the Registrant
                  (Registration No. 333-79761).)
 
 10.19
              Warrant
                  Agreement, dated as of March 25, 1999, by and among Liberty View
                  Fund,
                  L.L.C. and HomeCom Communications, Inc. (Incorporated herein by
                  reference
                  to Exhibit 10.56 of the Registration Statement on Form S-3 of the
                  Registrant (Registration No.
                  333-79761).)
 
 10.20
              Warrant
                  Agreement, dated as of March 25, 1999, by and among Liberty View
                  Funds,
                  L.P. and HomeCom Communications, Inc. (Incorporated herein by reference
                  to
                  Exhibit 10.57 of the Registration Statement on Form S-3 of the
                  Registrant
                  (Registration No. 333-79761).)
 
 61
 10.21
              Warrant
                  Agreement, dated as of March 25, 1999, by and among J.P. Turner
&
                  Company, L.L.C and HomeCom Communications, Inc. (Incorporated herein
                  by
                  reference to Exhibit 10.59 of the Registration Statement on Form
                  S-3 of
                  the Registrant (Registration No.
                  333-79761).)
 
 10.22
              Securities
                  Purchase Agreement dated as of July 23, 1999 by and among HomeCom
                  Communications, Inc. and MacNab LLC. (Incorporated herein by reference
                  to
                  Exhibit 10.65 of the Form S-1 Registration Statement of the Registrant
                  (Registration No. 333-88491).)
 
 10.23
              Registration
                  Rights Agreement dated as of July 23, 1999 by and among HomeCom
                  Communications, Inc. and MacNab LLC. (Incorporated herein by reference
                  to
                  Exhibit 10.66 of the Form S-1 Registration Statement of the Registrant
                  (Registration No. 333-88491).)
 
 10.24
              Transfer
                  Agent Instructions dated as of September 28, 1999. (Incorporated
                  herein by
                  reference to Exhibit 10.67 of the Form S-1 Registration Statement
                  of the
                  Registrant (Registration No.
                  333-88491).)
 
 10.25
              Transfer
                  Agent Legal Opinion dated as of July 23, 1999. (Incorporated herein
                  by
                  reference to Exhibit 10.68 of the Form S-1 Registration Statement
                  of the
                  Registrant (Registration No.
                  333-88491).)
 
 10.26
              Placement
                  Agency Agreement dated as of July 23, 1999 by and between HomeCom
                  Communications, Inc. and Greenfield Capital Partners. (Incorporated
                  herein
                  by reference to Exhibit 10.69 of the Form S-1 Registration Statement
                  of
                  the Registrant (Registration No.
                  333-88491).)
 
 10.27
              Warrant
                  Agreement, dated as of July 23, 1999, by and between HomeCom
                  Communications, Inc. and MacNab LLC. (Incorporated herein by reference
                  to
                  Exhibit 10.70 of the Form S-1 Registration Statement of the Registrant
                  (Registration No. 333-88491).)
 
 10.28
              Securities
                  Purchase Agreement dated as of September 27, 1999 by and among
                  HomeCom
                  Communications, Inc. and Jackson LLC. (Incorporated herein by reference
                  to
                  Exhibit 10.71 of the Form S-1 Registration Statement of the Registrant
                  (Registration No. 333-88491).)
 
 10.29
              Registration
                  Rights Agreement dated as of September 27, 1999 by and among HomeCom
                  Communications, Inc. and Jackson LLC. (Incorporated herein by reference
                  to
                  Exhibit 10.72 of the Form S-1 Registration Statement of the Registrant
                  (Registration No. 333-88491).)
 
 10.30
              Transfer
                  Agent Instructions dated as of September 28, 1999. (Incorporated
                  herein by
                  reference to Exhibit 10.73 of the Form S-1 Registration Statement
                  of the
                  Registrant (Registration No.
                  333-88491).)
 
 10.31
              Transfer
                  Agent Legal Opinion dated as of September 28, 1999. (Incorporated
                  herein
                  by reference to Exhibit 10.74 of the Form S-1 Registration Statement
                  of
                  the Registrant (Registration No.
                  333-88491).)
 
 10.32
              Placement
                  Agency Agreement dated as of September 27, 1999 by and between
                  HomeCom
                  Communications, Inc. and Greenfield Capital Partners. (Incorporated
                  herein
                  by reference to Exhibit 10.75 of the Form S-1 Registration Statement
                  of
                  the Registrant (Registration No.
                  333-88491).)
 
 10.33
              Warrant
                  Agreement, dated as of September 27, 1999, by and between HomeCom
                  Communications, Inc. and Jackson LLC. (Incorporated herein by reference
                  to
                  Exhibit 10.76 of the Form S-1 Registration Statement of the Registrant
                  (Registration No. 333-88491).)
 
 10.34
              Securities
                  Purchase Agreement dated as of April 14, 2000 by and among HomeCom
                  Communications, Inc. and McNab LLC. (Incorporated herein by reference
                  to
                  Exhibit 10.86 of the Form S-3 Registration Statement of the Registrant
                  (Registration No. 333-38326).)
 
 10.35
              Registration
                  Rights Agreement dated as of April 14, 2000 by and among HomeCom
                  Communications, Inc. and McNab LLC. (Incorporated herein by reference
                  to
                  Exhibit 10.87 of the Form S-3 Registration Statement of the Registrant
                  (Registration No. 333-38326).)
 
 10.36
              Transfer
                  Agent Instructions dated as of April 14, 2000. (Incorporated herein
                  by
                  reference to Exhibit 10.88 of the Form S-3 Registration Statement
                  of the
                  Registrant (Registration No.
                  333-38326).)
 
 62
 10.37
              Transfer
                  Agent Legal Opinion dated as of April 14, 2000. (Incorporated herein
                  by
                  reference to Exhibit 10.89 of the Form S-3 Registration Statement
                  of the
                  Registrant (Registration No.
                  333-38326).)
 
 10.38
              Warrant
                  Agreement, dated as of April 14, 2000, by and between HomeCom
                  Communications, Inc. and McNab LLC. (Incorporated herein by reference
                  to
                  Exhibit 10.90 of the Form S-3 Registration Statement of the Registrant
                  (Registration No. 333-38326).)
 
 10.39
              Employment
                  Agreement between the Registrant and Timothy R. Robinson dated
                  August 1,
                  2000. (Incorporated herein by reference to Exhibit 10.86 of the
                  Form 10-K
                  of the Registrant filed with the Commission on April 12, 2001.)
                  (1)
 
 10.40
              Amendment
                  to employment Agreement between Registrant and George Bokchava
                  dated
                  January 10, 2001. (Incorporated herein by reference to Exhibit
                  10.87 of
                  the Form 10-K of the Registrant filed with the Commission on April
                  12,
                  2001.)
 
