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As filed with the Securities and Exchange Commission on January 30, 1997
Registration No. 333-9599
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
AMENDMENT NO. 2
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
GLOBAL OUTDOORS, INC.
(Name of small business issuer in its charter)
Alaska 4833 33-0074499
(State or Jurisdiction of (Primary Standard Industrial (I.R.S. Employer
Incorporation or Organization) Classification Code Number) Identification No.)
43445 BUSINESS PARK DRIVE, SUITE 113, TEMECULA, CALIFORNIA 92590; (909) 699-4749
(Address and telephone number of principal executive offices and principal
place of business)
Perry T. Massie, President and Chief Executive Officer
43445 Business Park Drive, Suite 113, Temecula, California 92590; (909) 699-4749
(Name, address and telephone number of agent for service)
Copies to:
Richard K. Dickson II, Esq.
1100 Quail Street
Suite 114
Newport Beach, California 92660
(714) 955-3675
Approximate date of proposed sale to the public: As soon as practicable after
the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. / /
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement under the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: / /
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CALCULATION OF REGISTRATION FEE
Proposed maximum Proposed maximum
TITLE OF EACH CLASS OF Amount to be offering price aggregate Amount of
SECURITIES TO BE REGISTERED registered per unit (1) offering price (1) registration fee
- --------------------------------------- ------------- ---------------- ------------------ ----------------
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Units consisting of two shares of
Common Stock, $.02 par value, and one
Class F Warrant 625,000 $ 8.00 $5,000,000.00 $1,724.14
Common Stock, $.02 par value (2) (3) 625,000 $ 5.50 $3,437,500.00 $1,185.35
Selected Broker-Dealers Unit Warrants (4) 37,500 $ .001 $ 37.50 --
Units consisting of two shares of
Common Stock, $.02 par value, and one
Class F Warrant (5) 37,500 $ 9.60 $ 360,000.00 $ 124.14
Common Stock, $.02 par value (3) (6) 37,500 $ 5.50 $ 206,250.00 $ 71.12
---------
TOTAL $3,104.75
=========
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(1) Estimated for purposes of computing registration fee.
(2) Issuable upon exercise of Class F Warrants.
(3) Pursuant to Rule 416, an indeterminable number of additional shares of
Common Stock are registered hereunder which may be issued, as provided
in the Class F Warrants and the Selected Broker-Dealers Unit Warrants,
in the event provisions against dilution become operative.
(4) Issuable to the Selected Broker-Dealers or its designees. Pursuant
to Rule 457(g), no separate fees are required to register the
Selected Broker Dealers Warrants.
(5) Issuable upon exercise of the Selected Broker-Dealers Unit Warrants.
(6) Represents Common Stock issuable upon exercise of Class F Warrants
included in the Selected Broker-Dealers Unit Warrants.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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GLOBAL OUTDOORS, INC.
CROSS-REFERENCE SHEET SHOWING LOCATION IN PROSPECTUS OF PART I ITEMS OF
FORM SB-2 REGISTRATION STATEMENT.
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REGISTRATION STATEMENT ITEMS AND HEADINGS LOCATION IN PROSPECTUS
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1. Front of Registration Statement and Outside
Front Cover Page of Prospectus........................... Facing Page; Cover Page of Prospectus.
2. Inside Front and Outside Back Cover Pages
of Prospectus............................................ Inside Front and Outside Back Cover Pages of
Prospectus; Additional Information.
3. Summary Information and Risk Factors..................... Prospectus Summary; Risk Factors.
4. Use of Proceeds.......................................... Use of Proceeds.
5. Determination of Offering Price.......................... Cover Page of Prospectus; Plan of Distribution.
6. Dilution................................................. Not Applicable.
7. Selling Security Holders................................. Not Applicable.
8. Plan of Distribution..................................... Cover Page of Prospectus; Plan of Distribution.
9. Legal Proceedings........................................ Not applicable.
10. Directors, Executive Officers,
Promoters and Control Persons............................ Management.
11. Security Ownership of Certain Beneficial
Owners and Management.................................... Security Ownership of Certain Beneficial Owners and
Management.
12. Description of Securities................................
Description of Securities.
13. Interest of Named Experts and Counsel.................... Not Applicable.
14. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities.............................................. Management -- Limitation of Directors' and Officers' Liability
and Indemnification.
15. Organization Within Last Five Years......................
Not Applicable.
16. Description of Business.................................. Prospectus Summary; Business.
17. Management's Discussion and Analysis Management's Discussion and Analysis of Financial Condition
or Plan of Operation..................................... and Results of Operations.
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REGISTRATION STATEMENT ITEMS AND HEADINGS LOCATION IN PROSPECTUS
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18. Description of Property.............................. Properties.
19. Certain Relationships and Related
Transactions......................................... Management -- Certain Transactions.
20. Market for Common Equity and Related
Stockholder Matters.................................. Cover Page of Prospectus; Price Range of Common Stock.
21. Executive Compensation............................... Management -- Executive Compensation.
22. Financial Statements................................. Selected Financial Data; Index to Financial Statements.
23. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure............... Not Applicable.
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED JANUARY 30, 1997
GLOBAL OUTDOORS, INC.
625,000 UNITS
EACH UNIT CONSISTING OF TWO SHARES OF COMMON STOCK
AND ONE CLASS F WARRANT TO PURCHASE COMMON STOCK
Global Outdoors, Inc. (the "Company") hereby offers 625,000 Units (the
"Units"), each Unit consisting of two shares of Common Stock (the "Common
Stock") and one redeemable Class F Warrant to purchase one share of Common Stock
(the "Warrant" or "Class F Warrant"). The Common Stock and Class F Warrants are
immediately detachable and separately transferable. Each Class F Warrant
entitles the registered holder thereof to purchase, at any time over a two-year
period commencing on the date of this Prospectus, one share of Common Stock at a
price of $5.50 per share, subject to certain adjustments. The Class F Warrants
are subject to redemption, at any time, by the Company at $.02 per Warrant on 20
days' prior notice. The Company's Common Stock is traded on the Nasdaq Small Cap
Market under the symbol "GLRS". On January __, 1997, the closing bid and asked
prices for a share of the Company's Common Stock, as reported by Nasdaq, were
$________ and $_________, respectively. See "Price Range of Common Stock."
THE UNITS OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
BEGINNING AT PAGE 5 OF THIS PROSPECTUS FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED
HEREBY.
-------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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Price to Underwriting Discounts Proceeds to
Public and Commissions (1) Company (2)
<S> <C> <C> <C>
Per Unit........... $ 8.00 $ 0.80 $ 7.20
Total Minimum $ 200,000 $ 20,000 $ 180,000
25,000 Units
Total Maximum $5,000,000 $ 500,000 $ 4,500,000
625,000 Units
</TABLE>
(1) Excludes a non-accountable expense allowance payable to Selected
Broker-Dealers, (the "Selected Broker-Dealers") and the value of
warrants to be issued to the Selected Broker-Dealers or its designees
to purchase up to 37,500 Units (the "Broker-Dealer's Warrants"). The
Company has agreed to indemnify the Selected Broker-Dealers against
certain liabilities under the Securities Act of 1933, as amended. See
"Plan of Distribution."
(2) Before deducting expenses, other than underwriting discounts and
commissions, payable by the Company, estimated to be $250,000 for a
maximum offering and $30,000 for a minimum offering, including the
Representative's non-accountable expense allowance.
The Units are being offered severally by the Company and Selected
Broker-Dealers on a "best efforts" basis and on all or none basis as to the
minimum offering amount. The Selected Broker-Dealers reserve the right to
reject any order in whole or in part and to withdraw, cancel or modify the
offer without notice.
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The date of this Prospectus is_____ , 1997
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[ COLOR PHOTOGRAPHS ]
The Outdoor Channel(TM) is a trademark of the Company. This Prospectus also
refers to trademarks of companies other than the Company.
<PAGE> 6
PROSPECTUS SUMMARY
The following summary should be read in conjunction with, and is qualified
in its entirety by, the more detailed information and Financial Statements and
Notes thereto appearing elsewhere in this Prospectus. Unless otherwise
indicated, the information contained in this Prospectus assumes that there has
been no exercise of the Selected Broker-Dealer's Warrants, the Class E
Warrants or outstanding options to purchase shares of Common Stock granted or
to be granted under the Company's stock option plan and reflects (i) the
two-for-one stock split of the Common Stock effected September 12, 1994 and
(ii) the one-for-twenty reverse stock split of the Common Stock effected
March 4, 1992.
THE COMPANY
Global Outdoors, Inc. (the "Company" or "Global") owns and operates The
Outdoor Channel, the first national television network devoted solely to outdoor
activities, such as hunting, fishing, scuba diving and recreational gold
prospecting. Launched as a part-time network in June 1993, The Outdoor Channel
progressed to a full-time channel in April 1994 and since then has continued to
develop its management, programming, distribution and revenue. The Company also
owns and operates related businesses which serve the interests of viewers of The
Outdoor Channel and other outdoor enthusiasts. These related businesses include,
LDMA-AU, Inc. ("Lost Dutchman's"), Gold Prospectors' Association of America,
Inc. ("GPAA"), the Trips Division and a 51% interest in American Prospecting
Equipment Company ("APEC"). Lost Dutchman's is a national recreational gold
prospecting campground club with over 5,000 members and properties in
California, Oregon, Alaska, Nevada, Arizona, Colorado, Georgia, North Carolina
and South Carolina. Since January 1993, Lost Dutchman's has added five
properties and approximately 3,500 members. GPAA is the largest recreational
gold prospecting club in the world with approximately 50,000 active members.
GPAA also sells products and services related to recreational gold prospecting
and is the publisher of the Gold Prospector magazine. American Prospecting
Equipment Company markets products related to the recreational prospector. APEC
publishes a products catalog which is distributed to members of the GPAA. The
Company's Trips Division sponsors unique recreational prospecting trips to
Australia and to the Company's 2300 acre camp, located 11 miles west of Nome,
Alaska. In February 1995, the Company acquired 100% of GPAA for 2,500,000 shares
of Common Stock valued at $8,750,000 and potential Earn Out Shares (See Certain
Transactions). At the time of the acquisition, GPAA in addition to its other
interests owned The Outdoor Channel. The Company was incorporated in Alaska on
October 22, 1984. Effective July 23, 1996, the Company changed its name to
Global Outdoors, Inc. from Global Resources, Inc. to better reflect the nature
of the Company's business. The Company's NASDAQ trading symbol "GLRS" remained
unchanged.
The Outdoor Channel's programming is offered mainly by means of satellite
and through contractual relationships with operators of cable television systems
as part of their programming packages. The Company estimates that approximately
65 million households in the United States have cable television and that the
home satellite market has attracted another 5 million households. In addition,
direct broadcast satellites ("DBSs") provide another potential means for the
Company to distribute The Outdoor Channel. The Company believes that The Outdoor
Channel can currently be viewed by over 720,000 cable subscribers, 5,000,000
households and businesses that have satellite receivers and by approximately
1,200,000 broadcast households.
The Company's principal business strategy is to establish a position as a
leading provider of entertainment and information programming relating to
outdoor activities and to leverage that position as a means to market and sell
its products and services. The Company intends to implement this strategy by (i)
increasing The Outdoor Channel's carriage on cable television systems, (ii)
marketing and selling products and services to other specialty or niche markets,
(iii) increasing advertising revenue and subscriber fees derived from The
Outdoor Channel and (iv) increasing the number of recreational activities
offered by the Company.
The Company was incorporated in Alaska on October 22, 1984, and its
principal office is located at 43445 Business Park Drive, Suite 113, Temecula,
California 92590. Its telephone number is (909) 699-4749. Unless otherwise
indicated, all references herein to the "Company" refer to Global Outdoors,
Inc., and its wholly-owned subsidiaries, LDMA-AU, Inc., The Outdoor Channel,
Inc., Gold Prospectors' Association of America, Inc. and Big M Prospecting
Company, Inc.
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THE OFFERING
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Units offered by the Company................. 625,000 Units consisting of 1,250,000 shares of
Common Stock and 625,000 Class F Warrants
Common Stock and Class F Warrants
to be outstanding after the offering....... 5,382,164 shares of Common Stock and 625,000 Class
F Warrants if the maximum offering is completed(1)
4,182,164 shares of Common Stock and 25,000 Class F
Warrants, if the minimum offering is completed
Risk factors................................. This offering involves a high degree of risk. See "Risk
Factors."
Use of proceeds by the Company............... To upgrade production and broadcasting facilities, fund
increased advertising and marketing efforts, fund
acquisition and production of programming for The
Outdoor Channel, fund acquisition of recreational
properties, reduce amount drawn on line of credit and
for working capital and other general corporate
purposes. See "Use of Proceeds."
Nasdaq symbol................................ GLRS
</TABLE>
(1) Excludes (i) 75,000 shares of Common Stock issuable upon exercise of
the Selected Broker-Dealer's Warrants, (ii) 625,000 shares of Common
Stock issuable in the future upon exercise of options granted or to be
granted under the Company's stock option plans, (iii) 60,775 shares of
Common Stock issuable in the future upon conversion of outstanding
shares of Preferred Stock, (iv) 110,984 shares of Common Stock issuable
upon exercise of outstanding Class E Warrants and (v) up to 1,500,000
shares of Common Stock issuable to the former shareholders of Gold
Prospectors' Association of America, Inc., upon the occurrence of
certain events. See "Plan of Distribution;" "Management-- Stock
Option Plans;" "Management -- Certain Transactions" and "Description
of Securities."
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
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YEARS ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30
1994 1995 1995 1996
---- ---- ---- ----
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STATEMENT OF INCOME DATA:
Net sales $ 4,385 $ 4,340 $ 3,607 $ 4,021
Total expenses 3,699 4,421 3,413 5,500
Net income before income taxes 685 (80) 194 (1,178)
Net Income $ 425 $ (50) $ 120 $ (976)
per common share $ 0.11 $ (0.01) $ 0.03 $ (0.23)
Weighted average number of shares
outstanding 3,938 4,075 4,032 4,310
DECEMBER 31, SEPTEMBER 30, 1996
1994 1995 ACTUAL AS ADJUSTED(1)
---- ---- ------ --------------
BALANCE SHEET DATA:
Working capital $ 541 $ 840 $ (73) $ 3,427
Total assets 3,614 4,576 4,792 8,292
Long-term debt, net of current portion 181 289 1,017 267
Shareholders' equity 1,804 2,443 1,432 5,682
</TABLE>
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(1) Adjusted to give effect to the sale by the Company of the maximum
offering of 625,000 Units offered hereby at an assumed public offering
price of $4.00 per share and the application of the estimated net
proceeds therefrom. See "Use of Proceeds."
4
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RISK FACTORS
This Prospectus 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. Discussions containing such forward-looking statements may
be found in the material set forth under "Prospectus Summary," Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business," as well as within the Prospectus generally. Actual results could
differ materially from those projected in the forward-looking statements as a
result of the risk factors set forth below and the matters set forth in the
Prospectus generally. Prospective investors should consider carefully the
following factors, in addition to the other information contained in this
Prospectus, in evaluating an investment in the Units offered hereby.
