Halozyme Therapeutics Inc – ‘DEFM14C’ on 2/17/04

On:  Tuesday, 2/17/04, at 5:22pm ET   ·   Effective:  2/17/04   ·   Accession #:  1144204-4-1680   ·   File #:  0-49616

in

this entire Filing. an “Entity” Search.

Show

Documents searched

and

each “hit”. the 1st “hit”.

↓↑Hints

Definitive Proxy Information Statement — Merger or Acquisition   —   Schedule 14C
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: DEFM14C     Definitive Proxy Information Statement -- Merger     121    509K 
                          or Acquisition                                         

Document Table of Contents

DEFM14C
1st Page of 121
TOC
↑Top
Previous
Next
↓Bottom
Just 1st
 
SCHEDULE 14C INFORMATION STATEMENT

 Information Statement Pursuant to Section 14(c)
of the Securities Exchange Act of 1934

 [X] Filed by the Registrant

[ ] Filed by a Party other than the Registrant

Check the appropriate box:

 [ ] Preliminary Information Statement

[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))

[X] Definitive Information Statement

 GLOBAL YACHT SERVICES, INC.

 Commission File Number: 000-49616

Payment of Filing Fee (Check the appropriate box):                              

[ ]      No fee required                                                        

[X]      Fee computed on table below per Exchange Act Rules 14(a)6(i)(1)        
and 011.                                                      

    (1) Title of each class of securities to which investment applies:
Common stock.                                                 

 (2) Aggregate number of securities to which investment applies:
53,644,968.                                                   

      (3) Per unit price or other underlying value of transaction computed
       pursuant to Exchange Act Rule 011: (set forth the amount on which the
       filing fee is calculated and state how it was determined): The filing
       fee is determined based upon the sum of (a) the product of 34,999,701
       shares of Hyalozyme's common stock, 6,886,807 options and warrants to
       purchase 11,758,460 shares of Hyalozyme's common stock outstanding on
    the date of this filing and the merger consideration of the market
       price of Global Yacht's common stock ($0.02 per share on the close of
         business on February 4, 2004 as reported on Yahoo! Finance), making the
        transaction value equal to $1,072,899.36. Pursuant to Section 14(g) of
       the Exchange Act, the fee was determined by multiplying the aggregate
value of the transaction by 0.0001267.                        

         (4) Proposed Global Yacht aggregate value of transaction: $1,072,899.36

(5) Total fee paid: $135.94                                   

Fee paid previously with preliminary materials.                                 

[X] Check box if any part of the fee is offset as provided by Exchange Act Rule 
011(a)(2) and identify the filing for which the offsetting fee was paid         
previously. Identify the previous filing by registration statement number, or   
the Form or Schedule and the date of its filing.                                

(1) Amount Previously Paid: $135.94                           

(2) Form, Schedule or Registration Statement No.: PREM14C     

(3) Filing Party: Global Yacht Services, Inc.                 

(4) Date Filed: February 6, 2004                              

1 

DEFM14C
2nd Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 2nd
 GLOBAL YACHT SERVICES, INC.
 7710 HAZARD CENTER DRIVE, SUITE E-415
 SAN DIEGO, CALIFORNIA 92108

NOTICE OF ACTION TAKEN BY WRITTEN CONSENT OF MAJORITY SHAREHOLDERS              

DEAR SHAREHOLDERS:                                                              

We are writing to advise you that Global Yacht Services, Inc. has entered into  
an Agreement and Plan of Merger ("Merger") with DeliaTroph Pharmaceuticals,     
Inc., dba Hyalozyme Therapeutics, Inc., ("Hyalozyme") a privately held          
corporation based in San Diego, California and its stockholders to merge with   
Hyalozyme. The Merger is to be accomplished after we form a wholly-owned merger 
subsidiary in Nevada which would then merge with and into Hyalozyme, with       
Hyalozyme being the survivor. In addition, Hyalozyme's outstanding shares would 
then be converted into a combination of shares of our common stock, as well as  
options and warrants to purchase restricted shares of our common stock. This    
share conversion is intended to correspond to the capitalization of Hyalozyme.  
After the Merger is concluded, we will change our corporate name to Halozyme    
Therapeutics, Inc. We will also amend and restate our Articles of Incorporation 
to increase the number of authorized shares of common stock to one hundred      
million and to authorize twenty million shares preferred stock for which our    
Board of Directors may set the designations and preferences.                    

The Merger, name change, increase in authorized common stock and authorization  
of preferred stock was approved on January 28, 2004, by unanimous approval of   
our Board of Directors. In addition, Mitch Keeler, our President, director and  
our majority shareholder, approved the Merger, name change, increase in         
authorized common stock and authorization of preferred stock by written consent 
in lieu of a meeting on January 28, 2004, in accordance with the relevant       
sections of the Nevada Revised Statutes.                                        

The name change, increase in authorized common stock and authorization of       
preferred stock will not be effective until we amend and restate our Articles of
Incorporation by filing Amended and Restated Articles of Incorporation with the 
Nevada Secretary of State. The Merger will not be effective until the Articles  
of Merger between the acquisition subsidiary and Hyalozyme are filed with the   
Nevada Secretary of State and the California Secretary of State. We intend to   
file the Amended and Restated Articles of Incorporation and the Articles of     
Merger twenty days after this information statement is first mailed to our      
shareholders.                                                                   

Our purpose in entering into the Merger, changing our name to Halozyme          
Therapeutics, Inc., increasing our authorized common stock and authorizing      
preferred stock is to allow us to comply with the terms of an agreement we      
entered into with DeliaTroph Pharmaceuticals, Inc., a California corporation    
("HTI") to acquire and operate HTI as our wholly-owned subsidiary. We believe   
that the acquisition of HTI will increase our profitability and the total value 
of the corporation to our investors.                                            

No action is required by you. The accompanying information statement is         
furnished only to inform our shareholders of the action described above before  
it takes effect in accordance with Rule 14c-2 promulgated under the Securities  
Act of 1934, as amended. This information statement is being mailed to you on or
about February 17, 2004.                                                        

WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY. 
COMPLETION OF THE MERGER TRANSACTION WILL RESULT IN A CHANGE IN CONTROL BY      
HYALOZYME AND AN ASSUMPTION OF HYALOZYME'S ASSETS, LIABILITIES AND OPERATIONS.  

PLEASE NOTE THAT THE COMPANY'S CONTROLLING STOCKHOLDERS HAVE VOTED TO APPROVE   
THE MERGER, NAME CHANGE, INCREASE IN AUTHORIZED COMMON STOCK AND AUTHORIZATION  
OF PREFERRED STOCK. THE NUMBER OF VOTES HELD BY THE CONTROLLING STOCKHOLDERS ARE
SUFFICIENT TO SATISFY THE STOCKHOLDER VOTE REQUIREMENT FOR THESE ACTIONS AND NO 
ADDITIONAL VOTES WILL CONSEQUENTLY BE NEEDED TO APPROVE THESE TRANSACTIONS.     

By order of the Board of Directors,                                             

/s/ Mitch Keeler                                                                
-----------------------                                                         
Mitch Keeler, President                                                         
San Diego, California                                                           
February 17, 2004                                                               

2 

DEFM14C
3rd Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 3rd
 Global Yacht Services, Inc.

 INFORMATION STATEMENT REGARDING
ACTION TAKEN BY WRITTEN CONSENT OF
MAJORITY OF SHAREHOLDERS

We are furnishing this shareholder information statement to you to provide you  
with information and a description of an action taken by written consent of our 
majority shareholder, on January 28, 2004, in accordance with the relevant      
Sections of the Nevada Revised Statutes. This action was taken by Mitch Keeler, 
our President, director and our majority shareholder, who owns in excess of the 
required majority of our outstanding common stock necessary for the adoption of 
the actions.                                                                    

WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY. 

This information statement is being mailed on or about February 17, 2004 to     
shareholders of record on February 5, 2004. The information statement is being  
delivered only to inform you of the corporate action described herein before it 
takes effect in accordance with Rule 14c-2 promulgated under the Securities     
Exchange Act of 1934, as amended.                                               

We have asked brokers and other custodians, nominees and fiduciaries to forward 
this Information Statement to the beneficial owners of the common stock held of 
record by such persons and will reimburse such persons for out-of-pocket        
expenses incurred in forwarding such material.                                  

THIS IS NOT A NOTICE OF A MEETING OF STOCKHOLDERS AND NO STOCKHOLDERS' MEETING  
WILL BE HELD TO CONSIDER ANY MATTER DESCRIBED HEREIN.                           

PLEASE NOTE THAT THE COMPANY'S CONTROLLING STOCKHOLDERS HAVE VOTED TO APPROVE   
THE MERGER, NAME CHANGE, INCREASE IN AUTHORIZED COMMON STOCK AND AUTHORIZATION  
OF PREFERRED STOCK. THE NUMBER OF VOTES HELD BY THE CONTROLLING STOCKHOLDERS IS 
SUFFICIENT TO SATISFY THE STOCKHOLDER VOTE REQUIREMENT FOR THE MERGER, THE NAME 
CHANGE AND AUTHORIZATION OF PREFERRED STOCK AND NO ADDITIONAL VOTES WILL        
CONSEQUENTLY BE NEEDED TO APPROVE THESE ACTIONS.                                

GENERAL                                                                         

On January 28, 2004, our Board of Directors unanimously approved, subject to    
shareholder approval, entering into the Merger with Hyalozyme, and the amendment
and restatement of our Articles of Incorporation to change our corporate name to
"Halozyme Therapeutics, Inc.," increase our authorized common stock and         
authorize a class of preferred stock. On January 28, 2004, Mitch Keeler, our    
President, director and shareholder who owns in excess of the required majority 
of our outstanding common stock necessary for the adoption of the action,       
approved the name change and authorization of preferred stock by action taken by
written consent. The increase in authorized common stock to one hundred million 
(100,000,000) shares will allow us to comply with the terms of the Merger       
Agreement. The authorization of twenty million (20,000,000) shares preferred    
stock will allow us to issue preferred stock since we currently have only one   
class of stock authorized. The full text of the proposed Merger Agreement is    
attached hereto as Exhibit A, the full text of the proposed Articles of Merger  
is attached hereto as Exhibit B and the full text of the proposed Amended and   
Restated Articles of Incorporation is attached hereto as Exhibit C.             

PURPOSE OF MERGER                                                               

Our Board of Directors believes it is desirable to enter into the Agreement and 
Plan of Merger with Hyalozyme by means of forming an acquisition subsidiary and 
acquiring DeliaTroph Pharmaceuticals, Inc. doing business as Hyalozyme          
Therapeutics, Inc., a privately held California corporation ("HTI") as our      
wholly-owned subsidiary. We believe that the acquisition of HTI will increase   
our profitability and the total value of the corporation to our investors.      

3 

DEFM14C
4th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 4th
PROCEDURE FOR APPROVAL OF MERGER; VOTE REQUIRED                                 

Because the contemplated Merger is to be accomplished by our acquisition        
subsidiary, shareholder vote by our shareholders is not required by the Nevada  
Revised Statutes. However, because we are qualified to do business in California
the transaction may be governed by the California Corporations Code which       
requires that such action be approved by a majority of the outstanding shares   
entitled to vote. The Nevada Revised Statutes and California Corporations Code  
provides that any action which may be taken at a meeting of the shareholders may
be taken without a meeting and without prior notice, if a consent in writing,   
setting forth the action so taken, shall be signed by the holders of a majority 
of the outstanding shares entitled to vote.                                     

On February 5, 2004, the record date for determination of the shareholders      
entitled to receive this Information Statement, there were 8,196,362 shares of  
common stock outstanding. The holders of common stock are entitled to one vote  
for each share held of record on all matters submitted to a vote of our         
shareholders. We needed the affirmative vote of at least a majority of the      
outstanding shares of our common stock to approve the name change. Our Board, by
its unanimous written consent, adopted resolutions approving the Merger and the 
filing of the Certificate of Merger to consummate the transaction. By action of 
written consent, dated January 28, 2004, Mitch Keeler, our President, director  
and majority shareholder, who owns 4,275,000 shares, or 52.2% of the issued and 
outstanding shares of our common stock, approved the Merger and the filing of   
the Certificate of Merger with the Nevada Secretary of State and the California 
Secretary of State.                                                             

EFFECTIVE DATE OF MERGER                                                        

The Certificate of Merger, attached hereto as Exhibit B, will become effective  
upon its filing with the Nevada Secretary of State and the California Secretary 
of State. We intend to file the Certificates of Merger twenty days after this   
Information Statement is first mailed to shareholders.                          

PURPOSE OF CHANGE IN NAME OF THE CORPORATION, INCREASE IN AUTHORIZED COMMON     
STOCK AND AUTHORIZATION OF PREFERRED STOCK ON WHICH THE BOARD OF DIRECTORS MAY  
SET THE DESIGNATIONS AND PREFERENCES                                            

Our Board of Directors believes it is desirable to change the name of the       
Company to "Halozyme Therapeutics, Inc.," to increase our authorized common     
stock and to authorize the issuance of preferred stock on which our Board of    
Directors may set the preferences and designations. Our purpose in changing our 
name to Halozyme Therapeutics, Inc. reflects the fact that we entered into an   
agreement with DeliaTroph Pharmaceuticals, Inc., a California corporation       
("HTI") to acquire HTI as our wholly-owned subsidiary. The increase in          
authorized common stock to one hundred million (100,000,000) shares will allow  
us to comply with the terms of the Merger Agreement. The authorization of twenty
million (20,000,000) shares preferred stock will allow us to issue preferred    
stock since we currently have only one class of stock authorized, and the       
authorization for the Board of Directors to set the preferences and designations
on that preferred stock will allow such preferences and designations to be set  
without shareholder approval. We believe that these changes to our Articles and 
the acquisition of HTI will increase our profitability and the total value of   
the corporation to our investors, though there is no guarantee that these       
actions will have that result.                                                  

PROCEDURE FOR APPROVAL OF NAME CHANGE, INCREASE IN AUTHORIZED COMMON STOCK, AND 
AUTHORIZATION OF PREFERRED STOCK ON WHICH THE BOARD MAY SET PREFERENCES AND     
DESIGNATIONS; VOTE REQUIRED                                                     

The Nevada Revised Statutes require that, in order for us to amend and restate  
our Articles of Incorporation, such amendment must be approved by our Board of  
Directors and approved by a majority of the outstanding shares entitled to vote.
The Nevada Revised Statutes also provides that any action which may be taken at 
a meeting of the shareholders may be taken without a meeting and without prior  
notice, if a consent in writing, setting forth the action so taken, shall be    
signed by the holders of a majority of the outstanding shares entitled to vote. 

4 

DEFM14C
5th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 5th
On February 5, 2004, the record date for determination of the shareholders      
entitled to receive this Information Statement, there were 8,196,362 shares of  
common stock outstanding. The holders of common stock are entitled to one vote  
for each share held of record on all matters submitted to a vote of our         
shareholders.                                                                   

Thus, we needed the affirmative vote of at least a majority of the outstanding  
shares of our common stock , or 4,098,180 shares to approve the name change and 
authorization of preferred stock on which the Board of Directors may set the    
designations and preferences. Our Board, by its unanimous written consent,      
adopted resolutions approving the amendment and restatement of our Articles of  
Incorporation to effect the name change and authorization of preferred stock on 
which the Board of Directors may set the designations and preferences. By action
of written consent, dated January 28, 2004, Mitch Keeler, our President,        
director and majority shareholder, who owns 4,275,000 shares, or 52.2% of the   
issued and outstanding shares of our common stock, approved the name change and 
authorization of preferred stock on which the Board of Directors may set the    
designations and preferences.                                                   

EFFECTIVE DATE OF AMENDED AND RESTATED ARTICLES OF INCORPORATION                

The amendment and restatement of our Articles of Incorporation will become      
effective upon the filing with the Nevada Secretary of State of the Amended and 
Restated Articles of Incorporation, attached hereto as Exhibit C. We intend to  
file the Amended and Restated Articles of Incorporation twenty days after this  
Information Statement is first mailed to shareholders.                          

EFFECT ON CERTIFICATES EVIDENCING SHARES OF GLOBAL YACHT SERVICES, INC. STOCK   

The change in the name of Global Yacht Services, Inc. will be reflected in its  
stock records by book-entry in Global Yacht Services, Inc.'s records. For those 
shareholders that hold physical certificates, please do not destroy or send to  
Global Yacht Services, Inc. your common stock certificates. Those certificates  
will remain valid for the number of shares shown thereon, and should be         
carefully preserved by you.                                                     

DISSENTERS' RIGHTS                                                              

Under Nevada law, a stockholder is entitled to dissent from, and obtain payment 
for the fair value of his or her shares (i) in the event of consummation of a   
plan of merger or plan of exchange in which the Nevada corporation is a         
constituent entity, and (ii) any corporate action taken pursuant to a vote of   
the stockholders to the extent that the articles of incorporation, by-laws or a 
resolution of the board of directors provides that voting or non-voting         
stockholders are entitled to dissent and obtain payment for their shares. The   
Nevada Revised Statutes does not provide for dissenters' right of appraisal in  
connection with the name change and authorization of preferred stock on which   
the Board of Directors may set the designations and preferences.                

INTERESTS OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPON                        

No director, executive officer, nominee for election as a director, associate of
any director, executive officer or nominee or any other person has any          
substantial interest, direct or indirect, by security holdings or otherwise, in 
the Merger or name change which is not shared by all other shareholders of the  
Company.                                                                        

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT                  

The following table sets forth information regarding the beneficial ownership of
the shares of our common stock as of February 5, 2004, except as noted in the   
footnotes below, by:                                                            

5 

DEFM14C
6th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 6th
  o    Each person who we know to be the beneficial owner of 5% or more of
our outstanding common stock;                               

o    Each of our executive officers;                                  

o    Each of our directors; and                                       

o    All of our executive officers and directors as a group.          

Beneficial ownership is determined in accordance with the rules of the          
Securities and Exchange Commission. In computing the number of shares           
beneficially owned by a person and the percentage of ownership of that person,  
shares of common stock subject to options held by that person that are currently
exercisable or become exercisable within 60 days of February 5, 2004 are deemed 
outstanding even if they have not actually been exercised. Those shares,        
however, are not deemed outstanding for the purpose of computing the percentage 
ownership of any other person. As of February 5, 2004, 8,196,362 shares of our  
common stock were issued and outstanding. Unless otherwise indicated in the     
table, the persons and entities named in the table have sole voting and sole    
investment power with respect to the shares set forth opposite the shareholder's
name, subject to community property laws, where applicable. The address of each 
shareholder is listed in the table.                                             

The following table sets forth certain information regarding the beneficial     
ownership of our common stock as of February 5, 2004, by each person or entity  
known by us to be the beneficial owner of more than 5% of the outstanding shares
of common stock, each of our directors and named executive officers, and all of 
our directors and executive officers as a group.                                

                                                        [Enlarge/Download Table]

                                                                AMOUNT AND NATURE OF                    
TITLE OF CLASS  NAME OF BENEFICIAL OWNER                          BENEFICIAL OWNER      PERCENT OF CLASS
--------------  ------------------------                        --------------------    ----------------
                                                                                                        
Common Stock    Mitch Keeler                                     4,275,000 shares,            52.16%    
                7710 Hazard Center Drive, Suite E-415           president, director                     
                San Diego, California 92108                                                             

Common Stock    Melissa Day                                  21,375 shares, secretary,         0.26%    
                7710 Hazard Center Drive, Suite E-415           treasurer, director                     
                San Diego, California 92108                                                             

Common Stock    Flexgene Corp.                                     771,873 shares              9.42%    
                The Mill Mall, Barkers, P.O.  Box 62                                                    
                Roadtown, Tortola, BVI                                                                  

Common Stock    Carib-Ventures Inc.                                415,624 shares              5.07%    
                Caribbean Place, Suite #3, P.O.  Box 599                                                
                Providenciales, Turks & Caicos Islands, BWI                                             

Common Stock    All directors and named executive officers        4,296,375 shares            52.42%    
                as a group                                                                              

The officer, director and shareholder of Flexgene Corp. is Martin Regan. The    
director of Carib-Ventures Inc. is Sterling Directors Ltd. and Keith Burant. The
shareholder of Carib-Ventures Inc. is Meridian Trust Company Limited, which is  
controlled by Keith Burant.                                                     

Beneficial ownership is determined in accordance with the rules of the          
Securities and Exchange Commission and generally includes voting or investment  
power with respect to securities. In accordance with Securities and Exchange    
Commission rules, shares of our common stock which may be acquired upon exercise
of stock options or warrants which are currently exercisable or which become    
exercisable within 60 days of the date of the table are                         

6 

DEFM14C
7th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 7th
deemed beneficially owned by the optionees. Subject to community property laws, 
where applicable, the persons or entities named in the table above have sole    
voting and investment power with respect to all shares of our common stock      
indicated as beneficially owned by them.                                        

SUMMARY TERM SHEET

This summary term sheet does not contain all of the information that is         
important to you. You should carefully read the entire Information Statement and
the Appendices, as well as the information we incorporate by reference.         

 THE COMPANIES

GLOBAL YACHT SERVICES, INC., A NEVADA CORPORATION, ("GLOBAL YACHT"). Global     
Yacht was incorporated in Nevada on February 21, 2001. Global Yacht Services    
provides a broad range of yacht services in the global marketplace. Our services
include yacht rental and charter, yacht sales and yacht services, such as the   
provision of captain, crew, supplies, maintenance, delivery as well as          
full-scale contracted care of yachts. Our president, Mitch Keeler, is an        
experienced captain and possesses a captain certification from the U.S. Coast   
Guard. Mr. Keeler provides professional advice and consultation for all aspects 
of yacht lease, purchase and ownership and is available for on site assistance  
anywhere in the world. We currently generate revenues from our charter services,
which range from day charters to full week charters. We currently offer private 
yacht charters in San Diego, usually of up to one week in duration as well as   
corporate charters, which are typically 3 to 5 hours and short range. We have   
very few charters that are longer than one week, however, they do occur. Our    
officers act as captain and crew for our charter services, but we often utilize 
outside businesses for services such as catering and bartending.                

We have also generated revenues from our yacht management services and our      
delivery services. Yacht management services include managing the yacht for the 
owners including routine maintenance, repairs and electronics installation.     
Regular maintenance includes services such as exterior and interior cleaning,   
bottom cleaning, waxing and zinc replacement. Delivery services include         
delivering newly purchased yachts to various locations around the world. We use 
subcontractors on a per job basis for various services that we provide. Those   
subcontractors are paid by us when we are paid by the client. Subcontractors for
our charter services may include, but are not limited to, the following:        
captains, deckhands, stewards, cooks, caterers, entertainment, and bartenders.  
Other subcontractors that we use include yacht repair persons and skilled       
electronics installers.                                                         

However, upon recent analysis of operations to date, Global Yacht has decided to
focus on evaluating other opportunities that may enhance stockholder value,     
including the acquisition of a product or technology, or pursuing a merger or   
acquisition of another business entity with long-term growth potential. Global  
Yacht's shares currently are listed for quotation on the Over the Counter       
Bulletin Board under the symbol "GYHT" and the closing price of its shares of   
common stock on February 4, 2004 was $0.02 per share as reported on Yahoo!      
Finance.                                                                        

DELIATROPH PHARMACEUTICALS, INC., A CALIFORNIA CORPORATION, DBA HYALOZYME       
THERAPEUTICS, INC. ("HYALOZYME"). Hyalozyme was incorporated in California on   
February 26, 1998. Hyalozyme is a product-focused biotechnology company         
dedicated to the development and commercialization of recombinant therapeutic   
enzymes and drug enhancement systems, based on intellectual property covering   
the family of human enzymes known as hyaluronidases. Hyalozyme's first products 
are human synthetic formulations of a hyaluronidase enzyme that replaces current
animal slaughterhouse-derived enzymes that carry risks of animal pathogen       
contamination and immunogenicity. These products are based on a highly versatile
enzyme technology that has a wide range of therapeutic applications, and will   
enable Hyalozyme to help patients across multiple disease states while creating 
significant shareholder value.                                                  

Pursuant to the terms of the Agreement, an acquisition subsidiary of Global     
Yacht Services will merge with and into Hyalozyme and the separate corporate    
existence of such acquisition subsidiary shall cease. Following the Merger,     
Global Yacht Services shall continue as the parent corporation of Hyalozyme, but
will take the name "Halozyme Therapeutics, Inc." APPROVAL OF THIS MERGER WILL   
RESULT IN A CHANGE IN OUR CONTROL TO CONTROL BY HYALOZYME'S MANAGEMENT AND THE  
ASSUMPTION OF HYALOZYME'S OPERATIONS AND LIABILITIES.                           

7 

DEFM14C
8th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 8th
 PREEXISTING RELATIONSHIPS

Hyalozyme and Global Yacht did not have any preexisting relationship prior to   
entering into the Merger Agreement. To the best of our knowledge, none of Global
Yacht's shareholders hold shares of Hyalozyme nor do any of the stockholders of 
Hyalozyme hold shares of Global Yacht Services.                                 

 STRUCTURE OF THE MERGER

At the effective time of the Merger:                                            

o    Global Yacht will merge its acquisition subsidiary with and into 
     Hyalozyme and the separate corporate existence of the acquisition
subsidiary shall cease;                                     

 o    Global Yacht will issue 34,999,701 shares of its restricted common
stock, 6,886,807 options and 11,758,460 warrants to purchase
        additional shares of its restricted common stock to the shareholders
          of Hyalozyme in exchange for 100% of the issued and outstanding shares
       of common stock, and corresponding options and warrants to purchase
shares of Hyalozyme's common stock; and                     

o    A total of 4,296,375 shares of Global Yacht's current outstanding
   common stock will be tendered for redemption by Global Yacht in
exchange for $43,000 or $0.01 per share.                    

As a result of the Merger, Global Yacht shall be the parent corporation of the  
acquisition subsidiary which shall continue as the surviving corporation and the
shareholders of Hyalozyme will become stockholders of Global Yacht. The         
remaining stockholders of Global Yacht will own approximately 10% of the issued 
and outstanding shares of Global Yacht common stock, based on 38,899,688 Global 
Yacht shares outstanding after the Merger. The remaining shareholders of Global 
Yacht would own approximately 6.8% of the issued and outstanding shares of      
Global Yacht common stock if all 6,886,807 options and 11,758,460 warrants to   
purchase restricted shares of Global Yacht's common stock acquired pursuant to  
the Merger are exercised, which would result in 57,544,955 shares of common     
stock outstanding. On January 28, 2004, pursuant to an investment completed     
simultaneously with the Merger, Hyalozyme raised approximately $8.1 million.    

We are relying on Rule 506 of Regulation D of the Securities Act of 1933, as    
amended (the "Act") in regard to the shares we anticipate issuing pursuant to   
the Merger. We believe this offering qualifies as a "business combination" as   
defined by Rule 501(d). Reliance on Rule 506 requires that there are no more    
than 35 non-accredited purchasers of securities from the issuer in an offering  
under Rule 506. Hyalozyme has represented to us that all of their stockholders  
have certified to Hyalozyme that they are "accredited investors" as defined in  
Rule 501(a) of Regulation D. Hyalozyme also has represented to us that there has
been no advertising or general solicitation in connection with this transaction.

 GLOBAL YACHT'S REASONS FOR THE MERGER

Global Yacht's board of directors considered various factors in approving the   
Merger and the Merger Agreement, including:                                     

8 

DEFM14C
9th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 9th
o    its inability to expand its current level of operations;         

    o    the available technical, financial and managerial resources possessed
by Hyalozyme;                                               

o    prospects for the future;                                        

  o    the quality and experience of management services available and the
depth of Hyalozyme management;                              

o    Hyalozyme's potential for growth or expansion;                   

o    Hyalozyme's profit potential; and                                

o    an anticipated increase in stockholder value as a result of the  
Merger.                                                     

Global Yacht's board of directors considered various factors, but primarily that
Global Yacht's management has not been able to expand Global Yacht's operations 
to profitability. In considering the Merger with Hyalozyme, Global Yacht's board
of directors anticipated that this lack of profitability was likely to continue 
for the foreseeable future. Given those circumstances, Global Yacht's board     
decided that the best course of action for Global Yacht and its shareholders was
to enter into and conclude the proposed Merger with Hyalozyme, after which      
Global Yacht's management would resign. In agreeing to the Merger, Global       
Yacht's board hoped that by relinquishing control to Hyalozyme's management and 
adopting Hyalozyme's assets and operations, that such a move would eventually   
add value to Global Yacht and the interests of its shareholders. Global Yacht's 
board of directors reached this conclusion after analyzing Hyalozyme's          
operations, technical assets, intellectual property and managerial resources,   
which are described in more detail below and believes that acquiring Hyalozyme's
potential for profitable operations by means of the Merger was the best         
opportunity to increase value to Global Yacht's shareholders. Global Yacht's    
board of directors did not request a fairness opinion in connection with the    
Merger.                                                                         

HYALOZYME'S REASONS FOR THE MERGER

Hyalozyme's board of directors considered various factors in approving the      
Merger and the Merger Agreement, including:                                     

o    the increased market liquidity expected to result from exchanging
       stock in a private company for publicly traded securities of Global
Yacht;                                                      

     o    the ability to use registered securities to make acquisition of assets
or businesses;                                              

o    increased visibility in the financial community;                 

o    enhanced access to the capital markets;                          

o    improved transparency of operations; and                         

     o    perceived credibility and enhanced corporate image of being a publicly
traded company.                                             

Hyalozyme's board of directors did not request a fairness opinion in connection 
with the Merger.                                                                

9 

DEFM14C
10th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 10th
RISK FACTORS

The Merger entails several risks, including:                                    

o    Upon completion of the Merger, we will assume Hyalozyme's plan of
     operation, which is anticipated to require substantial additional
     funds to fully implement. Hyalozyme's management anticipates that
        after giving effect to the Merger, substantial additional funds will
        be required to implement its business plan. However, there can be no
assurance that management will be successful in raising such
additional capital.                                         

    o    Our current stockholders will be diluted by the shares issued as part
     of the Merger and may be diluted by future issuances of shares to
        satisfy our working capital needs. Even though 4,296,375 shares held
   by certain of our shareholders will be redeemed, we are issuing
       34,999,701 shares of our common stock, along with 6,886,807 options
       and 11,758,460 warrants to purchase additional shares of our common
     stock to the shareholders in Hyalozyme as part of the Merger. The
      above issuances, along with anticipated issuances to raise working
      capital, will reduce the percentage ownership of our stockholders.

  o    The market price of our common stock may decline as a result of the
          Merger if the integration of the Global Yacht and Hyalozyme businesses
is unsuccessful.                                            

     o    The stockholders of Hyalozyme will own approximately 90% of our common
 stock following completion of the Merger, even if none of the
         6,886,807 options or 11,758,460 warrants to purchase our common stock
        are exercised, which will limit the ability of other stockholders to
influence corporate matters.                                

 RISKS RELATED TO HYALOZYME'S BUSINESS

IF HYALOZYME DOES NOT RECEIVE AND MAINTAIN REGULATORY APPROVALS FOR ITS PRODUCT 
CANDIDATES, HYALOZYME WILL NOT BE ABLE TO COMMERCIALIZE ITS PRODUCTS, WHICH     
WOULD SUBSTANTIALLY IMPAIR ITS ABILITY TO GENERATE REVENUES AND MATERIALLY HARM 
ITS BUSINESS AND FINANCIAL CONDITION.                                           

None of Hyalozyme's product candidates has received regulatory approval from the
FDA. Approval from the FDA is necessary to manufacture and market pharmaceutical
products in the United States. Many other countries including major European    
countries and Japan have similar requirements.                                  

The 510(k) and NDA processes are extensive, time-consuming and costly, and there
is no guarantee that the FDA will approve 510(k)s or NDAs for any of Hyalozyme's
product candidates, or that the timing of any such approval will be appropriate 
for its product launch schedule and other business priorities, which are subject
to change.                                                                      

Clinical testing of pharmaceutical products is also a long, expensive and       
uncertain process. Even if initial results of preclinical studies or clinical   
trial results are positive, Hyalozyme may obtain different results in later     
stages of drug development, including failure to show desired safety and        
efficacy.                                                                       

The clinical trials of any of Hyalozyme's product candidates could be           
unsuccessful, which would prevent it from obtaining regulatory approval and     
commercializing the product. FDA approval can be delayed, limited or not granted
for many reasons, including, among others:                                      

10

DEFM14C
11th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 11th
  o    FDA officials may not find a product candidate safe or effective to
merit an approval;                                          

    o    FDA officials may not find that the data from preclinical testing and
      clinical trials justifies approval, or they may require additional
    studies that would make it commercially unattractive to continue
pursuit of approval;                                        

o    the FDA might not approve Hyalozyme's manufacturing processes or 
facilities, or the processes or facilities of its contract  
manufacturers or raw material suppliers;                    

     o    the FDA may change its approval policies or adopt new regulations; and

o    the FDA may approve a product candidate for indications that are 
      narrow or under conditions that place our product at a competitive
 disadvantage, which may limit Hyalozyme's sales and marketing
          activities or otherwise adversely impact the commercial potential of a
product;                                                    

If the FDA does not approve Hyalozyme's product candidates in a timely fashion  
on commercially viable terms or Hyalozyme terminates development of any of its  
product candidates due to difficulties or delays encountered in the regulatory  
approval process, it will have a material adverse impact on Hyalozyme's business
and Hyalozyme will be dependent on the development of its other product         
candidates and/or our ability to successfully acquire other products and        
technologies.                                                                   

In addition, Hyalozyme intends to market certain of its products, and perhaps   
have certain of its products manufactured, in foreign countries. The process of 
obtaining approvals in foreign countries is subject to delay and failure for    
similar reasons.                                                                

IF HYALOZYME PRODUCT CANDIDATES ARE APPROVED BY THE FDA BUT DO NOT GAIN MARKET  
ACCEPTANCE, ITS BUSINESS WILL SUFFER BECAUSE HYALOZYME MAY NOT BE ABLE TO FUND  
FUTURE OPERATIONS.                                                              

A number of factors may affect the market acceptance of any of Hyalozyme's      
existing products or any other products it develops or acquire in the future,   
including, among others:                                                        

    o    the price of Hyalozyme's products relative to other therapies for the
same or similar treatments;                                 

     o    the perception by patients, physicians and other members of the health
          care community of the effectiveness and safety of Hyalozyme's products
for their prescribed treatments;                            

o    Hyalozyme's ability to fund its sales and marketing efforts;     

o    the effectiveness of Hyalozyme's sales and marketing efforts; and

o    the introduction of generic competitors.                         

In addition, Hyalozyme's ability to market and promote its products will be     
restricted to the labels approved by the FDA. If the approved labels are        
restrictive, Hyalozyme's sales and marketing efforts, as well as market         
acceptance and the commercial potential of its products may be negatively       
affected.                                                                       

If Hyalozyme's products do not gain market acceptance, Hyalozyme may not be able
to fund future operations, including the development or acquisition of new      
product candidates and/or its sales and marketing efforts for its approved      
products, which would cause its business to suffer.                             

11

DEFM14C
12th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 12th
IF HYALOZYME IS UNABLE TO SUFFICIENTLY DEVELOP ITS SALES, MARKETING AND         
DISTRIBUTION CAPABILITIES OR ENTER INTO AGREEMENTS WITH THIRD PARTIES TO PERFORM
THESE FUNCTIONS, HYALOZYME WILL NOT BE ABLE TO COMMERCIALIZE PRODUCTS.          

Hyalozyme is currently in the process of developing its sales, marketing and    
distribution capabilities. However, Hyalozyme's current capabilities in these   
areas are limited. In order to commercialize any products successfully,         
Hyalozyme must internally develop substantial sales, marketing and distribution 
capabilities, or establish collaborations or other arrangements with third      
parties to perform these services. Hyalozyme does not have extensive experience 
in these areas, and it may not be able to establish adequate in-house sales,    
marketing and distribution capabilities or engage and effectively manage        
relationships with third parties to perform any or all of such services. To the 
extent that Hyalozyme enters into co-promotion or other licensing arrangements, 
its product revenues are likely to be lower than if it directly marketed and    
sold its products, and any revenues it receives will depend upon the efforts of 
third parties, whose efforts may not be successful.                             

HYALOZYME HAS NOT GENERATED ANY REVENUE FROM PRODUCT SALES TO DATE; IT HAS A    
HISTORY OF NET LOSSES AND NEGATIVE CASH FLOW, AND MAY NEVER ACHIEVE OR MAINTAIN 
PROFITABILITY.                                                                  

Hyalozyme has not generated any revenue from product sales to date and may never
generate revenues from product sales in the future. Even if Hyalozyme does      
achieve significant revenues from product sales, it expects to incur significant
operating losses over the next several years. Hyalozyme has never been          
profitable, and may never become profitable. Hyalozyme will need to raise       
additional capital during the next twelve months, particularly if it obtains FDA
approval for any of its products. If Hyalozyme engages in acquisitions of       
companies, products, or technology in order to execute its business strategy, it
may need to raise additional capital. Hyalozyme may be required to raise        
additional capital in the future through collaborative agreements, Private      
Investment in Public Equity ("PIPE") financings, and various other equity or    
debt financings. If Hyalozyme is required to raise additional capital in the    
future there can be no assurance that the additional financing will be available
on favorable terms, or at all.                                                  

IF HYALOZYME HAS PROBLEMS WITH ITS SOLE CONTRACT MANUFACTURER, ITS PRODUCT      
DEVELOPMENT AND COMMERCIALIZATION EFFORTS FOR ITS PRODUCT CANDIDATES COULD BE   
DELAYED OR STOPPED.                                                             

Hyalozyme has signed an agreement with a contract manufacturing organization to 
produce bulk recombinant enzyme product for clinical use. Hyalozyme's contract  
manufacturer will produce the active pharmaceutical ingredient under cGMP's for 
commercial scale validation and will provide support for chemistry,             
manufacturing and controls sections for FDA regulatory filings. Hyalozyme has   
not established and may not be able to establish arrangements with additional   
manufacturers for these ingredients or products should the existing supplies    
become unavailable or in the event that its sole contract manufacturer is unable
to adequately perform its responsibilities. Difficulties in Hyalozyme's         
relationship with its manufacturer or delays or interruptions in such           
manufacturer's supply of its requirements could limit or stop its ability to    
provide sufficient quantities of its products, on a timely basis, for clinical  
trials and, if Hyalozyme's products are approved, could limit or stop commercial
sales, which would have a material adverse effect on its business and financial 
condition.                                                                      

HYALOZYME'S INABILITY TO RETAIN KEY MANAGEMENT AND SCIENTIFIC PERSONNEL COULD   
NEGATIVELY AFFECT ITS BUSINESS.                                                 

Hyalozyme's success depends on the performance of key management and scientific 
employees with biotech experience. Given its small staff size and programs      
currently under development, Hyalozyme depends substantially on its ability to  
hire, train, retain and motivate high quality personnel, especially its         
scientists and management team in this field. If Hyalozyme were to lose one or  
more of its key scientists, then it would likely lose some portion of its       
institutional knowledge and technical know-how, potentially causing a           
substantial delay in one or more of its development programs until adequate     
replacement personnel could be hired and trained.                               

12

DEFM14C
13th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 13th
 RISKS RELATED TO HYALOZYME'S INDUSTRY

COMPLIANCE WITH THE EXTENSIVE GOVERNMENT REGULATIONS TO WHICH HYALOZYME IS      
SUBJECT IS EXPENSIVE AND TIME CONSUMING, AND MAY RESULT IN THE DELAY OR         
CANCELLATION OF PRODUCT SALES, INTRODUCTIONS OR MODIFICATIONS.                  

Extensive industry regulation has had, and will continue to have, a significant 
impact on Hyalozyme's business. All pharmaceutical companies, including         
Hyalozyme, are subject to extensive, complex, costly and evolving regulation by 
the federal government, principally the FDA and to a lesser extent by the U.S.  
Drug Enforcement Administration ("DEA"), and foreign and state government       
agencies. The Federal Food, Drug and Cosmetic Act, the Controlled Substances Act
and other domestic and foreign statutes and regulations govern or influence the 
testing, manufacturing, packing, labeling, storing, record keeping, safety,     
approval, advertising, promotion, sale and distribution of our products. Under  
certain of these regulations, Hyalozyme and its contract suppliers and          
manufacturers are subject to periodic inspection of its or their respective     
facilities, procedures and operations and/or the testing of products by the FDA,
the DEA and other authorities, which conduct periodic inspections to confirm    
that Hyalozyme and its contract suppliers and manufacturers are in compliance   
with all applicable regulations. The FDA also conducts pre-approval and         
post-approval reviews and plant inspections to determine whether Hyalozyme's    
systems, or its contract suppliers' and manufacturers' processes, are in        
compliance with cGMP and other FDA regulations.                                 

