<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB/A
Amendment No. 1
(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, 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 Juris- (IRS Employer
diction of incorporation Identification Number)
or organization)
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:
Number of Shares Outstanding
Class at November 13, 1996
----- ----------------------------
Common Stock, $.02 par value 4,119,264
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
<PAGE> 2
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB/A
Amendment No. 1
FINANCIAL STATEMENTS
PART I - ITEM 1
- --------------------------------------------------------------------------------
FOR THE QUARTER ENDED SEPTEMBER 30, 1996
- --------------------------------------------------------------------------------
GLOBAL OUTDOORS, INC.
-2-
<PAGE> 3
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
------------ -----------
Restated Restated Restated
-------- -------- --------
1996 1995 1995
---------- ---------- ----------
CURRENT ASSETS
<S> <C> <C> <C>
Cash $ 36,901 $ 278,095 $ 458,448
Current portion of stockholder receivable 40,800 25,892 40,800
Other receivables 134,820 104,469 135,937
Income taxes receivable 12,340 86,665 75,281
Inventories 134,675 142,411 192,268
Prepaid expenses 414,415 218,137 536,591
---------- ---------- ----------
Total current assets 773,951 855,669 1,439,325
MEMBERSHIP RECREATIONAL
MINING PROPERTIES (Note 3) 910,547 647,469 646,717
ALASKA RECREATIONAL
MINING PROPERTIES (Note 3) 1,535,826 1,574,052 1,550,052
EQUIPMENT AND LEASEHOLD
IMPROVEMENTS (Note 3) 420,030 88,389 226,970
STOCKHOLDER RECEIVABLE,
Interest at 6% $5,000 per month including
interest, secured by building, less
current portion 251,642 316,834 292,616
DEPOSITS 273,231 428,872 323,226
DEFERRED INCOME TAXES 502,829 - 30,582
OTHER ASSETS 123,694 12,140 67,367
---------- ---------- ----------
TOTAL ASSETS $4,791,750 $3,923,425 $4,576,855
========== ========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
-3-
<PAGE> 4
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
------------ -----------
Restated Restated Restated
-------- -------- --------
1996 1995 1995
---- ---- ----
CURRENT LIABILITIES
<S> <C> <C> <C>
Current maturities of long-term debt 322,417 $ 123,347 $ 111,387
Customer deposits 100 - 16,979
Accounts payable and accrued expenses 125,210 132,388 159,802
Deferred revenue, current 398,939 74,321 310,756
----------- ---------- ----------
Total current liabilities 846,666 330,056 598,924
DEFERRED REVENUE, Long term portion 1,496,217 1,168,205 1,245,852
DEFERRED INCOME TAXES - 73,611 -
LONG TERM DEBT, Less current portion 1,017,234 157,565 288,600
----------- ---------- ----------
(Note 4)
Total liabilities 3,360,117 1,729,437 2,133,376
----------- ---------- ----------
STOCKHOLDERS' EQUITY (Notes 5 and 6) Common stock,
$.02 par value; 50,000,000 shares authorized;
shares issued and outstanding: 4,103,551 at
September 30, 1996; 4,074,988 at December 31, 1995;
and 3,868,758 at September 30, 1995 82,385 78,562 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
September 30, 1996; 63,195 at December 31,
1995; and 63,855 at September 30, 1995 61 63 63
Additional paid-in capital 2,869,109 2,296,807 2,793,938
Retained Earnings (1,298,672) (39,806) (210,772)
Less Stock Subscriptions receivable ( 221,250) ( 221,250) ( 221,250)
----------- ---------- ----------
Total stockholders' equity $ 1,431,633 $2,193,988 $2,443,479
TOTAL LIABILITIES AND EQUITY $ 4,791,750 $3,923,425 $4,576,855
=========== ========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
-4-
<PAGE> 5
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
3 Months Ended 9 Months Ended
-------------- --------------
Restated Restated Restated Restated
-------- -------- -------- --------
September 30 September 30 September 30 September 30
1996 1995 1996 1995
---- ---- ---- ----
REVENUES
- --------
<S> <C> <C> <C> <C>
Alaska/Australia Trip $ 755,420 $ 608,945 $ 828,901 $ 656,161
Membership Sales 950,003 1,036,108 2,652,324 2,603,623
Advertising 181,655 124,652 520,648 296,662
Management fees - - - 25,000
Interest 6,132 5,365 19,210 25,127
----------- ------------ ------------- ------------
Total net revenues $ 1,893,210 $ 1,775,670 $ 4,021,083 $ 3,606,573
----------- ------------ ------------- ------------
EXPENSES
