Quarterly Report under Section 13 or 15(d) of the Securities Exchange Act of
1934
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10 Q SB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ending October 31, 1998
GLOBAL MEDIA CORPORATION
_____________________________________________________________________________
(Name of Registrant in its Charter)
Nevada 0-23491 91-1842480
______________________________________________________________________________
(State of Incorporation) (Commission File No.) (IRS Employer ID No.)
83 Victoria Crescent
Nanaimo, BC, Canada V9R 5B9
_______________________________
(Registrant's address)
(250) 716-9949
_________________________________
Registrant's Telephone Number
Check whether the issuer:
(1) filed all reports required to be filed by Section 13 or 15(d) of the
Exchange Act during the past 12 months (or for such shorter period that
the registrant was required to file such reports),
( X ) YES ( ) NO
(2) has been subject to such filing requirements for the past 90 days.
( X ) YES ( ) NO
As of April 30, 1998 the Registrant had 19,890,831 shares of Common Stock
outstanding.
Transitional Small Business Disclosure Format ( )YES ( X )NO
Global Media 10-Q for period ending October 31, 1998
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Unaudited Consolidated Balance Sheets for the Period Ended October 31, 1998
for the Period Ended October 31, 1998
Unaudited Consolidated Statements of Operations for the Period Ending October
31, 1998
Unaudited Consolidated Statements of Cash Flows for the Period Ending October
31, 1998
Unaudited Notes to Condensed Consolidated Financial Statements for the Period
Ending October 31, 1998
Global Media Corp.
CONSOLIDATED BALANCE SHEETS
_____________________________________________________________________________
As at October 31 (in US dollars)
For the
3 Months For the Year Ending
October 31 July 31 July 31
1998 1998 1997
$ $ $
__________________________________
ASSETS
Current
Cash 66,669 14,996 121,890
Accounts receivable,
net of allowance for doubtful Accounts of
$92,366 [July 31, 1998 - $ 92,366;
July 31,1997 - $13,307] 526 206 58,838
Inventory 793 1,992 15,469
Prepaid expenses 588 8,229 917
Due from affiliated companies [note 4] - 71,065 77,778
Income taxes recoverable [note 5] 2,439 2,439 -
_____________________________________________________________________________
71,015 98,927 274,892
Capital assets [notes 4 and 6] 185,526 172,635 20,566
_____________________________________________________________________________
256,541 271,562 295,458
_____________________________________________________________________________
_____________________________________________________________________________
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Current
Accounts payable and accrued liabilities 315,370 201,234 94,649
Taxes payable 54,722 51,354 30,124
Due to affiliated company [note 4] 126,650 46,284 -
Due to shareholders [note 4] 11,142 79,269 84,090
_____________________________________________________________________________
507,884 378,141 208,863
Deferred revenue - - 12,062
_____________________________________________________________________________
507,884 378,141 220,925
_____________________________________________________________________________
Shareholders' equity (deficiency)
Share capital [note 7] 11,892 11,892 11,059
Additional paid in capital [note 7] 543,525 543,525 128,641
Unissued share capital [note 7] - - 144,001
Deficit (832,568) (681,819) (209,145)
Cumulative translation adjustment 25,808 19,823 (23)
_____________________________________________________________________________
(251,343) (106,579) 74,533
_____________________________________________________________________________
256,541 271,562 295,458
_____________________________________________________________________________
_____________________________________________________________________________
See accompanying notes
<PAGE>
Global Media Corp.
CONSOLIDATED STATEMENTS OF OPERATIONS
_____________________________________________________________________________
3 Months ending October 31 (in US dollars)
For the 3 Months Ending
October 31 October 31
1998 1997
$ $
_______________________________
Revenue
Sales 20,130 90,000
________________________________________________________
General and administrative
expenses [note 4]
Advertising and marketing 40,969 -
Amortization 13,047 8,834
Bad debts - 17,500
Bank charges, interest
and financing fees 968 45
Foreign exchange 3,213 4,731
Professional fees 24,506 12,558
Office and miscellaneous 43,971 24,794
Travel 8,702 6,182
Wages and benefits 28,454 27,002
________________________________________________________
163,830 101,646
________________________________________________________
Loss from continuing
operations before and after
provision for income taxes (143,700) (11,646)
________________________________________________________
Loss from operations of
discontinued home satellite
business, less applicable
income tax recovery of
$8,682 [1997 - $nil] [note 3] (7,049) (65,258)
________________________________________________________
Loss for the year (150,749) (76,904)
________________________________________________________
________________________________________________________
Loss per common share from
continuing operations (0.01) (0.00)
Loss per common share from
discontinued operations (0.00) (0.00)
Loss per common share (0.01) (0.00)
________________________________________________________
________________________________________________________
See accompanying notes
<PAGE>
Global Media Corp.
