<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(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 30, 1996
[ ] 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 : 0-17287
GLOBAL OUTDOORS, INC.
- --------------------------------------------------------------------------------
(Exact,name.of Registrant as specified in its charter)
Alaska 33-0074499
- --------------------------------- ----------------------
(State or other Jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
43445 BUSINESS PARK DRIVE, SUITE 113
TEMECULA, CALIFORNIA 92590
- --------------------------------------------------------------------------------
(Address and zip code of principal executive offices)
(909) 699-4749
- --------------------------------------------------------------------------------
(Issuer's telephone number, including area code)
GLOBAL RESOURCES, INC.
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to the filing requirements for at least
the past 90 days. Yes [X] NO [ ]
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
<TABLE>
<CAPTION>
Number of Shares Outstanding
Class at August 13, 1996
----- ----------------------------
<S> <C>
Common Stock, $.02 par value 4,116,664
</TABLE>
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
<PAGE> 2
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
FINANCIAL STATEMENTS
PART I - ITEM 1
_________________________________________________
FOR THE QUARTER ENDED JUNE 30, 1996
_________________________________________________
GLOBAL OUTDOORS, INC.
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<PAGE> 3
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
--------------------------- -----------
1996 1995 1995
---------- ---------- -----------
<S> <C> <C> <C>
CURRENT ASSETS
Cash $ 71,764 $ 580,425 $ 458,448
Current portion of membership sales
contracts receivable, net (Note 2) 733,154 581,457 506,602
Current portion of stockholder receivable 40,800 25,892 40,800
Other receivables, net 207,838 103,379 135,937
Income taxes receivable - 33,000 -
Inventories 145,675 50,000 192,268
Prepaid expenses 369,034 119,213 536,591
Deferred income taxes 50,296 85,000 50,296
---------- ---------- ----------
Total current assets 1,618,561 1,578,366 1,920,942
MEMBERSHIP SALES CONTRACTS
RECEIVABLE, net (Note 2) 4,738,529 2,379,207 3,392,326
MEMBERSHIP RECREATIONAL
MINING PROPERTIES (Note 3) 744,133 504,692 480,226
ALASKA RECREATIONAL
MINING PROPERTIES (Note 3) 1,549,426 1,588,702 1,550,052
EQUIPMENT AND LEASEHOLD
IMPROVEMENTS 413,209 62,688 226,970
STOCKHOLDER RECEIVABLE,
Interest at 6% $5,000 per month including
interest, secured by building, less
current portion 268,217 326,434 292,616
DEPOSITS 312,926 383,000 323,226
DEFERRED INCOME TAXES 261,578 155,000 261,578
OTHER ASSETS 49,599 12,140 67,376
---------- ---------- ----------
TOTAL ASSETS $9,956,178 $6,990,229 $8,515,312
========== ========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
-3-
<PAGE> 4
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
--------------------------- -----------
1996 1995 1995
---------- ---------- -----------
<S> <C> <C> <C>
CURRENT LIABILITIES
Funds held in escrow $ - $ - $ 36,250
Current maturities of long-term debt 177,516 29,060 111,387
Customer deposits 237,515 193,778 224,273
Deferred membership costs (Note 2) 119,793 - 83,793
Accounts payable and accrued expenses 108,320 268,552 123,552
Income taxes payable 516,540 110,000 561,538
Deferred income taxes 300,714 302,500 45,714
Current portion of deferred revenue 247,650 206,246 218,621
---------- ---------- ----------
Total current liabilities 1,708,048 1,110,136 1,405,128
DEFERRED REVENUE, Long term portion 1,082,971 942,526 1,029,999
DEFERRED INCOME TAXES 879,102 836,000 879,102
LONG TERM DEBT, Less current portion 927,837 261,447 288,600
---------- ---------- ----------
Total liabilities 4,597,958 3,150,109 3,602,829
---------- ---------- ----------
STOCKHOLDERS' EQUITY (Notes 5 and 6)
Common stock, $.02 par value; 50,000,000
shares authorized; shares issued and outstanding:
4,103,551 at June 30, 1996; 4,074,988 at
December 31, 1995; and 3,868,758 at June
30, 1995 82,071 77,375 81,500
Convertible preferred stock, non voting, 10%
