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 (A)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ending April 30, 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),
( ) YES ( X ) NO
(2) has been subject to such filing requirements for the past 90 days.
( ) YES ( X ) 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
1. FINANCIAL STATEMENTS
GLOBAL MEDIA CORPORATION
______________________
CONSOLIDATED BALANCE SHEETS
______________________________________________________________________________
(in US dollars)
As at April 30 As at July 31
1998 1997 1996
$ $ $
______________________________________________________________________________
(unaudited)
ASSETS
Current
Cash 12,846 121,890 15,905
Accounts receivable, net of allowance
for doubtful accounts of $ 53342
(July 31, 1997 13,307;1996 $ 4,058) 60,962 58,838 105,841
Inventory 6,194 15,469 35,628
Prepaid expenses 11,917 917 1,515
Advances to
affiliated companies [note 3] 75,449 77,778
Loan receivable from
shareholder [note 3] 18,203
______________________________________________________________________________
167,368 274,892 177,092
Capital assets [note 5] 169,687 20,566 11,420
______________________________________________________________________________
337,055 295,458 188,512
______________________________________________________________________________
______________________________________________________________________________
LIABILITIES AND SHAREHOLDERS' EQUITY
Current
Accounts payable and
accrued liabilities 129,036 94,649 83,727
Accrued wages payable to
shareholder & spouse [note 3] 58,195
Taxes payable 41,700 30,124 25,195
Due to affiliated company [note 3] 1,872
Due to shareholder [note 3] 45,064 84,090 5,444
_____________________________________________________________________________
215,800 208,863 174,433
Deferred revenue 12,062
_____________________________________________________________________________
215,800 220,925 174,433
_____________________________________________________________________________
_____________________________________________________________________________
GLOBAL MEDIA CORPORATION
______________________
CONSOLIDATED BALANCE SHEETS
______________________________________________________________________________
(in US dollars)
As at April 30 As at July 31
________________ ___________________
1998 1997 1996
$ $ $
______________________________________________________________________________
(unaudited)
Shareholders' equity
Share capital [note 6] 11,892 11,059
Additional paid in capital [note 6] 543,525 128,641
Unissued share capital (note 6) 144,001 1
Retained earnings (deficit) (438,946) (209,145) 14,486
Cumulative translation adjustment 4,784 (23) (408)
______________________________________________________________________________
121,255 74,533 14,079
______________________________________________________________________________
337,055 295,458 188,512
______________________________________________________________________________
______________________________________________________________________________
See accompanying notes
On behalf of the Board:
Director Director
_________ ___________
GLOBAL MEDIA CORPORATION
______________________
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
______________________________________________________________________________
(in US dollars)
Quarterly Report
Three Months Ending Nine Months Ending
April 30 April 30
_____________________ ____________________
1998 1997 1998 1997
$ $ $ $
______________________________________________________________________________
(unaudited) (unaudited) (unaudited) (unaudited)
REVENUE
Sales 149,419 421,648 844,882 1,382,526
Commission earned 6,216 5,337 18,362 17,083
______________________________________________________________________________
155,635 426,985 863,244 1,399,609
Cost of sales 13,702 123,446 413,124 529,692
Commission paid 5,073 104,143 139,352 507,594
______________________________________________________________________________
Gross margin 136,860 199,396 310,768 362,323
______________________________________________________________________________
GENERAL AND
ADMINISTRATIVE
EXPENSES [note 3]
Advertising
and marketing 2,484 6,010 8,123 14,298
Amortization 5,115 1,914 16,678 3,333
Bad debts ($63) 2,025 50,495 6,127
Bank charges,
interest and
financing fees 2,581 1,514 14,484 10,488
Foreign Exchange (3,923) 7,673
Professional fees 21,744 13,155 90,746 23,723
Office and miscellaneous 38,119 42,999 125,150 139,726
Travel 7,879 3,809 26,453 14,389
Wages and benefits 53,600 28,045 200,767 87,566
______________________________________________________________________________
127,536 99,471 540,569 299,650
______________________________________________________________________________
Income (loss) before
provision for
income taxes 9,324 99,925 (229,801) 62,673
Income taxes [note 4] - - - -
______________________________________________________________________________
Net income (loss)