In addition, the FDA imposes a number of complex regulatory requirements on     
entities that advertise and promote pharmaceuticals, including, but not limited 
to, standards and regulations for direct-to-consumer advertising, off-label     
promotion, industry-sponsored scientific and educational activities, and        
promotional activities involving the Internet.                                  

Hyalozyme is dependent on receiving FDA and other governmental approvals prior  
to manufacturing, marketing and shipping its products. Consequently, there is   
always a risk that the FDA or other applicable governmental authorities will not
approve Hyalozyme's products, or will take post-approval action limiting or     
revoking its ability to sell its products, or that the rate, timing and cost of 
such approvals will adversely affect its product introduction plans or results  
of operations.                                                                  

HYALOZYME'S SUPPLIERS AND SOLE MANUFACTURER ARE SUBJECT TO REGULATION BY THE FDA
AND OTHER AGENCIES, AND IF THEY DO NOT MEET THEIR COMMITMENTS, HYALOZYME WOULD  
HAVE TO FIND SUBSTITUTE SUPPLIERS OR MANUFACTURERS, WHICH COULD DELAY THE SUPPLY
OF ITS PRODUCTS TO MARKET.                                                      

Regulatory requirements applicable to pharmaceutical products make the          
substitution of suppliers and manufacturers costly and time consuming. Hyalozyme
has no internal manufacturing capabilities and is, and expects to be in the     
future, entirely dependent on contract manufacturers and suppliers for the      
manufacture of its products and for their active and other ingredients. The     
disqualification of these suppliers through their failure to comply with        
regulatory requirements could negatively impact Hyalozyme's business because the
delays and costs in obtaining and qualifying alternate suppliers (if such       
alternative suppliers are available, which Hyalozyme cannot assure) could delay 
clinical trials or otherwise inhibit Hyalozyme's ability to bring approved      
products to market, which would have a material adverse affect on Hyalozyme's   
business and financial condition.                                               

HYALOZYME MAY BE REQUIRED TO INITIATE OR DEFEND AGAINST LEGAL PROCEEDINGS       
RELATED TO INTELLECTUAL PROPERTY RIGHTS, WHICH MAY RESULT IN SUBSTANTIAL        
EXPENSE, DELAY AND/OR CESSATION OF THE DEVELOPMENT AND COMMERCIALIZATION OF ITS 
PRODUCTS.                                                                       

Hyalozyme relies on patents to protect its intellectual property rights. The    
strength of this protection, however, is uncertain. For example, it is not      
certain that:                                                                   

13

DEFM14C
14th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 14th
 o    Hyalozyme's patents and pending patent applications cover products
and/or technology that it invented first;                   

o    Hyalozyme was the first to file patent applications for these    
inventions;                                                 

o    others will not independently develop similar or alternative     
technologies or duplicate Hyalozyme's technologies;         

   o    any of Hyalozyme's pending patent applications will result in issued
patents; and                                                

     o    any of Hyalozyme's issued patents, or patent pending applications that
     result in issued patents, will be held valid and infringed in the
event the patents are asserted against others.              

Hyalozyme currently owns or licenses several U.S. and foreign patents and also  
has pending patent applications. There can be no assurance that Hyalozyme's     
existing patents, or any patents issued to it as a result of such applications, 
will provide a basis for commercially viable products, will provide Hyalozyme   
with any competitive advantages, or will not face third-party challenges or be  
the subject of further proceedings limiting their scope or enforceability.      

Hyalozyme may become involved in interference proceedings in the U.S. Patent and
Trademark Office to determine the priority of Hyalozyme's inventions. In        
addition, costly litigation could be necessary to protect Hyalozyme's patent    
position. Hyalozyme also relies on trademarks to protect the names of its       
products. These trademarks may be challenged by others. If Hyalozyme enforces   
its trademarks against third parties, such enforcement proceedings may be       
expensive. Hyalozyme also relies on trade secrets, unpatented proprietary       
know-how and continuing technological innovation that it seeks to protect with  
confidentiality agreements with employees, consultants and others with whom     
Hyalozyme discusses its business. Disputes may arise concerning the ownership of
intellectual property or the applicability or enforceability of these           
agreements, and Hyalozyme might not be able to resolve these disputes in its    
favor.                                                                          

In addition to protecting Hyalozyme's own intellectual property rights, third   
parties may assert patent, trademark or copyright infringement or other         
intellectual property claims against Hyalozyme based on what they believe are   
their own intellectual property rights. Hyalozyme may be required to pay        
substantial damages, including but not limited to treble damages, for past      
infringement if it is ultimately determined that its products infringe a third  
party's intellectual property rights. Even if infringement claims against       
Hyalozyme are without merit, defending a lawsuit takes significant time, may be 
expensive and may divert management's attention from other business concerns.   
Further, Hyalozyme may be stopped from developing, manufacturing or selling its 
products until it obtains a license from the owner of the relevant technology or
other intellectual property rights. If such a license is available at all, it   
may require Hyalozyme to pay substantial royalties or other fees.               

IF THIRD-PARTY REIMBURSEMENT IS NOT AVAILABLE, HYALOZYME'S PRODUCTS MAY NOT BE  
ACCEPTED IN THE MARKET.                                                         

Hyalozyme's ability to earn sufficient returns on its products will depend in   
part on the extent to which reimbursement for its products and related          
treatments will be available from government health administration authorities, 
private health insurers, managed care organizations and other healthcare        
providers.                                                                      

Third-party payers are increasingly attempting to limit both the coverage and   
the level of reimbursement of new drug products to contain costs. Consequently, 
significant uncertainty exists as to the reimbursement status of newly approved 
healthcare products. If Hyalozyme succeeds in bringing one or more of its       
product candidates to market, third-party payers may not establish adequate     
levels of reimbursement for its products, which could limit their market        
acceptance and result in a material adverse effect on Hyalozyme's financial     
condition.                                                                      

14

DEFM14C
15th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 15th
HYALOZYME FACES INTENSE COMPETITION AND RAPID TECHNOLOGICAL CHANGE THAT COULD   
RESULT IN THE DEVELOPMENT OF PRODUCTS BY OTHERS THAT ARE SUPERIOR TO THE        
PRODUCTS HYALOZYME IS DEVELOPING.                                               

Hyalozyme has numerous competitors in the United States and abroad, including,  
among others, major pharmaceutical and specialized biotechnology firms,         
universities and other research institutions that may be developing competing   
products. Such competitors may include Sigma-Aldrich Corporation, Ista          
Pharmaceuticals, Inc. and Alcon Laboratories, Inc., among others. These         
competitors may develop technologies and products that are more effective or    
less costly than Hyalozyme's current or future product candidates or that could 
render its technologies and product candidates obsolete or noncompetitive. Many 
of these competitors have substantially more resources and product development, 
manufacturing and marketing experience and capabilities than Hyalozyme does. In 
addition, many of Hyalozyme's competitors have significantly greater experience 
than Hyalozyme does in undertaking preclinical testing and clinical trials of   
pharmaceutical product candidates and obtaining FDA and other regulatory        
approvals of products and therapies for use in healthcare.                      

HYALOZYME IS EXPOSED TO PRODUCT LIABILITY CLAIMS, AND INSURANCE AGAINST THESE   
CLAIMS MAY NOT BE AVAILABLE TO IT ON REASONABLE TERMS OR AT ALL.                

Hyalozyme might incur substantial liability in connection with clinical trials  
or the sale of its products. Product liability insurance is expensive and in the
future may not be available on commercially acceptable terms, or at all. A      
successful claim or claims brought against Hyalozyme in excess of its insurance 
coverage could materially harm its business and financial condition.            

DIRECTORS AND SENIOR MANAGEMENT OF GLOBAL YACHT FOLLOWING THE MERGER

Following completion of the Merger, the board of directors of Global Yacht will 
resign and new appointees will consist of directors which will be designated by 
Hyalozyme. The management and directors are anticipated to include:             

JONATHAN E. LIM, MD, (32) President & Chief Executive Officer and Director. Dr. 
Lim joined Hyalozyme in 2003. From 2001 to 2003, Dr. Lim was a management       
consultant at McKinsey & Company, where he specialized in the health care       
industry, serving a wide range of start-ups to Fortune 500 companies in the     
biopharmaceutical, medical products, and payor/provider segments. From 1999 to  
2001, Dr. Lim was a recipient of a National Institutes of Health Postdoctoral   
Fellowship, during which time he conducted clinical outcomes research at Harvard
Medical School. He has published articles in leading peer-reviewed medical      
journals such as the Annals of Surgery and the Journal of Refractive Surgery.   
Dr. Lim's prior experience also includes two years of clinical training in      
general surgery at the New York Hospital-Cornell Medical Center and Memorial    
Sloan-Kettering Cancer Center; Founder and President of a seed-stage health care
company; Founding Editor-in-Chief of the McGill Journal of Medicine; and basic  
science and clinical research at the Salk Institute for Biological Studies and  
Massachusetts Eye and Ear Infirmary. Dr. Lim is currently a member of the       
strategic planning committee of the American Medical Association. He earned his 
BS with honors and MS degrees in molecular biology from Stanford University, his
MD degree from McGill University, and his MPH degree in health care management  
from Harvard University.                                                        

GREGORY I. FROST, PHD, (32) Vice President & Chief Scientific Officer and       
Director. Dr. Frost joined Hyalozyme in 1999 and has spent more than ten years  
researching the hyaluronidase family of enzymes. From 1998 to 1999, he was a    
Senior Research Scientist at the Sidney Kimmel Cancer Center (SKCC), where he   
focused much of his work developing the hyaluronidase technology. Prior to SKCC,
his research in the Department of Pathology at the University of California, San
Francisco, led directly to the purification, cloning, and characterization of   
the human hyaluronidase gene family, and the discovery of several metabolic     
disorders. He has authored over 13 scientific peer-reviewed and invited articles
in the Hyaluronidase field, is an inventor on numerous patents, and has been the
recipient of federal grants. Dr. Frost's prior experience includes serving as a 
scientific consultant to a number of biopharmaceutical companies, including     
Q-Med (SE), Biophausia AB (SE), and Active Biotech (SE). Dr. Frost is registered
to practice before the US Patent Trademark Office, and earned his BA in         
biochemistry and molecular biology from the University of California, Santa     
Cruz, and his PhD in the department of Pathology at the University of           
California, San Francisco, where he was an ARCS-Scholar.                        

15

DEFM14C
16th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 16th
DAVID A. RAMSAY, MBA, (39) Vice President & Chief Financial Officer. Mr. Ramsay 
joined Hyalozyme in 2003 and brings 17 years of corporate financial experience  
spanning several industries. From 2000 to 2003, he was Vice President, Chief    
Financial Officer of Lathian Systems, a leading provider of technology-based    
sales solutions for the life sciences industry. Prior to Lathian, Mr. Ramsay was
the Vice President, Treasurer of ICN Pharmaceuticals, a multinational, specialty
pharmaceutical company with approximately $800 million in revenue and a market  
capitalization of $3 billion at the time. Mr. Ramsay joined ICN in 1998 from    
ARCO, where he spent four years in various financial roles, most recently       
serving as Manager of Financial Planning & Analysis for the company's           
1,700-station West Coast Retail Marketing Network. Prior to ARCO, he served as  
Vice President, Controller for Security Pacific Asian Bank, a $500 million      
subsidiary of Security Pacific Corporation. He began his career as a Senior     
Auditor (CPA) at Deloitte & Touche after graduating from the University of      
California, Berkeley with a BS degree in Business Administration. Mr. Ramsay    
earned his MBA degree with a dual major in Finance and Strategic Management from
The Wharton School at the University of Pennsylvania.                           

DON A. KENNARD, (57) Vice President of Regulatory Affairs & Quality Assurance.  
Mr. Kennard joined Hyalozyme in 2004 and brings to Hyalozyme nearly 30 years of 
professional senior management experience in the fields of regulatory affairs   
(RA), clinical programs, and quality assurance (QA). He has worked directly with
the U.S. Food and Drug Administration (FDA), as well as regulatory authorities  
of various foreign ministries of health, to secure registration, authorize      
commercialization, and successfully implement quality programs, for a broad     
range and extensive number of product approvals across pharmaceuticals,         
biologics, medical devices, and diagnostics. Prior to Hyalozyme, Mr. Kennard was
Vice President of Worldwide RA/QA at Quidel, Inc., an $80 million manufacturer  
of diagnostic products, where he led the RA/QA and Clinical functions to        
increase product approvals by 40% and increase sales volume by 22%, while also  
establishing a Quality System CE marking program that enabled Quidel to expand  
and sustain sales in the EU. From 1991 to 2001, he was Vice President of        
RA/QA/R&D for Nobel Biocare, Inc. and Steri-Oss (acquired by Nobel Biocare),    
where he directed all regulatory affairs, quality assurance, clinical trials,   
and R&D activities. From 1981 to 1991, Mr. Kennard was Director of RA/QA at     
Allergan, Inc., where he directed RA/QA/QC in the development and manufacture of
prescription and OTC ophthalmic and dermatological drugs, injectable drugs,     
biotechnology products (e.g., Botox), and ophthalmic products (e.g., contact    
lens, intraocular lens). Prior to Allergan, he was Director of Quality Control  
at B. Braun. Mr. Kennard holds a BS degree in Microbiology and a Regulatory     
Affairs Certificate.                                                            

CAROLYN M. RYNARD, PHD, (48) Vice President of Product Development &            
Manufacturing. Dr. Rynard joined Hyalozyme in 2003. Dr. Rynard's career in drug 
development spans 20 years in the pharmaceutical and biotech industries. Her    
broad experience includes project management, formulation, manufacturing,       
clinical supplies, validation, medical devices, and drug delivery systems. From 
2001 to 2003, Dr. Rynard was Vice President of Product Development at Medinox,  
Inc., where she was directly responsible for Medinox's Chemistry, Manufacturing,
and Controls (CM&C), formulation, analytical methods, and specification         
development. From 1994 to 2001, she worked for Amylin Pharmaceuticals, Inc., a  
San Diego, California-based pharmaceutical company where she held various       
positions of increasing responsibility, serving most recently as Senior Director
of Product Development. At Amylin, Dr. Rynard managed seven functional areas and
wrote CMC sections for US NDA and INDs; European MAA and CTX regulatory filings;
as well as device 510(k) and CE mark technical files. Prior to joining Amylin,  
Dr. Rynard held various R&D positions at Baxter Healthcare and at Du Pont. Dr.  
Rynard earned her BSc degree in Chemistry and Biochemistry from the University  
of Toronto, and her PhD in Physical and Organic Chemistry from Stanford         
University.                                                                     

MARK S. WILSON, MBA, (43) Vice President of Business Development. Mr. Wilson    
joined Hyalozyme in 2003 and has spent more than 15 years in the                
biotechnology/pharmaceutical industry, having most recently served as Founder   
and CEO of Biophysica Science, Inc. and Director of Strategic External Alliance 
Management at Pfizer Global R&D - La Jolla from 2001 to 2003. From 1996 to 2001,
Mr. Wilson was Associate Director of Materials at Agouron Pharmaceuticals, Inc.,
where he identified and negotiated international supply agreements in excess of 
$120 million annually and served as Materials Manager for the launch of         
Viracept(R). From 1991 to 1996, Mr. Wilson was an Associate Director at Gensia  
Laboratories, Ltd., where he directed a wide range of business operations. Prior
experience also includes various management and operational roles at Hybritech, 
Ferro Corporation, and TRW, Inc. Mr. Wilson earned his BS degree in engineering 
from the University of California, Berkeley, and his MBA degree at the Anderson 
Graduate School of Management at the University of California, Los Angeles.     

16

DEFM14C
17th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 17th
LOUIS H. BOOKBINDER, PHD, (46) Director of Biochemistry. Dr. Bookbinder joined  
Hyalozyme in 2002. Dr. Bookbinder has extensive experience in the biotechnology 
industry, serving as a Consulting Research Scientist to a number of companies,  
including Molecular Diagnostic Solutions-USA (San Diego, CA), Zygam, Inc.       
(Vista, CA), Mycoferm Technologies (Bellevue, WA), and Syrrx, Inc. (San Diego,  
CA), from 2001 to 2002. From 1995 to 2001, he was a Principal Investigator and  
Senior Staff Scientist at Tera Biotechnology Corporation (San Diego, CA) and    
Favrille, Inc. (San Diego, CA), a VC funded spin-off of Tera Biotechnology. Dr. 
Bookbinder's scientific background includes Senior Research Scientist at the    
Sidney Kimmel Cancer Center; Research Scientist at the La Jolla Institute for   
Experimental Medicine; Research Fellow at the Scripps Research Institute; and   
Senior Research Fellow at the University of Washington. He has authored multiple
scientific peer-reviewed articles in leading journals such as Science, Journal  
of Cellular Biology, and FASEB, and is a named inventor on numerous patents. Dr.
Bookbinder earned his BA in biology at the University of California, Los        
Angeles, his MS in zoology at the University of Maine, Orono, and his PhD in    
biology at the University of California, San Diego.                             

IRA M. LECHNER, (69) Director. Mr. Lechner currently serves as chairman of the  
board of the Sidney Kimmel Cancer Center in San Diego. This is an extension of a
prestigious career in law, service as a Virginia state legislator, and a long   
history of trustee-level involvements in many organizations. Prior to assuming  
the Board Chairmanship, Lechner served as SKCC's Vice Chairman of the Board of  
Trustees and as Chair of the SKCC Development and Planned Giving Committees. He 
currently serves on the Board of the Council on Higher Education Accreditation, 
and previously served as Vice Chair of the Randolph-Macon College Board of      
Trustees. For the past five years, Mr. Lechner has been employed as the sole    
proprietor of a law firm in the District of Columbia entitled Ira M. Lechner,   
Esq.                                                                            

EDWARD L. MERCALDO, (62) Director. Mr. Mercaldo is a Financial Consultant and   
private investor, following his successful career as an International Commercial
and Investment Banker for several leading companies including Bank of Montreal, 
Bankers Trust Company of New York, Gordon Capital and First Marathon Securities.
Mr. Mercaldo also served as Executive Vice President, Chief Financial Officer   
and Director of Diamond Fields Resources, Inc., and following the purchase of   
Diamond Fields by Inco Ltd. in August 1996, he continued as a Director of Inco  
until September 2000. Mr. Mercaldo has served as a self-employed consultant to  
numerous companies for the past five years.                                     

JOHN S. PATTON, PHD, (56) Director. Dr. Patton is co-Founder and Vice President,
Research of Nektar Therapeutics (formerly Inhale Therapeutic Systems) and has   
served as Chief Scientific Officer since November 2001 and as a director since  
July 1990. He is a world-renowned expert in the delivery of peptides and        
proteins. Before co-founding Inhale, John led the drug delivery group at        
Genentech, Inc., where he demonstrated the feasibility of systemic delivery of  
large molecules through the lungs. Prior to joining Genentech, Inc., he was a   
tenured professor at the University of Georgia. He has published a wide range of
articles and has presented his work in national and international arenas. Dr.   
Patton received his Ph.D. in Biology from the University of California, San     
Diego, and held post-doctoral positions in biomedicine at Harvard Medical School
and the University of Lund in Sweden. Dr. Patton is both a personal investor in 
Hyalozyme and Chairs the Scientific and Clinical Advisory Board.                

 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND

 MANAGEMENT FOLLOWING THE MERGER

The following table sets forth information with respect to the anticipated      
levels of beneficial ownership of our Common Stock owned after giving effect to 
the Merger, by:                                                                 

17

DEFM14C
18th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 18th
o    the holders of more than 5% of our Common Stock;                 

o    each of our directors;                                           

o    our executive officers; and                                      

o    all directors and executive officers of our company as a group.  

We currently have 8,196,362 shares of our common stock issued and outstanding.  
Pursuant to the terms of the Merger, we anticipate that 34,999,701 shares of our
common stock will be issued to Hyalozyme's shareholders along with options to   
purchase an additional 6,886,807 shares of our common stock and warrants to     
purchase an additional 11,758,460 shares of our common stock, which could result
in up to 57,544,955 shares of our common stock outstanding after giving effect  
to the Merger. We plan to redeem a total of 4,296,375 shares of common stock    
owned by certain of our shareholders in exchange for $43,000 or $0.01 per share 
upon the closing of the Merger.                                                 

APPROVAL OF THE MERGER WILL RESULT IN A CHANGE IN CONTROL FROM OUR MANAGEMENT TO
CONTROL BY HYALOZYME'S MANAGEMENT AND THE ASSUMPTION OF HYALOZYME'S OPERATIONS  
AND LIABILITIES.                                                                

The following table sets forth certain information regarding the beneficial     
ownership of our common stock after giving effect to the Merger by each person  
or entity known by us to be the beneficial owner of more than 5% of the         
outstanding shares of common stock, each of our directors and named executive   
officers, and all of our directors and executive officers as a group.           

                                                        [Enlarge/Download Table]

====================== =========================================== =========================== =======================
                                                                      AMOUNT AND NATURE OF                            
   TITLE OF CLASS         NAME AND ADDRESS OF BENEFICIAL OWNER          BENEFICIAL OWNER          PERCENT OF CLASS    
---------------------- ------------------------------------------- --------------------------- -----------------------
                                                                                                                      
Common Stock           Gregory Frost (1)                                3,429,016 shares                 8.75%        
                       c/o Hyalozyme Therapeutics, Inc.                                                               
                       11588 Sorrento Valley Road Suite 17                                                            
                       San Diego CA 92121                                                                             
---------------------- ------------------------------------------- --------------------------- -----------------------
Common Stock           Jonathan Lim (2)                                  808,426 shares                  2.08%        
                       c/o Hyalozyme Therapeutics, Inc.                                                               
                       11588 Sorrento Valley Road Suite 17                                                            
                       San Diego CA 92121                                                                             
---------------------- ------------------------------------------- --------------------------- -----------------------
Common Stock           Elliot Feuerstein (3)                            3,504,373 shares                 8.98%        
                       c/o Hyalozyme Therapeutics, Inc.                                                               
                       11588 Sorrento Valley Road Suite 17                                                            
                       San Diego CA 92121                                                                             
---------------------- ------------------------------------------- --------------------------- -----------------------
Common Stock           Ira Lechner (4)                                  1,152,329 shares                 2.94%        
                       c/o Hyalozyme Therapeutics, Inc.                                                               
                       11588 Sorrento Valley Road Suite 17                                                            
                       San Diego CA 92121                                                                             
---------------------- ------------------------------------------- --------------------------- -----------------------
Common Stock           Edward Mercaldo (5)                               819,938 shares                  2.10%        
                       c/o Hyalozyme Therapeutics, Inc.                                                               
                       11588 Sorrento Valley Road Suite 17                                                            
                       San Diego CA 92121                                                                             
---------------------- ------------------------------------------- --------------------------- -----------------------
Common Stock           John S. Patton (6)                                447,471 shares                  1.15%        
                       c/o Hyalozyme Therapeutics, Inc.                                                               
                       11588 Sorrento Valley Road Suite 17                                                            
                       San Diego CA 92121                                                                             
---------------------- ------------------------------------------- --------------------------- -----------------------

18

DEFM14C
19th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 19th
                                                        [Enlarge/Download Table]

                                                                                                                      
---------------------- ------------------------------------------- --------------------------- -----------------------
Common Stock           Borgstrom Family Trusts (7)                      2,710,474 shares                 6.97%        
                       c/o Hyalozyme Therapeutics, Inc.                                                               
                       11588 Sorrento Valley Road Suite 17                                                            
                       San Diego CA 92121                                                                             
---------------------- ------------------------------------------- --------------------------- -----------------------
Common Stock           Peter Geddes (8)                                 2,528,542 shares                 6.37%        
                       c/o Grove Capital                                                                              
                       333 South Beverly Drive #208-9                                                                 
                       Beverly Hills, CA 90212                                                                        
---------------------- ------------------------------------------- --------------------------- -----------------------
Common Stock           Jonathan Spanier (9)                             2,629,436 shares                 6.61%        
                       8732 St. Ives Drive                                                                            
                       Los Angeles, CA 90069                                                                          
---------------------- ------------------------------------------- --------------------------- -----------------------
Common Stock           Jesse Grossman (10)                              2,585,237 shares                 6.50%        
                       5000 Llano Drive                                                                               
                       Woodland Hills, CA 91364                                                                       
---------------------- ------------------------------------------- --------------------------- -----------------------
Common Stock           All officers and directors as a group (11)       6,657,180 shares                16.72%        
====================== =========================================== =========================== =======================

Beneficial ownership is determined in accordance with the Rule 13d-3(a) of the  
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and generally 
includes voting or investment power with respect to securities. Except as       
subject to community property laws, where applicable, the person named above has
sole voting and investment power with respect to all shares of Hyalozyme's      
common stock shown as beneficially owned by him.                                

----------                                                                      
(1)  Includes 2,837,364 shares and warrants to purchase 22,241 shares held in   
 the name of Dr. Frost; includes 116,415 shares and warrants to purchase
10,530 shares held in the name of the Frost Family Trust; and includes
   190,072 shares and warrants to purchase 22,241 shares held in the name of
  Francis E. Frost. Also includes 230,153 shares issuable upon exercise of
   options exercisable within 60 days of which are held in Dr. Frost's name.

(2)  Includes 484,497 shares and warrants to purchase 26,690 shares held in the 
name of Dr. Lim; and includes 266,101 shares and warrants to purchase 
31,138 shares held in the name of family members of Dr. Lim.          

(3)  Includes 3,373,287 shares and warrants to purchase 131,086 shares held in  
the name of Mr. Feuerstein.                                           

(4)  Includes 705,210 shares and warrants to purchase 134,806 shares held in an 
  IRA account for Mr. Lechner; and 190,072 shares and warrants to purchase
22,241 shares held in a charitable trust. Also includes 100,000 shares
   issuable upon exercise of options exercisable within 60 days of which are
held in Mr. Lechner's name.                                           

(5)  Includes 126,944 shares held in the name of Mr. Mercaldo; 123,883 shares   
  and warrants to purchase 44,483 shares held for the benefit of Karen and
 Mr. Mercaldo; and 380,145 shares and warrants to purchase 44,483 shares
     held in a family trust. Also includes 100,000 shares issuable upon exercise
   of options exercisable within 60 days of which are held in Mr. Mercaldo's
name.                                                                 

19

DEFM14C
20th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 20th
(6)  Includes 232,830 shares and warrants to purchase 31,590 shares held in a   
family trust, and 83,051 shares held in the name of Dr. Patton. Also  
includes 100,000 shares issuable upon exercise of options exercisable 
within 60 days of which are held in Dr. Patton's name.                

(7)  Includes 2,710,474 shares held in family trusts.                           

(8)  Includes 1,587,451 shares and 731,091 warrants to purchase shares, 140,000 
  shares and 50,000 warrants to purchase shares held by Peter Geddes under
   custodial accounts for the benefit of minors. Also includes 13,333 shares
   and 6,667 warrants to purchase shares held by Grove Capital, LLC in which
    Peter Geddes is a member. Peter Geddes may be deemed a beneficial owner of
the shares held by Grove Capital, LLC however, he disclaims beneficial
ownership except to the extent of his pecuniary interest therein.     

(9)  Includes 1,217,757 shares and 655,219 warrants to purchase shares, 474,890 
     shares and 211,570 warrants to purchase shares held by the Jonathan Spanier
IRA Account, includes 50,000 shares held by Jonathan Spanier under a  
   custodial account for the benefit of a minor. Also includes 13,333 shares
   and 6,667 warrants to purchase shares held by Grove Capital, LLC in which
    Jonathan Spanier and the Jonathan Spanier IRA Account are members. Each of
Jonathan Spanier and the Jonathan Spanier IRA Account may be deemed   
  beneficial owners of the shares held by Grove Capital, LLC however, each
disclaims beneficial ownership except to the extent of their pecuniary
interest therein.                                                     

(10) Includes 1,251,558 shares and 627,219 warrants to purchase shares, 474,890 
   shares and 211,570 warrants to purchase shares held by the Jesse Grossman
   Accountancy Corporation Retirement Trust. Also includes 13,333 shares and
     6,667 warrants to purchase shares held by Grove Capital, LLC in which Jesse
  Grossman and the Jesse Grossman Accountancy Corporation Retirement Trust
are members. Each of Jesse Grossman and the Jesse Grossman Accountancy
    Corporation Retirement Trust may be deemed beneficial owners of the shares
 held by Grove Capital, LLC however, each disclaims beneficial ownership
except to the extent of their pecuniary interest therein.             

(11) See Notes 1, 2, 3, 4, 5, and 6. Includes 530,153 shares issuable upon      
exercise of options exercisable within 60 days.                       

INTERESTS OF DIRECTORS, EXECUTIVE OFFICERS AND PRINCIPAL STOCKHOLDERS IN
THE MERGER

Some of the directors and executive officers of Hyalozyme have interests in the 
Merger that are different from, or are in addition to, the interests of their   
shareholders. These interests include positions as directors or executive       
officers of Global Yacht following the Merger, potential benefits under         
employment or benefit arrangements as a result of the Merger, and potential     
severance and other benefit payments in the event of termination of employment  
following the Merger. On January 8, 2004, Hyalozyme's directors, executive      
officers and their affiliates owned approximately 36.85% of Hyalozyme common    
stock entitled to vote on adoption of the Merger Agreement. The board of Global 
Yacht was aware of these interests and considered them in approving the Merger. 

 ANTICIPATED OPERATIONS FOLLOWING THE MERGER

HYALOZYME'S BACKGROUND. Hyalozyme was incorporated in California on February 26,
1998, as DeliaTroph Pharmaceuticals, Inc. After completing the Merger, Global   
Yacht will assume Hyalozyme's business operations, including their assets and   
liabilities as the parent corporation of the acquisition subsidiary into which  
Hyalozyme will merge. Hyalozyme is a product-focused biotechnology company      
dedicated to the development and commercialization of recombinant therapeutic   
enzymes and drug enhancement systems, based on intellectual property covering   
the family of human enzymes known as hyaluronidases. Hyalozyme's first products 
are human synthetic formulations of a hyaluronidase enzyme that replaces current
animal slaughterhouse-derived enzymes that carry risks of animal pathogen       
contamination and immunogenicity. These products are based on a highly versatile
enzyme technology that Hyalozyme's management believes has a wide range of      
therapeutic applications, and which Hyalozyme's management anticipates will     
enable Hyalozyme to help patients across multiple disease states while creating 
significant shareholder value.                                                  

20

DEFM14C
21st Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 21st
PRODUCTS/SERVICES. Hyalozyme's patented technology is based on recombinant human
PH20 (rHuPH20), a human synthetic hyaluronidase that degrades hyaluronic acid   
(HA), a space-filling "cement"-like substance that is a major component of      
tissues throughout the body (e.g., skin, cartilage). The PH20 enzyme is a       
naturally occurring enzyme that digests HA to break down the cement, thereby    
facilitating the penetration and diffusion of other drugs that are injected     
subcutaneously (i.e., in the skin) or intramuscularly (i.e., in the muscle).    
Hyalozyme has two product candidates it is currently focusing on:               

o    CUMULASEO-IVF is an ex vivo formulation of rHuPH20 to replace the
        bovine enzyme currently used for the preparation of oocytes prior to
         IVF and cryopreservation during the process of ICSI (intracytoplasmic
        sperm injection), in which the enzyme is an essential component. The
          FDA considers hyaluronidase IVF products to be medical devices subject
       to 510K approval. Hyalozyme believes the total CumulaseO-IVF market
      consists of nearly 500,000 ICSI (intracytoplasmic sperm injection)
cycles worldwide in 2004.                                   

    o    OPTIPHASEO is a low unit, fast-acting local formulation of rHuPH20 to
         replace Wydase(R), Wyeth's discontinued bovine enzyme previously used
      for over 50 years as a drug delivery agent to enhance diffusion of
      local anesthesia for ophthalmic surgery (mostly cataract surgery).
Hyalozyme believes the total OptiphaseO market consists of  
        approximately 6.4 million local anesthesia procedures (or 45% of the
          14.3 million total estimated cataract surgery procedures) worldwide in
2004.                                                       

INTELLECTUAL PROPERTY. The success of Hyalozyme's business will depend, in part,
on its ability to obtain patent protection for its inventions, to preserve its  
trade secrets and to operate without infringing the proprietary rights of third 
parties. Hyalozyme's strategy is to actively pursue patent protection in the    
United States and foreign jurisdictions for technology that it believes to be   
proprietary and that offers a potential competitive advantage for its           
inventions. To date, Hyalozyme has licensed issued and pending US and           
International Patents, as well as filed new patent applications for novel       
compositions, formulations and uses of mammalian hyaluronidases.                

In addition to patents, Hyalozyme relies on trade secrets and proprietary       
know-how. Hyalozyme seeks protection of these trade secrets and proprietary     
know-how, in part, through confidentiality and proprietary information          
agreements. Hyalozyme makes efforts to require its employees, directors,        
consultants and advisors, outside scientific collaborators and sponsored        
researchers, other advisors and other individuals and entities, to execute      
confidentiality agreements upon the start of employment, consulting or other    
contractual relationships with them. These agreements provide that all          
confidential information developed or made known to the individual or entity    
during the course of the relationship is to be kept confidential and not        
disclosed to third parties except in specific circumstances. In the case of     
employees and some other parties, the agreements provide that all inventions    
conceived by the individual will be the exclusive property of Hyalozyme. These  
agreements may not provide meaningful protection for or adequate remedies to    
protect its technology in the event of unauthorized use or disclosure of        
information. Furthermore, Hyalozyme's trade secrets may otherwise become known  
to, or be independently developed by, its competitors.                          

In addition, the approval process for patent applications in foreign countries  
may differ significantly from the process in the U.S. The patent authorities in 
each country administer that country's laws and regulations relating to patents 
independently of the laws and regulations of any other country, and the patents 
must be sought and obtained separately. Therefore, approval in one country does 
not necessarily indicate that approval can be obtained in other countries.      

GOVERNMENT REGULATIONS. The FDA and comparable regulatory agencies in foreign   
countries regulate extensively the manufacture and sale of the pharmaceutical   
products that Hyalozyme currently is developing. The FDA has established        
guidelines and safety standards that are applicable to the nonclinical          
evaluation and clinical investigation of therapeutic products and stringent     
regulations that govern the manufacture and sale of these products. The process 
of obtaining FDA approval for a new therapeutic product usually requires a      
significant amount of time and substantial resources. The steps typically       
required before a product can be produced and marketed for human use include: 1)
nonclinical pharmacological studies to obtain preliminary information on the    
safety and efficacy of a drug; and 2) nonclinical evaluation in vitro and in    
vivo, including extensive toxicology.                                           

21

DEFM14C
22nd Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 22nd
The results of these nonclinical studies may be submitted to the FDA as part of 
an investigational new drug application. The sponsor of an investigational new  
drug application may commence human testing of the compound only after being    
notified by the FDA that the agency has activated the investigational new drug  
application, which usually occurs within 30 days of submission of the           
application.                                                                    

The clinical testing program for a drug typically involves three phases:        

     o    Phase 1 investigations are generally conducted in healthy subjects. In
        certain instances, subjects with a terminal disease, such as cancer,
 may participate in Phase 1 studies that determine the maximum
tolerated dose and initial safety of the product;           

    o    Phase 2 studies are conducted in limited numbers of subjects with the
       disease or condition to be treated and are aimed at determining the
       most effective dose and schedule of administration, evaluating both
         safety and whether the product demonstrates therapeutic effectiveness
against the disease; and                                    

o    Phase 3 studies involve large, well-controlled investigations in 
diseased subjects and are aimed at verifying the safety and 
effectiveness of the drug.                                  

Data from all clinical studies, as well as all nonclinical studies and evidence 
of product quality, typically are submitted to the FDA in a new drug            
application.                                                                    

The FDA's Center for Drug Evaluation and Research (CDER) or the Center for      
Biologics Evaluation and Research (CBER) must approve a new drug application or 
biologics license application for a drug before the drug may be marketed in the 
U.S. At the time, if ever, that Hyalozyme begins to market its proposed products
for commercial sale in the U.S., any manufacturing operations that may be       
established in or outside the U.S. will be subject to rigorous regulation,      
including compliance with current good manufacturing practices. Hyalozyme also  
may be subject to regulation under the Occupational Safety and Health Act, the  
Environmental Protection Act, the Toxic Substance Control Act, the Export       
Control Act and other present and future laws of general application. In        
addition, the handling, care and use of laboratory mice, including the          
hu-PBL-SCID mice and rats, are subject to the Guidelines for the Humane Use and 
Care of Laboratory Animals published by the National Institutes of Health.      

INTERNATIONAL. For marketing outside the United States, Hyalozyme is also       
subject to foreign regulatory requirements governing human clinical trials and  
marketing approval for pharmaceutical products. The requirements governing the  
conduct of clinical trials, product approval, pricing and reimbursement vary    
widely from country to country. Whether or not FDA approval has been obtained,  
approval of a product by the comparable regulatory authorities of foreign       
countries must be obtained before manufacturing or marketing the product in     
those countries. The approval process varies from country to country and the    
time required for such approvals may differ substantially from that required for
FDA approval. Hyalozyme's management cannot give assurance that clinical trials 
conducted in one country will be accepted by other countries or that approval in
one country will result in approval in any other country. For clinical trials   
conducted outside the United States, the clinical stages are generally          
comparable to the phases of clinical development established by the FDA.        

RESEARCH AND DEVELOPMENT. Since its inception, Hyalozyme has made substantial   
investments in research and development. During the years ended December 31,    
2003 and 2002 and from the period February 26, 1998 (date of inception) to      
December 31, 2003, Hyalozyme spent $1.1 million, $0.8 million and $2.4 million, 
respectively, on research and development activities.                           

EMPLOYEES. At February 5, 2004, Hyalozyme employed 13 full-time employees.      
Approximately 9 of its employees are involved in research and clinical          
development activities. Four of Hyalozyme's employees hold Ph.D. or M.D.        
degrees. Hyalozyme believes that its relationship with its employees is good.   

FACILITIES. Hyalozyme's administrative offices and research facilities are      
located in San Diego, California. Hyalozyme leases approximately 5,700 square   
feet of office space which is adequate for its purposes for the next twelve to  
eighteen months. The lease expires on June 30, 2005.                            

22

DEFM14C
23rd Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 23rd
LEGAL PROCEEDINGS. From time to time, Hyalozyme may be involved in litigation   
relating to claims arising out of its operations in the normal course of        
business. Hyalozyme currently is not a party to any legal proceedings, the      
adverse outcome of which, in its management's opinion, individually or in the   
aggregate, would have a material adverse effect on its results of operations or 
financial position.                                                             

ANTICIPATED LIQUIDITY AND CAPITAL RESOURCES FOLLOWING THE MERGER

We will assume Hyalozyme's assets and liabilities following the Merger.         

Hyalozyme's management anticipates that after giving effect to the Merger,      
substantial additional capital will be required to implement its business plan. 
However, there can be no assurance that management will be successful. If       
additional funds are raised through the issuance of equity or convertible debt  
securities, the percentage ownership of our stockholders will be reduced,       
stockholders may experience additional dilution and such securities may have    
rights, preferences and privileges senior to those of our common stock. There   
can be no assurance that additional financing will be available on terms        
favorable to us or at all. If adequate funds are not available or are not       
available on acceptable terms, we may not be able to fund expansion, take       
advantage of unanticipated acquisition opportunities, develop or enhance        
services or products or respond to competitive pressures. Such inability could  
harm its business, results of operations and financial condition.               

 WHAT WE NEED TO DO TO COMPLETE THE MERGER

Global Yacht and Hyalozyme will complete the Merger only if the conditions set  
forth in the Merger Agreement are satisfied or, in some cases, waived. These    
conditions include:                                                             

 o    the approval and adoption of the Merger Agreement by the requisite
vote of the stockholders of Global Yacht and Hyalozyme;     

o    no statute, rule, regulation, executive order, decree, ruling or 
        injunction shall have been enacted, entered, promulgated or enforced
      by any United States court or Governmental Entity which prohibits,
   restrains, enjoins or restricts the consummation of the Merger;

o    accuracy of each company's representations and warranties;       

o    performance by each company of its obligations under the Merger  
Agreement; and                                              

     o    the mailing of this information to all Global Yacht stockholders as of
the record date.                                            

 CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Some statements in this Information Statement contain certain "forward-looking" 
statements of management of Global Yacht. Forward-looking statements are        
statements that estimate the happening of future events are not based on        
historical fact. Forward-looking statements may be identified by the use of     
forward-looking terminology, such as "may," "shall," "could," "expect,"         
"estimate," "anticipate," "predict," "probable," "possible," "should,"          
"continue," or similar terms, variations of those terms or the negative of those
terms. The forward-looking statements specified in the following information    
have been compiled by our management on the basis of assumptions made by        
management and considered by management to be reasonable. Our future operating  
results, however, are impossible to predict and no representation, guarantee, or
warranty is to be inferred from those forward-looking statements.               

