<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 MARCH 31, 1996
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number : 0-17287
GLOBAL RESOURCES, INC.
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(Exact name of Registrant as specified in its charter)
Alaska 33-0074499
(State or other Juris- (IRS Employer Identification
diction of incorporation Number)
or organization)
43445 BUSINESS PARK DRIVE, SUITE 113
TEMECULA, CALIFORNIA 92590
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(Address and zip code of principal executive offices)
(909) 699-4749
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(Issuer's telephone number, including area code)
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(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 May 14, 1996
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<S> <C>
Common Stock, $.02 par value 4,102,856
</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
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FOR THE QUARTER ENDED MARCH 31, 1996
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GLOBAL RESOURCES, INC.
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<PAGE> 3
GLOBAL RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
-------- -----------
1996 1995 1995
---------- ---------- ----------
<S> <C> <C> <C>
CURRENT ASSETS
Cash (Note 7) $ 288,382 $ 649,526 $ 458,448
Current portion of membership sales
contracts receivable, net (Note 2) 638,278 497,535 506,602
Current portion of stockholder receivable 40,800 25,892 40,800
Other receivables, net 185,843 103,379 135,937
Income taxes receivable -- 33,000 --
Inventories 162,269 50,000 192,268
Prepaid expenses 437,091 102,046 536,591
Deferred income taxes 50,296 85,000 50,296
---------- ---------- ----------
Total current assets 1,802,959 1,546,378 1,920,942
MEMBERSHIP SALES CONTRACTS
RECEIVABLE, net (Note 2) 4,279,568 2,035,824 3,392,326
MEMBERSHIP RECREATIONAL
MINING PROPERTIES (Note 3) 733,925 302,679 480,226
ALASKA RECREATIONAL
MINING PROPERTIES (Note 3) 1,529,052 1,580,302 1,550,052
EQUIPMENT AND LEASEHOLD
IMPROVEMENTS 322,771 55,577 226,970
STOCKHOLDER RECEIVABLE,
Interest at 6% $5,000 per month including
interest, secured by building, less
current portion 280,218 336,034 292,616
DEPOSITS 368,426 383,000 323,226
DEFERRED INCOME TAXES 261,578 155,000 261,578
OTHER ASSETS 94,559 12,140 67,376
---------- ---------- ----------
TOTAL ASSETS $9,673,056 $6,406,934 $8,513,312
========== ========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
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<PAGE> 4
GLOBAL RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
MARCH 31 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 336,620 144,801 224,273
Deferred membership costs (Note 2) 119,793 -- 83,793
Accounts payable and accrued expenses 153,419 193,207 123,552
Income taxes payable -- 277,500 561,538
Deferred income taxes 245,218 -- 45,714
Current portion of deferred revenue 226,150 206,246 218,621
----------- ----------- -----------
Total current liabilities 1,258,716 850,814 1,405,128
DEFERRED REVENUE, Long term portion 1,065,470 942,526 1,029,999
DEFERRED INCOME TAXES 1,440,640 836,000 879,102
LONG TERM DEBT, Less current portion 566,338 172,760 288,600
----------- ----------- -----------
Total liabilities 4,331,164 2,802,100 2,197,701
----------- ----------- -----------
STOCKHOLDERS' EQUITY (Notes 5 and 8)
Common stock, $.02 par value; 5,000,000
shares authorized; shares issued and
outstanding: 4,102,856 at March 31, 1996;
4,074,988 at December 31, 1995; and
3,843,410 at March 31, 1995 82,057 76,868 81,500
Convertible preferred stock, non voting,
10% noncumulative, no liquidation preference,
$.001 par value; 10,000,000 shares authorized;
shares issued and outstanding: 62,195 at
March 31, 1996; 63,195 at December 31,
1995; and 65,455 at March 31, 1995 62 65 63
Additional paid-in capital 2,869,438 2,060,520 2,793,938
Retained Earnings 2,611,585 1,688,631 2,258,232
Less Stock Subscriptions receivable (221,250) (221,250) (221,250)
----------- ----------- -----------
Total stockholders' equity $ 5,341,892 $ 3,604,834 $ 4,912,483
----------- ----------- -----------
TOTAL LIABILITIES AND EQUITY $ 9,673,056 $ 6,406,934 $ 8,515,312
=========== =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
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<PAGE> 5
GLOBAL RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
--------- ------------
REVENUES: 1996 1995 1995
---------- ---------- ----------
<S> <C> <C> <C>
Alaska/Australia Trip $ 129,537 $ 46,977 $ 673,161
Membership sales 2,187,764 1,029,833 4,872,480
Advertising 1,034,396 983,322 3,831,004
Management fees 7,500 -- 30,000
Interest 78,491 62,192 285,091
---------- ---------- ----------
Total Net Revenues 3,437,688 2,122,324 9,691,736
EXPENSES:
Alaska/Australia trip expenses -- -- 357,570
Advertising 709,075 207,809 1,058,988
Bank credit card charges 16,747 10,928 45,080
Compensation & related payroll costs 298,079 160,120 825,874
Cost of memberships sold 36,000 1,736 141,460
Depreciation 31,200 34,366 137,806
Freight 16,815 16,364 69,987
Insurance 22,464 10,350 67,203