noncumulative, no liquidation preference,
$.001 par value; 10,000,000 shares authorized;
shares issued and outstanding: 61,875 at June
30, 1996; 63,195 at December 31, 1995; and
63,855 at June 30, 1995 62 64 63
Additional paid-in capital 2,869,424 2,060,014 2,793,938
Retained Earnings 2,627,913 1,923,917 2,258,232
Less Stock Subscriptions receivable (221,250) (221,250) (221,250)
---------- ---------- ----------
Total stockholders' equity $5,358,220 $3,840,120 $4,912,483
---------- ---------- ----------
TOTAL LIABILITIES AND EQUITY $9,956,178 $6,990,229 $8,515,312
========== ========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
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<PAGE> 5
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
3 Months Ended 6 Months Ended
------------------------- -------------------------
June 30 June 30 June 30 June 30
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
REVENUES
- --------
Alaska/Australia Trip $ 426,736 $ 429,993 $ 556,273 $ 476,970
Membership Sales 1,420,367 1,143,017 3,608,131 2,222,850
Advertising 1,565,916 960,099 2,600,312 1,943,421
Management fees - 30,000 - 30,000
Interest 87,437 12,970 173,428 25,162
---------- ---------- ---------- ----------
Total net revenues $3,500,456 $2,576,079 $6,938,144 $4,698,403
---------- ---------- ---------- ----------
EXPENSES
- --------
Alaska/Australia trip expenses $ 304,933 $ 239,631 $ 304,933 $ 239,631
Advertising 368,781 315,618 857,856 489,427
Bank credit card charges 17,654 13,583 34,401 24,511
Compensation & related costs 357,211 185,042 655,290 340,162
Cost of memberships sold 38,000 - 74,000 6,736
Depreciation 31,200 34,500 62,400 68,866
Freight 34,596 17,489 51,411 33,853
Insurance 24,024 39,473 46,488 49,823
Interest 25,300 7,350 38,321 12,050
Merchandise purchases 65,162 27,021 163,872 60,789
Office supplies 13,722 7,401 23,744 14,171
Other 18,409 13,560 61,291 61,054
Outside labor 28,712 2,970 89,874 9,240
Postage & delivery 150,490 79,439 253,385 152,299
Printing 142,586 76,605 175,691 151,312
Professional services 89,977 105,635 122,871 169,473
Programming/advertising-barter 1,073,673 865,000 2,102,625 1,826,400
Property tax 986 1,184 3,987 3,119
Provision for doubtful contracts 64,958 22,793 190,320 41,264
Repairs and maintenance 17,940 7,957 33,347 15,663
Rent 24,565 15,300 71,665 27,930
Shows and seminars 93,422 60,947 145,550 76,614
Supplies and small tools 41,003 35,407 83,828 63,666
Tax and license 12,997 2,522 22,655 6,676
Telephone and utilities 58,227 29,379 113,958 63,044
---------- ---------- ---------- ----------
Total expenses $3,098,528 $2,205,806 $5,783,763 $4,007,773
---------- ---------- ---------- ----------
Income before income tax $ 401,928 $ 370,273 $1,154,381 $ 690,630
Loss on discontinued business
(TNN Show) (Note 7) 375,600 - 574,700 -
Income tax expense 10,000 135,000 210,000 250,000
---------- ---------- ---------- ----------
Net Income $ 16,328 $ 235,273 $ 369,681 $ 440,630
========== ========== ========== ==========
Earnings per share (Note 6) $ - $ .06 $ .09 $ .11
</TABLE>
See Notes to Consolidated Financial Statements
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<PAGE> 6
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Period Ended June 30
-----------------------
1996 1995
--------- ---------
<S> <C> <C>
Cash flows from operating activities $(619,125) $ 759,496
Cash flows (used in) investing activities,
purchase of equipment (421,443) (520,935)
Cash flows (used in) financing activities,
payments on long-term debt 653,884 (423,249)
--------- ---------
Net increase (decrease) in cash $(386,684) $(184,688)
Cash at beginning of period $ 458,448 $ 765,113
--------- ---------
Cash at end of period $ 71,764 $ 580,425
========= =========
</TABLE>
See Notes to Consolidated Financial Statements
-6-
<PAGE> 7
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES
Nature of business:
The Company owns and operates The Outdoor Channel, the first national
television network devoted solely to outdoor activities, such as hunting,
fishing, scuba diving, camping, RV-ing and recreational gold prospecting. The