 10.41
              Separation
                  and Release Agreement, dated March 29, 2001, between HomeCom
                  Communications, Inc. and Harvey Sax. (Incorporated herein by reference
                  to
                  Exhibit 10.1 of Form 10-Q of the Registrant filed with the Commission
                  on
                  May 21, 2001.)
 
 10.42
              License
                  Agreement, dated May 22, 2003, by and between HomeCom Communications,
                  Inc.
                  and Eurotech, Ltd. (Incorporated by reference to Exhibit 10.1 of
                  the
                  Registrant’s Current Report on Form 8-K, as filed with the Commission on
                  June 6, 2003.)
 
 10.43
              Secured
                  Promissory Note, dated May 22 2003, by HomeCom Communications,
                  Inc. in
                  favor of MacNab LLC. (Incorporated by reference to Exhibit 10.2
                  of the
                  Registrant’s Current Report on Form 8-K, as filed with the Commission on
                  June 6, 2003.)
 
 10.44
              Security
                  Agreement, dated May 22, 2003, by and between HomeCom Communications,
                  Inc.
                  and MacNab LLC. (Incorporated by reference to Exhibit 10.3 of the
                  Registrant’s Current Report on Form 8-K, as filed with the Commission on
                  June 6, 2003.)
 
 10.45
              Stock
                  Exchange Agreement, effective as of June 27, 2003, by and among
                  HomeCom
                  Communications, Inc., Eurotech, Ltd., Greenfield Capital Partners
                  LLC and
                  Polymate, Ltd. (Incorporated herein by reference to Exhibit 10.4
                  of Form
                  10-Q of the Registrant for the quarter ended June 30, 2003, as
                  filed with
                  the Commission on September 25,
                  2003.)
 
 10.46
              Amendment
                  No. 1 to License Agreement, effective as of June 27, 2003, by and
                  among
                  HomeCom Communications, Inc. and Eurotech, Ltd. (Incorporated herein
                  by
                  reference to Exhibit 10.5 of Form 10-Q of the Registrant for the
                  quarter
                  ended June 30, 2003, as filed with the Commission on September
                  25,
                  2003.)
 
 10.47
              Private
                  Equity Credit Agreement, dated September 30, 2003, by and between
                  HomeCom
                  Communications, Inc. and Brittany Capital Management LLC. (Incorporated
                  herein by reference to Exhibit 10.1 of Form 10-Q of the Registrant
                  for the
                  quarter ended September 30, 2003, as filed with the Commission
                  on October
                  29, 2003.)
 
 10.48
              Registration
                  Rights Agreement, dated September 30, 2003, by and between HomeCom
                  Communications, Inc. and Brittany Capital Management LLC. (Incorporated
                  herein by reference to Exhibit 10.2 of Form 10-Q of the Registrant
                  for the
                  quarter ended September 30, 2003, as filed with the Commission
                  on October
                  29, 2003.)
 
 10.49
              License
                  Agreement, dated as of August 15, 2003, by and between HomeCom
                  Communications, Inc. and Kristul Group. (Incorporated herein by
                  reference
                  to Exhibit 10.49 of Form 10-K of the Registrant for the year ended
                  December 31, 2003, as filed with the Commission on May 13,
                  2004.)
 
 10.50
              Assignment
                  and Consent Agreement, dated November 17, 2003, by and among Joseph
                  Kristul, Kristul Group, Environmental Friendly Materials, GMBH
                  and HomeCom
                  Communications, Inc. (Incorporated herein by reference to Exhibit
                  10.50 of
                  Form 10-K of the Registrant for the year ended December 31, 2003,
                  as filed
                  with the Commission on May 13,
                  2004.)
 
 10.51
              Secured
                  Promissory Note, dated May 31, 2004, by Tulix Systems, Inc. in
                  favor of
                  HomeCom Communications, Inc. (Incorporated herein by reference
                  to Exhibit
                  10.1 of Form 8-K of the Registrant as filed with the Commission
                  June 15,
                  2004.)
 
 10.52
              Security
                  Agreement, dated May 31, 2004, by and between HomeCom Communications,
                  Inc.
                  and Tulix Systems, Inc.(Incorporated herein by reference to Exhibit
                  10.2
                  of Form 8-K of the Registrant as filed with the Commission June
                  15,
                  2004.)
 
 63
 10.53
              Shareholders’
                  Agreement, dated May 31, 2004, by and among HomeCom Communications,
                  Inc.,
                  Tulix Systems, Inc., Gia Bokuchava, Nino Doijashvili and Timothy
                  R.
                  Robinson (Incorporated herein by reference to Exhibit 10.3 of Form
                  8-K of
                  the Registrant as filed with the Commission June 15,
                  2004.)
 
 10.54
              Indemnification
                  Agreement, dated May 31, 2004, by and between HomeCom Communications,
                  Inc.
                  and Tulix Systems, Inc. (Incorporated herein by reference to Exhibit
                  10.4
                  of Form 8-K of the Registrant as filed with the Commission June
                  15,
                  2004.)
 
 10.55
              Second
                  Exchange Agreement with Brittany Capital Management Ltd. dated
                  June 1,
                  2004 (Incorporated herein by reference to Exhibit 10.1 of Form
                  10-Q of the
                  Registrant as filed with the Commission August 16,
                  2004.)
 
 10.56
              Convertible
                  Note issued to Brittany Capital Management, Ltd. dated June 1,
                  2004
                  (Incorporated herein by reference to Exhibit 10.2 of Form 10-Q
                  of the
                  Registrant as filed with the Commission August 16,
                  2004.)
 
 10.57
              Securities
                  Purchase Agreement dated October 19, 2004 between Global Matrechs,
                  Inc.
                  and Southridge Partners LP (Incorporated herein by reference to
                  Exhibit
                  99.1 of Form 8-K of the Registrant as filed with the Commission
                  on October
                  18, 2004.)
 
 10.58
              Form
                  of Securities Purchase Agreement (Incorporated herein by reference
                  to
                  Exhibit 99.1 of Form 8-K of the Registrant as filed with the Commission
                  on
                  November 4, 2004.)
 
 10.59
              Securities
                  Purchase Agreement dated December 3, 2004 between Global Matrechs,
                  Inc.
                  and Deer Creek Fund, LLC (Incorporated herein by reference to Exhibit
                  99.3
                  of Form 8-K of the Registrant as filed with the Commission on December
                  8,
                  2004.)
 
 10.60
              Letter
                  of Engagement with Trilogy Capital Partners, Inc. (Incorporated
                  herein by
                  reference to Exhibit 99.1 of Form 8-K of the Registrant as filed
                  with the
                  Commission on December 22, 2004.)
 