Interest 13,021 4,700 38,218
Merchandise purchases 98,710 33,768 326,502
Office supplies 10,022 6,770 30,541
Other 62,882 47,494 75,399
Outside labor 61,162 6,270 126,036
Postage & Delivery 81,995 72,860 367,301
Printing 33,105 74,707 254,051
Professional services 32,894 33,838 62,787
Programming/advertising-barter 1,028,952 961,400 3,381,950
Property tax 3,001 1,935 8,818
Provision for doubtful contracts 125,362 18,471 235,116
Repairs and maintenance 15,407 7,706 33,984
Rent 17,100 12,630 87,772
Shows and seminars 82,128 15,667 150,496
Supplies and small tools 42,825 28,259 106,436
Tax and license 9,658 4,154 32,259
Telephone and utilities 35,731 33,665 152,432
---------- ---------- ----------
Total expenses 2,884,335 1,801,967 8,174,066
---------- ---------- ----------
Income before income taxes 553,353 320,357 1,517,670
Income tax expense 200,000 115,000 561,538
---------- ---------- ----------
Net income $ 353,353 $ 205,357 $ 956,132
---------- ---------- ----------
Earnings per share (Note 8) $ 0.08 $ 0.05 $ 0.23
========== ========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
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<PAGE> 6
GLOBAL RESOURCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Period Ended March 31
--------------------------
1996 1995
--------- ---------
<S> <C> <C>
Cash flows from operating activities $ (65,050) $ 225,648
Cash flows (used in) investing activities,
purchase of equipment (448,883) (296,875)
Cash flows (used in) financing activities,
payments on long-term debt 343,867 (44,360)
--------- ---------
Net increase (decrease) in cash $(170,066) $(115,587)
Cash at beginning of period $ 458,448 $ 765,113
--------- ---------
Cash at end of period $ 288,382 $ 649,526
========= =========
</TABLE>
See Notes to Consolidated Financial Statements
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<PAGE> 7
GLOBAL RESOURCES, 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. Revenues and Expenses for the fair value of these services are recorded
in the consolidated financial statements.
A summary of the Company's significant accounting policies is as follows:
Management Statement - The interim financial statements for the period January 1
through March 31, 1996, include all adjustments which in the opinion of
management are necessary in order to make the financial statements not
misleading.
Reference to 10-KSB - Please refer to the Company's 10-KSB for the year ended
December 31, 1995, for additional information and disclosures which may be of
interest to the reader hereof.
The Principles of Consolidation - The consolidated financial statements include
the accounts of Global Resources, 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.
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 over the
estimated economic lives.
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<PAGE> 8
GLOBAL RESOURCES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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 when the trips are taken.
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 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 sixty 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.
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
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<PAGE> 9
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
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.
NOTE 2. MEMBERSHIP SALES CONTRACTS RECEIVABLE
Membership sales contracts receivable are summarized as follows:
<TABLE>
<CAPTION>
MARCH 31 MARCH 31 DECEMBER 31
---------- ---------- -----------
1996 1995 1995
---------- ---------- ----------
<S> <C> <C> <C>
Contracts receivable 7,219,590 3,669,894 5,723,780
Unearned interest (1,755,317) (855,031) (1,391,638)
Allowance for cancellations (546,427) (281,484) (433,214)
---------- ---------- ----------
4,917,846 2,533,359 3,898,928
Less current portion (638,278) (497,525) (506,602)
---------- ---------- ----------
4,279,568 2,035,824 3,392,326
========== ========== ==========
</TABLE>
NOTE 3. RECREATIONAL MINING PROPERTIES
The components of recreational mining properties are as follows:
<TABLE>
<CAPTION>
MARCH 31 MARCH 31 DECEMBER 31
----------- ----------- -----------
1996 1995 1995
----------- ----------- -----------
<S> <C> <C> <C>
Membership recreational mining properties: $ 859,677 $ 384,568 $ 604,477
Land 66,845 64,596 66,845
Buildings and improvements (166,492) (124,880) (166,492)
----------- ----------- -----------
Less cost of memberships sold 760,030 324,284 504,830
Less accumulated depreciation (26,105) (21,605) (24,605)
----------- ----------- -----------
$ 733,925 $ 302,679 $ 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 842,137 796,387 842,137
----------- ----------- -----------
Vehicles and equipment 2,489,059 2,443,309 2,489,059
Less accumulated depreciation (960,007) (863,007) (939,007)
----------- ----------- -----------
$ 1,529,052 $ 1,580,302 $ 1,550,052
=========== =========== ===========
</TABLE>
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<PAGE> 10
GLOBAL RESOURCES, 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.