CONSOLIDATED STATEMENTS OF
SHAREHOLDERS' EQUITY (DEFICIENCY)
______________________________________________________________________________
Period ending October 31 (in US dollars)
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Additional Unissued Retained Cumulative
Common stock paid-in share earnings translation
Shares Amount capital capital (deficit) adjustment
# $ $ $ $ $
_______________________________________________________________________________________________________________
Balance, July 31, 1996 [note 7] - - - 1 14,486 (408)
Common shares issued for cash 11,059,400 11,059 128,641 - - -
Unissued common shares [note 7] - - - 144,000 - -
Movement on cumulative
translation - - - - - 385
Loss for the year - - - - (108,999) -
Dividends declared and paid - - - - (114,632) -
_______________________________________________________________________________________________________________
Balance, July 31, 1997 11,059,400 11,059 128,641 144,001 (209,145) (23)
Common shares issued
for cash [note 7] 730,533 731 364,536 (144,000) - -
Common shares issued for
other than cash consideration:
Consideration for shares in
Westcoast Wireless
[notes 1 and 7] 8,000,000 1 - (1) - -
In kind services 100,898 101 50,348 - - -
Movement on cumulative
translation - - - - - 19,846
Loss for the year - - - - (472,674) -
_______________________________________________________________________________________________________________
Balance, July 31, 1998 19,890,831 11,892 543,525 - (681,819) 19,823
Movement on cumulative
translation 5,985
Loss for the Period (150,749)
_______________________________________________________________________________________________________________
Balance, October 31, 1998 19,890,831 11,892 543,525 - (832,568) 25,808
_______________________________________________________________________________________________________________
_______________________________________________________________________________________________________________
</TABLE>
See accompanying notes
<PAGE>
Global Media Corp.
CONSOLIDATED STATEMENTS OF CASH FLOWS
_____________________________________________________________________________
Period ending October 31 (in US dollars)
For the 3 Months Ending
October 31 October 31
1998 1997
$ $
__________________________________________________________
OPERATING ACTIVITIES
Loss for the period (150,749) (76,904)
Items not requiring an
outlay of funds
Amortization 13,633 10,137
Services settled through
share issuance - 50,449
Deferred revenue - -
__________________________________________________________
(137,116) (16,318)
Changes in non-cash operating
working capital
Accounts receivable (320) (35,536)
Inventory 1,199 (8,333)
Prepaid expenses 7,641 (17,597)
Income taxes recoverable - -
Accounts payable and
accrued liabilities 114,136 47,457
Accrued wages payable - -
Taxes payable 3,368 413
Advances from (to)
shareholder (68,127) (6,881)
Advances from (to)
affiliated companies 151,431 1,264
___________________________________________________________
Cash provided by (used in)
operating activities 72,212 (35,531)
___________________________________________________________
INVESTING ACTIVITIES
Purchase of capital assets (26,524) (114,452)
Decrease in loan receivable
from shareholder - -
___________________________________________________________
Cash provided by (used in)
investing activities (26,524) (114,452)
___________________________________________________________
FINANCING ACTIVITIES
Dividends - -
Share subscriptions - 120,757
____________________________________________________________
Cash provided by
financing activities - 120,757
____________________________________________________________
Effect of exchange rate
changes on cash 5,985 3,146
Increase (decrease) in cash
during the period 51,673 (26,080)
Cash, beginning of period 14,996 121,890
____________________________________________________________
Cash, end of period 66,669 95,810
____________________________________________________________
____________________________________________________________
Interest - paid 1,765 884
Income taxes paid (recovered) - -
____________________________________________________________
____________________________________________________________
See accompanying notes
<PAGE>
GLOBAL MEDIA CORPORATION
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
_____________________________________________________________________________
1. NATURE OF BUSINESS AND BASIS OF PRESENTATION
Global Media Corp. (the "Company") was incorporated on April 8, 1997 in the
State of Nevada and is engaged in providing internet-integrated call center
services from its location in Nanaimo, Canada. Until the 4th quarter of 1998,
the Company was also engaged in the marketing of direct to home satellite
hardware and programming services to both commercial and private individuals
primarily in Western Canada [note 3]. The Company commenced its internet-
integrated call center in September, 1997. The Company is also in the process
of developing an electronic commerce web site for the distribution and
eventual downloading of music and video over the internet.