COMPETITION
The Outdoor Channel is the first television network devoted solely to
outdoor related programming. However, other basic and pay cable television
networks, including the Outdoor Life Network and ESPN compete with, or will
compete in the future with, The Outdoor Channel for viewers. If these or other
competitors, some of which may have substantially greater financial resources
than the Company, were to significantly expand their operations with respect to
outdoor-related programming or their market penetration, it could have a
material adverse effect on the Company. In addition, it is expected that certain
technological advances (including the development of digital compression
technology, the deployment of fiber optic cable and the "multiplexing" of cable
services) will eventually allow cable systems to greatly expand their present
channel capacity, which could lead to increased competition from existing or new
programming services. See "Business--Competition."
The Outdoor Channel competes or expects to compete in the future for
advertising revenue with the television networks described above, as well as
with other national programming services, superstations, broadcast networks,
local over-the-air television stations, direct broadcast satellites ("DBSs"),
multi-channel, multi-point distribution services, broadcast radio and the print
media. The Outdoor Channel also competes or will compete with the television
networks described above for subscriber fees from, and affiliation agreements
with, cable operators. Furthermore, recent court and Federal Communications
Commission (the "FCC") actions have removed certain of the impediments to entry
by local telephone companies into the video programming distribution business,
and proposals now under consideration may result in the elimination of other
impediments. These local telephone companies may distribute programming that is
competitive with that provided by the Company to cable operators. See
"Business--Competition."
The growth in advertising revenue of the Company has been caused in
part by increases in the number of cable and satellite subscribers receiving The
Outdoor Channel. The Company believes, in light of the continued growth in the
market penetration of cable television systems (which currently reach only 67%
of all television households in the United States), satellites and DBSs, as well
as the potential for distribution of The Outdoor Channel via other alternate
delivery services to customers not presently served by cable systems, satellite
or DBS, that significant opportunities to further increase the number of
subscribers exist. However, no assurances can be given that the number of
subscribers will grow.
ADVERSE IMPACT OF REGULATION OF CABLE TELEVISION SYSTEMS
Certain aspects of the operations of cable television systems,
including those which carry The Outdoor Channel, are subject to the regulation
described below. In 1992, Congress enacted the Cable Television Consumer
Protection and Competition Act of 1992 (the "1992 Cable Act"), which provides,
among other things, for a "must carry" regime for local broadcast stations
(which requires the mandatory carriage of certain broadcast stations and
payments by cable operators to other broadcast stations for retransmission of
their signals in some instances), for channel positioning rights for certain
local broadcast stations, for limits on the size of multiple system operators
("MSOs"), for limits on carriage by cable systems and other video distributors
of affiliated program services, for a prohibition on programmers in which cable
operators have an "attributable interest" from discriminating between cable
operators and their competitors, or among cable operators, and for increased
competition in video programming distribution (both within the cable industry
and between cable and competing video distributors). In addition, the 1992 Cable
Act requires the FCC to establish national guidelines for the rates that cable
operators subject to rate regulation
5
<PAGE> 9
may charge for basic cable service and certain other services and to establish
guidelines for determining when cable programming may not be provided
exclusively to cable system operators. Various cable operators have initiated
litigation challenging certain aspects of the 1992 Cable Act. The
constitutionality of the basic scheme of rate regulation under the 1992 Cable
Act has been upheld by a federal district court, and the FCC's regulation rules
were upheld by a federal appeals court in June 1995. The outcome of the balance
of this litigation cannot be predicted. However, Congress passed and the
President signed in March 1996 the most comprehensive rewrite of
telecommunications law since the Communications Act of 1934, reversing or
modifying many of the provisions of the 1992 Act. Among other things, the new
legislation allows cable and telephone industries into each other's markets and
eliminates federal cable rate regulation, immediately for small systems and
within three years for large operators. The Company cannot predict whether this
new law, possible changes in law or new regulations adopted or to be adopted by
the FCC to implement or amend the new law will have a material adverse impact on
the cable industry generally and/or the Company's television business. See
"Business--Government Regulation."
In the future, any increased regulation of rates, and in particular the
rates for basic cable services, could, among other things, put downward pressure
on the rates charged by cable programming services, and affect the ability or
willingness of cable system operators to retain The Outdoor Channel on their
cable systems. In the event that, in response to any rate regulation, cable
system operators implement channel offering structures that require subscribers
to affirmatively choose to pay a separate fee to receive The Outdoor Channel
(either by itself or in combination with a limited number of other channels),
the Company could be materially and adversely affected.
DEPENDENCE ON KEY PERSONNEL
The Company's success is dependent, in part, upon the continued
services of certain key executive officers, including Perry T. Massie, the
Company's Chief Executive Officer, President and Chairman of the Board of
Directors. The loss of any one of its key executive officers could have a
material adverse effect on the Company's results of operations. The continued
success of the Company may also be dependent upon its ability to attract and
retain highly qualified marketing, sales and other personnel. There can be no
assurance that the Company will be able to recruit and retain such personnel.
See "Management."
AGREEMENTS WITH PROGRAM CARRIERS
The success of The Outdoor Channel is highly dependent on its ability
to enter into and maintain agreements with program carriers, such as with
multiple systems operators ("MSOs") and their affiliate members, for the
transmission of The Outdoor Channel to cable television subscribers. Under its
current national carriage agreements("MSOs") and carriage agreements with the
MSOs' individual cable affiliates, the Company typically offers charter MSOs and
their cable affiliates the right to broadcast The Outdoor Channel to their
subscribers. The Outdoor Channel has entered into national carriage agreements
with approximately 13 of the top 100 MSOs. However, execution of a national
carriage agreement with a MSO does not ensure that their affiliate members will
carry The Outdoor Channel. Additionally, three of the top ten MSOs together own
a competitor to The Outdoor Channel which the Company believes will be an
inhibiting influence in obtaining national carriage agreements with such MSOs.
SATELLITE TRANSPONDER ARRANGEMENT
The Outdoor Channel signal is transmitted to cable television
subscribers and satellite dish users via an exclusive, non-protected,
non-preemptible (except under catastrophic circumstances) satellite transponder
on a domestic communications satellite under a service agreement.
"Non-protected" status means that, in the event of transponder failure, The
Outdoor Channel's signal will not be automatically transferred to another
transponder. In addition, under "catastrophic circumstances," The Outdoor
Channel's signal may be preempted by another signal with higher status than The
Outdoor Channel's signal, which status is based on the nature of the agreement
between the broadcaster and the lessor of the satellite transponder. The Outdoor
Channel has never had an interruption in programming due to transponder failure
or preemption. There can be no assurance, however, that there will not be an
interruption or termination of satellite transmission due to transponder failure
or preemption. Such interruption could have a material adverse effect on The
Outdoor Channel and the Company.
6
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FUTURE CAPITAL REQUIREMENTS AND UNCERTAINTY OF ADDITIONAL FUNDING
As of the date of this Prospectus, the Company requires short-term
financing of $300,000 to meet its short-term cash flow requirements. In order to
meet this need, the Company is reviewing avenues for short-term financing
including obtaining collateralized loans from principal shareholders.
Management believes that the Company's existing cash resources and anticipated
cash flows from operations, when combined with an offering that raises
$1,000,000 in net proceeds, and periodic borrowing under the line of credit,
will be sufficient to fund the Company's operations at currently anticipated
level for such a funding for the next twelve months. To the extent that such
amounts are insufficient to finance the Company's working capital requirements ,
the Company could be required to seek financing in addition to the $300,000 the
Company believes it will require in the short-term. In addition, if the Company
raises less than $1,000,000 in net proceeds it will require additional funding
within the next twelve months. 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.
The Company's future capital requirements will depend on numerous
factors, including: the success of the Company's efforts to increase advertising
revenues; resources the Company devotes to increasing distribution of The
Outdoor Channel and acquiring and producing programming for The Outdoor Channel;
and the costs of acquiring additional recreational properties. Accordingly, the
Company may be required to seek additional funds through debt or equity
financing, and there can be no assurance that such financing will be available
on terms satisfactory to the Company, if at all. In addition, the issuance of
additional equity securities by the Company could result in substantial dilution
to existing shareholders, including those purchasing shares in this offering.
The Company's inability to fund its capital requirements could have a material
adverse effect on the Company's results of operations. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources."
Anticipated capital expenditures for 1997, in the event this offering
raises the maximum amount, is estimated to be $4,250,000 which is comprised of
approximately $750,000 to upgrade its production and broadcasting facilities for
The Outdoor Channel, approximately $1,000,000 for funding the production and
acquisition of programming for The Outdoor Channel, approximately $750,000 for
the acquisition of recreational properties, approximately $500,000 to fund
marketing and advertising programs related to The Outdoor Channel, approximately
$750,000 for payment on the Company's line of credit and long term debt and
approximately $500,000 for working capital. In the event the Company does not
raise any money in this offering The Company anticipates no capital expenditures
in 1997. The amount of these expenditures will vary depending upon the success
of this offering.
VOLATILITY OF STOCK PRICE
The Company's Common Stock is currently traded on the Nasdaq Small Cap
Market which market has experienced and is likely to experience in the future
significant price and volume fluctuations, which could adversely affect the
price of the Common Stock without regard to the operating performance of the
Company. The Company's Common Stock is currently traded on the Nasdaq Small Cap
Market and the Company believes factors such as quarterly fluctuations in
financial results, failure to meet financial analysts' expectations and
developments in the cable-television and outdoor recreational activity
industries could contribute to the volatility of the price of its Common Stock,
causing it to fluctuate significantly. These factors, as well as general
economic conditions such as recessions or high interest rates, may adversely
affect the market price of the Common Stock.
CONTROL BY MANAGEMENT
If the maximum offering amount is sold in this offering, the Company's
existing management will beneficially own 55% of the Company's Common Stock .
Consequently, the Company's existing management will have the ability to control
the election of all the Company's directors and to determine the outcome of most
corporate actions submitted to the vote of the Company's shareholders. See
"Security Ownership of Certain Beneficial Owners and Management."
7
<PAGE> 11
REGULATORY AND ENVIRONMENTAL CONSIDERATIONS
In addition to the regulations applicable to the cable television
industry in general, the Company is also subject to various local, state and
federal regulations, including, without limitation, regulations promulgated by
federal and state environmental, health and labor agencies. The Company's
prospecting clubs are subject to various local, state and federal statutes,
ordinances, rules and regulations concerning zoning, development and other
utilization of its properties. Historically, regulatory compliance by the
Company and its customers has not had a material effect on the Company's
business or operations. However, changes to or additions to the regulations
relating to federal prospecting claims and campground memberships could
adversely affect the Company's results of operations. See "Business --
Government Regulation."
BROAD DISCRETION IN APPLICATION OF PROCEEDS
A substantial portion of the net proceeds of this offering has been
allocated for working capital and will be used for such specific purposes as
management may determine. Accordingly, management will have broad discretion
with respect to the expenditure of substantial portions of the net proceeds of
this offering. See "Use of Proceeds."
POSSIBLE ISSUANCE OF PREFERRED STOCK; ANTI-TAKEOVER EFFECT OF ALASKAN LAW
The Company is authorized to issue up to 10,000,000 shares of preferred
stock, par value $.001 per share (the "Preferred Stock"). The Preferred Stock
may be issued in one or more series, the terms of which may be determined at the
time of issuance by the Board of Directors, without further action by the
Company's shareholders, and may include voting rights, preferences as to
dividends and liquidation, conversion and redemption rights, and sinking fund
provisions as determined by the Board of Directors. Although the Company has no
present plans to issue any shares of Preferred Stock in addition to the 60,775
outstanding shares of 10% Convertible Preferred Stock, which have no voting
rights nor any liquidation preference over the Common Stock, the issuance of any
additional shares of Preferred Stock in the future could affect the rights of
the holders of Common Stock and thereby reduce the value of the Common Stock. In
particular, specific rights granted to future holders of Preferred Stock could
be used to restrict the Company's ability to merge with or sell its assets to a
third party, thereby preserving control of the Company by its present owners.
These provisions, together with certain provisions of Alaskan law, may also have
the effect of delaying or preventing changes in control or management of the
Company which could adversely affect the market price of the Company's Common
Stock. See "Description of Securities."
ABSENCE OF DIVIDENDS
The Company has never paid any cash dividends on shares of its Common
Stock and does not anticipate that it will pay dividends in the foreseeable
future. The Company intends to apply any earnings to fund the development of its
business. See "Dividend Policy."
SHARES ELIGIBLE FOR FUTURE SALE
Future sales of shares by existing shareholders could lead to a decline
in the market price of the Company's Common Stock. In addition to the 1,250,000
shares contained in the Units offered hereby, all of the shares of Common Stock
currently outstanding are available for immediate sale in the public market as
of December 31, 1996, other than (i) a total of 3,589,133 shares of Common Stock
that may be sold in compliance with Rule 144 under the Securities Act of 1933,
as amended (the "Securities Act") at various times.
POSSIBLE DILUTIVE EFFECT OF OUTSTANDING OPTIONS AND WARRANTS
As of December 31, 1996, there were 900,000 shares of Common Stock
reserved for issuance upon exercise of outstanding stock options granted and
available for grant under the Company's stock options plans. Of such reserved
shares, there were 523,000 shares of Common Stock reserved for issuance upon the
exercise of stock options outstanding under the Company's stock option plan at
exercise prices ranging from $2.25 to $4.00 per share, of which options to
purchase 517,000 shares are currently exercisable. An additional 383,000 shares
of Common Stock are reserved for issuance upon the exercise of options available
for future grant under such plans. In addition, 110,984
8
<PAGE> 12
shares of Common Stock are reserved for issuance upon the exercise of the Class
E Warrants at an exercise price of $5.50 per share; 625,000 shares of Common
Stock are reserved for issuance upon exercise of the Class F Warrants at an
exercise price of $5.50 per share, if the maximum offering amount is sold in
this offering; and 37,500 shares of Common Stock are reserved for issuance upon
the exercise of the Selected Broker-Dealers' Warrants. Furthermore, 1,500,000
shares of Common Stock are reserved for issuance of Earn Out Shares to the
former shareholders of GPAA. To the extent the trading price of Common Stock
at the time of exercise of any such options or warrants exceeds the exercise
price, such exercise will have a dilutive effect on the Company's
shareholders. See "Shares Eligible for Future Sale," "Description of
Securities" and "Management-Certain Transactions."
IMPORTANT FACTORS RELATED TO FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
This Prospectus 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. These forward-looking statements
include plans and objectives of management for future operations including plans
and objectives relating to The Outdoor Channel's distribution, programming,
marketing, business strategy and competition. These forward-looking statements
also include plans and objectives of management relating to the Company's other
businesses including Lost Dutchman's, GPAA and the Trips Division. These
forward-looking statements include or relate to the ability of The Outdoor
Channel to (i) command subscriber fees in the future, (ii) continue to obtain
distribution, (iii) attract advertisers, (iv) increase product sales and
services through marketing and (v) have a competitive advantage over other
programming services. These forward-looking statements also include or relate to
the ability of Lost Dutchman's, GPAA and the Trips Divisions to (i) market their
products and services and (ii) to have a competitive advantage over their
competition.