 10.61
              Secured
                  note (Incorporated herein by reference to Exhibit 10.1 of Form
                  8-K of the
                  Registrant as filed with the Commission on January 6,
                  2005.)
 
 10.62
              Security
                  agreement (Incorporated herein by reference to Exhibit 10.2 of
                  Form 8-K of
                  the Registrant as filed with the Commission on January 6,
                  2005.)
 
 10.63
              Guaranty
                  (Incorporated herein by reference to Exhibit 10.3 of Form 8-K of
                  the
                  Registrant as filed with the Commission on January 6,
                  2005.)
 
 10.64
              Collateral
                  pledge agreement (Incorporated herein by reference to Exhibit 10.4
                  of Form
                  8-K of the Registrant as filed with the Commission on January 6,
                  2005.)
 
 10.65
              Second
                  Securities Purchase Agreement with Southridge Partners LP (Incorporated
                  herein by reference to Exhibit 10.1 of Form 8-K of the Registrant
                  as filed
                  with the Commission on February 4,
                  2005.)
 
 10.66
              Nonnegotiable
                  2% Secured Convertible Promissory Note issued to Southridge Partners
                  LP
                  (Incorporated herein by reference to Exhibit 10.2 of Form 8-K of
                  the
                  Registrant as filed with the Commission on February 4,
                  2005.)
 
 10.67
              Exchange
                  Agreement with Woodward LLC (Incorporated herein by reference to
                  Exhibit
                  10.3 of Form 8-K of the Registrant as filed with the Commission
                  on
                  February 4, 2005.)
 
 10.68
              Second
                  Securities Purchase Agreement (Incorporated herein by reference
                  to Exhibit
                  10.1 of Form 8-K of the Registrant as filed with the Commission
                  on April
                  15, 2005.)
 
 21.1
              List
                  of Subsidiaries. (Incorporated herein by reference to exhibit of
                  the same
                  number in the Form S-1 Registration Statement of the Registrant
                  (Registration No. 333-42599).)
 
 31.1
              Certification
                  by CEO and CFO of Periodic Report Pursuant to Rule 13a-14(a) or
                  Rule
                  15d-14(a)*
 
 32.1
              Certification
                  pursuant to Section 906 of the Sarbanes-Oxley Act of
                  2002.*
 
 64
 *
        Filed
        herewith
 
 (1)
              Indicates
                  a management contract or compensatory plan or arrangement required
                  to be
                  filed as an exhibit to this Form
                  10-KSB.
 
 ITEM
        14.
        PRINCIPAL ACCOUNTING FEES AND SERVICES
 
 The
        following table sets forth fees billed to us by our auditors during the fiscal
        years ended December 31, 2004 and December 31, 2003 for: (i) services rendered
        for the audit of our annual financial statements and the review of our quarterly
        financial statements, (ii) services by our auditor that are reasonably related
        to the performance of the audit or review of our financial statements and
        that
        are not reported as Audit Fees, (iii) services rendered in connection with
        tax
        compliance, tax advice and tax planning, and (iv) all other fees for services
        rendered.
 
 
 December
                  31,
              
              December
                  31,2004
              
              2003(i)
                  Audit Fees
              
              $
              40,000
              
              $
              40,000(ii)
                  Audit Related Fees
              
              $
              0
              
              $
              0(iii)
                  Tax Fees
              
              $
              6,000
              
              $
              6,000(iv)
                  All Other Fees
              
              $
              0
              
              $
              0
 
 AUDIT
        FEES. Consists of fees billed for professional services rendered for the
        audit
        of Homecom Communications, Inc.’s financial statements and review of the interim
        consolidated financial statements included in quarterly reports and services
        that are normally provided by Sherb & Company, LLC in connection with
        statutory and regulatory filings or engagements.
 
 AUDIT-RELATED
        FEES. Consists of fees billed for assurance and related services that are
        reasonably related to the performance of the audit or review of Homecom
        Communications, Inc.’s financial statements and are not reported under “Audit
        Fees.”
 
 TAX
        FEES.
        Consists of fees billed for professional services for tax compliance, tax
        advice
        and tax planning.
 
 ALL
        OTHER
        FEES. Consists of fees for products and services other than the services
        reported above. There were no management consulting services provided in
        fiscal
        2004 or 2003.
 
 PRE-APPROVAL
        POLICIES AND PROCEDURES. The Company does not have an audit committee. The
        Board
        of Directors has approved Sherb & Company, LLC to serve as the Company’s
        outside accounting firm. It is the policy of the Company that all services
        provided by Sherb & Company, LLC shall be pre-approved by the Board of
        Directors. Sherb & Company, LLC will provide the Board of Directors with an
        engagement letter outlining the scope of the audit services proposed to be
        performed during the fiscal year and the estimated fees for such services.
        Pre-approval of audit and permitted non-audit services may be given by the
        Board
        of Directors at any time up to one year before the commencement of such services
        by Sherb & Company, LLC. Pre-approval must be detailed as to the particular
        services to be provided. Pre-approval may be given for a category of services,
        provided that (i) the category is narrow enough and detailed enough that
        management of the Company will not be called upon to make a judgment as to
        whether a particular proposed service by Sherb & Company, LLC fits within
        such pre-approved category of services and (ii) the Board of Directors also
        establishes a limit on the fees for such pre-approved category of
        services.
 
 
 65
  SIGNATURES
 
 In
        accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
        this report to be signed on its behalf by the undersigned, thereunto duly
        authorized.
 
 GLOBAL
                  MATRECHS, INC.Date:
                  October 7, 2005
              By:
              /s/Michael
                  SheppardMichael
                SheppardTitle:
                  President, Chief Executive Officer,
                Chief
                  Operating Officer and acting Chief
                Financial
                  Officer
 
 In
        accordance with the Exchange Act, this report has been signed below by the
        following persons on behalf of the registrant and in the capacities and on
        the
        dates indicated.
 
 Date:
                  October 7, 2005
              By:
              /s/Michael
                  SheppardMichael
                SheppardTitle:
                  President, Chief Executive Officer,
                Chief
                  Operating Officer and acting Chief
                Financial
                  Officer (principal executive
                officer
                  and principal accounting officer)
 
 Date:
                  October 7, 2005
              By:
              /s/ Mark
                  AllenMark
                AllenTitle:
                  Director
 
 
  66
  EXHIBIT
        INDEX
 
 Exhibit
              Description
  2.1
              Asset
                  Purchase Agreement, dated January 31,2001, for the Acquisition
                  of Certain
                  Assets of HomeCom Communications, Inc., InsureRate, Inc. and FIMI
                  Securities, Inc. by Digital Insurance, Inc. (Incorporated byreference
                  to
                  Exhibit 2.1 of the Registrant’s Annual Report on Form 10-K for the year
                  ended December 31, 2000, as filed with the Commission on April
                  12,
                  2001.)
 