The assumptions used for purposes of the forward-looking statements specified in
the following information represent estimates of future events and are subject  
to uncertainty as to possible changes in economic, legislative, industry, and   
other circumstances. As a result, the identification and interpretation of data 
and other information and their use in developing and selecting assumptions from
and among reasonable alternatives require the exercise of judgment. To the      
extent that the assumed events do not occur, the outcome may vary substantially 
from anticipated or projected results, and, accordingly, no opinion is expressed
on the achievability of those forward-looking                                   

23

DEFM14C
24th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 24th
statements. We cannot guarantee that any of the assumptions relating to the     
forward-looking statements specified in the following information are accurate, 
and we assume no obligation to update any such forward-looking statements.      

 FINANCIAL AND OTHER INFORMATION

 GLOBAL YACHT AUDITED FINANCIAL STATEMENTS

The financial statements of Global Yacht as of December 31, 2002 and 2001 and   
are contained in Global Yacht's Annual Report on Form 10-KSB for the year ended 
December 31, 2002 which is included in this document as Exhibit E. These        
financial statements have been audited by Hall & Company, independent auditors. 
You are encouraged to review the financial statements, related notes and other  
information included elsewhere in this filing.                                  

HYALOZYME'S PLAN OF OPERATIONS

REVENUES. Hyalozyme has generated no revenues since its inception on February   
26, 1998, and does not anticipate generating revenues before the last quarter of
fiscal 2004. However, no assurances can be given as to the recognition of any   
revenues in fiscal 2004.                                                        

EXPENSES. Hyalozyme has generated net losses of $4.0 million from its inception 
through December 31, 2003. These losses are primarily due to research and       
development expenses of $2.4 million, general and administrative expenses of    
$1.2 million, and interest expense of $.4 million.                              

LIQUIDITY AND CAPITAL RESOURCES. Hyalozyme has used $3.0 million net cash in its
operating activities and purchased equipment for $.3 million from its inception 
through December 31, 2003. It has financed its operating and investing          
activities by raising $3.8 million in cash from the issuance of notes of $1.3   
million, common stock of $.1 million, and preferred stock of $2.4 million. While
Hyalozyme has $.5 million cash at December 31, 2003, additional financing is    
required in order to execute its business plan. There can be no assurance that  
additional financing will be available on terms favorable to Hyalozyme or at    
all. On January 28, 2004, pursuant to an investment completed simultaneously    
with the Merger, Hyalozyme raised approximately $8.1 million.                   

By adjusting its operations and development to the level of capitalization,     
management believes it has sufficient capital resources to meet projected cash  
flow deficits during 2004. However, if during that period or thereafter, we are 
not successful in generating sufficient liquidity from operations or in raising 
sufficient capital resources, on terms acceptable to us, this could have a      
material adverse effect on our business, results of operations, liquidity and   
financial condition.                                                            

MERGER. On January 28, 2004, Hyalzoyme entered into an Agreement and Plan of    
Merger (the "Merger Agreement") with Global Yacht Services, Inc., a publicly    
traded Nevada corporation ("Global Yacht"), Hyalozyme Acquisition Corporation, a
Nevada corporation and wholly owned subsidiary of Global Yacht (the "Merger     
Sub") and certain other parties. The Merger Agreement will provide for Merger   
Sub to merge with and into Hyalozyme with Hyalozyme remaining as the surviving  
corporation (the "Merger") and becoming a public company. See Exhibit A, the    
Merger Agreement, for a detailed discussion of the terms and conditions of the  
Merger.                                                                         

PATENTS. Hyalozyme currently owns or licenses several U.S. and foreign patents  
and also has pending patent applications. There can be no assurance that        
Hyalozyme's existing patents, or any patents issued to it as a result of such   
applications, will provide a basis for commercially viable products, will       
provide Hyalozyme with any competitive advantages, or will not face third-party 
challenges or be the subject of further proceedings limiting their scope or     
enforceability.                                                                 

EMPLOYEES. At February 5, 2004, Hyalozyme employed 13 full-time employees.      
Approximately 9 of its employees are involved in research and clinical          
development activities. Four of Hyalozyme's employees hold Ph.D. or M.D.        
degrees. Hyalozyme anticipates hiring 5 to 10 additional employees by the end of
2004.                                                                           

24

DEFM14C
25th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 25th
HYALOZYME AUDITED FINANCIAL STATEMENTS

The financial statements of Hyalozyme Therapeutics, Inc. ("Hyalozyme") for the  
years ending December 31, 2003 and December 31, 2002 are attached hereto as     
Exhibit F. These statements have been audited by Cacciamatta Accountancy        
Corporation, independent auditors. You are encouraged to review the financial   
statements, related notes and other information included elsewhere in this      
filing.                                                                         

 SUMMARY FINANCIAL INFORMATION

The following gives a summary of the most recent unaudited balance sheet data of
Global Yacht as of September 30, 2003 and as of December 31, 2002 and (2) the   
unaudited statements of operations data of Global Yacht for the nine months     
ended September 30, 2003 and for the year ended December 31, 2002.              

                                                                [Download Table]

Income Statement                      Global Yacht          Global Yacht   
                                Nine month period ending     Year ending   
                                   September 30, 2003     December 31, 2002
                                           $                      $        
                                                                           
Revenue                                  23,386                87,769      
Gross Profit (Operating Loss)           (24,373)               38,095      
Net Loss                                (25,173)              (65,263)     
Net Loss Per Share                       (.01)                  (.04)      


Balance Sheet                      September 30, 2003     December 31, 2002
                                           $                      $        
                                                                           
Total Assets                             68,149                97,249      
Total Liabilities                        4,752                 10,434      
Shareholders' Equity (Deficit)           63,397                86,815      

The following gives a summary of the most recent audited balance sheet data of  
Hyalozyme for the years ended December 31, 2003 and December 31, 2002 and (2)   
the audited statements of operations data of Hyalozyme for the years ended      
December 31, 2003 and December 31, 2002.                                        

                                                                [Download Table]

Income Statement                    Hyalozyme          Hyalozyme    
                                   Year ending        Year ending   
                                December 31, 2003  December 31, 2002
                                        $                  $        
                                                                    
Revenue                                 0                  0        
Gross Profit (Operating Loss)      (1,721,872)        (1,152,902)   
Net Loss                           (2,115,025)        (1,134,765)   
Net Loss Per Share                    (.31)              (.25)      


Balance Sheet                   December 31, 2003  December 31, 2002
                                        $                  $        
                                                                    
Total Assets                         647,247            230,580     
Total Liabilities                    273,440            610,140     
Shareholders' Equity (Deficit)       373,807           (379,560)    

This information is only a summary. You should also read the historical         
information, management's discussion and analysis and related notes of Global   
Yacht contained it its Quarterly Report on Form 10-QSB as filed with the        
Securities and Exchange Commission for the nine month period ended September 30,
2003, which are incorporated by reference into this document and the historical 
financial statements, management's discussion and analysis and related notes for
Global Yacht contained elsewhere in this document.                              

25

DEFM14C
26th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 26th
We are providing above financial and other information for informational        
purposes only. It does not necessarily represent or indicate what the financial 
position and results of operations of Global Yacht will be once the Merger is   
concluded.                                                                      

ADDITIONAL INFORMATION

Global Yacht will furnish without charge to any stockholder, upon written or    
oral request, any documents filed by Global Yacht pursuant to the Securities    
Exchange Act. Requests for such documents should be addressed to Global Yacht,  
Inc., 7710 Hazard Center Drive, Suite E-415, San Diego, California 92108.       
Documents filed by Global Yacht pursuant to the Securities Exchange Act may be  
reviewed and/or obtained through the Securities and Exchange Commission's       
Electronic Data Gathering Analysis and Retrieval System, which is publicly      
available through the Securities and Exchange Commission's web site             
(http://www.sec.gov).                                                           

DISSENTERS' RIGHTS

We do not believe that the Nevada Revised Statutes ("NRS") provide dissenters'  
rights with respect to the Merger. However, it may be determined that as an     
owner of Global Yacht common stock, you do have the right to dissent from this  
Merger and obtain cash payment for the "fair value" of your shares, as          
determined in accordance with the NRS. In the event that it is determined that  
you do have the right to dissent, below is a description of the steps you must  
take if you wish to exercise dissenters' rights with respect to the Merger under
NRS Sections 92A.300 to 92A.500, the Nevada dissenters' rights statute. The text
of the statute is set forth in Exhibit D. This description is not intended to be
complete. If you are considering exercising your dissenters' rights, you should 
review NRS Sections 92A.300 to 92A.500 carefully, particularly the steps        
required to perfect dissenters' rights. Failure to take any one of the required 
steps may result in termination of your dissenters' rights under Nevada law. If 
you are considering dissenting, you should consult with your own legal advisor. 

To exercise your right to dissent, you must:                                    

    o    before the effective date of the Merger, deliver written notice to us
     at Global Yacht, Inc., 7710 Hazard Center Drive, Suite E-415, San
        Diego, California 92108, Attn: Corporate Secretary, stating that you
        intend to demand payment for your shares if the Merger is completed;
and                                                         

 o    not vote your shares in favor of the Merger, either by proxy or in
person.                                                     

If you satisfy those conditions, we will send you a written dissenter's notice  
within 10 days after the Merger is effective. This dissenter's notice will:     

   o    specify where you should send your payment demand and where and when
you must deposit your stock certificates, if any;           

     o    inform holders of uncertificated shares to what extent the transfer of
 their shares will be restricted after their payment demand is
received;                                                   

    o    supply a form of payment demand that includes the date the Merger was
         first publicly announced and the date by which you must have acquired
beneficial ownership of your shares in order to dissent;    

   o    set a date by when we must receive the payment demand, which may not
       be less than 30 or more than 60 days after the date the dissenters'
notice is delivered; and                                    

o    provide you a copy of Nevada's dissenters' rights statute.       

After you have received a dissenter's notice, if you still wish to exercise your
dissenters' rights, you must:                                                   

26

DEFM14C
27th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 27th
    o    demand payment either through the delivery of the payment demand form
to be provided or other comparable means;                   

   o    certify whether you have acquired beneficial ownership of the shares
before the date set forth in the dissenter's notice; and    

     o    deposit your certificates, if any, in accordance with the terms of the
dissenter's notice.                                         

FAILURE TO DEMAND PAYMENT IN THE PROPER FORM OR DEPOSIT YOUR CERTIFICATES AS    
DESCRIBED IN THE DISSENTER'S NOTICE WILL TERMINATE YOUR RIGHT TO RECEIVE PAYMENT
FOR YOUR SHARES PURSUANT TO NEVADA'S DISSENTERS' RIGHTS STATUTE. YOUR RIGHTS AS 
A STOCKHOLDER WILL CONTINUE UNTIL THOSE RIGHTS ARE CANCELED OR MODIFIED BY THE  
COMPLETION OF THE MERGER.                                                       

Within 30 days after receiving your properly executed payment demand, we will   
pay you what we determine to be the fair value of your shares, plus accrued     
interest (computed from the effective date of the Merger until the date of      
payment). The payment will be accompanied by:                                   

   o    our balance sheet as of the end of a fiscal year ended not more than
      16 months before the date of payment, an income statement for that
       year, a statement of changes in stockholders' equity for that year,
  and the latest available interim financial statements, if any;

  o    an explanation of how we estimated the fair value of the shares and
how the interest was calculated;                            

o    information regarding your right to challenge the estimated fair 
value; and                                                  

o    a copy of Nevada's dissenters' rights statute.                   

We may elect to withhold payment from you if you became the beneficial owner of 
the shares on or after the date set forth in the dissenter's notice. If we      
withhold payment, after the consummation of the Merger, we will estimate the    
fair value of the shares, plus accrued interest, and offer to pay this amount to
you in full satisfaction of your demand. The offer will contain a statement of  
our estimate of the fair value, an explanation of how the interest was          
calculated, and a statement of dissenters' rights to demand payment under NRS   
Section 92A.480.                                                                

If you believe that the amount we pay in exchange for your dissenting shares is 
less than the fair value of your shares or that the interest is not correctly   
determined, you can demand payment of the difference between your estimate and  
ours. You must make such demand within 30 days after we have made or offered    
payment; otherwise, your right to challenge our calculation of fair value       
terminates.                                                                     

If there is still disagreement about the fair market value within 60 days after 
we receive your demand, we will petition the District Court of Clark County,    
Nevada to determine the fair value of the shares and the accrued interest. If we
do not commence such legal action within the 60-day period, we will have to pay 
the amount demanded for all unsettled demands. All dissenters whose demands     
remain unsettled will be made parties to the proceeding, and are entitled to a  
judgment for either:                                                            

   o    the amount of the fair value of the shares, plus interest, in excess
of the amount we paid; or                                   

  o    the fair value, plus accrued interest, of the after-acquired shares
for which we withheld payment.                              

We will pay the costs and expenses of the court proceeding, unless the court    
finds the dissenters acted arbitrarily, vexatiously or in bad faith, in which   
case the costs will be equitably distributed. Attorney fees will be divided as  
the court considers equitable.                                                  

FAILURE TO FOLLOW THE STEPS REQUIRED BY NRS SECTIONS 92A.400 THROUGH 92A.480 FOR
PERFECTING DISSENTERS' RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS. IF         
DISSENTERS' RIGHTS ARE NOT PERFECTED, YOU WILL BE ENTITLED TO RECEIVE THE       
CONSIDERATION RECEIVABLE WITH RESPECT TO SUCH SHARES IN ACCORDANCE WITH THE     
MERGER AGREEMENT. IN                                                            

27

DEFM14C
28th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 28th
VIEW OF THE COMPLEXITY OF THE PROVISIONS OF NEVADA'S DISSENTERS' RIGHTS STATUTE,
IF YOU ARE CONSIDERING OBJECTING TO THE MERGER YOU SHOULD CONSULT YOUR OWN LEGAL
ADVISOR.                                                                        

 [The remainder of this page is left blank intentionally.]

28

DEFM14C
29th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 29th
 EXHIBIT A

MERGER AGREEMENT

AGREEMENT AND PLAN OF MERGER

BY AND AMONG

 DELIATROPH PHARMACEUTICALS, INC., DBA HYALOZYME THERAPEUTICS, INC.,
 A CALIFORNIA CORPORATION,

 AND

 THE DELIATROPH PHARMACEUTICALS, INC. STOCKHOLDERS
ON THE ONE HAND,

 AND

GLOBAL YACHT SERVICES, INC.,
 A NEVADA CORPORATION,

HYALOZYME ACQUISITION CORPORATION,
 A NEVADA CORPORATION,

 AND

 THE GLOBAL YACHT STOCKHOLDERS

 ON THE OTHER HAND

DATED AS OF JANUARY 28, 2004

DEFM14C
30th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 30th
AGREEMENT AND PLAN OF MERGER

         THIS  AGREEMENT  AND PLAN OF MERGER  (the  "Agreement")  is dated as of
January 28, 2004, by and among DeliaTroph  Pharmaceuticals,  Inc., dba Hyalozyme
Therapeutics,  Inc., a  California  corporation  ("Hyalozyme"),  and each of the
shareholders of Hyalozyme set forth on the signature page hereto  (collectively,
the "Hyalozyme Shareholders"), on the one hand, and Global Yacht Services, Inc.,
a publicly traded Nevada  corporation  ("Global Yacht"),  Hyalozyme  Acquisition
Corporation,  a Nevada  corporation and wholly owned  subsidiary of Global Yacht
("Merger  Sub"),  and Mitch Keeler and Melissa Day,  individual  stockholders of
Global Yacht (the "Global Yacht Stockholders"), on the other hand.              

RECITALS

         A. Global  Yacht,  Merger Sub and  Hyalozyme  have each  determined  to
engage in the  transactions  contemplated  hereby  (collectively,  the "Merger")
pursuant to which Merger Sub will merge with and into Hyalozyme,  with Hyalozyme
being the surviving  corporation,  and the outstanding shares of Hyalozyme shall
be converted  into shares of Global  Yacht's  common stock in the manner  herein
described.                                                                      

         B. The  respective  boards of directors of Hyalozyme,  Global Yacht and
Merger Sub have each approved this  Agreement and the Merger,  and the Hyalozyme
Shareholders  and Global Yacht, as the sole shareholder of Merger Sub, have each
approved this Agreement and the Merger.                                         

         C.  The  parties  intend  that  this  Agreement  constitutes  a plan of
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), and the regulations promulgated thereunder.   

 AGREEMENT

         NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained  herein  and in  reliance  upon  the  representations  and  warranties
hereinafter set forth, the parties hereto hereby agree as follows:              

 ARTICLE 1
THE MERGER

1.1      Surviving Entity; Effective Time.                    

                  (a) At the Closing (as  hereinafter  defined),  subject to the
terms and conditions of this Agreement, Merger Sub shall be merged with and into
Hyalozyme  in  accordance  with the  relevant  sections  of the  Nevada  Revised
Statutes  ("NRS")  and the  California  General  Corporation  Law (the  "CGCL"),
whereupon the separate  existence of Merger Sub shall cease, and Hyalozyme shall
be the surviving corporation  ("Surviving  Corporation") and shall take the name
"Halozyme  Therapeutics,  Inc." (the  "Effective  Time").  It is intended by the
parties  hereto that the Merger  shall  constitute a  reorganization  within the
meaning of Section  368(a) of the Internal  Revenue Code and                    

2 

DEFM14C
31st Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 31st
the parties  hereto  hereby adopt this  Agreement as a "plan of  reorganization"
within the meaning of Sections  1.368-2(g)  and  1.368-3(a) of the United States
Treasury Regulations.                                                           

                  (b) Simultaneously  with the Closing,  Articles of Merger (the
"Merger  Articles"),  in the form  attached  hereto as Exhibit A, shall be filed
with the  Secretary of State of the State of Nevada in  accordance  with Section
92A.200 of the NRS.  Subsequent to the Closing, a certified copy of the Articles
of Merger as filed with the  Secretary  of State of the State of Nevada shall be
filed with the Secretary of State of the State of California. From and after the
Effective Time, Hyalozyme shall possess all the rights,  privileges,  powers and
franchises and be subject to all of the restrictions, disabilities and duties of
both Hyalozyme and Merger Sub, as provided under the NRS and the CGCL.          

         1.2 Articles of Incorporation and Bylaws. The Articles of Incorporation
and  Bylaws of the Merger Sub as in effect  immediately  prior to the  Effective
Time shall be the Articles of  Incorporation  and Bylaws,  respectively,  of the
Surviving  Corporation  from and  after the  Effective  Time,  until  thereafter
amended in accordance with applicable law.                                      

         1.3 Directors and Officers.  From and after the Effective  Time,  until
their successors are duly elected or appointed and qualified,  the directors and
officers of Global Yacht and the  Surviving  Corporation  shall be the directors
and  officers,  respectively,  of Hyalozyme in office  immediately  prior to the
Effective Time.                                                                 

         1.4  Conversion of Shares.  As of the Effective  Time, by virtue of the
Merger, automatically and without any action on the part of any holder thereof: 

              Each  fully paid and  nonassessable  share of  Hyalozyme's  common
stock, no par value ("Hyalozyme  Common Stock"),  warrants to purchase shares of
Hyalozyme's  Common Stock ("Hyalozyme  Warrants") and options to purchase shares
of Hyalozyme's Common Stock ("Hyalozyme Options"), outstanding immediately prior
to the  Effective  Time,  shall be  converted  into the same number of shares of
Global  Yacht's  common stock,  par value $0.001 per share ("Global Yacht Common
Stock"),  warrants to purchase  shares of Global  Yacht's  common stock ("Global
Yacht  Warrants") or options to purchase  shares of Global  Yacht's common stock
("Global Yacht  Options"),  respectively.  Each Hyalozyme  shareholder  shall be
entitled  to receive  the  equivalent  number of shares of Global  Yacht  Common
Stock,  Global Yacht  Warrants or Global Yacht  Options as set forth on Schedule
1.4 attached hereto; collectively,  the Hyalozyme shareholders shall be entitled
to receive an  aggregate  of  approximately  33,624,898  shares of Global  Yacht
Common Stock,  (the "Global Yacht  Shares"),  Global Yacht  Warrants to purchase
approximately  11,316,033  shares of Global  Yacht Common Stock and Global Yacht
Options to purchase approximately 6,886,807 shares of Global Yacht Common Stock.

         1.5 Fractional  Shares.  Fractional shares of Global Yacht shall not be
issued in connection  with the Global Yacht Shares,  but any  fractional  shares
shall be rounded to the nearest whole share.  No cash shall be issued in lieu of
any fractional shares.                                                          

1.6      Stock Certificates.                                  

3 

DEFM14C
32nd Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 32nd
                  (a)  Upon  surrender  to  Global  Yacht  of  the  certificates
representing the Hyalozyme Common Stock, Hyalozyme Warrants or Hyalozyme Options
(collectively,  the  "Hyalozyme  Certificates"),  the holders of such  Hyalozyme
Certificates  shall each be entitled to receive in exchange therefor one or more
certificates  representing  the number of shares of Global Yacht  Common  Stock,
Global Yacht Warrants or Global Yacht Options respectively, to which such holder
is entitled pursuant to the provisions of Section 1.4 hereof.                   

                  (b) Each  Hyalozyme  Certificate  converted  into Global Yacht
Common Stock, Global Yacht Warrants or Global Yacht Options  respectively shall,
by  virtue of the  Merger  and  without  any  action  on the part of the  holder
thereof,  cease to be outstanding,  be cancelled and retired and cease to exist.
Until  surrendered as contemplated by this Section 1.6, each holder of Hyalozyme
Common  Stock,  Hyalozyme  Warrants or  Hyalozyme  Options,  respectively  shall
thereafter  cease to possess any rights with respect to such shares,  except the
right to receive upon such surrender the number of shares of Global Yacht Common
Stock, Global Yacht Warrants or Global Yacht Options,  respectively, as provided
by Section 1.4 hereof.                                                          

                  (c) All shares of Global  Yacht  Common  Stock,  Global  Yacht
Warrants or Global  Yacht  Options,  respectively,  delivered  to the  Hyalozyme
shareholders  in respect of the Hyalozyme  Common Stock,  Hyalozyme  Warrants or
Hyalozyme Options , respectively, in accordance with the terms of this Agreement
shall be  deemed to have  been  delivered  in full  satisfaction  of all  rights
pertaining  to such shares of  Hyalozyme  Common  Stock,  Hyalozyme  Warrants or
Hyalozyme  Options,  respectively.  If,  after  the  Effective  Time,  Hyalozyme
Certificates are presented for any reason, they shall be cancelled and exchanged
as provided in this Section 1.6.                                                

         1.7 Closing.  Subject to the  satisfaction of the conditions  precedent
specified  in Section 6 hereof,  the  closing of the Merger  shall take place at
11:00 a.m. (Pacific Time) at the offices of Gray Cary Ware & Freidenrich LLP, on
or before  April 30,  2004,  or at such other time and date as the  parties  may
mutually agree (the "Closing").                                                 

         1.8. Press  Releases.  At Closing,  Global Yacht shall issue such press
release or  announcement of the  transactions  contemplated by this Agreement as
may be required by the reporting  requirements of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), subject to the applicable requirements of
Rules  135a  and  135c  under  the  Securities  Act of  1933,  as  amended  (the
"Securities   Act"),  and  such  release  or  announcement  will  be  reasonably
satisfactory  in form and substance to Hyalozyme  and its counsel.  Global Yacht
shall not issue any other press release or otherwise make public any information
with respect to this Agreement or the transactions contemplated hereby, prior to
the Closing,  without the prior written consent of Hyalozyme which consent shall
not be unreasonably withheld. Notwithstanding the foregoing, if required by law,
Global  Yacht may issue  such a press  release or  otherwise  make  public  such
information as long as Global Yacht  notifies the Hyalozyme of such  requirement
and discusses with Hyalozyme in good faith the contents of such disclosure.     

         1.9  Redemption.  At Closing,  Global  Yacht shall cause to be redeemed
4,296,375  shares  of its  outstanding  restricted  common  stock  from  certain
stockholders.                                                                   

         1.10 Dissenters' Rights.  Notwithstanding anything in this Agreement to
the contrary,                                                                   

4 

DEFM14C
33rd Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 33rd
shares of Hyalozyme  capital stock that are issued and  outstanding  immediately
prior to the Effective Time and which are held by shareholders  who did not vote
in favor of the Merger (the "Dissenting Shares"), which shareholders comply with
all of the  relevant  provisions  of the CGCL (the  "Dissenting  Shareholders"),
shall not be  converted  into or be  exchangeable  for the right to receive  the
Global Yacht Shares,  unless and until such holders shall have failed to perfect
or shall have effectively  withdrawn or lost their rights to appraisal under the
CGCL. If any Dissenting  Shareholder  shall have failed to perfect or shall have
effectively  withdrawn or lost such right,  such holder's Shares shall thereupon
be converted into and become  exchangeable  for the right to receive,  as of the
Effective  Time,  Global Yacht Shares  without any interest  thereon.  Hyalozyme
shall give Global Yacht (a) prompt  notice of any written  demands for appraisal
of any shares,  attempted  withdrawals of such demands and any other instruments
served pursuant to the CGCL and received by Hyalozyme  relating to shareholders'
rights of dissent  and  appraisal,  and (b) the  opportunity  to direct,  in its
reasonable  business judgment,  all negotiations and proceedings with respect to
demands  for  appraisal  under the CGCL.  Neither  Hyalozyme  nor the  Surviving
Corporation  shall,  except  with the prior  written  consent  of Global  Yacht,
voluntarily make any payment with respect to, or settle or offer to settle,  any
such demand for payment. If any Dissenting  Shareholder shall fail to perfect or
shall have  effectively  withdrawn  or lost the right to dissent,  the shares of
Hyalozyme  capital stock held by such Dissenting  Shareholder shall thereupon be
treated  as though  such  shares  had been  converted  into the right to receive
Global Yacht Shares pursuant to Section 1.4                                     

 ARTICLE 2
 REPRESENTATIONS AND WARRANTIES OF HYALOZYME

         Hyalozyme hereby represents and warrants to Global Yacht and Merger Sub
as follows:                                                                     

         2.1 Organization.  Hyalozyme is a corporation,  duly organized, validly
existing, and in good standing under the laws of the State of California.       

         2.2 Capitalization.  The authorized capital stock of Hyalozyme consists
of 60,000,000  shares of common stock,  no par value,  and 15,000,000  shares of
preferred stock, no par value, which are, and at the Closing will be, issued and
outstanding in the following manner;                                            

         a)   18,320,094   shares  of   Hyalozyme   Common   Stock   issued  and
              outstanding,   with  options  to  purchase   6,886,807  shares  of
              Hyalozyme Common Stock, and warrants to purchase  3,663,631 shares
              of Hyalozyme Common Stock, held by the historical  shareholders of
Hyalozyme;                                          
         b)   15,304,804  Hyalozyme  Common  Shares,  with each purchase of such
              shares  receiving  a warrant to  purchase  one share of  Hyalozyme
              Common  Stock for  every two  shares  of  Hyalozyme  Common  Stock
purchased;                                          
         c)   Up to an additional  800,000  Hyalozyme  Common Shares,  with each
              purchase of such shares  receiving a warrant to purchase one share
              of Hyalozyme Common Stock for every two shares of Hyalozyme Common
              Stock   purchased  and  warrants  to  purchase  68,000  shares  of
Hyalozyme Common Stock in accordance therewith; and 
         d)   There shall be reserved  approximately 618,000 shares of Hyalozyme
              Common  Stock to be issued to Monico  Capital  Partners,  LLC upon
closing of funding of $7,112,142.                   

5 

DEFM14C
34th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 34th
         All of the issued and outstanding  shares of capital stock of Hyalozyme
are duly  authorized,  validly issued,  fully paid,  non-assessable  and free of
preemptive rights. Other than as specified above, there are no other outstanding
or authorized options, rights, warrants,  calls, convertible securities,  rights
to subscribe,  conversion  rights or other  agreements or  commitments  to which
Hyalozyme  is a party or which are  binding  upon  Hyalozyme  providing  for the
issuance or transfer by Hyalozyme of additional  shares of its capital stock and
Hyalozyme  has not reserved any other shares of its capital  stock for issuance,
nor are there any other  outstanding  stock  option  rights,  phantom  equity or
similar rights,  contracts,  arrangements or commitments  which are binding upon
Hyalozyme.  There are no voting trusts or any other agreements or understandings
with respect to the voting of Hyalozyme's capital stock.                        

         2.3  Certain  Corporate  Matters.  Hyalozyme  is duly  qualified  to do
business as a foreign  corporation and is in good standing in each  jurisdiction
in which the ownership of its properties, the employment of its personnel or the
conduct of its business requires it to be so qualified, except where the failure
to be so  qualified  would not have a  material  adverse  effect on  Hyalozyme's
financial  condition,  results of  operations  or business.  Hyalozyme  has full
corporate  power and  authority  and all  authorizations,  licenses  and permits
necessary to carry on the business in which it is engaged and to own and use the
properties owned and used by it.                                                

         2.4 Authority  Relative to this Agreement.  Hyalozyme has the requisite
power  and  authority  to  enter  into  this  Agreement  and to  carry  out  its
obligations hereunder. The execution, delivery and performance of this Agreement
by Hyalozyme and the consummation by Hyalozyme of the transactions  contemplated
hereby have been duly authorized by the Hyalozyme  Shareholders and the Board of
Directors  of  Hyalozyme  and no  other  actions  on the part of  Hyalozyme  are
necessary to authorize this Agreement or the transactions  contemplated  hereby.
This Agreement has been duly and validly executed and delivered by Hyalozyme and
constitutes  a valid and binding  agreement of  Hyalozyme,  enforceable  against
Hyalozyme  in  accordance  with its  terms,  except as such  enforcement  may be
limited  by   bankruptcy,   insolvency  or  other  similar  laws  affecting  the
enforcement of creditors' rights generally or by general principles of equity.  

         2.5 Consents and Approvals;  No Violations.  Except for requirements of
applicable  law,  no filing  with,  and no  permit,  authorization,  consent  or
approval  of, any third party,  public body or  authority  is necessary  for the
consummation  by Hyalozyme of the  transactions  contemplated by this Agreement.
Neither the  execution  and  delivery of this  Agreement  by  Hyalozyme  nor the
consummation  by  Hyalozyme  of  the  transactions   contemplated   hereby,  nor
compliance by Hyalozyme  with any of the  provisions  hereof,  will (a) conflict
with or result in any breach of any provisions of the  organizational  documents
of  Hyalozyme,  (b) result in a violation or breach of, or  constitute  (with or
without  due  notice  or lapse of time or both) a  default  (or give rise to any
right of termination,  cancellation or  acceleration)  under,  any of the terms,
conditions  or  provisions  of any note,  bond,  mortgage,  indenture,  license,
contract,  agreement or other  instrument or obligation to which  Hyalozyme is a
party or by which it or its properties or assets may be bound or (c) violate any
order,  writ,  injunction,  decree,  statute,  rule or regulation  applicable to
Hyalozyme, or any of its properties or assets, except in the case of clauses (b)
and (c) for  violations,  breaches  or defaults  which are not in the  aggregate
material to Hyalozyme taken as a whole.                                         

6 

DEFM14C
35th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 35th
2.6      Financial Statements                                 

                  (a) Hyalozyme has provided its unaudited  balance sheets as at
December 31, 2003 and 2002, and the related statements of operations, changes in
stockholders'  equity and cash flows for the years ended  December  31, 2003 and
2002, (collectively, "Hyalozyme's Financials").                                 

                  (b)  Hyalozyme's  Financials  are (i) in  accordance  with the
books and records of Hyalozyme,  (ii) correct and complete, (iii) fairly present
the  financial  position and results of  operations of Hyalozyme as of the dates
indicated,  and (iv)  prepared in  accordance  with U.S.  GAAP  (except that (x)
unaudited financial statements may not be in accordance with GAAP because of the
absence of footnotes  normally contained  therein,  and (y) interim  (unaudited)
financials  are  subject  to  normal  year-end  audit  adjustments  that  in the
aggregate  will  not have a  material  adverse  effect  on  Hyalozyme,  or their
respective businesses, financial conditions or results of operations).          

         2.7 Events Subsequent to Financial Statements. Since December 31, 2003,
there has not been:                                                             

                  (a) any sale,  lease,  transfer,  license or assignment of any
assets, tangible or intangible, of Hyalozyme;                 

                  (b) any damage,  destruction or property loss,  whether or not
         covered by insurance, affecting adversely the properties or business of
Hyalozyme;                                                    

                  (c)  any  declaration  or  setting  aside  or  payment  of any
         dividend or distribution with respect to the shares of capital stock of
         Hyalozyme or any redemption,  purchase or other acquisition of any such
shares;                                                       

                  (d) any issuance of shares of capital  stock or the  granting,
         issuance or execution of any rights,  warrants,  options or commitments
         by the  Hyalozyme,  as the case may be,  relating to its  authorized or
issued capital stock;                                         

                  (e) any subjection to any lien on any of the assets,  tangible
or intangible, of Hyalozyme;                                  

                  (f) any incurrence of  indebtedness or liability or assumption
of obligations by Hyalozyme;                                  

                  (g) any  waiver or release  by  Hyalozyme  of any right of any
material value;                                               

                  (h) any compensation or benefits paid to officers or directors
of Hyalozyme;                                                 

                  (i)  any  change  made  or   authorized  in  the  Articles  of
Incorporation or Bylaws of Hyalozyme;                         

7 

DEFM14C
36th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 36th
                  (j)  any  loan  to or  other  transaction  with  any  officer,
         director or stockholder of Hyalozyme  giving rise to any claim or right
         of  Hyalozyme  against  any  such  person  or of  such  person  against
Hyalozyme; or                                                 

                  (k) any material adverse change in the condition (financial or
         otherwise)  of the  properties,  assets,  liabilities  or  business  of
         Hyalozyme.,  except  changes in the ordinary  course of business  that,
      individually and in the aggregate, have not been materially adverse.

         2.8 Title to Assets.  Hyalozyme has good and marketable title to all of
the assets and properties now carried on its books  including those reflected in
the most recent balance sheet contained in the Hyalozyme  Financial  Statements,
free and  clear of all  liens,  claims,  charges,  security  interests  or other
encumbrances,  except as  described in the  Hyalozyme  Financial  Statements  or
arising  thereafter  in the ordinary  course of business  (none of which will be
material).                                                                      

         2.9  Undisclosed   Liabilities.   Except  as  otherwise   disclosed  in
Hyalozyme's  Financials,  Hyalozyme  has no  material  liability  or  obligation
whatsoever,  either direct or indirect, matured or unmatured, accrued, absolute,
contingent or otherwise.                                                        

         2.10 Real  Property.  Except as disclosed in Schedule  2.10,  Hyalozyme
does not own or lease any real property.                                        

         2.11 Books and Records.  The corporate and financial  books and records
of Hyalozyme delivered to the Global Yacht prior to the Closing fully and fairly
reflect the  transactions  to which  Hyalozyme  is a party or by which it or its
properties are bound.                                                           

         2.12  Questionable  Payments.   Neither  Hyalozyme,   nor  any  of  its
respective  employees,  agents or  representatives  has, directly or indirectly,
made any bribes, kickbacks,  illegal payments or illegal political contributions
using  Hyalozyme's  funds  or  made  any  payments  from  Hyalozyme's  funds  to
governmental  officials for improper  purposes or made any illegal payments from
Hyalozyme's funds to obtain or retain business.                                 

         2.13 Intellectual  Property.  Other than as specified below on Schedule
2.13,  Hyalozyme  neither owns nor uses any  trademarks,  trade  names,  service
marks, patents,  copyrights or any applications with respect thereto.  Hyalozyme
has no  knowledge  of any claim  that,  or inquiry as to whether,  any  product,
activity or operation of Hyalozyme  infringes upon or involves,  or has resulted
in the infringement  of, any trademarks,  trade-names,  service marks,  patents,
copyrights or other proprietary rights of any other person, corporation or other
entity; and no proceedings have been instituted, are pending or are threatened. 

2.14     Tax Matters.                                         

                  (a)  Hyalozyme  has duly filed all  material  federal,  state,
local and foreign tax returns required to be filed by or with respect to it with
the  Internal  Revenue  Service or other  applicable  taxing  authority,  and no
extensions with respect to such tax returns have been requested or granted;     

8 

DEFM14C
37th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 37th
                  (b)  Hyalozyme has paid,  or  adequately  reserved  against in
Hyalozyme's  Financials,  all  material  taxes  due,  or  claimed  by any taxing
authority to be due, from or with respect to it;                                

                  (c) To the knowledge of Hyalozyme,  there has been no material
issue  raised or  material  adjustment  proposed  (and none is  pending)  by the
Internal Revenue Service or any other taxing authority in connection with any of
Hyalozyme's tax returns;                                                        

                  (d) No waiver or extension of any statute of limitations as to
any material  federal,  state,  local or foreign tax matter has been given by or
requested from Hyalozyme; and                                                   

                  (e) Hyalozyme has not filed a consent under Section  341(f) of
the Internal Revenue Code of 1986, as amended.                                  

         For the purposes of this Section 2.14, a tax is due (and must therefore
either be paid or adequately reserved against in Hyalozyme's Financials) only on
the last date  payment of such tax can be made  without  interest or  penalties,
whether such payment is due in respect of estimated  taxes,  withholding  taxes,
required tax credits or any other tax.                                          

         2.15 Contracts.  Except as provided in Schedule 2.15,  Hyalozyme has no
material  contracts,  leases,  arrangements  or  commitments  (whether  oral  or
written).  Hyalozyme is not a party to or bound by or affected by any  contract,
lease,  arrangement or commitment (whether oral or written) relating to: (a) the
employment of any person; (b) collective  bargaining with, or any representation
of any  employees by, any labor union or  association;  (c) the  acquisition  of
services,  supplies,  equipment or other personal property;  (d) the purchase or
sale of real property;  (e) distribution,  agency or construction;  (f) lease of
real or personal  property as lessor or lessee or  sublessor or  sublessee;  (g)
lending or advancing of funds; (h) borrowing of funds or receipt of credit;  (i)
incurring any obligation or liability; or (j) the sale of personal property.    

         2.16 Absence of Default. Each of the agreements listed on Schedule 2.15
that creates  obligations  of  Hyalozyme  is, and,  after  giving  effect to the
Merger,  will be, valid and binding and in full force and effect,  in each case,
without breaching the terms thereof or resulting in the forfeiture or impairment
of any rights thereunder and without notice to, the consent, approval or act of,
or the making of any filing with, any other person;                             

                  (b)  Hyalozyme  has  fulfilled  and  performed in all material
respects its obligations under each such agreement to which it is a party to the
extent such obligations are required by the terms thereof to have been fulfilled
or performed through the date hereof;                                           

                  (c)  Hyalozyme  is not  alleged in writing to be, and no other
party to any such  agreement  is, in  default  under,  nor is there  alleged  in
writing to be any basis for termination of, any such agreement;                 

                  (d) No event has  occurred  and no condition or state of facts
exists  which,  with the passage of time or the giving of notice or both,  would
constitute such a default or breach by                                          

9 

DEFM14C
38th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 38th
Hyalozyme or by any such other party; and                                       

                  (e)  Hyalozyme  is  not  currently   renegotiating   any  such
agreement or paying liquidated damages in lieu of performance thereunder.       

2.17     Environmental Matters.                               

                  (a)  Definitions.  For  the  purpose  of this  Agreement,  the
following terms shall have the meaning herein specified:                        

                           (i)  "Governmental  Authority"  shall mean the United
States, each state, each county, each city and each other                       

political  subdivision  in which  Hyalozyme's  or Global  Yacht's  business,  as
applicable,  is  located,  and  any  court,  political  subdivision,  agency  or
instrumentality  with  jurisdiction over Hyalozyme's or Global Yacht's business,
as applicable.                                                                  

                           (ii)   "Environmental   Laws"   shall  mean  (A)  the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Act of 1986, 42 U.S.C.A.
9601 et seq.  ("CERCLA"),  (B) the Resource  Conservation  and Recovery  Act, as
amended by the Hazardous and Solid Waste Amendment of 1984, 42 U.S.C.A.  6901 et
seq. ("RCRA"),  (C) the Clean Air Act, 42 U.S.C.A. 7401 et seq., (D) the Federal
Water Pollution Control Act, as amended, 33 U.S.C.A. 1251 et seq., (E) the Toxic
Substances Control Act, 15 U.S.C.A. 2601 et seq., (F) all applicable state laws,
and (G) all other laws and ordinances  relating to municipal waste, solid waste,
air  pollution,  water  pollution  and/or the handling,  discharge,  disposal or
recovery of on-site or off-site  hazardous  substances or materials,  as each of
the foregoing has been or may hereafter be amended from time to time.           