On May 20, 1997 the Company issued 8,000,000 common shares and paid $100,000
in cash for all of the outstanding shares of Westcoast Wireless Cable Ltd.
("Westcoast Wireless"), a company which markets direct to home satellite
hardware and programming services.
Westcoast Wireless contracted for the sales of certain satellite hardware and
programming services, therefore the majority of the purchases were sourced
from a single supplier.
These financial statements reflect the continuity of interests of the former
shareholder of Westcoast Wireless, due to the continuation of common control.
The consolidated statements of operations, shareholders' equity (deficiency),
and cash flows for the period from August 1, 1996 to May 20, 1997 (included in
the results for the year ended July 31, 1997) represent the results of
operations and cash flows of Westcoast Wireless during those periods.
References to "the Company" in these financial statements include Westcoast
Wireless (for events occurring prior to May 20, 1997).
The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles in the United States of America.
The Company has not yet achieved a profitable level of operations. The
Company's continued operation is dependent upon achieving a profitable level
of operations from its electronic commerce web site, scheduled to commence
operations in March 1999, and upon obtaining additional financing and the
continued support of the Company's shareholders [note 10], to fund both
current operations, and web site construction.
<PAGE>
2. SIGNIFICANT ACCOUNTING POLICIES
INVENTORY
Inventory is recorded at the lower of cost, using the first in, first out
method, and net realizable value.
CAPITAL ASSETS AND AMORTIZATION
Capital assets are recorded at cost. Amortization has been calculated using
the following methods and rates, except in the year of acquisition when one
half of the rate is used.
Call center infrastructure 3 year straight line
Office furniture and equipment 20% declining balance
Software 20% declining balance
Computer equipment 30% declining balance
Leasehold improvements 5 year straight line
REVENUE RECOGNITION
Revenues from the call center are recognized on a straight line basis over the
term of the contract.
Revenues are recorded at the time of installation for hardware sales, and at
contract inception for sales of programming.
ADVERTISING AND MARKETING COSTS
Advertising and marketing costs are expensed as incurred.
FOREIGN CURRENCY TRANSLATION
The assets and liabilities of the Company's foreign subsidiary, Westcoast
Wireless, are translated into US dollars at fiscal period end exchange rates.
Income and expense items are translated at average exchange rates prevailing
during the fiscal period. The resulting translation adjustments are recorded
as a separate component of shareholders' equity.
Monetary assets and liabilities of the Company denominated in a foreign
currency are translated at period end exchange rates. Other balances are
recorded at rates in effect on the dates of the transaction. Exchange gains
and losses arising are reflected in net income for the period.
USE OF ESTIMATES
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States requires the Company's
management to make estimates and assumptions that affect the amounts reported
in the consolidated financial statements and related notes to the financial
statements. Actual results may differ from those estimates.
<PAGE>
FIANANCIAL INSTRUMENTS
The carrying values of the Company's financial instruments approximate fair
values, except as otherwise disclosed in the financial statements.
LOSS PER SHARE
The Company has adopted SFAS128, 'Earnings per share' in the current year on a
retroactive basis. There is no impact on previously reported loss per share
amounts.
RECENT ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has issued SFAS130, 'Reporting
comprehensive income', SFAS131, 'Disclosures about segments of an enterprise
and related information', SFAS132 'Employers' Disclosures about pensions and
other postretirement benefits' and SFAS133 'Accounting for derivative
instruments and hedging activities'. SFAS130, SFAS131 and SFAS132 are
effective for financial statements for fiscal years beginning after December
15, 1997. SFAS133 is effective for financial statements for fiscal years
beginning after June 15, 1999.
