Global Capital Partners 10QSB/A 2001 Q1 Quarterly report (small business) (amended)

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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

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FORM 10-QSB/A No. 1
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|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2000

|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

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Commission file number 0-26202

GLOBAL CAPITAL PARTNERS, INC.
(Exact Name Of Small Business Issuer As Specified In Its Charter)
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Delaware 52-1807562
(State Or Other Jurisdiction Of (I.R.S. Employer
Incorporation Or Organization) Identification No.)

6000 Fairview Road, Suite 1410, Charlotte, North Carolina 28210
(Address Of Principal Executive Offices)

(704) 643-8220
(Issuer's Telephone Number, Including Area Code)
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Check whether the issuer: (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes |X| No |_|

Transitional Small Business Disclosure Format: Yes |_| No |X|

The total number of shares of the registrant's Common Stock, $.05 par value,
outstanding on August 11, 2000, was 10,460,839.

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Explanatory Note

The undersigned registrant hereby amends portions of Part I, Item 1,
Financial Statements and Part I, Item 2, Management's Discussion and Analysis or
Plan of Operation of its Form 10-QSB for the quarterly period ended June 30,
2000. The amendments effected hereby are to accurately report certain changes to
the consolidated statements of financial condition, operations, and cash flows
and to notes 1 and 2 of the notes to consolidated financial statements
and to further clearly reflect the registrant's financial position for the
quarterly period ended June 30, 2000.

GLOBAL CAPITAL PARTNERS, INC.

Index to Form 10-QSB

Page
Part I-- FINANCIAL INFORMATION
Item 1. Financial Statements
Historical Financial Statements
Consolidated Statement of Financial Condition
as of June 30, 2000..................................... 2
Consolidated Statements of Operations
Quarterly Periods Ended June 30, 2000 and 1999.......... 3
Consolidated Statements of Cash Flows
Quarterly Periods Ended June 30, 2000 and 1999.......... 4
Notes to Consolidated Financial Statements................. 6
Item 2. Management's Discussion and Analysis or
Plan of Operation......................................... 12

Part II-- OTHER INFORMATION
Item 1. Legal Proceedings......................................... 21
Item 2. Changes in Securities and Use of Proceeds................. 22
Item 3. Defaults Upon Senior Securities........................... 22
Item 4. Submission of Matters to a Vote of Security Holders....... 22
Item 5. Other Information......................................... 22
Item 6. Exhibits and Reports on Form 8-K.......................... 22
Signature ........................................................ 23

Part I - FINANCIAL INFORMATION
Financial Statements

GLOBAL CAPITAL PARTNERS, INC.
(A Delaware Corporation)

Consolidated Statement of Financial Condition

(In thousands, except share amounts)

June 30,
2000
----------------
(As restated)

ASSETS
Cash and cash equivalents $ 1,491
Receivables
Broker dealers 3,724
Other 1,253
Securities owned, at value 12,491
Notes receivable 25,500
Furniture and equipment, at cost
(net of accumulated depreciation
and amortization of $738)
1,435
Deferred taxes 442
Goodwill, net 3,408
Other assets and deferred amounts 638
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Total Assets $ 50,382
================

LIABILITIES AND SHAREHOLDERS' EQUITY
Compensation, benefits, and related taxes $ 1,992
Securities sold not yet purchased, at value 588
Accounts payable and accrued expenses 4,201
Other liabilities and deferred amounts 286
----------------
7,067

Long-term borrowings 2,500
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Total liabilities 9,567
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Minority interest in consolidated
subsidiaries ( 86)
----------------
Commitments and contingencies
Shareholders' equity
Preferred stock; $.01 par value;
10,000,000 shares authorized;
no shares issued and outstanding
at June 30, 2000 -

Common stock; $.05 par value;
25,000,000 shares authorized;
10,460,839 shares issued and
outstanding at June 30, 2000 523
Paid-in capital 45,884
Accumulated deficit ( 4,140)
Notes receivable - common stock
and warrants ( 1,366)
----------------
Total shareholders' equity 40,901
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Total Liabilities and
Shareholders' Equity $ 50,382
================

See notes to consolidated financial statements.

- 2 -

GLOBAL CAPITAL PARTNERS, INC.
(A Delaware Corporation)
Consolidated Statements of Operations

(In thousands, except per share amounts)

For the Quarters Ended
June 30,
---------------------------------------
2000 1999
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(As restated) (As restated)

Revenues
Commissions $ 5,706 $ 5,604
Investment banking 633 1,085
Interest and dividends 143 60
Principal transactions, net
Trading 1,046 987
Investment 894 40
Other 567 685
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Total revenues 8,989 8,461
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Costs and expenses
Compensation and benefits 5,373 6,095
Brokerage, clearing, exchange
fees and other 1,353 522
General and administrative 578 416
Occupancy 415 511
Communications 345 388
Office supplies and expense 269 112
Consulting fees 205 97
Interest 80 120
Depreciation and amortization 125 63
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Total costs and expenses 8,743 8,324
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Income before benefit for income taxes
and minority interest in earnings
of subsidiaries 246 137
Benefit for income taxes 290 -
Minority interest in earnings of
subsidiaries 47 -
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Income from continuing
operations 583 137
Discontinued operations
Income (loss) from discontinued
operations, net of income taxes ( 189) 320
Gain on sale of discontinued
operations, net of income taxes 1,958 -
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Income from discontinued
operations 1,769 320
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Net income $ 2,352 $ 457
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Weighted average number of common
shares outstanding
Basic 10,420,498 4,800,551
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Diluted 11,791,720 4,800,551
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Income from continuing operations
per share
Basic $ 0.06 $ 0.03
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Diluted $ 0.05 $ 0.03
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Income from discontinued operations
per share
Basic $ 0.17 $ 0.07
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Diluted $ 0.15 $ 0.07
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Net income per share
Basic $ 0.23 $ 0.10
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Diluted $ 0.20 $ 0.10
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See notes to consolidated financial statements.

- 3 -

GLOBAL CAPITAL PARTNERS, INC.
(A Delaware Corporation)

Consolidated Statements of Cash Flows

(In thousands)

For the Quarters Ended
June 30,
--------------------------
2000 1999
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(As restated)

Cash flows from operating activities
Net income from continuing operations $ 246 $ 137
Adjustments to reconcile net income
to net cash (used in) operating
activities from continuing operations:

Depreciation and amortization 125 63
Minority interest in earnings of subsidiaries ( 47) -
Deferred taxes ( 290) -
Other ( 17) ( 10)
Changes in operating assets and liabilities
Receivables 3,568 831
Securities owned, at value ( 3,180) ( 2,049)
Other assets ( 91) 213
Compensation, benefits and related taxes ( 3,114) 247
Securities sold, not yet purchased 350 ( 650)
Accounts payable and accrued expenses 2,655 ( 121)
Other liabilities ( 316) 748
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Net cash (used in) operating activities from
continuing operations ( 111) ( 591)
Net cash (used in) discontinued operations ( 983) ( 1,378)
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Net cash (used in) operating activities ( 1,094) ( 1,969)
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Cash flows from investing activities
Net (payments for)
Capital expenditures ( 398) ( 286)
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Net cash (used in) investing activities ( 398) ( 286)
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Cash flows from financing activities
Net proceeds from (payments for)
Issuance of common stock 1,079 41
Proceeds from borrowings - 4,071
Repayments of borrowings ( 380) ( 1,250)
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Net cash provided by financing activities 699 2,862
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Increase (decrease) in cash and cash equivalents ( 793) 607

Cash and cash equivalents, beginning of period 2,284 712
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Cash and cash equivalents, end of period $ 1,491 $ 1,319
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Supplemental disclosure of cash flow information
Cash paid for income taxes $ - $ -
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Cash paid for interest $ 80 $ 120
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See notes to consolidated financial statements.

