Attached files
| file | filename |
|---|---|
| 8-K - CURRENT REPORT ON FORM 8-K - GABRIEL TECHNOLOGIES CORP | gabriel_8k-082109.htm |
| EX-10.1 - EMPLOYMENT AGREEMENT - GABRIEL TECHNOLOGIES CORP | gabriel_8k-ex1001.htm |
| EX-10.3 - FORM OF PROMISSORY NOTE PURCHASE AGREEMENT - GABRIEL TECHNOLOGIES CORP | gabriel_8k-ex1003.htm |
| EX-10.2 - AMENDMENT TO EMPLOYMENT AGREEMENT - GABRIEL TECHNOLOGIES CORP | gabriel_8k-ex1002.htm |
Exhibit 99.1
Dear
Gabriel Shareholders:
Now that
the New Year is here, I want to update you on some important Gabriel financial
matters, securities matters, litigation matters, and other
circumstances. In addition, I want to report on some significant
events that occurred at Gabriel in 2009 and tell you what you might expect from
Gabriel in 2010.
First, I
apologize for not writing to you over the two past months, but the management
and directors of Gabriel have been working on: (1) transitioning Gabriel’s
lawsuit against Qualcomm to a new law firm; (2) obtaining short-term
financing for Gabriel; 3) obtaining long-term operations financing for Gabriel;
4) evaluating Gabriel’s relative ownership interest in its pending lawsuit
against Qualcomm, et. al., and the relative interests in the outcome of the
lawsuit that have been or may be assigned to third parties; and, 5) all of the
other issues described in more detail below.
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1.
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Withdrawal of Former Attorneys
– Gabriel came to the end of its relationship with its former
attorneys in the Qualcomm case and in other Gabriel corporate, patent,
etc. matters at the end of 2009. Gabriel is now in arbitration with its
former attorneys on the matter of attorneys’ fees and potentially other
matters. Gabriel’s directors believe that the termination of
this relationship was/is in the best interests of Gabriel in general, and
particularly in its efforts against Qualcomm. We expect
Gabriel’s California counsel to remain involved in the Qualcomm case for
the foreseeable future.
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2.
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New Gabriel Attorneys For
Qualcomm Case – After a diligent search, Gabriel is working to
engage one of several well-qualified law firms to succeed our former
attorneys in the Qualcomm case. We hope to make an announcement
in the next month or so that a new law firm is representing Gabriel as
lead trial counsel against
Qualcomm.
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3.
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Next Stages of Qualcomm Lawsuit
– Gabriel’s Fourth Amended Complaint in the Qualcomm lawsuit was
filed January 11, 2010. Qualcomm’s Answer to Gabriel’s Fourth
Amended Complaint was filed on or about January 21. We expect discovery to
begin as soon as parties meet and confer to establish a discovery plan –
likely within the next 30 to 60
days.
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4.
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Gabriel Historical Financial
Statements – Under the management of its former officers and
directors, Gabriel did not file reports with the SEC, including historical
financial statements, since 2006. The current management has
prepared Gabriel’s 2007 annual financial
statements, and is working with the Gabriel auditors to finalize
them. We intend to file Gabriel’s historical annual financial
statements with the SEC and make them public when this work is
completed. As part of the audit process, Gabriel’s auditors will be
examining financial statements filed by Gabriel in 2006 and before – to
assure the accuracy of those previously filed financial statements. The
current Gabriel management and directors cannot verify as accurate the
previously filed financial statements of Gabriel, until this audit process
is complete.
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5.
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Action Against Select Former
Gabriel Officers, Directors and Third Parties – An action against
select former Gabriel officers and directors, and certain third parties,
was filed in 2008 at the direction of the former directors of Gabriel. The
current Gabriel directors have been assessing this lawsuit, and believe
that it may be insufficient in its naming of alleged defendants and in the
causes of action alleged. Gabriel’s primary goal in this lawsuit is to
possibly recapture for Gabriel monies, securities, and/or interests in the
Qualcomm case from persons/entities who may have received them improperly.
New counsel has been retained to reassess this lawsuit and to make
recommendations to the directors as to the possible filing of an amended
complaint.
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6.
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Gabriel Operations Financing
Transaction – Although approximately $5.7 million was invested in
Gabriel in late 2007 and early 2008, when the new Gabriel directors were
appointed in June of 2009 Gabriel had little or no cash on hand, and was
more than $800,000 past due in its payments to its attorneys, its
landlord, its insurers, and other creditors. An investment group,
including several of Gabriel’s current directors, furnished Gabriel
approximately $1 million of financing in 2009; however, this
financing is insufficient to pay for future operations of
Gabriel. Therefore, Gabriel recently completed a $500,000
short-term debt transaction to provided needed funds to pay continuing
operations of the Company, and Gabriel is now working with its investment
bankers on a possible means of securing long-term financing of Gabriel’s
operations. Any and all long-term operations financing
transactions entered into by Gabriel will be completed only as necessary,
only on the most favorable terms available to Gabriel, and only upon
advice and approval of Gabriel’s investment bankers and other advisors
that such transactions are fair to the shareholders of
Gabriel. There can be no assurance, however, whether or on what
terms, Gabriel will be able to complete a long-term
financing.