SFAS130 establishes standards for reporting and display of comprehensive
income, its components and accumulated balances. Comprehensive income is
defined to include all changes in equity except those resulting from
investments by owners and distributions to owners. Among other disclosures,
SFAS130 requires that all items that are required to be recognized under
current accounting standards as components of comprehensive income be reported
in a financial statement that is displayed with the same prominence as other
financial statements.
SFAS131, SFAS132 and SFAS133 currently have no impact on the Company.
3. DISCONTINUED OPERATION
In November 1997, a decision was made by the Canadian Federal Court of Appeal
of, ruling that sale of US satellite and programming services in Canada was
not permitted. Following a period of trading in Canadian satellite and
programming services the management of Westcoast Wireless decided to withdraw
completely from the home satellite business in late fiscal 1998. The home
satellite business includes all operations of Westcoast Wireless.
This subsidiary company has been accounted for as a discontinued operation,
and accordingly, its operations have been segregated in the accompanying
consolidated statements of operations.
Revenues of the discontinued company for the period ending October 31, 1998
were Nil, (1997-$400,836) and for the year ended July 31, 1998 were $591,938
[1997 - $1,617,528]. At October 31, 1998, net current liabilities of the
discontinued operation were $ 132,672, (1997-$164,177) and at July 31, 1998
were $130,076 [1997 - $31,578] consisting principally of accounts payable and
balances due to shareholder. Net non-current assets at October 31, 1998 were
$14,654, (1997-$24,316) and at July 31, 1998 were $15,352 [1997 - $8,504].
4. RELATED PARTY TRANSACTIONS
All related party balances as disclosed in the balance sheet are non-interest
bearing and without specific terms of repayment.
The affiliated companies are related to Global Media Corp. by virtue of
control by officers of the Company. The fair values of the balances are not
determinable since they have no fixed repayment terms.
The Company's consolidated statement of operations for the year ended July 31,
1998 includes the following related party transactions:
wages and benefits expense of $Nil, July 31,1998 were $81,747
[1997 - $45,565], to a shareholder and spouse.
income from recharge of wages of $Nil, July 31, 1998 were $Nil
[1997 - $72,610], to a company related by virtue of control by an officer
of the Company.
During the year ended July 31, 1998 the following capital asset additions were
purchased from related parties:
$32,909 [1997 - $nil] for call center development from shareholders of
the Company.
$2,454 [1997 - $nil] for call center development from an officer of the
Company.
$5,709 [1997 - $nil] for office equipment, $4,171 [1997 - $nil] for
leasehold improvements and $12,170 [1997 - $nil] for call center
development from a company controlled by an officer of the Company.
No related party transactions occurred during the period ending October 31,
1998 with the exception of:
(i) A partial repayment of a shareholder loan, $ 71,065, which was
used to repay a receivable owed to the Company by an affiliate
owned by the same shareholder;
(ii) Advances from an affiliated company for $ 80,366
5. INCOME TAXES
At July 31, 1998, the Company had a domestic net operating loss of $240,407
which will begin to expire in 2011, and foreign net operating loss
carryforwards of $250,671 which will expire in 2005. Utilization of these
carryforwards depends on the recognition of future taxable income.
For financial reporting purposes, a valuation allowance has been established
for all deferred tax assets due to the uncertainty of realization. As a
result of certain stock transactions, utilization of the Company's net
operating loss carryforwards may be subject to certain limitations in the
event that a change in ownership has occurred, as defined in Section 382 of
the Internal Revenue Code of 1986, as amended.