Company's other business activities consist of the promotion and sale of an
"Alaska trip", a recreational gold mining expedition to the Company's Cripple
River property located near Nome, Alaska, and the sale of Lost Dutchman's,
(LDMA-AU, Inc.) memberships which entitles members to engage in recreational
prospecting on its California, Oregon, Alaska, Nevada, Arizona, Colorado,
Georgia, North Carolina and South Carolina properties. The Company has also
signed a mutual use agreement with another organization whose members are
entitled to engage in recreational mining on certain of each other's
properties. The Company also receives revenues from the sale of memberships in
a gold prospecting club, revenue from advertisers in a bi-monthly magazine,
advertising revenue through cable television programming d/b/a The Outdoor
Channel and through merchandise sales. The Outdoor Channel barters advertising
time for some of its programming. For financial reporting purposes the Company
reports offsetting revenue and expense items, as if the Company had sold
advertising and purchased programming, at the prevailing advertising rates.
A summary of the Company's significant accounting policies is as follows:
Management Statement - The interim financial statements for the period January
1 through June 30, 1996, include all adjustments which in the opinion of
management are necessary in order to make the financial statements not
misleading.
The Principles of Consolidation - The consolidated financial statements include
the accounts of Global Outdoors, Inc. and its wholly-owned subsidiaries,
LDMA-AU, Inc., Big "M" Mining Company, Inc., Gold Prospectors' Association of
American, Inc. (GPAA) and The Outdoor Network, Inc. which operates a satellite
and cable television channel.
Business Combination - On February 10, 1995, the Company effected a business
combination with GPAA by exchanging 2,500,000 shares of its common stock for
all the common stock of GPAA. GPAA was 100% owned by the majority stockholders
of the Company. The agreement called for an additional 1,500,000 shares of
common stock to be issued if certain earnings or valuation levels are attained.
The combination was accounted for in a manner similar to a pooling of interests
with prior periods being restated to give retroactive effect to the combination
as if it occurred on January 1, 1992. A reconciliation of the amounts of
revenue and earnings previously reported by the Company and the combined
amounts presented in the financial statements was included in the Company's
Form 10-K for the year ended December 31, 1994. Details of the results of
operations for the previously separate companies for the period before the
combination was consummated were included in the Form 10- K for the year ended
December 31, 1994. GPAA previously had a year of February 28 and as a result
of the combination adopted a December 31 fiscal year-end. The income and cash
flows for two months ended February 28, 1994 were included in both the twelve
months ended December 31, 1994 and 1993. The duplication of income for these
two months totals $21,667 and was eliminated in the statement of retained
earnings. The amount of revenues and expenses for that period were, $646,880
and $625,213, respectively.
Reference to Forms 10-KSB and 10-K - Please refer to the Company's Form 10-KSB
for the year ended December 31, 1995 and Form 10-K for the year ended December
31, 1994 for additional information and disclosures which may be of interest to
the reader hereof.
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<PAGE> 8
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Recently Issued Accounting Pronouncements - In March 1995, the Financial
Accounting Standards Board issued Statement of Financial Accounting Standards
("SFAS") No. 121, "Accounting for the Impairment of Long-Lived Assets and
Long-Lived Assets to be Disposed of." The Company has adopted SFAS No. 121.
SFAS No. 121 establishes recognition and measurement criteria for impairment
losses when the Company no longer expects to recover the carrying value of a
long-lived asset. The effect on the consolidated financial statements of
adopting SFAS was not material.