 2.2
              Asset
                  Purchase Agreement by and between Netzee, Inc. and HomeCom Communications,
                  Inc. dated as of March 15, 2001. (Incorporated by reference to
                  Exhibit 2.2
                  of the Registrant’s Annual Report on Form 10-K for the year ended December
                  31, 2000, as filed with the Commission on April 12,
                  2001.)
 
 2.3
              Asset
                  Purchase Agreement by and between HomeCom Communications, Inc.
                  and Tulix
                  Systems, Inc., dated March 24, 2003. (Incorporated by reference
                  to Exhibit
                  2.3 of the Registrant’s Annual Report on Form 10-K for the year ended
                  December 31, 2002, as filed with the Commission on April 15,
                  2003.)
 
 2.4
              License
                  and Exchange Agreement, dated March 27, 2003, by and among HomeCom
                  Communications, Inc., Eurotech, Ltd. and, with respect to Articles
                  V and
                  VI thereof, Polymate, Ltd. and Greenfield Capital Partners LLC.
                  (Incorporated by reference to Exhibit 2.4 of the Registrant’s Annual
                  Report on Form 10-K for the year ended December 31, 2002, as filed
                  with
                  the Commission on April 15, 2003.)
 
 2.5
              Amendment
                  No. 1 to License and Exchange Agreement, effective as of June 27,
                  2003, by
                  and among HomeCom Communications, Inc., Eurotech, Ltd., and, solely
                  with
                  respect to Article V and Article XI of the License and Exchange
                  Agreement,
                  Polymate, Ltd. and Greendfield Capital Partners LLC. (Incorporated
                  herein
                  by reference to Exhibit 10.6 of Form 10-Q of the Registrant for
                  the
                  quarter ended June 30, 2003, as filed with the Commission on September
                  25,
                  2003.)
 
 2.6
              Agreement
                  and plan of merger (Incorporated herein by reference to Exhibit
                  2.1 of
                  Form 8-K of the Registrant as filed with the Commission on January
                  6,
                  2005.)
 
 3.1
              Restated
                  Certificate of Incorporation of the Registrant. (Incorporated herein
                  by
                  reference to exhibit of the same number in the Form S-1 Registration
                  Statement of the Registrant (Registration No.
                  333-12219).)
 
 3.2
              Restated
                  Bylaws of the Registrant. (Incorporated herein by reference to
                  exhibit of
                  the same number in the Form S-1 Registration Statement of the Registrant
                  (Registration No. 333-12219).)
 
 3.3
              Certificate
                  of Designation of Series A Convertible Preferred stock. (Incorporated
                  herein by reference to exhibit of the same number in the Form S-1/A
                  Registration Statement of the Registrant (Registration No.
                  333-42599).)
 
 3.4
              Certificate
                  of Designation of Series B Convertible Preferred Stock. (Incorporated
                  herein by reference to Exhibit 10.49 in the Form 10-K of the Registrant
                  filed with the Commission on March 31,
                  1999.)
 
 3.5
              Certificate
                  of Designation of Series C Convertible Preferred Stock. (Incorporated
                  herein by reference to exhibit of the same number in the Form S-1
                  Registration Statement of the Registrant (Registration No.
                  333-88491).)
 
 3.6
              Certificate
                  of Designation of Series D Convertible Preferred Stock. (Incorporated
                  herein by reference to exhibit of the same number in the Form S-1
                  Registration Statement of the Registrant (Registration No.
                  333-88491).)
 
 3.7
              Certificate
                  of Designation of Series E Convertible Preferred Stock. (Incorporated
                  herein by reference to exhibit of the same number in the Form S-3
                  Registration Statement of the Registrant (Registration No.
                  333-38326).)
 
 3.8
              Certificate
                  of Designation of Series F Convertible Preferred Stock. (Incorporated
                  by
                  reference to Exhibit 3.8 of the Registrant’s Annual Report on Form 10-K
                  for the year ended December 31, 2002, as filed with the Commission
                  on
                  April 15, 2003.)
 
 3.9
              Certificate
                  of Designation of Series G Convertible Preferred Stock. (Incorporated
                  by
                  reference to Exhibit 3.9 of the Registrant’s Annual Report on Form 10-K
                  for the year ended December 31, 2002, as filed with the Commission
                  on
                  April 15, 2003.)
 
 67
 3.10
              Certificate
                  of Designation of Series H Convertible Preferred Stock. (Incorporated
                  herein by reference to Exhibit 3.1 of Form 10-Q of the Registrant
                  for the
                  quarter ended September 30, 2003, as filed with the Commission
                  on October
                  29, 2003.)
 
 3.11
              Certificate
                  of Amendment of Amended and Restated Certificate of Incorporation
                  of
                  HomeCom Communications, Inc., as filed with the Secretary of State
                  of
                  Delaware on June 14, 2004 (Incorporated herein by reference to
                  Exhibit 3.1
                  of Form 8-K of the Registrant as filed with the Commission on June
                  15,
                  2004).
 
 3.12
              Certificate
                  of Amendment of Certificate of Designations, Preferences and Rights
                  of
                  Series B Convertible Preferred Stock of HomeCom Communications,
                  Inc.
                  (Incorporated herein by reference to Exhibit 3.2 of Form 8-K of
                  the
                  Registrant as filed with the Commission on June 15,
                  2004.)
 
 3.13
              Certificate
                  of Amendment of Certificate of Designations, Preferences and Rights
                  of
                  Series C Convertible Preferred Stock of HomeCom Communications,
                  Inc.
                  (Incorporated herein by reference to Exhibit 3.3 of Form 8-K of
                  the
                  Registrant as filed with the Commission on June 15,
                  2004.)
 
 3.14
              Certificate
                  of Amendment of Certificate of Designations, Preferences and Rights
                  of
                  Series D Convertible Preferred Stock of HomeCom Communications,
                  Inc.
                  (Incorporated herein by reference to Exhibit 3.4 of Form 8-K of
                  the
                  Registrant as filed with the Commission on June 15,
                  2004.)
 
 3.15
              Certificate
                  of Amendment of Certificate of Designations, Preferences and Rights
                  of
                  Series E Convertible Preferred Stock of HomeCom Communications,
                  Inc.
                  (Incorporated herein by reference to Exhibit 3.5 of Form 8-K of
                  the
                  Registrant as filed with the Commission on June 15,
                  2004.)
 