The forward-looking statements included herein are based on current
expectations that involve a number of risks and uncertainties. These
forward-looking statements are based on assumptions that The Outdoor Channel
will (i) continue to obtain acceptance by viewers, MSOs and local operators,
(ii) be perceived by advertisers as a worthwhile medium to place significant
advertising dollars and (iii) be an important avenue for sales of Company
products and services. These expectations could be materially different due to
the following factors. It is possible that other channels could be considered
superior to The Outdoor Channel to the degree that significant distribution of
The Outdoor Channel and attraction of advertisers is inhibited. Other direct
competitors to The Outdoor Channel's programming could launch channels. The
Outdoor Channel could be precluded from distribution based upon the absence of
business relationships with owners of MSOs and other channels. The Outdoor
Channel could lose a competitive advantage if it does not obtain additional
financing. The forward-looking statements are also based on the assumptions that
Lost Dutchman's, GPAA and the Trips Division will (i) continue to increase the
sales of their products and services and (ii) maintain competitive advantages.
These expectations could be materially different due to the following factors.
Lost Dutchman's may not be able to continue to attract members who prefer a
rustic hands on campground experience. The Company may reach a limit as to the
number of persons who would like to join recreational gold mining clubs such as
Lost Dutchman's and GPAA. Other forms of recreation may become more attractive
than the Company's gold prospecting clubs and prospecting trips.
In general the Company may not accurately forecast market demand and
the assumption that there will be no material adverse change in the Company's
operations or business may be incorrect. Assumptions relating to the foregoing
involve judgments with respect to, among other things, future economic,
competitive and market conditions, and future business decisions, all of which
are difficult or impossible to predict accurately and many of which are beyond
control of the Company.
9
<PAGE> 13
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Units offered by
it hereby, assuming a public offering price of $8.00 per Unit and after
deducting underwriting discounts and estimated offering expenses are estimated
to be approximately $4,250,000, if the maximum offering amount is sold. If the
minimum offering amount is sold the net proceeds are estimated to be $150,000.
If the maximum offering amount is sold, the Company anticipates that it
will use approximately $500,000 to fund marketing and advertising programs
related to The Outdoor Channel, $750,000 of the net proceeds of this offering to
upgrade its production and broadcasting facilities, approximately $1,000,000 for
funding the production and acquisition of programming for The Outdoor Channel,
approximately $750,000 for the acquisition of recreational properties and
approximately $750,000 for payment on the Company's line of Credit. The balance
of the net proceeds are expected to be used for working capital and general
corporate purposes. If the minimum offering amount is sold the net proceeds are
expected to be used for working capital and general corporate purposes.
The Company has not determined the exact amounts it plans to expend on
each of such uses or the timing of such expenditures. The amounts actually
expended for each such use, if any, are at the discretion of the Company and may
vary significantly depending upon a number of factors, including future revenue
growth, the amount of cash generated by the Company's operations, and changing
competitive conditions. See "Risk Factors -- Broad Discretion in Application of
Proceeds." Pending their use as set forth above, the net proceeds of this
offering will be invested in United States government or governmental agency
securities or short-term insured certificates of deposit.
PRICE RANGE OF COMMON STOCK
The Company's Common Stock is currently traded on the Nasdaq Small Cap
Market under the symbol "GLRS." The following table sets forth for the quarters
indicated the reported high and low closing sales prices as reported by Nasdaq.
<TABLE>
<CAPTION>
High Low
---- ---
<S> <C> <C>
YEAR ENDED DECEMBER 31, 1994:
1st Quarter................................. $ 4.25 $ 3.00
2nd Quarter................................. 4.00 2.50
3rd Quarter................................. 4.00 2.25
4th Quarter................................. 5.00 2.50
YEAR ENDED DECEMBER 31, 1995:
1st Quarter................................. $ 4.88 $ 3.75
2nd Quarter................................. 5.00 4.12
3rd Quarter................................. 4.75 3.12
4th Quarter................................. 5.75 3.50
YEAR ENDED DECEMBER 31, 1996:
1st Quarter................................. $ 5.75 $ 4.62
2nd Quarter................................. 5.50 3.75
3rd Quarter................................. 5.00 3.75
4th Quarter................................. 5.00 1.75
YEAR ENDED DECEMBER 31, 1997:
1st Quarter (through January 17, 1997)...... $ 2.62 $ 1.62
</TABLE>
On December 31, 1996 there were four broker-dealers publishing quotes
for the Common Stock. As of December 31, 1996, there were approximately 890
holders of record of the Company's Common Stock.
10
<PAGE> 14
DIVIDEND POLICY
The Company has never paid any cash dividends on its Common Stock and
does not anticipate that it will pay dividends in the foreseeable future. The
Company intends to apply any earnings to the development and expansion of its
business.
CAPITALIZATION
The following table sets forth the capitalization of the Company at
September 30, 1996 and as adjusted to reflect the receipt of the net proceeds
from the sale of the maximum offering amount of 625,000 Units offered hereby by
the Company at an assumed public offering price of $8.00 per Unit.
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30, 1996
-------------------------
ACTUAL AS ADJUSTED
-------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Long-term debt (less current portion) $ 1,017 $ 267
Shareholders' equity:
Preferred stock, $.001 par value:
10,000,000 shares authorized, 60,875 issued and outstanding -- --
Common stock, $.02 par value:
10,000,000 shares authorized, 4,119,264 shares issued and
outstanding 5,369,264 shares issued and outstanding
as adjusted (1) 82 107
Additional paid-in capital 2,869 7,094
Less stock subscriptions receivable (221) (221)
Retained earnings (1,298) (1,298)
------- -------
Total shareholders' equity 1,432 5,682
------- -------
Total capitalization $ 2,449 $ 5,949
======= =======
</TABLE>
- ---------------------
(1) Excludes (i) 75,000 shares of Common Stock issuable upon exercise of
the Selected Broker-Dealers' Warrants; (ii) 900,000 shares of Common
Stock issuable in the future upon exercise of options granted or to be
granted under the Company's stock option plans; (iii) 60,775 shares of
Common Stock issuable in the future upon conversion of outstanding
shares of Preferred Stock; (iv) 110,984 shares of Common Stock issuable
upon exercise of outstanding Class E Warrants and (v) up to 1,500,000
shares of Common Stock issuable to the former shareholders of Gold
Prospectors' Association of America, Inc., upon the occurrence of
certain events. See "Management--Stock Option Plans;" "Management--
Certain Transactions;" "Plan of Distribution" and "Description of
Securities."
11
<PAGE> 15
SELECTED FINANCIAL DATA
The selected financial data set forth below as of and for each of the
three years in the period ended December 31, 1995 and for the nine months ended
September 30, 1996 and 1995 have been derived from the Financial Statements of
the Company and its subsidiaries and should be read in conjunction with the
Financial Statements (including the notes thereto) included elsewhere herein and
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" also included elsewhere herein.
SUMMARY FINANCIAL INFORMATION
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
YEARS ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30
1994 1995 1995 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
STATEMENT OF INCOME DATA:
Net sales .............................. $ 4,385 $ 4,340 $ 3,607 $ 4,021
Total expenses ......................... 3,699 4,421 3,413 5,500
Net income before income taxes ......... 685 (80) 194 (1,178)
Net Income ............................. $ 425 $ (50) $ 120 $ (976)
per common share ....................... $ 0.11 $ (0.01) $ 0.03 $ (0.23)
Weighted average number of shares
outstanding ....................... 3,938 4,075 4,032 4,310
DECEMBER 31, SEPTEMBER 30, 1996
1994 1995 ACTUAL AS ADJUSTED(1)
---- ---- ------ --------------
BALANCE SHEET DATA:
Working capital ........................ $ 541 $ 840 $ (73) $ 3,427
Total assets ........................... 3,614 4,576 4,792 8,292
Long-term debt, net of current portion . 181 289 1,017 267
Shareholders' equity ................... 1,804 2,443 1,432 5,682
</TABLE>
- -------------
(1) Adjusted to give effect to the sale by the Company of the maximum
offering of 625,000 Units offered hereby at an assumed public offering
price of $4.00 per share and the application of the estimated net
proceeds therefrom. See "Use of Proceeds."
12
<PAGE> 16
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following information includes forward-looking statements, the realization
of which may be impacted by certain factors discussed under "Risk
Factors-Important Factors Related to Forward-Looking Statements and Associated
Risks."
GENERAL
Global Outdoors, Inc. (the "Company" or "Global") owns and operates The
Outdoor Channel, the first national television network devoted solely to outdoor
activities, such as hunting, fishing, scuba diving and recreational gold
prospecting. The Company also owns and operates related businesses which serve
the interests of viewers of The Outdoor Channel and other outdoor enthusiasts.
These related businesses include, LDMA-AU, Inc. ("Lost Dutchman's"), Gold
Prospectors' Association of America, Inc. ("GPAA") and the Trips Division. Lost
Dutchman's is a national recreational gold prospecting campground club with over
5,000 members and properties in California, Alaska, Oregon, Nevada, Arizona,
Colorado, Georgia, South Carolina and North Carolina GPAA is the largest
recreational gold prospecting club in the world with approximately 50,000 active
members. GPAA also sells products and services related to recreational gold
prospecting and is the publisher of the Gold Prospector magazine. Prior to being
a wholly-owned subsidiary of the Company, GPAA was an affiliated company which
owned the Outdoor Channel. As discussed below, the Company acquired 100% of the
stock of GPAA in February 1995. The Company's Trips Division sponsors unique
recreational prospecting trips to Australia and to the Company's 2300 acre camp,
located 11 miles west of Nome, Alaska. Global started a new products division in
1995 called "American Prospecting Equipment Company" and owns a 51% interest
therein.
The Company has been selling its GPAA club memberships since its
incorporation in 1984. From 1968 to 1984, GPAA memberships were sold by the
proprietorship owned by the Company's founders. GPAA membership sales took a
marked upswing in 1992 in conjunction with the airing of the "Gold Prospector
Show," a show the Company has owned and produced since 1990. During 1992, the
"Gold Prospector Show" was broadcast on various television and cable channels,
for which the Company purchased air time. In 1993, GPAA launched The Outdoor
Channel and, since then, broadcasts of the "Gold Prospector Show" and related
sales of GPAA memberships have occurred almost exclusively on The Outdoor
Channel. The Company intends that The Outdoor Channel be used as the primary
vehicle to promote the Company's services and products and anticipates that it
will be the major factor in the future growth of GPAA, Lost Dutchman's and the
Trips Division.
On February 10, 1995, Global acquired 100% of the stock of GPAA in
exchange for 2,500,000 shares of its Common Stock and potential Earn Out Shares
(See "Certain Transactions"). For accounting purposes, the assets of GPAA are
recorded at their historical cost basis in a manner similar to a pooling of
interest. The financial statements included herein and discussed below have been
restated to effect the pooling of interests between the Company and GPAA as of
January 1, 1992.
Although The Outdoor Channel is not aligned with any sizable
entertainment or cable company, as are many emerging channels, it has to date
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 has 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 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
13
<PAGE> 17
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. 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 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. The Company's
efforts to obtain distribution for The Outdoor Channel to date have largely been
focused on areas where there are the greatest number of outdoor enthusiasts,
mainly in rural areas of the United States. In 1996, the Company has entered
into national carriage agreements with approximately 13 of the top 100 MSOs in
the United States, including TCA Cable, the 18th largest MSO ,with over 600,000
subscribers; TW Fanch, the 20th largest MSO, with over 500,000 subscribers;
Rifkin & Associates, the 26th largest MSO, with approximately 350,000
subscribers; Tele-Media, the 28th largest MSO, with approximately 300,000
subscribers; and Service Electric Cable Television, the 29th largest MSO, with
approximately 300,000 subscribers. The Company has been launched on additional
cable systems without signed national carriage agreements and is in active
negotiations with such systems including Tele-Communications, Inc., the largest
MSO in the country. In addition, the Company is in active negotiations with many
other cable operators. The Company believes that it will be able to enter into
more affiliation agreements in the future as a result of increased installation
of new cable distribution systems and the expected significant expansion of
channel capacity of existing cable systems. 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 believes that
MediaAmerica could bring net revenues in excess of $100,000 per month in the
second quarter of 1997, with the potential to increase thereafter.
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 will seek to add
additional properties to Lost Dutchman's in 1997.
The Company conducted the final closing of a private placement 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.
Effective January 20, 1997, the Company restated its financial
statements 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. This restatement resulted in a substantial reduction of revenue,
income, assets and equity for the Company. The financial statements herein and
all matters related thereto reflect this restatement. (See financial statements
following "Index to Financial Statements")
14
<PAGE> 18
COMPARISON OF NINE MONTHS 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 nine months ended September 30, 1996 were
$4,021,083, an increase of $414,510 or 11%, compared to revenues of $3,606,573
for the nine months ended September 30, 1995. This increase was primarily the
result of increases in two items of revenue. Advertising revenue increased
substantially to $520,648 for the nine months ended September 30, 1996 compared
to $296,662 for the nine months ended September 30, 1995, due primarily to an
increase in advertising revenue at The Outdoor Channel. Membership sales was
$2,652,324 for the nine months ended September 30, 1996 compared to a like
amount of $2,603,623 for the nine months ended September 30, 1995. Revenues from
the Trips Division was up notably at $828,901 for the nine months ended
September 30, 1996 compared to $656,161 for the nine months ended September 30,
1995. Despite management devoting significant time and resources to increasing
distribution and revenues for The Outdoor Channel, in the first nine months of
1996, the Company increased its sales for the Alaska Trip and kept revenue
nearly the same for Lost Dutchman's and other membership 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 nine months ended September 30, 1996 were $5,499,991,
a very significant increase of $2,087,132, or 61%, compared to $3,412,859 for
the nine months ended September 30, 1995. This increase was predominately due to
major increases in three items and increases in several other items.
Compensation and Related Payroll Costs increased substantially to $1,050,501, an
increase of $427,054 for the nine months ended September 30, 1996, compared to
$623,447 for the nine months 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. Advertising
increased during the nine months ended September 30, 1996, primarily due to
increased in transponder and uplink costs for The Outdoor Channel and promotion
in conjunction with management's focus on increasing visibility of The Outdoor
Channel. Advertising was $1,219,652 for the nine months ended September 30,
1996, an increase of $342,356, compared to $877,296 for the nine months ended
September 30, 1995. The Company's "Gold Prospecting Show" which was produced for
airing on The Nashville Network ("TNN") commencing January 1996 was popular with
viewers. However, 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, resulting in a $574,700 loss to the Company
for the nine months ended September 30, 1996. There was no comparable item in
this category for the nine months ended September 30, 1995. There were also
significant increases in Postage and Delivery, Professional Services, Shows and
Seminars and Telephone and utilities which increases were in the range of
approximately $75,000 to $100,000 for each item. These increases were also
primarily due to increased activity at The Outdoor Channel.