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 123, "Accounting for Stock-Based
Compensation." The accounting or disclosure requirements of this statement are
effective at the Company's fiscal year-ended 1996. It is currently anticipated
that the Company will continue to account for stock-based compensation using
Accounting Principles Board Opinion No. 25 and the impact of SFAS 123 has not
yet been determined.
Allowance for Contract Cancellations - The Company provides an allowance for
future cancellations of membership contracts. The allowance is based on
management's estimate of future contract cancellations considering the
Company's historical cancellation rates, delinquencies of receivables and other
factors deemed relevant to the analysis. The allowance is reviewed on a
periodic basis and adjusted upon management's estimate.
Membership Recreational Mining Properties - Membership recreational mining
properties consist primarily of land, are held for membership sales and are
recorded at the lower of cost or estimated net realizable value. These
properties are charged to cost of memberships sold in proportion to total
memberships which the Company estimates it will ultimately sell.
Alaska Recreational Mining Properties - Alaska recreational mining properties
consist primarily of land, buildings and equipment, are recorded at cost, net
of accumulated depreciation on the buildings and equipment provided on a
straight-line basis over the estimated economic lives of between 5 and 10
years.
Equipment and leasehold improvements:
Equipment and leasehold improvements are carried at cost. Depreciation is
calculated using accelerated methods over the estimated useful lives of the
assets.
Revenue recognition:
Revenue on the "Alaska trip" income is recognized proportionately as expenses
are incurred. Trips are taken in July and August each year.
The Company has sold memberships primarily on an installment basis.
Memberships include contracts that give purchasers recreational prospecting and
mineral rights to the Company's land and rights to use the land and facilities.
The contracts are generally noninterest bearing, unsecured and provide for a
down payment and monthly installments of $25 for periods of up to ten years.
Sales revenue is recognized upon execution of a sales contract, expiration of
the refund period, and receipt of cumulative payments of at least 10% of the
sales price. Cumulative payments received on contracts
-8-
<PAGE> 9
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
where the refund period has not expired, or which are less than 10% of the
original contract amount are recorded as deposits. Deposits are fully
refundable for ten days. The contracts are discounted over the contractual
repayment period at a discount rate of 8%.
The Company also sells membership for periods varying from one year to lifetime
memberships. For nonlifetime memberships, revenue is recognized over the life
of the membership. Management estimates the expected period of time a lifetime
member is active in the membership club to be fifteen years. Accordingly, for
lifetime memberships, revenue is recognized over fifteen years. Effective
March 1, 1994, the expected period of time a lifetime member is active in the
membership club was extended from ten to fifteen years as it was determined
that lifetime members are remaining active on average approximately fifteen
years.
The Company imputes compensation for the future campground services that Lost
Dutchman's will provide until dues are paid (usually around 6 years per
membership), pursuant to Paragraph 31 of FAS 66. In addition, the Company
accrues the future costs for GPAA benefits provided with Lost Dutchman's
memberships (bi-monthly magazine, yearly mining guide and quarterly newspaper)
until dues are paid.
Certain prior year amounts in the consolidated financial statements have been
reclassified to conform to the current year presentation.
Advertising:
Advertising costs are charged to income as incurred and production costs of
advertising are expensed the first time the advertising takes place except for
production costs related to the TNN show.
Income taxes:
Deferred taxes are provided on a liability method whereby deferred tax assets
are recognized for deductible temporary differences and deferred tax
liabilities are recognized for taxable temporary differences. Temporary
differences are the differences between the reported amounts of assets and
liabilities and their tax basis. Deferred tax assets are reduced by valuation
allowance when, in the opinion of management, it is more likely than not that
some portion or all of the deferred tax assets will not be realized. Deferred
tax assets and liabilities are adjusted for the effects of changes in tax laws
and rates on the date of the enactment.