for the year 9,324 99,925 (229,801) 62,673
______________________________________________________________________________
Net income (loss)
per common share 0.00 0.005 (0.01) 0.00
______________________________________________________________________________
______________________________________________________________________________
See accompanying notes
GLOBAL MEDIA CORPORATION
______________________
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
______________________________________________________________________________
(in US dollars)
Years Ended July 31
__________________________________________
1997 1996 1995
$ $ $
______________________________________________________________________________
REVENUE
Sales 1,617,528 1,745,061 552,003
Commission earned 20,204 10,154 64,250
______________________________________________________________________________
1,637,732 1,755,215 616,253
Cost of sales 755,446 764,619 289,519
Commission paid 621,597 543,894 150,932
______________________________________________________________________________
Gross margin 260,689 446,702 175,802
______________________________________________________________________________
GENERAL AND
ADMINISTRATIVE
EXPENSES [note 3]
Advertising
and marketing 22,452 100,485 61,906
Amortization 3,957 1,917 416
Bad debts 11,131 4,096 525
Bank charges,
interest and
financing fees 15,766 38,734 12,085
Foreign Exchange
Professional fees 63,003 7,888 2,004
Office and miscellaneous 180,597 90,438 58,300
Travel 26,088 16,880 6,294
Wages and benefits 46,694 140,024 35,831
______________________________________________________________________________
369,688 400,462 177,361
______________________________________________________________________________
Income (loss) before
provision for
income taxes (108,999) 46,240 (1,559)
Income taxes [note 4] - 10,354 -
______________________________________________________________________________
Net income (loss)
for the year (108,999) 35,886 (1,559)
______________________________________________________________________________
Net income (loss)
per common share (0.01) 0.00 0.00
______________________________________________________________________________
______________________________________________________________________________
See accompanying notes
GLOBAL MEDIA CORPORATION
______________________
CONSOLIDATED STATEMENTS OF
RETAINED EARNINGS (DEFICIT)
______________________________________________________________________________
(in US dollars)
Nine Months Ending
April 30, Years ended July 31,
_________________ ____________________________
1998 1997 1997 1996 1995
$ $ $ $ $
(unaudited) (unaudited)
______________________________________________________________________________
Balance,
beginning of year (209,145) 14,486 14,486 (21,400) (6,774)
Net income (loss)
for the year (229,801) 62,673 (108,999) 35,886 (1,559)
______________________________________________________________________________
(438,946) 77,159 (94,513) 14,486 (8,333)
Dividends
declared and paid (114,632) (13,067)
______________________________________________________________________________
Balance,
end of year (438,946) 77,159 (209,145) 14,486 (21,400)
______________________________________________________________________________
______________________________________________________________________________
See accompanying notes
<PAGE>
GLOBAL MEDIA CORPORATION
______________________
CONSOLIDATED STATEMENTS OF CASH FLOWS
______________________________________________________________________________
(in US dollars)
Quarterly Report
Three Months Ending Nine Months Ending
April 30 April 30
_____________________ ____________________
1998 1997 1998 1997
$ $ $ $
______________________________________________________________________________
(unaudited) (unaudited) (unaudited) (unaudited)
OPERATING ACTIVITIES
Net income (loss)
for the year 9,324 99,925 (229,801) 62,673
Items not requiring
an outlay of funds
Amortization 5,115 1,914 16,678 3,333
Services settled
through share
issuance 50,449
______________________________________________________________________________
14,439 101,839 (162,674) 66,006
Changes in non-cash
operating working capital
Accounts receivable 8,878 1,444 (2,124) 52,804
Inventory 7,750 1,408 9,275 14,981
Prepaid expenses 5,722 384 (11,000) 858
Accounts payable
and accrued
liabilities (14,543) (35,372) 34,387 (30,477)
Accrued wages payable (58,195)
Taxes payable (3,414) 11,576 (10,962)
Advances from
(repayments to)
shareholder (7,397) (762) (39,026) (28,722)
Advances to/from
affiliated companies (1,317) (65,345) 2,329 (28,506)
Deferred revenue (12,062)
______________________________________________________________________________
Cash provided by
(used in)
operating activities 13,532 182 (169,319) (22,213)
______________________________________________________________________________
INVESTING ACTIVITIES
Sale (purchase)
of capital assets (21,604) 471 (165,414) (7,317)