Income Before Income Taxes. Income before income taxes decreased as a
percentage of revenues from 5% for the nine months ended September 30, 1995 to
(37)% for the nine months ended September 30, 1996. Although revenues increased
modestly for the nine months ended September 30, 1996, compared to the nine
months ended September 30, 1995, income before income taxes was affected
primarily by the very substantial increase in expenses discussed above.
Income Tax Expense. Income tax expense for the nine months ended
September 30, 1996 was $(502,829) which was substantially less than $73,611 for
the nine months ended September 30, 1995, due to the Company providing for a
loss for the first nine months of 1996 as compared to a gain for 1995.
COMPARISON OF YEARS ENDED DECEMBER 31, 1995 AND DECEMBER 31, 1994
Revenues. The Company's revenues include revenues from advertising
fees, GPAA and Lost Dutchman's membership sales, and the Trips Division.
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 year ended December 31, 1995 were $4,340,967, a marginal
decrease compared to revenues of $4,385,102 for the year
15
<PAGE> 19
ended December 31, 1994. This was due to offsetting results in certain
items. Advertising increased substantially to $449,054 for the year ended
December 31, 1995, compared to $338,240 for the year ended December 31, 1994,
due primarily to an increase in advertising revenue at The Outdoor Channel.
Membership sales increased modestly to $3,157,971 for the year ended December
31, 1995, compared to $2,967,758 for the year ended December 31, 1994. Revenues
from the Trips Division decreased significantly to $673,161 for the year ended
December 31, 1995 from $981,671 for the year ended December 31, 1994. Because
management has been devoting substantial time and resources to increasing
distribution and revenues for The Outdoor Channel, revenues from other divisions
have decreased or not changed significantly.
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 year ended December 31, 1995 were $4,421,446, an
increase of $722,246, or 20%, compared to $3,699,200 for the year ended December
31, 1994. This increase was predominately due to increases in specific areas.
Compensation and related payroll costs increased to $825,874 for the year ended
December 31, 1995, compared to approximately $587,643 for the year ended
December 31, 1994. This increase was due to the addition of sales and
administrative personnel for The Outdoor Channel during the year ended December
31, 1995. Advertising and promotion increased during the year ended December 31,
1995, primarily due to increased promotion in conjunction with management's
focus on increasing visibility of The Outdoor Channel. Advertising and promotion
was $1,058,988 for the year ended December 31, 1995, compared to $641,814 for
the year ended December 31, 1994.
Income Before Income Taxes. Income before income taxes decreased as a
percentage of revenues from 16% for the year ended December 31, 1994 to (2)% for
the year ended December 31, 1995. Although revenues remained nearly the same for
the year ended December 31, 1995, compared to the year ended December 31, 1994,
income before income taxes was affected primarily by an increase in expenses
resulting from increased promotion of The Outdoor Channel as well as increased
employee and signal transmission costs.
Income Tax Expense. Income tax expense for the year ended December 31,
1995 was $(30,582), a decrease of $291,225, or 112%, compared to $260,643 for
the year ended December 31, 1994. This was due to a decrease in net income.
LIQUIDITY AND CAPITAL RESOURCES
With the exception of a private placement of Common Stock completed in
January 1996 and its revolving line of credit, the Company has financed its
activities in the last five years with cash flows from operations. The private
placement raised gross proceeds of $832,380. Net proceeds to the Company were
approximately $700,000. 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.
On February 10, 1995, Global acquired 100% of the stock of GPAA in
exchange for 2,500,000 shares of its Common Stock (the "Acquisition"). The
Acquisition agreement provides for the issuance of up to an additional 1,500,000
shares of Common Stock of Global to the former shareholders of GPAA if GPAA
achieves certain earnings or valuation milestones. For purposes of the
Acquisition, the value of the Global Common Stock was deemed to be $3.50 per
share with the initial total acquisition cost being $8,750,000. For accounting
purposes, the assets of GPAA are recorded at their historical cost basis in a
manner similar to a pooling of interest.
The Company utilized cash from operations of $436,591 in 1995, compared
to generating cash of $364,000 in 1994 and had a cash balance of $458,448 at
December 31, 1995, which was an decrease of $306,665 from the balance of
$765,113 at December 31, 1994. Current assets increased to $1,439,325 compared
to $1,116,402 in 1994. Current liabilities increased to $598,924 for 1995
compared to $574,737 for 1994. Net working capital increased to $840,031 in
1995, compared to $541,665 in 1994. The Company generated sufficient cash in
1994 and 1995 to acquire the Arctic Creek property in Alaska for $125,000 in
cash, make a $50,000 down payment on the Stanton property in Arizona, make
$100,000 down payment on the Oconee property in South Carolina and make
transponder and "Gold Prospecting Show" deposits in 1995, of $270,000 and
$363,436, respectively. These deposits significantly
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diminished the Company's cash reserves. The Company drew on its $500,000 credit
line for the first time in the fall of 1995.
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 September 30, 1996, the Company had four notes payable to
individuals, with balances outstanding as of that date of $63,938, $91,344,
$98,318 and $200,000. The first three notes bear interest rates that range from
8% to 9.5% and are due in August 1998, April 1997 and January 2001, and in
respectively. The fourth note bears interest at 7.5% with principal payments of
$50,000 due April 1997 and thereafter every January commencing in 1998.
The discontinued "Gold Prospecting Show" aired on TNN utilized
significant amounts of available cash in 1995 and the first quarter of 1996 but
will not require any additional expenditures. The Outdoor Channel has used a
significant portion of the Company's cash resources with transponder and uplink
costs increasing to $125,000 per month commencing December 1, 1995, from the
previous monthly cost of $85,000 from April 1995 through November 1995, and
$60,000 from April 1994 through March 1995.
Anticipated capital expenditures for 1997, in the event this offering
raises the maximum amount, is estimated to be $4,250,000 which is comprised of
approximately $750,000 to upgrade its production and broadcasting facilities for
The Outdoor Channel, approximately $1,000,000 for funding the production and
acquisition of programming for The Outdoor Channel, approximately $750,000 for
the acquisition of recreational properties, approximately $500,000 to fund
marketing and advertising programs related to The Outdoor Channel, approximately
$750,000 for payment on the Company's line of credit and long term debt and
approximately $500,000 for working capital. In the event the Company does not
raise any money in this offering The Company anticipates no capital expenditures
in 1997. The amount of these expenditures will vary depending upon the success
of this offering.
As of the date of this Prospectus, the Company requires short-term
financing of $300,000 to meet its short-term cash flow requirements. In order to
meet this need, the Company is reviewing avenues for short-term financing
including obtaining collateralized loans from principal shareholders.
Management believes that the Company's existing cash resources and anticipated
cash flows from operations, when combined with the net proceeds of an offering
that raises $1,000,000 in net proceeds, and periodic borrowing under the line of
credit, will be sufficient to fund the Company's operations at currently
anticipated level for such a funding for the next twelve months. To the extent
that such amounts are insufficient to finance the Company's working capital
requirements , the Company could be required to seek financing in addition to
the $300,000 the Company believes it will require in the short-term. In
addition, if the Company raises less than $1,000,000 in net proceeds it will
require additional funding within the next twelve months. 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.
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
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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.
BUSINESS
The following information includes forward-looking statements. Actual results
could differ materially. See "Risk Factors-Important Factors Related to
Forward-Looking Statements and Associated Risks."
GENERAL
Global Outdoors, Inc. (the "Company" or "Global") owns and operates The
Outdoor Channel, the first national television network devoted solely to outdoor
activities, such as hunting, fishing, scuba diving and recreational gold
prospecting. Launched as a part-time network in June 1993, The Outdoor Channel
progressed to a full-time channel in April 1994 and since then has continued to
develop its management, programming, distribution and revenue. The Company also
owns and operates related businesses which serve the interests of viewers of The
Outdoor Channel and other outdoor enthusiasts. These related businesses include,
LDMA-AU, Inc. ("Lost Dutchman's"), Gold Prospectors' Association of America,
Inc. ("GPAA"), the Trips Division and a 51% interest in American Prospecting
Equipment Company ("APEC"). Lost Dutchman's is a national recreational gold
prospecting campground club with over 5,000 members and properties in
California, Oregon, Alaska, Nevada, Arizona, Colorado, Georgia, North Carolina
and South Carolina. Since January 1993, Lost Dutchman's has added five
properties and approximately 3,500 members. GPAA is the largest recreational
gold prospecting club in the world with approximately 50,000 active members.
GPAA also sells products and services related to recreational gold prospecting
and is the publisher of the Gold Prospector magazine American Prospecting
Equipment Company markets products related to the recreational prospector. APEC
publishes a products catalog which is distributed to members of the GPAA. The
Company's Trips Division sponsors unique recreational prospecting trips to
Australia and to the Company's 2300 acre camp, located 11 miles west of Nome,
Alaska. In February 1995, the Company acquired 100% of GPAA for 2,500,000 shares
of Common Stock valued at $8,750,000 and potential Earn Out Shares (See Certain
Transactions). At the time of the acquisition, GPAA in addition to its other
interests owned The Outdoor Channel. The Company was incorporated in Alaska on
October 22, 1984. Effective July 23, 1996, the Company changed its name to
Global Outdoors, Inc. from Global Resources, Inc. to better reflect the nature
of the Company's business. The Company's NASDAQ trading symbol "GLRS" remained
unchanged.
BUSINESS STRATEGY
The Company's principal business strategy is to establish a position as
a leading provider of entertainment programming relating to outdoor activities
and to leverage that position as a means to market and sell its products and
services. Key elements of the Company's business strategy are as follows:
Increase the Outdoor Channel's Carriage on Cable Television Systems:
The Company intends to increase The Outdoor Channel's carriage on cable
television systems by improving the quality of the originally produced and
acquired programming on The Outdoor Channel and by increasing the public's
awareness and name recognition of The Outdoor Channel through intensified public
relations and marketing efforts targeting cable operators and potential
subscribers.
Market and Sell Products and Services to Other Specialty or Niche
Markets: The Company intends to utilize The Outdoor Channel to market and sell
outdoor-related products to specialty or niche markets in addition to
recreational gold prospecting, including hunting, fishing and camping. The
Company intends to leverage The Outdoor Channel's increased distribution and
name recognition to market and sell such products and services to those viewers
who identify The Outdoor Channel and related products and services with quality
and integrity.
Increase Advertising Revenue and Subscriber Fees Derived From The
Outdoor Channel: The Company believes that as the quality and popularity of The
Outdoor Channel increase, the Company will be able to increase
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advertising rates on The Outdoor Channel and increase subscriber fees from cable
operators. On June 1, 1996, The Outdoor Channel introduced a rate card which
requires new affiliates to begin paying subscriber fees in 1997. In addition,
the Company intends to offer "charter" or reduced advertising rates to large
national advertisers in an effort to attract reputable, well-known advertisers
who will be willing to pay higher rates as The Outdoor Channel achieves greater
distribution.
Increase the Number of Offered Recreational Activities: The Company
intends to increase the number of recreational activities offered to members of
Lost Dutchman's and to customers of the Trips Division, including hunting,
fishing and camping. In addition, the Company may establish new clubs based on
these new activities and may acquire new properties to serve as campgrounds
where members can engage in such activities.
THE OUTDOOR CHANNEL
The Outdoor Channel, Inc. ("The Outdoor Channel") was incorporated
under the laws of the State of Nevada on December 10, 1990, under the name Gold
News Network, Inc., as a wholly owned subsidiary of GPAA. Initially, The Outdoor
Channel produced the "Gold Prospector Show." In early 1993, due to the success
of the Gold Prospector Show, the owner of The Outdoor Channel, GPAA., decided to
launch a satellite television network. Not wanting to limit the scope of the
incipient channel to gold prospecting, it was decided to name the channel, The
Outdoor Channel. To reflect the diversity of programming The Outdoor Channel had
achieved, in July 1994, the channel's incorporated name was changed to The
Outdoor Network, Inc. In December 1996, the incorporated name was changed to its
present name, The Outdoor Channel, Inc.
The Outdoor Channel is a premier provider of a full range of quality
programming related to outdoor activities and is one of the only television
networks whose programming specifically targets the interests and concerns of
the huge number of persons interested in the outdoors. The Outdoor Channel
provides the Company, as well as other advertisers, with a cost effective means
to promote goods and services to a large and rapidly increasing market. In
addition, The Outdoor Channel affords cable operators the opportunity to both
attract subscribers from a significant market segment not specifically targeted
by other programming services and respond to cable subscribers' demands for more
outdoor-related programming.
DISTRIBUTION AND CABLE SUBSCRIBERS
The Outdoor Channel's programming is offered mainly by means of
satellite and through contractual relationships with operators of cable
television systems and broadcast stations. The Company estimates that
approximately 65 million households in the United States have cable television
and that the home satellite market has attracted another 5 million households.
Industry statistics indicate that approximately 12,000 additional C-Band home
satellite dishes are being installed each month. In addition, "wireless cable"
("MMDS"), new video systems presently being built by telephone companies and the
recent development of direct- broadcast satellite ("DBS") companies provide
additional opportunities for the Company to distribute The Outdoor Channel. The
Company believes that The Outdoor Channel can currently be viewed by
approximately 5,000,000 households and businesses that have satellite receivers
and 1,900,000 cable and broadcast households.
The Company transmits all of its programs from its production facility
located in Temecula, California by means of a master control room that is linked
via fiber optic cable to an earth station transmitting antenna (an "uplink"),
which the Company leases under a service agreement. The uplink facility
transmits The Outdoor Channel's programming signal over an orbiting AT&T Telstar
402R satellite transponder to cable system headend receiving antennae and
satellite dishes throughout the United States and Canada. The Company has
editing equipment at its production facility which is used to assemble programs
that are produced in house, edit acquired programming and insert advertising
spots. The Company also has several filming sets at its production facility from
which some of its in house programming is produced.
Under its current national carriage agreements with multiple systems
operators ("MSOs") and carriage agreements with the MSOs' individual cable
affiliates, the Company typically offers MSOs and their cable affiliates
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the right, for a nominal subscriber fee to broadcast The Outdoor Channel to
their subscribers for five years and the Company provides the MSOs and their
cable affiliates with two minutes per broadcast hour of local advertising time.