- 4 -

GLOBAL CAPITAL PARTNERS, INC.
(A Delaware Corporation)

Consolidated Statements of Cash Flows (continued)

(In thousands)

For the Quarters Ended
June 30,
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2000 1999
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Supplemental disclosure of cash flow information

Non-cash transactions

In June 2000, the Company sold its
European operations in exchange for
$2,000 in equity securities and
notes receivable totaling
$25,500. The total sales price
was $27,500.

Equity securities received, at
market value $ 2,000 $ -
Notes receivable 25,500 -
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Total consideration received in
sale of European operations $ 27,500 $ -
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See notes to consolidated financial statements.

- 5 -

GLOBAL CAPITAL PARTNERS, INC.
(A Delaware corporation)

Notes to Consolidated Financial Statements
For the Quarterly Period Ended June 30, 2000

(Unaudited)

1. Interim Reporting

The financial statements of Global Capital Partners, Inc., its U.S.
subsidiaries and European subsidiaries through the date of disposition
(collectively, "Global Capital Partners" or the "Company") for the
quarterly period ended June 30, 2000 have been prepared by the Company, are
unaudited, and are subject to year-end adjustments. These unaudited
financial statements reflect all known adjustments (which included only
normal, recurring adjustments) which are, in the opinion of management,
necessary for a fair presentation of the financial position, results of
operations, and cash flows for the periods presented in accordance with
generally accepted accounting principles. The results presented herein for
the interim periods are not necessarily indicative of the actual results to
be expected for the fiscal year.

The notes accompanying the consolidated financial statements in the
Company's Annual Report on Form 10-KSB as amended for the year ended March
31, 2000 include accounting policies and additional information pertinent
to an understanding of these interim financial statements.

2. Summary of Significant Accounting Policies

Organization and Basis of Presentation

The consolidated financial statements include Global Capital Partners,
Inc., its U.S. subsidiaries, and European subsidiaries through the date of
disposition. Investments in business entities in which the Company does not
have control, but has the ability to exercise significant influence over
the operating and financial policies, are accounted for under the equity
method.

These consolidated financial statements reflect, in the opinion of
management, all adjustments necessary for a fair presentation of the
consolidated financial position and the results of the operations of the
Company. All significant intercompany balances and transactions have been
eliminated in consolidation.

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 revenues and expenses
during the reporting period. Management believes that the estimates
utilized in the preparation of the consolidated financial statements are
prudent and reasonable. Actual results could differ from these estimates.

The Company, through its subsidiaries, provides a wide range of financial
services primarily in the United States, Central Europe, and Eastern
Europe. Its businesses include securities underwriting, distribution and
trading; merger, acquisition, restructuring, and other corporate finance
advisory activities; asset management; merchant banking and other principal
investment activities; brokerage and research services; and securities
clearance services. These services are provided to a diversified group of
clients and customers, including corporations, governments, financial
institutions, and individuals.

Financial Instruments

Substantially all of the Company's financial assets and liabilities and the
Company's trading positions are carried at market or fair values or are
carried at amounts which approximate fair value because of their short-term
nature. Estimates of fair value are made at a specific point in time, based
on relevant market information and information about the financial
instrument, specifically, the value of the underlying financial instrument.
These estimates do not reflect any premium or discount that could result
from offering for sale at one time the Company's entire holdings of a
particular financial instrument. The Company has no investments in
derivatives.

-6-

GLOBAL CAPITAL PARTNERS, INC.
(A Delaware corporation)

Notes to Consolidated Financial Statements (continued)
For the Quarterly Period Ended June 30, 2000

(Unaudited)

2. Summary of Significant Accounting Policies (continued)

Financial Instruments (continued)

Equity securities purchased in connection with merchant banking and other
principal investment activities are initially carried at their original
costs. The carrying value of such equity securities is adjusted when
changes in the underlying fair values are readily ascertainable, generally
as evidenced by listed market prices or transactions which directly affect
the value of such equity securities. Downward adjustments relating to such
equity securities are made in the event that the Company determines that
the eventual realizable value is less than the carrying value.

Securities classified as available for sale are carried at fair value with
unrealized gains and losses reported as a separate component of
stockholders' equity. Realized gains and losses on these securities are
determined on a specific identification basis and are included in earnings.

Collateralized Securities Transactions

Accounts receivable from and payable to customers include amounts due on
cash transactions. Securities owned by customers are held as collateral for
these receivables. Such collateral is not reflected in the consolidated
financial statements.

Securities purchased under agreements to resell are treated as financing
arrangements and are carried at contract amounts reflecting the amounts at
which the securities will be subsequently resold as specified in the
respective agreements. The Company takes possession of the underlying
securities purchased under agreements to resell and obtains additional
collateral when the market value falls below the contract value. The
maximum term of these agreements is generally less than ninety-one days.

Other Receivables

From time to time, the Company provides operating advances to select
companies as a portion of its merchant banking activities. These
receivables are due on demand.

Underwritings

Underwritings include gains, losses, and fees, net of syndicate expenses
arising from securities offerings in which the Company acts as an
underwriter or agent. Underwriting fees are recorded at the time the
underwriting is completed and the income is reasonably determinable. The
Company reflects this income in its investment banking revenue.

Fees

Fees are earned from providing merger and acquisition, financial
restructuring advisory, and general management advisory services. Fees are
recorded based on the type of engagement and terms of the contract entered
into by the Company. The Company reflects this income in its investment
banking revenue.

Securities Transactions

Government and agency securities and certain other debt obligations
transactions are recorded on a trade date basis. All other securities
transactions are recorded on a settlement date basis and adjustments are
made to a trade date basis, if significant.

Commissions

Commissions and related clearing expenses are recorded on a trade date
basis as securities transactions occur.

-7-

GLOBAL CAPITAL PARTNERS, INC.
(A Delaware corporation)

Notes to Consolidated Financial Statements (continued)
For the Quarterly Period Ended June 30, 2000

(Unaudited)

2. Summary of Significant Accounting Policies (continued)

Translation of Foreign Currencies

Assets and liabilities of operations in foreign currencies are translated
at period end rates of exchange, and the income statements are translated
at weighted average rates of exchange for the period. In accordance with
Statement of Financial Accounting Standards ("SFAS") No. 52, "Foreign
Currency Translation," gains or losses resulting from translating foreign
currency financial statements, net of hedge gains or losses and their
related tax effects, are reflected in cumulative translation adjustments, a
separate component of stockholders' equity. Gains or losses resulting from
foreign currency transactions are included in net income.

Furniture, and Equipment

Furniture and equipment are carried at cost and are depreciated on a
straight-line basis over the estimated useful life of the related assets
ranging from three to ten years.

Common Stock Data

Earnings per share is based on the weighted average number of common stock
and stock equivalents outstanding. The outstanding warrants and stock
options are currently excluded from the earnings per share calculation as
their effect would be antidilutive.