Alaska/Australia trip expenses $ 310,446 $ 353,075 $ 353,090 $ 353,075
Advertising 361,796 353,869 1,219,652 877,296
Bank credit card charges 9,879 10,737 44,280 35,248
Compensation & related costs 395,211 283,285 1,050,501 623,447
Depreciation 31,200 34,500 93,600 103,366
Freight 44,947 5,881 96,358 39,734
Insurance 1,080 18,278 47,568 68,101
Interest 25,109 6,617 63,430 18,667
Merchandise purchases 82,887 123,473 246,759 184,262
Office supplies 7,966 9,152 31,710 23,323
Other 39,531 1,386 100,822 62,440
Outside labor 43,465 73,551 133,339 82,791
Postage & delivery 67,061 91,370 320,446 243,669
Printing 88,558 53,304 264,249 204,616
Professional services 23,218 3,919 146,089 53,392
Property tax 3,199 274 7,186 3,393
Provision for doubtful contracts - 2,759 - 2,759
Repairs and maintenance 17,331 14,329 50,678 29,992
Rent 27,774 26,212 99,439 54,142
Shows and seminars 83,262 41,613 228,812 118,227
Supplies and small tools 26,196 30,627 110,024 94,293
Tax and license 10,724 26,307 33,379 33,383
Telephone and utilities 89,922 40,199 183,880 103,243
TNN Show - - 574,700 -
----------- ------------ ------------- ------------
Total expenses $ 1,790,762 $ 1,579,826 $ 5,499,991 $ 3,412,859
----------- ------------ ------------- ------------
Income (loss) before income tax $ 102,448 $ 195,244 $ (1,478,908) $ 193,714
Income tax expense 38,930 74,193 (502,829) 73,611
----------- ------------ ------------- ------------
Net income (loss) $ 63,518 $ 121,051 $ (976,079) $ 120,103
=========== ============ ============= ============
Earnings per share (Note 6) $ 0.01 $ 0.03 $ (0.23) $ 0.03
</TABLE>
See Notes to Consolidated Financial Statements
-5-
<PAGE> 6
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Period Ended September 30
-------------------------
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities $ (824,337) $ (7,913)
Cash flows (used in) investing activities,
purchase of equipment (536,874) (787,816)
Cash flows (used in) financing activities,
payments on long-term debt 939,664 308,711
------------ ------------
Net increase (decrease) in cash $ (421,547) $ (487,018)
Cash at beginning of period $ 458,448 $ 765,113
------------ ------------
Cash at end of period $ 36,901 $ 278,095
============ ============
</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, In c.)
memberships which entitle 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 Gold
Prospectors' Association of American, Inc. ("GPAA"), revenue from advertisers in
a bi-monthly magazine, advertising revenue through cable television programming
d/b/a The Outdoor Channel and through merchandise sales. Effective July 23,
1996, the Company changed its name from Global Resources, Inc. to Global
Outdoors, Inc. which change is reflected throughout these 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 September 30
1996, include all adjustments which in the opinion of management are necessary
in order to make the financial statements not misleading. Said financial
statements have been restated as further described in Note 2 herein.
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 and The Outdoor Channel,
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 of the common stock of
GPAA. GPAA was 100% owned by the majority stockholders of the Company. The
agreement also calls for an additional 1,500,000 shares of common stock to be
issued if certain earnings or valuation levels are attained. The principal
business of GPAA is the sales of memberships in a gold prospecting club. The
GPAA also generates revenue from advertisers in a bimonthly magazine and through
merchandise sales. The combination was accounted for in manner similar to a
pooling of interests. GPAA previously had a year-end of February 28 and as a
result of the combination has adopted a December 31 fiscal year-end. The income
and cash flows for two months ended February 28, 1994 are included in both of
the twelve months ended December 31, 1995 and 1994. The duplication of the
income for these two months totals $21,667 and is eliminated in the statement of
retained earnings.
-7-
<PAGE> 8
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Reference to Forms 10-KSB and 10-K:
Please refer to the Company's Form 10-KSB and amendment thereto dated January
1997 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.
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.