                           (iii) "Hazardous Materials" shall mean, among others,
(A) any  "hazardous  waste" as  defined  by RCRA,  and  regulations  promulgated
thereunder;  (B) any "hazardous substance" as defined by CERCLA, and regulations
promulgated  thereunder;  (C) any "toxic  pollutant"  as defined in the  Federal
Water Pollution  Prevention and Control Act, as amended, 33 U.S.C. 1251 et seq.,
(commonly known as "CWA" for "Clean Water Act"), and any regulations thereunder;
(D) any "hazardous air pollutant" as defined in the Air Pollution Prevention and
Control Act, as amended,  42 U.S.C.  7401 et seq.  (commonly  known as "CAA" for
"Clean  Air  Act")  and  any   regulations   thereunder;   (E)   asbestos;   (F)
polychlorinated  biphenyls;  (G) any  substance  the  presence  of  which at the
Business  Location (as hereinafter  defined) is prohibited by any  Environmental
Laws; and (H) any other substance which is regulated by any Environmental Laws. 

                           (iv) "Hazardous  Materials  Contamination" shall mean
the presence of Hazardous Materials in the soil,  groundwater,  air or any other
media  regulated by the  Environmental  Laws on, under or around  Hyalozyme's or
Global Yacht's  facilities,  as  applicable,  at levels or  concentration  which
trigger  any  requirement  under the  Environmental  Laws to remove,  remediate,
mitigate,  abate or otherwise reduce the level or concentration of the Hazardous
Materials.  The term "Hazardous  Materials  Contamination"  does not include the
presence of Hazardous  Materials  in process  tanks,  lines,  storage or reactor
vessels,  delivery trucks or any other equipment or containers,  which Hazardous
Materials are used in the manufacture,  processing,  distribution, use, storage,
sale,                                                                           

10

DEFM14C
39th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 39th
handling, transportation, recycling, reuse or disposal of the products that were
manufactured and/or distributed by Hyalozyme or Global Yacht, as applicable.    

                            (v)   "Business   Location"   shall  mean  any  real
property, building, facility or structure owned, leased or occupied by Hyalozyme
or  Global  Yacht,  as  applicable,  at any time  from its  inception  until the
present.                                                                        

                  (b)  Representations  and Warranties.  Based on the foregoing,
Hyalozyme represents and warrants that:                                         

                            (i)  To  the  knowledge  of  Hyalozyme,   after  due
investigation,  there has been no material  failure by  Hyalozyme to comply with
all  applicable  requirements  of  Environmental  Laws  relating  to  Hyalozyme,
Hyalozyme's operations, and Hyalozyme's manufacture,  processing,  distribution,
use,  treatment,   generation,   recycling,  reuses,  sale,  storage,  handling,
transportation or disposal of any Hazardous  Material and Hyalozyme is not aware
of any facts or circumstances which could materially impair such compliance with
all applicable Environmental Laws.                                              

                            (ii)  Hyalozyme  has not  received  notice  from any
Governmental Authority or any other person of any actual or alleged violation of
any Environmental Laws, nor is any such notice anticipated.                     

                            (iii)  Except as provided in Schedule  2.17,  to the
knowledge  of  Hyalozyme,  after due  investigation,  Environmental  Laws do not
require  that any  permits,  licenses or similar  authorizations  to  construct,
occupy or operate any equipment or facilities used in the conduct of Hyalozyme's
business.                                                                       

                            (iv) No Hazardous  Materials  are now located at the
Business Location, and, to the knowledge of Hyalozyme,  after due investigation,
Hyalozyme  has not ever  caused  or  permitted  any  Hazardous  Materials  to be
generated,  placed,  stored,  held,  handled,  located  or used at the  Business
Location,  except those which may lawfully be used,  transported,  stored, held,
handled,  generated  or  placed  at the  Business  Location  in the  conduct  of
Hyalozyme's business.                                                           

                            (v) Hyalozyme has not received any notices,  whether
from a Governmental Authority or some other third party, that Hazardous Material
Contamination  exists at the Business Location or at any other location utilized
by  Hyalozyme  in the  conduct of its  business  nor is  Hyalozyme  aware of any
circumstances that would give rise to an allegation of such contamination.      

                            (vi)  To  the  knowledge  of  Hyalozyme,  after  due
investigation,   no  investigation,   administrative  order,  consent  order  or
agreement,  litigation  or  settlement  with respect to  Hazardous  Materials or
Hazardous Materials Contamination is proposed, threatened,  anticipated, pending
or otherwise in existence with respect to the Business  Location or with respect
to any other site  controlled  or utilized by Hyalozyme in the  operation of its
business. To the knowledge of Hyalozyme,  after due investigation,  the Business
Location  is not  currently  on,  and has never  been on,  any  federal or state
"Superfund" or "Superlien" list.                                                

11

DEFM14C
40th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 40th
         2.18  Litigation  and  Governmental  Enforcement.  To the  knowledge of
Hyalozyme,  neither  it nor  any  of  its  affiliates,  officers,  directors  or
shareholders  owning 5% or over of its  capital  stock is a party to any action,
suit, arbitration,  legal or administrative  proceeding or investigation pending
or threatened against it by any federal,  state, municipal or governmental body,
including,  but not  limited  to, the SEC nor any they  acting on behalf of such
governmental bodies. To the knowledge of Hyalozyme, neither Hyalozyme nor any of
its affiliates,  officers,  directors or shareholders  owning 5% or over of each
entities  capital  stock  have  ever  been  fined,  sanctioned,  disciplined  or
imprisoned  for any securities  violation.  There is no judgment,  order,  writ,
injunction  or decree  of any  court,  governmental  agency,  tribunal  or other
governmental or regulatory  authority as to which any of the assets,  properties
or  business of  Hyalozyme  or any of its  affiliates,  officers,  directors  or
shareholders  owning 5% or over of its capital  stock is subject,  and Hyalozyme
knows of no basis  for  such  actions,  suits,  proceedings  or  investigations.
Hyalozyme agrees to immediately  provide Global Yacht with written  notification
of any  inquiry  by any of the  aforementioned  regulatory  bodies  should  they
receive notice of same prior to the Effective Time.                             

         2.19  Employees.  Hyalozyme  has twelve  employees.  Hyalozyme  owes no
compensation  of any kind,  deferred  or  otherwise,  to any current or previous
employees.  Hyalozyme  has no written  or oral  employment  agreements  with any
officer or director of  Hyalozyme.  Hyalozyme  is not a party to or bound by any
collective bargaining agreement. There are no loans or other obligations payable
or owing by  Hyalozyme  to any  stockholder,  officer,  director  or employee of
Hyalozyme,  nor are  there any  loans or debts  payable  or owing by any of such
persons to Hyalozyme or any guarantees by Hyalozyme of any loan or obligation of
any nature to which any such person is a party.                                 

         2.20   Employee   Benefit   Plans.   Neither   Hyalozyme  has  any  (a)
non-qualified   deferred  or  incentive  compensation  or  retirement  plans  or
arrangements, (b) qualified retirement plans or arrangements, (c) other employee
compensation, severance or termination pay or welfare benefit plans, programs or
arrangements  or (d) any related  trusts,  insurance  contracts or other funding
arrangements maintained, established or contributed to by Hyalozyme.            

         2.21 Legal Compliance.  To the knowledge of Hyalozyme no claim has been
filed  against  Hyalozyme  alleging  a  violation  of any  applicable  laws  and
regulations of foreign,  federal,  state and local  governments and all agencies
thereof. Hyalozyme holds all of the material permits, licenses,  certificates or
other authorizations of foreign,  federal,  state or local governmental agencies
required for the conduct of its business as presently conducted.                

         2.22 No Subsidiaries.  Hyalozyme does not own any capital stock or have
any  interest  in any  corporation,  partnership,  or  other  form  of  business
organization.                                                                   

         2.23 Broker's Fees. Neither  Hyalozyme,  nor anyone on their behalf has
any liability to any broker,  finder,  investment banker or agent, or has agreed
to pay any brokerage  fees,  finder's fees or  commissions,  or to reimburse any
expenses of any broker,  finder,  investment  banker or agent in connection with
this Agreement.                                                                 

         2.24 Affiliate Transactions.  Except as disclosed in Schedule 2.24, (a)
no officer or director of Hyalozyme has any  significant  interest in any entity
that is engaged in a  business  which is in                                     

12

DEFM14C
41st Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 41st
competition  with the  business of  Hyalozyme  and (b) no officer or director of
Hyalozyme  is a supplier  to, or a customer of  Hyalozyme,  or is a party to any
contract.                                                                       

         2.25 No  Disagreements  with  Accountants  and  Lawyers.  There  are no
disagreements  of any kind  presently  existing,  or reasonably  anticipated  by
Hyalozyme to arise,  between the accountants  and lawyers  formerly or presently
employed by Hyalozyme  and Hyalozyme is current with respect to any fees owed to
its accountants and lawyers.                                                    

         2.26 Securities Law Compliance.  Hyalozyme has, on a timely basis, made
any and all  appropriate  filings  required  by any  applicable  SEC  rules  and
regulations  and state  securities  laws  ("Blue Sky Laws") in any  jurisdiction
where Hyalozyme has offered, sold or distributed shares of its common stock, and
Hyalozyme represents and warrants that:                                         

         (a) All issued and  outstanding  shares of Hyalozyme's  stock have been
offered,  sold or otherwise  distributed in a manner  compliant with any and all
applicable SEC regulations or state  securities  laws, and that Hyalozyme shall,
upon request,  be required to furnish in writing to Global Yacht all information
within Hyalozyme's  possession or knowledge required by the applicable rules and
regulations of the SEC and by any applicable  state  securities  laws concerning
the method of sale,  distribution or other disposition of Hyalozyme common stock
to its  shareholders,  including  but  not  limited  to  the  identity  of,  and
compensation  to be paid to,  any  proposed  underwriter(s)  that may have  been
employed or utilized in connection therewith; and                               

         (b) To the  knowledge of  Hyalozyme,  there is no order  preventing  or
suspending  the sale or trading of the  securities  of  Hyalozyme  that has been
issued by the  Securities  and  Exchange  Commission  or any similar  regulatory
agency and Hyalozyme is not aware of any  justification  for such an order to be
issued.                                                                         

         2.27 Insurance.  Except as provided in Schedule 2.27,  Hyalozyme has no
insurance policies in effect                                                    

         2.28 Disclosure.  The  representations and warranties and statements of
fact made by Hyalozyme in this Agreement are, as applicable,  accurate,  correct
and complete and do not contain any untrue  statement of a material fact or omit
to state  any  material  fact  necessary  in order  to make the  statements  and
information contained herein not false or misleading.                           

 ARTICLE 3
REPRESENTATIONS AND WARRANTIES
 OF THE HYALOZYME SHAREHOLDERS

         Each of the  Hyalozyme  Shareholders  hereby  represents  and warrants,
individually as to himself, to Global Yacht and Merger Sub as follows:          

         3.1  Restricted  Securities.  Each  Stockholder  acknowledges  that the
Global Yacht Shares will not be registered pursuant to the Securities Act or any
applicable  state  securities  laws,  that  the                                 

13

DEFM14C
42nd Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 42nd
Global Yacht  Shares will be  characterized  as  "restricted  securities"  under
federal securities laws, and that under such laws and applicable regulations the
Global Yacht Shares cannot be sold or otherwise disposed of without registration
under the Securities Act or an exemption therefrom.  In this regard, each of the
Stockholders is familiar with Rule 144 promulgated  under the Securities Act, as
currently in effect, and understands the resale limitations  imposed thereby and
by the Securities Act.                                                          

         3.2 Accredited Investor.  Each Stockholder is an "Accredited  Investor"
as that  term is  defined  in rule 501 of  Regulation  D  promulgated  under the
Securities Act. Each  Stockholder is able to bear the economic risk of acquiring
the Global Yacht  Shares  pursuant to the terms of this  Agreement,  including a
complete loss of such Stockholder's investment in the Global Yacht Shares.      

         3.3  Legend.  Each  Stockholder  acknowledges  that the  certificate(s)
representing the Global Yacht Shares shall each  conspicuously  set forth on the
face or back thereof a legend in substantially the following form:              

         THESE  SECURITIES HAVE NOT BEEN REGISTERED  UNDER THE SECURITIES ACT OF
         1933, AS AMENDED.  THEY MAY NOT BE SOLD,  OFFERED FOR SALE,  PLEDGED OR
         HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE  REGISTRATION  STATEMENT AS
         TO THE  SECURITIES  UNDER SAID ACT OR  PURSUANT  TO AN  EXEMPTION  FROM
         REGISTRATION OR AN OPINION OF COUNSEL  SATISFACTORY TO THE COMPANY THAT
SUCH REGISTRATION IS NOT REQUIRED.                            

 ARTICLE 4
 REPRESENTATIONS AND WARRANTIES OF
GLOBAL YACHT, MERGER SUB AND THE GLOBAL YACHT STOCKHOLDERS

         Except as set forth under the  corresponding  section of the disclosure
schedule  delivered to Hyalozyme  and the  Hyalozyme  Shareholders  concurrently
herewith (the "Disclosure Schedule"),  which Disclosure Schedule shall be deemed
a part hereof,  Global Yacht,  Merger Sub and the Global Yacht  Stockholders  to
their  Knowledge (for purposes of this Article 4, the Global Yacht  Stockholders
will be deemed to have  "Knowledge" of a particular fact or other matter if they
had a duty to investigate such matter and, upon investigation,  should have been
aware of such fact or other matter only after investigation  thereof. The Global
Yacht  Stockholders  will be not be deemed to have  "Knowledge"  of a particular
fact or other matter merely because those  individual is serving,  or has at any
time served, as a director or officer.) hereby, jointly and severally, represent
and warrant to Hyalozyme and the Hyalozyme Shareholders as follows:             

         4.1 Organization.  Each of Global Yacht and Merger Sub is a corporation
duly  organized,  validly  existing and in good  standing  under the laws of the
state of its  incorporation,  and has the requisite  corporate power to carry on
its business as now conducted.                                                  

         4.2 Capitalization. Global Yacht's authorized capital stock consists of
50,000,000 shares of capital stock, all of which are designated as Common Stock,
of which no more  than  3,900,000  shares  at the  Closing  will be  issued  and
outstanding.  Prior to  Closing,  Global  Yacht  shall  amend  its              

14

DEFM14C
43rd Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 43rd
Articles  of  Incorporation   to  increase  the  authorized   capital  stock  to
100,000,000 shares. All issued and outstanding shares of capital stock of Global
Yacht  and  Merger  Sub  are  duly  authorized,   validly  issued,  fully  paid,
non-assessable  and free of  preemptive  rights.  When issued,  the Global Yacht
Shares will be duly authorized,  validly issued, fully paid,  non-assessable and
free of preemptive  rights,  there are no  outstanding  or  authorized  options,
rights, warrants, calls, convertible securities, rights to subscribe, conversion
rights or other agreements or commitments to which Global Yacht or Merger Sub is
a party or which are binding upon Global Yacht or Merger Sub  providing  for the
issuance by Global Yacht or Merger Sub or transfer by Global Yacht or Merger Sub
of additional shares of Global Yacht's or Merger Sub's capital stock and neither
Global  Yacht nor Merger Sub has  reserved  any shares of its capital  stock for
issuance,  nor are there any outstanding stock option rights,  phantom equity or
similar rights, contracts, arrangements or commitments to issue capital stock of
Global Yacht or Merger Sub.  There are no voting trusts or any other  agreements
or  understandings  with respect to the voting of Global Yacht's or Merger Sub's
capital stock.                                                                  

         4.3 Certain Corporate  Matters.  Each of Global Yacht and Merger Sub is
duly  licensed or qualified to do business and is in good  standing as a foreign
corporation  in every  jurisdiction  in which the character of its properties or
nature of its  business  requires it to be so licensed or  qualified  other than
such jurisdictions in which the failure to be so licensed or qualified does not,
or  insofar as can  reasonably  be  foreseen,  in the  future  will not,  have a
material  adverse  effect on its financial  condition,  results of operations or
business.  Each of Global  Yacht and  Merger  Sub has full  corporate  power and
authority and all authorizations, licenses and permits necessary to carry on the
business in which it is engaged or in which it proposes  presently to engage and
to own and use the  properties  owned and used by it.  Each of Global  Yacht and
Merger Sub has delivered to Hyalozyme true,  accurate and complete copies of its
Articles of  Incorporation  and Bylaws,  which reflect all  restatements  of and
amendments  made  thereto at any time prior to the date of this  Agreement.  The
records of meetings of the  stockholders and Boards of Directors of Global Yacht
and Merger Sub previously furnished to Hyalozyme are complete and correct in all
material  respects.  The stock  records  of Global  Yacht and Merger Sub and the
stockholder  lists of Global  Yacht  and  Merger  Sub  previously  furnished  to
Hyalozyme  are  complete and correct in all  material  respects  and  accurately
reflect the record ownership and the beneficial ownership of all the outstanding
shares  of  Global  Yacht's  and  Merger  Sub's  capital  stock  and  any  other
outstanding  securities  issued by Global Yacht and Merger Sub.  Neither  Global
Yacht nor Merger Sub is in default under or in violation of any provision of its
Articles of  Incorporation  or Bylaws in any material  respect.  Neither  Global
Yacht  nor  Merger  Sub  is in  any  material  default  or in  violation  of any
restriction,  lien,  encumbrance,  indenture,  contract,  lease, sublease,  loan
agreement,  note or other  obligation  or  liability  by which it is bound or to
which any of its assets is subject.  Global Yacht has delivered to Hyalozyme and
the Hyalozyme  Shareholders a complete copy of Global Yacht's  financial records
and tax returns from Global Yacht's inception to the Closing Date.              

         4.4  Authority  Relative to this  Agreement.  Each of Global  Yacht and
Merger Sub has the  requisite  corporate  power and authority to enter into this
Agreement and carry out its/his obligations hereunder.  The execution,  delivery
and  performance  of this  Agreement  by  Global  Yacht and  Merger  Sub and the
consummation of the transactions  contemplated  hereby have been duly authorized
by the Boards of Directors  of Global Yacht and Merger Sub and no other  actions
on the part of Global  Yacht or  Merger  Sub are  necessary  to  authorize  this
Agreement or the transactions  contemplated                                     

15

DEFM14C
44th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 44th
hereby.  This  Agreement  has been duly and validly  executed  and  delivered by
Global Yacht and Merger Sub and  constitutes  a valid and binding  obligation of
Global Yacht and Merger Sub enforceable in accordance with its terms,  except as
such enforcement may be limited by bankruptcy,  insolvency or other similar laws
affecting  the  enforcement  of  creditors'   rights  generally  or  by  general
principles of equity.                                                           

         4.5  Consents  and  Approvals;  No  Violations.  Except for  applicable
requirements  of federal  securities laws and Blue Sky Laws, no filing with, and
no permit,  authorization,  consent or approval of, any third party, public body
or authority is necessary for the  consummation by Global Yacht or Merger Sub of
the  transactions  contemplated  by this  Agreement.  Neither the  execution and
delivery of this Agreement by Global Yacht or Merger Sub nor the consummation by
Global  Yacht  or  Merger  Sub  of the  transactions  contemplated  hereby,  nor
compliance by Global Yacht or Merger Sub with any of the provisions hereof, will
(a) conflict  with or result in any breach of any  provisions  of the charter or
Bylaws of Global Yacht or Merger Sub, (b) result in a violation or breach of, or
constitute  (with or without  due notice or lapse of time or both) a default (or
give rise to any right of termination,  cancellation or acceleration) under, any
of the terms,  conditions or provisions of any note, bond, mortgage,  indenture,
license,  contract,  agreement or other instrument or obligation to which Global
Yacht or Merger Sub is a party or by which it or any of its properties or assets
may be bound, or (c) violate any order, writ, injunction,  decree, statute, rule
or regulation applicable to Global Yacht or Merger Sub, or any of its properties
or assets, except in the case of clauses (b) and (c) for violations, breaches or
defaults  which are not in the aggregate  material to Global Yacht or Merger Sub
taken as a whole.                                                               

         4.6 SEC  Documents.  Global Yacht has filed all reports  required to be
filed by it under the Securities Act and the Exchange Act, including pursuant to
Section 13(a) or 15(d) thereof,  for the two years preceding the date hereof (or
such shorter  period as Global Yacht was required by law to file such  material)
(the foregoing  materials,  including the exhibits thereto,  being  collectively
referred to herein as the "SEC Reports").  As of their respective dates, the SEC
Documents  complied  in all  material  respects  with  the  requirements  of the
Exchange Act and the rules and  regulations  promulgated  thereunder and none of
the SEC Documents contained an untrue statement of a material fact or omitted to
state a material  fact  required to be stated  therein or  necessary to make the
statements  therein,  in light of the circumstances  under which they were made,
not  misleading.  The financial  statements of Global Yacht  included in the SEC
Documents comply as to form in all material respects with applicable  accounting
requirements  and the published  rules and  regulations  of the SEC with respect
thereto,  have been prepared in accordance  with generally  accepted  accounting
principles in the United States (except, in the case of unaudited statements, as
permitted by the applicable form under the Exchange Act) applied on a consistent
basis  during the  periods  involved  (except as may be  indicated  in the notes
thereto)  and fairly  present the  financial  position of Global Yacht as of the
dates thereof and its  statements of operations,  stockholders'  equity and cash
flows for the periods then ended (subject,  in the case of unaudited statements,
to normal  and  recurring  year-end  audit  adjustments  which  were and are not
expected  to have a  material  adverse  effect on Global  Yacht,  its  business,
financial  condition or results of operations).  Except as and to the extent set
forth on the  consolidated  balance  sheet of Global Yacht as of  September  30,
2003,  including the notes thereto,  neither Global Yacht nor Merger Sub has any
liability or obligation of any nature (whether accrued, absolute,  contingent or
otherwise and whether required to be reflected on a balance sheet or            

16

DEFM14C
45th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 45th
not).                                                                           

4.7      Financial Statements.                                

                  (a)  Included in the SEC  Documents  are the  audited  balance
sheets  of Global  Yacht as at  December  31,  2002 and  2001,  and the  related
statements of operations, changes in stockholders' equity and cash flows for the
year ended  December 31,  2002,  and the periods  February 21, 2001  (inception)
through December 31, 2001 and February 21, 2001 (inception) through December 31,
2002, together with the unqualified report thereon of Hall & Company CPAs, Inc.,
a   Professional   Accountancy   Corporation   ("Hall"),   independent   auditor
(collectively, "Global Yacht's Audited Financials").                            

                  (b)  Included  in  the  SEC   Documents   are  the   unaudited
consolidated  balance  sheets of Global Yacht as at September 30, 2003,  and the
related  statements  of  operations  and cash  flows for the nine  months  ended
September 30, 2003, as reviewed by Hall ("Global  Yacht's Interim  Financials").
The unaudited  balance  sheet at September  30, 2003 included in Global  Yacht's
Interim  Financials is hereinafter  referred to as the "Unaudited Balance Sheet"
and September 30, 2003 is  hereinafter  referred to as the "Global Yacht Balance
Sheet Date".                                                                    

                  (c) Global  Yacht's  Audited  Financials  and  Global  Yacht's
Interim Financials  (collectively "Global Yacht's Financial Statements") are (i)
in  accordance  with the books and  records of Global  Yacht,  (ii)  correct and
complete,  (iii) fairly present the financial position and results of operations
of Global Yacht as of the dates indicated,  and (iv) prepared in accordance with
U.S.  GAAP  (except  that  (x)  unaudited  financial  statements  may  not be in
accordance  with GAAP  because of the absence of  footnotes  normally  contained
therein,  and (y) interim (unaudited)  financials are subject to normal year-end
audit  adjustments that in the aggregate will not have a material adverse effect
on  Global  Yacht or  Merger  Sub,  or their  respective  businesses,  financial
conditions or results of operations.                                            

         4.8 Events Subsequent to Financial Statements. Since December 31, 2002,
there has not been:                                                             

                  (a) any sale,  lease,  transfer,  license or assignment of any
assets, tangible or intangible, of Global Yacht;              

                  (b) any damage,  destruction or property loss,  whether or not
         covered by insurance, affecting adversely the properties or business of
Global Yacht;                                                 

                  (c) except as contemplated by this Agreement,  any declaration
         or setting  aside or  payment  of any  dividend  or  distribution  with
         respect  to  the  shares  of  capital  stock  of  Global  Yacht  or any
redemption, purchase or other acquisition of any such shares; 

                  (d) any issuance of shares of capital  stock or the  granting,
         issuance or execution of any rights,  warrants,  options or commitments
         by the Global Yacht,  as the case may be, relating to its authorized or
issued capital stock,  except with respect to Global Yacht's  

17

DEFM14C
46th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 46th
         investment in Merger Sub and Global Yacht's forward split of its common
         stock, which is effective on December 5, 2003 and the action by written
         consent of  shareholders  in lieu of a meeting on or about  January 28,
         2004 to  authorize  increase  the  authorized  number  of shares of its
common stock and ;                                            

                  (e) any subjection to any lien on any of the assets,  tangible
or intangible, of Global Yacht;                               

                  (f) any incurrence of  indebtedness or liability or assumption
of obligations by Global Yacht or Merger Sub;                 

                  (g) any waiver or release by Global Yacht or Merger Sub of any
right of any material value;                                  

                  (h) any compensation or benefits paid to officers or directors
         of Global Yacht,  except as to the redemption of those shares of common
         stock held by the Global Yacht Stockholders specified in Section 1.9 of
this Agreement;                                               

                  (i)  any  change  made  or   authorized  in  the  Articles  of
Incorporation or Bylaws of Global Yacht;                      

                  (j)  any  loan  to or  other  transaction  with  any  officer,
         director or  stockholder  of Global  Yacht  giving rise to any claim or
         right of Global Yacht against any such person or of such person against
Global Yacht; or                                              

                  (k) any material adverse change in the condition (financial or
         otherwise) of the properties, assets, liabilities or business of Global
Yacht.                                                        

         4.9 Undisclosed  Liabilities.  Except as otherwise  disclosed in Global
Yacht's  Financial  Statements,  neither  Global  Yacht nor  Merger  Sub has any
material liability or obligation whatsoever,  either direct or indirect, matured
or unmatured, accrued, absolute, contingent or otherwise.                       

4.10     Tax Matters.                                         

                  (a)  Global  Yacht and  Merger  Sub have  each duly  filed all
material federal,  state,  local and foreign tax returns required to be filed by
or with  respect to it with the  Internal  Revenue  Service or other  applicable
taxing  authority,  and no extensions with respect to such tax returns have been
requested or granted;                                                           

                  (b) Global Yacht and Merger Sub have each paid,  or adequately
reserved against in Global Yacht's Financial Statements, all material taxes due,
or claimed by any taxing authority to be due, from or with respect to it;       

                  (c) To the knowledge of Global Yacht and Merger Sub, there has
been no material  issue  raised or  material  adjustment  proposed  (and none is
pending)  by the  Internal  Revenue  Service                                    

18

DEFM14C
47th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 47th
or any other  taxing  authority  in connection with any of Global Yacht's or    
Merger Sub's tax returns;                                                       

                  (d) No waiver or extension of any statute of limitations as to
any material  federal,  state,  local or foreign tax matter has been given by or
requested from Global Yacht or Merger Sub; and                                  

                  (e)  neither  Global  Yacht nor Merger Sub has filed a consent
under Section 341(f) of the Internal Revenue Code of 1986, as amended.          

         For the purposes of this Section 4.10, a tax is due (and must therefore
either  be paid or  adequately  reserved  against  in Global  Yacht's  Financial
Statements)  only on the  last  date  payment  of such  tax can be made  without
interest  or  penalties,  whether  such  payment is due in respect of  estimated
taxes, withholding taxes, required tax credits or any other tax.                

         4.11 Real Property.  Neither Global Yacht nor Merger Sub owns or leases
any real property.                                                              

         4.12 Books and Records.  The corporate and financial  books and records
of Global Yacht and Merger Sub delivered to the Hyalozyme  Shareholders prior to
the Closing fully and fairly reflect the transactions to which Global Yacht is a
party or by which it or its properties are bound.                               

         4.13 Questionable Payments. Neither Global Yacht nor Merger Sub, or any
of their  respective  employees,  agents or  representatives  has,  directly  or
indirectly,  made any bribes,  kickbacks,  illegal payments or illegal political
contributions  using  Global  Yacht's or Merger Sub's funds or made any payments
from Global Yacht's or Merger Sub's funds to governmental officials for improper
purposes or made any illegal  payments from Global Yacht's or Merger Sub's funds
to obtain or retain business.                                                   

        4.14 Environmental Matters. Global Yacht represents and warrants that:

              (i)  To the  knowledge  of  Global  Yacht  and  the  Global  Yacht
Stockholders,  after due  investigation,  there has been no material  failure by
Global Yacht to comply with all applicable  requirements of  Environmental  Laws
relating  to  Global  Yacht,  Global  Yacht's  operations,  and  Global  Yacht's
manufacture,  processing,  distribution, use, treatment, generation,  recycling,
reuses,  sale,  storage,  handling,  transportation or disposal of any Hazardous
Material and Global Yacht is not aware of any facts or circumstances which could
materially impair such compliance with all applicable Environmental Laws.       

              (ii) Global  Yacht has not received  notice from any  Governmental
Authority  or any  other  person  of any  actual  or  alleged  violation  of any
Environmental Laws, nor is any such notice anticipated.                         

              (iii) To the  knowledge  of  Global  Yacht  and the  Global  Yacht
Stockholders,  after due  investigation,  Environmental Laws do not require that
any permits, licenses or similar authorizations to construct,  occupy or operate
any equipment or facilities used in the conduct of                              

19

DEFM14C
48th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 48th
Global Yacht's business.                                                        

              (iv) No  Hazardous  Materials  are  now  located  at the  Business
Location,   and,  to  the  knowledge  of  Global  Yacht  and  the  Global  Yacht
Stockholders,  after due  investigation,  Global  Yacht  has not ever  caused or
permitted  any  Hazardous  Materials  to be  generated,  placed,  stored,  held,
handled,  located  or used at the  Business  Location,  except  those  which may
lawfully be used, transported, stored, held, handled, generated or placed at the
Business Location in the conduct of Global Yacht's business.                    

              (v) Global  Yacht has not  received  any  notices,  whether from a
Governmental  Authority  or some other  third  party,  that  Hazardous  Material
Contamination  exists at the Business Location or at any other location utilized
by Global  Yacht in the  conduct of its  business  nor are  Global  Yacht or the
Global Yacht  Stockholders aware of any circumstances that would give rise to an
allegation of such contamination.                                               

              (vi)  To the  knowledge  of  Global  Yacht  and the  Global  Yacht
Stockholders,  after due investigation, no investigation,  administrative order,
consent order or agreement,  litigation or settlement  with respect to Hazardous
Materials  or  Hazardous  Materials   Contamination  is  proposed,   threatened,
anticipated,  pending or  otherwise  in  existence  with respect to the Business
Location  or with  respect to any other site  controlled  or  utilized by Global
Yacht in the operation of its business. To the knowledge of Global Yacht and the
Global Yacht Stockholders, after due investigation, the Business Location is not
currently  on,  and has never  been on,  any  federal  or state  "Superfund"  or
"Superlien" list.                                                               

         4.15 Intellectual Property. Other than listed on Schedule 4.15, neither
Global Yacht nor Merger Sub owns or uses any  trademarks,  trade names,  service
marks,  patents,  copyrights or any applications  with respect thereto.  Neither
Global Yacht nor Merger Sub has any  knowledge of any claim that,  or inquiry as
to whether,  any  product,  activity or  operation of Global Yacht or Merger Sub
infringes  upon  or  involves,  or has  resulted  in the  infringement  of,  any
trademarks, trade-names, service marks, patents, copyrights or other proprietary
rights of any other person, corporation or other entity; and no proceedings have
been instituted, are pending or are threatened.                                 

         4.16  Insurance.  Neither Global Yacht nor Merger Sub has any insurance
policies in effect.                                                             

         4.17  Contracts.  Neither  Global Yacht nor Merger Sub has any material
contracts,  leases,  arrangements  or  commitments  (whether  oral or  written).
Neither Global Yacht nor Merger Sub is a party to or bound by or affected by any
contract,  lease,  arrangement or commitment  (whether oral or written) relating
to: (a) the  employment of any person;  (b) collective  bargaining  with, or any
representation  of any  employees  by, any labor union or  association;  (c) the
acquisition of services, supplies, equipment or other personal property; (d) the
purchase or sale of real property; (e) distribution, agency or construction; (f)
lease  of real or  personal  property  as  lessor  or  lessee  or  sublessor  or
sublessee;  (g) lending or advancing of funds; (h) borrowing of funds or receipt
of  credit;  (i)  incurring  any  obligation  or  liability;  or (j) the sale of
personal property.                                                              

         4.18 Litigation.  Neither Global Yacht nor Merger Sub is subject to any
judgment or order                                                               

20

DEFM14C
49th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 49th
of any court or  quasijudicial  or  administrative  agency of any  jurisdiction,
domestic or foreign, nor is there any charge, complaint, lawsuit or governmental
investigation  pending against Global Yacht or Merger Sub.  Neither Global Yacht
nor Merger Sub is a plaintiff  in any action,  domestic or foreign,  judicial or
administrative.  There are no existing actions,  suits,  proceedings  against or
investigations  of Global  Yacht or Merger  Sub,  and neither  Global  Yacht nor
Merger  Sub  knows  of  any  basis  for  such  actions,  suits,  proceedings  or
investigations.   There  are  no  unsatisfied  judgments,   orders,  decrees  or
stipulations  affecting  Global  Yacht or Merger Sub or to which Global Yacht or
Merger Sub is a party.                                                          

         4.19 Employees.  Neither Global Yacht nor Merger Sub has any employees.
Neither Global Yacht nor Merger Sub owes any compensation of any kind,  deferred
or otherwise,  to any current or previous  employees.  Neither  Global Yacht nor
Merger Sub has any  written or oral  employment  agreements  with any officer or
director of Global Yacht or Merger Sub. Neither Global Yacht nor Merger Sub is a
party to or bound by any collective bargaining agreement.  There are no loans or
other  obligations  payable  or  owing by  Global  Yacht  or  Merger  Sub to any
stockholder,  officer,  director or employee of Global  Yacht or Merger Sub, nor
are there any loans or debts  payable or owing by any of such  persons to Global
Yacht or Merger Sub or any  guarantees by Global Yacht or Merger Sub of any loan
or obligation of any nature to which any such person is a party.                

         4.20 Employee  Benefit  Plans.  Neither Global Yacht nor Merger Sub has
any (a) non-qualified  deferred or incentive compensation or retirement plans or
arrangements, (b) qualified retirement plans or arrangements, (c) other employee
compensation, severance or termination pay or welfare benefit plans, programs or
arrangements  or (d) any related  trusts,  insurance  contracts or other funding
arrangements maintained, established or contributed to by Global Yacht or Merger
Sub.                                                                            

         4.21 Legal Compliance. To the knowledge of Global Yacht and Merger Sub,
after due investigation,  no claim has been filed against Global Yacht or Merger
Sub  alleging a violation of any  applicable  laws and  regulations  of foreign,
federal, state and local governments and all agencies thereof.  Global Yacht and
Merger Sub each holds all of the material  permits,  licenses,  certificates  or
other authorizations of foreign,  federal,  state or local governmental agencies
required for the conduct of its business as presently conducted.                

         4.22 Subsidiaries.  Except for all of the issued and outstanding shares
of capital stock of Merger Sub and Global Yacht  Services (BVI) Limited , Global
Yacht does not own any capital  stock or have any  interest in any  corporation,
partnership,  or other form of business  organization.  Global Yacht owns all of
the capital stock or other equity  interests of Merger Sub free and clear of any
liens,  charges,  security  interests,  encumbrances,  rights of first  refusal,
preemptive rights or other restrictions.                                        

         4.23 Broker's Fees.  Neither Global Yacht nor Merger Sub, nor anyone on
their  behalf has any  liability  to any broker,  finder,  investment  banker or
agent, or has agreed to pay any brokerage fees, finder's fees or commissions, or
to reimburse any expenses of any broker,  finder,  investment banker or agent in
connection with this Agreement.                                                 

21

DEFM14C
50th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 50th
         4.24  Registration  Rights.  Global  Yacht has not granted or agreed to
grant to any person or entity any rights  (including  "piggy back"  registration
rights) to have any  securities of Global Yacht  registered  with the Securities
and Exchange  Commission or any other governmental  authority that have not been
satisfied.                                                                      

         4.25 Listing and Maintenance Requirements. Global Yacht has not, in the
12 months preceding the date hereof,  received notice from the trading market or
stock quotation  system on which Global Yacht's Common Stock is listed or quoted
to the  effect  that  Global  Yacht is not in  compliance  with the  listing  or
maintenance  requirements  of such  trading  market or stock  quotation  system.
Global  Yacht  is,  and  has no  reason  to  believe  that  it  will  not in the
foreseeable  future  continue  to be, in  compliance  with all such  listing and
maintenance requirements.                                                       

         4.26 No  Disagreements  with  Accountants  and  Lawyers.  There  are no
disagreements  of any kind  presently  existing,  or reasonably  anticipated  by
Global Yacht to arise, between the accountants and lawyers formerly or presently
employed by Global  Yacht and Global  Yacht is current  with respect to any fees
owed to its accountants and lawyers.                                            

         4.27 Disclosure.  The  representations and warranties and statements of
fact made by Global Yacht and Merger Sub in this  Agreement  are, as applicable,
accurate,  correct and  complete  and do not contain any untrue  statement  of a
material fact or omit to state any material fact  necessary in order to make the
statements and information contained herein not false or misleading.            

 ARTICLE 5
 COVENANTS AND AGREEMENTS OF THE PARTIES
EFFECTIVE PRIOR TO CLOSING

         5.1 Corporate  Examinations and  Investigations.  Prior to the Closing,
each party shall be entitled, through its employees and representatives, to make
such  investigations  and  examinations  of the  books,  records  and  financial
condition of  Hyalozyme,  Global Yacht and Merger Sub as each party may request.
In order that each party may have the full opportunity to do so, Hyalozyme,  the
Hyalozyme   Shareholders,   Global  Yacht,  Merger  Sub  and  the  Global  Yacht
Stockholders shall furnish each party and its representatives during such period
with all such information  concerning the affairs of Hyalozyme,  Global Yacht or
Merger Sub as each party or its representatives may reasonably request and cause
Hyalozyme, Global Yacht or Merger Sub and their respective officers,  employees,
consultants,  agents,  accountants  and  attorneys to cooperate  fully with each
party's  representatives  in connection  with such review and examination and to
make full disclosure of all  information  and documents  requested by each party
and/or its  representatives.  Any such  investigations and examinations shall be
conducted  at  reasonable  times and under  reasonable  circumstances,  it being
agreed  that any  examination  of  original  documents  will be at each  party's
premises,  with  copies  thereof  to  be  provided  to  each  party  and/or  its
representatives upon request.                                                   

         5.2  Cooperation;  Consents.  Prior to the  Closing,  each party  shall
cooperate  with the other  parties  to the end that the  parties  shall (i) in a
timely manner make all necessary  filings with, and conduct  negotiations  with,
all  authorities  and other  persons the  consent or  approval of which,  or the
license or permit from which is required for the  consummation of the Merger and
(ii)  provide  to each  other  party  such  information  as the other  party may
reasonably  request in order to enable it to prepare                            

22

DEFM14C
51st Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 51st
such filings and to conduct such negotiations.                                  

         5.3 Conduct of Business.  Subject to the  provisions  hereof,  from the
date  hereof  through  the  Closing,  each party  hereto  shall (i)  conduct its
business in the ordinary course and in such a manner so that the representations
and  warranties  contained  herein shall  continue to be true and correct in all
material respects as of the Closing as if made at and as of the Closing and (ii)
not enter into any material  transactions  or incur any material  liability  not
required or  specifically  contemplated  hereby,  without  first  obtaining  the
written consent of Hyalozyme and the Hyalozyme  Shareholders on the one hand and
Global Yacht and Merger Sub on the other hand. Without the prior written consent
of  Hyalozyme,  the Hyalozyme  Shareholders,  Global Yacht or Merger Sub, as the
case may be, except as required or specifically  contemplated hereby, each party
shall not  undertake or fail to  undertake  any action if such action or failure
would render any of said warranties and  representations  untrue in any material
respect as of the Closing.                                                      

               5.4  Litigation.  From the date hereof through the Closing,  each
party hereto shall promptly  notify the  representative  of the other parties of
any lawsuits,  claims, proceedings or investigations which after the date hereof
are  threatened or commenced  against such party or any of its affiliates or any
officer, director, employee,  consultant, agent or shareholder thereof, in their
capacities as such, which, if decided adversely, could reasonably be expected to
have a material  adverse  effect upon the condition  (financial  or  otherwise),
assets,  liabilities,  business,  operations or prospects of  Hyalozyme,  Global
Yacht or Merger Sub.                                                            

               5.5 Notice of Default.  From the date hereof through the Closing,
each party hereto shall give to the  representative  of the other parties prompt
written  notice of the  occurrence  or  existence  of any  event,  condition  or
circumstance  occurring  which would  constitute  a violation  or breach of this
Agreement by such party or which would render inaccurate in any material respect
any of such party's representations or warranties herein.                       