In June 1996, the Company ended its charter affiliate offer which gave the cable
operator The Outdoor Channel free for 5 years. A total of 110 cable operators
representing approximately 3,000,000 subscribers signed charter affiliate
contracts, of which approximately 500,000 subscribers have been launched. The
new carriage agreement which calls for modest license fees beginning in 1997 has
been signed by 57 cable operators representing over 300,000 subscribers of which
approximately 55,000 have been launched. The Company recently signed a national
carriage agreement with the National Cable Television Cooperative ("NCTC")
enabling the 7,500,000 NCTC members of carry The Outdoor Channel. There are over
40 cable operators who have launched The Outdoor Channel without signed national
carriage agreements representing approximately 16,000,000 subscribers, of which
approximately 200,000 have launched. The Company is in active negotiations with
such cable operators including Tele-Communications, Inc. , the largest MSO in
the country. The Company believes that it will be able to enter into more
affiliation agreements in the future as a result of increased installation of
new cable distribution systems and the expected significant expansion of channel
capacity of existing cable systems. In addition, 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 Outdoor Channel is also broadcast via its own satellite to those
homes and businesses that have large analog satellite receivers. Given the fact
that approximately 5,000,000 homes and businesses own satellite receivers, the
Company believes that this means of broadcasting provides an unique opportunity
for the Company to attract advertisers as well as advertise and market the
Company's other outdoor-related products and services. The company intends to
encrypt its signal by the end of 1998 requiring satellite viewers to purchase
subscriptions.
DBS providers, such as DirecTv, Prime Star and EchoStar represent an
additional, although smaller, means of potential distribution of The Outdoor
Channel. The Company believes that distribution by means of DBS will increase as
market acceptance and the installed base of DBSs increase. At this time The
Outdoor Channel is seeking DBS distribution but has no agreements for such
distribution.
The Company also plans to increase international distribution of The
Outdoor Channel, and has applied for trademarks in various foreign countries
including Canada, France, Taiwan, Hong Kong, Australia, New Zealand, Germany and
The United Kingdom. The Company recently completed initial negotiations with a
major packager and distributor of cable channels for international markets, and
expects to begin international distribution in 1997.
ADVERTISING
The Company derived $449,054 from advertising revenue for the year
ended December 31, 1995. The Company received $314,958 for cash sales of
advertising time on The Outdoor Channel and received $134,096 for advertising in
its publications such as the Gold Prospector magazine. Compared to most other
television networks, The Outdoor Channel's success is not as dependant upon
obtaining advertising revenue due to the fact that the Company advertises and
markets many of its own products and services on The Outdoor Channel, including
trips offered through the Global Outdoors' Trips Division and memberships
offered in Global Outdoors's GPAA and Lost Dutchman's clubs The Company
anticipates that it will continue to derive a substantial portion of its revenue
from the sale of products and services to specialty or niche markets; however,
the Company is also focusing its efforts on attracting national and local
advertisers who are interested in reaching these markets. The Company engages in
"barter" advertising transactions under which the Company acquires programming
from third parties in exchange for a portion of the advertising time within such
programming. The Company does not recognize any of the barter advertising as
revenue. The Company will also continue to enter into "barter" advertising
transactions but the long term plan for the Company is to slowly replace the
barter programming with programming that is either produced in house or is
acquired, giving the Company control of 100% of the advertising time within
these programs.
The Company believes that advertising on The Outdoor Channel is
attractive to advertisers because it allows them to execute both a general
market strategy of reaching more cable television viewers and a target market
strategy of reaching consumers interested in outdoor-related activities. The
Company believes that over the past 15 years, cable television has captured a
greater share of advertising budgets and that during this period, the overall
ratings for
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the major networks (ABC, CBS and NBC), and for local broadcast stations, have
declined, while over the same period the overall ratings for basic cable
television programming services have increased. Because ratings are a
significant factor in determining both advertisers' placement strategy and the
pricing of advertising time, cable advertising revenues have grown significantly
faster during this period than those of broadcast networks.
In addition the Company believes that The Outdoor Channel will benefit
from the trend in advertising strategies toward greater market segmentation. The
Company believes that a significant number of major national advertisers of
outdoor-related products and services are dedicating a larger share of their
advertising budgets to target the consumer interested in outdoor-related
activities, in an effort to increase their share of this large and rapidly
growing market. Industry sources estimate that the outdoor life-style market is
currently worth approximately $190 billion yearly worldwide. Therefore, the
Company believes that advertisers, including manufacturers and providers of
outdoor-related products and services, will increasingly advertise on The
Outdoor Channel because it will provide them with a cost effective means to
reach a significant number of consumers interested in outdoor-related
activities. Many well known companies have advertised on The Outdoor Channel
with much of such advertising revenue belonging to third parties who provide
barter programming for advertising time. Advertisers on The Outdoor Channel who
have paid The Outdoor Channel directly include Subaru Corporation, Honda
Corporation, Sprint, Sorel Boots and The National Rifle Association.
Advertising time on The Outdoor Channel is marketed and sold by
MediaAmerica, Inc., the Company's exclusive national advertising sales
representative located in New York, and by the Company's advertising sales
director located in Temecula, California. The Company intends on modestly
increasing the size of its advertising sales staff.
PROGRAMMING
The Outdoor Channel produces approximately 9% of its programming and
acquires the remainder from external sources. Program offerings include shows
devoted to hunting, fishing, recreational gold prospecting, rodeo and scuba
diving, as well as talk shows emphasizing issues relating to the outdoors.
The Company's originally produced programming is focused on providing
entertainment, education, consumer values and a balanced approach to the use of
outdoor natural resources. The Company produces its programs with the outdoor
enthusiast in mind, often after considering suggestions and recommendations of
its viewers. Therefore, the Company believes that its programming, as opposed to
its competitors' programming, accurately represents the values and interests of
the outdoor community. Most of the Company's originally produced programming is
produced in a production facility leased by the Company and located in Temecula,
California.
To complement its originally produced programming, the Company acquires
programs from independent film and television production companies. Typically
the programs have previously aired in various regional markets and The Outdoor
Channel is acquiring the national broadcast rights for the programs. The Outdoor
Channel is often one of the few national television outlets for these types of
programs and, therefore, exhibition rights are relatively inexpensive. In
certain instances the Company is able to acquire programming in exchange for a
portion of the advertising time within such programming. The Company exhibits
the acquired productions pursuant to licensing agreements with suppliers who
generally own the copyrights to such programming. Licenses to air acquired
programming generally run for a calendar quarter to one year and entitle the
Company to show each episode several times. Examples of programming acquired
from third parties include "Call of the Wild," "In-Fisherman," and "Exploring
Idaho."
In 1997, the Company plans to produce and acquire higher quality
programming for The Outdoor Channel which the Company believes will enable it to
obtain greater distribution and increase advertising rates. In addition, the
Company plans to offer additional programming which will be of interest to a
wider demographic.
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MARKETING
Because it owns other outdoor-related businesses, The Outdoor Channel
affords the Company the unique opportunity to market and sell its own
outdoor-related products and services. The Company estimates that it has had
several hundred thousand responses to outdoor-related products, services and
memberships as a direct result of the Company's marketing efforts on The Outdoor
Channel. As the network achieves greater name recognition and distribution, the
Company anticipates that it will be able to increase sales of its products and
services, as well as its sales and exclusive distribution of products produced
by third parties, often at relatively high profit margins.
Outdoor-related products and services currently marketed by the Company
on The Outdoor Channel include those of Lost Dutchman's, GPAA, the Trips
Division and the Products Division (APEC"). In addition, the Company believes it
is close to an agreement in principle with a major producer of "infomercials"
for a marketing partnership to develop private label products under one or more
of the Company's brands, produce infomercials and other marketing materials, and
market the products through The Outdoor Channel and other media.
LOST DUTCHMAN'S
Lost Dutchman's is a national recreational gold prospecting campground
club, with campgrounds in California, Oregon, Alaska, Nevada, Arizona, Colorado,
Georgia, North Carolina and South Carolina. Lost Dutchman's currently has over
5,000 members, 1,200 and 1,600 of which joined in 1994 and 1995, respectively.
Lost Dutchman's memberships cost up to $4,500 with annual dues presently set at
$96; however, significant discounts are available to those members who purchase
memberships at Company sponsored outings or trade shows.
Lost Dutchman's members are entitled to use any of the fourteen
campgrounds owned by the Company or by an affiliated organization, pursuant to a
mutual use agreement between the Company and such organization. Members are
entitled to keep all gold found while prospecting on any of the Company's
properties. The Company is committed only to those duties which would be
required as an absentee owner of raw land, such as the payment of property
taxes. Five of the properties have a caretaker which the Company has been able
to retain at a minimal stipend which averages about $450 per month. The
caretaker's job it is to provide minor repairs and maintenance such as keeping
the weeds down, cleaning bathrooms and other facilities, if any, and generally
taking care of the property and the campers. It is worthy of note that in the
past when a major improvement has been made to a property such as a building, a
clubhouse or road that Lost Dutchmans members have contributed both labor and
materials towards its construction so that the Company had very little cost in
the project. It is the Company's intention to utilize a portion of the proceeds
of this offering, to actively acquire and develop additional recreational
properties and to add recreational facilities and improvements at current camps.
In addition to advertising on The Outdoor Channel, the Company markets
Lost Dutchman's memberships by advertising at trade conventions and in the Gold
Prospector Magazine published by the Company. In addition, the Company targets
the 150,000 former and present members of GPAA as well as participants in the
Trips Division's expeditions as potential members of Lost Dutchman's. As funds
are available, the Company intends to purchase additional properties for use by
Lost Dutchman's members and to intensify its marketing efforts to recruit new
Lost Dutchman's members.
GPAA
GPAA is the largest recreational gold prospecting club in the world,
with approximately active 50,000 members. In addition, GPAA publishes and sells
the Mining Guide, which contains detailed information on mining claims
comprising approximately 500,000 acres and is updated annually, as well as the
bi-monthly Gold Prospector magazine, which has a distribution of approximately
100,000 copies. GPAA also operates gold prospecting trade shows and conventions,
from which the Company derives revenue from admissions and booth rentals, and
sells recreational gold prospecting-related merchandise, including gold pans,
hats, jackets and belt buckles.
GPAA's initial memberships cost $67.50, and members are entitled to
receive a 14" gold pan, an annual subscription to the Gold Prospector magazine,
an annual subscription to the quarterly Pick & Shovel Gazette, a current
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GPAA Mining Guide and Prospecting Permit as well as related merchandise. Annual
renewal membership fees range from $20 to $59. The Company markets and
advertises GPAA memberships and products on The Outdoor Channel.
THE TRIPS DIVISION
The Trips Division offers unique recreational gold prospecting trips to
residents of the United States and Canada. The principal trip offered by the
Trips Division is the annual trip to Alaska, the fees for which are up to $1,950
per week and $950 per additional week, that include round-trip transportation to
and from Seattle, Washington. The Alaska Trip Crew usually arrives in early June
with the camp closing in mid August. The Alaskan expedition begins in Nome,
Alaska where participants are taken to the Company's 2,300-acre camp on the
Cripple River adjacent to the Bering Sea. In 1996, the Alaska trip had
approximately 378 participants, and the Company expects that the number of
participants will increase in the future due to the Company's increased
advertising and marketing efforts on The Outdoor Channel, as well as
advertisements in the Gold Prospector magazine and on the Gold Prospector's
Show.
In 1995, the Company augmented the Alaska Trip with a one week cruise
from Seattle to Anchorage. In 1995, approximately 80 people participated in the
Cruise.
The Company introduced an Australia Expedition in 1995. The
expedition's destination is to Leonora, near Kalgoorlie in Western Australia.
The Western Australia gold fields are some of the richest in the world. In 1995,
approximately 10 people participated in the expedition. Beginning April 1
through October 20, 1996 the Australian expedition has expanded and consists of
6 two week and 6 four week excursions into the Australian outback. The price of
the expedition is $4,950 for four weeks or $3,950 for two weeks and includes
airfare from Los Angeles, accommodations and meals.
AMERICAN PROSPECTING EQUIPMENT COMPANY
American Prospecting Equipment Company ("APEC") markets recreational
prospecting related products. APEC distributes a sales catalog and has
distribution agreements with equipment manufacturers including Homelite, 3M and
various others. The catalog is distributed to members of the GPAA and at company
sponsored conventions.
COMPETITION
There is intense competition for viewers among companies providing
programming services via cable television and through other video delivery
systems. More than 90 programming services are currently distributed nationwide
by satellite to cable systems. The Outdoor Channel competes for advertising
revenues with other national cable programming services, broadcast networks,
local over-the-air television stations, broadcast radio and the print media. The
Outdoor Channel's direct competitors include the Outdoor Life Network and to a
lesser extent, The Nashville Network and ESPN. More generally, The Outdoor
Network competes with various other leisure-time activities such as home videos,
movie theaters, and other alternative forms of information and entertainment.
The Outdoor Channel also competes for available channel space on cable
television systems with other cable programming services and nationally
distributed and local television stations. As of the end of fiscal 1996, there
were numerous basic cable programming services and several superstations.
Increased competition in the cable industry may result from
technological advances, such as digital compression, which allows cable systems
to expand channel capacity, and "multiplexing," which allows programming
services to offer more than one feed of their programming. As a result of the
increased segmentation made possible by these advances, other programming
services might be able to provide programming that targets the Company's viewing
audience.
The Company believes that The Outdoor Channel has a competitive
advantage over other outdoor-related programming services in obtaining
distribution, due to the fact that The Outdoor Channel offers cable operators
the opportunity to broadcast The Outdoor Channel for low subscriber fees for
five years. The Company also believes
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that it has an advantage over its competitors in attracting advertisers of
outdoor-related products and services because the Company, unlike its
competitors, broadcasts The Outdoor Channel to approximately 5 million satellite
receivers, currently charges relatively low advertising rates and offers its
advertisers exposure through a programming format which focuses exclusively on
the traditional outdoor lifestyle of hunting, fishing, camping and related
outdoor activities. In addition, while developments such as digital compression
and new distributors in the cable marketplace may have the effect of increasing
competition for The Outdoor Channel, they also create tremendous potential for
additional distribution for the network.
Global is not aware of any company that is in direct competition for
the type of recreational activity it provides through the Alaska Trip. Global
believes it has an advantage in promoting its trip in Alaska due to its
association with the GPAA and its ability to utilize the Gold Prospector
magazine, The Outdoor Channel and the Company's gold shows. Persons planning an
Alaska gold prospecting venture would be expected to evaluate other camps in
Alaska, as well as the option of undertaking a trip not associated with a group.
The table below lists the approximate number of participants in the "Alaska
Trip" since 1990 by Global.
Year Participants
---- ------------
1990 172
1991 220
1992 215
1993 579
1994 538
1995 369
1996 378
In a broad sense, Global's "Alaska Trip" is an expedition for study in
Alaskan geology with equal emphasis on the educational and recreational aspects
of this far northern property. Its competition thus includes other sources of
recreational activities.
While Lost Dutchman's has numerous campground competitors, it is the
only campground club the Company is aware of that has a theme, namely gold
prospecting. It has been estimated that there are approximately 15,000
campgrounds in the United States of which approximately 600 are membership
campgrounds such as Lost Dutchman's. For instance, there is Thousand
Trails/NACO, Outdoor World and Thousand Adventures. It is believed that these
companies compete primarily by quality of facilities and amenities offered. By
contrast, Lost Dutchman's has rustic facilities and few amenities and seeks to
attract persons who are interested in gold prospecting, hands on outdoor
activities and wish to be part of a club.