Stock-Based Compensation

In October 1995, the Financial Accounting Standards Board (the "FASB")
issued SFAS No. 123, "Accounting for Stock-Based Compensation." SFAS No.
123 encourages, but does not require, companies to record compensation
expense for stock-based employee compensation plans at fair value. The
Company has elected to account for its stock-based compensation plans using
the intrinsic value method prescribed by Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB No. 25").
Under the provisions of APB No. 25, compensation cost for stock options is
measured as the excess, if any, of the quoted market price of the Company's
common stock at the date of grant over the amount an employee must pay to
acquire the stock.

Deferred Income Taxes

Deferred income taxes in the accompanying financial statements reflect
temporary differences in reporting results of operations for income tax and
financial accounting purposes. Deferred tax assets are reduced by a
valuation allowance when, in the opinion of management, it is more likely
than not that some portion or all of the deferred tax assets will not be
realized.

Cash and Cash Equivalents

For purposes of the consolidated financial statements, the Company
considers all demand deposits held in banks and certain highly liquid
investments with maturities of 90 days or less other than those held for
sale in the ordinary course of business to be cash equivalents.

Goodwill

Goodwill is amortized on a straight-line basis over 25 years and is
periodically evaluated for impairment that is other than temporary on an
undiscounted cash flow basis. The carrying value is reviewed to evaluate if
the facts and circumstances support the valuation for recoverability. If a
review of the facts and circumstances, such as significant declines in
sales, earnings or cash flows or material adverse changes in the business
climate beyond normal, cyclical variations, suggest that it may be impaired
and not recoverable, as determined based on the operating performance and

-8-

GLOBAL CAPITAL PARTNERS, INC.
(A Delaware corporation)

Notes to Consolidated Financial Statements (continued)
For the Quarterly Period Ended June 30, 2000

(Unaudited)

2. Summary of Significant Accounting Policies (continued)

Goodwill (continued)

the estimated future undiscounted cash flows of the entity acquired,
impairment is measured by comparing the carrying value of goodwill to
estimated fair value. Estimated fair value is determined based on the
viability of the underlying entity acquired on a stand-alone basis,
discounted cash flows, or appraisals.

Reclassifications

Certain amounts in prior periods have been reclassified to conform to the
current presentation.

3. Acquisitions

EBI Securities Corporation

In May 1998, the Company acquired all of the outstanding common stock of
Cohig & Associates, Inc., a Denver, Colorado based investment banking and
brokerage firm, in exchange for 445,000 unregistered shares of the
Company's common stock and an agreement to advance $1,500,000 in additional
working capital. Following the acquisition, the Company changed the name of
Cohig & Associates, Inc. to EBI Securities Corporation. The Company intends
to develop EBI Securities as the foundation to expand its U.S. based
investment banking and brokerage presence. EBI Securities was the first
acquisition targeting successful medium size investment banking and
brokerage firms both domestically and internationally.

EBI Securities is a full service brokerage firm specializing in providing
investment advice and counsel to individuals and small to middle market
institutions. At the present time, EBI Securities has approximately 200
licensed representatives. EBI Securities provides its brokerage clients
with a broad range of traditional investment products and services. EBI
Securities also strives to differentiate itself in the minds of investors
and corporate finance clients through its commitment to a professional but
personalized service, which not only sets it apart from the large firms,
but also serves to develop long-term client relationships. Its trading
department makes a market in approximately 100 securities which include its
investment banking clients and those securities that its research
department has identified as promising, small to middle-market, potentially
high growth companies. EBI Securities' investment banking department
operates with a single goal in mind: to enhance and develop the capital
structures of small to middle market emerging growth companies through
private placements, bridge financing, and public offerings which serves to
enable the firm's corporate finance clients to capitalize on promising
business opportunities, favorable market conditions, and/or late stage
product development.

EBI Securities is registered as a broker-dealer with the SEC and is
licensed in 50 states and the District of Columbia. It is also a member of
the National Association of Securities Dealers ("NASD") and the Securities
Investor Protection Corporation ("SIPC"). Customer accounts are insured to
$25 million under the SIPC excess insurance program. EBI Securities
operates pursuant to the exemptive provisions of SEC Rule 15c3-3 (k)(2)(ii)
and clears all transactions with and for customers on a fully disclosed
basis.

EBI Securities maintains its clearing arrangement with Fiserv Correspondent
Services, Inc. ("Fiserv"), a subsidiary of Fiserv, Inc. (NASDAQ: FISV).
Fiserv provides EBI Securities with back office support, transaction
processing services on all the principal national securities exchanges and
access to many other financial services and products. This arrangement
enables EBI Securities to offer its clients a broad range of products and
services that is typically only offered by firms that are larger and/or
have a larger capital base.

-9-

GLOBAL CAPITAL PARTNERS, INC.
(A Delaware corporation)

Notes to Consolidated Financial Statements (continued)
For the Quarterly Period Ended June 30, 2000

(Unaudited)

3. Acquisitions (continued)

Global Capital Markets, LLC

In November, 1999, The Company expanded its US investment banking and
brokerage operations further with the acquisition of Global Capital
Markets, LLC ("formerly The JB Sutton Group, LLC"), a New York based
brokerage and investment banking firm. Global Capital Markets has one main
office with over 80 registered representatives. Global Capital Markets'
primary focus is the operation of a retail brokerage firm serving
individual investors with a full service approach. Global Capital Markets
has also utilized its corporate finance and trading activities to augment
the services provided to its customer base. Global Capital Markets provides
its retail clients with a broad range of traditional investment products
and services.

Global Capital Markets is registered as a broker-dealer with the SEC and a
member of the National Association of Securities Dealers ("NASD") and the
Securities Investor Protection Corporation ("SIPC").

Global Capital Markets operates pursuant to the exemptive provisions of SEC
Rule 15c3-3 (k)(2)(ii) and clears all transactions with and for customers
on a fully disclosed basis.

Global Capital Markets maintains dual clearing arrangements with CIBC
Oppenheimer, a division of CIBC World Markets Corp. ("OPPCO"), and Penson
Financial Services Inc., a division of Service Asset Management Company
("Penson"). OPPCO provides Global Capital Markets with back office support,
transaction processing services on all the principal national securities
exchanges and access to many other financial services and products. This
arrangement enables Global Capital Markets to offer its clients a broad
range of products and services that is typically only offered by firms that
are larger and/or have a larger capital base. Penson provides similar
services as OPPCO, but it is utilized by Global Capital Markets primarily
to facilitate the trading activity in the customer accounts using the
SuttonOnline trading system.

Sutton Online

In addition to our growing US investment banking and brokerage presence,
the Company purchased a majority interest in SuttonOnline, Inc.
("SuttonOnline") (http://www.suttononline.com) an online trading firm that
offers individual investors, money managers and hedge funds, trade
executions, level II software & data, internet service and training for
online investors. SuttonOnline also provides brokerage firms the necessary
tools to offer financial products via the internet.

4. Short-Term Borrowings

The Company meets its short-term financing needs through lines of credit
with financial institutions, advances from affiliates, and by entering into
repurchase agreements whereby securities are sold with a commitment to
repurchase at a future date.

Lines of Credit

These lines of credit carry interest rates between 7.00 percent and 12.00
percent as computed on an annual basis.

Advances from Affiliated Companies

Periodically, the Company's subsidiaries and affiliates will provide
operating advances to other members in the affiliated group. These advances
are generally due on demand and are not subject to interest charges.