               5.5 Continuation of Insurance  Coverage.  From the date hereof to
the Closing,  each party  hereto  shall keep in full force and effect  insurance
coverage  for its assets and  operations  comparable  in amount and scope to the
coverage now maintained covering its assets and operations.                     

5.6 Hyalozyme Audited Financial Statements.         

                  (a) Prior to the Effective  Time,  Hyalozyme  will provide its
audited  balance  sheets  as at  December  31,  2003 and 2002,  and the  related
statements of operations, changes in stockholders' equity and cash flows for the
year ended  December 31, 2003 and 2002,  together  with the  unqualified  report
thereon of  Cacciamatta  Accountancy  Corporation,  a  Professional  Accountancy
Corporation,    independent   auditor   (collectively,    "Hyalozyme's   Audited
Financials").                                                                   

                  (b) Hyalozyme's  Audited Financials are (i) in accordance with
the books and records of  Hyalozyme,  (ii)  correct and  complete,  (iii) fairly
present the financial  position and results of operations of Hyalozyme as of the
dates indicated, and (iv) prepared in accordance with U.S. GAAP.                

23

DEFM14C
52nd Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 52nd
 ARTICLE 6
 CONDITIONS TO CLOSING

         6.1   Conditions  to   Obligations   of  Hyalozyme  and  the  Hyalozyme
Shareholders.  The obligations of Hyalozyme and the Hyalozyme Shareholders under
this Agreement shall be subject to each of the following conditions:            

                  (a) Closing  Deliveries.  At the Closing,  Global Yacht and/or
the Global Yacht  Stockholders shall have delivered or caused to be delivered to
Hyalozyme and the Hyalozyme Shareholders the following:                         

                           (i)   resolutions   duly  adopted  by  the  Board  of
                  Directors  of  each  of  Global  Yacht  and  Merger  Sub,  and
                  authorizing  and  approving  the  Merger  and  the  execution,
delivery and performance of this Agreement; 

                           (ii) a  certificate  of  good  standing  for  each of
                  Global Yacht and Merger Sub from the Secretary of State of the
                  State of Nevada,  dated not  earlier  than three days prior to
the Closing Date;                           

                           (iii) subject to compliance with Section 14(f) of the
                  Exchange Act and Rule 14f-1 thereunder,  written  resignations
                  of all  officers  and  directors  of  Global  Yacht in  office
                  immediately  prior  to  the  Closing,  and  board  resolutions
                  electing  the  following  individuals  to the  positions  with
   Global Yacht listed opposite their names below:

                  Jonathan Lim..........................CEO, President, Director
                  David Ramsay...............................................CFO
                  Ira Lechner...........................................Director
                  Gregory Frost.........................................Director
                  Edward Mercaldo.......................................Director
                  John S. Patton........................................Director

                           (iv)  certificates   representing  the  Global  Yacht
                  Shares bearing the names of the Hyalozyme Shareholders as well
                  as the Global Yacht  Warrants  and Global  Yacht  Options that
                shall be issued as provided on Schedule 1.4 attached hereto;

                            (v)  evidence of  cancellation  of  4,296,375 of the
                  total number of shares held by certain  stockholders of Global
Yacht;                                      

                           (vi) such other documents as Hyalozyme may reasonably
                  request  in  connection  with  the  transactions  contemplated
hereby.                                     

                  (b)   Representations   and   Warranties   to  be  True.   The
representations  and warranties of Global Yacht and Merger Sub herein  contained
shall be true in all  material  respects at                                     

24

DEFM14C
53rd Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 53rd
the Closing  with the same effect as though made at such time.  Global Yacht and
Merger Sub shall have  performed in all material  respects all  obligations  and
complied in all material respects with all covenants and conditions  required by
this  Agreement  to be  performed  or  complied  with by them at or prior to the
Closing.                                                                        

                  (c) Spinoff. Global Yacht shall have spun off its wholly owned
subsidiary, Global Yacht Services (BVI) Limited ("Global Yacht - BVI") and shall
have contributed all of the tangible assets and intellectual  property rights of
Global Yacht to the Global Yacht  Stockholders and the Global Yacht Stockholders
shall have assumed substantially all the liabilities of Global Yacht, except for
up to  $100,000  of  liabilities  of any  kind  whatsoever  (the  "Global  Yacht
Liabilities") will be completed on or before the Effective Time (the "Spinoff").
The amount of liabilities of any kind whatsoever remaining in Global Yacht after
the Spinoff  will not exceed the Global Yacht  Liabilities.  The Spinoff will be
effected in compliance with all applicable laws,  including  without  limitation
the applicable provisions of the NRS and any other applicable state and national
laws.  The  consummation  of the Spinoff will not require any consent,  release,
waiver or approval that would adversely affect Global Yacht. The consummation of
the Spinoff will not give rise to or trigger the application of any right of any
third  party that has not been  waived by such party in a writing  signed by it.
The  consummation  of the Spinoff  will not conflict  with,  or (with or without
notice or lapse of time, or both) result in a termination, breach, impairment or
violation  of, (a) any provision of the Articles of  Incorporation  or Bylaws of
the Global Yacht,  (b) any note,  bond,  lease,  mortgage,  indenture,  license,
franchise,  permit,  agreement,  contract  or  other  instrument  or  obligation
(whether oral or in writing) to which Global Yacht is or was a party or by which
Global  Yacht is or was  bound,  or (c) any  federal,  state,  local or  foreign
statute,  law,  concession,  grant,  franchise,  permit  or  other  governmental
authorization or approval applicable to Global Yacht or Global Yacht - BVI.     

                  (d) Amendment of Articles of Incorporation. Global Yacht shall
have amended its  Articles of  Incorporation  to: (i)  increase  the  authorized
number of shares of Common Stock to 100,000,000  and (ii)  authorize  20,000,000
shares  of  preferred  stock,  upon  which the  Board of  Directors  may set the
preferences and designations without shareholder approval.                      

         6.2  Conditions  to  Obligations  of Global  Yacht and the Global Yacht
Stockholders.  The obligations of Global Yacht,  Merger Sub and the Global Yacht
Stockholders  under this  Agreement  shall be  subject to each of the  following
conditions:                                                                     

                  (a) Closing Deliveries.  On the Closing Date, Hyalozyme and/or
the Hyalozyme Shareholders shall have delivered to Global Yacht the following:  

                  (i)   one or more certificates  representing all of the issued
                        and  outstanding  shares of capital  stock of  Hyalozyme
                        duly  endorsed or  accompanied  by duly  executed  stock
power(s);                       

                  (ii)  evidence  of  completion  of  financing  wherein  up  to
     $7,112,142 will have been raised; and

                  (iii) such  other  documents  as Global  Yacht may  reasonably
                        request in connection with the transactions contemplated
hereby.                         

25

DEFM14C
54th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 54th
                  (b)   Representations   and   Warranties   to  be  True.   The
representations  and  warranties  of Hyalozyme  and the  Hyalozyme  Shareholders
herein contained shall be true in all material  respects at the Closing with the
same  effect  as  though  made  at  such  time.   Hyalozyme  and  the  Hyalozyme
Shareholders  shall have performed in all material  respects all obligations and
complied in all material respects with all covenants and conditions  required by
this  Agreement  to be  performed  or  complied  with by them at or prior to the
Closing.                                                                        

                  (c) Director Questionnaires. Each of the individuals listed as
directors in Section  6.1(a)(iii)  shall have  submitted to Global Yacht's legal
counsel,  no later than 15 calendar  days prior to the Closing  Date,  a written
response to the director  questionnaire  previously delivered to Hyalozyme,  and
upon receipt of all such  responses  Global  Yacht's legal counsel shall prepare
and file with the SEC at least 10  calendar  days prior to the  Closing  Date an
Information Statement Notice of Change In Control and of a Majority of Directors
pursuant to Section  14(f) of the  Exchange Act and Rule 14f-1  thereunder.  The
Hyalozyme  Shareholders  and Hyalozyme  shall have the opportunity to review and
provide comments to such Information Statement prior to its filing with the SEC.

 ARTICLE 7
TERMINATION; AMENDMENT; WAIVER

         7.1 Termination by Mutual  Agreement.  This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, whether
before or after the  approval  of the  Merger by  Hyalozyme's  shareholders  and
Global  Yacht's  stockholders,  by mutual  written  consent of the Hyalozyme and
Global Yacht by action of their respective boards of directors.                 

         7.2 Termination by either Global Yacht or Hyalozyme. This Agreement may
be terminated and the Merger may be abandoned at any time prior to the Effective
Time by action of the board of directors of either Global Yacht or Hyalozyme if:

                  (a) the Merger  shall not have been  consummated  by [May 31],
2004, whether such date is before or after the date of approval of the Merger by
Hyalozyme's  shareholders  and Global  Yacht's  stockholders  (the  "Termination
Date");                                                                         

                  (b) any law  permanently  restraining,  enjoining or otherwise
prohibiting  consummation  of the Merger shall  become final and  non-appealable
(whether before or after the approval of the Merger by Hyalozyme's  shareholders
and Global Yacht's stockholders); provided, however, that the right to terminate
this Agreement  pursuant to this Section 7.2 shall not be available to any party
that has breached in any material  respect its obligations  under this Agreement
in any manner that shall have  proximately  contributed to the occurrence of the
failure of the Merger to be consummated; or                                     

         7.3 Termination by Hyalozyme.  This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time,  whether before
or after the  approval  of the  Merger by  Hyalozyme's  shareholders  and Global
Yacht's stockholders by action of                                               

26

DEFM14C
55th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 55th
Hyalozyme's board of directors, if:                                             

                  (a) (i) any of Global Yacht's  representations  and warranties
shall  have  been  inaccurate  as of the date of this  Agreement,  such that the
condition set forth in Section 6.1 would not be satisfied, or (ii) if (A) any of
Global Yacht's  representations  and warranties  become  inaccurate as of a date
subsequent to the date of this Agreement (as if made on such  subsequent  date),
such that the  condition set forth in Section 6.1 would not be satisfied and (B)
such  inaccuracy  has not been cured by Global Yacht  within ten  business  days
after its receipt of written  notice  thereof  and  remains  uncured at the time
notice of  termination  is given,  or (iii) Global  Yacht's  representation  and
warranties with respect to its capitalization are inaccurate such that there are
shares or rights to obtain  shares  outstanding  in addition to those  initially
disclosed;                                                                      

                  (b) Hyalozyme's due diligence  examination of Global Yacht and
its assets and business reveals  information that varies materially or adversely
from  the  understandings  upon  which  Hyalozyme  agreed  to  proceed  with the
transactions  contemplated by this Agreement,  as determined by Hyalozyme in its
reasonable discretion;                                                          

                  (c) since the date of this Agreement,  Global Yacht shall have
suffered any material  adverse  effect on its  financial  condition,  results of
operations or business.                                                         

         7.4  Termination by Global Yacht.  This Agreement may be terminated and
the Merger may be abandoned  at any time prior to the  Effective  Time,  whether
before or after the  approval  of the  Merger by  Hyalozyme's  shareholders  and
Global  Yacht's  stockholders,  by action of the  Board of  Directors  of Global
Yacht, if:                                                                      

                  (a)  (i) any of  Hyalozyme's  representations  and  warranties
shall  have  been  inaccurate  as of the date of this  Agreement,  such that the
condition set forth in Section 6.2 would not be satisfied, or (ii) if (A) any of
Hyalozyme's  representations  and  warranties  become  inaccurate  as of a  date
subsequent to the date of this Agreement (as if made on such  subsequent  date),
such that the  condition set forth in Section 6.2 would not be satisfied and (B)
such  inaccuracy has not been cured by Hyalozyme  within ten business days after
its receipt of written notice thereof and remains  uncured at the time notice of
termination is given;                                                           

                  (b) if,  since the date of this  Agreement,  there  shall have
occurred any material  adverse  effect on the  financial  condition,  results of
operations or business of Hyalozyme.                                            

         7.5 Effect of Termination and Abandonment.  In the event of termination
of this Agreement and the  abandonment of the Merger pursuant to this Article 7,
this Agreement  shall become void and of no effect with no liability on the part
of  any  party  hereto  (or  of  any  of  its  directors,  officers,  employees,
consultants,  contractors,  agents,  legal  and  financial  advisors,  or  other
representatives);  provided,  however, that except as otherwise provided herein,
no such  termination  shall relieve any party hereto of any liability or damages
resulting from any willful breach of this Agreement.                            

27

DEFM14C
56th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 56th
 ARTICLE 8
GENERAL PROVISIONS

         8.1 Name Change.  The parties agree to take  whatever  actions that are
necessary to change the name of Global Yacht to "Halozyme Therapeutics, Inc." as
of or as soon as possible after the Effective Time.                             

         8.2 Notices. All notices and other communications hereunder shall be in
writing  and shall be deemed to have been duly  given if  delivered  personally,
sent by overnight  courier or mailed by  registered  or certified  mail (postage
prepaid  and  return  receipt  requested)  to the  party  to whom the same is so
delivered,  sent or mailed at addresses set forth on the  signature  page hereof
(or at such other address for a party as shall be specified by like notice).    

         8.3  Interpretation.  The headings  contained in this Agreement are for
reference  purposes  only  and  shall  not  affect  in any  way the  meaning  or
interpretation  of this Agreement.  References to Sections and Articles refer to
sections and articles of this Agreement unless otherwise stated.                

         8.4 Severability.  If any term,  provision,  covenant or restriction of
this Agreement is held by a court of competent  jurisdiction to be invalid, void
or  unenforceable,  the  remainder  of  the  terms,  provisions,  covenants  and
restrictions  of this Agreement  shall remain in full force and effect and shall
in no way be affected,  impaired or invalidated  and the parties shall negotiate
in good faith to modify this  Agreement  to preserve  each  party's  anticipated
benefits under this Agreement.                                                  

         8.5  Miscellaneous.  This Agreement  (together with all other documents
and instruments  referred to herein):  (a) constitutes the entire  agreement and
supersedes all other prior agreements and  undertakings,  both written and oral,
among the parties  with  respect to the  subject  matter  hereof;  (b) except as
expressly set forth herein,  is not intended to confer upon any other person any
rights or remedies  hereunder  and (c) shall not be assigned by operation of law
or otherwise, except as may be mutually agreed upon by the parties hereto.      

         8.6 Separate Counsel. Each party hereby expressly  acknowledges that it
has been advised to seek its own separate  legal counsel for advice with respect
to this  Agreement,  and that no  counsel  to any party  hereto  has acted or is
acting as counsel to any other party hereto in connection with this Agreement.  

         8.7 Governing  Law;  Venue.  This  Agreement  shall be governed by, and
construed and enforced in accordance  with, the laws of the State of California,
U.S.A.  Any and all actions brought under this Agreement shall be brought in the
state and/or  federal  courts of the United States  sitting in the County or San
Diego,  California  and each  party  hereby  waives  any  right to object to the
convenience of such venue.                                                      

         8.8  Counterparts  and  Facsimile  Signatures.  This  Agreement  may be
executed in two or more  counterparts,  which together shall constitute a single
agreement.  This Agreement and any documents  relating to it may be executed and
transmitted to any other party by facsimile,  which facsimile shall be deemed to
be, and utilized in all respects as, an original, wet-inked document.           

28

DEFM14C
57th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 57th
         8.9 Amendment.  This Agreement may be amended, modified or supplemented
only by an instrument in writing executed by all parties hereto.                

         8.10  Parties In  Interest:  No Third  Party  Beneficiaries.  Except as
otherwise  provided  herein,  the terms and conditions of this  Agreement  shall
inure  to the  benefit  of and be  binding  upon  the  respective  heirs,  legal
representatives,  successors and assigns of the parties  hereto.  This Agreement
shall not be deemed to confer  upon any person not a party  hereto any rights or
remedies hereunder.                                                             

         8.11 Waiver. No waiver by any party of any default or breach by another
party of any representation,  warranty,  covenant or condition contained in this
Agreement shall be deemed to be a waiver of any subsequent  default or breach by
such  party of the  same or any  other  representation,  warranty,  covenant  or
condition. No act, delay, omission or course of dealing on the part of any party
in exercising  any right,  power or remedy under this  Agreement or at law or in
equity  shall  operate as a waiver  thereof or otherwise  prejudice  any of such
party's rights, powers and remedies. All remedies,  whether at law or in equity,
shall be cumulative  and the election of any one or more shall not  constitute a
waiver of the right to pursue other available remedies.                         

         8.12 Expenses. At or prior to the Closing, the parties hereto shall pay
all of their own  expenses  relating to the  transactions  contemplated  by this
Agreement,  including,  without  limitation,  the  fees  and  expenses  of their
respective counsel and financial advisers;  provided,  however,  that the Global
Yacht   Liabilities   may  include  legal  fees  related  to  the   transactions
contemplated by this Agreement.                                                 

         8.13 Schedules. If there is any inconsistency between the statements in
the body of this  Agreement and those in the schedules  (other than an exception
expressly set forth in the schedules with respect to a  specifically  identified
representation  or warranty),  the statements in the body of this Agreement will
control.                                                                        

         8.14  Construction.  The  parties  have  participated  jointly  in  the
negotiation  and  drafting of this  Agreement.  If an  ambiguity  or question of
intent or interpretation  arises, this Agreement will be construed as if drafted
jointly by the parties and no presumption or burden of proof will arise favoring
or  disfavoring  any party  because of the  authorship  of any provision of this
Agreement.                                                                      

         8.15. Incorporation of Exhibits and Schedules. The exhibits, schedules,
and other  attachments  identified in this Agreement are incorporated  herein by
reference and made a part hereof.                                               

 [SIGNATURES FOLLOW]

29

DEFM14C
58th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 58th
         IN WITNESS  WHEREOF,  the parties have executed this Agreement and Plan
of Merger as of the date first written above.                                   

DeliaTroph Pharmaceuticals, Inc.,                                               

By: /s/ Jonathan Lim                                                            
--------------------------------                                        
Name:  Jonathan Lim                                                             
Title: President and Chief Executive                                            
Officer                                                           

Address:                                                                        

HYALOZYME SHAREHOLDERS:                                                         

/s/ Jonathan Lim                                                                
------------------------------------                                            

/s/ Gregory Frost                                                               
------------------------------------                                            

/s/ Ira M. Lechner                                                              
------------------------------------                                            

[SIGNATURES CONTINUE ON NEXT PAGE]

DEFM14C
59th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 59th
[SIGNATURE PAGE TWO OF
 AGREEMENT AND PLAN OF MERGER]

         IN WITNESS  WHEREOF,  the parties have executed this Agreement and Plan
of Merger as of the date first written above.                                   

GLOBAL YACHT SERVICES, INC.                                                     

By: /s/ Mitch Keeler                                                            
--------------------------------                                        
Name:   Mitch Keeler                                                            
Title:  President                                                               

7710 Hazard Centre Dr.                                                          
Suite E-415                                                                     
San Diego, CA 92108                                                             

GLOBAL YACHT SERVICES, INC. STOCKHOLDERS                                        

/s/ Mitch Keeler                                                                
------------------------------------                                            
MITCH KEELER                                                                    

/s/ Melissa Day                                                                 
------------------------------------                                            
MELISSA DAY                                                                     

HYALOZYME ACQUISITION CORP.                                                     

By: /s/ Mitch Keeler                                                            
--------------------------------                                        
Name:   Mitch Keeler                                                            
Title:  President                                                               

7710 Hazard Centre Dr.                                                          
Suite E-415                                                                     
San Diego, CA 92108                                                             

DEFM14C
60th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 60th
 EXHIBIT B-1

Dean Heller                                                                     
Secretary of State                                                              
204 North Carson Street, Suite 1                                                
Carson City, Nevada 89701-4299                                                  
(775) 684-5708                                                                  

ARTICLES OF MERGER                                                              
(PURSUANT TO NRS 92A.200)                                                       

 (Pursuant to Nevada Revised Statutes Chapter 92A)
 (excluding 92A.200(4b))

1)       Name and jurisdiction of organization of each constituent entity (NRS  
92A.200).                                                     

                                                                [Download Table]

                                                                             
Global Yacht Services, Inc.               Nevada                  Corporation
Name of parent of merging entity          Jurisdiction            Entity type

Hyalozyme Acquisition Corporation         Nevada                  Corporation
Name of merging entity                    Jurisdiction            Entity type
and,                                                                         

DeliaTroph Pharmaceuticals, Inc.          California              Corporation
Name of surviving entity                  Jurisdiction            Entity type

2)       Forwarding address where copies of process may be sent by the Secretary
         of State of Nevada (if a foreign entity is the survivor in the merger -
NRS 92A.190):                                                 

Attn:        Jonathan E. Lim, MD                    
c/o:         Halozyme Therapeutics, Inc.            
    11588 Sorrento Valley Road S17
San Diego CA 92121        

3)       The undersigned declares that a plan of merger has been adopted by each
constituent entity (NRS 92A.200)                              

DEFM14C
61st Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 61st
4)       Owners approval (NRS 92A.200)                                          

       (a) Owner's approval was not required from: Not Applicable.

           (b) The plan was approved by the required consent of the owners
of:                                         

Global Yacht Services, Inc.                 
Name of parent of merging entity            

Hyalozyme Acquisition Corporation           
Name of merging entity                      

and,                                        

DeliaTroph Pharmaceuticals, Inc.            
Name of surviving entity                    

5)       Amendments, if any, to the articles or certificates of the surviving   
  entity. Provide article numbers if available. (NRS 92A.200): Not
Applicable.                                                   

6)       Location of the plan of merger:                                        

[ ] (a) The entire plan of merger is attached;      

or,                                         

              |X|     (b) The entire plan of merger is on file at the registered
                  office of the surviving corporation, or other place of
business of the surviving entity.   

7)       Effective date: (optional):_______________________                     

[The remainder of this page is left blank intentionally.] 

DEFM14C
62nd Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 62nd
8)       Signatures- Must be signed by: an officer of each Nevada corporation   
(NRS 92A.230)*                                                

Global Yacht Services, Inc.                         

Name of parent of merging entity                    

President 
              ------------------------------------------------------------------
Signature             Title                     Date

Hyalozyme Acquisition Corporation                   
Name of merging entity                              

President 
              ------------------------------------------------------------------
Signature             Title                     Date

DeliaTroph Pharmaceuticals, Inc.                    
Name of surviving entity                            

President 
              ------------------------------------------------------------------
Signature             Title                     Date

Secretary 
              ------------------------------------------------------------------
Signature             Title                     Date

______________________                                                          
* The articles of merger must be signed by each foreign constituent entity in   
the manner provided by the law governing it.                                    

DEFM14C
63rd Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 63rd
 EXHIBIT B-2

 AGREEMENT OF MERGER
A CALIFORNIA CORPORATION

       THIS AGREEMENT OF MERGER (this "Agreement"), is made and entered into
as of ______ ___, 2004, by and among Global Yacht Services, Inc., a Nevada      
corporation (the "Parent"), DeliaTroph Pharmaceuticals, Inc. dba Hyalozyme      
Therapeutics, Inc., a California corporation (the "Company"), and Hyalozyme     
Acquisition Corporation, a Nevada corporation and a wholly-owned subsidiary of  
Parent ("Sub" and, together with the Company, the "Constituent Corporations").  

RECITALS

         A. Parent, the Company and Sub have entered into that certain Agreement
and Plan of Merger dated January 28, 2004 (the "Reorganization Agreement"),     
providing for, among other things, the execution and filing of this Agreement   
and the merger of Sub with and into the Company upon the terms set forth in the 
Reorganization Agreement and this Agreement (the "Merger").                     

  B. The respective Boards of Directors of each of the Constituent
Corporations deem it advisable and in the best interests of each of such        
corporations and their respective shareholders that Sub be merged with and into 
the Company and, in accordance therewith, have approved the Reorganization      
Agreement, this Agreement and the Merger.                                       

     C. The Reorganization Agreement, this Agreement and the Merger have
been approved by the shareholders of the Company and by the sole stockholder of 
Sub.                                                                            

         NOW, THEREFORE, in consideration of the mutual agreements and covenants
set forth herein, each of the Constituent Corporations hereby agrees that Sub   
shall be merged with and into the Company in accordance with this Agreement and 
the provisions of the laws of the State of California, upon the terms and       
subject to the conditions set forth as follows:                                 

ARTICLE I 

THE CONSTITUENT CORPORATIONS

  1.1 The Company. The Company is a corporation duly organized and
existing under the laws of the State of California. The total number of shares  
that the Company is authorized to issue is 75,000,000 shares, 60,000,000 of     
which shall be Common Stock and 15,000,000 of which shall be Preferred Stock. Of
the authorized shares of Common Stock, 34,999,701 are issued and outstanding as 
of the date hereof. Of the authorized shares of Preferred Stock, which no shares
are issued and outstanding as of the date hereof: (i) 4,816,000 shares are      
designated Series A Preferred Stock; (ii) 3,473,343 shares are designated Series
B Preferred Stock; and (iii) 2,367,394 shares are designated of Series C        
Preferred Stock. The Company was incorporated under the laws of the State of    
California on February 26, 1998.                                                

DEFM14C
64th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 64th
     1.2 Sub. Sub is a corporation duly organized and existing under the
laws of the State of Nevada with an authorized capital of 50,000,000 shares of  
common stock. As of the date of this Agreement, 1000 shares of common stock of  
Sub are issued and outstanding and held by Parent. Sub was incorporated under   
the laws of the State of Nevada on January 7, 2004.                             

ARTICLE II

THE MERGER

  2.1 The Merger. At the Effective Time (as defined in Section 2.2
hereof) and subject to and upon the terms and conditions of this Agreement and  
the applicable provisions of the General Corporation Law of the State of        
California (the "California Law"), Sub shall be merged with and into the        
Company, the separate corporate existence of Sub shall cease and the Company    
shall continue as the surviving corporation and as a wholly-owned subsidiary of 
Parent. The surviving corporation after the Merger is sometimes referred to     
hereinafter as the "Surviving Corporation."                                     

         2.2 Filing and Effectiveness. This Agreement, together with the officer
certificates of each of the Constituent Corporations required by California Law 
(together, the "Officer Certificates"), shall be filed with the Secretary of    
State of the State of California. The Merger shall become effective, in         
accordance with California Law, upon the filing of this Agreement and the       
Officer Certificates with the Secretary of State of the State of California (the
"Effective Time").                                                              

    2.3 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement and in the applicable provisions  
of the California Law. Without limiting the generality of the foregoing, and    
subject thereto, at the Effective Time, all the property, rights, privileges,   
powers and franchises of the Company and Sub shall vest in the Surviving        
Corporation, and all debts, liabilities and duties of the Company and Sub shall 
become the debts, liabilities and duties of the Surviving Corporation.          

    2.4 Articles of Incorporation. Effective immediately following the
Merger, the Articles of Incorporation of Surviving Corporation are amended and  
restated to read as attached hereto as Exhibit A.                               

2.5 Directors and Officers.                                   

             (a) The directors of the Company immediately prior to the Effective
Time shall be the directors of the Surviving Corporation immediately after the  
Effective Time, each to serve as a director of the Surviving Corporation in     
accordance with the provisions of the California Law and the articles of        
incorporation and bylaws of the Surviving Corporation until such director's     
successor is duly elected and qualified.                                        

            (b) The officers of the Company immediately prior to the Effective
Time shall be the officers of the Surviving Corporation immediately after the   
Effective Time, each to hold office in accordance with the provisions of the    
bylaws of the Surviving Corporation.                                            

DEFM14C
65th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 65th
2.6 Effect of Merger on the Capital Stock of the Constituent  
Corporations.                                                                   

            (a) Definitions. For all purposes of this Agreement, the following
terms shall have the following respective meanings:                             

           "CGCL" shall mean the California General Corporation Law.

           "Closing" shall mean the consummation of the transactions
contemplated by the Reorganization Agreement.                                   

"Closing Date" shall mean the date of Closing.

                 "Company Common Stock" shall mean shares of common stock of the
Company.                                                                        

                 "Outstanding Company Common Stock" shall mean shares of Company
Common Stock outstanding at the Effective Time.                                 

                "Parent Common Stock" shall mean shares of Common Stock of the
Parent, $0.001 par value per share.                                             

       "Shareholder" shall mean each holder of any shares of
Outstanding Company Common Stock immediately prior to Closing.                  

              Capitalized terms used herein but not defined shall have the
respective meanings ascribed to such terms in the Reorganization Agreement.     

          (b) Effect on Outstanding Company Common Stock. At the Effective
Time, by virtue of the Merger and without any action on the part of Sub, the    
Company or any of the Shareholders, each share of Outstanding Company Common    
Stock shall be converted into the right to receive one share of Parent Common   
Stock. No fractional shares of Parent Common Stock will be issued.              

           (c) Capital Stock of Sub. At the Effective Time, by virtue of the
Merger and without any action on the part of Parent, Sub or the Company, each   
share of common stock of Sub issued and outstanding immediately prior to the    
Effective Time shall be converted into and exchanged for one validly issued,    
fully paid and nonassessable share of Company Common Stock.                     

ARTICLE III 

 MISCELLANEOUS

      3.1 Termination by Mutual Agreement. Notwithstanding the approval of
this Agreement by the shareholders of Sub and the Company, this Agreement may be
terminated at any time prior to the Effective Time by mutual agreement of the   
board of directors of the Sub and the Company.                                  

3 

DEFM14C
66th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 66th
 3.2 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which       
together shall constitute one agreement.                                        

      3.3 Governing Law. This Agreement shall be governed in all respects,
including validity, interpretation and effect by the laws of the State of       
California.                                                                     

[The remainder of this page is left blank intentionally.] 

4 

DEFM14C
67th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 67th
        IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.                                                   

                     HYALOZYME ACQUISITION CORPORATION

                                  ----------------------------------------------
Mitch Keeler
           President and Secretary

                    DELIATROPH PHARMACEUTICALS, INC.
                    DBA HYALOZYME THERAPEUTICS, INC.

                                  ----------------------------------------------
Jonathan Lim
President   

                                  ----------------------------------------------
David Ramsay
Secretary   

               GLOBAL YACHT SERVICES, INC.

                                  ----------------------------------------------
Mitch Keeler
President   

                                  ----------------------------------------------
Melissa Day 
Secretary   

 [SIGNATURE PAGE TO AGREEMENT OF MERGER]

DEFM14C
68th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 68th
 Exhibit A

 ARTICLES OF INCORPORATION

OF

 _______________________, INC.

 I

The name of the Corporation is ______________, Inc.           

II

  The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation 
Law of California other than the banking business, the trust company business or
the practice of a profession permitted to be incorporated by the California     
Corporations Code.                                                              

 III

        The Corporation is authorized to issue one class of shares of stock to
be designated no par value Common Stock. The total number of shares of Common   
Stock that the Corporation is authorized to issue is 100.                       

IV

        The liability of the directors of the Corporation for monetary damages
shall be eliminated to the fullest extent permissible under California law, as  
such law exists from time to time.                                              

 V

        The Corporation is authorized to provide indemnification of agents (as
defined in Section 317 of the California Corporations Code) through bylaw       
provisions, agreements with agents, vote of shareholders or disinterested       
directors or otherwise, in excess of the indemnification otherwise permitted by 
Section 317 of the California Corporations Code, subject only to applicable     
limits set forth in Section 204 of the California Corporations Code with respect
to actions for breach of duty to the Corporation and its shareholders.          

DEFM14C
69th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 69th
IV

         The Corporation shall have the power to purchase and maintain insurance
on behalf of any agent of the Corporation against any liability asserted against
or incurred by the agent in such capacity or arising out of the agent's status  
as such whether or not the Corporation would have the power to indemnify the    
agent against such liability under provisions of the California Corporations    
Code. The fact that the Corporation owns all or a portion of the shares of the  
company issuing a policy of insurance shall not render this Article void if any 
policy issued by such company is limited to the extent required by applicable   
California law.                                                                 

DATED: March __, 2004                                         

                                  ----------------------------------------------
                  Jonathan E. Lim, MD, President

                                  ----------------------------------------------
              David A. Ramsay, Secretary

DEFM14C
70th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 70th
DELIATROPH PHARMACEUTICALS, INC.

 OFFICERS' CERTIFICATE OF APPROVAL OF MERGER

   The undersigned, Jonathan E. Lim, President, and David A. Ramsay,
Secretary, hereby certify that:                                                 

      1. They are the President and Secretary, respectively, of DeliaTroph
Pharmaceuticals, Inc. dba Hyalozyme Therapeutics, Inc., a California corporation
(the "Company").                                                                

        2. The principal terms of the Agreement of Merger in the form attached
to this Certificate (the "Merger Agreement") providing for the merger (the      
"Merger") of Hyalozyme Acquisition Corporation, a California corporation, with  
and into the Company were duly approved by the Board of Directors and           
shareholders of the Company.                                                    

       3. The total number of shares that the Company is authorized to issue
is 75,000,000 shares, 60,000,000 of which shall be Common Stock and 15,000,000  
of which shall be Preferred Stock. The authorized capital stock of the Company  
consists of: (i) 4,816,000 shares of Series A Preferred Stock, (iii) 3,473,343  
shares of Series B Preferred Stock, and (iii) 2,367,394 shares of Series C      
Preferred Stock. There were no shares of Series A Preferred Stock, Series B     
Preferred Stock and Series C Preferred Stock issued and outstanding. There were 
34,999,701 shares of Common Stock of the Company issued and outstanding as of   
February 17, 2004, 18,320,094 shares of which were entitled to vote upon the    
Merger. The votes of more than fifty percent (50%) of the outstanding shares of 
Common Stock, voting together as a single class, were required to approve the   
Merger and the principal terms of the Merger Agreement.                         

     4. The principal terms of the Merger Agreement were approved by the
consent of the holders of a majority of the outstanding shares of Common Stock  
voting together as a single class, which votes exceeded the votes required.     

         Each of the undersigned further declares under penalty of perjury under
the laws of the State of California that the matters set forth in this          
certificate are true and correct of his own knowledge.                          

Date:  March ___, 2004                                                          

                                  ----------------------------------------------
Jonathan Lim
President   

                                  ----------------------------------------------
David Ramsay
Secretary   

DEFM14C
71st Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 71st
 HYALOZYME ACQUISITION CORPORATION

 OFFICER'S CERTIFICATE OF APPROVAL OF MERGER

The undersigned, Mitch Keeler, President and Secretary, hereby
certifies that:                                                                 

1. He is the President and Secretary of Hyalozyme Acquisition 
Corporation, a Nevada corporation ("Sub") and wholly-owned subsidiary of Global 
Yacht Services, Inc., a Nevada corporation ("Parent").                          

        2. The principal terms of the Agreement of Merger in the form attached
to this Certificate (the "Merger Agreement") providing for the merger (the      
"Merger") of Sub with and into DeliaTroph Pharmaceuticals, Inc. dba Hyalozyme   
Therapeutics, Inc., a California corporation, were duly approved by the Board of
Directors and by the sole shareholder of Sub.                                   

         3. The authorized capital stock of Sub consists of 50,000,000 shares of
Common Stock. There were 1000 shares of Common Stock of Sub issued and          
outstanding, all of which were entitled to vote upon the Merger. A vote of more 
than 50% of the outstanding shares of Common Stock of Sub was required to       
approve the Merger.                                                             

     4. The principal terms of the Merger Agreement were approved by the
consent of Sub's sole shareholder, holding one hundred percent (100%) of the    
Company's issued and outstanding shares, which vote exceeded the vote required. 

         5. The approval of the outstanding shares of Parent was not required to
approve the Merger; however, approval by a majority of the shareholders of      
Parent was obtained.                                                            

     The undersigned further declares under penalty of perjury under the
laws of the State of California that the matters set forth in this certificate  
are true and correct of his own knowledge.                                      

Date:  March ___, 2004                                                          

                                  ----------------------------------------------
Mitch Keeler
           President and Secretary

DEFM14C
72nd Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 72nd
EXHIBIT C 

AMENDED AND RESTATED ARTICLES OF INCORPORATION

OF

 GLOBAL YACHT SERVICES, INC.

Pursuant to the provisions of Section 78.403 of the Nevada Revised Statutes, the
undersigned corporation adopts the following Amended and Restated Articles of   
Incorporation as of this date:                                                  

FIRST:    The name of the corporation is Global Yacht Services, Inc.            

SECOND: The Articles of Incorporation of the corporation were filed by the      
Secretary of State on the 22nd day of February, 2001 and were amended by a      
Certificate of Amendment filed on June 6, 2001.                                 

THIRD:    The name and address of the original incorporator is as follows:      

Sara A. Zaro                                              
51 Jeanell Dr. Suite 3                                    
Carson City, Nevada 89703                                 

FOURTH: The board of directors at a meeting duly convened and held on the ____  
day of ______, 2004, adopted a resolution to amend and restate the original     
Articles as follows:                                                            

 ARTICLE I

The name of the corporation is Halozyme Therapeutics, Inc. (the       
"Corporation").                                                                 

ARTICLE II

   The purpose of the Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the Nevada General Corporation   
Law.                                                                            

 ARTICLE III

The Corporation is authorized to issue two classes of stock to be     
designated "Common Stock" and "Preferred Stock." The total number of shares of  
Common Stock that the Corporation is authorized to issue is One Hundred Million 
(100,000,000) shares, with a par value of $0.001 per share. The total number of 
shares of Preferred Stock that the Corporation is authorized to issue is Twenty 
Million (20,000,000) shares, with a par value of $0.001 per share.              

  The Preferred Stock authorized by these Amended and Restated Articles of
Incorporation may be issued from time to time in one or more series. The Board  
is expressly authorized to increase or decrease (but not below the number of    
shares of such series then outstanding ) the number of shares of any series     
prior to or subsequent to the issue of shares in that series. In case the number

1 

DEFM14C
73rd Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 73rd
     of shares of any such series shall be so decreased, the shares constituting
such decrease shall resume the status that they had prior to the adoption of the
resolution originally fixing the number of shares of such series.               

ARTICLE IV

   The number of Directors constituting the Board of Directors shall be five
(5). Such Directors shall so serve until the successor(s) thereto are elected   
and qualified pursuant to the Bylaws of the Corporation.                        

The name and address of each member of the Board of Directors is:     

     1.Jonathan Lim    11588 Sorrento Valley Road, Suite 17, San Diego, CA 92121

     2.Ira Lechner     11588 Sorrento Valley Road, Suite 17, San Diego, CA 92121

     3.Gregory Frost   11588 Sorrento Valley Road, Suite 17, San Diego, CA 92121

     4.Edward Mercaldo 11588 Sorrento Valley Road, Suite 17, San Diego, CA 92121

     5.John S. Patton  11588 Sorrento Valley Road, Suite 17, San Diego, CA 92121

 ARTICLE V

     No director or officer of the Corporation shall have any personal liability
to the Corporation or its shareholders for damages resulting from breach of     
fiduciary duty by said director or officer unless such damages result from: (a) 
Acts or omissions which involve intentional misconduct, fraud or a knowing      
violation of law; or (b) the payment of dividends in violation of Nevada General
Corporation Law Chapter 78.300.                                                 

     No  amendment  or repeal of this  Article V applies to or has any effect on
the liability or alleged liability of any officer or director of this           
Corporation for or with respect to any acts or omissions of the officer or      
director occurring prior to the amendment or repeal, except as otherwise        
required by law.                                                                

ARTICLE VI

     In furtherance and not in limitation of the rights, powers, privileges, and
discretionary  authority granted or conferred by Nevada General  Corporation Law
Chapter  78 or other  statutes  or laws of the  State of  Nevada,  the  Board of
Directors is expressly authorized:                                              

1.         To make, amend, alter, or repeal the Bylaws of the Corporation:      

2.         To adopt from time to time bylaw provisions with respect to          
          indemnification of directors, officers, employees, agents, and other
         persons as it shall deem expedient and in the best interests of the
Corporation and to the extent permitted by law; and       

3.         To fix and determine designations, preferences, privileges, rights,  
        and powers and relative, participating, optional, or other special

2 

DEFM14C
74th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 74th
         rights, qualifications, limitations, or restrictions on the capital
        stock of the Corporation as provided by Nevada General Corporation
Law Chapter 78.195, unless otherwise provided herein.     

 ARTICLE VII

     The  capital  stock,  after the amount of the  subscription  price,  or par
value,  has been paid in, shall not be subject to assessment to pay the debts of
this Corporation.                                                               

ARTICLE VIII

This Corporation is to have perpetual existence.                      