Deferred tax assets reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the Company's deferred tax assets and liabilities are as follows:
July 31,
1998
$
_____________________________________________________________________________
Deferred tax assets:
Net operating loss carryforwards 196,094
Tax vs. accounting value in fixed assets 5,431
Unrealized foreign exchange loss 4,155
_____________________________________________________________________________
Total gross deferred tax assets 205,680
Less valuation allowance (205,680)
Deferred tax liability -
_____________________________________________________________________________
Net deferred tax assets -
_____________________________________________________________________________
_____________________________________________________________________________
6. CAPITAL ASSETS Accumulated Net Book
Cost Amortization Value
$ $ $
_____________________________________________________________________________
October 31, 1998
Office furniture and equipment 3,718 5,556 8,162
Computer equipment 70,825 18,301 52,524
Leasehold improvements 8,504 4,987 3,517
Call center infrastructure 91,575 19,483 72,092
Software 48,246 9,015 39,231
_____________________________________________________________________________
242,868 57,342 185,526
_____________________________________________________________________________
_____________________________________________________________________________
July 31, 1998
Office furniture and equipment 18,859 4,842 14,018
Computer equipment 70,107 13,117 56,990
Leasehold improvements 8,594 4,905 3,689
Call center infrastructure 91,575 17,325 74,250
Software 27,209 3,520 23,689
_____________________________________________________________________________
216,344 43,709 172,635
_____________________________________________________________________________
_____________________________________________________________________________
July 31, 1997
Office furniture and equipment 9,794 2,576 7,218
Computer equipment 8,814 2,187 6,627
Leasehold improvements 2,029 709 1,320
Software 6,001 600 5,401
_____________________________________________________________________________
26,638 6,072 20,566
_____________________________________________________________________________
_____________________________________________________________________________
7. SHARE CAPITAL
1998 1997
# #
_____________________________________________________________________________
Authorized
Common shares, par value $0.001 each 200,000,000 200,000,000
Issued
Common shares 19,890,831 11,059,400
Unissued common shares - 8,288,000
_____________________________________________________________________________
_____________________________________________________________________________
As at July 31, 1997, 8,000,000 shares issued in consideration for the shares
in Westcoast Wireless and 288,000 of the shares issued for cash had not been
issued; however, legal agreements for the issue of these shares were in place
at July 31, 1997. The amounts were recorded as unissued share capital of $1
and $144,000 respectively as at July 31, 1997. All of these shares were
issued in the year ended July 31, 1998.
Effective April 8, 1997 the Company adopted the 1997 Directors and Officers
Stock Option Plan (the "Plan"). The Plan is administered by the Board of
Directors who have sole discretion and authority to determine individuals
eligible for awards under the Plan. The Plan provides for issuance of a total
of 500,000 options, within a period of 10 years from the effective date. The
conditions of exercise of each grant are determined individually by the Board
at the time of the grant. During the current year, this plan was amended to
increase the number of options from 500,000 to 1,000,000 shares.
During the quarter 1,000,000 options at an exercise price of $0.50 per share
were granted to various officers, directors and employees of the company.
At October 31, 1998, no options have been exercised.
8. SEGMENTED INFORMATION
The Company's business segment which derived revenue from the marketing of
direct to home satellite hardware and programming services, has been presented
as a discontinued operation in the current year [note 3].
The remaining segment of the business relates to call center services. The
Global Media call center provides internet integrated call center services to
US based clients from its location in Nanaimo, Canada. The Global Media call
center commenced operations in September of 1997 and comprises all continuing
operations of the Company. The call center is presently providing services to
the Company by obtaining licensing contacts for the entertainment web site and
fielding investor and shareholder inquiries relating to the Company and its
operations.
9. COMMITMENTS AND CONTINGENCIES
Global Media entered into a commercial lease for office space effective
October 1, 1997, and will pay a total of $52,939 per year until July 31, 2002.
10. SUBSEQUENT EVENT
On November 5, 1998, the Company entered into a loan agreement with Rolling
Oaks Enterprises, LLC allowing the Company to draw on a line of credit of up
to $500,000, repayable within one year. The interest rate on the credit
facility is 24% per annum, with an origination fee of 1% payable on the
receipt of funds.
The loan is collateralized by a first charge on all available fixed assets of
the Company, and 1,000,000 of common shares in the Company at a price of $1
per share currently in issue.
Since October 31, 1998, two principal shareholders of the Company have
advanced funds of $126,000 to the Company. The shareholder loans at October
31, 1998, and advanced since the balance sheet date, have no fixed terms of
repayment and therefore are classified as current liabilities in the balance
sheet. However, the shareholders have indicated their intent to continue to
support the operations of the Company.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following "Management's Discussion and Analysis of Financial Condition and
Results of Operations" contains forward-looking statements based on current
expectations, estimates and projections about the Company's industry,
management's beliefs and certain assumptions made by management. All
statements, trends, analyses and other information contained in this report
relative to trends in net sales, gross margin, anticipated expense levels,
liquidity and capital resources, as well as other statements, including, but
not limited to, words such as "anticipate," "believe," "plan," "estimate,"
"expect," "seek" and "intend," and other similar expressions, constitute
forward-looking statements. These forward-looking statements involve risks
and uncertainties, and actual results may differ materially from those
anticipated or expressed in such statements. Except as required by law, the
Company undertakes no obligation to update any forward-looking statement,
whether as a result of new information, future events or otherwise.