-10-

GLOBAL CAPITAL PARTNERS, INC.
(A Delaware corporation)

Notes to Consolidated Financial Statements (continued)
For the Quarterly Period Ended June 30, 2000

(Unaudited)

5. Discontinued Operations

The Company decided to sell its interest in Eastbrokers Beteiligungs AG and
on June 14, 2000 entered into agreements with certain non-related entities
to sell such subsidiaries for $27,500,000 consisting of equity securities
valued at $2,000,000 and notes of $25,500,000. As of the date of sale, the
foreign subsidiaries' net assets and costs of disposal were approximately
$24,311,000.

The disposal of Eastbrokers Beteiligungs AG has been accounted for as
discontinued operations. Accordingly, its operating results are segregated
and reported as discontinued operations in the accompanying consolidated
statements of operations and cash flows. The fiscal year end of the former
European subsidiaries is December 31. Their financial information is
included on the basis of a closing date that precedes the Company's closing
date by three months.

6. Commitments and Contingencies

Leases and Related Commitments

The Company occupies office space under leases which expire at various
dates through 2003. These leases contain provisions for periodic
escalations to the extent of increases in certain operating and other
costs. The Company's subsidiaries occupy office space under various
operating leases which generally contain cancellation clauses whereby the
Company may cancel the lease with thirty to ninety days written notice.

-11-

Part I-- FINANCIAL INFORMATION (continued)

Management's Discussion and Analysis or Plan of Operation

Certain information set forth in this report under this caption
"Management's Discussion and Analysis or Plan of Operation" includes "forward-
looking statements" within the meaning of the Private Securities Litigation
Reform Act of 1995. In addition, from time to time, we may publish
"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, or make oral statements that constitute forward-looking
statements. These forward-looking statements may relate to such matters as
anticipated financial performance, future revenues or earnings, business
prospects, projected ventures, new products, anticipated market performance and
similar matters. The words "budgeted", "anticipate", "project", "estimate",
"expect", "may", "believe", "potential" and other similar statements are
intended to be among the statements that are considered "forward-looking"
statements. Readers are cautioned not to place undue reliance on these forward-
looking statements, which are made as of the date hereof. The Private Securities
Litigation Reform Act of 1995 provides a safe harbor for forward-looking
statements. In order to comply with the terms of the safe harbor, we caution
readers that a variety of factors could cause our actual results to differ
materially from the anticipated results or other expectations expressed in our
forward-looking statements. These risks and uncertainties, many of which are
beyond our control, include, but are not limited to: (i) transaction volume in
the securities markets, (ii) the volatility of the securities markets, (iii)
fluctuations in interest rates, (iv) changes in regulatory requirements which
could affect the cost of doing business, (v) fluctuations in currency rates,
(vi) general economic conditions, both domestic and international, (vii) changes
in the rate of inflation and related impact on securities markets, (viii)
competition from existing financial institutions and other new participants in
the securities markets, (ix) legal developments affecting the litigation
experience of the securities industry, (x) changes in federal and state tax laws
which could affect the popularity of products sold by us, (xi) significant and
rapid changes in technology which could negatively affect our internet related
projects and (xii) the risks and uncertainties set forth under the caption "Risk
Factors" which appears in Item 1 of our Annual Report on Form 10-KSB as amended
for the fiscal year ended March 31, 2000 (the "Report"). We undertake no
obligation to release publicly any revisions to the forward-looking statements
to reflect events or circumstances after the date hereof or to reflect
unanticipated events or developments.

This Form 10-QSB for the quarterly period ended June 30, 2000, makes
reference to our Report. The Report includes information necessary or useful to
an understanding of our businesses and financial statement presentations. We
will furnish a copy of this Report upon request made directly to our
headquarters at 6000 Fairview Road, Suite 1410, Charlotte, North Carolina 28210,
telephone number (704) 643-8220 and facsimile number (704) 643-8097.

We use the following terms of identification to simplify the presentation
of information in this Prospectus. "GCAP and subsidiaries" refers to Global
Capital Partners, Inc. and its subsidiaries. Global Capital Partners, Inc. is
the issuer of the publicly traded common stock covered hereby. "We," "us," or
"our" refer collectively to GCAP and its subsidiaries. The term SEC is sometimes
used to simplify references to the U.S. Securities and Exchange Commission.

Plan of Operation

General Overview

In 1996, we re-evaluated our business strategy and, after considering a
variety of investment opportunities, acquired Eastbrokers Beteiligungs AG.
Eastbrokers Beteiligungs AG is an Austrian brokerage company with offices
throughout Central and Eastern Europe. This acquisition enhanced our development
by both providing us with a vehicle to implement our acquisition strategy and
extending our opportunities beyond the Czech Republic to the entirety of Central
and Eastern Europe.

Our business strategy for European operations was to utilize our emerging
market expertise in the areas of merchant banking, corporate finance,
privatization and trading, in order to expand throughout Central and Eastern
Europe. However, during 1998, we modified our business strategy for Europe, in
response to an overall

-12-

economic downturn that covered much of Central and Eastern Europe. This market
downturn, which peaked in the Summer of 1998, led to sharp decreases in stock
markets worldwide, particularly in Central and Eastern Europe. In addition, to
falling prices, the overall liquidity throughout much of the region was
significantly reduced. In order to minimize the negative effects on our
financial operations, we reduced our work force in Austria and either closed or
sold our operations in the Czech Republic, Hungary, Slovakia, Romania, Turkey,
Russia, and Bulgaria. In 1999, we continued our restructuring program and closed our
offices in Azerbaijan, Croatia and Kazakhstan. In Austria, Poland and Slovenia,
we made significant changes in our management and cost structures. In 1999, we
re-entered the Czech Republic through the purchase of a minority interest in
Stratego Invest a.s., Prague, as well as signed an agreement to purchase a
minority interest in Unitrust SA, a Swiss financial services company. As of the
date of this filing, the purchase of Unitrust SA is pending due to required
regulatory approvals.

In March 1997, we expanded our brokerage operations into the United States
through the acquisition of an existing New York-based broker dealer. During the
development of this New York broker dealer, we were approached by several U.S.
based broker dealers who were interested in being acquired. We believed that
consolidation within the securities industry, particularly in the United States,
was and is inevitable. This consolidation can be attributed to the volatility
prevailing in the financial markets, the higher degree of capital needed to
maintain solid brokerage functions and the increased regulatory environment. We
decided that as a well-capitalized, professionally managed, international,
publicly-traded, investment banking firm, we would be particularly appealing to
the sellers of medium size brokerage firms. In addition, we believe that the
purchase and roll-up of complementary securities businesses both in the United
States and in Europe can be financed by the issuance of our common stock.

In May 1998, we made a significant step in our roll-up strategy in the
United States through the acquisition of all of the outstanding common stock of
Cohig & Associates, Inc., a Denver, Colorado based investment banking and
brokerage firm. Following the acquisition, we changed the name from Cohig &
Associates, Inc. to EBI Securities Corporation.

During the most recent fiscal year, we continued our acquisition strategy
by acquiring approximately 48 percent of the outstanding common stock of
MoneyZone.com, all of the outstanding ownership interests of Global Capital
Markets, LLC (then, The JB Sutton Group, LLC), an investment banking and
brokerage firm, and 55 percent of the outstanding ownership interests of Sutton
Online, Inc. (then, Sutton Online, LLC), an online trading company. See
"Acquisitions and Dispositions During the Fiscal Year" on this page. We have
continued to grow our assets under management, our commission revenue,
underwriting fees, and distribution capabilities and remain committed to our
mission of building, through acquisitions and strategic alliances, a highly
successful, global, middle-market, investment banking and securities firm. We
also believe that the rapid development of the internet and technological
revolution will have a significant and lasting impact on the financial services
industry. We have actively positioned ourselves in less than one year, to
participate in this new medium. We believe that our ability to respond quickly
and capitalize on upcoming financial opportunities, such as the creation,
incubation and capitalization of MoneyZone.com could lead to significant new
opportunities for us.