ARTICLE IX

    No shareholder shall be entitled as a matter of right to subscribe for, or
receive additional shares of any class of stock of the Corporation, whether now 
or hereafter authorized, or any bonds, debentures or securities convertible into
stock may be issued or disposed of by the Board of Directors to such persons and
on such terms as is in its discretion it shall deem advisable                   

 * * *

FIFTH: The number of shares of the corporation outstanding and entitled to vote 
on an amendment to the Articles of Incorporation is __________; that the above  
changes and amendment has been consented to an approved by a majority vote of   
the stockholders holding at least a majority of each class of stock outstanding 
and entitled to vote thereon.                                                   

SIXTH: Mitch Keeler is the president of Global Yacht Services, Inc. and Melissa 
Day is the secretary of the corporation; that they have been authorized to      
execute the foregoing certificate by resolution of the board of directors,      
adopted at a meeting of the board of directors duly called and that such meeting
was held on the ____ day of _____, 2004 and that the foregoing certificate sets 
forth the text of the Articles of Incorporation as amended to the date of the   
certificate.                                                                    

Date:  _____________ ___, 2004                                                  

         GLOBAL YACHT SERVICES, INC.

By:               
                ----------------------------
               Mitch Keeler, President

                 and

             -------------------------------
              Melissa Day, Secretary

3 

DEFM14C
75th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 75th
 EXHIBIT D

NEVADA DISSENTERS' RIGHTS STATUTE -- RIGHTS OF DISSENTING OWNERS

NRS 92A.300 DEFINITIONS. As used in NRS 92A.300 to 92A.500, inclusive, unless   
the context otherwise requires, the words and terms defined in NRS 92A.305 to   
92A.335, inclusive, have the meanings ascribed to them in those sections.       

NRS 92A.305 "BENEFICIAL STOCKHOLDER" DEFINED. "Beneficial stockholder" means a  
person who is a beneficial owner of shares held in a voting trust or by a       
nominee as the stockholder of record.                                           

NRS 92A.310 "CORPORATE ACTION" DEFINED. "Corporate action" means the action of a
domestic corporation.                                                           

NRS 92A.315 "DISSENTER" DEFINED. "Dissenter" means a stockholder who is entitled
to dissent from a domestic corporation's action under NRS 92A.380 and who       
exercises that right when and in the manner required by NRS 92A.400 to 92A.480, 
inclusive.                                                                      

NRS 92A.320 "FAIR VALUE" DEFINED. "Fair value," with respect to a dissenter's   
shares, means the value of the shares immediately before the effectuation of the
corporate action to which he objects, excluding any appreciation or depreciation
in anticipation of the corporate action unless exclusion would be inequitable.  

NRS 92A.325 "STOCKHOLDER" DEFINED. "Stockholder" means a stockholder of record  
or a beneficial stockholder of a domestic corporation.                          

NRS 92A.330 "STOCKHOLDER OF RECORD" DEFINED. "Stockholder of record" means the  
person in whose name shares are registered in the records of a domestic         
corporation or the beneficial owner of shares to the extent of the rights       
granted by a nominee's certificate on file with the domestic corporation.       

NRS 92A.335 "SUBJECT CORPORATION" DEFINED. "Subject corporation" means the      
domestic corporation which is the issuer of the shares held by a dissenter      
before the corporate action creating the dissenter's rights becomes effective or
the surviving or acquiring entity of that issuer after the corporate action     
becomes effective.                                                              

NRS 92A.340 COMPUTATION OF INTEREST. Interest payable pursuant to NRS 92A.300 to
92A.500, inclusive, must be computed from the effective date of the action until
the date of payment, at the average rate currently paid by the entity on its    
principal bank loans or, if it has no bank loans, at a rate that is fair and    
equitable under all of the circumstances.                                       

NRS 92A.350 RIGHTS OF DISSENTING PARTNER OF DOMESTIC LIMITED PARTNERSHIP. A     
partnership agreement of a domestic limited partnership or, unless otherwise    
provided in the partnership agreement, an agreement of merger or exchange, may  
provide that contractual rights with respect to the partnership interest of a   
dissenting general or limited partner of a domestic limited partnership are     
available for any class or group of partnership interests in connection with any
merger or exchange in which the domestic limited partnership is a constituent   
entity.                                                                         

NRS 92A.360 RIGHTS OF DISSENTING MEMBER OF DOMESTIC LIMITED-LIABILITY COMPANY.  
The articles of organization or operating agreement of a domestic               
limited-liability company or, unless otherwise provided in the articles of      
organization or operating agreement, an agreement of merger or exchange, may    
provide that contractual rights with respect to the interest of a dissenting    
member are available in connection with any merger or exchange in which the     
domestic limited-liability company is a constituent entity.                     

NRS 92A.370       RIGHTS OF DISSENTING MEMBER OF DOMESTIC NONPROFIT CORPORATION.

1. Except as otherwise provided in subsection 2, and unless otherwise provided  
in the articles or bylaws, any member of any constituent domestic nonprofit     
corporation who voted against the merger may, without prior notice, but within  
30 days after the effective date of the merger, resign from membership and is   
thereby excused from all contractual obligations to the constituent or surviving
corporations which did not occur before his                                     

1 

DEFM14C
76th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 76th
resignation and is thereby entitled to those rights, if any, which would have   
existed if there had been no merger and the membership had been terminated or   
the member had been expelled.                                                   

2. Unless otherwise provided in its articles of incorporation or bylaws, no     
member of a domestic nonprofit corporation, including, but not limited to, a    
cooperative corporation, which supplies services described in chapter 704 of NRS
to its members only, and no person who is a member of a domestic nonprofit      
corporation as a condition of or by reason of the ownership of an interest in   
real property, may resign and dissent pursuant to subsection 1.                 

NRS 92A.380 RIGHT OF STOCKHOLDER TO DISSENT FROM CERTAIN CORPORATE ACTIONS AND  
TO OBTAIN PAYMENT FOR SHARES.                                                   

1. Except as otherwise provided in NRS 92A.370 and 92A.390, a 
stockholder is entitled to dissent from, and obtain payment of the fair value of
his shares in the event of any of the following corporate actions:              

              (a) Consummation of a plan of merger to which the domestic
corporation is a constituent entity:                                            

                         (1) If approval by the stockholders is required for
the merger by NRS 92A.120 to 92A.160, inclusive, or the articles of             
incorporation, regardless of whether the stockholder is entitled to vote on the 
plan of merger; or                                                              

                         (2) If the domestic corporation is a subsidiary and
is merged with its parent pursuant to NRS 92A.180.                              

                (b) Consummation of a plan of exchange to which the domestic
corporation is a constituent entity as the corporation whose subject owner's    
interests will be acquired, if his shares are to be acquired in the plan of     
exchange.                                                                       

            (c) Any corporate action taken pursuant to a vote of the
stockholders to the event that the articles of incorporation, bylaws or a       
resolution of the board of directors provides that voting or nonvoting          
stockholders are entitled to dissent and obtain payment for their shares.       

         2. A stockholder who is entitled to dissent and obtain payment pursuant
to NRS 92A.300 to 92A.500, inclusive, may not challenge the corporate action    
creating his entitlement unless the action is unlawful or fraudulent with       
respect to him or the domestic corporation.                                     

NRS 92A.390 LIMITATIONS ON RIGHT OF DISSENT: STOCKHOLDERS OF CERTAIN CLASSES OR 
SERIES; ACTION OF STOCKHOLDERS NOT REQUIRED FOR PLAN OF MERGER.                 

     1. There is no right of dissent with respect to a plan of merger or
exchange in favor of stockholders of any class or series which, at the record   
date fixed to determine the stockholders entitled to receive notice of and to   
vote at the meeting at which the plan of merger or exchange is to be acted on,  
were either listed on a national securities exchange, included in the national  
market system by the National Association of Securities Dealers, Inc., or held  
by at least 2,000 stockholders of record, unless:                               

                (a) The articles of incorporation of the corporation issuing
the shares provide otherwise; or                                                

                 (b) The holders of the class or series are required under the
plan of merger or exchange to accept for the shares anything except:            

                          (1) Cash, owner's interests or owner's interests and
cash in lieu of fractional owner's interests of:                                

                                 (I) The surviving or acquiring entity; or

2 

DEFM14C
77th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 77th
                           (II) Any other entity which, at the
effective date of the plan of merger or exchange, were either listed on a       
national securities exchange, included in the national market system by the     
National Association of Securities Dealers, Inc., or held of record by a least  
2,000 holders of owner's interests of record; or                                

                        (2) A combination of cash and owner's interests of
the kind described in sub-subparagraphs (I) and (II) of subparagraph (1) of     
paragraph (b).                                                                  

 2. There is no right of dissent for any holders of stock of the
surviving domestic corporation if the plan of merger does not require action of 
the stockholders of the surviving domestic corporation under NRS 92A.130.       

NRS 92A.400 LIMITATIONS ON RIGHT OF DISSENT: ASSERTION AS TO PORTIONS ONLY TO   
SHARES REGISTERED TO STOCKHOLDER; ASSERTION BY BENEFICIAL STOCKHOLDER.          

      1. A stockholder of record may assert dissenter's rights as to fewer
than all of the shares registered in his name only if he dissents with respect  
to all shares beneficially owned by any one person and notifies the subject     
corporation in writing of the name and address of each person on whose behalf he
asserts dissenter's rights. The rights of a partial dissenter under this        
subsection are determined as if the shares as to which he dissents and his other
shares were registered in the names of different stockholders.                  

        2. A beneficial stockholder may assert dissenter's rights as to shares
held on his behalf only if:                                                     

                 (a) He submits to the subject corporation the written consent
of the stockholder of record to the dissent not later than the time the         
beneficial stockholder asserts dissenter's rights; and                          

                (b) He does so with respect to all shares of which he is the
beneficial stockholder or over which he has power to direct the vote.           

NRS 92A.410       NOTIFICATION OF STOCKHOLDERS REGARDING RIGHT OF DISSENT.      

  1. If a proposed corporate action creating dissenters' rights is
submitted to a vote at a stockholders' meeting, the notice of the meeting must  
state that stockholders are or may be entitled to assert dissenters' rights     
under NRS 92A.300 to 92A.500, inclusive, and be accompanied by a copy of those  
sections.                                                                       

    2. If the corporate action creating dissenters' rights is taken by
written consent of the stockholders or without a vote of the stockholders, the  
domestic corporation shall notify in writing all stockholders entitled to assert
dissenters' rights that the action was taken and send them the dissenter's      
notice described in NRS 92A.430.                                                

NRS 92A.420       PREREQUISITES TO DEMAND FOR PAYMENT FOR SHARES.               

  1. If a proposed corporate action creating dissenters' rights is
submitted to a vote at a stockholders' meeting, a stockholder who wishes to     
assert dissenter's rights:                                                      

                (a) Must deliver to the subject corporation, before the vote
is taken, written notice of his intent to demand payment for his shares if the  
proposed action is effectuated; and                                             

                 (b) Must not vote his shares in favor of the proposed action.

        2. A stockholder who does not satisfy the requirements of subsection 1
and NRS 92A.400 is not entitled to payment for his shares under this chapter.   

3 

DEFM14C
78th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 78th
NRS 92A.430 DISSENTER'S NOTICE: DELIVERY TO STOCKHOLDERS ENTITLED TO ASSERT     
RIGHTS; CONTENTS.                                                               

  1. If a proposed corporate action creating dissenters' rights is
authorized at a stockholders' meeting, the subject corporation shall deliver a  
written dissenter's notice to all stockholders who satisfied the requirements to
assert those rights.                                                            

        2. The dissenter's notice must be sent no later than 10 days after the
effectuation of the corporate action, and must:                                 

                 (a) State where the demand for payment must be sent and where
and when certificates, if any, for shares must be deposited;                    

       (b) Inform the holders of shares not represented by
certificates to what extent the transfer of the shares will be restricted after 
the demand for payment is received;                                             

                  (c) Supply a form for demanding payment that includes the date
of the first announcement to the news media or to the stockholders of the terms 
of the proposed action and requires that the person asserting dissenter's rights
certify whether or not he acquired beneficial ownership of the shares before    
that date;                                                                      

                (d) Set a date by which the subject corporation must receive
the demand for payment, which may not be less than 30 nor more than 60 days     
after the date the notice is delivered; and                                     

           (e) Be accompanied by a copy of NRS 92A.300 to 92A.500,
inclusive.                                                                      

NRS 92A.440 DEMAND FOR PAYMENT AND DEPOSIT OF CERTIFICATES; RETENTION OF RIGHTS 
OF STOCKHOLDER.                                                                 

1. A stockholder to whom a dissenter's notice is sent must:   

(a) Demand payment;                         

               (b) Certify whether he acquired beneficial ownership of the
shares before the date required to be set forth in the dissenter's notice for   
this certification; and                                                         

                (c) Deposit his certificates, if any, in accordance with the
terms of the notice.                                                            

       2. The stockholder who demands payment and deposits his certificates,
if any, before the proposed corporate action is taken retains all other rights  
of a stockholder until those rights are canceled or modified by the taking of   
the proposed corporate action.                                                  

3. The stockholder who does not demand payment or deposit his 
certificates where required, each by the date set forth in the dissenter's      
notice, is not entitled to payment for his shares under this chapter.           

NRS 92A.450 UNCERTIFICATED SHARES: AUTHORITY TO RESTRICT TRANSFER AFTER DEMAND  
FOR PAYMENT; RETENTION OF RIGHTS OF STOCKHOLDER.                                

    1. The subject corporation may restrict the transfer of shares not
represented by a certificate from the date the demand for their payment is      
received.                                                                       

         2. The person for whom dissenter's rights are asserted as to shares not
represented by a certificate retains all other rights of a stockholder until    
those rights are canceled or modified by the taking of the proposed corporate   
action.                                                                         

4 

DEFM14C
79th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 79th
NRS 92A.460  PAYMENT FOR SHARES: GENERAL REQUIREMENTS.                          

      1. Except as otherwise provided in NRS 92A.470, within 30 days after
receipt of a demand for payment, the subject corporation shall pay each         
dissenter who complied with NRS 92A.440 the amount the subject corporation      
estimates to be the fair value of his shares, plus accrued interest. The        
obligation of the subject corporation under this subsection may be enforced by  
the district court:                                                             

                  (a) Of the county where the corporation's registered office is
located; or                                                                     

               (b) At the election of any dissenter residing or having its
registered office in this state, of the county where the dissenter resides or   
has its registered office. The court shall dispose of the complaint promptly.   

2. The payment must be accompanied by:                        

                  (a) The subject corporation's balance sheet as of the end of a
fiscal year ending not more than 16 months before the date of payment, a        
statement of income for that year, a statement of changes in the stockholders'  
equity for that year and the latest available interim financial statements, if  
any;                                                                            

                (b) A statement of the subject corporation's estimate of the
fair value of the shares;                                                       

          (c) An explanation of how the interest was calculated;

               (d) A statement of the dissenter's rights to demand payment
under NRS 92A.480; and                                                          

    (e) A copy of NRS 92A.300 to 92A.500, inclusive.

NRS 92A.470 PAYMENT FOR SHARES: SHARES ACQUIRED ON OR AFTER DATE OF DISSENTER'S 
NOTICE.                                                                         

         1. A subject corporation may elect to withhold payment from a dissenter
unless he was the beneficial owner of the shares before the date set forth in   
the dissenter's notice as the date of the first announcement to the news media  
or to the stockholders of the terms of the proposed action.                     

      2. To the extent the subject corporation elects to withhold payment,
after taking the proposed action, it shall estimate the fair value of the       
shares, plus accrued interest, and shall offer to pay this amount to each       
dissenter who agrees to accept it in full satisfaction of his demand. The       
subject corporation shall send with its offer a statement of its estimate of the
fair value of the shares, an explanation of how the interest was calculated, and
a statement of the dissenters' right to demand payment pursuant to NRS 92A.480. 

NRS 92A.480 DISSENTER'S ESTIMATE OF FAIR VALUE: NOTIFICATION OF SUBJECT         
CORPORATION; DEMAND FOR PAYMENT OF ESTIMATE.                                    

         1. A dissenter may notify the subject corporation in writing of his own
estimate of the fair value of his shares and the amount of interest due, and    
demand payment of his estimate, less any payment pursuant to NRS 92A.460, or    
reject the offer pursuant to NRS 92A.470 and demand payment of the fair value of
his shares and interest due, if he believes that the amount paid pursuant to NRS
92A.460 or offered pursuant to NRS 92A.470 is less than the fair value of his   
shares or that the interest due is incorrectly calculated.                      

    2. A dissenter waives his right to demand payment pursuant to this
section unless he notifies the subject corporation of his demand in writing     
within 30 days after the subject corporation made or offered payment for his    
shares.                                                                         

5 

DEFM14C
80th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 80th
NRS 92A.490 LEGAL PROCEEDING TO DETERMINE FAIR VALUE: DUTIES OF SUBJECT         
CORPORATION; POWERS OF COURT; RIGHTS OF DISSENTER.                              

       1. If a demand for payment remains unsettled, the subject corporation
shall commence a proceeding within 60 days after receiving the demand and       
petition the court to determine the fair value of the shares and accrued        
interest. If the subject corporation does not commence the proceeding within the
60-day period, it shall pay each dissenter whose demand remains unsettled the   
amount demanded.                                                                

        2. A subject corporation shall commence the proceeding in the district
court of the county where its registered office is located. If the subject      
corporation is a foreign entity without a resident agent in the state, it shall 
commence the proceeding in the county where the registered office of the        
domestic corporation merged with or whose shares were acquired by the foreign   
entity was located.                                                             

      3. The subject corporation shall make all dissenters, whether or not
residents of Nevada, whose demands remain unsettled, parties to the proceeding  
as in an action against their shares. All parties must be served with a copy of 
the petition. Nonresidents may be served by registered or certified mail or by  
publication as provided by law.                                                 

       4. The jurisdiction of the court in which the proceeding is commenced
under subsection 2 is plenary and exclusive. The court may appoint one or more  
persons as appraisers to receive evidence and recommend a decision on the       
question of fair value. The appraisers have the powers described in the order   
appointing them, or any amendment thereto. The dissenters are entitled to the   
same discovery rights as parties in other civil proceedings.                    

        5. Each dissenter who is made a party to the proceeding is entitled to
a judgment:                                                                     

                 (a) For the amount, if any, by which the court finds the fair
value of his shares, plus interest, exceeds the amount paid by the subject      
corporation; or                                                                 

         (b) For the fair value, plus accrued interest, of his
after-acquired shares for which the subject corporation elected to withhold     
payment pursuant to NRS 92A.470.                                                

NRS 92A.500 LEGAL PROCEEDING TO DETERMINE FAIR VALUE: ASSESSMENT OF COSTS AND   
FEES.                                                                           

      1. The court in a proceeding to determine fair value shall determine
all of the costs of the proceeding, including the reasonable compensation and   
expenses of any appraisers appointed by the court. The court shall assess the   
costs against the subject corporation, except that the court may assess costs   
against all or some of the dissenters, in amounts the court finds equitable, to 
the extent the court finds the dissenters acted arbitrarily, vexatiously or not 
in good faith in demanding payment.                                             

       2. The court may also assess the fees and expenses of the counsel and
experts for the respective parties, in amounts the court finds equitable:       

           (a) Against the subject corporation and in favor of all
dissenters if the court finds the subject corporation did not substantially     
comply with the requirements of NRS 92A.300 to 92A.500, inclusive; or           

                (b) Against either the subject corporation or a dissenter in
favor of any other party, if the court finds that the party against whom the    
fees and expenses are assessed acted arbitrarily, vexatiously or not in good    
faith with respect to the rights provided by NRS 92A.300 to 92A.500, inclusive. 

      3. If the court finds that the services of counsel for any dissenter
were of substantial benefit to other dissenters similarly situated, and that the
fees for those services should not be assessed against the subject corporation, 
the court may award to those counsel reasonable fees to be paid out of the      
amounts awarded to the dissenters who were benefited.                           

6 

DEFM14C
81st Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 81st
     4. In a proceeding commenced pursuant to NRS 92A.460, the court may
assess the costs against the subject corporation, except that the court may     
assess costs against all or some of the dissenters who are parties to the       
proceeding, in amounts the court finds equitable, to the extent the court finds 
that such parties did not act in good faith in instituting the proceeding.      

       5. This section does not preclude any party in a proceeding commenced
pursuant to NRS 92A.460 or 92A.490 from applying the provisions of N.R.C.P. 68  
or NRS 17.115.                                                                  

7 

DEFM14C
82nd Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 82nd
EXHIBIT E 

 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 FORM 10-KSB

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE    
ACT OF 1934 For the fiscal year ended December 31, 2002                 
                     -----------------

[ ] 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: 000-49616                                               

 Global Yacht Services, Inc.
 ---------------------------
(Exact name of registrant as specified in its charter)

Nevada                                                               88-0488686 
------                                                               ---------- 
(State or other jurisdiction of             (I.R.S. Employer Identification No.)
incorporation or organization)                                                  

7710 Hazard Center Drive, Suite E-415, San Diego, California             92108  
------------------------------------------------------------------------------  
(Address of principal executive offices)                             (Zip Code) 

619.990.0976
------------
(Registrant's Telephone Number, Including Area Code)

Securities registered under Section 12(b) of the Act:                           

 Title of each class registered:      Name of each exchange on which registered:
-------------------------------      -----------------------------------------

None                                          None
----                                          ----
Securities registered under Section 12(g) of the Act:                           

Common Stock, Par Value $.001             
-----------------------------             
(Title of Class)            

Indicate by check mark whether the registrant (1) has 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. [X] Yes [ ] 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. [ ]                                       

State issuer's revenues for its most recent fiscal year. $87,769.               

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity 
was sold, or the average bid and asked price of such common equity, as of a     
specified date within the past 60 days. (See definition of affiliate in Rule    
12b-2 of the Exchange Act.) As of March 28, 2003, approximately $228,068.       

As of March 28, 2003, there were 1,917,277 shares of the issuer's $.001 par     
value common stock issued and outstanding.                                      

Documents incorporated by reference. There are no annual reports to security    
holders, proxy information statements, or any prospectus filed pursuant to Rule 
424 of the Securities Act of 1933 incorporated herein by reference.             

Transitional Small Business Disclosure format (check one):                      

[ ]  Yes          [ ]  No     

1 

DEFM14C
83rd Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 83rd
PART I

Item 1. Description of Business.                                                
--------------------------------                                                

Our Background.  We were incorporated in Nevada on February 21, 2001.           

Our Business. We provide a broad range of yacht services in the global          
marketplace. Our services include yacht rental and charter, yacht sales and     
yacht services, such as the provision of captain, crew, supplies, maintenance,  
delivery as well as full-scale contracted care of yachts. Our president, Mitch  
Keeler, is an experienced captain and possesses a captain certification from the
U.S. Coast Guard. Mr. Keeler provides professional advice and consultation for  
all aspects of yacht lease, purchase and ownership and is available for on site 
assistance anywhere in the world.                                               

We currently generate revenues from our charter services, which range from day  
charters to full week charters. We currently offer private yacht charters in San
Diego, usually of up to one week in duration as well as corporate charters,     
which are typically 3 to 5 hours and short range. We have very few charters that
are longer than one week, however, they do occur. Our officers act as captain   
and crew for our charter services, but we often utilize outside businesses for  
services such as catering and bartending.                                       

For those charter services, Mr. Keeler did not get paid or reimbursed for       
providing the use of his yacht. We do not believe that there are limitations on 
our use of Mr. Keeler's yacht in the future, although Mr. Keeler has not made   
any formal commitment to provide us with the use of his yacht at no charge. We  
anticipate that Mr. Keeler will not expect to be paid or reimbursed for         
providing the use of his yacht as long as he is our president and maintains a   
significant equity interest in us.                                              

We also have arrangements with four yacht charter companies, which provide that 
we may use their yachts for our charter services. Those arrangements provide    
that we can rent those companies' yachts for fixed daily and hourly rental fees 
ranging from $300 per hour to $3000 per day depending on the size of the yacht. 
We cannot guaranty that those yachts will be available in the event that we need
to rent those yachts to provide our services.                                   

We have also generated revenues from our yacht management services and our      
delivery services. Yacht management services include managing the yacht for the 
owners including routine maintenance, repairs and electronics installation.     
Regular maintenance includes services such as exterior and interior cleaning,   
bottom cleaning, waxing and zinc replacement. Delivery services include         
delivering newly purchased yachts to various locations around the world.        

We use subcontractors on a per job basis for various services that we provide.  
Those subcontractors are paid by us when we are paid by the client.             
Subcontractors for our charter services may include, but are not limited to, the
following: captains, deckhands, stewards, cooks, caterers, entertainment, and   
bartenders. Other subcontractors that we use include yacht repair persons and   
skilled electronics installers.                                                 

Our Products and Services. We intend to be a professional source that the yacht 
owner or enthusiast will utilize for all their yachting requirements, including 
brokering sales or providing consulting services for yacht purchases, overseeing
delivery to a foreign destination, recruiting captain and crew, procuring and   
supervising quality subcontract repairs and routine maintenance, and providing  
yacht charter cruises. We intend to provide high quality customer service, which
we hope will result in repeat and referral business.                            

We currently provide the following services:                                    

o    yacht services such as the provision of captains, engineers and crew, from 
a list of qualified prospects and also supplies and maintenance;      
o    deliveries of yachts to worldwide destinations;                            
o    full-scale contracted care yachts, including interior and exterior cleaning
    twice monthly, exterior waxing twice yearly, bottom cleaning once monthly,
and routine maintenance;                                              
o    brokering traditional face-to-face yacht sales, of vessels in the $1 -     
$1.5 million range, and;                                              
o    advice and consultation to clients with regard to all aspects of yacht     
     lease, purchase, custom construction and ownership, such as consultation at
   a boat show by contract, although we have not generated any revenues from
theses services.                                                      

2 

DEFM14C
84th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 84th
We are currently equipped to provide all of the above services those services   
only require the manpower of our officers and directors and the use of          
subcontractors.                                                                 

We intend to provide the following services:                                    

o    yacht sales or lease by means of the website, of vessels in the $500,000   
range; and                                                            
o    custom yacht design and construction.                                      

In order to provide the above services, we need to develop our website. We also 
intend to establish relationships with various parties including yacht owners,  
sellers, brokers, lessors, charter agents, maintenance suppliers, industry      
professionals and specialists, captains, crew, engineers, designers, insurance  
agents, legal advisors, and government agents. In the high-end yachting         
industry, reputation of the company and its personnel is very important to the  
customers. Our president, Mitch Keeler has extensive contacts and experience in 
all aspects of the yachting industry due to his 20 years in the field as a      
licensed yacht captain. We believe that a significant portion of our customers  
will be generated by referral from Mr. Keeler's contacts.                       

Our facilities are located in San Diego, California, giving us a presence in    
what we believe is one of the world's largest luxury yacht markets. We also     
intend to conduct operations to the eastern Caribbean market through Global     
Yacht Services (BVI) Limited, our wholly owned subsidiary. We anticipate that   
our subsidiary will establish an office in Tortola, British Virgin Islands, so  
that we provide services to that market. Our subsidiary has not conducted any   
operations to date.                                                             

We anticipate that we will develop our website so that it will function as a    
means for global clients to access our range of services and communicate with   
us. In California, the chief means of contact will be in person, by mail,       
e-mail, phone or fax, although we anticipate that a significant portion of our  
business will be conducted away from the office or at the client's location. We 
believe that we must be accessible via multiple types of communication systems, 
such as cellular phone and email, so that prospects and clients can always reach
us.                                                                             

We anticipate that we will rely upon effective business systems to grow our     
business. We intend to develop an information database to capture client data   
for future business development, which will cue our management follow-up calls  
to brokers and clients for a regular check up to ensure they are satisfied with 
current services. As with many other luxury purchases, luxury yacht purchases   
are often cyclical with some clients upgrading to new models every 2 or 3 years.
We hope to serve these clients in making these upgrade purchases. However, we   
expect that other clients will maintain their original yacht, but make use of   
relevant maintenance services through us.                                       

Our business, as well as the entire recreational boating industry, is highly    
seasonal, with seasonality varying in different geographic markets. We expect to
realize significantly lower sales and operations in winter months in climates   
that are characterized by cold temperatures or severe weather. However, we      
anticipate activity to generally fluctuate with seasonal changes. Our business  
could become substantially more seasonal as we expand operations into colder    
regions of the United States. In addition, weather conditions adversely impact  
our operating results. For example, drought conditions, reduced rainfall levels,
and excessive rain may force boating areas to close or render boating dangerous 
or inconvenient, thereby curtailing customer demand for our products. In        
addition, unseasonably cool weather and prolonged winter conditions may lead to 
shorter selling seasons in certain locations. Hurricanes and other storms could 
result in the disruption of our proposed Caribbean operations or damage to our  
proposed boat inventories and facilities. As a result, our operating results in 
some future quarters could be below our expectations.                           

Our Website www.gysi-online.com. Our current website, which is hosted by a local
provider in San Diego, California, displays our corporate logo and contact      
information and provides a general description of our staff, the services that  
we provide as well as links to resources of interest to yacht owners. We believe
that there is a need in the global yacht industry for clients to obtain timely  
and comprehensive services. We hope to fulfill this need by means of our        
website, which we intend to further develop to provide one-stop shopping and    
support for clients and prospective clients.                                    

3 

DEFM14C
85th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 85th
Our Target Markets and Marketing Strategy. We do not believe that our current   
operations depend on one or a limited number of customers. We intend to serve   
the global high-end luxury yachting market through relationship marketing and   
our website. We will begin by providing service in the San Diego region, central
to the southern California yacht market, by approaching existing yacht owners to
act as charter agents. Yacht services such as care-taking or maintenance, making
travel arrangements and brokering captains and crew, yacht delivery world-wide, 
yacht sales and general yachting related services will be provided initially in 
San Diego, Orange, and Los Angeles counties. The southern California region is  
second only to Florida in the U.S. market for luxury yachts and services.       

We intend to be competitive in price to satisfy those clients who are price     
shoppers. However, we intend to provide high quality services, which we believe 
will attract loyal clients for whom price will be a secondary consideration. We 
will promote our services primarily by means of our website, but also by        
relationship-building with yacht brokers, articles and advertisements in trade  
publications such as Yachts International, duPont Registry, Yachting, Yachting  
World, Sea Magazine and Motor Yachting Magazine, as well as by reputation and   
word-of-mouth. Additionally, we anticipate that attendance at a number of boat  
shows will be necessary, often in a contract capacity to assist a client to find
a new vessel.                                                                   

Our Growth Strategy. Our objective is to establish our reputation of providing  
preeminent services to luxury yacht owners and users of yacht services initially
in San Diego, Orange and Los Angeles counties. Our strategy is to provide       
clients with exceptional personal service and access to products and services.  
Key elements of our strategy include:                                           

o    cultivate relationships with existing and potential clients;               
o    increase our relationships with third party providers of maintenance and   
repair products and services;                                         
o    continue to promote our website and expand its capabilities; and           
o    expand operations in the southern California and eastern Caribbean markets.

Our Competition. The market for luxury yacht sales and services is very         
competitive. We compete primarily with single-location boat dealers and yacht   
brokers with respect to brokering sales or providing consulting services for    
yacht purchases and overseeing delivery to a foreign destination. We also       
compete with national specialty marine parts and accessories stores, catalog    
retailers, sporting goods stores, and mass merchants with respect to sales of   
marine parts, accessories, services and equipment.                              

We also compete with other providers of yacht charter services and with cruise  
ship lines and other forms of vacation choices and types of recreation. In      
addition, several of our competitors, especially those selling marine equipment 
and accessories, are large international, national or regional businesses that  
have substantial financial, marketing, and other resources. Private boat        
charters are additional competition.                                            

We intend to compete on the basis of price and quality of service and by        
offering a complete range of services. We intend to utilize the experience and  
contacts of Mitch Keeler to provide high quality services at a reasonable price.
We believe that Mr. Keeler's experience and contacts in the industry will allow 
us to pay less for the services that we subcontract. We also believe that we can
compete by providing a complete range of services, from assisting clients with  
purchase, delivery maintenance and sale of their yacht. We can also teach the   
client how to operate the boat and understand the systems. We believe that by   
offering a total range of services to the yacht owner we can compete effectively
with those competitors that only offer one of the services that we provide.     

Additionally, the market for similar products and services offered over the     
Internet is highly competitive. There are no substantial barriers to entry in   
these markets, and we expect that competition will continue to intensify. Our   
yacht purchasing and maintenance services compete against a variety of Internet 
and traditional boat and other recreational equipment purchasing services as    
well as boat manufacturers, yacht brokers and yacht maintenance companies.      
Therefore, the competitive factors faced by both Internet commerce companies as 
well as traditional, offline companies within the boating equipment and service 
industries affect us. To compete successfully in the global marketplace as an   
Internet-based commercial entity, we must significantly increase awareness of   
our services and brand name.                                                    

4 

DEFM14C
86th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 86th
We anticipate we will compete with other entities which maintain similar        
commercial websites including buymarine.com, yachtworld.com, boating.com,       
boattraderonline.com, boatowners.com and boat-yachts.com. In addition, all major
cruise companies, yacht manufacturers and other boating industry players have   
their own websites and many have recently launched or announced plans to launch 
online buying services. For example, Campers & Nicholsons, or C&N, which is     
based overseas with a long-established history and reputation, uses traditional 
means such as relying on referrals, direct mail and high-end catalogue to       
generate leads. However, C&N also has a website, cnconnect.com, but mostly      
relies upon this means of communication to generate calls to brokers. On the    
other hand, Yachtstore generates the majority of its business from its website, 
where a buyer can conduct transactions from yacht purchases to charter          
arrangements without speaking to a live broker. We also compete with yacht      
charter or maintenance companies, as well as yacht manufacturers and dealers.   
Such companies may already maintain or may introduce websites which compete with
ours.                                                                           

Many of these competitors have greater financial resources than we have,        
enabling them to finance acquisition and development opportunities, to pay      
higher prices for the same opportunities or to develop and support their own    
operations. In addition, many of these companies can offer bundled, value-added 
or additional services not provided by us, and may have greater name            
recognition. These companies might be willing to sacrifice profitability to     
capture a greater portion of the market for yacht sales, service or charters, or
pay higher prices than we would for the same expansion and development          
opportunities. Consequently, we may encounter significant competition in our    
efforts to achieve our internal growth objectives.                              

Our Intellectual Property. We do not presently own any patents, trademarks,     
copyrights, licenses, concessions or royalties. Our success may depend in part  
upon our ability to protect our trade name, preserve our trade secrets, obtain  
and maintain patent protection for our technologies, products and processes, and
operate without infringing the proprietary rights of other parties. However, we 
may rely on certain proprietary technologies, trade secrets, and know-how that  
are not patentable. Although we may take action to protect our unpatented trade 
secrets and our proprietary information, in part, by the use of confidentiality 
agreements with our employees, consultants and certain of our contractors, we   
cannot guaranty that                                                            

o    these agreements will not be breached;                                     
o    we would have adequate remedies for any breach; or                         
o    our proprietary trade secrets and know-how will not otherwise become known 
or be independently developed or discovered by competitors.           

We cannot guaranty that our actions will be sufficient to prevent imitation or  
duplication of either our products or services by others or prevent others from 
claiming violations of their trade secrets and proprietary rights.              

We own the Internet domain name www.gysi-online.com. Under current domain name  
registration practices, no one else can obtain an identical domain name, but    
someone might obtain a similar name, or the identical name with a different     
suffix, such as ".org", or with a country designation. The regulation of domain 
names in the United States and in foreign countries is subject to change, and we
could be unable to prevent third parties from acquiring domain names that       
infringe or otherwise decrease the value of our domain names.                   

Government Regulation. Our yacht sales, maintenance and charter operations are  
subject to extensive regulation, supervision, and licensing under various       
federal, state, and local statutes, ordinances, and regulations. For example,   
broker services require sales licenses in most states, and boats under charter  
must adhere to U.S. Coast Guard standards, including safety regulations such as 
those for life-saving equipment, and are subject to various vessel inspection   
and testing requirements. Also, vessel manufacturers must certify yachts and all
recreational powerboats sold in the U.S. meet U.S. Coast Guard standards. These 
certifications specify standards for the design and construction of yachts and  
other powerboats. In addition, yacht safety is subject to federal regulation    
under the Boat Safety Act of 1971. The Boat Safety Act requires boat            
manufacturers to recall products for replacement of parts or components that    
have demonstrated defects affecting safety. In addition, boats manufactured for 
sale in other countries must be certified to meet standards in those            
jurisdictions.                                                                  

5 

DEFM14C
87th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 87th
Certain states have required or are considering requiring a license to operate a
recreational boat. These licensing requirements are not expected to be unduly   
restrictive. They may, however, discourage potential first-time buyers, which   
could hinder our ability to generate revenues. In addition, certain state and   
local governmental authorities are contemplating regulatory efforts to restrict 
boating activities on certain inland bodies of water. While the scope of these  
potential regulations is not yet known, their adoption and enforcement could    
significant reduce our revenues.                                                

Changes in federal and state tax laws, such as an imposition of luxury taxes on 
new boat purchases, also could influence consumers' decisions to purchase       
products we offer and could have a negative effect on our sales. For example,   
during 1991 and 1992, the federal government imposed a luxury tax on new        
recreational boats with sales prices in excess of $100,000, which coincided with
a sharp decline in boating industry sales from the late 1980s compared to 1992. 

Our business or that of our subcontractors may involve the use, handling,       
storage, and contracting for recycling or disposal of hazardous or toxic        
substances or wastes, including environmentally sensitive materials, such as    
motor oil, waste motor oil and filters, transmission fluid, antifreeze, freon,  
waste paint and lacquer thinner, batteries, solvents, lubricants, degreasing    
agents, gasoline, and diesel fuels. Accordingly, we could be subject to         
regulation by federal, state, and local authorities establishing investigation  
and health and environmental quality standards, and liability related thereto,  
and providing penalties for violations of those standards.                      

In particular, the Comprehensive Environmental Response, Compensation and       
Liability Act, or CERCLA or Superfund, imposes joint, strict, and several       
liability on:                                                                   

o    owners or operators of facilities at, from, or to which a release of       
hazardous substances has occurred;                                    
o    parties who generated hazardous substances that were released at such      
facilities; and                                                       
o    parties who transported or arranged for the transportation of hazardous    
substances to such facilities.                                        

A majority of states have adopted Superfund statutes comparable to and, in some 
cases, more stringent than CERCLA. In addition, operations conducted on         
waterways are subject to federal or state laws regulating navigable waters      
(including oil pollution prevention), fish and wildlife, and other matters.     

Additionally, Internet access and online services are not subject to direct     
regulation in the United States. Changes in the laws and regulations relating to
the telecommunications and media industry, however, could impact our business.  
For example, the Federal Communications Commission could begin to regulate the  
Internet and online services industry, which could result in increased costs for
us. The laws and regulations applicable to the Internet and to our services are 
evolving and unclear and could damage our business. There are currently few laws
or regulations directly applicable to access to, or commerce on, the Internet.  
Due to the increasing popularity and use of the Internet, it is possible that   
laws and regulations may be adopted, covering issues such as user privacy,      
defamation, pricing, taxation, content regulation, quality of products and      
services, and intellectual property ownership and infringement. Such legislation
could expose us to substantial liability as well as dampen the growth in use of 
the Internet, decrease the acceptance of the Internet as a communications and   
commercial medium, or require us to incur significant expenses in complying with
any new regulations. The European Union has recently adopted privacy and        
copyright directives that may impose additional burdens and costs on            
international operations.                                                       

Our Research and Development. We are not currently conducting any research and  
development activities, other than the development of our website. We do not    
anticipate conducting such activities in the near future.                       

Employees. As of March 28, 2003, we have no employees other than our officers.  
We anticipate that we will not hire any employees in the next six months, unless
we generate significant revenues. From time-to-time, we anticipate that we will 
use the services of independent contractors and consultants for the various     
services that we provide.                                                       

Facilities. Our executive, administrative and operating offices are located 7710
Hazard Center Drive, Suite E-415, San Diego, California 92108.                  

6 

DEFM14C
88th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 88th
Item 2.  Description of Property.                                               
---------------------------------                                               

Property held by us. As of the date specified in the following table, we held   
the following property:                                                         

==================================== ======================================     
       Property                                    December 31, 2002
------------------------------------ --------------------------------------     
Cash                                                               $97,249      
==================================== ======================================     

Our Facilities. Our executive, administrative and operating office is           
approximately 150 square feet and is located in the personal residence of Mitch 
Keeler, our president and one of our directors. We have complete ownership of   
this office and we do not share this office with any other business. We believe 
that our facilities are adequate for our needs and that additional suitable     
space will be available on acceptable terms as required. We do not own any real 
estate. Mitch Keeler, our president and director, currently provides office     
space to us at no charge. We do not have a written lease or sublease agreement  
and Mr. Keeler does not expect to be paid or reimbursed for providing office    
facilities. Our financial statements reflect, as occupancy costs, the fair      
market value of that space, which is approximately $193 per month. That amount  
has been included in the financial statements as additional capital contribution
by Mr. Keeler.                                                                  

Item 3.  Legal Proceedings.                                                     
---------------------------                                                     

There are no legal actions pending against us nor are any legal actions         
contemplated by us at this time.                                                

Item 4.  Submission of Matters to Vote of Security Holders                      
----------------------------------------------------------                      

Not applicable.                                                                 

 PART II

Item 5.  Market Price for Common Equity and Related Stockholder Matters.        
------------------------------------------------------------------------        

Reports to Security Holders. We are a reporting company with the Securities and 
Exchange Commission, or SEC. The public may read and copy any materials filed   
with the SEC at the SEC's Public Reference Room at 450 Fifth Street N.W.,       
Washington, D.C. 20549. The public may also obtain information on the operation 
of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC      
maintains an Internet site that contains reports, proxy and information         
statements, and other information regarding issuers that file electronically    
with the SEC. The address of that site is http://www.sec.gov.                   