Decrease (increase)
in loan receivable
from shareholder 18,203
______________________________________________________________________________
Cash provided by
(used in)
investing activities (21,604) 471 (165,414) 10,886
______________________________________________________________________________
FINANCING ACTIVITIES
Dividends
Share subscriptions 221,267
Increase (decrease)
in bank indebtedness - - - -
______________________________________________________________________________
Cash provided by
(used in)
financing activities 0 0 221,267 0
______________________________________________________________________________
Effect of exchange
rate changes on cash (4,089) (4,128) 4,422 (736)
Increase (decrease)
in cash during the year (12,161) (3,475) (109,044) (12,063)
______________________________________________________________________________
Cash,
beginning of period 25,007 7,316 121,890 15,905
______________________________________________________________________________
Cash,
end of period 12,846 3,841 12,846 3,842
______________________________________________________________________________
Cash is represented by:
Cash 12,846 (10,468) 12,846 121,890
Term Deposits 14,310
______________________________________________________________________________
121,890
Interest - paid 2,581 1,265 4,470 331
Income taxes paid - - - -
______________________________________________________________________________
______________________________________________________________________________
See accompanying notes
GLOBAL MEDIA CORPORATION
______________________
CONSOLIDATED STATEMENTS OF CASH FLOWS
______________________________________________________________________________
(in US dollars)
Year Ended July 31
______________________________________
1997 1996 1995
______________________________________________________________________________
OPERATING ACTIVITIES
Net income (loss)
for the year (108,999) 35,886 (1,559)
Items not requiring
an outlay of funds
Amortization 3,957 1,917 416
Services settled
through share
issuance - - -
______________________________________________________________________________
105,042 37,803 (1,143)
Changes in non-cash
operating working capital
Accounts receivable 47,216 (103,292) (3,495)
Inventory 20,233 (17,551) (18,203)
Prepaid expenses 599 (1,291)
Accounts payable
and accrued
liabilities 11,090 29,560 54,329
Accrued wages payable (58,527) 58,737
Taxes payable 5,034 12,728 12,551
Advances from
(repayments to)
shareholder 79,266 5,358 (6,993)
Advances to/from
affiliated companies (80,309) 23,204 (21,075)
Deferred revenue 12,062
______________________________________________________________________________
Cash provided by
(used in)
operating activities (68,378) 45,256 15,971
______________________________________________________________________________
INVESTING ACTIVITIES
Sale (purchase)
of capital assets (13,209) (9,652) (4,165)
Decrease (increase)
in loan receivable
from shareholder 18,306 (18,372)
______________________________________________________________________________
Cash provided by
(used in)
investing activities 5,097 (28,024) (4,165)
______________________________________________________________________________
FINANCING ACTIVITIES
Dividends (114,632) (13,067)
Share subscriptions 283,700
Increase (decrease)
in bank indebtedness - (6,318) 6,247
________________________________________________________________________
Cash provided by
(used in)
financing activities 169,068 (6,318) (6,820)
______________________________________________________________________________
Effect of exchange
rate changes on cash 198 (143) 54
Increase (decrease)
in cash during the year 105,985 10,771 5,040
______________________________________________________________________________
Cash,
beginning of period 15,905 5,134 94
______________________________________________________________________________
Cash,
end of period 121,890 15,905 5,134
______________________________________________________________________________
Cash is represented by:
Cash 121,890 15,905
Term Deposits - - 5,134
______________________________________________________________________________
121,890 15,905 5,134
Interest - paid 357
Income taxes paid 9,278
______________________________________________________________________________
______________________________________________________________________________
See accompanying notes
Item 2 Management's Discussion and Analysis of Plan of Operation
(a) Liquidity
In the quarter, the Company made strides toward improving its liquidity. The
call center operation was able to reach a break-even level for the third
quarter ending April 30, 1998. The Company was able to reduce overhead by
approximately $25,000/month by closing the Alder grove office. The Alder
grove office was no longer required because the Company was no longer
importing US satellite dishes for sale in Canada; operations were centralized
at the Nanaimo office.