In July 1999, we completed the merger of our majority owned subsidiary,
EBonlineinc.com, Inc. with and into CERX Venture Corporation. The name of the
surviving corporation was later changed to MoneyZone.com. As a result of this
transaction, we owned approximately 48 percent of MoneyZone.com. At the time of
the merger, CERX Venture Corporation had approximately $1,000 in tangible net
assets and EBonlineinc.com, Inc. had no tangible net assets. EBonlineinc.com,
Inc.'s only asset at that time was an idea that became the framework of the
business plan for MoneyZone.com. Soon thereafter, MoneyZone.com launched
www.MoneyZone.com, a capital formation Internet portal that matches investors
with entrepreneurs. We advanced over $300,000 of the initial development costs
to MoneyZone.com. These advances for the intial development costs were later
repaid upon the completion of a private placement by MoneyZone.com. We
subsequently disposed of approximately 600,000 shares of our MoneyZone.com
common stock and presently own approximately thirty percent of MoneyZone.com's
outstanding common stock. MoneyZone.com's common stock trades on the
over-the-counter bulletin board under the symbol "MNZN."

In November 1999, we purchased one-hundred percent of the outstanding
ownership interests of Global Capital Markets, LLC (then, The JB Sutton Group,
LLC), a New York based investment banking and brokerage firm in exchange for
700,000 unregistered shares of our common stock and an agreement to provide
$1,500,000

-13-

in additional working capital to that firm. Following the acquisition, we
changed the name from The JB Sutton Group, LLC to Global Capital Markets, LLC.
We intend to consolidate the operations of EBI Securities Corporation and Global
Capital Markets over the next twelve to eighteen months. We believe we will
realize cost savings from economies of scale which may further enable us to
eliminate duplicate costs and maximize our capital resources. After this
consolidation, we will then operate a single U.S.-based broker-dealer with 17
offices and over 300 registered representatives.

In November 1999, we also purchased fifty-five percent of the then issued
and outstanding LLC membership interest in Sutton Online, LLC (now, Sutton
Online, Inc.) in exchange for 250,000 unregistered shares of our common stock
and an agreement to advance $250,000 in additional working capital to Sutton
Online, Inc. Sutton Online, Inc. is an online trading firm that offers trade
routing, level II software and data, Internet service and training for online
investors including individuals, hedge funds and money managers, and provides
brokerage firms with the necessary tools to offer financial products via the
Internet.

We anticipate that our acquisitions of EBI Securities Corporation and
Global Capital Markets are the beginning of a series of acquisitions targeting
other successful medium size investment banking and brokerage firms both
domestically and internationally. We believe that our current organizational
structure as an entrepreneurial and international publicly-traded company will
be particularly appealing to potential acquisition candidates.

In May 2000, Sutton Online, Inc. announced the formation of a wholly owned
subsidiary, Sutton Online Europe. Sutton Online Europe will develop and market
online trading products and services to European clients. Sutton Online Europe,
whose operations will be based in Germany, will utilize the professional-level
online trading platform of Sutton Online, Inc. to execute trades in U.S. and
European securities. We are currently in the process of an extensive executive
search for a chief executive officer to lead this subsidiary, secure financing
and develop proprietary software to access financial markets throughout the
world.

In June 2000, due to continued net operating losses and persistent net cash
flow deficits, we sold our interest in Eastbrokers Beteiligungs AG and its
subsidiaries for $27.5 million USD in equity securities and notes receivable.
This disposition was reported on our Current Report on Form 8-K filed on June
29, 2000. We intend to utilize a portion of the proceeds from this sale to
expand our U.S. brokerage operations and further the development and expansion
of Sutton Online, Inc. We are also in the process of evaluating the purchase of
various strategic investment banking and brokerage operations in Western Europe,
particularly in the rapidly growing German market. We intend to continue
participating in the Eastern European markets through multiple fee-based
franchise agreements with Eastbrokers Beteiligungs AG's operations in Poland,
the Czech Republic and Slovenia.

Total Online s.r.o. is a Czech Republic based online trading software
developer and Total Solutions s.r.o. is a Czech Republic based developer of
front and back office financial management software solutions for financial
institutions, investment companies and brokerages. Total Online develops
software for advanced online trading systems that allows users to buy and sell
securities on various worldwide exchanges. One of the products will be able to
be used for trading on the New York, Prague, Vienna, Frankfurt and Amsterdam's
AEX Exchanges, as well as Nasdaq.

Based on our current trends, we anticipate that our second quarter will be
profitable. We remain committed to our mission of building, through acquisitions
and strategic alliances, a highly successful, global, middle market, investment
banking and securities firm.

EBI Securities Corporation

EBI Securities Corporation operates 16 retail brokerage offices in 15
cities across the United States. These offices include 6 company-owned branches,
and 10 franchise branches employing over 250 people. EBI

-14-

Securities Corporation is a registered broker-dealer with the SEC and is
licensed in 50 states and the District of Columbia. It is also a member of the
NASD and the Securities Investor Protection Corporation ("SIPC"). Customer
accounts are insured to $100 million under the SIPC excess insurance program.
EBI Securities Corporation operates pursuant to the exemptive provisions of SEC
Rule 15c3-3(k)(2)(ii) and clears all transactions with and for customers on a
fully disclosed basis. Since its inception, EBI Securities Corporation has
participated in the underwriting and/or co-underwriting of over $500 million in
initial and secondary equity and debt offerings for over 50 public U.S.
companies.

EBI Securities Corporation maintains its clearing arrangement with Fiserv
Correspondent Services, Inc., a subsidiary of Fiserv, Inc. (NASDAQ:FISV). Fiserv
Correspondent Services, Inc. provides EBI Securities Corporation with back
office support, transaction processing services on all the principal national
securities exchanges and access to many other financial services and products.
This arrangement enables EBI Securities Corporation to offer its clients a broad
range of products and services that is typically only offered by firms that are
larger and/or have a larger capital base.

EBI Securities Corporation operates primarily as a full-service retail
brokerage firm focusing on individual investors. It additionally maintains and
conducts corporate finance, proprietary research and trading activities. EBI
Securities Corporation provides its brokerage clients with a broad range of
traditional investment products and services. EBI Securities Corporation also
strives to establish itself with investors and corporate finance clients through
its commitment to a professional but personalized service. Its trading
department makes markets in approximately 100 securities which include its
investment banking clients and those securities that our research department has
identified as promising, small to middle-market, potentially high growth
companies. Its investment banking department's mission is to enhance and develop
the capital structures of small to middle-market emerging growth companies
through private placements, bridge financing, and public offerings in order to
enable our corporate finance clients to capitalize on promising business
opportunities, favorable market conditions and/or late stage product
development. EBI Securities Corporation is also active in the public finance
area with offerings of public and private debt securities. This activity is also
complemented by a bond trading department that focuses on government, municipal
and corporate debt obligations.