Prices of Common Stock. We participate in the OTC Bulletin Board, an electronic 
quotation medium for securities traded outside of the Nasdaq Stock Market, and  
prices for our common stock are published on the OTC Bulletin Board under the   
trading symbol "GYHT". This market is extremely limited and the prices quoted   
are not a reliable indication of the value of our common stock. As of March 28, 
2003 our common stock has not traded.                                           

We are authorized to issue 50,000,000 shares of $.001 par value common stock,   
each share of common stock having equal rights and preferences, including voting
privileges. As of December 31, 2002, 1,917,277 shares of our common stock were  
issued and outstanding.                                                         

There are 12,827 shares that can be sold pursuant to Rule 144 promulgated       
pursuant to the Securities Act of 1933. There are no outstanding options or     
warrants to purchase, or securities convertible into, shares of our common      
stock. There are no outstanding shares of our common stock that we have agreed  
to register under the Securities Act for sale by security holders. The          
approximate number of holders of record of shares of our common stock is four.  

In February 2002, our registration statement on Form SB-2 to register 750,000   
shares of common stock to be offered for sale by us, and 50,000 shares of common
stock held by our shareholders was declared effective by the SEC. We sold       
634,500 shares of our common stock pursuant to that offering, which resulted in 
proceeds to us of $126,900.                                                     

7 

DEFM14C
89th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 89th
There have been no cash dividends declared on our common stock. Dividends are   
declared at the sole discretion of our Board of Directors.                      

Penny Stock Regulation. Shares of our common stock are subject to rules adopted 
by the Securities and Exchange Commission that regulate broker-dealer practices 
in connection with transactions in "penny stocks". Penny stocks are generally   
equity securities with a price of less than $5.00 (other than securities        
registered on certain national securities exchanges or quoted on the Nasdaq     
system, provided that current price and volume information with respect to      
transactions in those securities is provided by the exchange or system). The    
penny stock rules require a broker-dealer, prior to a transaction in a penny    
stock not otherwise exempt from those rules, deliver a standardized risk        
disclosure document prepared by the Securities and Exchange Commission, which   
contains the following:                                                         

o    a description of the nature and level of risk in the market for penny      
stocks in both public offerings and secondary trading;                
o    a description of the broker's or dealer's duties to the customer and of the
    rights and remedies available to the customer with respect to violation to
such duties or other requirements of securities' laws;                
o    a brief, clear, narrative description of a dealer market, including "bid"  
and "ask" prices for penny stocks and the significance of the spread  
between the "bid" and "ask" price;                                    
o    a toll-free telephone number for inquiries on disciplinary actions;        
o    definitions of significant terms in the disclosure document or in the      
conduct of trading in penny stocks; and                               
o    such other information and is in such form (including language, type, size 
 and format), as the Securities and Exchange Commission shall require by
rule or regulation.                                                   

Prior to effecting any transaction in penny stock, the broker-dealer also must  
provide the customer the following:                                             

o    the bid and offer quotations for the penny stock;                          
o    the compensation of the broker-dealer and its salesperson in the           
transaction;                                                          
o    the number of shares to which such bid and ask prices apply, or other      
  comparable information relating to the depth and liquidity of the market
for such stock; and                                                   
o    monthly account statements showing the market value of each penny stock    
held in the customer's account.                                       

In addition, the penny stock rules require that prior to a transaction in a     
penny stock not otherwise exempt from those rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for 
the purchaser and receive the purchaser's written acknowledgment of the receipt 
of a risk disclosure statement, a written agreement to transactions involving   
penny stocks, and a signed and dated copy of a written suitably statement. These
disclosure requirements may have the effect of reducing the trading activity in 
the secondary market for a stock that becomes subject to the penny stock rules. 
Holders of shares of our common stock may have difficulty selling those shares  
because our common stock will probably be subject to the penny stock rules.     

Item 6.  Management's Discussion and Analysis of Financial Condition or Plan    
of Operation.                                                                   
------------------------------------------------------------------------------- 

This following information specifies certain forward-looking statements of      
management of the company. Forward-looking statements are statements that       
estimate the happening of future events are not based on historical fact.       
Forward-looking statements may be identified by the use of forward-looking      
terminology, such as "may", "shall", "will", "could", "expect", "estimate",     
"anticipate", "predict", "probable", "possible", "should", "continue", or       
similar terms, variations of those terms or the negative of those terms. The    
forward-looking statements specified in the following information have been     
compiled by our management on the basis of assumptions made by management and   
considered by management to be reasonable. Our future operating results,        
however, are impossible to predict and no representation, guaranty, or warranty 
is to be inferred from those forward-looking statements.                        

The assumptions used for purposes of the forward-looking statements specified in
the following information represent estimates of future events and are subject  
to uncertainty as to possible changes in economic, legislative, industry, and   
other circumstances. As a result, the identification and interpretation of data 
and other information and their use in developing and selecting assumptions from
and among reasonable alternatives require the exercise of judgment. To the      
extent that the assumed events do not occur, the outcome may vary substantially 
from anticipated or projected results, and, accordingly, no opinion is expressed
on the achievability of those forward-looking statements. No assurance can be   
given that any of the assumptions relating to the forward-looking statements    
specified in the following information are accurate, and we assume no obligation
to update any such forward-looking statements.                                  

8 

DEFM14C
90th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 90th
Liquidity and Capital Resources. We had cash of $97,249 as at December 31, 2002.
We believe that our available cash is sufficient to pay our day-to-day          
expenditures. Our total current assets and total assets were approximately      
$97,249 as at December 31, 2002. In February 2002, our registration statement on
Form SB-2 to register 750,000 shares of common stock to be offered for sale by  
us at $0.20 per share, and 50,000 shares of common stock held by our            
shareholders was declared effective by the SEC. As of March 28, 2003, we have   
sold 634,500 shares of common stock for proceeds of $126,900, and we have     
terminated the offering.                                                        

Our current liabilities were $10,434 as at December 31, 2002, and were          
represented by accounts payable and accrued expenses. We had no other           
liabilities and no long term commitments or contingencies as at December 31,    
2002.                                                                           

Results of Operations.                                                          

Revenue. For the year ended December 31, 2002, we realized revenues of $87,769. 
This is in comparison to the period from February 21, 2001, our date of         
inception, to December 31, 2001, when we realized revenues of approximately     
$24,685 from providing charter and yacht management services. We hope to        
continue to generate more revenues as we expand our customer base. Our cost of  
revenues for the year ended December 31, 2002 was $49,674, making our gross     
operating margin $38,095. This is in comparison to our cost of revenues which   
were $15,857 from the period from February 21, 2001, our date of inception, to  
December 31, 2002. Therefore, our gross operating margin from February 21, 2001,
our date of inception, through December 31, 2002, was $8,828. Because we        
increased the scope and volume of our operations, we had greater costs of       
generating revenues, but increased our gross operating margin as well.          

Operating Expenses. For the year ended December 31, 2002, we had $77,482 in     
total operating expenses, compared to the period from February 21, 2001, our    
date of inception, through December 31, 2002, where our total operating expenses
were approximately $48,534. For the year ended December 31, 2002, the majority  
of those expenses were represented by legal and professional fees of $64,768. We
also had advertising expenses of $350, occupancy expenses of $2,340, office     
supplies and expense of $2,112, outside services expenses of $6,000, and $1,912 
for telephone and utilities. Therefore, for the year ended December 31, 2002,   
our loss from operations was $39,387. We also had $25,076 in other expenses,    
which resulted in a net loss of $64,463 before provision for income taxes and   
our net loss a total of $65,263. By comparison, for the period from our         
inception on February 21, 2001 through December 31, 2002, we experienced a net  
loss of approximately $39,706, plus $54 in other income, for a net loss of      
$39,652. We anticipate that we will continue to incur significant general and   
administrative expenses.                                                        

Our Plan of Operation for the Next Twelve Months. In our management's opinion,  
to effectuate our business plan in the next twelve months, the following events 
should occur or we should reach the following milestones in order for us to     
become profitable:                                                              

1.       We must conduct marketing activities to promote our services and obtain
         additional customers to increase our customer base. We currently market
our business primarily through referrals and our website. Our 
   president, Mitch Keeler, had a large foundation of business and a
strong reputation in the industry, which we believe has been  
         transferred to us. We believe that referrals comprise approximately 70%
of our business and business generated from our website is    
  approximately 30% of our business. Future marketing will include
articles and advertisements in industry publications, such as:
     Yachting, Motor Boating, and Sea. Within six months, we should have
increased our customer base.                                  

2.       We must develop relationships with various parties including yacht     
owners, sellers, brokers, lessors, charter agents, maintenance
    suppliers, industry professionals and specialists, captains, crew,
        engineers, designers, insurance agents, legal advisors, and government
    agents. We believe that these parties will help supply some of our
         services and they may become sources of referrals. Within six to twelve
      months, we should have developed relationships with several of those
      parties who provide some of the services that we offer as well as be
sources of referrals.                                         

9 

DEFM14C
91st Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 91st
3.       We must develop our website so that it will function as a means for    
        global clients to access our range of services and communicate with us
       for support services as well as for use as a marketing tool to inform
         and persuade customers to engage our services. We intend to develop our
         website so that we utilize a database set up on the backend, which will
  capture customer information and allow us to process information
     concerning our clients and potential clients. One objective for our
      website is to interact with clients in "real time" so that they feel
  that their needs are being taken care of professionally and on a
       personal level. Within six to twelve months, we should have developed
our website to provide those services.                        

We anticipate that we will use the funds raised from our offering and revenues  
generated to fund marketing activities and for working capital. Our failure to  
market and promote our services will hinder our ability to increase the size of 
our operations and generate additional revenues.                                

We have cash of $97,249 as of December 31, 2002. In the opinion of management,  
available funds will satisfy our working capital requirements for the next      
twelve months. Our forecast for the period for which our financial resources    
will be adequate to support our operations involves risks and uncertainties and 
actual results could fail as a result of a number of factors. In order to expand
our operations, we do not currently anticipate that we will need to raise       
additional capital in addition to the funds raised in this offering.            

We are not currently conducting any research and development activities, other  
than the development of our website. We do not anticipate conducting such       
activities in the near future. In the event that we expand our customer base,   
then we may need to hire additional employees or independent contractors as well
as purchase or lease additional equipment.                                      

Item 7.  Financial Statements                                                   
-----------------------------                                                   

 GLOBAL YACHT SERVICES, INC.

 CONSOLIDATED FINANCIAL STATEMENTS

 DECEMBER 31, 2002

10

DEFM14C
92nd Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 92nd
 GLOBAL YACHT SERVICES, INC.

CONTENTS

                                                                          PAGE
                                                                          ----
Consolidated Financial Statements                                               

   Independent Auditors' Report                                           12

   Consolidated Balance Sheet                                             13

   Consolidated Statements of Operations                                  14

   Consolidated Statements of Changes in Stockholders' Equity             15

   Consolidated Statements of Cash Flows                                  16

   Notes to Consolidated Financial Statements                             17

11

DEFM14C
93rd Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 93rd
INDEPENDENT AUDITORS' REPORT
----------------------------

To the Stockholders of                                                          
Global Yacht Services, Inc.                                                     

We have audited the accompanying consolidated balance sheet of Global Yacht     
Services, Inc. and subsidiary as of December 31, 2002, and the related          
consolidated statements of operations, changes in stockholders' equity, and cash
flows for the year then ended. 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 audit. The financial statements of      
Global Yacht Services, Inc. and subsidiary for the period February 21, 2001     
(inception) through December 31, 2001, were audited by other auditors whose     
report dated February 8, 2002, expressed an unqualified opinion on those        
statements.                                                                     

We conducted our audit in accordance with auditing standards generally accepted 
in the United States of America. Those standards require that we plan and       
perform the audit 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 amounts and disclosures in the 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 audit provides a          
reasonable basis for our opinion.                                               

In our opinion, the financial statements referred to above present fairly, in   
all material respects, the financial position of Global Yacht Services, Inc. and
subsidiary as of December 31, 2002 and the results of its operations and its    
cash flows for the year then ended in conformity with accounting principles     
generally accepted in the United States of America.                             

                                                                HALL & COMPANY
                                                            Irvine, California

12

DEFM14C
94th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 94th
 GLOBAL YACHT SERVICES, INC.

CONSOLIDATED BALANCE SHEET

 DECEMBER 31, 2002

ASSETS
------
Current assets                                                                  
  Cash                                                           $      97,249
                                                                 -------------

    Total current assets                                                97,249
                                                                 -------------

      Total assets                                               $      97,249
                                                                 =============

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------

Current liabilities                                                             
  Accounts payable and accrued expenses                          $      10,434
                                                                 -------------

   Total current liabilities                                          10,434

Stockholders' Equity                                                            
Common stock, $.001 par value;                                            
Authorized shares-- 50,000,000                                        
    Issued and outstanding shares-- 1,917,277                            1,917
  Additional paid-in-capital                                           189,813
   Accumulated deficit                                                 (104,915)
                                                                 -------------

    Total stockholders' equity                                          86,815
                                                                 -------------

      Total liabilities and stockholders' equity                 $      97,249
                                                                 =============

 See accompanying notes to consolidated financial statements

13

DEFM14C
95th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 95th
 GLOBAL YACHT SERVICES, INC.

 CONSOLIDATED STATEMENTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2002 AND FEBRUARY 21, 2001 (INCEPTION)
 THROUGH DECEMBER 31, 2001

                                                                [Download Table]

                                                                              
                                                    2002             2001     
                                                -------------   ------------- 

REVENUES                                        $      87,769   $      24,685 

COST OF REVENUES                                       49,674          15,857 
                                                -------------   ------------- 

GROSS MARGIN                                           38,095           8,828 

OPERATING EXPENSES                                                            
   Advertising                                            350           1,121 
   Legal and professional fees                         64,768          29,578 
   Occupancy                                            2,340           1,990 
   Office supplies and expense                          2,112           4,063 
   Outside services                                     6,000          10,550 
   Telephone and utilities                              1,912           1,232 
                                                -------------   ------------- 

     Total operating expenses                          77,482          48,534 
                                                -------------   ------------- 

LOSS FROM OPERATIONS                                  (39,387)        (39,706)

OTHER INCOME (EXPENSE)                                (25,076)             54 
                                                -------------   ------------- 

LOSS BEFORE PROVISION FOR INCOME TAXES                (64,463)        (39,652)

PROVISION FOR INCOME TAX EXPENSE (BENEFIT)                800             --- 
                                                -------------   ------------- 

NET LOSS/COMPREHENSIVE LOSS                     $     (65,263)  $     (39,652)
                                                =============   ============= 

NET LOSS/COMPREHENSIVE LOSS PER COMMON SHARE--                                
 BASIC AND DILUTED                                                            
                                                $        (.04)  $        (.03)
                                                =============   ============= 

WEIGHTED AVERAGE OF COMMON SHARES-- BASIC AND                                 
 DILUTED                                                                      
                                                    1,691,300       1,199,450 
                                                =============   ============= 

See accompanying notes to consolidated financial statements 

14

DEFM14C
96th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 96th
 GLOBAL YACHT SERVICES, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

YEAR ENDED DECEMBER 31, 2002 AND FEBRUARY 21, 2001 (INCEPTION)
 THROUGH DECEMBER 31, 2001

                                                        [Enlarge/Download Table]

                                                                                                                
                                             COMMON STOCK                                                       
                                         ---------------------        PAID-IN              ACCUMULATED          
                                         SHARES         AMOUNT        CAPITAL        DEFICIT         TOTAL      
                                     ------------    ------------  -------------  -------------   ------------- 
Balance, December 31, 2001              1,282,777    $      1,283  $      61,207  $     (39,652)  $      22,838 

Issuance of common  stock,  May 10,                                                                             
   2002                                   634,500             634        126,266            ---         126,900 

Cost of occupancy                                                                                               
   contributed by officer                     ---             ---          2,340            ---           2,340 

Net loss/comprehensive loss                   ---             ---            ---        (65,263)        (65,263)
                                     ------------    ------------  -------------  -------------   ------------- 

Balance, December 31, 2002              1,917,277    $      1,917  $     189,813  $    (104,915)  $      86,815 
                                     ============    ============  =============  =============   ============= 

 See accompanying notes to consolidated financial statements

15

DEFM14C
97th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 97th
 GLOBAL YACHT SERVICES, INC.

 CONSOLIDATED STATEMENTS OF CASH FLOWS

YEAR ENDED DECEMBER 31, 2002 AND FEBRUARY 21, 2001 (INCEPTION)
 THROUGH DECEMBER 31, 2001

                                                        [Enlarge/Download Table]

                                                                                                    
                                                                          2002             2001     
                                                                      -------------   ------------- 
CASH FLOWS FROM OPERATING ACTIVITIES                                                                
   Net loss                                                           $     (65,263)  $     (39,652)
   Adjustments to reconcile net income to net cash used in operating                                
     activities                                                                                     
       Occupancy costs contributed by officer                                 2,340           1,990 
       Changes in operating assets and liabilities                                                  
         Increase in accounts payable and accrued expenses                    7,145           3,289 
                                                                      -------------   ------------- 

           Net cash provided/(used) by operating activities                 (55,778)        (34,373)

CASH FLOWS FROM FINANCING ACTIVITIES                                                                
   Proceeds from issuance of common stock                                   126,900          60,500 
                                                                      -------------   ------------- 

           Net cash provided by financing activities                        126,900          60,500 
                                                                      -------------   ------------- 

NET INCREASE IN CASH                                                         71,122          26,127 

CASH, beginning of period                                                    26,127             --- 
                                                                      -------------   ------------- 

CASH, end of period                                                   $      97,249   $      26,127 
                                                                      =============   ============= 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION                                                    
   Income taxes paid                                                  $         800   $         --- 
                                                                      =============   ============= 
   Interest paid                                                      $         ---   $         --- 
                                                                      =============   ============= 

 See accompanying notes to consolidated financial statements

16

DEFM14C
98th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 98th
 GLOBAL YACHT SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2002 AND 2001

Note 1 - BUSINESS DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES               

Business Description - Global Yacht Services, Inc. and its subsidiary (the      
"Company") provides chartering, delivery, maintenance and consulting services to
luxury yacht owners and manufacturers. The Company's President is a United      
States Coast Guard certified captain. The Company was incorporated in the state 
of Nevada on February 21, 2001 and is headquartered in San Diego, California.   

Principles of Consolidation - The accompanying consolidated financial statements
include the accounts of Global Yacht Services, Inc. and its majority owned      
subsidiary Global Yacht Services, Ltd. (collectively, the "Company"). All       
significant intercompany accounts and transactions have been eliminated, if any.

Cash Equivalents - For purposes of the balance sheet and statement of cash      
flows, the Company considers all highly liquid debt instruments purchased with  
maturity of three months or less to be cash equivalents.                        

Receivables - Receivables, if any, represent valid claims against debtors for   
sales or other charges arising on or before the balance-sheet date and are      
reduced to their estimated net realizable value. An allowance for doubtful      
accounts is computed as a percentage (%) of sales.                              

Fair Value of Financial Instruments - The carrying amount of the Company's      
financial instruments, which includes cash and accounts payable and accrued     
expenses approximate their fair value due to the short period to maturity of    
these instruments.                                                              

Recognition of Revenue - The Company records revenues of its services when they 
are complete, fee is fixed and determinable, and collectibility is reasonably   
assured. The Company will also provide an allowance for returns when experience 
is established. Cost of goods sold consists of fuel, docking fees, supplies and 
cost of services and related expenses of personnel used.                        

Advertising Costs - The Company expenses all advertising costs as incurred.     

Income Taxes - The Company recognizes deferred tax assets and liabilities based 
on differences between the financial reporting and tax bases of assets and      
liabilities using the enacted tax rates and laws that are expected to be in     
effect when the differences are expected to be recovered. The Company provides a
valuation allowance for deferred tax assets for which it does not consider      
realization of such assets to be more likely than not.                          

Net Loss per Common Share - The Company has adopted the provisions of Statement 
of Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128").   
SFAS 128 requires the reporting of basic and diluted earnings/loss per share.   
Basic loss per share is calculated by dividing net loss by the weighted average 
number of outstanding common shares during the period.                          

17

DEFM14C
99th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 99th
 GLOBAL YACHT SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2002 AND 2001

Note 1 - BUSINESS DESCRIPTION AND SIGNIFICANT ACCOUNTING POLICIES (Continued)   

Comprehensive Loss - The Company applies Statement of Financial Accounting      
Standards No. 130, "Reporting Comprehensive Income" ("SFAS 130"). SFAS 130      
establishes standards for the reporting and display of comprehensive income or  
loss, requiring its components to be reported in a financial statement that is  
displayed with the same prominence as other financial statements. For the period
ended December 31, 2001, the Company had no other components of its             
comprehensive income or loss other than the net loss as reported on the         
consolidated statement of operations.                                           

Accounting Estimates - The preparation of financial statements in conformity    
with generally accepted accounting principles in the United States of America   
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. Actual results could differ  
from those estimates.                                                           

NOTE 2 - CONTINGENCIES                                                          

As shown in the accompanying consolidated financial statements, the Company has 
incurred a net operating loss of $104,915 since inception on February 21, 2001  
through December 31, 2002. Management believes its existing cash resources of   
approximately $96,000 will be sufficient over the next twelve months to continue
the expansion of its business plan and operations.                              

The Company occupies office space within the officer's residence. Accordingly,  
occupancy costs have been allocated to the Company based on the square foot     
percentage assumed multiplied by the officer's total monthly costs. These       
amounts are shown in the accompanying consolidated statements of operations for 
years ended December 31, 2002 and 2001, respectively.                           

NOTE 3 - ACCRUED EXPENSES                                                       

Accrued Wages and Compensated Absences - The Company currently does not have any
employees. The majority of development costs and services have been provided to 
the Company by the officers and outside, third party vendors. As such, there is 
no accrual for wages or compensated absences as of December 31, 2002 and 2001.  

NOTE 4 - COMMON STOCK                                                           

On February 22, 2001, the Company issued 1,000,000 shares of its common stock to
its officer and founder for $10,000 cash to initially capitalize the Company.   
Since there was no readily available market value at the time the shares were   
issued, the value of $0.01 per share was considered as a reasonable estimate of 
fair value between the officer and the Company.                                 

18

DEFM14C
100th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 100th
 GLOBAL YACHT SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2002 AND 2001

NOTE 4 - COMMON STOCK (Continued)                                               

On May 4, 2001, the Company issued 5,000 shares of its common stock to an       
officer for $500 cash. Since there was no readily available market value at the 
time the shares were issued, the value of $0.10 per share was considered as a   
reasonable estimate of fair value between the office and the Company.           

On May 31, 2001, the Company completed a "best efforts" offering of its common  
stock pursuant to the provisions of Section 5 of the Securities Act of 1933 and 
Regulation S promulgated by the Securities and Exchange Commission. In          
accordance with the Private Placement Memorandum Offering, the Company issued   
277,777 shares of its common stock at $0.18 per share for a total of $50,000.   

On May 10, 2002, the Company issued 634,500 shares of its common stock at a     
selling price of $0.20 per share pursuant to its prospectus as filed with its   
registration statement on Form SB-2. The net proceeds were $126,900.            

NOTE 5 - INCOME TAXES                                                           

At December 31, 2002, the Company has available for federal income tax purposes 
a net operating loss carryforward of approximately $104,915, expiring at various
dates through 2022, that may be used to offset future taxable income. Therefore,
the provision for income taxes includes only the minimum state franchise tax of 
$800.                                                                           

In addition, the Company has deferred tax assets of approximately $24,000 at    
December 31, 2002. The Company has not recorded a benefit from its net operating
loss carryforward because realization of the benefit is uncertain and,          
therefore, a valuation allowance of ($24,000) has been provided for the deferred
tax assets.                                                                     

NOTE 6 - RELATED PARTY TRANSACTIONS                                             

On February 22, 2001 and May 4, 2001, the Company issued 1,000,000 and 5,000    
shares of its common stock, respectively to it current officers for cash as     
described in Note 4.                                                            

The Company occupies office space provided by its officer. Accordingly,         
occupancy costs have been allocated to the Company based on the square foot     
percentage assumed multiplied by the officer's total monthly costs. These       
amounts are shown in the accompanying consolidated statement of operations for  
the year ended December 31, 2002 and for the period February 21, 2001           
(inception) through December 31, 2001 and are considered additional             
contributions of capital by the officer and the Company.                        

19

DEFM14C
101st Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 101st
The financial statements required by Item 7 are presented in the following      
order:                                                                          

Item 8.  Changes in and Disagreements with Accountants.                         
-------------------------------------------------------                         

On November 11, 2002, our Board of Directors voted to replace our independent   
accountant, Quintanilla Accountancy Corporation ("Quintanilla"). Effective as of
November 11, 2002, our new independent accountant is Hall & Company, certified  
public accountants ("Hall & Company"). We retained the accounting firm of Hall &
Company on November 11, 2002, to make an examination of our financial statements
for the 2002 fiscal year. We authorized Quintanilla to respond fully to any     
inquiries from Hall & Company and to make its work papers available to Hall &   
Company.                                                                        

The reports of Quintanilla from February 21, 2001, the date of our inception,   
through November 11, 2002, did not contain any adverse opinion, disclaimer of   
opinion, or qualification or modification as to the certainty, audit scope or   
accounting principles. During February 21, 2001 through November 11, 2002, there
were no disagreements between us and Quintanilla on any matter of accounting    
principles or practices, financial statement disclosure, or auditing scope or   
procedure. In addition, during February 21, 2001 through November 11, 2002,     
there were no "reportable events" within the meaning of Item 304 of the         
Securities and Exchange Commission's Regulation S-K.                            

PART III

Item 9.  Directors, Executive Officers, Promoters and Control Persons.          
----------------------------------------------------------------------          

Executive Officers and Directors. We are dependent on the efforts and abilities 
of certain of our senior management. The interruption of the services of key    
management could hinder our ability to conduct operations and complete future   
development, if suitable replacements are not promptly obtained. We hope that we
will enter into employment agreements with Mitch Keeler and Melissa Day.        
Although we do not know the terms of those proposed agreements, we hope to enter
into an employment agreement with Mitch Keeler and Melissa Day with a term of at
least one year with compensation contingent on us becoming profitable. We cannot
guaranty that each executive will remain with us during or after the term of his
or her employment agreement. In addition, our success depends, in part, upon our
ability to attract and retain other talented personnel. Although we believe that
our relations with our personnel are good and that we will continue to be       
successful in attracting and retaining qualified personnel, we cannot guaranty  
that we will be able to continue to do so. Our officers and directors will hold 
office until their resignations or removal.                                     

Our directors and principal executive officers are as specified on the following
table:                                                                          

=============================== =============== ================================
Name                                 Age        Position                        
------------------------------- --------------- --------------------------------
Mitch Keeler                          45        President and Director          
------------------------------- --------------- --------------------------------
Melissa Day                           34        Secretary, Treasurer, Director  
=============================== =============== ================================

Mitch Keeler. Mr. Keeler is our president and one of our directors since our    
inception. Mr. Keeler is our principal executive officer and is responsible for 
our day-to-day operations. Mr. Keeler currently devotes approximately 40 hours  
per week to our business. Mr. Keeler has been a licensed yacht captain for the  
past twenty years. He has a 100 Ton Master license, and is qualified for motor  
and sail operations and commercial assistance towing. He also has completed the 
following courses: U.S. Coast Guard Advanced Navigation; the Shipboard          
Firefighting School, Coast Guard Certified Course at Mobile, Alabama and the    
Maritime Consortium Compliance with U.S. Coast Guard Drug Testing Regulations.  
From 1997 to the present, Mr. Keeler has been the owner and operator of         
Tlaquepaque Yacht Charters, managing the crew and performing routine maintenance
on a cruising route between Baja California, Mexico to Santa Barbara, CA.       
Tlaquepaque Yacht Charters' current operations include the rental of Mr.        
Keeler's yacht, Tlaquepaque, to other yacht charter service companies. Mr.      
Keeler currently devotes less than two hours per month on the business of       
Tlaquepaque Yacht Charters. Also from 1997 to the present, he has served as a   
tugboat captain for West Coast Tugs, where he moves various vessels and barges, 
works closely with pilots, and trains the crew. From 1994 to 1997, he served as 
the operations manager and captain for San Diego Harbor Excursions, conducting  
both ferry and dinner charters as the Captain of the Spirit of San Diego, a 120'
Blaunt 600 passenger charter yacht. He also served as the manager of charters,  
performing maintenance, Coast Guard inspections, and personnel and deliveries.  
Prior to 1994, he was the captain of vessels ranging between 65' and 120', and  
has experience including interisland cruising in Hawaii, returning a vessel to  
Newport Beach from Kauai, Pacific yacht racing, long range cruising, conducting 
sport fishing charters, dinner cruises and whale watching trips. Mr. Keeler has 
not been a director of any other reporting company.                             

Melissa Day. Ms. Day has been our secretary and treasurer since our inception   
and was appointed one of our directors in August 2001. Ms. Day is our principal 
financial and accounting officer and is responsible for all of our financial    
reporting and record keeping. Ms. Day currently devotes approximately 40 hours  
per week to our business. Ms. Day has experience in the charter industry and has
experience in advertising, web site design, graphic art and marketing. Ms. Day  
is a Microsoft Certified Professional in Windows NT, and has experience in      
network administration, design and installation. From 1999 to 2000, Ms. Day was 
a technical marketing director for Technology Answers, and in 1999 a Marketing  
Director of Information Systems for CFS Management. She was the Assistant NT    
Systems Administrator from 1998 to 1999 for Centrax Corporation, and from 1996  
to 1998 was the owner of Business Systems Consulting, providing consulting      
services for technical-based business. She has a Bachelor of Science degree in  
business administration from the University of Southern California, with an     
emphasis in marketing and entrepreneurship, which she earned in 1993, and has an
Associates degree in Computer Applications and Networks from Coleman College in 
La Mesa, California. Ms. Day is not an officer or director of any other         
reporting company.                                                              

20

DEFM14C
102nd Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 102nd
There is no family relationship between any of our officers or directors. There 
are no orders, judgments, or decrees of any governmental agency or              
administrator, or of any court of competent jurisdiction, revoking or suspending
for cause any license, permit or other authority to engage in the securities    
business or in the sale of a particular security or temporarily or permanently  
restraining any of our officers or directors from engaging in or continuing any 
conduct, practice or employment in connection with the purchase or sale of      
securities, or convicting such person of any felony or misdemeanor involving a  
security, or any aspect of the securities business or of theft or of any felony.
Nor are any of the officers or directors of any corporation or entity affiliated
with us so enjoined.                                                            

Our directors will serve until the next annual meeting of stockholders. Our     
executive officers are appointed by our Board of Directors and serve at the     
discretion of the Board of Directors.                                           

Section 16(a) Beneficial Ownership Reporting Compliance. Our officers,          
directors, and principal shareholders have filed all reports required to be     
filed on, respectively, a Form 3 (Initial Statement of Beneficial Ownership of  
Securities), a Form 4 (Statement of Changes of Beneficial Ownership of          
Securities), or a Form 5 (Annual Statement of Beneficial Ownership of           
Securities).                                                                    

Item 10.  Executive Compensation                                                
--------------------------------                                                

Any compensation received by our officers, directors, and management personnel  
will be determined from time to time by our Board of Directors. Our officers,   
directors, and management personnel will be reimbursed for any out-of-pocket    
expenses incurred on our behalf.                                                

Summary Compensation Table. The table set forth below summarizes the annual and 
long-term compensation for services in all capacities to us payable to our chief
executive officer and our other executive officers during the year ended        
December 31, 2002. Our Board of Directors may adopt an incentive stock option   
plan for our executive officers which would result in additional compensation.  

                                                        [Enlarge/Download Table]

                                                                                                                         
==================================== ======= ============= ============= ===================== ==========================
Name and Principal Position           Year      Annual      Bonus ($)        Other Annual       All Other Compensation   
                                              Salary ($)                   Compensation ($)                              
------------------------------------ ------- ------------- ------------- --------------------- --------------------------
Mitch Keeler - president             2002        None          None              None                    None            
------------------------------------ ------- ------------- ------------- --------------------- --------------------------
Melissa Day - secretary, treasurer   2002        None          None              None                    None            
==================================== ======= ============= ============= ===================== ==========================

Compensation of Directors.  Our current directors are also our employees        
and receive no extra compensation for their service on our board of directors.  

Item 11. Security Ownership of Certain Beneficial Owners and Management.        
------------------------------------------------------------------------        

The following table sets forth certain information regarding the beneficial     
ownership of our common stock as of March 28, 2003, by each person or entity    
known by us to be the beneficial owner of more than 5% of the outstanding shares
of common stock, each of our directors and named executive officers, and all of 
our directors and executive officers as a group.                                

                                                        [Enlarge/Download Table]

                                                                                                                                   
Title of Class           Name of Beneficial Owner                              Amount and Nature of           Percent of Class     
                                                                               Beneficial Owner                                    
------------------------ ----------------------------------------------------- ------------------------------ ---------------------

Common Stock             Mitch Keeler                                          1,000,000 shares, president,          52.16%        
                         7710 Hazard Center Drive, Suite E-415, San Diego,               director                                  
                         California 92108                                                                                          

Common Stock             Melissa Day                                             5,000 shares, secretary,            0.26%         
                         7710 Hazard Center Drive, Suite E-415, San Diego,          treasurer, director                            
                         California 92108                                                                                          

Common Stock             Flexgene Corp.                                               180,555 shares                 9.42%         
                         The Mill Mall, Barkers                                                                                    
                         P.O. Box 62                                                                                               
                         Roadtown, Tortola, BVI                                                                                    

Common Stock             Carib-Ventures Inc.                                           97,222 shares                 5.07%         
                         Caribbean Place, Suite #3                                                                                 
                         P.O. Box 599                                                                                              
                         Providenciales, Turks & Caicos Islands, BWI                                                               

Common Stock             All directors and named executive officers as a             1,005,000 shares                52.42%        
                         group                                                                                                     

The officer, director and shareholder of Flexgene Corp. is Martin Regan. The    
director of Carib-Ventures Inc. is Sterling Directors Ltd. and Keith Burant. The
shareholder of Carib-Ventures Inc. is Meridian Trust Company Limited, which is  
controlled by Keith Burant.                                                     

21

DEFM14C
103rd Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 103rd
Beneficial ownership is determined in accordance with the rules of the          
Securities and Exchange Commission and generally includes voting or investment  
power with respect to securities. In accordance with Securities and Exchange    
Commission rules, shares of our common stock which may be acquired upon exercise
of stock options or warrants which are currently exercisable or which become    
exercisable within 60 days of the date of the table are deemed beneficially     
owned by the optionees. Subject to community property laws, where applicable,   
the persons or entities named in the table above have sole voting and investment
power with respect to all shares of our common stock indicated as beneficially  
owned by them.                                                                  

Item 12.  Certain Relationships and Related Transactions.                       
---------------------------------------------------------                       

Related party transactions.                                                     

Mitch Keeler, our president and director, currently provides office space to us 
at no charge. Mr. Keeler does not expect to be paid or reimbursed for providing 
office facilities. Our financial statements reflect, as occupancy costs, the    
fair market value of that space, which is approximately $193 per month. That    
amount has been included in the financial statements as additional capital      
contribution by Mr. Keeler.                                                     

Our president, Mitch Keeler, owns one yacht, Tlaquepaque, which is used for our 
charter services. Mr. Keeler does not expect to be paid or reimbursed for       
providing the use of his yacht.                                                 

In February 2001, we issued 1,000,000 shares of our common stock to Mitch       
Keeler, our president and one of our directors, in exchange for $10,000, or     
$0.01 per share.                                                                

In May 2001, we issued 5,000 shares of our common stock to Melissa Day, our     
secretary, treasurer and one of our directors, in exchange for $500, or $0.10   
per share.                                                                      

With regard to any future related party transaction, we plan to fully disclose  
any and all related party transactions, including, but not limited to, the      
following:                                                                      

o    disclosing such transactions in prospectuses where required;               
o    disclosing in any and all filings with the Securities and Exchange         
Commission, where required;                                           
o    obtaining disinterested directors consent; and                             
o    obtaining shareholder consent where required.                              

Item 13.  Exhibits and Reports on Form 8-K                                      
------------------------------------------                                      

(a) Exhibit No.                                                                 
---------------                                                                 

3.1                        Articles of Incorporation*                           

3.2                        Certificate of Amendment to Articles of              
Incorporation*            

3.3                        Bylaws*                                              

* Included in the registration statement on Form SB-2 filed on September 21,    
2001.                                                                           

(b) Reports on Form 8-K                                                         
-----------------------                                                         

No reports on Form 8-K were filed during the last quarter of the period covered 
by this annual report on Form 10-KSB, except for the following:                 

On November 12, 2002, we filed a report on Form 8-K to report our change in     
accountant.                                                                     

22

DEFM14C
104th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 104th
SIGNATURES                                                                      

Pursuant to the requirements of the Securities Exchange Act of 1934, the        
Registrant has duly caused this report to be signed on its behalf by the        
undersigned in the City of San Diego, on March 28, 2003.                        

          Global Yacht Services, Inc.,
  a Nevada corporation

         By:      /s/   Mitch Keeler
                                       ---------------------------------------
            Mitch Keeler
                              Its:     president, principal executive officer,
        director

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.                                                                

By:      /s/   Mitch Keeler                                   March 28, 2003    
--------------------------------------------                  
Mitch Keeler                                                  
Its:     president, principal executive officer, director                       

By:      /s/  Melissa Day                                     March 28, 2003    
--------------------------------------------                  
Melissa Day                                                   
Its:     secretary, treasurer, director                                         

23

DEFM14C
105th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 105th
CERTIFICATIONS                                                                  
--------------                                                                  

I, Mitch Keeler, certify that:                                                  

1. I have reviewed this annual report on Form 10-KSB of Global Yacht Services,  
Inc.;                                                                           

2. Based on my knowledge, this annual report does not contain any untrue        
statement of a material fact or omit to state a material fact necessary to make 
the statements made, in light of the circumstances under which such statements  
were made, not misleading with respect to the period covered by this annual     
report;                                                                         

3. Based on my knowledge, the financial statements, and other financial         
information included in this annual report, fairly present in all material      
respects the financial condition, results of operations and cash flows of the   
registrant as of, and for, the periods presented in this annual report;         

4. The registrant's other certifying officers and I are responsible for         
establishing and maintaining disclosure controls and procedures (as defined in  
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:              

    a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
       consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this annual report is
being prepared;                                               

        b) evaluated the effectiveness of the registrant's disclosure controls
        and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and               

c) presented in this annual report our conclusions about the  
      effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                         

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of 
registrant's board of directors (or persons performing the equivalent           
functions):                                                                     

        a) all significant deficiencies in the design or operation of internal
   controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have 
     identified for the registrant's auditors any material weaknesses in
internal controls; and                                        

    b) any fraud, whether or not material, that involves management or
 other employees who have a significant role in the registrant's
internal controls; and                                        

6. The registrant's other certifying officers and I have indicated in this      
annual report whether there were significant changes in internal controls or in 
other factors that could significantly affect internal controls subsequent to   
the date of our most recent evaluation, including any corrective actions with   
regard to significant deficiencies and material weaknesses.                     

Date: March 28, 2003                                                            

/s/ Mitch Keeler                                                                
-----------------------                                                         
Mitch Keeler                                                                    
Chief Executive Officer                                                         

24

DEFM14C
106th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 106th
CERTIFICATIONS                                                                  
--------------                                                                  
I, Melissa Day, certify that:                                                   

1. I have reviewed this annual report on Form 10-KSB of Global Yacht Services,  
Inc.;                                                                           

2. Based on my knowledge, this annual report does not contain any untrue        
statement of a material fact or omit to state a material fact necessary to make 
the statements made, in light of the circumstances under which such statements  
were made, not misleading with respect to the period covered by this annual     
report;                                                                         

3. Based on my knowledge, the financial statements, and other financial         
information included in this annual report, fairly present in all material      
respects the financial condition, results of operations and cash flows of the   
registrant as of, and for, the periods presented in this annual report;         

4. The registrant's other certifying officers and I are responsible for         
establishing and maintaining disclosure controls and procedures (as defined in  
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:              

    a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
       consolidated subsidiaries, is made known to us by others within those
         entities, particularly during the period in which this annual report is
being prepared;                                               

        b) evaluated the effectiveness of the registrant's disclosure controls
        and procedures as of a date within 90 days prior to the filing date of
this annual report (the "Evaluation Date"); and               

c) presented in this annual report our conclusions about the  
      effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;                         

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation, to the registrant's auditors and the audit committee of 
registrant's board of directors (or persons performing the equivalent           
functions):                                                                     

        a) all significant deficiencies in the design or operation of internal
   controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have 
     identified for the registrant's auditors any material weaknesses in
internal controls; and                                        

    b) any fraud, whether or not material, that involves management or
 other employees who have a significant role in the registrant's
internal controls; and                                        

6. The registrant's other certifying officers and I have indicated in this      
annual report whether there were significant changes in internal controls or in 
other factors that could significantly affect internal controls subsequent to   
the date of our most recent evaluation, including any corrective actions with   
regard to significant deficiencies and material weaknesses.                     