Readers, however, should carefully review the factors set forth in other
reports or documents that the Company files from time to time with the
Securities and Exchange Commission (the "SEC").
RESULTS OF OPERATIONS
STATEMENT OF OPERATIONS DATA
Revenue decreased to $20,130 (1997 - $90,000) during the first quarter ending
October 31, 1998. This was due to fundamental changes in the company's
business discussed above. The Company has moved into a development cycle and
does not expect further revenues pending the launch of its web site. Global
Media is in the process of developing a web site and associated licensing
program to sell music CDs, video cassettes, DVDs, books, magazine
subscriptions and other entertainment products via a series of Internet web
sites. The Company also plans to be a major participant in the newest method
of music and video distribution via direct Internet download.
General and Administrative expenses of $163,830 (1997 $101,646) increased
mainly as a result of advertising (news releases, Internet and other
promotional material) associated with informing the investment community of
the listing of the Company's securities and office expenses relating increase
operations.
_____________________________________________________________________________
October 31 October 31
1998 1997
$ $
__________ __________
Sales 20,130 90,000
Advertising and Marketing 40,969 -
Amortization 13, 047 8,834
Office and Miscellaneous 43,971 24,794
Wages and Benefits 28,454 27,002
_____________________________________________________________________________
_____________________________________________________________________________
Advertising expense was $40,969 (1997 - $NIL) due to the news releases,
Internet and other promotions used to inform the investment community of the
listing of the Company's securities and its busines plan. Professional fees
increased to $24,506 (1997 - $12,558) mainly relating to corporate web site
development, generation of investor leads and listing in Standard and Poor's
Corporation Records.
Office expense of $43,971 (1997 - $24,794) increased primarily due to rent
expense at the larger Nanaimo offices and other expenses associated with
promotion. Office expense consisted mainly of accounting and legal fees
$7,907 (1997 - $16,720); rent $15,825 (1997 - $5,930); telephone $11,145 (1997
$324); general office expense $5,205 (1997 - $1,305) and Internet charges of
$2,382 (1997 $288). Travel expense of $8,702 (1997 - $6,182) consisted
primarily of travel relating to development of strategic alliances, evaluation
of web site designers and attending industry related conferences. Wages of
$28,454 (1997 27,002) consisted primarily of call center staff and
administration; answering investor, shareholder and other investment community
member inquiries; initiating our licensing and affiliate programs and
corporate web site development.
LIQUIDITY AND CAPITAL RESOURCES
Cash increased by $51,673 (1997 decrease of $26,080) primarily resulting
from advances from affiliated companies in the amount of $151,431. This
increase in cash was offset by cash used in operations to repay shareholder
loans of $68,127 (1997 - $6,881) and purchase of capital assets of $26,524
(1997 - $114,452)
Operating activities produced a loss of $150,749 (1997 $76,904) offset by
amortization of $13,633 (1997 - $10,137).
STATEMENT OF CASH FLOW DATA
_____________________________________________________________________________
October 31 October 31
1998 1997
$ $
__________ __________
Loss for the period (150,749) (76,904)
Accounts receivable (320) (35,536)
Inventory 1,199 (8,333)
Prepaid expenses 7,641 (17,597)
Accounts payable and accrued liabilities 114,136 47,457
Advances from (to) shareholder (68,127) (6,881)
Advances from (to) affiliated companies 151,431 1,264
INVESTING ACTIVITES
Purchase of capital assets (26,524) (114,452)
Incresae (decrease) in cash during period 51,673 (26,080)
_____________________________________________________________________________
_____________________________________________________________________________
CHANGES IN NON-OPERATING CAPITAL
Increases in cash were caused by: the sale of some inventory for $1,199 (1997
increase in inventory levels needed for sales lead to decrease in cash of
$8,333); prepaid expenses decreased by $7,641 due to use of presentation
folders for mailing corporate information and expensing of prepaid rent (1997
increase in prepaid of $17,597 resulting from prepayment of a portion of
rent to landlord); an increase in accounts payable of $114,136 resulting from
recent payables from web site development and operating activities (1997 -
$47,457); and advances from affiliated companies totaled $151,431 (1997
$1,264).