The current deficiency in working capital is being supported by shareholder
loans. Management intends to improve liquidity by completing a Regulation D
private placement. The Company plans to sell 1,000,000 units at a price of $1
per unit, each unit consisting of 1 share of common stock and one warrant
exercisable at $2.00. These warrants will expire on August 31, 1999. There
are no registration rights for the common stock underlying the warrants.
After offering costs, the net proceeds to the Company are expected to be
$800,000. Based on the success of the stock price, the $2 warrants may also
provide future financing to the Company, to a maximum of $2,000,000 if all
warrants are exercised. The majority of the funds raised through this private
placement will be used to fund development and marketing of the Company's
Internet web site which will be focussed on the sale of entertainment
products, primarily music CD's and film video cassette products. Funds will
also be used for working capital. A portion of the funds raised will also be
used to expand the call center operations.
(b) Capital Resources
The Company continues to meet its obligations. The decrease in cash flow for
the nine months ended April 30, 1998 was $109,044 including a net loss of
$229,801, amortization of $16,678 and services settled through share issuance
of $50,449. The services settled through share issuance were primarily
related to development of call center infrastructure. Prepaid expenses
increased by $11,000 as prepaid rent was part of the services settled through
share issuance. Accounts payable increased by $34,387 primarily related to
accounting and legal fees. Advances from shareholder decreased by $39,026
representing repayment of a shareholder loan.
The Company has continued to invest in developing its communications center.
Purchase of capital assets for the nine months ended April 30, 1998 totaled
$165,414 comprised mostly of telephone and computer equipment and software.
The Company is in the process of seeking long term debt financing using its
wholly owned assets of the communications center as collateral under a
lease/buy-back program. If favorable terms can be obtained, the proceeds, not
expected to exceed $100,000, will be used to purchase new equipment and for
working capital. As the call center approaches profitability, management
expects to able to fund future capital asset purchases through cash flow and
equity financing. The Company has no commitment to purchase capital assets
for continuing operations of the call center.
Cash provided by financing activities was $221,267 representing the sale of
share subscriptions.
For the three months ending April 30, 1998 operations generated a positive
cash flow of $13,532 comprised of net income of $9,324, a collection of $8,878
of accounts receivable, a decrease in inventory of $7,750 offset by a
reduction of accounts payable by $14,543 and repayments to a shareholder of
$7,397. The company continued to invest in capital assets using $21,604 in
investing activities primarily for call center infrastructure.