-9-
<PAGE> 10
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2. MEMBERSHIP SALES CONTRACTS RECEIVABLE
Membership sales contracts receivable are summarized as follows:
<TABLE>
<CAPTION>
JUNE 30 JUNE 30 DECEMBER 31
1996 1995 1995
---------- --------- -----------
<S> <C> <C> <C>
Contracts receivable
Unearned interest 8,032,614 4,288,903 5,723,780
Allowance for cancellations (1,952,966) (999,276) (1,391,638)
(607,965) (328,963) (433,214)
---------- --------- ----------
Less current portion 5,471,683 2,960,664 3,898,928
(733,.154) (481,457) (506,602)
---------- --------- ----------
4,738,529 2,479,207 3,392,326
========== ========= ==========
</TABLE>
NOTE 3. RECREATIONAL MINING PROPERTIES
The components of recreational mining properties are as follows:
<TABLE>
<CAPTION>
JUNE 30 JUNE 30 DECEMBER 31
1996 1995 1995
---------- --------- -----------
<S> <C> <C> <C>
Membership recreational mining properties: $ 859,677 $ 580,781 $ 604,477
Land 78,553 67,396 66,845
Buildings and improvements (166,492) (124,880) (166,492)
---------- ---------- ----------
Less cost of memberships sold 771,738 523,297 504,830
Less accumulated depreciation (27,605) (18,605) (24,605)
---------- ---------- ----------
$ 744,133 $ 504,692 $ 480,225
========== ========== ==========
Alaska recreational mining properties: $1,202,373 $1,202,373 $1,202,373
Land 444,549 444,549 444,549
Buildings and Improvements 883,511 826,787 842,137
---------- ---------- ----------
Vehicles and equipment 2,530,433 2,473,709 2,489,059
Less accumulated depreciation (981,007) (885,007) (939,007)
---------- ---------- ----------
$1,549,426 $1,588,702 $1,550,052
========== ========== ==========
</TABLE>
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<PAGE> 11
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 4. LONG-TERM DEBT
The Company purchased the Vein Mountain Camp for $250,000 to add to its Lost
Dutchman's holdings in February 1996. The Camp consists of 130 deeded acres
located in the middle of North Carolina's motherlode. There are presently no
improvements on the property. There is camping for up to 250 self-contained
recreational vehicles. In connection with the purchase the Company executed a
note payable to individuals in the amount of $200,000 secured by Deed of Trust
on the land. The note is payable in monthly installments of interest at 7.5%
($1,250 per month) plus annual principal payments due every January commencing
in 1997 of $50,000. The Company made significant draws on its bank line of
credit increasing the amount drawn from $33,139 as of December 31, 1995 to
$532,713 as of June 30, 1996.
NOTE 5. STOCKHOLDERS' EQUITY
In February of 1992, the Board of Directors authorized a one-for-twenty reverse
stock split which reduced the number of outstanding common shares from
12,250,435 to 612,521. The par value of the Company's common stock was
simultaneously increased from $.001 a share to $.02 a share. All per share
amounts for prior years have been restated to give retroactive effect to the
reverse stock split.
In August 1994, the Board of Directors authorized a two-for-one forward stock
split which increased the number of outstanding shares from 1,920,955 to
3,841,910. The par value of the Company's common stock was not changed.
NOTE 6. EARNINGS PER SHARE
Earnings per share are based on the weighted average number of common and
common equivalent shares outstanding during the year. On June 30, 1996 and
1995, the weighted average number of shares for computing earnings per share
were 4,309,527 and 4,031,974, respectively.
NOTE 7. LOSS ON DISCONTINUED BUSINESS (TNN SHOW)
The Company's "Gold Prospecting Show" which was produced by an outside
production company for airing on The Nashville Network ("TNN") commencing
January 1996 was popular with viewers. Production and airing costs per show
were approximately $43,000. Due to the lack of immediate commercial success,
the Company decided to devote its resources to other aspects of the Company's
business with the show ending its run on TNN in May 1996.