 3.16
              Certificate
                  of designations, preferences and rights of Series I Convertible
                  Preferred
                  Stock (Incorporated herein by reference to Exhibit 3.1 of Form
                  10-Q of the
                  Registrant as filed with the Commission on August 16,
                  2004.)
 
 4.1
              See
                  Exhibits 3.1 and 3.2 for provisions of the Restated Certificate
                  of
                  Incorporation and Bylaws of the Registrant defining rights of the
                  holders
                  of Common Stock of the Registrant. (Incorporated herein by reference
                  to
                  exhibit of the same number in the Form S-1 Registration Statement
                  of the
                  Registrant (Registration No.
                  333-12219).)
 
 4.2
              Specimen
                  Stock Certificate. (Incorporated herein by reference to exhibit
                  of the
                  same number in the Form S-1 Registration Statement of the Registrant
                  (Registration No. 333-12219).)
 
 4.3
              Form
                  of Warrant. (Incorporated herein by reference to exhibit of the
                  same
                  number in the Form S-1 Registration Statement of the Registrant
                  (Registration No. 333-12219).)
 
 4.4
              2%
                  Secured Convertible Promissory Note dated October 19, 2004 issued
                  to
                  Southridge Partners LP (Incorporated herein by reference to Exhibit
                  4.1 of
                  Form 8-K of the Registrant as filed with the Commission on October
                  18,
                  2004.)
 
 4.5
              Common
                  Stock Purchase Warrant dated October 19, 2004 issued to Southridge
                  Partners LP (Incorporated herein by reference to Exhibit 99.2 of
                  Form 8-K
                  of the Registrant as filed with the Commission on October 18,
                  2004.)
 
 4.6
              Form
                  of 2% Secured Convertible Promissory Note (Incorporated herein
                  by
                  reference to Exhibit 4.1 of Form 8-K of the Registrant as filed
                  with the
                  Commission on November 4, 2004.)
 
 4.7
              Form
                  of Common Stock Purchase Warrant (Incorporated herein by reference
                  to
                  Exhibit 99.2 of Form 8-K of the Registrant as filed with the Commission
                  on
                  November 4, 2004.)
 
 4.8
              2%
                  Secured Convertible Promissory Note dated December 3, 2004 issued
                  to Deer
                  Creek Fund, LLC (Incorporated herein by reference to Exhibit 99.1
                  of Form
                  8-K of the Registrant as filed with the Commission on December
                  8,
                  2004.)
 
 4.9
              Common
                  Stock Purchase Warrant dated December 3, 2004 issued to Deer Creek
                  Fund,
                  LLC (Incorporated herein by reference to Exhibit 99.2 of Form 8-K
                  of the
                  Registrant as filed with the Commission on December 8,
                  2004.)
 
 4.10
              Form
                  of Warrants issued to Trilogy Capital Partners, Inc. (Incorporated
                  herein
                  by reference to Exhibit 99.2 of Form 8-K of the Registrant as filed
                  with
                  the Commission on December 22,
                  2004.)
 
 4.11
              Form
                  of Warrants issued to Consultant (Incorporated herein by reference
                  to
                  Exhibit 99.1 of Form 8-K of the Registrant as filed with the Commission
                  on
                  December 29, 2004.)
 
 68
 4.12
              Common
                  Stock Purchase Warrant issued to Southridge Partners LP (Incorporated
                  herein by reference to Exhibit 4.1 of Form 8-K of the Registrant
                  as filed
                  with the Commission on February 4,
                  2005.)
 
 4.13
              Nonnegotiable
                  2% Secured Convertible Promissory Note issued to Woodward LLC
                  (Incorporated herein by reference to Exhibit 10.4 of Form 8-K of
                  the
                  Registrant as filed with the Commission on February 4,
                  2005.)
 
 4.14
              Common
                  Stock Purchase Warrant issued to Southridge Partners LP (Incorporated
                  herein by reference to Exhibit 4.1 of Form 8-K of the Registrant
                  as filed
                  with the Commission on March 7,
                  2005.)
 
 4.15
              Nonnegotiable
                  2% Secured Convertible Promissory Note issued to Southridge Partners
                  LP
                  (Incorporated herein by reference to Exhibit 4.2 of Form 8-K of
                  the
                  Registrant as filed with the Commission on March 7,
                  2005.)
 
 4.16
              Common
                  Stock Purchase Warrant issued to Southridge Partners LP (Incorporated
                  herein by reference to Exhibit 4.1 of Form 8-K of the Registrant
                  as filed
                  with the Commission on April 15,
                  2005.)
 
 4.17
              Nonnegotiable
                  2% Secured Convertible Promissory Note issued to Southridge Partners
                  LP
                  (Incorporated herein by reference to Exhibit 4.2 of Form 8-K of
                  the
                  Registrant as filed with the Commission on April 15,
                  2005.)
 
 10.1
              HomeCom
                  Communications, Inc. Stock Option Plan and form of Stock Option
                  Certificate. (Incorporated herein by reference to exhibit of the
                  same
                  number in the Form S-1 Registration Statement of the Registrant
                  (Registration No. 333-12219).) (1)
 
 10.2
              HomeCom
                  Communications, Inc. Non-Employee Directors Stock Option Plan and
                  form of
                  Stock Option Certificate. (Incorporated herein by reference to
                  exhibit of
                  the same number in the Form S-1 Registration Statement of the Registrant
                  (Registration No. 333-12219).) (1)
 
 10.3
              Form
                  of Employment Agreement entered into between the Registrant and
                  each of
                  its executive officers except Harvey W. Sax. (Incorporated herein
                  by
                  reference to Exhibit 10.4 of the Form S-1 Registration Statement
                  of the
                  Registrant (Registration No. 333-12219).)
                  (1)
 
 10.4
              Lease
                  Agreement between Property Georgia OBJLW One Corporation and the
                  Registrant dated January 22, 1996. (Incorporated herein by reference
                  to
                  Exhibit 10.5 of the Form S-1 Registration Statement of the Registrant
                  (Registration No. 333-12219).)
 
 10.5
              Form
                  of Warrant to purchase 200,000 shares of Common Stock at an exercise
                  price
                  of $4.00 per share issued by the Registrant to First Granite Securities,
                  Inc. (Incorporated herein by reference to Exhibit 10.24 of the
                  Form S-1
                  Registration Statement of the Registrant (Registration No.
                  333-42599).)
 
 10.6
              Form
                  of Warrant to purchase 200,000 shares of Common Stock at an exercise
                  price
                  of $6.00 per share issued by the Registrant to First Granite Securities,
                  Inc. (Incorporated herein by reference to Exhibit 10.25 of the
                  Form S-1
                  Registration Statement of the Registrant (Registration No.
                  333-42599).)
 
