FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.D. 20549
(Mark One)
[X] Quarterly report pursuant to Section
13 or 15(d) of the Securities Exchange Act of
1934
For the quarterly period ended September 30,
1998
or
[ ] 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 0-22851
GLOBAL DIGITAL INFORMATION, INC.
(Exact name of registrant as specified in its
charter)
Washington 91-179-3053
(State or jurisdiction (I.R.S. Employer
of incorporation Identification No.)
or organization)
455 Wards Corner Road
Loveland, OH 45140
513-831-6647
(Registrant's telephone number, including
area code)
(Former Address, if changed since last
report)
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 that the
registrant was required to file such
reports), and (2) has shorter period been
subject to such filing requirements for the
past 90 days.
Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED IN
BANKRUPTCY.
Indicate by check mark whether the
registrant has filed all documents and
reports required to be filed by Sections 12,
13 or 15(d) of the Securities Exchange Act of
1934 subsequent to the distribution of
securities under a plan confirmed by a court.
Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares
outstanding of each of the issuer's classes
of common stock, as of the latest practicable
date.
As of September 30, 1998, approximately
10,632,984 shares of the Registrant's Common
Stock, $.01 par value, were outstanding.
Part I - Financial Information.
Item 1. Financial Statements.
SEE ATTACHED EXHIBIT 27,
FINANCIAL DATA SHEET.
Item 2. Managements Discussion and Analysis
of Financial Condition and Results of
Operations.
NOTE 1. - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
(a) The Company
The Company was incorporated in 1983 under
the laws of the State of Utah as Forward
Electronics Corporation. In 1988 it was
reorganized with United Stated Mining &
Exploration, Inc. (USM) and changed its name
at that time. Also in 1988 the Company
acquired Ridge Rock Mining Corporation which
it subsequently dissolved. During 1989 Rocky Mountain Process Components was
acquired. This company was also dissolved. Since 1990
the Company has had no operations, until the
merger with Global Digital Information, Inc.
(GDI) After the merger the Company changed
its name to Global Digital Information, Inc.
Although there has been a change in reporting
entity i.e. from USM to GDI the accompanying
financial statements include the activities
of USM for comparison purposes for years
prior to 1998.
(b) Fixed Assets
Fixed Assets includes all property, plant and
equipment. Furniture and fixtures, computer
equipment and manufacturing equipment are
stated at cost. They are be depreciated over
their estimated useful lives of five to
twenty years, as appropriate. Depreciation
expense amounted $1,500 for the quarter ended
June 30, 1998.
(c) Business Activity
GLOBAL DIGITAL INFORMATION, INC. was
incorporated June 25, 1997 in the State of
Washington. The Company designs, develops,
markets and supports medical document
management systems and personal productivity
software which facilitates the recording,
imaging, manipulation, distribution and
storage of paper-based medical information on
personal network computers. The Company has
acquired "CaduSys Medical Record: a
client/server clinical information software
package that collects and stores patient data
during the creation of the clinical
narrative. It is sold to health care
organizations including, but not limited to,
single and multi-doctor practices, clinics,
health care organizations and small
hospitals. Some of the Company's other
products include office adaptations which use
the personal computer to eliminate paper in
the office filing system.
(d) Income Taxes
Effective April 1, 1993, the Company adopted
the provisions of Statement of Financial
Accounting Standards No. 109, "Accounting for
Income Taxes". SFAS No. 109 requires a
company to recognize deferred tax assets and
liabilities for the expected future income
tax consequences of events the have been recognized in the financial statements.
Under this method, deferred tax assets and
liabilities are determined based on the
temporary differences between the financial
statement carrying amounts and tax basis of
assets and liabilities using enacted tax
rates in effect in the year in which the
temporary differences are expected to
reverse. There was no cumulative effect of
adopting SFAS No. 109.
(e) Principals of Consolidation
The Consolidated Financial Statements,
including the Balance Sheet, Statement of
Retained Earnings, Statement of Net Income
(Loss), and Statement of Cash Flows, include
the accounts of all subsidiaries. All inter- company items and transactions
have been eliminated.
(f) Cash
Cash included in the statement of cash flows
includes cash and cash equivalents at the
balance sheet date. Certain noncash
transactions with shareholders for which were
reimbursed in shares of Common stock have
been eliminated.
NOTE 2. - MERGER AND REORGANIZATION
Effective November 11, 1998 the Company U.S.
Mining & Exploration, Inc. (USM) pursuant to
a Reorganization Agreement (the "Plan") with
Global Digital Information, Inc. (GDI) USM
was acquired in a "reverse acquisition" and
the shareholders of GDI became the major
shareholders in USM. The "Plan" as approved
by the Board of Directors provided for a 2
for 1 split of the then owned shares of the
USM, the issuance of additional shares
(440,962) for cash ($52,500), and 276,410
shares issued for services rendered by
officers and directors of the Company. The
total shares of Common stock outstanding at
the time was then 1,700,000. As part of the
"Plan" the shareholders of GDI were issued an
additional 8,500,000 shares making the total
shares outstanding 10,200,000 shares. The
then existing Board of Directors (USM)
resigned and was replaced by directors from
GDI.