NOTE 8. SUBSEQUENT EVENTS
On July 16, 1996, the Company held its annual stockholders' meeting. At the
meeting the stockholders approved changing the Company's name from Global
Resources, Inc. to Global Outdoors, Inc. to better reflect the nature of the
Company's business. The name change was effective in the State of Alaska on
July 23, 1996. The shareholders also approved increasing the authorized number
of shares of Common Stock to 50,000,000 shares from 5,000,000 shares and
authorized the Company to increase, in its discretion, the Board of Directors
to a maximum of seven persons from the prior number of three persons. On
August 5, 1996, the Company filed an SB-2 Registration Statement with the
Securities and Exchange Commission for a follow-on public offering of the
Company's Units. The Units consist of two (2) shares of Common Stock and one
(1) Class F Warrant to purchase Common Stock.
-11-
<PAGE> 12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This report on Form 10-QSB contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. The Company intends that such forward-looking
statements be subject to the safe harbors created thereby. This report should
be read in conjunction with the Company's report on Form 10-KSB for the year
ended December 31, 1995.
COMPARISON OF QUARTERS ENDED JUNE 30, 1996 AND JUNE 30, 1995
Revenues. The Company's revenues include revenues from advertising
fees, GPAA and Lost Dutchman's membership sales, product sales and the Trips
Division sales. Advertising fees result from a combination of paid advertising
and barter transactions, under which the Company acquires programming from
third parties in exchange for a portion of advertising revenue derived from
such programming. Revenues for the quarter ended June 30, 1996 were
$3,500,456, a substantial increase of $924,377 or 36%, compared to revenues of
$2,576,079 for the quarter ended June 30, 1995. This increase was primarily a
result of an increase in advertising revenue to $1,565,916 for the quarter
ended June 30, 1996 from $960,099 for the quarter ended June 30, 1995 and a
result of an increase in membership sales to $1,420,367 for the quarter ended
June 30, 1996 from $1,143,017 for the quarter ended June 30, 1995. The
advertising revenue increase was principally attributable to increase in barter
rates. Revenues from the Trips Division was virtually the same at $426,736 for
the quarter ended June 30, 1996 and $429,933 for the quarter ended June 30,
1995. Despite management devoting significant time and resources to increasing
distribution and revenues for The Outdoor Channel, in the Second Quarter of
1996, the Company increased its sales for Lost Dutchman's while the Alaska Trip
revenue remained nearly the same. These sales figures reversed the trend of
flat Lost Dutchman's sales and decreasing Alaska Trip sales.
Expenses. Expenses consist primarily of the cost of the Company's
satellite transponder and uplink facilities, programming, advertising and
promotion, sales and administrative salaries, office expenses and general
overhead. Expenses for the quarter ended June 30, 1996 were $3,098,528, an
increase of $892,722, or 40%, compared to $2,205,806 for the quarter ended June
30, 1995. This increase was predominately due to increases in specific areas.
Alaska/Australia trip expense rose to $304,933 for the quarter ended June 30,
1996 compared to $239,631 for the quarter ended June 30, 1995, due to increased
participation on the Alaska and Australia trips. Programming/advertising-
barter accounted for $208,673 of this increase rising to $1,073,673 for the
quarter ended June 30, 1996 compared to $865,000 for the quarter ended June 30,
1995, and was primarily due to increased barter rates. Compensation and
Related Payroll Costs increased $172,169 to $357,211 for the quarter ended June
30, 1996, compared to $185,042 for the quarter ended June 30, 1995. This
increase was due to the cumulative addition of executive, sales and
administrative personnel for The Outdoor Channel during the period after June
30, 1995. Merchandise purchases increased to $65,162 for the quarter ended
June 30, 1996 compared to $27,021 for the quarter ended June 30, 1995, due to
sharply increased activity in the products division. Printing increased to
$142,586 for the quarter ended June 30, 1996 compared to $76,605 for the
quarter ended June 30, 1995, due the expansion of in-house printing activities
and promotions for which mailers are distributed. Postage increased to
$150,490 for the quarter ended June 30, 1996 compared to $79,439 for the
quarter ended June 30, 1995, due primarily to increased mailings in connection
with company promotions and products. The Provision for Doubtful Contracts
increased to $64,958 for the quarter ended June 30, 1996, compared to $22,793
for the quarter ended June 30, 1995, which was due to the increased Lost
Dutchman's sales in the second quarter of 1996. Shows and Seminars increased
to $93,422 for the quarter ended June 30, 1996, compared to $60,947 for the
quarter ended June 30, 1995, due to substantial increase in participation by
The Outdoor Channel in trade shows for the purpose of increasing industry
visibility.