The increase in cash was offset by a small increase in accounts receivable due
to employee advances (1997 - decrease in receivable of $35,536 from tightening
up on receivable policy); and a re-payment of a shareholder loan of $68,127
which was re-advanced to the Company to pay off a receivable owed by an
affiliate owned by the same shareholder (1997 payment of $6,881).
INVESTING ACTIVITIES
There was a decrease in cash of $26,524 (1997 - $114,452) caused by fixed
asset purchases of computer equipment and software to be used in the
entertainment website.
FINANCING ACTIVITIES
No financing activities occurred during the period.
OVERVIEW
Global Media is in the process of developing a web site and associated
licensing program to sell music CDs, video cassettes, DVDs, books, magazine
subscriptions and other entertainment products via a series of Internet web
sites. The Company also plans to be a major participant in the newest method
of music and video distribution via direct Internet download. Global Media
will strive to offer its customers compelling value through innovative use of
technology, broad selection, high-quality content, a high level of customer
service and personalized services. The Company will offer a catalog of more
than 250,000 CDs, 150,000 movie video cassettes, 30,000 DVDs, 100,000 digital
audio files and 2 million book titles; easy-to-use search and browse features;
e-mail services; personalized shopping services; Web-based credit card payment
and direct shipping to customers. Operating as an online retailer, Global
Media will have virtually unlimited online shelf space and offers customers a
vast selection through an efficient search-and-retrieval interface. The
Company believes that as its user base grows, it will not only be able to
increase revenues from sales of its main product lines but also through
related merchandise, advertising and sponsorship programs.
Global Media Corp. was incorporated on April 8, 1997, pursuant to the laws of
the State of Nevada for the purpose of acquiring and developing profitable
communications projects to increase shareholder wealth. The Company's
principal corporate offices are located in Nanaimo, British Columbia, Canada.
The Company listed its common stock is on the NASD Over the Counter Bulletin
Board (OTC:BB) under the symbol "GLMC".
LICENSING
Global Media will license use of its back end database and secure transaction
processing, ordering and fulfilment systems to third party Internet marketers.
This will allow companies without sufficient development expertise or funding
to use an existing system to target various niche markets. For an up front
charge consisting only of web design fees and ongoing revenue sharing,
companies will be able to license unique front end web sites running off
Global Media's back end. This licensing program differs from the affiliate
program, which will also be offered by Global Media, in that the entire
purchase experience occurs within the licensees front end with all the back
end database and transaction processing systems being managed by Global Media.
With Global Media's licensing program, everyone from small Internet start-ups
to major "bricks and mortar" retailers will be able to have their own online
entertainment sales web site. Global Media will provide these businesses with
a unique front-end web site which may either be targeted to niche or broad-
based markets. The entire purchasers' experience will appear to happen
completely within the licensee's site, allowing them to build their own brand
name. Global Media will manage the entire back-end system including
inventory, packaging, shipping, database management, and transaction
processing.
Based on the individual agreement, licensees may also license Global Media's
editorial content, including general interest entertainment articles, CD and
movie reviews, etc.. This will allow businesses to quickly enter the online
entertainment retailing market without undergoing the significant time and
expenditure involved in developing a sophisticated back-end system. Licenses
will be available for an up-front cost with ongoing revenue sharing.
PARTNERSHIPS
Global Media has agreements with Muze Inc., Baker & Taylor and Liquid Audio.
Muze Inc. is the leading independent source of digital information about
music, books and movies, to include Muze's music and home video content and
will be the database source for the web site. Baker & Taylor will manage all
packaging, shipping and returns of CDs, videos and DVDs sold through Global
Media's web site. Operating worldwide, Baker & Taylor distributes a wide
range of products, including books, video, audio, software, and related
services to retail stores and libraries. The company has 11 inventory
distribution centers across the United Sates. Liquid Audio's technology
allows consumers to preview and purchase CD-quality music over the Internet,
while ensuring copyright protection and tracking royalties.
GENERAL
During the past quarter, the Company listed its securities on the NASD Over
The Counter Bulletin Board under the symbol GLMC. The Company engaged in
various promotional activities to inform the investment community of its
listed securities and current business plan, these included press releases,
phone and Internet based investor relations and development and promotion of a
corporate web site.