Results of Operations
For the three months ending April 30, 1998, the Company produced a net profit
of $9,324 and now has a net loss for the nine months ending April 30, 1998, of
$229,801. Sales for the quarter ending April 30, 1998 were $155,635
contributing to total revenue of $863,244 for the nine month period ending
April 30, 1998. Sales decreased 38.9% to $844,882 for the nine months ended
April 30, 1998 compared to $1,382,526 for the nine months ended April 30,
1997. This was primarily due to the continuing impact of retail prices having
dropped by an average of 50% during 1997 coupled with the discontinued sale of
a large portion of the product line in conjunction with a supreme court
ruling. Advertising and marketing expense decreased $6,175 to $8,123 for the
nine months ending April 30, 1998 compared to $14,298 for the nine months
ended April 30, 1997. This was primarily due to decreased advertising for the
product lines prohibited in the recent supreme court ruling. Amortization
increased by $13,345 to $16,678 for the nine months ending April 30, 1998
compared to $3,333 for the nine months ended April 30, 1997. This was
primarily due the depreciation of a larger capital asset base in the call
center. Bad debt expense increased by $44,368 to $50,495 for the nine months
ending April 30, 1998 compared to $6,127 for the nine months ended April 30,
1997. This was related to a receivable from the call center ($35,000) now
deemed to be unrecoverable and further write-offs of satellite programming
receivables (15,495).
Professional fees increased by $67,023 to $90,746 for the nine months ending
April 30, 1998 compared to $23,723 for the nine months ended April 30, 1997.
This was primarily related to legal and accounting expenses associated with
completing recent S.E.C. filings. Travel expense increased by $12,064 to
$26,453 for the nine months ending April 30, 1998 compared to $14,389 for the
nine months ended April 30, 1997. This increase in primarily attributable to
travel to and from the call center by officers and directors who do not live
in Nanaimo. Wages and benefits increased by $113,201 to $200,767 for the nine
months ending April 30, 1998 compared to $87,566 for the nine months ended
April 30, 1997. This was primarily due to increased staffing for the call
center.
While the Company continues to invest in its call center infrastructure and
add strength to its existing database, the Company has been able to reach a
break even stage of operations during the third quarter. Net income for the
three months ending April 30, 1998 was $9,324 representing a decrease of
$90,601 from the same period last year. The decrease in profit was mainly
attributable to a decrease in sales.
Due to the decreased prices and margins currently available from the sales of
satellite hardware and programming services, management has decided to suspend
sales of these products pending a significant change in the marketplace. This
is the main cause behind the 64.6% decrease in sales for the three months
ended April 30, 1998, $149,419, compared to $421,648 for the three months
ended April 30, 1997. Cost of sales also decreased significantly resulting in
only a 31.6% decrease in gross margin which fell to $136,860 (91,6% of sales)
for the three months ended April 30, 1998 compared to $199,396 (47.3% of
sales) for the three months ended April 30, 1997. General and administrative
expenses increased in the quarter, mainly due to an increase in wages and
benefits of $25,555 as a result of increased call center staff.
Management intends to focus its strengths in entertainment sales and
telemarketing in conjunction with the expanded reach brought by the newly
developed communications center to sell other entertainment products. The
Company is currently developing an Internet web site which will focus on the
sale of music CD and videos. The Company will continue to use its existing
communications infrastructure and marketing expertise in the sale of these new
product lines. Due to the suspension of satellite sales, management expects a
significant drop in revenues pending the completion of development of the web
site.
<PAGE>
NOTES
_______
All amounts as of April 30, 1998 and for the nine (in US dollars)
months ended April 30, 1998 and 1997 are unaudited.
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, and marketing of direct to home
satellite hardware and programming services to both commercial and private
individuals primarily in Western Canada. The Company commenced its internet-
integrated call center operation in September of 1997.
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 is contracted as an agent for the sales of certain
satellite hardware and programming services, therefore the majority of the
purchases are 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,
and are prepared on the following basis:
In the consolidated balance sheet at July 31, 1996 the assets, liabilities and
retained earnings of the Company represent the assets, liabilities and
retained earnings of Westcoast Wireless at that date.
The consolidated statements of income (loss), retained earnings (deficit), and
cash flows for the years ended July 31, 1995 and 1996 and for the period from
August 1, 1996 to May 20, 1997 (included in the results for the year ended
July 31, 1997) as well as the unaudited nine month period ended April 30, 1997
represent the results of operations and changes in financial position of
Westcoast Wireless during that period.