EBI Securities Corporation is actively reorganizing itself in order to
create additional revenue opportunities and cost savings. The potential result
is increased internal growth, which complements external growth through
acquisitions. Several initiatives that EBI Securities Corporation has undertaken
follow:

1. FIXED INCOME. In December 1998, EBI Securities Corporation added a
fixed income department. This group is responsible for the underwriting,
trading, retail distribution and research of government, municipal and corporate
bonds. This group adds an additional profit center to the retail, corporate
finance and equity trading divisions and also has created synergies with the
other departments. As EBI Securities Corporation works to broaden the product
base of its financial consultants and their customers, the fixed income
department creates or locates new product through underwritings or independent
research ideas. Additionally, the fixed income department allows EBI Securities
Corporation corporate finance to capture business that would not have been
previously available.

2. ASSET ALLOCATION. EBI Securities Corporation has developed an
in-house asset allocation program to augment the efforts of our financial
consultants. This in-house system was developed utilizing industry software
which, along with additional marketing materials, is customized for our use.
This approach represents an investment strategy which is based on a Nobel Prize
winning study called "Modem Portfolio Theory," the basis of which is that people
can create "optimal"-risk-vs.-return portfolios by mixing varying amounts of
different asset classes according to their correlation to one another. Many
market studies suggest that asset allocation rather than individual investment
selection accounts for over 90 percent of a typical portfolio's returns. We
concur with this notion, and as a result, are educating our financial
consultants to utilize the program. The results have been very favorable and we
have found this approach to be an effective tool for gathering more assets. EBI
Securities Corporation believes that the new communication systems that are
being implemented and which will be available at the desk top level will enhance
our financial consultant's ability to utilize the asset allocation model.

-15-

3. MANAGED MONEY. In keeping with the changes in the securities
industry, EBI Securities Corporation is actively entering the field of
managed-money and wrap-fee compensation arrangements in place of the more
traditional fee-per-transaction approaches. In short, the managed money approach
charges the client a flat annual percentage of the money managed rather than a
fee for each transaction. Many people believe that this approach better aligns
the investment advisor's goals with that of the client. This approach requires
some additional accounting and registration procedures, both of which have been
implemented by EBI Securities Corporation and its applicable business partners.
EBI Securities Corporation intends to hire additional financial consultants with
managed money experience in addition to actively re-educating our existing
financial consultants.

4. RETAIL EXPANSION. Currently, EBI Securities Corporation is
focusing on filling its existing offices in order to improve efficiencies. EBI
Securities Corporation also believes that expansion of our retail brokerage
services through additional offices will be most effective if it occurs in and
around the corporate headquarters in Denver, Colorado. EBI Securities
Corporation believes that through the creation of a more visible presence around
the corporate headquarters will enhance our efforts in several ways. Locations
conveniently located in relation to the corporate offices are more effectively
managed from a corporate perspective. In addition, economies of scale are
available in terms of concentrated marketing and greater overall exposure in the
community. This may serve to enhance the recognition of EBI Securities
Corporation as a serious participant in the markets we serve.

Global Capital Markets, LLC (formerly, The JB Sutton Group, LLC)

Global Capital Markets, LLC operates from a single location with over 80
financial consultants. Similar to EBI Securities Corporation, Global Capital
Markets, LLC operates primarily as a retail brokerage firm focusing on
individual investors. In addition, Global Capital Markets, LLC augments its
product offerings through its corporate finance and trading activities. Global
Capital Markets, LLC provides its retail clients with a broad range of
traditional and progressive investment products and services.

Global Capital Markets, LLC is a registered broker dealer with the SEC and
a member of the NASD and the SIPC. Global Capital Markets, LLC operates pursuant
to the exemptive provisions of SEC Rule 15c3-3(k)(2)(ii) and clears all
transactions with and for customers on a fully disclosed basis.

Global Capital Markets, LLC maintains dual arrangements with CIBC
Oppenheimer, a division of CIBC World Markets Corp., and Penson Financial
Services Inc., a division of Service Asset Management Company. CIBC Oppenheimer
provides Global Capital Markets, LLC with back office support, transaction
processing services on all the principal national securities exchanges and
access to many other financial services and products. This arrangement enables
Global Capital Markets, LLC to offer its clients a broad range of products and
services that is typically only offered by firms that are larger and/or have a
larger capital base. Service Asset Management Company provides similar services
as CIBC Oppenheimer, but it is utilized by Global Capital Markets, LLC for the
online customer accounts using the Sutton Online, Inc. trading system.

Sutton Online Inc. (formerly, Sutton Online, LLC)

Since our November 1999 acquisition of Sutton Online, Inc., Sutton Online,
Inc. has focused its efforts on hiring key personnel, building its
infrastructure, and establishing strategic alliances. It has also expanding its
product offerings which has served to increase the volume of its business.

In January 2000, Sutton Online, Inc. signed an agreement with ECN Access
Europe, S.A. to provide our trading platform to its customers for the purpose of
routing trades in U.S. stocks by European institutional investors through our
system. Due to regulatory requirements and a delay in the direct digital order
routing system implemented by ECN Access Europe, S.A., Sutton Online, Inc. has
been unable to route trades via its data center in Madrid. ECN Access Europe,
S.A. expects to have these issues resolved in the short term. We anticipate that
ECN Access may become one of our larger clients.

In January 2000, Sutton Online, Inc. signed an agreement with Newman Ladd
Capital, a New York brokerage firm, to provide our Direct Access Trading
software and trade routing to Newman Ladd Capital's clients. While Newman Ladd
Capital awaits the necessary regulatory approval for its online broker dealer,
it has not yet

-16-

marketed our Sonic 2000 trading platform to their internet based clients. To
date, it has only been utilizing our solutions for their in-house trading desk.
Once Newman Ladd Capital establishes its second broker dealer, we are optimistic
that it will actively market our Direct Access Trading software and which may
add considerable online trading revenue.

In February 2000, Sutton Online, Inc. announced a joint marketing and order
flow agreements with Xcaliburtrading.com. The relationship with Excalibur
Trading was formed in order for Sutton Online, Inc. to offer a state-of-the-art
virtual training platform to our subscribers. Xcaliburtrading.com's compensation
under these arrangements is contingent on the volume of trades generated by
their clients.

In March 2000, Sutton Online, Inc. signed an agreement with Shark Fisher,
Ltd., a brokerage and financial consulting firm based in Zurich, Switzerland,
whereby Shark Fisher, Ltd. will exclusively utilize our trading platform and
order-routing service bureau to facilitate European trades in U.S. stocks. Shark
Fisher, Ltd. is currently expanding its banking relationships to offer its
clients greater flexibility to trade online.

In April 2000, Sutton Online, Inc. formed MPD Trading in a joint venture
arrangement with Mack Arnette. Sutton Online, Inc. and Mr. Arnette have agreed
that Sutton Online, Inc. will purchase Mr. Arnette's ownership interest in MPD
Trading and that Mr. Arnette will then become Vice President of Retail
Development for Sutton Online, Inc. Mr. Arnette is one of the pioneers of the
day-trading industry and is the former president and co-founder of Executioner
LLC, a Real Tick III trading platform vendor.

In May 2000, Paul Mougel joined Sutton Online, Inc. as Vice President of
Broker-Dealer Sales. Mr. Mougel has served as Vice President for sales at
Tradecast Ltd., a software company specializing in the development of financial
trading systems.