The Company also continued development of its communications center which
managed Global Media's investor relations over multiple mediums including
phone, fax and e-mail. The communications center also managed the
distribution of corporate information via the Internet, fax and physical
packages. The communications center continues to allow Global Media to
maintain and develop relationships with its shareholders, the investment
community and the media. It is also being used to develop and manage
relationships with the large number of companies and individuals expressing
interest in Global Media's licensing and affiliate programs.
The Company developed its corporate web site in order to showcase its business
plan, management and partnerships with its shareholders, the investment
community and the media. The corporate web site is also being used to provide
information to businesses and individuals about the Global Media's licensing
and affiliate programs.
During the quarter, Global Media also developed several key strategic
alliances including Muze Inc., Baker & Taylor and Liquid Audio. These
alliances represent significant steps toward execution of the company's
business plan. Muze Inc. is the leading independent source of digital
information about music, books and movies, to include Muze's music and home
video content and will be the database source for the web site. Baker &
Taylor will manage all packaging, shipping and returns of CDs, videos and DVDs
sold through Global Media's web site. Operating worldwide, Baker & Taylor
distributes a wide range of products, including books, video, audio, software,
and related services to retail stores and libraries. The company has 11
inventory distribution centers across the United Sates. Liquid Audio's
technology allows consumers to preview and purchase CD-quality music over the
Internet, while ensuring copyright protection and tracking royalties.
As part of its growth strategy, the Company seeks to establish strategic
alliances with global on-line, music and media companies to attract additional
users to, and increase brand awareness of, the Company's websites. These
include network television operators, cable and satellite operators as well as
radio networks. These types of partnerships not only bring credibility and
financial backing but have access to leverage existing viewers to a sales web
site. The Company is also seeking partnerships with large Internet portals,
search engines and chat. Global Media views entertainment development and
distribution as an essential, compelling element to draw visitors to its site
and worked during the quarter to develop relationships with content developers
and distribution technology partners.
Pursuing the business plan relating to company's Internet entertainment and
sales web site and licensing program was coupled with fundamental changes in
the company's business. The Company's satellite hardware and programming
sales business was discontinued in the previous quarter and the Company is no
longer accepting investor relations contracts in favor of focussing entirely
on development of its current business plan. The Company has thus moved into
a development cycle and does not expect further revenues pending the launch of
its web site.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
There are no legal proceedings to report.
ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS
On or about August 18, 1998, the Registrant filed on Form S-8 its
registration statement for 1,000,000,000 shares of common stock dedicated
to the Global Media Corporation 1998 Directors and Officers Stock Option
Plan. As of October 31, 1998, no options had been exercised under the
plan.
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5 - OTHER INFORMATION
None.
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
None.
In accordance with the requirements of the Securities Act of 1933, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
GLOBAL MEDIA CORPORATION
By /s/ Michael Metcalfe
____________________
Michael Metcalfe,
President and Director
By /s/ Robert Fuller
____________________
Robert Fuller
CEO and Director
<TABLE> <S> <C>
<ARTICLE>5
<MULTIPLIER>1
<CURRENCY> U.S. DOLLARS
<S> <C>
<FISCAL-YEAR-END> JUL-31-1998
<PERIOD-TYPE> 3-MOS
<PERIOD-START> AUG-01-1998
<PERIOD-END> OCT-31-1998
<EXCHANGE-RATE> 1
<CASH> 66,669
<SECURITIES> 0
<RECEIVABLES> 526
<ALLOWANCES> 0
<INVENTORY> 793
<CURRENT-ASSETS> 71,015
<PP&E> 0
<DEPRECIATION> 13,047
<TOTAL-ASSETS> 257,541
<CURRENT-LIABILITIES> 507,884
<BONDS> 0
0
0
<COMMON> 11,892
<OTHER-SE> (251,343)
<TOTAL-LIABILITY-AND-EQUITY> 256,541
<SALES> 20,130
<TOTAL-REVENUES> 20,130
<CGS> 0
<TOTAL-COSTS> 163,830
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (143,700)
<INTEREST-EXPENSE> 1,765
<INCOME-PRETAX> (143,700)
<INCOME-TAX> 0
<INCOME-CONTINUING> (143,700)
<DISCONTINUED> (7,049)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (150,749)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> (.01)
</TABLE>