Membership Recreational Mining Properties:
Membership recreational mining properties consist primarily of land, are held
for membership use and are recorded at the lower of cost or estimated net
realizable value.
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 which in general is 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 when trips are taken. Trips
are taken in June through August each year.
The Company has sold memberships in its Lost Dutchman's club 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 for camping and recreational vehicle parking. The
contracts are generally noninterest bearing, unsecured and provide for a down
payment and monthly installments of $25 or $30 for periods of up to ten years.
No deferred revenue or accounts receivable have been recorded for amounts not
yet due under the contract terms due to uncertainty with respect to collection.
Sales revenue is recognized based upon a weighted average ten year straight line
method. The ten year weighted average method was established
-8-
<PAGE> 9
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
based upon historical membership longevity taking into consideration member
defaults and withdrawals. Deposits are taken with new sales contracts, which are
fully refundable for 10 days.
The Company also sells Gold Prospecting club memberships for periods varying
from one year to lifetime memberships. For nonlifetime memberships, revenue is
recognized over the life of the membership. Approximately 10% of the Gold
Prospecting club members are members of the Lost Dutchman's club referred to in
the paragraph above. Based on demographics, the Gold Prospecting club members
have a longer term than the Lost Dutchman's members. 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.
Reclassification:
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.
NOTE 2. RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS
The Company's December 31, 1995 and 1994 consolidated financial statements and
September 30, 1996 and 1995 consolidated financial statements have been restated
to reflect the above stated revenue recognition policy for its Lost Dutchman's
membership sales from a policy of recognizing most of the revenue upon execution
of a sales contract and the expiration of the refund period as previously
reported. In addition, the consolidated financial statements have been restated
to eliminate all barter advertising revenue as previously reported. The
Company's changes in accounting policy and in revenue recognition policy have
resulted in the following changes in assets, shareholders equity, sales revenue,
operating expenses and profits for the nine months ended September 30, 1996 and
1995:
-9-
<PAGE> 10
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
As Previously Change in Barter As Restated
------------- --------- ------ -----------
Reported LDMA Sales Eliminated
-------- ---------- ----------
Accounting
----------
9-30-95
- -------
<S> <C> <C> <C> <C>
Assets 7,251,171 (3,327,746) - 3,923,425
Shareholder equity 4,343,099 (2,295,496) - 2,047,603
Total net revenue $ 7,416,683 $(1,028,710) $(2,781,400) $ 3,606,573
Operating expenses 6,363,554 (169,295) (2,781,400) 3,412,859
----------- ------------ ------------ ----------
Net income before tax 1,053,129 (859,415) - 193,714
Income tax expense 292,500 (218,889) - 73,611
Net income 760,629 (640,526) - 120,103
Earnings per share $ .19 $ (.16) $ - $ .03
9-30-96
- -------
Assets 10,265,021 (5,302,294) - 4,962,727
Shareholder equity 5,507,713 (3,905,103) - 1,602,610
Total net revenue $ 9,706,649 $(2,607,941) $(3,077,625) $ 4,021,083
Operating expenses 8,892,472 (314,856) (3,077,625) 5,499,991
--------- ------------ ----------- ----------
Income before income 814,177 (2,293,085) - (1,478,908)
tax
Income tax expense 295,000 (797,829) - (502,829)
Net income 519,177 (1,495,256) - (976,079)
Earnings per share $ .12 $ (.35) $ - $ (.23)
</TABLE>
As of December 31, 1995 scheduled payments and amounts to be recognized as
income in future years from existing Lost Dutchman's membership sales contracts
are:
<TABLE>
<CAPTION>
Scheduled Revenue to Be
--------- -------------
Payments Recognized
-------- ----------
<S> <C> <C>
1996 $ 981,624 $1,072,865
1997 902,957 1,072,865
1998 800,538 1,072,865
1999 698,617 1,072,865
2000 426,045 1,045,332
2001 and after $1,465,629 $3,486,377
---------- ----------
Total $5,275,410 $8,823,169
========== ==========
</TABLE>
-10-
<PAGE> 11
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3. PROPERTY, PLANT AND EQUIPMENT
The components of property, plant and equipment are as follows:
<TABLE>
<CAPTION>
September 30 September 30 December 31
------------ ------------ -----------
1996 1995 1995
----------- ----------- -----------
<S> <C> <C> <C>
Membership recreational mining properties:
Land $ 859,677 $ 600,677 $ 604,477
Buildings and improvements 79,985 67,396 66,845
----------- ----------- -----------