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. SUBSEQUENT EVENTS
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 non peak hours. The Company has begun
receiving minimum weekly checks of $14,000 pursuant to the contract. In April
1996, The Outdoor Channel signed an advertising agreement with Honda
Corporation.
NOTE 7. CASH CONCENTRATION RISK
On March 31, 1996, the Company had approximately $124,217 at Home Savings.
Deposits at a financial institution in excess of $100,000 are not insured.
NOTE 8. EARNINGS PER SHARE
Earnings per share are based on the weighted average number of common and common
equivalent shares outstanding during the year. On March 31, 1996 and 1995, the
weighted average number of shares for computing earnings per share were
4,323,436 and 3,954,371, respectively.
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<PAGE> 11
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 MARCH 31, 1996 AND MARCH 31, 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 March 31, 1996 were $3,437,689, a
substantial increase of $1,315,365 or 62%, compared to revenues of $2,122,324
for the quarter ended March 31, 1995. This increase was primarily a result of an
increase in membership sales to $2,187,764 for the quarter ended March 31, 1996
from $1,029,833 for the quarter ended March 31, 1995, due to a major Lost
Dutchman's membership drive. Revenues from the Trips Division increased to
$129,537 for the quarter ended March 31, 1996 from $46,977 for the quarter ended
March 31, 1995, due to increased sales for the Alaska Trip for 1996 compared to
1995. Despite management devoting significant time and resources to increasing
distribution and revenues for The Outdoor Channel, in the first quarter of 1996,
the Company increased its sales for Lost Dutchman's and for the Alaska Trip.
These sales increases 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 March 31, 1996 were $2,884,335, an
increase of $1,082,368, or 60%, compared $1,801,967 for the quarter ended March
31, 1995. This increase was predominately due to increases in specific areas.
The primary component of the increase was the increased cost of advertising to
$709,075 for the quarter ended March 31, 1996 from $207,809 for the quarter
ended March 31, 1995, due to production costs and purchasing advertising time on
The Nashville Network ("TNN") for the Company's "Gold Prospecting Show." The
Cost of these items was approximately $450,000 for the quarter ended March 31,
1996. Although membership sales and the trips revenues increased in the first
quarter of 1996, compared to the same period in 1995, these increases were not
due in substantial part to the "Gold Prospecting Show." The show was popular
with viewers but due to the lack of immediate commercial success the Company has
decided to devote its resources to other aspects of the Company's business with
the show ending its run on TNN at the end of May 1996. Compensation and Related
Payroll Costs increased to $298,079 for the quarter ended March 31, 1996,
compared to $160,120 for the quarter ended March 31, 1995. This increase was due
to the cumulative addition of executive, sales and administrative personnel for
The Outdoor Channel during the period after March 31, 1995. The provision for
doubtful contracts increased to $125,362 for the quarter ended March 31, 1996,
compared to $18,471 for the quarter March 31, 1995, which was due to the
increased Lost Dutchman's sales in the first quarter of 1996. Shows and Seminars
increased to $82,128 for the quarter ended March 31, 1996, compared to $15,667
for the quarter ended March 31, 1995, due to substantial increase in
participation by The Outdoor Channel in trade shows for the purpose of
increasing industry visibility.
Income Before Income Taxes. Income before income taxes increased as a
percentage of revenues from 15% for the quarter ended March 31, 1995 to 16% for
the quarter ended March 31, 1996. Although revenues and net income increased
overall for the quarter ended March 31, 1996, compared to the same
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<PAGE> 12
period in 1995, income before income taxes would have been greater if "The Gold
Prospecting Show" on TNN had been a commercial success.