In May 2000, Richard W. Joyce agreed to join the board of directors of
Sutton Online, Inc. Mr. Joyce is a London-based senior vice president of
worldwide sales at 3Com Corp., a broad-based global supplier of networking
systems and services. Previously, he was president of 3Com Europe and
Asia/Pacific Rim. Joyce joined 3Com UK in 1987 as manager for the workgroup
systems division, became president of 3Com Europe in 1990 and assumed
responsibility for Asia/Pacific Rim sales in 1993. Before joining 3Com, Joyce
held a variety of management positions at Cambridge International Trading Corp.,
Esso Petroleum and RRL Electronics.

In June 2000, Sutton Online, Inc. signed a letter of intent with Brazil
Securities SA, an investment and financial services company based in Montevideo,
Uruguay, to provide our online trading services on an exclusive basis to their
clients. We are currently in the process of finalizing our arrangement with
them. We anticipate that they will begin processing accounts through our systems
as early as July 1, 2000. Sutton Online, Inc. and Brazil Securities SA are
developing a Portuguese version of the Sutton Online, Inc.'s website, and will
utilize existing quote and order routing system to access the BOVESPA. The
completion will enable clients using our system to trade securities on the South
American markets.

We feel that our expanded products and services will greatly enhance our
ability to significantly increase our overall volume of trades. Sutton Online,
Inc. has two principal products, SONIC 2000 and Web Based Trading application.
SONIC 2000 is its flagship product, which provides the user with dynamic
quotations on the NYSE, AMEX, and NASDAQ combined with instant trade routing to
market makers and electronic communication networks. Our Web Based Trading
system is an entry-level platform for the amateur online trader. Over the last
several months, we have added an array of products to meet the needs of both
retail and broker-dealer clients. Sutton Online, Inc. now offers the following
direct access software: SONIC 2000, RealTick III, The Terminator, The EZ
Daytrader, and the JTerminator. RealTick III is the industry's most popular
trading platform, while The Terminator contains some of the fastest technology
on the market. Each product targets a specific demographic profile, and has
unique operating characteristics. Sutton Online, Inc. is currently testing two
proprietary filtering devices, The LiveWire Advisor and The Market Sweeper. Both
of these products contain next-generation technology and have the ability to
provide both visual and audio alerts.

MoneyZone.com (formerly, EBonlineinc.com)

During 1999, MoneyZone.com's activities have been directed toward securing
financing and developing, implementing and marketing an Internet site designed
to facilitate mergers, acquisitions and the

-17-

funding of corporate finance activities. In October 1999, MoneyZone.com
completed its initial private placement of $2,200,000. Since January 2000,
MoneyZone.com has concentrated on developing and expanding its business.

MoneyZone.com operates a website which provides five primary services to
its customers the ability to apply for a commercial loan from a network of more
than 100 lenders; the ability to list a business for sale; the ability to post
an equity funding request; search capabilities for professional service
providers; and a business toolkit with resources for business owners.

MoneyZone.com's plan of operation for the next year includes: increasing
its network of commercial lenders and equity funding sources throughout the
United States and Europe; developing improved functionality for the lending and
equity funding sections so that funding seekers and funding sources may monitor
transactions continuously in real time; licensing MoneyZone Capital Corporation
registered as a broker-dealer to enable it to collect investment banking and
advisory fees; enrolling corporate finance affiliates throughout the United
States and Europe to assist in aggregating and facilitating corporate finance
transactions; sponsoring MoneyZone Capital Partners Fund I LLP to invest in
business-to-business Internet companies and early-stage information technology
and information services companies; co-investing with established venture
capital and investment firms; and retaining additional corporate finance
professionals to expand its capabilities in facilitating commercial loan and
investment banking transactions.

Results of Operations

See Note 1 of the Notes to Consolidated Financial Statements for the
Quarterly Period Ended June 30, 2000, for an explanation of the basis of
presentation of the financial statements.

For the quarterly period ended June 30, 2000, we generated consolidated
revenues in the amount of $8,989,000, compared to $8,461,000, for the quarterly
period ended June 30, 1999, as restated. Our total revenues for the quarterly
period ended June 30, 2000, are higher than the previous periods due to
increases in overall commission and trading revenue. Revenue for the quarterly
period ended June 30, 2000, as compared to the prior year's quarter was also
higher due to the inclusion of Global Capital Markets and Sutton Online. Global
Capital Markets and Sutton Online generated approximately $2,161,000 and
$591,000, respectively of revenues for the quarterly period ended June 30, 2000.
For the quarterly period ended June 30, 2000, EBI Securities generated
approximately $5,619,000 compared with revenue of approximately $8,293,000 from
the same period of a year earlier. This decline is attributable to the overall
decline in the financial markets during April and May 2000.

We incurred total consolidated costs and expenses of $8,743,000, for the
quarterly period ended June 30, 2000, compared to $8,324,000, for the quarterly
period ended June 30, 1999, as restated. Total costs and expenses for the
quarterly period ended June 30, 2000, are higher than the comparable period of
the prior year due to the inclusion of Global Capital Markets and Sutton Online.
For the quarterly period ended June 30, 2000, Global Capital Markets and Sutton
Online incurred costs and expenses of $1,759,000 and $705,000, respectively. For
the quarterly period ended June 30, 2000, EBI Securities incurred costs and
expenses of approximately $5,859,000 compared with costs and expenses of
approximately $7,969,000 from the same period of a year earlier.

We are reporting consolidated net income for the quarterly period ending
June 30, 2000 of $2,352,000 compared to a consolidated net income of $457,000
for the comparable period of the prior year. The net income in the current year
includes a one-time gain on the sale of our European operations of $1,958,000,
net of income taxes.

On June 30, 2000, we had total assets of $50,382,000, and total liabilities
of $9,567,000, compared to $29,400,000, and $10,471,000, respectively, on June
30, 1999, as restated.

The cash flows for the quarterly period ended June 30, 2000 reflect the
volatile nature of the securities industry and the reallocation of our assets
indicative of a growing organization. Our statement of financial condition
reflects a liquid financial position of cash and cash equivalents convertible to
cash representing approximately 3 percent of total assets as of June 30, 2000.

-18-

We are subject to net capital and liquidity requirements. As of March 31,
2000 and 1999, we were in excess of its minimum net capital and liquidity
requirements.

We finance our operations primarily with existing capital and funds
generated from our diversified operations and financing activities.

In the opinion of our management, our existing capital and cash flow from
operations will be adequate to meet our capital needs for at least the next 12
months in light of currently known and reasonably estimable trends. We are
currently exploring our options with regards to additional debt or equity
financing and there can be no assurance such financing will be available.
However, we recognize that with increased liquidity we may be better positioned
to take advantage of potential opportunities in the markets where we maintain
our operations. However, no assurances can be made as to our ability to meet our
cash requirements subsequent to any further business combinations.

As a broker/dealer in securities, we will periodically acquire positions in
securities on behalf of our clients. As disclosed in the notes of the financial
statements, we have title to various financial instruments in the countries in
which we operate. Certain of these investments may be characterized as
relatively illiquid and potentially subject to rapid fluctuations in liquidity.

Acquisitions and Dispositions

In June 2000, Sutton Online Europe acquired a majority interest in Total
Online s.r.o. and a minority interest in Total Solutions s.r.o. in exchange for
a combined total of 10 percent of the issued and outstanding shares of Sutton
Online Europe. At the time of this acquisition, Sutton Online Europe was a newly
formed holding company and had only minimal value. There was no significant
consideration paid or exchanged to acquire these interests. The fiscal
year-end of the Company's European subsidiaries and equity investments is
December 31. These subsidiaries and equity investments are included on the basis
of closing dates that precede the Company's closing date by three months.