939,662 668,073 671,322
Less accumulated depreciation (29,105) (20,604) (24,605)
----------- ----------- -----------
$ 910,557 $ 647,469 $ 646,717
=========== =========== ===========
Alaska recreational mining properties:
Land $ 1,204,773 $ 1,202,373 $ 1,202,373
Buildings and Improvements 444,549 444,549 444,549
Vehicles and equipment 888,511 839,137 842,137
----------- ----------- -----------
2,537,833 2,486,059 2,489,059
Less accumulated depreciation (1,002,007) (912,007) (939,007)
----------- ----------- -----------
$ 1,535,826 $ 1,574,052 $ 1,550,052
=========== =========== ===========
Equipment and Leasehold Improvements:
Furniture and fixtures $ 63,73 $ 17,414 $ 38,914
Equipment 425,800 124,739 255,259
Vehicles 99,033 94,102 94,102
Leasehold improvements 27,748 8,876 8,876
----------- ----------- -----------
616,311 245,131 397,151
Less accumulated depreciation (196,281) (156,742) 170,181
----------- ----------- -----------
$ 420,030 $ 88,389 $ 226,970
=========== =========== ===========
</TABLE>
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
$328,061 as of September 30, 1996. In September 1996, the Company converted
$450,000 of its bank line of credit to a long term loan bearing interest at
9.75% with $12,500 in principal payable monthly and interest on the balance
payable monthly.
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
-11-
<PAGE> 12
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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.
In July 1996 the stockholders approved increasing the authorized number of
shares of Common Stock to 50,000,000 shares.
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 September 30, 1996
and 1995, the weighted average number of shares for computing earnings per
share were 4,312,550 and 4,101,063, respectively.
NOTE 7. SUBSEQUENT EVENTS
On October 15, 1996, a new independent accounting firm, Arthur Andersen, LLP
was engaged by the Company as its principal accountants to audit the Company's
financial statements for the year ended December 31, 1996.
-12-
<PAGE> 13
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This report on Form 10-QSB/A 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 and Form
10-KSB/A for the year ended December 31, 1995.
COMPARISON OF QUARTERS ENDED SEPTEMBER 30, 1996 AND SEPTEMBER 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 the sale of advertising time on
The Outdoor Channel and from advertising space in publications such as the
Gold Prospector magazine. Revenues for the quarter ended September 30, 1996
were $1,893,210, a modest increase of $117,540 or 7%, compared to revenues of
$1,775,670 for the quarter ended September 30, 1995. This increase was
primarily the result of increases in two items of revenue, Advertising and the
Trips Division. Advertising revenue increased substantially to $181,655 for
the quarter ended September 30, 1996 compared to $124,652 for the quarter
ended September 30, 1995, due primarily to an increase in advertising revenue
for The Outdoor Channel. Revenues from the Trips Division was up significantly
to $755,420 for the quarter ended September 30, 1996 compared to $608,945 for
the quarter ended September 30, 1995, due to increased sales of the Alaska
trip. Membership sales were $950,003 for the quarter ended September 30, 1996
compared to a higher amount of $1,036,108 for the quarter ended September 30,
1995. Despite management devoting significant time and resources to increasing
distribution and revenues for The Outdoor Channel, in the Third Quarter of
1996, the Company increased its sales for the Alaska Trip and keep revenue for
membership sales to a small decline.
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 September 30, 1996 were $1,790,762,
an increase of $186,045, or 12%, compared to $1,604,717 for the quarter ended
September 30, 1995. This increase was predominately due to change in specific
line items. Compensation and Related Payroll Costs accounted or the majority
of the increase in expenses at $395,211 for the quarter ended September 30,
1996, compared to $283,285 for the quarter ended September 30, 1995. This
increase was due to the cumulative addition of executive, sales and
administrative personnel for The Outdoor Channel during the period after
September 30, 1995. Shows and Seminars increased significantly to $83,262 for
the quarter ended September 30, 1996 compared to $41,613 for the quarter ended
September 30, 1995, due primarily to increased activity at trade shows for The
Outdoor Channel. Telephone and utilities increased substantially to $89,922
for the quarter ended September 30, 1996 compared to $40,199 for the quarter
ended September 30, 1995, due predominately to increased telemarketing efforts
for the Company's business divisions separate from The Outdoor Channel. Other
items did not vary significantly or the variation was overall not a relatively
large amount.