The acquisition has been accounted for as a "Pooling of Interests" as per APB
Opinion No. 16. Since GDI came into existence on June
25, 1997, its results of operations have been
included in these financial statements. No
adjustment is made to prior years presented
because GDI was not in existence at that
time.
NOTE 3. - EARNINGS PER SHARE:
Primary earnings per share have not been
computed since they are antidilutive.
NOTE 4. - RELATED PARTY TRANSACTIONS
The Company has acquired its rights to most
of its software programs from its
shareholders who are also shareholders in
previous corporations which had these rights
or had developed the programs. The Company
purchased these rights through the issuance
of common stock. Although the value of these
rights may be substantial, because of the
lack of a proper valuation method, they have
been recorded at the par value of the stock
issued. i.e. 8,044,150 shares were issued to
the founders and they have been valued at
$.001 per share or $8,044. In addition to
the stock the Company agreed to pay for
liabilities in the approximate amount of
$47,000.00.
NOTE 5. - ISSUANCE OF COMMON STOCK:
Effective July 1, 1997, the Company offered
shares of its common stock to a limited
number of investors pursuant to a Regulation
D exemption up to a maximum of 500,000
shares. At June 30, 1998, as a result of
this offering, 888,834 Common Shares of stock
were sold to individual investors, grossing
the company $534,774. The placement is being
offered and expenses were paid in conjunction
with the offering amounting to $183,008 at
June 30, 1998, including commissions for a
net total of $351,766.
NOTE 6. - CASH TRANSACTIONS
Since no cash was actually paid by the
company for the acquisition of the CaduSys
software no cash disbursements have been shown on these financial statements for
the transaction.
NOTE 7. - COMMON STOCK SALE
As part of the reorganization between U.S.
Mining and Exploration, Inc.(USM) and Global
Digital Information, Inc. (GDI) the Company
previously reported the receipt of $52,500
(the amount has been reported as expense of
issuing common stock on the financial
statements). Upon further review, it has
been determined that this amount in not
correct. The correct amount may be $220,481
or it may be that the Company has not
received any funds for the sale of stock.
The Company's previous attorney, who is in
control of the records, has refused to
release them. The Company is endeavoring to
settle with the former majority shareholders
of USM concerning the merger between USM and
GDI. Upon receipt of those records, the
correct amount received, as well as a
determination of what should have been
received, will be known. If the amounts
actually received by the Company were greater
than that which was reported, the difference
will be reported as additional costs or
reduced costs of issuing the common stock to
effect the merger.
NOTE 8 - INCOME TAXES
As discussed in Note 1, effective April 1,
1993, the Company applied the provisions of
SFAS No. 109 in accounting for income taxes.
Prior to that date the Company accounted for
income taxes under the provisions of
Accounting Principles Board Opinion No. 11.
The adoption of SFAS No. 109 had no
cumulative effect on the results of
operations.
The Company has no income tax provision for
the years ended March 31, 1998 and 1997 due
to net operating loss carryforwards.
The income tax effect of the temporary
differences giving rise to the Company's
deferred tax assets as of March 31, 1998 is
as follows:
Federal net operating loss
carryforwards $198,587
Total deferred tax asset 198,587
Valuation allowance (198,587)
Net deferred tax asset $ -0-
Upon implementation of SFAS NO. 109 at April
1, 1993, the Company recorded a valuation
allowance due to the uncertainty of
utilization of net operating loss
carryforwards. The change in the valuation
allowance for the year ended October 30, 1995
is as follows:
Balance April 1, 1997 $ 2,592
Increase in non-utilization of
net operating Loss carryforwards 195,995
Balance, October 30, 1995 $198,587
At March 31, 1998, the Company had unused net
operating loss carryforwards for income tax
purposes available to offset future taxable
income, if any, as follows:
Alternative
Expiring In Regular Tax Minimum Tax
2008 17,279 17,279
2012 566,799 566,799
$584,078 $584,078
NOTE 9 - ACQUISITION OF MASTERPIECE MEDICAL
The Board of Directors of Global Digital
Information, Inc. approved the acquisition of
Masterpiece Medical, Inc. (MM), and Del Crane
Medical, Inc. (D). Masterpiece Medical and
Del Crane Medical are Ohio corporations with software programs and billing
capability which compliment the CaduSys medical records
program offered by the Company.
The Company intends to purchase all of the
stock of the companies by issuance of common
stock. The acquisition will not be completed
until approved by the Board of Directors of
Masterpiece Medical.
The Company believes that the addition of the
sales generated by MM and DC combined with
the anticipated sales of the CaduSys product,
will produce significant sales and potential
income for the Company. In addition, the
management and technical personnel of MM and
DC will be added to and compliment those of
the Company.
Part II - Other Information
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 there
unto duly authorized.
Global Digital Information, Inc.
(Registrant)
Date /s/ Newell Crane
President
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