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.
These interim financial statements include all adjustments which in the
opinion of management are necessary in order to ensure the financial
statements are not misleading.
2. SIGNIFICANT ACCOUNTING POLICIES
INVENTORY
Inventory is recorded at the lower of actual 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 methods and rates as follows, except in the year of acquisition when one
half of the rate is used.
Call center infrastructure 20% declining balance
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 are recorded at the time of installation for hardware sales, and at
contract inception for sales of programming.
Revenues from the Call Center are recognized on a straight line basis over the
length of the contract.
FOREIGN CURRENCY TRANSLATION
The assets and liabilities of the Company's foreign subsidiary, Westcoast
Wireless, are translated into US dollars at fiscal year and exchange rates.
Income and expense items are translated at average exchange rates prevailing
during the fiscal year. 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.
FINANCIAL INSTRUMENTS
The financial instruments of the Company are carried at values which
approximate fair value.
3. RELATED PARTY TRANSACTIONS
April 30 July 31
1997 1997 1996
_____________________________________________ $__________$__________$___
(unaudited)
Loan receivable from shareholder
and spouse - - 18,203
Advances to affiliated companies 75,449 77,778 -
Due to affiliated company - - (1,872)
Due to shareholder (45,064) (84,090) (5,444)
Accrued wages payable to shareholder
and spouse - - (58,195)
____________________________________________________________________________
The loan receivable from the shareholder was non-interest bearing and was
fully repaid on January 31, 1997.
Other related party balances are non-interest bearing and without specific
terms of repayment.
The affiliated companies are related to Global Media Corp. through common
control. The fair value of the balances are not determinable since they have
no fixed repayment terms.
During the nine months ended April 30, 1998, the Company's consolidated
statement of income (loss) includes the following related party transactions:
* wages and benefits expense $64,269 [1997 - $53,513], to a shareholder
and spouse.
* income from recharge of wages $ nil [1997 - $ 72,610], to a company
related through common control.
During the year ended July 31, 1997 the Company's statement of income (loss)
includes the following related party transactions:
* advertising and marketing expense $nil [1996 - $73,421; 1995 - $20,237],
to a company related through common control.
* wages and benefits expense $45,565 [1996 - $147,752; 1995 - $33,859], to
a shareholder and spouse.
* income from recharge of wages of $72,610 [1996 - $19,824; 1995 - $nil],
to a company related through common control.
4. INCOME TAXES
The actual income tax expense attributable to earnings for the years ended
July 31, 1997, 1996 and 1995 and the nine month periods ended April 30, 1998
and 1997 differed from the amounts computed by applying combined statutory
income tax rates to pretax earnings as a result of the following;
April 30 July 31,
________________ _______________________
1998 1997 1997 1996 1995
$ $ $ $ $
_____________________________________________________________________________
(unaudited) (unaudited)
Tax provision at combined
statutory income tax rate (37,923) (2,684) (16,694) 10,173 (343)
Benefit of operating loss
carryforwards - - - (719) -
Other, net - - - 900
Losses for which no tax
benefit has been
recognized 37,923 2,684 16,694 - 343
_____________________________________________________________________________
- - 10,354
_____________________________________________________________________________
At July 31, 1997 the Company has operating loss carryforwards available to
reduce future taxable income. $ 24,857 expires in 2004 and $ 25,297 expires
in 2005. A deferred tax asset has not been recognized in respect of these
amounts as their future utilization does not meet the more likely than not'
test prescribed by Financial Accounting Standard No. 109.