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7.
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Assignment of Interests in
Possible Proceeds of Qualcomm Lawsuit – In connection with certain
financing transactions by Gabriel, and to pay Gabriel’s creditors, Gabriel
former directors began the practice, several years ago, of assigning
percentage interests in a settlement amount or favorable judgment, if any,
that may be obtained by Gabriel in its action against
Qualcomm. We are currently reevaluating this
practice. In the meantime, you should be aware that we estimate
that the total percentage interests in the possible proceeds from the
Qualcomm lawsuit that previously have been committed by Gabriel, and that
might be committed by Gabriel to third parties, etc. in the foreseeable
future, will be not less than seventy-five percent (75%) and may be as
much as ninety-five percent (95%). This estimate includes the
possible percentage interests that we may assign in connection with the
engagement of new lead trial counsel, to obtain litigation financing, and
to procure long-term financing for Gabriel. These interests of
third parties in any proceeds from the Qualcomm lawsuit effectively reduce
the amount of such proceeds, if any, that will be available to Gabriel and
its shareholders. Of course, there can be no assurance that
Gabriel will be able financially to continue to prosecute the Qualcomm
lawsuit or, if so, that it will achieve a favorable outcome or receive any
significant proceeds from that
lawsuit.
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8.
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Actions Taken Prior To
Appointment of New Gabriel Directors – Prior to the current Gabriel
directors appointment earlier this year, actions taken at Gabriel over the
past several years include, but were not limited
to:
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A.
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Issuance
of approximately sixty-six million (66,000,000) shares of Gabriel’s
securities, in the form of: stock; stock warrants; stock options, SEUs
(Stock Equivalent Units); and warrants on SEUs. The total
authorized number of shares of Gabriel stock is sixty million
(60,000,000). The total number of SEUs and warrants on SEUs is
now being ascertained, but this process will take time, as there is no
transfer agent for such securities to track their
interest.
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B.
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Loans
to Gabriel of $5.7 million in 2007 and 2008, some of which loans are
redeemable by the lenders for double their face value beginning in the
first quarter of 2011. We are currently evaluating how the
proceeds of these $5.7 million in loans were utilized by the
Company. By April 2009, Gabriel had spent the $5.7 million it
procured in 2007 – 2008, and incurred outstanding obligations in excess of
$800,000.
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C.
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Expenditures
by Gabriel on corporate matters alone with Gabriel’s former attorneys in
excess of $1 million;
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D.
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The
former directors’ issuance to themselves of percentage interests in the
result of Gabriel’s action against
Qualcomm;
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E.
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The
Company’s failure to hold an annual shareholders meeting within the past
three years. The annual shareholders meeting still cannot be
held due to the failure to have current financials filed with the
SEC. This fact continues to hamper Gabriel’s efforts to obtain
financing since additional Gabriel stock cannot be authorized by Delaware
State authorities without such a shareholders meeting approving such
additional stock authorization. This requires the Gabriel
directors to continue to rely on the possible proceeds, if any, of
Gabriel’s action against Qualcomm to obtain needed
financing.
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In short,
the new directors continue to be challenged by the issues described above;
however, the new directors are committed to: recapture for Gabriel monies,
securities, and/or interests in the Qualcomm case from persons/entities who may
have received them improperly; achieve financial stability in Gabriel; increase
the value of each valid share/warrant/SEU of Gabriel; and, engage new counsel
and litigation financing to move the Qualcomm case to discovery and trial as
quickly as possible.
Although
there can be no assurances, the Gabriel directors continue to believe that
Gabriel’s claim against Qualcomm is meritorious, and that our claim vs. Qualcomm
holds promise for a possible result of significant economic recovery to
Gabriel.
I will
continue to advise you of important developments at Gabriel in the
future.
Thank
you.
/s/ George
Tingo
George
Tingo
CEO and
President, Gabriel Technologies Corporation
THIS
LETTER CONTAINS FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF
SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED. SUCH STATEMENTS INVOLVE RISKS AND UNCERTAINTIES THAT COULD
CAUSE ACTUAL EVENTS OR RESULTS TO DIFFER MATERIALLY FROM THE EVENTS OR RESULTS
DESCRIBED IN THE FORWARD-LOOKING STATEMENTS, INCLUDING RISKS RELATING TO
GABRIEL’S ABILITY TO ACHIEVE ONE OR MORE OF THE OBJECTIVES DESCRIBED IN THIS
LETTER, RISKS RELATING TO GABRIEL’S ABILITY TO OBTAIN FUNDING TO PROSECUTE THE
QUALCOMM LAWSUIT AND OTHER LITIGATION DESCRIBED IN THIS LETTER, AND THE RISKS
AND UNCERTAINTIES REGARDING THE TIMING AND EVENTUAL OUTCOME OF THE QUALCOMM
LAWSUIT AND OTHER LITIGATION. ALL FORWARD-LOOKING STATEMENTS ARE
BASED UPON INFORMATION CURRENTLY AVAILABLE TO GABRIEL. GABRIEL
UNDERTAKES NO OBLIGATION TO PUBLICLY UPDATE OR REVISE ANY FORWARD-LOOKING
STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR
OTHERWISE.