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 June 28, 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 of (I.R.S. Employer
incorporation or organization) Identification No.)
Global Digital Information, Inc.
10655 NE 4th Street, Suite 707
Bellevue, WA 98004
(Previous Address)
425-643-0777
(Registrant's Previous telephone number, including area code)
Global Digital Information, Inc.
455 Wards Corner Road
Loveland, OH 45140
513-831-6647
(Registrant's telephone number, including area code)
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 X 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 June 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.
GLOBAL DIGITAL INFORMATION, INC.
FINANCIAL STATEMENTS
JUNE 30, 1998
CONTENTS
Page
Accountant's
Report.......................................................................1
Balance
Sheet..........................................................................2
Statement of Earnings(Deficit) and Retained Deficit..
...... ...... ...... ...... ...... ..................................3
Statement of Shareholders' Equity....................................... .....4
Statement of Cash
Flows................................................................. ......5
Notes to Financial
Statements.................................................................6
THOMAS J HARRIS CPA
3901 STONE WAY N #202
SEATTLE, WA 98103
INDEPENDENT AUDITOR'S REPORT
Board of Directors
GLOBAL DIGITAL INFORMATION, INC
Seattle, Washington
We have compiled the accompanying balance sheet
of GLOBAL DIGITAL INFORMATION, INC, as of JUNE 30,
1998, and the related statement of income and retained
earnings for the period then ended, in accordance with
Statements on Standards for Accounting and Review
Services issued by the American Institute of Certified
Public Accountants.
A compilation is limited to presenting in the
form of financial statements that which is the
representation of management. We have not audited or
reviewed the accompanying financial statements and,
accordingly, do not express an opinion or any form of
assurance on them.
August 17, 1998
GLOBAL DIGITAL INFORMATION, INC.
BALANCE SHEET
JUNE 30, 1998
UNAUDITED
Assets
1998 1997
CURRENT ASSETS:
Cash in Bank $ -0- $ -0-
Accounts Receivable 9,750 -0-
TOTAL CURRENT ASSETS $ 9,750 $ -0-
PROPERTY & EQUIPMENT:
Office Equipment $ 34,348 $ -0-
Depreciation 4,844 -0-
TOTAL FIXED ASSETS $ 29,504 $ -0-
OTHER ASSETS
CaduSys Software $ 8,044 $ -0-
TOTAL ASSETS $ 47,298 $ -0-
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Bank overdraft $ 1,775
Accounts payable 61,797 $ 1,902
Payroll taxes $ 34,871 $ -0-
TOTAL CURRENT LIABILITIES $98,443 $ 1,902
Loans payable shareholders $162,800 $ -0-
TOTAL LIABILITIES $ 261,243 $ 1,902
STOCKHOLDER'S EQUITY:
Common Stock, no par; $.001 stated value;
50,000,000 shares authorized and
10,632,984 shares issued $10,633 $ 491
Paid in Surplus 790,938 441,169
Accumulated Deficit (1,015,516) (443,562)
TOTAL STOCKHOLDER'S EQUITY $(213,945) $ (1,902)
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $47,298 $ -0-
See accompanying notes and accountants' report
2
GLOBAL DIGITAL INFORMATION, INC.
Statement of Earnings(Deficit) and Retained Deficit
For the Quarter Ended JUNE 30, 1998 and 1997
UNAUDITED
1998 1997
REVENUE $26,937 $-0-
EXPENSES:
Payroll $103,454 $-0-
Payroll taxes &
employee benefits 8,385 -0-
Insurance 319 -0-
Depreciation 1,500 -0-
Miscellaneous 2,607 -0-
Office 3,197 -0-
Postage & Delivery 2,425 -0-
Printing &
Reproduction 3,136 -0-
Rent 5,117 -0-
Supplies 2,406 -0-
Telephone 20,762 -0-
Trade Shows 5,865 -0-
Travel &
Entertainment $ 1,095 $ -0-
Total Expenses $160,268 $ -0-
NET LOSS FOR THE
PERIOD $(133,331) $ -0-
Retained Deficit
Balance beginning
of period $(878,841) $ -0-
Balance end of
Period $(1,012,172) $ -0-
See accompanying notes and accountants' report
3
GLOBAL DIGITAL INFORMATION , INC.