-12-
<PAGE> 13
Income Before Income Taxes. Income before income taxes decreased as a
percentage of revenues from 14% for quarter ended June 30, 1995 to 11% for the
quarter ended June 30, 1996.
Loss on discontinued business (TNN Show). The Company's "Gold
Prospecting Show" which was produced for airing on The Nashville Network
("TNN") commencing January 1996 was popular with viewers. Production and
airing costs per show were approximately $43,000. Due to the lack of immediate
commercial success, the Company decided to devote its resources to other
aspects of the Company's business with the show ending its run on TNN in May
1996. The loss for the quarter ended June 30, 1996 for this item was $375,600.
Income Tax Expense. Income tax expense for the quarter ended June 30,
1996 was $10,000, a decrease of $125,000, or 93%, compared to $135,000 for the
quarter ended June 30, 1995, due to the decrease in net income which was
primarily due to discontinuing the TNN Show.
GENERAL
Management of Global has continued its emphasis on the growth and
development of The Outdoor Channel during the first and second quarters of
1996. Although The Outdoor Channel is not aligned with any sizable
entertainment or cable company, as are many emerging channels, it has achieved
substantial visibility in the cable industry. The Company is committed to
converting visibility for The Outdoor Channel's programming into greater
distribution into cable households. Greater distribution will allow the
Company to charge higher advertising rates, command subscriber fees from cable
affiliates, attract more advertisers and receive greater revenues for the
Company's products. This strategy is a principal contributing factor to
increased Company expenses.
In April 1996, The Outdoor Channel executed a media placement
agreement with Frederiksen Television, Inc. for the placement of direct
response programming on The Outdoor Channel, primarily during off hours. That
agreement was renegotiated in July 1996 with the Company now anticipating
revenues from the contract in the range of $30,000 to $40,000 per month.
In May 1996, the Company hired James E. Crawford as Vice President for
Sales and Marketing for The Outdoor Channel. Mr. Crawford is also a recognized
cable television executive. From October 1995 to April 1996, he was the
Director of Affiliate Sales Western Division for Outdoor Life Network, a
competitor of The Outdoor Channel, and for Speedvision Network. Mr. Crawford
was instrumental in Outdoor Life's sales and marketing from that network's
inception.
A primary objective of the Company is to obtain distribution for The
Outdoor Channel. To accomplish this objective the Channel seeks to sign
national carriage agreements with multiple systems operators ("MSOs") and
thereafter carriage agreements with the MSOs' individual cable affiliates. In
January 1996, The Outdoor Channel signed a national carriage agreement with
Fanch Communications which has 270,000 subscribers. In March 1996, The Outdoor
Channel signed a national carriage agreement with Service Electric Cable which
has 257,000 subscribers. In April 1996, in anticipation of signing a national
carriage agreement, The Outdoor Channel was launched on several cable
affiliates of Bresnan Communications which has 209,000 subscribers. In May
1996, The Outdoor Channel signed a national carriage agreement with Northland
Communications which has 191,000 subscribers. The Company has received verbal
agreements with several other MSO's. The Outdoor Channel on an ongoing basis
is being launched on the individual cable affiliates of the above MSO's as
well as MSO's that were signed with prior to 1996 such as TCA Cable and Westar
Communications. The Company intends to continue its promotional activities,
such as attending regional and local cable trade shows, in order to increase
cable industry awareness of The Outdoor Channel.