 10.7
              Form
                  of Securities Purchase Agreement between the Registrant, Sovereign
                  Partners, L.P. and Dominion Capital Fund, LTD. dated as of December
                  23,
                  1997. (Incorporated herein by reference to Exhibit 10.26 of the
                  Form S-1/A
                  Registration Statement of the Registrant (Registration No.
                  333-42599).)
 
 10.8
              Form
                  of Registration Rights Agreement between the Registrant, Sovereign
                  Partners, L.P. and Dominion Capital Fund, LTD. dated as of December
                  23,
                  1997. (Incorporated herein by reference to Exhibit 10.27 of the
                  Form S-1/A
                  Registration Statement of the Registrant (Registration No.
                  333-42599).)
 
 10.9
              Form
                  of Warrant to purchase 18,750 shares of Common Stock issued by
                  the
                  Registrant to Sovereign Partners, L.P. (Incorporated herein by
                  reference
                  to Exhibit 10.28 of the Form S-1/A Registration Statement of the
                  Registrant (Registration No.
                  333-42599).)
 
 10.10
              Form
                  of Warrant to purchase 56,250 shares of Common Stock issued by
                  the
                  Registrant to Dominion Capital Fund, LTD. (Incorporated herein
                  by
                  reference to Exhibit 10.29 of the Form S-1/A Registration Statement
                  of the
                  Registrant (Registration No.
                  333-42599).)
 
 10.11
              Form
                  of Warrant to purchase 25,000 shares of Common Stock for an aggregate
                  purchase price of $92,500 by the Registrant to Hamilton Dorsey
                  Alston
                  Company. (Incorporated herein by reference to Exhibit 10.34 of
                  the Form
                  S-1/A Registration Statement of the Registrant (Registration No.
                  333-42599).)
 
 69
 10.12
              Form
                  of Warrant to purchase 50,000 shares of Common Stock issued by
                  the
                  Registrant to The Malachi Group, Inc. (Incorporated herein by reference
                  to
                  Exhibit 10.37 of the Form S-1 Registration Statement of the Registrant
                  filed (Registration No.
                  333-45383).)
 
 10.13
              Letter
                  Agreement, dated April 17, 1998 by and among Sovereign Partners,
                  L.P.,
                  Dominion Capital Fund and HomeCom. (Incorporated herein by reference
                  to
                  Exhibit 10 of the Form 8-K of the Registrant filed with the Commission
                  on
                  April 28, 1998.)
 
 10.14
              Securities
                  Purchase Agreement dated as of March 25, 1999 by and among HomeCom
                  Communications, Inc. and CPR (USA), Inc., Liberty View Funds, L.P.,
                  and
                  Liberty View Fund, L.L.C. (Incorporated herein by reference to
                  Exhibit
                  10.50 of the Form 10-K of the Registrant filed with the Commission
                  on
                  March 31, 1999.)
 
 10.15
              Registration
                  Rights Agreement dated as of March 25, 1999 by and among HomeCom
                  Communications, Inc. and CPR (USA), Inc., Liberty View Funds, L.P.,
                  and
                  Liberty View Fund, L.L.C. (Incorporated herein by reference to
                  Exhibit
                  10.51 of the Form 10-K of the Registrant filed with the Commission
                  on
                  March 31, 1999.)
 
 10.16
              Transfer
                  Agent Instructions dated as of March 25, 1999. (Incorporated herein
                  by
                  reference to Exhibit 10.52 of the Form 10-K of the Registrant filed
                  with
                  the Commission on March 31, 1999.)
 
 10.17
              Transfer
                  Agent Legal Opinion dated as of March 25, 1999. (Incorporated herein
                  by
                  reference to Exhibit 10.53 of the Form 10-K of the Registrant filed
                  with
                  the Commission on March 31, 1999.)
 
 10.18
              Warrant
                  Agreement, dated as of March 25, 1999, by and among CPR (USA),
                  Inc. and
                  HomeCom Communications, Inc. (Incorporated herein by reference
                  to Exhibit
                  10.55 of the Registration Statement on Form S-3 of the Registrant
                  (Registration No. 333-79761).)
 
 10.19
              Warrant
                  Agreement, dated as of March 25, 1999, by and among Liberty View
                  Fund,
                  L.L.C. and HomeCom Communications, Inc. (Incorporated herein by
                  reference
                  to Exhibit 10.56 of the Registration Statement on Form S-3 of the
                  Registrant (Registration No.
                  333-79761).)
 
 10.20
              Warrant
                  Agreement, dated as of March 25, 1999, by and among Liberty View
                  Funds,
                  L.P. and HomeCom Communications, Inc. (Incorporated herein by reference
                  to
                  Exhibit 10.57 of the Registration Statement on Form S-3 of the
                  Registrant
                  (Registration No. 333-79761).)
 
 10.21
              Warrant
                  Agreement, dated as of March 25, 1999, by and among J.P. Turner
&
                  Company, L.L.C and HomeCom Communications, Inc. (Incorporated herein
                  by
                  reference to Exhibit 10.59 of the Registration Statement on Form
                  S-3 of
                  the Registrant (Registration No.
                  333-79761).)
 
 10.22
              Securities
                  Purchase Agreement dated as of July 23, 1999 by and among HomeCom
                  Communications, Inc. and MacNab LLC. (Incorporated herein by reference
                  to
                  Exhibit 10.65 of the Form S-1 Registration Statement of the Registrant
                  (Registration No. 333-88491).)
 
 10.23
              Registration
                  Rights Agreement dated as of July 23, 1999 by and among HomeCom
                  Communications, Inc. and MacNab LLC. (Incorporated herein by reference
                  to
                  Exhibit 10.66 of the Form S-1 Registration Statement of the Registrant
                  (Registration No. 333-88491).)
 
 10.24
              Transfer
                  Agent Instructions dated as of September 28, 1999. (Incorporated
                  herein by
                  reference to Exhibit 10.67 of the Form S-1 Registration Statement
                  of the
                  Registrant (Registration No.
                  333-88491).)
 
 10.25
              Transfer
                  Agent Legal Opinion dated as of July 23, 1999. (Incorporated herein
                  by
                  reference to Exhibit 10.68 of the Form S-1 Registration Statement
                  of the
                  Registrant (Registration No.
                  333-88491).)
 
 10.26
              Placement
                  Agency Agreement dated as of July 23, 1999 by and between HomeCom
                  Communications, Inc. and Greenfield Capital Partners. (Incorporated
                  herein
                  by reference to Exhibit 10.69 of the Form S-1 Registration Statement
                  of
                  the Registrant (Registration No.
                  333-88491).)
 