STATEMENT OF SHAREHOLDERS' EQUITY
YEAR ENDED MARCH 31, 1998
COMMON STOCK PAID IN SURPLUS ACCUM
SHARES AMOUNT AMOUNT DEFICIT TOTAL
United States Mining & Exploration Inc. prior to merger:
Balance, MARCH 31, 1997 491,314 $491 $441,169 (443,562) $(1,902)
Shares issued 2 for 1
Stock split 491,314 $492 $(492)
Shares issued for cash
to investors 440,962 $441 $52,059 $ 52,500
Less expenses of issuing
the Common Stock (52,776) $(52,776)
Shares issued for services
to Shareholders 276,410 $276 $ 276
Net Income $ 1,902 $ 1,902
Balance,
November 11, 1997 1,700,000 $1,700 $439,960 $ (441,660) $ -0-
Global Digital Information Inc. shares issued prior to merger:
Shares issued at par
June, 1997 to Founders for
acquisition rights 8,044,150 $8,044 $ 8,044
Shares issued for cash
June, 1997 to November 11, 1997
to investors 455,850 $456 $327,294 $ 327,750
Less expenses of issuing
the Common Stock (64,463) $(64,463)
Net Loss $ (217,589) $(217,589)
Balance,
November 11, 1997 8,500,000 $8,500 $262,831 $ (217,589) $ 53,742
Combined balance after merger
Balance,
November 11, 1997 10,200,000 $10,200 $702,791 $ (659,249) $ 53,742
Shares issued for cash
November 11, 1997 to March 31,1998
to investors 331,934 $ 332 $156,268 $ 156,600
Less expenses of issuing
the Common Stock (102,060) $(102,060)
Net Loss $(219,592) $(219,592)
Balance,
MARCH 31, 1998 10,531,934 $ 10,532 $756,999 $ (878,841) $(111,310)
Shares issued for cash
March 31,1998 to June 30, 1998
to investors 101,050 $ 101 $ 50,424 $ 50,525
Less expenses of issuing
the Common Stock (16,485) $ (16,485)
Net Loss $ (129,987) $(129,987)
Balance,
JUNE 30, 1998 10,632,984 $ 10,633 $807,423 $(1,015,516) $(213,945)
The accompanying notes are an integral part of these financial statements.
4
GLOBAL DIGITAL INFORMATION, INC.
Statement of Cash Flows
UNAUDITED
For the Quarter Ended JUNE 30, 1998 and 1997
1998 1997
Operating Activities
Net Income (Loss) $ (133,331) $ -0-
Add depreciation not
requiring cash 1,500 -0-
Changes in:
Accounts Receivable 10,550 -0-
Accounts payable 21,732
Payroll Taxes 16,611 -0-
Cash Provided (used)
by Operations $ (82,938) $ -0-
Investing Activities
Investment in Office
Equipment $ (4,244) $ -0-
Net Cash Provided(used) by Investing
Activities $ (4,244) $ -0-
Financing Activities
Shareholder loans $ 15,000 $ -0-
Sale of Common Stock 50,525 -0-
Costs of Issuing
Common Stock (16,485) -0-
Net Cash provided (used) by Financing
Activities $ 49,040 $ -0-
Increase (Decrease)
in Cash $ (38,142) $ -0-
Cash Balance Beginning $ 36,367 $ -0-
Cash Balance Ending $ (1,775) $ -0-
See accompanying notes and accountants' report
5
GLOBAL DIGITAL INFORMATION, INC.
NOTES TO FINANCIAL STATEMENTS
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
States Mining & Exploration, Inc.(USM) and changed its
name at that time. Also in 1998 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 that 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.
6
GLOBAL DIGITAL INFORMATION, INC.
NOTES TO FINANCIAL STATEMENTS
NOTE 1. - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES(Continued)
(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
intercompany 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, 1997 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 that
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.
7
GLOBAL DIGITAL INFORMATION, INC.
NOTES TO FINANCIAL STATEMENTS
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.
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 $1.00 per share or
$500,000. At June 30, 1998, as a result of this
offering, 888,834 Common Shares of stock were sold to
individual investors for $1.00 per unit, grossing the
company $534,774. The placement is being offered on a
"best efforts" basis by various employees and officers
of the company. Fees 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 that 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 is 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.
8
GLOBAL DIGITAL INFORMATION, INC.
NOTES TO FINANCIAL STATEMENTS
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
9
Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations.
The information required by this item is set forth in the Company's
quarterly financial statements and is incorporated herein by this
reference.
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