EMPLOYEES
As of December 31, 1996, the Company had a total of 53 employees of
which 50 were full time. The Company also engages the services of additional
employees during the Alaskan trip offered by the Trips Division. During 1996,
the Company engaged the services of approximately eight such seasonal employees.
None of the Company's employees is covered by a collective bargaining agreement.
The Company considers its relationship with its employees to be good.
GOVERNMENT REGULATION
The Company's operations are subject to various government regulations.
The operations of cable television systems, satellite distribution systems and
broadcast television program distribution companies are subject to the
Communications Act of 1934, as amended, and to regulatory supervision thereunder
by the Federal Communications Commission (the "FCC"). The Company's leased
uplink facility in Perris, California is licensed by the FCC and must be
operated in conformance with the terms and conditions of that license. Cable
systems are also subjected to local franchise authority regulation.
24
<PAGE> 28
Local Cable Regulation
The cable television industry is regulated by municipalities or other
local government authorities which have the jurisdiction to grant and to assign
franchises and to negotiate generally the terms and conditions of such
franchises, including rates charged to subscribers, except to the extent that
such jurisdiction is preempted by federal law. Any such rate regulation could
place downward pressure on the potential subscriber fees to be earned by the
Company.
Federal Cable Regulation
In 1992, Congress enacted the Cable Television Consumer Protection and
Competition Act of 1992 (the "1992 Cable Act"), which provides, among other
things, for a "must carry" regime for local broadcast stations (which requires
the mandatory carriage of certain broadcast stations and payments by cable
operators to other broadcast stations for retransmission of their signals in
some instances), for channel positioning rights for certain local broadcast
stations, for limits on the size of MSOs, for limits on carriage by cable
systems and other video distributors of affiliated program services, for a
prohibition on programmers in which cable operators have an "attributable
interest" from discriminating between cable operators and their competitors, or
among cable operators, and for increased competition in video programming
distribution (both within the cable industry and between cable and competing
video distributors). In addition, the 1992 Cable Act requires the FCC to
establish national guidelines for the rates that cable operators subject to rate
regulation may charge for basic cable service and certain other services and to
establish guidelines for determining when cable programming may not be provided
exclusively to cable system operators. Various cable operators have initiated
litigation challenging certain aspects of the 1992 Cable Act. The
constitutionality of the basic scheme of rate regulation under the 1992 Cable
Act has been upheld by a federal district court, and the FCC's regulation rules
were upheld by a federal appeals court in June 1995. The outcome of the balance
of this litigation cannot be predicted. However, Congress passed and the
President signed in March 1996 the most comprehensive rewrite of
telecommunications law since the Communications Act of 1934, reversing or
modifying many of the provisions of the 1992 Act. Among other things, the new
legislation allows cable and telephone industries into each other's markets and
eliminates federal cable rate regulation, immediately for small systems and
within three years for large operators. The Company believes these developments
are very positive for The Outdoor Channel, as they will result in significantly
expanded channel capacity, new distributors to whom the Company can market the
network, and new pressures on cable operators to launch new programming
services, both for competitive reasons and because they will once again be able
to recover the costs of new programming through rate actions.
Lost Dutchman's Regulations
To operate its campgrounds, the Company must comply with discretionary
permits or approvals issued by local governments under local zoning ordinances
and other state laws. In addition, to construct improvements at campgrounds, the
Company has usually been required to obtain permits such as building and
sanitary sewage permits. Some states in which the Company sells memberships have
laws regulating campground memberships. These laws sometimes require
comprehensive disclosure to prospective purchasers. Some states have laws
requiring the Company to register with a state agency and obtain a permit to
market. The Company has undertaken a comprehensive program to ensure compliance
with applicable laws in all 50 states.
Other Regulations
In addition to the regulations applicable to the cable television and
campground industries in general, the Company is also subject to various local,
state and federal regulations, including, without limitation, regulations
promulgated by federal and state environmental, health and labor agencies. The
Company's mining clubs and Trips Division are subject to various local, state
and federal statutes, ordinances, rules and regulations concerning, zoning,
development, and other utilization of its properties.
25
<PAGE> 29
INTELLECTUAL PROPERTY
The Company neither holds nor depends upon any material patent,
trademark, license or other proprietary right except its trademark for "The
Outdoor Channel(TM)" for which the Company has made application for
registration. The Company is, however, researching registration of several names
for the private label products referred to in the "Marketing" section above.
PROPERTIES
CRIPPLE RIVER
The Cripple River property which now includes the Arctic Creek property
consists of approximately 2300 patented (*See definition of "patented," below)
acres and is located in the Cape Nome area of Alaska. The Cripple River property
is the principal destination of the "Alaska Trip" participants. It is the former
location of a large historic gold mining operation. The Company has constructed
over 130 rooms on the property for trip participants. Also, Global has
constructed a chow hall, Saloon (non-alcoholic), general store, gold recovery
plant, small commercial gold mining plant, drinking and wastewater treatment
facilities and other buildings. In addition to recreational gold mining the
Cripple River property has excellent fishing including yearly runs of pink and
silver salmon.
LOUD MINE
The Loud Mine is located in White County, Georgia, near the eastern end
of Georgia's famous Dahlonega Gold Belt, which stretches diagonally (southwest
to northeast) across the north end of the state. The camp's office is staffed
with a full-time caretaker. Campground facilities include a clubhouse,
bathrooms, showers and a dump station. Camping is available for 250 or more
persons. Approximately one-third mile of Town Creek and one of its smaller
tributaries meander through this 38 deeded acre property. Dredges of up to 4"
intake may be used in Town Creek. Highbanking, sluicing and panning also are
popular. Deep layers of alluvial gravels, separated by dense clay layers,
overlay soft bedrock (saprolite) throughout this region. Numerous gold-bearing
quartz veins run through the Loud Mine property. Some "Loud" gold is smooth, but
coarse gold is mostly found, indicating that it is still relatively close to its
source.
STANTON PROPERTY
The Stanton property consists of 35 patented acres and is located
approximately 50 miles northwest of Phoenix, Arizona. It is contiguous with 85
acres owned by an affiliated organization with which Global has a mutual use
agreement. Either on Global's property or the other organization's property
there are sanitary facilities, showers, club house, pool room, card room,
library, kitchen area with sink, water and electric outlets, 65 sites for
hookups and parking for several hundred self contained units. Gold is present
throughout the property from surface to bedrock.
LEADVILLE PROPERTY
The Leadville property is located in Lake County, Colorado was acquired
in August 1995. The camp is approximately 60 patented acres in the heart of
Colorado's historic mining area. At over 11,000 feet in elevation, it has
spectacular scenery including views of the two highest peaks in Colorado. This
is a primitive campground with no facilities. Future plans include bathrooms,
showers and a clubhouse. Completion of future improvements is estimated at 1 to
2 years. There is camping for up to 200 self-contained recreational vehicles.
26
<PAGE> 30
OCONEE CAMP
The Oconee Camp is located in the northwest corner of South Carolina
and just north of Walhalla was acquired in June 1995. This camp consists of 120
acres of deeded property. Oconee is a primitive campground with no facilities.
Future plans include bathrooms, showers, water and a clubhouse. Completion of
future improvements is estimated at 1 to 2 years. There is Camping for up to 250
self-contained recreational vehicles.
VEIN MOUNTAIN CAMP
The Vein Mountain Camp is located in West Central North Carolina
approximately 7 miles from the town of Marion was acquired in February 1996. The
Camp consists of 130 deeded acres located in the middle of North Carolina's
motherlode. Between 1829 and 1830 7 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.
BURNT RIVER/ CAVE CREEK
The Burnt River Camp consists of 135 patented acres and the adjacent
Cave Creek property consists of 32 patented acres. These properties are located
in eastern Oregon and have a clubhouse, sanitary facilities, dump station,
restrooms and showers. There is dredging and excellent Highbanking along the
Burnt River. The Cave Creek property is a slender parcel of land that takes in
about one mile of Cave Creek, providing abundant ground for recreational
prospecting.
JUNCTION BAR PLACER
The Junction Bar Placer is located at the confluence of the Klamath and
Scott Rivers in northern California. Fourteen of the property's 26 acres of
patented land are zoned Highway Commercial. With frontage on both Highway 96 and
Scott River Road, this property has excellent development potential. Global has
begun to develop the Junction Bar Placer. Global has conducted a survey of the
property as well as contracted an architect to draw plans for a campground
facility. Approximately $9,000 was expended on the project in 1992. Global
commenced work on obtaining local approval to construct facilities in 1995. The
camp will only be constructed if the Company has sufficient cash on hand to
complete the project. Members of Lost Dutchman's have expressed great interest
in this property and Membership sales should be enhanced upon completion of the
campground.
AMERICAN CREEK
The American Creek claims consist of five U.S. Federal mining claims in
the Cape Nome area of Alaska. There are certain improvements and mining
equipment thereon including a bucket line gold dredge, machine shop and
airstrip. The dredge was partially operated in the summer of 1988, more fully
operated in 1989 and due to mechanical problems only partially operated in 1990,
1991 and 1992. Operations are not anticipated for 1997. In 1989 the Dredge
produced approximately 8.5 ounces of gold with global's share being 2.5 ounces
and trip participants dividing up 6 ounces. In 1990 the Dredge produced a small
and undetermined amount of gold which was divided up entirely among the Dredge
Crew. The Dredge produced no gold in 1988 and 1991. The Dredge Crew also had the
opportunity to operate small gold recovery machines at American Creek in 1989,
1991 and 1992. In 1996, it is anticipated that only experienced Dredge Crew
members will work at American Creek and will perform limited exploration work on
the claims.
27
<PAGE> 31
OMILAK SILVER MINE
The Omilak Silver Mine consists of approximately 40 acres of patented
land and is located about 80 miles northeast of Nome, Alaska. The property has
on it previously existing equipment, mine shafts, rail and mine cars and several
buildings including a two-story bunk house constructed by Global. The Omilak
Silver Mine, in addition to recreational uses, has the potential for being
reactivated as a commercial silver mine. At such time, as Global has sufficient
resources, the price of silver warrants and Global believes it is timely, the
Company intends on evaluating the Omilak property.
HIGH DIVIDE PROPERTY
The High Divide property consists of 20 acres of patented land and is
located in Esmeralda County, Nevada. This property is remote and there are no
facilities. It was patented for lode mining but placer gold is present in the
area.
NEDERLAND PROPERTY
The Nederland property consists of 5 patented acres located in Boulder
County, Colorado. There are no facilities on this property. The area around the
Nederland property has produced over 1 million ounces of gold since 1858. This
property has mostly silver with small amounts of gold.
* Patented land is United States public land that has been transferred to
private fee simple ownership. Mining claims can be perfected into
patented land which is what occurred on some of the Company's
properties before the Company acquired those properties.
28
<PAGE> 32
MANAGEMENT
DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES
The directors, executive officers and key employees of the Company are
as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Perry T. Massie 34 Chief Executive Officer, President and Chairman of the Board
Thomas H. Massie 32 Executive Vice President, Secretary and Director
Richard K. Dickson II 50 Senior Vice President, General Counsel and Director
David M. Ashwood 48 Chief Financial Officer and General Manager
Christopher B. Forgy 43 President and Chief Executive Officer of The Outdoor Channel
Andrew J. Dale 41 Senior Vice President Operations of The Outdoor Channel
Jacob B. Hartwick 43 Vice President Sales and Promotions of The Outdoor Channel
and Lost Dutchmans Mining Association
James E. Crawford 43 Vice President Sales and Marketing of The Outdoor Channel
</TABLE>
Perry T. Massie has served as Chief Executive Officer of the Company
since 1986, has served as President and Chairman of the Board since 1994. From
1986 until January 1996, Mr. Massie served as Chief Financial Officer of the
Company. He has been the Managing Editor of the Gold Prospector Magazine since
1988. Mr. Massie earned a Bachelor of Science degree in Mining Engineering from
the University of Alaska, Fairbanks in June 1986. Perry T. Massie is the brother
of Thomas H. Massie.
Thomas H. Massie has served as Secretary and a director of the Company
since 1984, and has served as Executive Vice President of the Company and the
President of Gold Prospectors' Association of America, Inc. since 1994. Mr.
Massie is also the host of the "Gold Prospecting Show." He attended the
University of Alaska, Fairbanks from 1984 to 1986, studying business
administration. Thomas H. Massie is the brother of Perry T. Massie.
Richard K. Dickson II has served as Senior Vice President, General
Counsel and a director of the Company since 1994. From November 1984 until 1994,
Mr. Dickson served as the Company's corporate counsel and has been a practicing
attorney, specializing in corporate and securities law, with his own firm since
1979. Mr. Dickson served as an attorney with the California Department of
Corporations from 1976 to 1979. He earned a Bachelor of Science degree in
Business Administration from the University of California, Berkeley in 1968, a
Masters in Business Administration from the University of Southern California in
1970 and a law degree from the University of the Pacific in 1976.
David M. Ashwood has served as Chief Financial Officer of the Company
since January 1996. From May 1995 to the present, he has been the General
Manager of the Company. Mr. Ashwood has been the Controller of the Company since
November 1984. From 1984 until February 1996, Mr. Ashwood was the President of
Affiliated Professional Services, a privately-held company that provides
accounting, tax consulting and business management services to small to
medium-sized companies. Mr. Ashwood earned a Bachelor of Science degree in
Business Administration and a Masters in Business Administration, with an
emphasis in Accounting and Finance, from California State University at
Northridge in 1968 and 1969, respectively.
29
<PAGE> 33
Christopher B. Forgy has served as the President and Chief Executive
Officer of The Outdoor Channel since February 1996. From February 1995 through
January 1996, Mr. Forgy owned Chris Forgy Associates, a television industry
consulting firm. From 1989 through January 1995, he served as Senior Vice
President of Marketing, Sales and Programming for Times Mirror Cable Television.
Mr. Forgy is past Chairman of the Cable Television Administration and
Marketing Society (CTAM). He has served on the board of directors of the
Cabletelevision Advertising Bureau (CAB) and Pay Per View Holding Company, which
owns and operates Viewer's Choice networks. Mr. Forgy was a founding member of
the cable committee of the Academy of Television Arts & Sciences.
Andrew J. Dale has served as Senior Vice President Operations of The
Outdoor Channel since 1994. From 1990 to 1993, he has acted as a video and
television consultant to both Global Outdoors, Inc. and the Gold News Network,
Inc. From 1989 to 1994, Mr. Dale was a production manager at Vidfilm Services, a
major Hollywood post-production facility, whose clients include Disney, MCA,
Columbia and a host of other major studios. Vidfilm provides comprehensive
services from film-to-tape transfer, editing and duplications, to standards
conversion from NTSC to PAL and SECAM. Mr. Dale was born and raised in the
United Kingdom.