Income Tax Expense. Income tax expense for the quarter ended March 31,
1996 was $200,000, an increase of $85,000, or 74%, compared to $115,000 for the
quarter ended March 31, 1995, due to the increase in net income.
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.
Christopher B. Forgy joined the Company as President and Chief
Executive Officer of The Outdoor Channel. Mr. Forgy is a recognized and highly
regarded cable television executive. From 1989 to 1995, he was Senior Vice
President of Marketing, Sales and Programming for Times Mirror Cable Television.
He is Immediate Past Chairman of the Cable Television Administration and
Marketing Society (CTAM), the cable industry's professional association of
marketers, with some 5,000 national members. He has also served on the boards of
directors of the Cabletelevision Advertising Bureau (CAB), the National
Association of Minorities in Cable, the NAMIC Foundation and Pay Per View
Holding Company, Inc., which owns and operates the Viewer's Choice networks. It
is anticipated that Mr. Forgy will have a major impact on The Outdoor Channel
and Company as a whole.
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. The Company has
begun receiving minimum weekly checks of $14,000 pursuant to the contract. The
contract is potentially worth a minimum of $728,000 if it runs the full year
term. In April 1996, The Outdoor Channel signed an advertising agreement with
Honda Corporation.
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, The Outdoor Channel was launched on several
cable affiliates of Bresnan Communications which has 209,000 subscribers in
anticipation of signing a national carriage agreement. 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
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<PAGE> 13
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.
The Company added the Vein Mountain Camp to its Lost Dutchman's
holdings in February 1996. The Vein Mountain Camp is located in West Central
North Carolina approximately 7 miles from the town of Marion. The Camp consists
of 130 deeded acres located in the middle of North Carolina's motherlode.
Between 1829 and 1830, seven pound nuggets were reported to have been taken from
the property. During the same era a 28 pound nugget and 200 pound mass of gold
and quartz were reported to have been taken within several miles of the
property. There are presently no improvements on the property. There is camping
for up to 250 self-contained recreational vehicles.
The Company undertook a major Lost Dutchman's sales effort commencing
in August and ending December 1995. The effort was very successful with a
significant portion of revenue being reported in the first quarter of 1996 due
to the Company's policy of recognizing income upon the expiration of the sale
refund period which, at the time, was 60 days. The Company has changed the sale
refund period to 10 days effective May 1, 1996. Therefore, most of the sales in
the Company's Spring membership drive will be reported in the second quarter of
1996. The Company will continue 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.
In January 1996, the Company began the weekly airing of the "Gold
Prospecting Show" on The Nashville Network ("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. The Company intends
to discontinue the show at the end of May 1996. While the Company believes the
show would eventually have become a commercial success it has elected to
allocate resources that would have been devoted to the show to The Outdoor
Channel.
The Company conducted the final closing for $100,375 of a private
placement of its Common Stock in January 1996. The private placement consisted
of the sale of Units at a price of $7.50 per Unit, each made up of two (2)
shares of Common Stock and one (1) Class E Warrant to purchase Common Stock. A
total of 110,984 Units were sold for $832,380. Net proceeds to the Company were
approximately $700,000.
To achieve modest growth, the Company believes that its available funds
and expected cash flow to be generated from operations will be adequate to meet
the Company's anticipated cash needs during the next 12 to 18 months. In order
to have a higher growth rate, the Company believes it will be necessary to
obtain outside capital. The Company can place no assurance on receiving equity
funding through outside sources. If cash flow from operations are insufficient
or if working capital requirements are greater than anticipated, the Company
could be required to seek financing. 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.
-13-
<PAGE> 14
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
27 Financial Data Schedule.
Exhibit
Number
-------
-
(b) Reports on Form 8-K
A report on Form 8-K was filed with the Securities and
Exchange Commission on approximately March 27, 1996. Said
report concerned the dismissal of McGladrey & Pullen, LLP
as the Company's auditor.
A report on Form 8-K was filed with the Securities and
Exchange Commission on approximately March 29, 1996. Said
report concerned the hiring of Kenneth E. Walsh, Certified
Public Accountant, as the Company's auditor.
-14-
<PAGE> 15
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 RESOURCES, INC.
(Registrant)
Dated: May 17, 1996 By: /s/ PERRY T. MASSIE
-----------------------
PERRY T. MASSIE,
President and Chief
Executive Officer
Dated: May 17, 1996 By: /s/ DAVID M. ASHWOOD
------------------------
DAVID M. ASHWOOD,
Chief Financial Officer
-15-
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