Income Before Income Taxes. Income before income taxes decreased as a
percentage of revenues to 5% for quarter ended September 30, 1996 compared to
11% for the quarter ended September 30, 1995, due to revenues increasing more
than expenses for the quarter ended September 30, 1996 compared to the quarter
ended September 30, 1995.
Income Tax Expense. Income tax expense for the quarter ended September
30, 1996 was $38,930 compared to $64,734 for the quarter ended September 30,
1995, due to the Company having greater expenses for the quarter ended
September 30, 1996, compared to September 30, 1995.
-13-
<PAGE> 14
GENERAL
Management of Global continued its emphasis on the growth and
development of The Outdoor Channel during the third quarter 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.
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 approximately 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 approximately
209,000 subscribers. In May 1996, The Outdoor Channel signed a national
carriage agreement with Northland Communications which has approximately
191,000 subscribers. In July 1996, The Outdoor Channel signed a national
carriage agreement with Rifkin and Associates which has approximately 370,000
subscribers. The Company has received verbal agreements with several other
MSO's. The Outdoor Channel has launched on systems of several MSOs in advance
of signing a national carriage agreement with those MSOs. 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.
In September 1996, The Outdoor Channel executed an agreement retaining
MediaAmerica, Inc. as the exclusive national advertising sales representative
for The Outdoor Channel. After a ramp up period, the Company anticipates that
MediaAmerica will bring net revenues of approximately $60,000 in April 1997,
with the potential to increase thereafter.
The Company has continued to aggressively market Lost Dutchman's, other
memberships and products in 1996.
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 ("SEC") 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 $8.00 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 the Company, Selected Broker-Dealers/Underwriter. The Company
anticipates contributing substantially to the sale of Units by referring
persons to Selected Broker-
-14-
<PAGE> 15
Dealers/Underwriters, in which case, such firms will receive a lower sales
commission. In a comment letter date August 22, 1996, the SEC proposed that
the Company's financial statements be revised to defer revenue for lifetime
Lost Dutchmans memberships and amortize it on a straight line basis over the
estimated period which the member is expected to use the land and facilities.
On October 15, 1996, a new independent accounting firm, Arthur
Andersen, LLP was engaged by the Company as its principal accountants to audit
the Company's financial statements for the year ended December 31, 1996.
As of September 30, 1996, the Company had a $750,000 revolving line of
credit with Wells Fargo Bank, $328,061 of which was outstanding. The line of
credit bears interest at 9.25%. In September 1996, the Company converted
$450,000 of its bank line of credit to a long term loan from said bank bearing
interest at 9.75% with $12,500 in principal payable monthly and interest on
the balance payable monthly. The line of credit and loan are unsecured but are
personally guaranteed by Perry T. Massie, Thomas H. Massie and a major
shareholder.
As of November 14, 1996, the Company anticipated that it would require
additional short-term financing in the amount of $400,000 by mid January 1997
to meet its anticipated cash flow obligations for the following three months.
The Company was 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 $400,000 and with the net proceeds of the offering in
an amount of $1,000,0000, would be sufficient to fund the Company's operations
at current 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
$400,000 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.
Effective January 20, 1997, the Company restated its financial
statements for the year ended December 31, 1995 and 1994, to among other
matters, recognize revenue from its Lost Dutchman's sales on a straight line
basis over ten years and eliminate barter advertising revenue and the
offsetting expense. This restatement resulted in a substantial reduction of
revenue, income, assets and equity for the Company. The financial statements
herein have also been restated and all matters related thereto reflect the
restatements.
-15-
<PAGE> 16
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
-------------------
Form 8-K dated September 27, 1996, was filed with the
Securities and Exchange Commission regarding a news
release on the status of the Company's SB-2 Registration
Statement.
-16-
<PAGE> 17
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Amendment No. 1 to this report to be
signed on its behalf by the undersigned thereunto duly authorized.
GLOBAL OUTDOORS, INC.
(Registrant)
Dated: January 30, 1997 By: /s/ PERRY T. MASSIE
--------------------------------------
PERRY T. MASSIE,
President and Chief
Executive Officer
Dated: January 30, 1997 By: /s/ DAVID M. ASHWOOD
--------------------------------------
DAVID M. ASHWOOD,
Chief Financial Officer
(Principal Financial and Accounting Officer)
-17-
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