Jacob B. Hartwick has served in various position with the Company since
1986. From 1994 to the present Mr. Hartwick has been Vice President Sales and
Promotions for The Outdoor Channel and Lost Dutchmans Mining Association. From
1991 to 1994, he served as a Vice President for Gold Prospector's Association of
America, Inc.
James E. Crawford has served as Vice President Sales and Marketing of
The Outdoor Channel since May 1996. From 1991 to May 1996, Mr. Crawford was
employed by Times Mirror Cable Television. While with Times Mirror, he was the
Director of Affiliate Sales Western Division for Outdoor Life Network, a
competitor of The Outdoor Channel and he was Director of Marketing and Sales for
Times Mirror Cable Television in North San Diego and Sun City, California. He is
a graduate of the University of Minnesota.
BOARD OF DIRECTORS
The Board of Directors of the Company took action by unanimous written
consent or held meetings thirteen (13) times during the fiscal year ended
December 31, 1995. Each incumbent Director attended at least seventy-five
percent (75%) of the aggregate of the number of meetings of the Board and the
number of meetings held by all committees of the Board on which he or she
served. The Company does not have any standing committees. In July 1996, the
Company amended its Articles of Incorporation to authorize the Board of
Directors to be increased to a maximum of seven directors. The Company
anticipates increasing the size of the Board to five members if it becomes
listed on the National Market System.
COMPENSATION OF EXECUTIVE OFFICERS
The following table sets forth compensation received for the fiscal
years ended December 31, 1995, 1994 and 1993 by the Company's Chief Executive
Officer, and the other executive officers whose salary and bonus exceeded
$100,000 for fiscal year 1995, 1994 and 1993 (collectively, the "Named Executive
Officers"):
30
<PAGE> 34
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Compensation
Securities
Other Under-
Annual Restricted laying All Other
Compen- Stock Options/ LTIP Compen-
Name and Principal Position Year Salary($) Bonus($) sation($) Awards /SARS Payouts sation
- --------------------------- ---- --------- -------- ------- ------ ----- ------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Perry T. Massie, CEO 1995 52,000 10,500 - - - - -
1994 52,000 43,301 - - - - -
1993 35,850 -
Richard K. Dickson II 1995 60,000 60,000 - - - - -
1994 60,000 60,000 - - - - -
</TABLE>
In 1995 and 1994, Mr. Dickson devoted approximately 80% and 75%,
respectively, of his business time to the Company's affairs. Mr. Dickson
received cash payments for 1995 and 1994 of $100,000 and $60,000, respectively,
out of which he paid his office expenses of approximately $2,200 per month. The
additional $20,000 due Mr. Dickson for 1995 may be paid in either cash or stock
at such time as is agreed upon by Mr. Dickson and the Company. The additional
$60,000 for 1994 due Mr. Dickson may be paid in either cash or stock at such
time as is agreed upon by Mr. Dickson and the Company.
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
% of Total
Options Potential Realizable
Number of Granted Value at Assumed
Securities to Exercise Annual Rates of Stock
Underlying Employees or Base Price Appreciation for
Options in Fiscal Price Expiration Option Term(2)
Name Granted (#) Year(1) ($/Share) Date 5%($) 10%($)
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Perry T. Massie, CEO - - - - - -
</TABLE>
31
<PAGE> 35
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
Number of Securities Underlying Value of Unexercised
Shares Unexercised Options in-the-Money Options
Acquired On Value at Fiscal Year-End(#) at Fiscal Year-End($)
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Perry T. Massie, CEO - - 85,000 -- $210,628 -
Thomas H. Massie - - 85,000 - $210,628 -
Richard K. Dickson II - - 25,000 - $ 65,625 -
David M. Ashwood - - 20,000 - $ 52,500 -
Christopher B. Forgy - - 125,000 - $172,500 -
</TABLE>
The exercise price of the options listed above for Messrs. Perry T. Massie
and Thomas H. Massie are $2.50 per share for 50,000 shares and $2.25 per share
for 35,000 shares. The exercise price of the options listed above for Messrs.
Dickson and Ashwood are $2.25. The exercise price of the options listed above
for Mr. Forgy is $3.50. The Bid Price of Global's Common Stock at 1995 fiscal
year-end was $4.88 per share.
STOCK OPTION PLANS
On May 26, 1993, the Company adopted two stock option plans ("Plan 1
Stock Options" and "Plan 2 Stock Options"). Plan 1 Stock Options are for persons
who held stock options prior to the adoption of Plan 1 Stock Options. There are
presently four persons who hold Plan 1 Stock Options for 115,000 shares of
Common Stock exercisable at a price of $2.50 per share. Plan 1 Stock Options are
non-qualified stock options and no further grants will be made under this plan.
Plan 2 Stock Options may be granted to provide incentives to executive officers,
employees and independent consultants. Options to purchase 285,000 may be
granted under Plan 2 Stock Options. Options to purchase 235,000 shares are
outstanding at an exercise price of $2.25 per share leaving options to purchase
50,000 shares available for grant. Plan 1 Stock Options are non-qualified stock
options.
In September 1995, the Company authorized another stock option plan
(the "1995 Stock Option Plan"). The 1995 Stock Option Plan was approved the by
the shareholders of the Company at the Company's 1996 Annual Meeting held on
July 16, 1996. The 1995 Stock Option Plan provides for the grant of options to
purchase up to 500,000 shares of Common Stock in order to enhance the Company's
ability to attract and retain the services of qualified employees, officers,
directors, consultants and other service providers. The Company may grant
incentive stock options and nonqualified stock options under the 1995 Stock
Option Plan. There are options to purchase 173,000 shares of Common Stock
outstanding under the 1995 Stock Option Plan. An option to purchase 125,000
shares of Common Stock exercisable at $3.50 per share was granted to Christopher
B. Forgy, President and Chief Executive Officer of The Outdoor Channel,
effective October 16, 1995 and options to purchase 48,000 shares of Common Stock
exercisable at prices ranging form $3.25 to $4.00 per share were granted to
several employees and service providers. As of the date of this Prospectus,
options to purchase 327,000 shares of Common Stock may be granted under the 1995
Stock Option Plan.
DIRECTOR'S FEES
The directors of the Company are also executive officers of the
Company. For 1995, directors were not compensated separately or reimbursed for
expenses incurred in attending meetings of the Board of Directors.
32
<PAGE> 36
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Based solely upon its review of the copies of reports furnished to the
Company, or representations that no annual Form 5 reports were required, the
Company believes that all filing requirements under Section 16(a) of the
Exchange Act applicable to its directors, officers and any persons holding ten
percent (10%) or more of the Company's Common Stock with respect to the
Company's fiscal year ended December 31, 1995, were satisfied, with the
exception that Perry T. Massie filed a Form 5 on a timely basis that included
sales of 6,000 shares of the Company's Common Stock at prices ranging from $3.75
to $4.50 per share not filed on a timely basis on Form 4 during the year 1995.
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
The Board of Directors has responsibility for matters that would be
handled by the Compensation Committee if Global had such a committee. The Board
has attempted to conserve Global's cash. Therefore, Global did not pay any
direct salaries in 1994 and 1993. With the acquisition of Gold Prospector's
Association of America, Inc. ("GPAA") in 1995, Global commenced paying direct
salaries to Messrs. Perry and Thomas Massie since they were receiving salaries
from GPAA. Global paid GPAA management fees of $30,000 in 1994 and 1993. Global
considers part of this prior management fee an indirect salary to Global's Chief
Executive Officer, Perry Massie, since this management fee was utilized to pay a
portion of Perry Massie's salary at GPAA. Global paid Richard Dickson for legal
services rendered to the Company in 1995 and it is anticipated that Global will
continue to pay Mr. Dickson for legal services rendered to Global.
The Company considers services rendered, nature of the services,
quality of performance, past practice, conservation of cash and amount of
present stock ownership in determining executive compensation. The Company
desires to encourage performance by stock ownership.
EMPLOYMENT CONTRACTS
The Company has entered into an employment agreement with Christopher
B. Forgy, President and Chief Executive Officer of The Outdoor Channel, for a
four year term commencing on February 1, 1996. If Mr. Forgy's employment is
terminated other than for cause, he will be entitled generally to one year's
salary and upon a change in control to two year's salary
CERTAIN TRANSACTIONS
Prior to the acquisition in February 1995 of 100% of the outstanding
stock of Gold Prospectors Association of America, Inc. ("GPAA") by the Company,
GPAA was paid a management fee by the Company which amounted to $30,000 in 1994,
said fee included office rent for the Company. Additionally, GPAA received a 25%
sales commission on all sales of Lost Dutchman's memberships sold using GPAA
mailing lists. Sales commissions paid to GPAA by the Company for 1994 totaled
$614,037. The shareholders of GPAA were Perry T. Massie, Thomas H. Massie and
Wilma M. Massie, all of whom were shareholders of the Company prior to the
Company's acquisition of 100% of the outstanding stock of GPAA. The Company has
accounted for its purchase of GPAA as a pooling of interests. Accordingly, the
Company has restated its financial statements to include those of GPAA for the
period prior to February 1995, and the related management fees and sales
commissions have been eliminated upon such consolidated restatement. No
management fees or sales commissions have been paid since February 1995.
The Company is leasing its administrative facilities from Wilma M.
Massie, a shareholder of the Company and the mother of Perry T. Massie and
Thomas H. Massie, under a month-to-month lease agreement (the "Lease") currently
requiring monthly rent payments of $5,000. Rent expense totaled $57,000 and
$48,000 for the years ended December 31, 1995 and 1994, respectively. The total
rent commitment at December 31, 1995 is five years or $300,000.
33
<PAGE> 37
In conjunction with the Lease, the Company has a note receivable from
Wilma M. Massie, the balance outstanding on which was $292,616 and $342,570 at
December 31, 1995 and 1994, respectively. The note bears interest at 6%.
On February 10, 1995, the Company acquired 100% of the stock of GPAA in
exchange for 2,500,000 shares of its Common Stock (the "Acquisition"). The
acquisition agreement provided for the issuance of up to an additional 1,500,000
shares of Common Stock ("Earn Out Shares") to the former shareholders of GPAA if
GPAA achieved certain earnings or valuation milestones. The former shareholders
of GPAA, Perry T. Massie, Thomas H. Massie, and Wilma M. Massie, are
shareholders of the Company and Messrs. Perry and Thomas Massie are officers of
the Company. For purposes of the Acquisition, the value of the Global Common
Stock was deemed to be $3.50 per share with the initial total acquisition cost
being $8,750,000. For accounting purposes, the assets of GPAA are recorded at
their historical cost basis in a manner similar to a pooling of interest.
The 1,500,000 Earn Out Shares will be unissued or held in escrow by
Global's Transfer Agent for the benefit of the former shareholders of GPAA. All
or part of such shares are to be delivered to the former shareholders of GPAA in
the amounts set forth below if GPAA achieves the cumulative levels of earnings
after deduction of income taxes, set forth below during the period beginning
January 1, 1995 and ending March 31, June 30, September 30 or December 31, in
1995, 1996, 1997, and 1998.
<TABLE>
<CAPTION>
The Number of Earn Out Shares
If Cumulative Earnings to be Delivered to Former
Are Not Less Than GPAA Shareholders
----------------- -----------------
<S> <C>
$1,500,000 500,000
$2,000,000 an additional 500,000
$2,700,000 an additional 500,000
</TABLE>
Alternatively, in recognition of the fact that a significant expansion
of The Outdoor Channel is being conducted and that such expansion, while
potentially increasing the value of GPAA, may not be reflected in earnings, the
below listed valuation earn out formula may be used. The valuation must be made
by an independent certified public accountant or independent unaffiliated
appraiser. The time periods listed above for earnings also apply for the
valuation.
<TABLE>
<CAPTION>
The Number of Earn Out Shares
If Valuation of GPAA to be Delivered to Former
Is Not Less Than GPAA Shareholders
---------------- -----------------
<S> <C>
$12,000,000 500,000
$16,000,000 an additional 500,000
$21,000,000 an additional 500,000
</TABLE>
After 1998, Earn Out Shares which are not delivered to the former
shareholders of GPAA are to be considered void. While unissued or held in
escrow, the former shareholders of GPAA will not be able to vote such shares and
will not be entitled to receive any dividends thereon.
The Company has an agreement with Richard K. Dickson II, a director and
officer of the Company, to provide legal services for a monthly retainer of
$5,000. In the event services rendered by Mr. Dickson on behalf of the Company
exceed $5,000 in any given month, the agreement calls for Mr. Dickson to receive
shares of the Company's Common Stock at its then current market value as payment
for the services rendered in excess of $5,000. During 1994, Mr. Dickson was paid
$60,000 and was entitled to receive $60,000 worth of Common Stock pursuant to
this agreement. During 1995, Mr. Dickson was paid $100,000 and was entitled to
receive $20,000 worth of Common Stock pursuant to this agreement.
34
<PAGE> 38
The transactions between the Company and the Company's management and
significant shareholders are believed by management of the Company to have been
on terms no less favorable to the Company than those that could have been
obtained from unaffiliated parties
In connection with an employment agreement entered into between the
Company and Christopher B. Forgy on February 1, 1996, Wilma M. Massie, a
shareholder of the Company, granted to Mr. Forgy an option to purchase an
aggregate of 100,000 shares of common stock of the Company owned by her. The
option to Mr. Forgy to purchase stock is exercisable at a price of $3.50 per
share of Common Stock.
Perry T. Massie and Thomas H. Massie each have an option to purchase
160,000 shares of the Company owned by Wilma M. Massie and an option to purchase
up to 96,000 shares of Wilma Massie's Earn Out Shares. Mr. Dickson has an option
to purchase 200,000 shares of the Common Stock of the Company owned by Wilma
Massie and has an option to purchase up to 150,000 shares of Wilma Massie's Earn
Out Shares. In January 1996, Mr. Dickson exercised an option to purchase 50,000
shares of his option from Wilma M. Massie. David M. Ashwood, an officer of the
Company, has an option to purchase 80,000 shares of the Common Stock of the
Company owned by Wilma Massie and has an option to purchase up to 34,000 shares
of Wilma Massie's Earn Out Shares.
LIMITATION OF DIRECTORS' AND OFFICERS' LIABILITY AND INDEMNIFICATION
Section 10.06.490 of the Alaska Corporations Code provides that a
corporation may indemnify directors and officers as well as other employees and
individuals against expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by the person in
connection with specified actions or proceedings, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
corporation -- a "derivative action"), if they acted in good faith and in a
manner they reasonably believed to be in or not opposed to the best interests of
the corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. A similar standard is
applicable in the case of derivative actions, except that indemnification only
extends to expenses (including attorneys' fees) actually and reasonably incurred
by the person in connection with the defense or settlement of such action, and
the statute requires court approval before there can be any indemnification
where the person seeking indemnification has been found liable for negligence or
misconduct in the performance of the person's duty to the corporation. The
statute provides that it is not exclusive of other indemnification that may be
granted by a corporation's bylaws, agreement, vote of shareholders or
disinterested directors or otherwise.