-19-

Employees

At June 30, 2000, we currently have approximately 450 full-time employees
and 30 part-time employees. No employees are covered by collective bargaining
agreements and we believe our relations are good with both our employees and our
independent contractors and consultants.

New Accounting Standards

In February 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 128. The new standard replaces primary and fully diluted earnings per
share with basic and diluted earnings per share. SFAS No. 128 was adopted by us

beginning with the interim reporting period ended December 31, 1997. The
adoption did not impact previously reported earnings per share amounts.

In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive
Income." This statement established standards for reporting and display of
comprehensive income and its components (revenues, expenses, gains and losses)
in a full set of general-purpose financial statements. This statement was
adopted by us beginning with the fiscal year ended March 31, 1999.

In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." This statement established standards for
the way that public business enterprises report information about operating
segments in annual financial statements and requires that enterprises report
selected information about operating segments in interim financial reports
issued to stockholders. This statement was effective for our annual report for
the fiscal year ended March 31, 1999. In the initial year of application,
comparative information for earlier years was restated. This statement did not
have a significant impact on us.

In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This Statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. The
effective date of SFAS No. 133 was deferred by the issuance of SFAS No. 137.
SFAS No. 133 was then further amended by SFAS No. 138. The deferred effective
date of SFAS No. 133 is for fiscal years beginning after June 15, 2000. We will
adopt SFAS No. 133 as amended by SFAS No. 138 effective with the fiscal year
beginning April 1, 2001.

-20-

PART II - OTHER INFORMATION

Legal Proceedings

We and our subsidiaries are subject to several legal proceedings in various
jurisdictions throughout the United States.

Euro-American Insurance Company Ltd., et al. v. National Family Care Life
Insurance Company, et al., 191st Judicial District of Dallas County, Texas. In
April, 1996, National Family Care Life Insurance Company commenced the above
action against, among others, EBI Securities Corporation and Steve Signer, an
employee of EBI Securities Corporation. In late 1994 or early 1995, National
Family Care Life Insurance Company entered into an arrangement with Debenture
Guaranty Corporation, another defendant in this litigation, whereby National
Family Care Life Insurance Company lent money to Debenture Guaranty Corporation,
and Debenture Guaranty Corporation opened an account in Debenture Guaranty
Corporation's name to trade U.S. Treasuries. The note to National Family Care
Life Insurance Company was in the amount by which the treasuries could be
margined. This transaction was allegedly part of a scheme whereby National
Family Care Life Insurance Company was attempting to inflate its assets for
regulatory purposes. Debenture Guaranty Corporation allegedly misappropriated
the funds for its own benefit. National Family Care Life Insurance Company
alleged that EBI Securities Corporation and Mr. Signer aided, abetted and
conspired with Debenture Guaranty Corporation in allegedly defrauding Plaintiff.
National Family Care Life Insurance Company has reduced its damages demand from
approximately $11,500,000 to $1,100,000. EBI Securities Corporation believes it
has meritorious defenses and intends to vigorously defend against National
Family Care Life Insurance Company's claims. The case is not presently scheduled
for trial. EBI Securities Corporation has filed a motion for summary judgment.

EBI Securities Corporation also is involved in an arbitration proceeding
related to the National Family Care Life Insurance Company litigation entitled
National Family Care Life Insurance Co. v. Pauli Company, Inc., et al., NASDR
Case No. 96-02673 (the "Arbitration"). The Arbitration panel entered an award
against EBI Securities Corporation in July 1998 in favor of third-party
plaintiff Pauli & Company, Inc. of approximately $370,000, which was
significantly below the initial award sought by Pauli & Company, Inc. of
approximately $1,100,000. EBI Securities Corporation has filed a motion in the
National Family Care Life Insurance Company litigation to vacate this award and
plans to vigorously contest this award on appeal.

Jack G. Larsen, as receiver for Southwest Income, Trust Advantage Income
Trust and Investors Trading Trust v. Cohig and Associates, Inc. et al., Maricopa
County Superior Court, Arizona, Case No. CV 98-20281. Plaintiff commenced this
action against EBI Securities Corporation and one of its brokers in December
1998 (and process was served on EBI Securities Corporation in January 1999)
seeking damages in excess of $8 million against EBI Securities Corporation as
well as an accounting of funds allegedly in possession of EBI Securities
Corporation. Plaintiff, who apparently has been appointed receiver for three
trusts, alleges that customer accounts established at EBI Securities Corporation
by third parties contained funds that actually belonged to the trusts, and that
EBI Securities Corporation negligently failed to supervise its employees, in
failing to determine that the third parties' trading activities, which allegedly
resulted in significant trading losses, were in violation of the terms of
agreements between the third parties and the Trusts. Plaintiff also contends
that EBI Securities Corporation has in its possession and has wrongfully refused
to return approximately $270,000 belonging to the trusts. This case is presently
scheduled for trial in October, 2000. EBI Securities Corporation has filed a
motion for summary judgment. EBI Securities Corporation believes that it has
meritorious defenses and intends to vigorously defend against Plaintiff's
claims.

Lee Schlessman et al v. Global Capital Partners, Inc. and EBI Securities
Corporation, Denver County District Court, Colorado, Case No. 00 CV 1795.
Plaintiffs commenced this action in April 2000, alleging that we unlawfully
prepaid $1,350,000 of convertible secured promissory notes without affording the
Plaintiffs the right to convert the notes into common stock. The notes were
issued in March 1999, and entitled the holders to convert at a price of $5.75.
We filed a registration statement covering the conversion, which was declared
effective in August of 1999. In February 2000, we inquired as to whether the
Noteholders intended to convert. When it was learned that they were not
intending to convert, we prepaid the notes pursuant to their terms, thereby

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extinguishing the conversion privilege. The Noteholders have sued both Global
Capital Partners, Inc. and EBI Securities Corporation, claiming that they have
suffered damages as a result of not being entitled to convert and sell the
common stock issued upon conversion. We have filed a motion to compel
arbitration. We believe that we have meritorious defenses and intend to
vigorously defend against Plaintiffs claims.

We are involved in a number of judicial, regulatory and arbitration
proceedings (including those described above and actions that have been
separately described in previous filings) concerning matters arising in
connection with the conduct of our businesses. Some of the actions have been
brought on behalf of various classes of claimants and seek damages of material
and indeterminate amounts. We believe, based on currently available information
and advice of counsel, that the results of such proceedings, in the aggregate,
will not have a material adverse effect on our financial condition but might be
material to operating results for any particular period, depending, in part,
upon the operating results for such period.

Changes in Securities and Use of Proceeds

None

Defaults on Senior Securities

None

Submission of Matters to a Vote of Security Holders

None

Other Information

None

Exhibits and Reports on Form 8-K

a. Exhibits
None.

b. There were two reports on Form 8-K filed during the quarterly period
ended June 30, 2000, incorporated by reference to the Current Reports
on Form 8-K dated April 7, 2000 and June 29, 2000 (File No. 000-26202).

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SIGNATURE

In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this amendment to this report to be signed on its
behalf by the undersigned thereunto duly authorized.

GLOBAL CAPITAL PARTNERS, INC.
(Registrant)

By /s/ Kevin D. McNeil
Kevin D. McNeil
Executive Vice President, Treasurer,
Secretary, and Chief Financial Officer
(Principal Financial and Accounting Officer)

Dated: November 2, 2001

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Global Capital Partners (GCPL) Inactive 10QSB/A2001 Q1 Quarterly report (small business) (amended)