-13-
<PAGE> 14
The Company has continued to aggressively market Lost Dutchman's
memberships in 1996 and expects the 1996 memberships sold to exceed those of
1995. The Company will also seek to add additional properties to Lost
Dutchman's in 1996, in addition to the Vein Mountain Camp added in January
1996.
In January 1996, the Company began the weekly airing of the "Gold
Prospecting Show" on TNN, a network with approximately 70 million potential
viewers. While the show was a success with viewers, the Company did not
achieve the commercial success through the sales of its products and services
and advertising time that it had anticipated and the Company discontinued the
show at the end of May 1996. While the Company believed the show would
eventually have become a commercial success it elected to allocate resources
that would have been devoted to the show to The Outdoor Channel.
On July 16, 1996, the Company held its annual stockholders' meeting.
At the meeting the stockholders approved changing the Company's name from
Global Resources, Inc. to Global Outdoors, Inc. to better reflect the nature of
the Company's business. The name change was effective in the State of Alaska
on July 23, 1996. The shareholders also approved increasing the authorized
number of shares of Common Stock to 50,000,000 shares from 5,000,000 shares and
authorized the Company to increase, in its discretion, the Board of Directors
to a maximum of seven persons from the prior number of three persons. The
increase in authorized shares will allow the Company to raise funds by selling
Common Stock for cash, issue Common Stock for property or businesses and allow
the Company to effect stock splits.
On August 5, 1996, the Company filed an SB-2 Registration Statement
with the Securities and Exchange Commission for a follow-on public offering of
the Company's Units. The Units consist of two (2) shares of Common Stock and
one (1) Class F Warrant to purchase Common Stock. The presently anticipated
price of the Units is $10.00 each. The offering is for a minimum of $200,000
and a maximum of $5,000,000 and is being conducted on a best efforts basis by
New York based Castle Securities Corporation. The Company anticipates
contributing substantially to the sale of Units by referring persons to Castle,
in which case, Castle will receive a lower sales commission.
As of June 30, 1996, the Company had a $750,000 revolving line of
credit with Wells Fargo Bank, $532,713 of which was outstanding. The line of
credit bears interest at 9.25%. The line of credit is unsecured but is
personally guaranteed by Perry T. Massie, Thomas H. Massie and a major
shareholder.
As of the date of this report, the Company requires short-term
financing of $300,000 to meet its anticipated cash flow obligations through
October 1996. With non-discounted contracts receivable of approximately
$8,000,000, the Company is considering obtaining short-term loans utilizing the
contracts receivable as collateral. The Company is also considering obtaining
collateralized loans from a principal shareholder. Management believes that
the Company's existing cash resources and anticipated cash flows from
operations, when combined with short-term financing of $300,000 and with the
net proceeds of the offering in an amount of $1,000,0000, will be sufficient to
fund the Company's operations at currently anticipated levels for the next
year. To the extent that such amounts are insufficient to finance the
Company's working capital requirements and the Company does not raise at least
$1,000,000 in net proceeds in its proposed offering, the Company could be
required to seek financing in addition to the $300,000 the Company believes it
will require in the short-term. There can be no assurance that equity or debt
financing will be available if needed, or, if available, will be on terms
favorable to the Company or its shareholders. Significant dilution may be
incurred by present shareholders as a result of any such financing.
-14-
<PAGE> 15
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable
ITEM 5. OTHER INFORMATION
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
Number
-------
27 Financial Data Schedule. (SEC filing only)
(b) Reports on Form 8-K
Amendments No. 1 and No. 2 to a Report on Form 8-K dated
March 26, 1996, were filed with the Securities and
Exchange Commission on approximately April 9 and 13, 1996.
Said amendments concerned the dismissal of McGladrey &
Pullen, LLP as the Company's auditor.
-15-
<PAGE> 16
SIGNATURES
In accordance with 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 thereunto duly authorized.
GLOBAL OUTDOORS, INC.
(Registrant)
Dated: August 14, 1996 By: /s/ DAVID M. ASHWOOD
-------------------------
DAVID M. ASHWOOD,
Chief Financial Officer
(Principal Financial and
Accounting Officer)
-16-
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