5. CAPITAL ASSETS
Accumulated Net Book
Cost Amortization Value
$ $ $
_____________________________________________________________________________
APRIL 30, 1998 (unaudited)
Office furniture and equipment 19,440 4,292 15,148
Computer equipment 58,480 8,511 49,969
Leasehold improvements 8,640 1,081 7,559
Call Center Infrastructure 83,473 6,261 77,212
Software 22,019 2,220 19,799
_____________________________________________________________________________
192,052 22,365 169,687
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
July 31, 1996
Office furniture and equipment 8,917 1,439 7,478
Computer equipment 3,404 510 2,894
Leasehold improvements 1,415 367 1,048
_____________________________________________________________________________
13,736 2,316 11,420
_____________________________________________________________________________
6. SHARE CAPITAL
Apr. 30, '98 July 31, '97 July 31 '96
# # #
______________________________________________________________________________
AUTHORIZED
Common shares
par value of $0.001 each 200,000,000 200,000,000 200,000,000
ISSUED
Common shares 19,890,831 11,059,400
Unissued common shares 8,288,000 8,000,000
______________________________________________________________________________
ISSUED:
Share Additional
Common Shares Capital Paid in Capital
# $ $
______________________________________________________________________________
At April 30, 1998
Common Shares 11,059,400 11,059 128,641
Common shares issued for cash 730,533 731 364,536
Common Shares issued for
other than cash consideration:
Consideration for shares
in Westcoast Wireless (note 1) 8,000,000 1 -
In Kind Services 100,898 101 50,348
______________________________________________________________________________
At April 30, 1998 (unaudited)
Common Shares 19,890,831 11,892 543,525
______________________________________________________________________________
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 agreement for the issue of these shares were in place
at July 31, 1997, therefore 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 five month period ended December 31, 1997.
As at December 31, 1997, 42,898 common shares have been issued in kind for
rent of property while the remaining 58,000 have been issued in exchange for
professional services (8,000), consulting (14,200) and wiring the computer and
telephone infrastructure at the call center (35,800). In addition, 442,533
were issued for cash in the first five month period ending December 31, 1997.
Effective April 8, 1997 the company adopted, subject to shareholder approval,
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 with an exercise price of
U.S. $0.50 per share, 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.
At April 30, no options were outstanding under the Plan.
7. SEGMENTED INFORMATION
The Company's business operations are grouped into two industry segments:
Satellite Sales & Service - Westcoast Wireless Cable
Principally the marketing of direct to home satellite hardware and programming
services to both commercial and private individuals primarily in Western
Canada. Westcoast Wireless Cable commenced operations in the 1995 fiscal
year.
Call Center Services - Global Media Call Center
Principally in providing 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.
9 months ending 9 months ending Year Ending
4/30/97 4/30/97 7/31/97
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Call Cable (Consolidated)
$ $ $ $ $
______________________________________________________________________________
(Unaudited) (Unaudited)
Total Revenue 261,954 601,290 863,244 1,399,608 1,637,732
Net Income
(loss) (22,758) (207,043) (229,801) (62,673) (108,999)
Amortization 14,093 2,585 16,678 3,333 3,957
Identifiable
Assets 219,157 117,898 337,055 120,057 295,458
Capital
Expenditures 161,310 4,104 165, 414 7,032 13,209
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8. COMMITMENTS AND CONTINGENCIES
(a) Global Media entered into a commercial lease for office space effective
October 1, 1997, and will pay a total of $31,972 per year for the next five
years ending September 30, 2002.
(b) Following a decision by the Federal Court of Appeal of Canada in November
1997, with respect to the sale of U.S. satellite and programming services in
Canada, the management of Westcoast Wireless decided to withdraw from this
business, and to terminate its existing warranty agreements for such
equipment. It is management's opinion that fulfillment of the warranty
agreements would involve the Company transacting in business contrary to the
Federal Court ruling, and that any liability resulting for this decision would
not have a significant adverse effect on the financial position of the
Company.
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
GLOBAL MEDIA CORPORATION
/s/ Michael Metcalfe
Michael Metcalfe, President and Director