 10.27
              Warrant
                  Agreement, dated as of July 23, 1999, by and between HomeCom
                  Communications, Inc. and MacNab LLC. (Incorporated herein by reference
                  to
                  Exhibit 10.70 of the Form S-1 Registration Statement of the Registrant
                  (Registration No. 333-88491).)
 
 70
 10.28
              Securities
                  Purchase Agreement dated as of September 27, 1999 by and among
                  HomeCom
                  Communications, Inc. and Jackson LLC. (Incorporated herein by reference
                  to
                  Exhibit 10.71 of the Form S-1 Registration Statement of the Registrant
                  (Registration No. 333-88491).)
 
 10.29
              Registration
                  Rights Agreement dated as of September 27, 1999 by and among HomeCom
                  Communications, Inc. and Jackson LLC. (Incorporated herein by reference
                  to
                  Exhibit 10.72 of the Form S-1 Registration Statement of the Registrant
                  (Registration No. 333-88491).)
 
 10.30
              Transfer
                  Agent Instructions dated as of September 28, 1999. (Incorporated
                  herein by
                  reference to Exhibit 10.73 of the Form S-1 Registration Statement
                  of the
                  Registrant (Registration No.
                  333-88491).)
 
 10.31
              Transfer
                  Agent Legal Opinion dated as of September 28, 1999. (Incorporated
                  herein
                  by reference to Exhibit 10.74 of the Form S-1 Registration Statement
                  of
                  the Registrant (Registration No.
                  333-88491).)
 
 10.32
              Placement
                  Agency Agreement dated as of September 27, 1999 by and between
                  HomeCom
                  Communications, Inc. and Greenfield Capital Partners. (Incorporated
                  herein
                  by reference to Exhibit 10.75 of the Form S-1 Registration Statement
                  of
                  the Registrant (Registration No.
                  333-88491).)
 
 10.33
              Warrant
                  Agreement, dated as of September 27, 1999, by and between HomeCom
                  Communications, Inc. and Jackson LLC. (Incorporated herein by reference
                  to
                  Exhibit 10.76 of the Form S-1 Registration Statement of the Registrant
                  (Registration No. 333-88491).)
 
 10.34
              Securities
                  Purchase Agreement dated as of April 14, 2000 by and among HomeCom
                  Communications, Inc. and McNab LLC. (Incorporated herein by reference
                  to
                  Exhibit 10.86 of the Form S-3 Registration Statement of the Registrant
                  (Registration No. 333-38326).)
 
 10.35
              Registration
                  Rights Agreement dated as of April 14, 2000 by and among HomeCom
                  Communications, Inc. and McNab LLC. (Incorporated herein by reference
                  to
                  Exhibit 10.87 of the Form S-3 Registration Statement of the Registrant
                  (Registration No. 333-38326).)
 
 10.36
              Transfer
                  Agent Instructions dated as of April 14, 2000. (Incorporated herein
                  by
                  reference to Exhibit 10.88 of the Form S-3 Registration Statement
                  of the
                  Registrant (Registration No.
                  333-38326).)
 
 10.37
              Transfer
                  Agent Legal Opinion dated as of April 14, 2000. (Incorporated herein
                  by
                  reference to Exhibit 10.89 of the Form S-3 Registration Statement
                  of the
                  Registrant (Registration No.
                  333-38326).)
 
 10.38
              Warrant
                  Agreement, dated as of April 14, 2000, by and between HomeCom
                  Communications, Inc. and McNab LLC. (Incorporated herein by reference
                  to
                  Exhibit 10.90 of the Form S-3 Registration Statement of the Registrant
                  (Registration No. 333-38326).)
 
 10.39
              Employment
                  Agreement between the Registrant and Timothy R. Robinson dated
                  August 1,
                  2000. (Incorporated herein by reference to Exhibit 10.86 of the
                  Form 10-K
                  of the Registrant filed with the Commission on April 12, 2001.)
                  (1)
 
 10.40
              Amendment
                  to employment Agreement between Registrant and George Bokchava
                  dated
                  January 10, 2001. (Incorporated herein by reference to Exhibit
                  10.87 of
                  the Form 10-K of the Registrant filed with the Commission on April
                  12,
                  2001.)
 
 10.41
              Separation
                  and Release Agreement, dated March 29, 2001, between HomeCom
                  Communications, Inc. and Harvey Sax. (Incorporated herein by reference
                  to
                  Exhibit 10.1 of Form 10-Q of the Registrant filed with the Commission
                  on
                  May 21, 2001.)
 
 10.42
              License
                  Agreement, dated May 22, 2003, by and between HomeCom Communications,
                  Inc.
                  and Eurotech, Ltd. (Incorporated by reference to Exhibit 10.1 of
                  the
                  Registrant’s Current Report on Form 8-K, as filed with the Commission on
                  June 6, 2003.)
 
 10.43
              Secured
                  Promissory Note, dated May 22 2003, by HomeCom Communications,
                  Inc. in
                  favor of MacNab LLC. (Incorporated by reference to Exhibit 10.2
                  of the
                  Registrant’s Current Report on Form 8-K, as filed with the Commission on
                  June 6, 2003.)
 
 10.44
              Security
                  Agreement, dated May 22, 2003, by and between HomeCom Communications,
                  Inc.
                  and MacNab LLC. (Incorporated by reference to Exhibit 10.3 of the
                  Registrant’s Current Report on Form 8-K, as filed with the Commission on
                  June 6, 2003.)
 
 71
 10.45
              Stock
                  Exchange Agreement, effective as of June 27, 2003, by and among
                  HomeCom
                  Communications, Inc., Eurotech, Ltd., Greenfield Capital Partners
                  LLC and
                  Polymate, Ltd. (Incorporated herein by reference to Exhibit 10.4
                  of Form
                  10-Q of the Registrant for the quarter ended June 30, 2003, as
                  filed with
                  the Commission on September 25,
                  2003.)
 
 10.46
              Amendment
                  No. 1 to License Agreement, effective as of June 27, 2003, by and
                  among
                  HomeCom Communications, Inc. and Eurotech, Ltd. (Incorporated herein
                  by
                  reference to Exhibit 10.5 of Form 10-Q of the Registrant for the
                  quarter
                  ended June 30, 2003, as filed with the Commission on September
                  25,
                  2003.)
 
 10.47
              Private
                  Equity Credit Agreement, dated September 30, 2003, by and between
                  HomeCom
                  Communications, Inc. and Brittany Capital Management LLC. (Incorporated
                  herein by reference to Exhibit 10.1 of Form 10-Q of the Registrant
                  for the
                  quarter ended September 30, 2003, as filed with the Commission
                  on October
                  29, 2003.)
 