Date: March 28, 2003                                                            

/s/  Melissa Day                                                                
-----------------------                                                         
Melissa Day                                                                     
Chief Financial Officer                                                         

25

DEFM14C
107th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 107th
 EXHIBIT F

DELIATROPH PHARMACEUTICALS, INC.
 (A DEVELOPMENT STAGE COMPANY)

FINANCIAL STATEMENTS
 DECEMBER 31, 2003

DEFM14C
108th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 108th
The Board of Directors and Shareholders                                         
DeliaTroph Pharmaceuticals, Inc.                                                

We have audited the accompanying  balance sheets of DeliaTroph  Pharmaceuticals,
Inc., doing business as Hyalozyme Therapeutics, (a California corporation) as of
December  31,  2003  and  2002,  and  the  related   statements  of  operations,
shareholders'  equity and cash flows for the years then ended and for the period
from  inception  (February  26,  1998) to December  31,  2003.  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 auditing standards generally accepted
in the  United  States of  America.  Those  standards  require  that we plan and
perform the audit 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 amounts and  disclosures in the 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 financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of DeliaTroph  Pharmaceuticals,
Inc. as of December 31, 2003 and 2002, and the results of its operations and its
cash flows for the years then ended and for the period from inception  (February
26,  1998) to December  31,  2003,  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 8 to the
financial   statements,   the  Company's   significant  operating  losses  raise
substantial doubt about its ability to continue as a going concern. Management's
plans  regarding  this  uncertainty  are also described in Note 8. The financial
statements do not include any adjustments  that might result from the outcome of
this uncertainty.                                                               

CACCIAMATTA ACCOUNTANCY CORPORATION                                             

Irvine, CA                                                                      
January 7, 2004                                                                 

DEFM14C
109th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 109th
                                                        [Enlarge/Download Table]

DELIATROPH PHARMACEUTICALS, INC.                                                                                                   
(A DEVELOPMENT STAGE COMPANY)                                                                                                      
BALANCE SHEETS                                                                                                                     
DECEMBER 31, 2003 AND 2002                                                                                                         
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                           2003                 2002               
                                                                                                                                   
ASSETS                                                                                                                             

CURRENT ASSETS:                                                                                                                    
Cash and cash equivalents                                                                  $ 503,580            $ 88,910           
                                                                                   ------------------   -----------------          
      Total current assets                                                                   503,580              88,910           

PROPERTY AND EQUIPMENT - Net                                                                 130,904             134,170           

OTHER ASSETS                                                                                  12,763               7,500           
                                                                                   ------------------   -----------------          

      Total Assets                                                                         $ 647,247            $230,580           
                                                                                   ==================   =================          

LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)                                                                                     

CURRENT LIABILITIES:                                                                                                               
Accounts payable                                                                           $ 223,278            $ 58,800           
Accrued expenses                                                                              50,162             109,085           
Notes payable                                                                                      -             430,000           
Interest on notes payable                                                                          -              12,255           
                                                                                   ------------------   -----------------          
      Total Current Liabilities                                                              273,440             610,140           

COMMITMENTS AND CONTINGENCIES                                                                      -                   -           

SHAREHOLDERS' EQUITY (DEFICIT):                                                                                                    
Series A convertible  preferred  stock,  without  par  value;  4,816,000  shares                                                   
      authorized; 0 shares issued and outstanding                                                                                  
      in 2003; 3,803,507 shares issued and outstanding in 2002                                     -             198,006           
Series B convertible preferred stock, without par value; 3,473,343                                                                 
      shares authorized; 0 shares issued and outstanding in 2003; 5,333,350                                                        
      shares authorized; 2,743,121 shares issued and outstanding in 2002                           -           1,254,672           
Series C convertible preferred stock, without par value; 2,367,394                                                                 
      shares authorized; 2,367,114 shares issued and outstanding                                                                   
      in 2003; 0 shares issued and outstanding in 2002                                     1,004,486                   -           
Common stock, without par value; 60,000,000 shares authorized;                                                                     
      15,952,980 shares issued and outstanding in 2003;                                                                            
      4,599,951 shares issued and outstanding in 2002                                      3,349,826              33,242           
Deficits accumulated during the development stage                                         (3,980,505)         (1,865,480)          
                                                                                   ------------------   -----------------          

      Total Shareholders' Equity (Deficit)                                                   373,807            (379,560)          
                                                                                   ------------------   -----------------          

      Total Liabilities and Shareholders' Equity (Deficit)                                 $ 647,247           $ 230,580           
                                                                                   ==================   =================          

The accompanying notes are an integral part of these financial statements.

-1- 

DEFM14C
110th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 110th
                                                        [Enlarge/Download Table]

DELIATROPH PHARMACEUTICALS, INC.                                                                                                   
(A DEVELOPMENT STAGE COMPANY)                                                                                                      
STATEMENTS OF OPERATIONS                                                                                                           
YEARS ENDED DECEMBER 31, 2003 AND 2002 AND FROM INCEPTION TO DECEMBER 31, 2003                                                     
-----------------------------------------------------------------------------------------------------------------------------------

                                                                                                          CUMULATIVE               
                                                                                                        FROM INCEPTION             
                                                                                                       (FEBRUARY 26, 1998)         
                                                                    2003                2002                TO 2003                
                                                                                                                                   
EXPENSES:                                                                                                                          
Research and development                                           $ 1,145,420            $ 773,464          $ 2,410,044           
General and administrative                                             576,452              379,438            1,201,145           
                                                              -----------------   ------------------   ------------------          

OPERATING LOSS                                                      (1,721,872)          (1,152,902)          (3,611,189)          

Other income (expense)                                                                                                             
      Interest expense                                                (394,439)             (12,306)            (406,745)          
      Other, net                                                         2,086               31,243               42,229           
                                                              -----------------   ------------------   ------------------          

        Other income (expense)                                        (392,353)              18,937             (364,516)          

LOSS BEFORE INCOME TAXES                                            (2,114,225)          (1,133,965)          (3,975,705)          

Income tax expense                                                         800                  800                4,800           
                                                              -----------------   ------------------   ------------------          

NET LOSS                                                          $ (2,115,025)        $ (1,134,765)        $ (3,980,505)          
                                                              =================   ==================   ==================          

Net loss per share, basic and diluted                                  $ (0.31)             $ (0.25)                               
                                                              =================   ==================                               

Shares used in computing net loss per share,                                                                                       
      basic and diluted                                              6,826,109            4,599,591                                
                                                              =================   ==================                               

The accompanying notes are an integral part of these financial statements.

-2- 

DEFM14C
111th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 111th
                                                        [Enlarge/Download Table]

DELIATROPH PHARMACEUTICALS, INC.                                                                                                   
(A DEVELOPMENT STAGE COMPANY)                                                                                                      
STATEMENTS OF SHAREHOLDERS' EQUITY                                                                                                 
FROM INCEPTION (FEBRUARY 26, 1998) TO DECEMBER 31, 2003                                                                            
-----------------------------------------------------------------------------------------------------------------------------------
(All share information reflects post-split amounts)                                                                                

                                                      SERIES A               SERIES B               SERIES C                       
                                                     CONVERTIBLE            CONVERTIBLE             CONVERTIBLE                    
                                                   PREFERRED STOCK        PREFERRED STOCK        PREFERRED STOCK                   
                                                  SHARES     AMOUNT      SHARES     AMOUNT      SHARES     AMOUNT                  
                                                ---------------------- ---------------------- ----------------------               
                                                                                                                                   
Initial capitalization                                   -          -           -          -           -          -                
Issuance of Series A preferred stock             2,520,014    132,819           -          -           -          -                
Net loss                                                 -          -           -          -           -          -                
                                                ---------------------- ---------------------- ----------------------               

BALANCE, DECEMBER 31, 1999                       2,520,014    132,819           -          -           -          -                

Issuance of common stock for cash                        -          -           -          -           -          -                
Issuance of common stock for license                     -          -           -          -           -          -                
Issuance of Series A preferred stock - net       1,283,493     65,187           -          -           -          -                
Net loss                                                 -          -           -          -           -          -                
                                                ---------------------- ---------------------- ----------------------               

BALANCE, DECEMBER 31, 2000                       3,803,507    198,006           -          -           -          -                

Issuance of Series B preferred stock - net               -          -   1,779,608    801,709           -          -                
Net loss                                                 -          -           -          -           -          -                
                                                ---------------------- ---------------------- ----------------------               

BALANCE, DECEMBER 31, 2001                       3,803,507    198,006   1,779,608    801,709           -          -                

Issuance of Series B preferred stock - net               -          -     963,513    452,963           -          -                
Issuance of common stock options to consultant           -          -           -          -           -          -                
Issuance of warrants for common stock for                                                                                          
   services                                              -          -           -          -           -          -                
Net loss                                                 -          -           -          -           -          -                
                                                ---------------------- ---------------------- ----------------------               

BALANCE, DECEMBER 31, 2002                       3,803,507    198,006   2,743,121  1,254,672           -          -                

Issuance of Series C preferred stock - net               -          -     289,482          -   2,367,114  1,004,486                
Issuance of common stock options to consultants          -          -           -          -           -          -                
Issuance of common stock due to the exercise                                                                                       
   of options                                            -          -           -          -           -          -                
Conversion of notes to common stock                      -          -           -          -           -          -                
Conversion of interest on notes to common stock          -          -           -          -           -          -                
Beneficial conversion feature of 2003 notes              -          -           -          -           -          -                
Conversion of Series A preferred stock to                                                                                          
   common stock                                 (3,803,507)  (198,006)          -          -           -          -                
Conversion of Series B preferred stock to                                                                                          
   common stock                                          -          -  (3,032,603)(1,254,672)          -          -                
Net loss                                                 -          -           -          -           -          -                
                                                ---------------------- ---------------------- ----------------------               

BALANCE, DECEMBER 31, 2003                               -          -           -          -   2,367,114  1,004,486                
                                                ====================== ====================== ======================               

                                                        [Enlarge/Download Table]

                                                                          DEFICIT                        
                                                                         ACCUMULATED           TOTAL     
                                                     COMMON STOCK          DURING          SHAREHOLDERS' 
                                                   SHARES      AMOUNT    DEVELOPMENT          EQUITY     
                                                 ----------- ---------  ----------------  ---------------
                                                                                                         
Initial capitalization                            2,078,662     10,956              -           10,956   
Issuance of Series A preferred stock                      -          -              -          132,819   
Net loss                                                  -          -        (41,884)         (41,884)  
                                                 ----------- ---------  ----------------  ---------------

BALANCE, DECEMBER 31, 1999                        2,078,662     10,956        (41,884)         101,891   

Issuance of common stock for cash                 2,078,662     10,956              -           10,956   
Issuance of common stock for license                442,267      2,330              -            2,330   
Issuance of Series A preferred stock - net                -          -              -           65,187   
Net loss                                                  -          -       (125,210)        (125,210)  
                                                 ----------- ---------  ----------------  ---------------

BALANCE, DECEMBER 31, 2000                        4,599,591     24,242       (167,094)          55,154   

Issuance of Series B preferred stock - net                -          -              -          801,709   
Net loss                                                  -          -       (563,621)        (563,621)  
                                                 ----------- ---------  ----------------  ---------------

BALANCE, DECEMBER 31, 2001                        4,599,591     24,242       (730,715)         293,242   

Issuance of Series B preferred stock - net                -          -              -          452,963   
Issuance of common stock options to consultant            -        500              -              500   
Issuance of warrants for common stock for                                                                
   services                                               -      8,500              -            8,500   
Net loss                                                  -          -     (1,134,765)      (1,134,765)  
                                                 ----------- ---------  ----------------  ---------------

BALANCE, DECEMBER 31, 2002                        4,599,591     33,242     (1,865,480)        (379,560)  

Issuance of Series C preferred stock - net                -          -              -        1,004,486   
Issuance of common stock options to consultants           -     85,388              -           85,388   
Issuance of common stock due to the exercise                                                             
   of options                                       256,410    100,000              -          100,000   
Conversion of notes to common stock               3,960,359  1,272,000              -        1,272,000   
Conversion of interest on notes to common stock     300,510     99,764              -           99,764   
Beneficial conversion feature of 2003 notes               -    306,754              -          306,754   
Conversion of Series A preferred stock to                                                                
   common stock                                   3,803,507    198,006              -                -   
Conversion of Series B preferred stock to                                                                
   common stock                                   3,032,603  1,254,672              -                -   
Net loss                                                  -          -     (2,115,025)      (2,115,025)  
                                                 ----------- ---------  ----------------  ---------------

BALANCE, DECEMBER 31, 2003                       15,952,980  3,349,826     (3,980,505)         373,807   
                                                 =========== =========  ================  ===============

The accompanying notes are an integral part of these financial statements.

-3- 

DEFM14C
112th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 112th
                                                        [Enlarge/Download Table]

DELIATROPH PHARMACEUTICALS, INC.                                                                                                   
(A DEVELOPMENT STAGE COMPANY)                                                                                                      
STATEMENTS OF CASH FLOWS                                                                                                           
YEARS ENDED DECEMBER 31, 2003 AND 2002 AND FROM INCEPTION TO DECEMBER 31, 2003                                                     
-----------------------------------------------------------------------------------------------------------------------------------

                                                                                                                  CUMULATIVE       
                                                                                                                FROM INCEPTION     
                                                                                                             (FEBRUARY 26, 1998)   
                                                                                  2003             2002            TO 2003         
                                                                                                                                   
CASH FLOWS FROM OPERATING ACTIVITIES:                                                                                              
Net loss                                                                     $    (2,115,025) $    (1,134,765)  $    (3,980,505)   
Adjustments to reconcile net loss to net cash used in operating activities:                                                        
     Depreciation and amortization                                                    75,726          100,386           208,890    
     Issuance of common stock for goods and services                                  85,388            9,000           102,245    
     Issuance of common stock for license                                                  -                -             2,330    
     Issuance of common stock for accrued interest on notes                           87,510           12,254            99,764    
     Beneficial conversion feature on 2003 notes                                     306,754                -           306,754    
     Changes in operating assets and liabilities:                                                                                  
       Prepaid expenses and other assets                                              (5,263)          (9,999)          (12,763)   
       Accounts payable and accrued expenses                                         105,554          156,375           273,440    
                                                                             ---------------  ---------------   ---------------    
       Net cash used by operating activities                                      (1,459,356)        (866,749)       (2,999,845)   

CASH FLOWS FROM INVESTING ACTIVITIES:                                                                                              
Purchase of property and equipment                                                   (72,460)        (194,738)         (316,695)   
                                                                             ---------------  ---------------   ---------------    
       Net cash used in investing activities                                         (72,460)        (194,738)         (316,695)   

CASH FLOWS FROM FINANCING ACTIVITIES:                                                                                              
Proceeds from issuance of notes                                                      842,000          430,000         1,272,000    
Proceeds from issuance of common stock                                               100,000                -           110,956    
Proceeds from issuance of Series A preferred stock - net                                   -                -           178,006    
Proceeds from issuance of Series B preferred stock - net                                   -          452,962         1,254,672    
Proceeds from issuance of Series C preferred stock - net                           1,004,486                -         1,004,486    
                                                                             ---------------  ---------------                      
                                                                                                                ---------------    
       Net cash provided by financing activities                                   1,946,486          882,962         3,820,120    
                                                                             ---------------  ---------------   ---------------    

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                 414,670         (178,525)          503,580    

CASH AND CASH EQUIVALENTS, beginning of period                                        88,910          267,435                 -    
                                                                             ---------------  ---------------   ---------------    

CASH AND CASH EQUIVALENTS, end of period                                     $       503,580  $        88,910   $       503,580    
                                                                             ===============  ===============   ===============    

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                                                                                 
     Cash paid for income taxes                                              $           800  $           800   $         4,800    
                                                                             ===============  ===============   ===============    
     Interest paid                                                           $             -  $             -   $             -    
                                                                             ===============  ===============   ===============    

     Non cash investing and financing activities:                                                                                  

       Common stock issued for property and equipment                        $             -  $             -   $         3,099    
                                                                             ===============  ===============   ===============    
       Series A preferred stock issued for property and equipment            $             -  $             -   $        20,000    
                                                                             ===============  ===============   ===============    
       Conversion of notes payable to common stock                           $     1,371,764  $             -   $     1,371,764    
                                                                             ===============  ===============   ===============    
       Conversion of Series A preferred stock to common stock                $       198,006  $             -   $       198,006    
                                                                             ===============  ===============   ===============    
       Conversion of Series B preferred stock to common stock                $     1,254,672  $             -   $     1,254,672    
                                                                             ===============  ===============   ===============    

The accompanying notes are an integral part of these financial statements.

-4- 

DEFM14C
113th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 113th
DELIATROPH PHARMACEUTICALS, INC.                                                
(A DEVELOPMENT STAGE COMPANY)                                                   

NOTES TO DECEMBER 31, 2003 FINANCIAL STATEMENTS                                 
------------------------------------------------------------------------------- 

1.   GENERAL AND SIGNIFICANT ACCOUNTING POLICIES                                

  GENERAL - DeliaTroph Pharmaceuticals, Inc. (a development stage company)
dba Hyalozyme Therapeutics, Inc. (the "Company") was incorporated on  
     February 26, 1998 and is a development stage, product-focused biotechnology
   company dedicated to the development and commercialization of recombinant
 therapeutic enzymes and drug enhancement systems, based on intellectual
property covering the family of enzymes known as hyaluronidases.      

 BASIS OF PRESENTATION - The accompanying financial statements have been
     prepared in accordance with accounting principles generally accepted in the
United States.                                                        

CASH AND CASH EQUIVALENTS - The Company considers all highly liquid   
investments with maturities of three months or less from the original 
purchase date to be cash equivalents.                                 

CONCENTRATION OF CREDIT RISK - Financial instruments that potentially 
   subject the Company to a concentration of credit risk consist of cash and
  cash equivalents. The Company maintains its cash balances with one major
    commercial bank. The balances are insured by the Federal Deposit Insurance
Corporation up to $100,000.                                           

PROPERTY AND EQUIPMENT - Property and equipment are recorded at cost. 
    Equipment and furniture are depreciated using the straight-line basis over
    their estimated useful lives of three years and leasehold improvements are
    amortized using the straight-line method over the estimated useful life of
the asset or the lease term, whichever is shorter.                    

     LONG-LIVED ASSETS - The Company accounts for the impairment and disposition
    of long-lived assets in accordance with Statements of Financial Accounting
  Standards ("SFAS") No. 144, Accounting for the Impairment or Disposal of
   Long-Lived Assets. In accordance with SFAS No. 144, long-lived assets are
    reviewed for events of changes in circumstances, which indicate that their
  carrying value may not be recoverable. At December 31, 2003, the Company
believes there has been no impairment of the value of such assets.    

   INCOME TAXES - Income taxes are recorded in accordance with SFAS No. 109,
 Accounting for Income Taxes. This statement requires the recognition of
    deferred tax assets and liabilities to reflect the future tax consequences
   of events that have been recognized in the Company's financial statements
   or tax returns. Measurement of the deferred items is based on enacted tax
     laws. In the event the future consequences of differences between financial
reporting bases and tax bases of the Company's assets and liabilities 
    result in a deferred tax asset, SFAS No. 109 requires an evaluation of the
    probability of being able to realize the future benefits indicated by such

 -5-

DEFM14C
114th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 114th
   assets. A valuation allowance related to a deferred tax asset is recorded
  when it is more likely than not that some portion or all of the deferred
tax asset will not be realized. At December 31, 2003, the Company had 
federal and state deferred tax assets of approximately $1,200,000 and 
 $300,000, respectively, both consisting primarily of net operating loss
    carryforwards. The Company has recorded a full valuation allowance for all
net deferred tax assets generated to date. The deferred tax assets and
    valuation allowances increased approximately $800,000 in 2003. The federal
  and state net operating losses of approximately $3,400,000 will begin to
expire in 2018 and 2008, respectively.                                

    STOCK-BASED COMPENSATION - The Company has elected to adopt the disclosure
     only provisions of SFAS No. 148 and will continue to follow APB Opinion No.
   25 and related interpretations in accounting for stock options granted to
its employees and directors. Accordingly, employee and director       
  compensation expense is recognized only for those options whose price is
     less than the market value at the measurement date. When the exercise price
   of the employee or director stock options is less then the estimated fair
value of the underlying stock on the grant date, the Company records  
deferred compensation for the difference and amortizes this amount to 
     expense in accordance with FASB Interpretation No. 28, Accounting for Stock
   Appreciation Rights and Other Variable Stock Options or Award Plans, over
the vesting period of the options.                                    

   Stock options issued to non-employees are recorded at their fair value as
   determined in accordance with SFAS No. 123 and Emerging Issues Task Force
  ("EITF") No. 96-18, Accounting for Equity Instruments That Are Issued to
    Other Than Employees for Acquiring or in Conjunction With Selling Goods or
    Services, and recognized over the related service period. Deferred charges
  for options granted to non-employees are periodically re-measured as the
    options vest. The Company's calculations were made using the Black-Scholes
option-pricing model with the following weighted-average assumptions: 
    expected life of 48 months; 100% stock volatility; risk-free interest rate
    of 3.0%; no dividends during the expected term; and forfeitures recognized
as they occur.                                                        

For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the estimated life of the related
   options. The Company's pro forma information follows (in thousands except
per share data):                                                      

                                                                [Download Table]
                                                             Year Ended         
                                                             ----------         

                                                        2003           2002     
                                                        ----           ----     
                                                                                
Net loss, as reported                               $       (2,115) $    (1,135)

Deduct:  Total stock-based employee                                             
Compensation expense determined under                                           
Fair value based method for all awards              $         (149) $        (1)
                                                    --------------- ------------

Pro forma net loss                                  $       (2,264) $    (1,136)
                                                    =============== ============

Net loss per share, basic and diluted, as reported  $        (0.31) $     (0.25)
                                                    =============== ============

Pro forma net loss per share, basic and diluted     $        (0.33) $     (0.25)
                                                    =============== ============

-6- 

DEFM14C
115th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 115th
  USE OF ESTIMATES - The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of 
   America necessarily 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 periods. Actual results could differ from these estimates.  

     COMPREHENSIVE INCOME (LOSS) - Comprehensive income (loss) is defined as all
changes in a company's net assets, except changes resulting from      
    transactions with shareholders. At December 31, 2003 and 2002, the Company
has no reportable differences between net loss and comprehensive loss.

 RESEARCH AND DEVELOPMENT COSTS - Costs and expenses that can be clearly
   identified as research and development are charged to expense as incurred
in accordance with FASB statement No. 2, "Accounting for Research and 
Development Costs."                                                   

   NET LOSS PER SHARE - In accordance with SFAS No. 128, Earnings Per Share,
     and SEC Staff Accounting Bulletin ("SAB") No. 98, basic net loss per common
share is computed by dividing net loss for the period by the weighted 
   average number of common shares outstanding during the period. Under SFAS
  No. 128, diluted net income (loss) per share is computed by dividing the
   net income (loss) for the period by the weighted average number of common
and common equivalent shares, such as stock options and warrants,     
    outstanding during the period. Such common equivalent shares have not been
     included in the Company's computation of net loss per share as their effect
would have been anti-dilutive. [OBJECT OMITTED]                       

                                                        [Enlarge/Download Table]
                                                                   2003          2002    
                                                                                         
Numerator - Net loss                                          $ (2,115,025) $ (1,134,765)
                                                              ============= =============

Denominator - Weighted average shares outstanding                 6,826,109     4,599,591
                                                               ============ =============

Net loss per share                                                 $ (0.31)      $ (0.25)
                                                               ============ =============

Incremental common shares (not included in denominator of                                
diluted earnings per share because of their anti-dilutive nature)                        
     Employee stock options                                       6,392,567       168,710
     Warrants to outside parties                                     67,129             -
     Warrants on notes                                              867,419       315,830
     Series B warrants                                              361,969       361,969
     Series C warrants                                            2,367,114             -
     Series C option                                             15,304,804             -
     Warrants issuable if Series C option is exercised            7,652,402             -
                                                               ------------ -------------

     Potential common equivalents                                33,013,404       846,509
                                                               ============ =============

  If all currently outstanding potential common equivalents are exercised,
   the Company would receive proceeds of approximately $25.3 million. RECENT
ACCOUNTING                                                            

 -7-

DEFM14C
116th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 116th
   PRONOUNCEMENTS - In August 2001, the Financial Accounting Standards Board
    ("FASB") issued SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets. This statement addresses financial accounting and  
reporting for the impairment or disposal of long-lived assets and     
    supersedes SFAS No. 91, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of, and the accounting and   
reporting provisions of APB Opinion No. 30, Reporting the Results of  
    Operations - Reporting the Effects of Disposal of a Segment of a Business,
and Extraordinary, Unusual, and Infrequently Occurring Events and     
   Transactions. This statement also amends Accounting Research Bulletin No.
51, Consolidated Financial Statements, to eliminate the exception to  
     consolidation for a subsidiary for which control is likely to be temporary.
The provisions are generally to be applied prospectively. The Company 
 adopted the provisions of this statement effective January 1, 2002. The
     adoption of SFAS No. 144 did not have a significant impact on the Company's
financial statements.                                                 

     In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated
    with Exit or Disposal Activities, which addresses financial accounting and
reporting for costs associated with exit or disposal activities and   
supersedes Emerging Issues Task Force ("ETIF") Issue 94-3, Liability  
  Recognition for Certain Employee Termination Benefits and Other Costs to
 Exit an Activity (including Certain Costs Incurred in a Restructuring).
     SFAS No. 146 requires that a liability for an exit cost, as defined in ETIF
    Issue 94-3, be recognized at the date of an entity's commitment to an exit
    plan. SFAS No. 146 also establishes that the liability should initially be
     measured and recorded at fair value. The provisions of SFAS No. 146 will be
   adopted for exit or disposal activities that are initiated after December
31, 2002.                                                             

In November 2002, the FASB issued FASB Interpretation No. ("FIN") 45, 
Guarantor's Accounting and Disclosure Requirements for Guarantees,    
   Including Guarantees of Indebtedness of Others, an interpretation of FASB
Statement Nos. 5, 57 and 107, and rescission of FIN 34, Disclosure of 
 Indirect Guarantees of Indebtedness of Others. FIN 45 elaborates on the
     disclosures to be made by the guarantor in its interim and annual financial
statements about its obligations under certain guarantees that it has 
    issued. It also requires that a guarantor recognize, at the inception of a
   guarantee, a liability for the fair value of the obligation undertaken in
   issuing the guarantee. The initial recognition and measurement provisions
    of this interpretation are applicable on a prospective basis to guarantees
 issued or modified after December 31, 2002; while the provisions of the
   disclosure requirements are effective for financial statements of interim
    or annual periods ending after December 15, 2002. The Company believes the
     adoption of the recognition provisions of such interpretation will not have
  a material impact on its results of operations or financial position and
has adopted such interpretation on January 1, 2003, as required.      

    In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
  Compensation - Transition and Disclosure - an amendment of SFAS No. 123.
This statement amends SFAS No. 123, Accounting for Stock-Based        
    Compensation, to provide alternative methods of transition for a voluntary
change to the fair value-based method of accounting for stock-based   
  employee compensation. In addition, this statement amends the disclosure
requirements of SFAS No. 123 to                                       

 -8-

DEFM14C
117th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 117th
require prominent disclosures in both annual and interim financial    
statements about the method of accounting for stock-based employee    
compensation and the effect of the method used on reported results.   

     In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of Both Liabilities and Equity, which
 establishes standards for how an issuer classifies and measures certain
    financial instruments with characteristics of both liabilities and equity.
This statement 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, except for    
mandatory redeemable financial instruments of nonpublic companies. For
     nonpublic companies, mandatory redeemable financial instruments are subject
   to the provisions of this statement for the first fiscal period beginning
    after December 15, 2003. The Company does not believe that the adoption of
    this statement will have a significant impact on its financial statements.

2.   PROPERTY AND EQUIPMENT                                                     

                                            2003      2002

Research equipment                             $195,534  $168,445     
Office equipment and furniture                   59,687    30,254     
Leasehold improvements                           84,573    68,636     
                                          --------  --------
                                           339,794   267,335

Less accumulated depreciation and amortization (208,890) (133,165)    
                                          --------  --------

                                          $130,904  $134,170
                                          ========  ========

3.   ACCRUED EXPENSES                                                           

                                            2003      2002

Accrued wages payable                          $ 11,000  $ 86,667     
Accrued vacation payable                         39,162    22,418     
                                          --------  --------

                                          $ 50,162  $109,085
                                          ========  ========

The 2002 accrued wages payable were due to two former officers and one
     current officer of the Company. The former officers were paid their accrued
 wages of $50,000 in February 2003. The remaining balance of $36,667 was
  converted to a note payable in February 2003. This note was subsequently
converted to common stock (see Note 4).                               

4.   NOTES PAYABLE                                                              

     In 2002, the Company issued 10% promissory notes in the amount of $355,000.
     As amended, principal and interest automatically convert to common stock at
   $0.449 per share at the closing of the next equity financing in which the
    Company receives gross proceeds of at least $800,000. Because market value

 -9-

DEFM14C
118th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 118th
     of the common shares was below the conversion price at the commitment date,
    there was no beneficial conversion feature. The notes carried a 40 percent
warrant coverage for the purchase of common stock (see Note 5).       

    In 2002 and 2003, the Company issued 10% promissory notes in the amount of
$917,000. As amended, principal and interest automatically convert to 
common stock at $0.281 per share at the closing of the next equity    
financing in which the Company receives gross proceeds of at least    
   $800,000. Because the market value of the shares was above the conversion
   price at the commitment date, a beneficial conversion feature of $306,754
    was recorded as interest expense and additional paid in capital in October
2003, upon the Company's issuance of $1,004,486 of Series C preferred 
    stock. The notes carried a 20 percent warrant coverage for the purchase of
common stock (see Note 5).                                            

 Upon closing the Series C preferred financing, the principal balance of
 $1,272,000 of the above described notes and $99,764 of accrued interest
were converted into 4,260,869 shares of common stock of the Company.  

5.   SHAREHOLDERS' EQUITY                                                       

ISSUANCE OF COMMON STOCK - In March 1999, the Company issued 2,078,662
    shares of common stock for $10,956 in goods and services. In January 2000,
     the Company issued 2,078,662 shares of common stock for $10,956 in cash. In
    August 2000, the Company issued 442,267 shares of common stock in exchange
   for a license valued at $2,330. Of the common stock 4,157,324 shares were
sold to founders of the Company.                                      

ISSUANCE OF COMMON STOCK OPTIONS FOR SERVICES - In September 2002, the
     Company issued 7,897 common stock options for consulting services valued at
   $500. In January 2003, the Company issued 39,488 common stock options for
 consulting services valued at $2,500. In April 2003, the Company issued
  39,488 common stock options for consulting services valued at $2,500. In
     October 2003, the Company issued 39,488 common stock options for consulting
services valued at $2,500. In November 2003, the Company issued 24,712
    common stock options for consulting services valued at $9,638. In December
   2003, the Company issued 100,000 common stock options to two former Board
members and 75,000 common stock options to members of its Scientific  
  Advisory Board. These options were fully exercisable and fully vested on
   the date of grant and shall expire in ten years based on the terms of the
     options. The fair value of these options, totaling $68,250, was recorded as
a noncash stock issuance cost by the Company.                         

SERIES A, B AND C CONVERTIBLE PREFERRED STOCK - In January 2001, the  
  Company completed an 8 for 1 stock split of its outstanding common stock
  and Series A preferred stock. In November 2001 the Company completed a 2
     for 1 stock split for the Series B preferred stock and warrants. In October
     2003, the Company completed a 1 for 1.266199 reverse stock split of all its
common stock. All share numbers and per share dollar values in the    
    accompanying financial statements and footnotes have been restated for all
periods presented to reflect the stock splits.                        

  -10-

DEFM14C
119th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 119th
From March 1999 to January 2000, the Company sold 3,803,507 shares of 
     Series A convertible preferred stock ("Series A") for $198,006 ($178,006 in
    cash and $20,000 in goods and services), net of issuance costs. From March
     2001 to May 2002, the Company sold 2,743,121 shares of Series B convertible
     preferred stock ("Series B") for $1,254,672 in cash, net of issuance costs.
During October 2003, the Company sold 2,367,114 shares of Series C    
  convertible preferred stock ("Series C") for $1,004,486, net of issuance
    costs. In addition, in connection with the Series C financing, the Company
issued an option to purchasers of the Series C to buy an additional   
  15,304,804 shares of the Company's common stock for $0.4647 per share or
   $7,112,142. In connection with the Series C financing, 289,482 additional
    shares of Series B stock were issued to the Series B investors as a result
of anti-dilution provisions.                                          

  Upon closing the Series C investment, the Series A and Series B were all
  converted to common stock. The liquidation preference of the Series C is
$0.4647 per share and is payable in preference to the common stock.   
    Following this distribution, upon liquidation, any remaining assets of the
Company shall be distributed ratably to holders of the common stock.  

   WARRANTS - In November and December of 2001, the Company granted warrants
    to purchase 252,721 shares of common stock at an exercise price of $0.4748
per share to purchasers of the Series B. From January to May 2002, the
   Company granted warrants to purchase 109,248 shares of common stock at an
  exercise price of $0.4748 per share to purchasers of the Series B. These
     warrants are exercisable until February 15, 2005. In June 2002, the Company
granted, to outside parties for services, warrants to purchase 67,129 
shares of common stock at an exercise price of $0.13 per share. These 
   warrants were fully exercisable and fully vested on the date of grant and
shall expire in ten years based on the terms of the warrants. The fair
   value of these warrants, totaling $8,500, was recorded as a noncash stock
issuance cost by the Company.                                         

In connection with the notes issued in 2002 and 2003 (see Note 4), the
   Company granted warrants to purchase 867,419 shares of common stock at an
   exercise price of $0.4496 per share. In October 2003, in conjunction with
the issuance of its Series C convertible preferred stock, the Company 
     granted warrants to purchase 2,367,114 shares of common stock to purchasers
of the Series C at an exercise price of $0.7667 per share, exercisable
until October 15, 2008.                                               

     In connection with an option the Company issued to purchasers of the Series
   C stock to buy an additional 15,304,804 disclosed above, the Company also
  granted these purchasers warrants to purchase 7,652,402 shares of common
stock at an exercise price of $1.75 per share, as amended.            

6.   STOCK OPTION PLAN                                                          

     The Company's 2001 Stock Option Plan (the "Plan"), as amended, provides for
    the granting of non-statutory or incentive stock options to acquire shares
of the Company's common stock to employees of the Company. The Plan is
    administered by the Board of Directors and permits the issuance of options
   for the purchase of up to 10,000,000 shares, as amended, of the Company's
    common stock at exercises prices of not less than the fair market value of
the underlying shares on the                                          

  -11-

DEFM14C
120th Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 120th
date of grant. Options granted under the Plan generally vest over a   
  four-year period and expire up to a maximum of 10 years from the date of
grant.                                                                

The following table summarizes stock option activity for the periods  
indicated:                                                            

                                                              WEIGHTED
                                                               AVERAGE
                                                              EXERCISE
                                                               PRICE
                                                     SHARES    PER SHARE

Outstanding, January 1, 2002                          --         --   

Granted                                            179,037      $0.06 
Canceled                                           (10,327)     $0.06 
                                     ---------

Outstanding, December 31, 2002                     168,710      $0.06 

Granted                                          6,484,962      $0.39 
Exercised                                         (256,410)     $0.39 
Canceled                                            (4,695)     $0.06 
                                     ---------

Outstanding, December 31, 2003                   6,392,567      $0.38 
                                     =========

  The following table summarizes information concerning on outstanding and
exercisable options as of December 31, 2003:                          

                          OPTIONS OUTSTANDING                OPTIONS EXERCISABLE
                        -----------------------              -------------------

          WEIGHTED
                                   AVERAGE     WEIGHTED               WEIGHTED
                                 REMAINING    AVERAGE                AVERAGE
   EXERCISE             NUMBER   CONTRACTUAL   EXERCISE   NUMBER      EXERCISE
  PRICE             OUTSTANDING    LIFE       PRICE   EXERCISABLE    PRICE

 $0.06               164,015      5.5        $0.06     61,714      $0.06
 $0.39             6,228,552      9.9        $0.39    705,153     $ 0.39
        ---------                          -------

                   6,392,567      9.8        $0.38    766,867     $ 0.36
        =========                          =======

7.    COMMITMENTS AND CONTINGENCIES                                             

   OPERATING LEASES - The Company leases its San Diego, California corporate
 office under a two-year lease. Additionally, the Company leases certain
    office equipment under operating leases. Rent expense totaled $123,110 and
$64,958 for the years ended December 31, 2003 and 2002, respectively. 

  -12-

DEFM14C
Last Page of 121
TOC
1st
Previous
Next
↓Bottom
Just 121st
   Future minimum payments, by year and in the aggregate, required under the
Company's noncancelable operating lease obligations consist of the    
following:                                                            

YEAR ENDING                                                                     
DECEMBER 31                                                                     

2004                                                  $132,306                  
2005                                                    67,492                  
                                  ----------

                                     199,798
                                  ==========

  CONTRACT MANUFACTURING AGREEMENT - In November 2003, the Company entered
into a contract manufacturing agreement whereby the contractor will   
 manufacture the Company's recombinant protein to be used as the Company
 seeks regulatory approval for its product. The value of the contract is
     approximately $1,500,000 and is payable as milestones are achieved over the
term of the contract in 2004.                                         

    CONSULTING AGREEMENTS - In November and December 2003, the Company entered
into consulting agreements with key members of its Scientific Advisory
Board. In connection with these agreements, the Company issued stock  
options to some of these members. As discussed in Note 4, the Company 
recorded the fair value of these options as an expense on the date of 
grant.                                                                

    MANAGEMENT AGREEMENTS - The Company has entered into employment agreements
   with various members of its executive management team. The agreements are
for one year and then revert to "at will" employment.                 

INDEMNITIES AND GUARANTEES - During its normal course of business, the
Company has made certain indemnities, commitments and guarantees under
which it may be required to make payments in relation to certain      
transactions. These indemnities include those given to directors and  
   officers of the Company to the maximum extent permitted under the laws of
     the State of California. The duration of these indemnities, commitments and
     guarantees varies. Some of these indemnities, commitments and guarantees do
     not provide for any limitation of the maximum potential future payments the
Company could be obligated to make. The Company has not recorded any  
liability for these indemnities, commitments and guarantees in the    
accompanying balance sheets.                                          

     MERGER AGREEMENT - The Company is currently in negotiations to merge with a
 public company in order to maximize shareholder value. The terms of the
agreement have not yet been finalized.                                

8.   GOING CONCERN                                                              

The accompanying financial statements have been prepared assuming the 
   Company will continue as a going concern. The Company has reported losses
 from its inception, is still in the development stage and does not have
sufficient cash to cover its current operating needs. The Company is  
seeking to raise the additional capital it will require to meet its   
  obligations in 2004. There can be no assurances that the Company will be
successful in these efforts.                                          

 * * * * * * *

-13-

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘DEFM14C’ Filing		Date		First		Last			Other Filings
		10/15/08		119
		6/30/05		22					10QSB
		2/15/05		119
		4/30/04		32
Filed on / Effective on:		2/17/04		2		70
		2/6/04		1					PREM14C
		2/5/04		3		24
		2/4/04		1		7
		1/28/04		2		63			8-K
		1/8/04		20
		1/7/04		64		108
		12/31/03		22		120			10KSB
		12/15/03		117
		12/5/03		46					8-K
		9/30/03		25		45			10QSB
		6/15/03		117
		5/31/03		117
		3/28/03		82		106			10KSB
		1/1/03		116
		12/31/02		22		120			10KSB,  10KSB/A
		12/15/02		116
		11/12/02		103					8-K
		11/11/02		101					8-K
		5/10/02		100
		2/8/02		93					3
		1/1/02		116		120
		12/31/01		24		100			10KSB
		9/21/01		103					SB-2
		6/6/01		72
		5/31/01		100
		5/4/01		100
		2/22/01		99		100
		2/21/01		7		101
		2/26/98		7		113
									List all Filings