 10.48
              Registration
                  Rights Agreement, dated September 30, 2003, by and between HomeCom
                  Communications, Inc. and Brittany Capital Management LLC. (Incorporated
                  herein by reference to Exhibit 10.2 of Form 10-Q of the Registrant
                  for the
                  quarter ended September 30, 2003, as filed with the Commission
                  on October
                  29, 2003.)
 
 10.49
              License
                  Agreement, dated as of August 15, 2003, by and between HomeCom
                  Communications, Inc. and Kristul Group. (Incorporated herein by
                  reference
                  to Exhibit 10.49 of Form 10-K of the Registrant for the year ended
                  December 31, 2003, as filed with the Commission on May 13,
                  2004.)
 
 10.50
              Assignment
                  and Consent Agreement, dated November 17, 2003, by and among Joseph
                  Kristul, Kristul Group, Environmental Friendly Materials, GMBH
                  and HomeCom
                  Communications, Inc. (Incorporated herein by reference to Exhibit
                  10.50 of
                  Form 10-K of the Registrant for the year ended December 31, 2003,
                  as filed
                  with the Commission on May 13,
                  2004.)
 
 10.51
              Secured
                  Promissory Note, dated May 31, 2004, by Tulix Systems, Inc. in
                  favor of
                  HomeCom Communications, Inc. (Incorporated herein by reference
                  to Exhibit
                  10.1 of Form 8-K of the Registrant as filed with the Commission
                  June 15,
                  2004.)
 
 10.52
              Security
                  Agreement, dated May 31, 2004, by and between HomeCom Communications,
                  Inc.
                  and Tulix Systems, Inc.(Incorporated herein by reference to Exhibit
                  10.2
                  of Form 8-K of the Registrant as filed with the Commission June
                  15,
                  2004.)
 
 10.53
              Shareholders’
                  Agreement, dated May 31, 2004, by and among HomeCom Communications,
                  Inc.,
                  Tulix Systems, Inc., Gia Bokuchava, Nino Doijashvili and Timothy
                  R.
                  Robinson (Incorporated herein by reference to Exhibit 10.3 of Form
                  8-K of
                  the Registrant as filed with the Commission June 15,
                  2004.)
 
 10.54
              Indemnification
                  Agreement, dated May 31, 2004, by and between HomeCom Communications,
                  Inc.
                  and Tulix Systems, Inc. (Incorporated herein by reference to Exhibit
                  10.4
                  of Form 8-K of the Registrant as filed with the Commission June
                  15,
                  2004.)
 
 10.55
              Second
                  Exchange Agreement with Brittany Capital Management Ltd. dated
                  June 1,
                  2004 (Incorporated herein by reference to Exhibit 10.1 of Form
                  10-Q of the
                  Registrant as filed with the Commission August 16,
                  2004.)
 
 10.56
              Convertible
                  Note issued to Brittany Capital Management, Ltd. dated June 1,
                  2004
                  (Incorporated herein by reference to Exhibit 10.2 of Form 10-Q
                  of the
                  Registrant as filed with the Commission August 16,
                  2004.)
 
 10.57
              Securities
                  Purchase Agreement dated October 19, 2004 between Global Matrechs,
                  Inc.
                  and Southridge Partners LP (Incorporated herein by reference to
                  Exhibit
                  99.1 of Form 8-K of the Registrant as filed with the Commission
                  on October
                  18, 2004.)
 
 10.58
              Form
                  of Securities Purchase Agreement (Incorporated herein by reference
                  to
                  Exhibit 99.1 of Form 8-K of the Registrant as filed with the Commission
                  on
                  November 4, 2004.)
 
 10.59
              Securities
                  Purchase Agreement dated December 3, 2004 between Global Matrechs,
                  Inc.
                  and Deer Creek Fund, LLC (Incorporated herein by reference to Exhibit
                  99.3
                  of Form 8-K of the Registrant as filed with the Commission on December
                  8,
                  2004.)
 
 10.60
              Letter
                  of Engagement with Trilogy Capital Partners, Inc. (Incorporated
                  herein by
                  reference to Exhibit 99.1 of Form 8-K of the Registrant as filed
                  with the
                  Commission on December 22, 2004.)
 
 72
 10.61
              Secured
                  note (Incorporated herein by reference to Exhibit 10.1 of Form
                  8-K of the
                  Registrant as filed with the Commission on January 6,
                  2005.)
 
 10.62
              Security
                  agreement (Incorporated herein by reference to Exhibit 10.2 of
                  Form 8-K of
                  the Registrant as filed with the Commission on January 6,
                  2005.)
 
 10.63
              Guaranty
                  (Incorporated herein by reference to Exhibit 10.3 of Form 8-K of
                  the
                  Registrant as filed with the Commission on January 6,
                  2005.)
 
 10.64
              Collateral
                  pledge agreement (Incorporated herein by reference to Exhibit 10.4
                  of Form
                  8-K of the Registrant as filed with the Commission on January 6,
                  2005.)
 
 10.65
              Second
                  Securities Purchase Agreement with Southridge Partners LP (Incorporated
                  herein by reference to Exhibit 10.1 of Form 8-K of the Registrant
                  as filed
                  with the Commission on February 4,
                  2005.)
 
 10.66
              Nonnegotiable
                  2% Secured Convertible Promissory Note issued to Southridge Partners
                  LP
                  (Incorporated herein by reference to Exhibit 10.2 of Form 8-K of
                  the
                  Registrant as filed with the Commission on February 4,
                  2005.)
 
 10.67
              Exchange
                  Agreement with Woodward LLC (Incorporated herein by reference to
                  Exhibit
                  10.3 of Form 8-K of the Registrant as filed with the Commission
                  on
                  February 4, 2005.)
 
 10.68
              Second
                  Securities Purchase Agreement (Incorporated herein by reference
                  to Exhibit
                  10.1 of Form 8-K of the Registrant as filed with the Commission
                  on April
                  15, 2005.)
 
 21.1
              List
                  of Subsidiaries. (Incorporated herein by reference to exhibit of
                  the same
                  number in the Form S-1 Registration Statement of the Registrant
                  (Registration No. 333-42599).)
 
 31.1
              Certification
                  by CEO and CFO of Periodic Report Pursuant to Rule 13a-14(a) or
                  Rule
                  15d-14(a)*
 
 32.1
              Certification
                  pursuant to Section 906 of the Sarbanes-Oxley Act of
                  2002.*
 
 *
        Filed
        herewith
 
 (1)
              Indicates
                  a management contract or compensatory plan or arrangement required
                  to be
                  filed as an exhibit to this Form
                  10-KSB.
 
 
 
 73