There is no pending litigation or proceeding involving a director or
officer of the Company as to which indemnification is being sought, nor is the
Company aware of any pending or threatened litigation that may result in claims
for indemnification by any director or officer.
35
<PAGE> 39
SECURITY OWNERSHIP
OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the
beneficial ownership of the Company's Common Stock as of December 31, 1996 by
each director and executive officer of the Company, each person known to the
Company to be the beneficial owner of more than 5% of the outstanding Common
Stock, and all directors and executive officers of the Company as a group.
Except as otherwise indicated below, the Company believes that each person
listed below has sole voting and investment power with respect to the shares
owned, subject to applicable community property laws.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
NAME AND ADDRESS OF BENEFICIAL OWNED PRIOR TO THE OWNED IF MAXIMUM
OWNER OR IDENTITY OF GROUP OFFERING(1) OFFERING AMOUNT SOLD
-------------------------- ----------- --------------------
NUMBER PERCENT NUMBER PERCENT
------ ------- ------ -------
<S> <C> <C> <C> <C>
Wilma M. Massie (3)......................... 1,391,926 33% 1,391,926 25%
Perry T. Massie (4)(5)...................... 1,239,196 29% 1,239,196 23%
Thomas H. Massie (6)(7)..................... 1,262,700 30% 1,262,700 23%
Richard K. Dickson II(8).................... 301,550 7% 301,550 6%
Christopher B. Forgy(9)..................... 225,000 5% 225,000 4%
David M. Ashwood(10)........................ 114,070 3% 114,070 2%
Andrew J. Dale(11).......................... 25,000 * % 25,000 * %
Jacob B. Hartwick(12)....................... 30,904 * % 30,904 * %
All directors and Named
Executive Officers as a
group (7 persons) (13)...................... 3,198,420 70% 3,198,420 55%
</TABLE>
- -------------
* Less than one percent.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Common Stock
subject to options or warrants currently exercisable or convertible, or
exercisable or convertible within 60 days of January 10, 1997, are
deemed outstanding for computing the percentage of the persons holding
such options but are not deemed outstanding for computing the
percentage of any other person.
(2) The address of each shareholder is c/o Global Outdoors, Inc., 43445
Business Park Dr., Suite 113, Temecula, California 92590.
(3) Includes 95,000 shares subject to options from the Company exercisable
within 60 days of January 10, 1997.
(4) Includes 85,000 shares subject to options from the Company and 160,000
shares subject to options from Wilma M. Massie exercisable within 60
days of January 10, 1997.
(5) 8,500 of the shares shown are owned jointly by Perry T. Massie and his
wife, Sandy Massie, who share voting and investment power with respect
to such shares.
(6) Includes 85,000 shares subject to options from the Company and 160,000
shares subject to options from Wilma M. Massie exercisable within 60
days of January 10, 1997.
(7) 8,500 of the shares shown are owned jointly by Thomas H. Massie and his
wife, Cindy Massie, who share voting and investment power with respect
to such shares.
36
<PAGE> 40
(8) Includes 25,000 shares subject to options from the Company and 200,000
shares subject to options from Wilma M. Massie exercisable within 60
days of January 10, 1997.
(9) Includes 125,000 shares subject to options from the Company and 100,000
shares subject to options from Wilma M. Massie exercisable within 60
days of January 10, 1997.
(10) Includes 20,000 shares subject to options from the Company and 80,000
shares subject to options from Wilma M. Massie exercisable within 60
days of January 10, 1997.
(11) Includes 20,000 shares subject to options from the Company exercisable
within 60 days of January 10, 1997.
(12) Includes 20,000 shares subject to options from the Company exercisable
within 60 days of January 10, 1997.
(13) Includes directors' and executive officers' shares listed above,
including 465,000 shares subject to options from the Company and
700,000 shares subject to options from Wilma M. Massie exercisable
within 60 days of January 10, 1997.
DESCRIPTION OF SECURITIES
The authorized capital stock of the Company consists of 50,000,000
shares of Common Stock, $.02 par value per share, of which 4,132,164 shares were
issued and outstanding as of December 31, 1996, and 10,000,000 shares of
Preferred Stock, $.001 par value per share, of which 60,775 shares were issued
and outstanding as of December 31, 1996.
UNITS
The securities offered hereby are Units consisting of two shares of
Common Stock and one Class F Warrant. The shares of Common stock and Class F
Warrant included in the Units become separately transferable immediately.
COMMON STOCK
Holders of the Common Stock are entitled to one vote per share on all
matters to be voted upon by the shareholders. Holders of Common Stock are
entitled to receive ratably such dividends, if any, as may be declared by the
Board of Directors out of funds legally available therefor. See "Dividend
Policy." Upon the liquidation, dissolution, or winding up of the Company, the
holders of Common Stock are entitled to share ratably in all assets of the
Company which are legally available for distribution, after payment of all debts
and other liabilities. Holders of Common Stock have no preemptive, subscription,
redemption or conversion rights. The outstanding shares of Common Stock are, and
the shares being sold by the Company in this offering will be, when issued and
delivered, validly issued, fully paid and nonassessable.
PREFERRED STOCK
The Board of Directors is authorized, subject to any limitations
prescribed by the laws of the State of Alaska, but without further action by the
Company's shareholders, to provide for the issuance of Preferred Stock in one or
more series, to establish from time to time the number of shares to be included
in each such series, to fix the designations, powers, preferences and rights of
the shares of each such series and any qualifications, limitations or
restrictions thereof, and to increase or decrease the number of shares of any
such series (but not below the number of shares of such series then outstanding)
without any further vote or action by the shareholders. The Board of Directors
may authorize and issue Preferred Stock with voting or conversion rights that
could adversely affect the voting power or other rights of the holders of Common
Stock. In addition, the issuance of Preferred Stock may have the effect of
delaying, deferring or preventing a change in control of the Company.
As of December 31, 1996, there were 60,775 shares of 10% noncumulative
convertible preferred stock (the "10% Preferred Stock") issued and outstanding.
Each holder of 10% Preferred Stock is entitled to receive annual noncumulative
dividends at the rate of 10% per annum. Such dividends on the 10% Preferred
Stock are payable before any dividends are paid or declared with respect to the
Common Stock, and may be paid in Common Stock,
37
<PAGE> 41
at the option of the Company, at the rate of one share of Common Stock per share
of 10% Preferred Stock. Each share of 10% Preferred Stock is convertible into
one share of Common Stock, subject to adjustment for stock splits, stock
dividends and similar events, at the option of the holders thereof or the
Company upon giving the holders 30 days' prior notice. The holders of the 10%
Preferred Stock are not entitled to vote on any matters and are not entitled to
any preemptive rights nor any preference upon liquidation, dissolution or
winding-up of the Company.
WARRANTS
The Class F Warrants will be issued separate from, and not attached to,
the Common Stock offered hereby and may be immediately transferred separately
from the Common Stock. The Class F Warrants will be issued in registered form
pursuant to the terms of a warrant agreement (the "Warrant Agreement") between
the Company and American Securities Transfer and Trust, Inc. as warrant agent
(the "Warrant Agent"). The following statements are brief summaries of certain
provisions of the Warrant Agreement. Copies of the Warrant Agreement may be
obtained from the Company or the Warrant Agent and have been filed with the
Commission as an exhibit to the Registration Statement of which this Prospectus
is a part.
The Company has authorized the issuance of Class F Warrants to purchase
a maximum of 662,500 shares of Common Stock (including 37,500 Class F Warrants
issuable upon exercise of the Selected Broker-Dealer's Warrants) and has
reserved an equivalent number of shares of Common Stock for issuance upon
exercise of such Class F Warrants. The Company will pay cash in lieu of
fractional shares. Each Class F Warrant entitles the holder thereof to purchase
at any time one share of Common Stock at an exercise price of $5.50 per share of
Common Stock until the second anniversary of the date of this Prospectus. The
rights to exercise Class F Warrants will terminate at the close of business on
the second anniversary of the date of this Prospectus. The Class F Warrants
contain provisions that protect the Class F Warrant holders against dilution by
adjustment of the exercise price in certain events, including, but not limited
to stock dividends, stock splits, reclassification or mergers. Holders of Class
F Warrants may not exercise the Class F Warrants for fractional shares. A Class
F Warrant holder will not possess any rights as a shareholder of the Company.
Shares of Common Stock, when issued upon the exercise of the Class F Warrants in
accordance with the terms thereof, will be fully paid and non-assessable.
The Company may redeem, at any time, some or all of the Class F
Warrants at a call price of $.02 per Warrant upon 20 days' prior written notice.
At any time when the Class F Warrants are exercisable, the Company is
required to have a current Registration Statement on file with the Commission
and to effect appropriate qualifications under the laws and regulations of
states in which the holders of the Class F Warrants reside in order to comply
with applicable laws in connection with the exercise of the Class F Warrants and
the resale of the Common Stock issued upon such exercise. So long as the Class F
Warrants are outstanding, the Company has undertaken to file all post-effective
amendments to the Registration Statement required to be filed under the
Securities Act, and to take appropriate action under federal law and the
securities laws of those states where the Class F Warrants were initially
offered to permit the issuance and resale of the Common Stock issuable upon
exercise of the Class F Warrants. However, there can be no assurance that the
Company will be in a position to effect such action under the federal and
applicable state securities laws, and the failure of the Company to effect such
action may cause the exercise of the Class F Warrants and the resale or other
disposition of the Common Stock issued upon such exercise to become unlawful.
The Company may amend the terms of the Class F Warrants, but only by extending
the termination date or lowering the exercise price thereof. The Company has no
present intention of amending such terms.
As of December 31, 1996, there were 110,984 Class E Warrants
outstanding to purchase an aggregate of 110,984 shares of Common Stock at an
exercise price of $5.50 per share. The Class E Warrants were issued in a private
placement, became exercisable on July 1, 1995 and expire on December 31, 1997,
unless extended by the Board of Directors. The Company may redeem the Class E
Warrants at a price of $0.02 per Class E Warrant, upon giving the holders
thereof 20 days' prior written notice. If any Class E Warrant called for
redemption is not exercised by such time, it will cease to be exercisable and
the holder thereof will be entitled only to the redemption price. The exercise
price of the Class E Warrants and the number of shares of Common Stock
underlying such Class E Warrants are subject to adjustment for stock splits,
stock dividends and similar events. The Class E Warrants do not contain
38
<PAGE> 42
anti-dilution provisions relating to issuances or sales of Common Stock at
prices below the exercise price or the then prevailing market price of the
Common Stock. The Class E Warrants may be exercised in whole or in part.
The Company has previously issued or authorized the issuance of Class
A, Class B, Class C and Class D Warrants. The expiration date for all such
warrants has lapsed.
TRANSFER AGENT, WARRANT AGENT AND REGISTRAR
The transfer agent, warrant agent and registrar for the Company's
Common Stock and Class F Warrants is American Securities Transfer and Trust,
Inc., 1825 Lawrence Street, Suite 444, Denver, Colorado 80202.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of this offering, if the maximum offering amount of
1,250,000 shares are sold, the Company will have 5,382,164 shares of Common
Stock outstanding. All of the 1,250,000 shares potentially sold in this offering
will be freely transferable by persons other than "affiliates" of the Company
(as that term is defined under the Securities Act) without restriction or
further registration under the Securities Act.
Of the remaining outstanding shares of Common Stock, approximately
3,565,466 shares will be "restricted securities" within the meaning of Rule 144
under the Securities Act and may not be sold in the absence of registration
under the Securities Act unless an exemption from registration is available,
including the exemption contained in Rule 144. In the absence of agreements with
the Selected Broker-Dealers, approximately 3,350,000 of such shares have met the
two-year holding period requirement under Rule 144 and are available for
immediate sale in the public market. However, pursuant to the terms of the
Selected Broker-Dealer Agreement, 3,350,000 shares of such Common Stock owned by
officers, directors and other holders, as well as Common Stock obtained by them
upon exercise of stock options, may not be sold until six months from the date
of this Prospectus without the prior written consent of the Selected
Broker-Dealers. The remaining approximately 216,000 shares of Common Stock held
by existing shareholders have not met the two-year holding period requirement
under Rule 144 and become available for sale in the public market at various
times commencing in March, 1997.
In general, under Rule 144, as currently in effect, a person who has
beneficially owned shares for at least two years is entitled to sell, within any
three-month period, a number of "restricted" shares that does not exceed the
greater of 1% of the then outstanding shares of Common Stock or the average
weekly trading volume during the four calendar weeks preceding such sale. Sales
under Rule 144 are also subject to certain manner of sale limitations, notice
requirements and the availability of current public information about the
Company. Rule 144(k) provides that a person who is not deemed an "affiliate" and
who has beneficially owned shares for at least three years is entitled to sell
such shares at any time under Rule 144 without regard to the limitations
described above.
In addition to the shares of Common Stock that are currently
outstanding, a total of (i) 900,000 shares of Common Stock have been reserved
for issuance under the Company's stock option plans, (ii) 60,775 shares of
Common Stock have been reserved for issuance upon conversion of outstanding
shares of Preferred Stock, (iii) 110,984 shares of Common Stock have been
reserved for issuance upon exercise of outstanding Class E Warrants at an
exercise price of $5.50 per share and (iv) 1,500,000 shares of Common Stock have
been reserved for issuance to the former shareholders of Gold Prospectors'
Association of America, Inc. upon the occurrence of certain events. Options to
acquire 500,000 shares of Common Stock at prices ranging from $2.25 to $4.00 per
share have been granted pursuant to the Company's stock option plans. See
"Description of Securities;" "Management -- Certain Transactions; -- Stock
Option Plans."
The Company is unable to estimate the number of shares that may be sold
in the future by its existing shareholders or the effect, if any, that sales of
shares by such shareholders will have on the market price of Common Stock
prevailing from time to time. Sales of a substantial number of shares of Common
Stock by existing shareholders could adversely affect prevailing market prices.
39
<PAGE> 43
PLAN OF DISTRIBUTION
The Selected Broker-Dealer Agreement, a copy of which has been filed
with the Securities and Exchange Commission as an exhibit to the Registration
Statement provides in part as follows:
The Company will pay Selected Broker-Dealers (the "Selected
Broker-Dealers") a commission of 2% and a nonaccountable expense allowance of 2%
of the sales price of all Units sold in this offering from referrals by the
Company and a commission of 10% and a nonaccountable expense allowance of 2% of
the sales price of all other Units sold in this offering. The nonaccountable
expense allowance is limited to a maximum of $20,000 on all Units sold.
At the Closing of the Offering, the Company will sell to the Selected
Broker-Dealers for $0.001 per Warrant, Warrants (the "Selected Broker-Dealers'
Warrants") entitling the Selected Broker-Dealers to purchase one Unit for each
ten Units sold in the Offering for the first 125,000 Units sold and one Unit for
each twenty Units sold thereafter. The exercise price of the Selected
Broker-Dealers' Warrants shall be $9.60 per Unit. The Selected Broker-Dealers'
Warrants will be exercisable three months after the date of the definitive
Prospectus and for 21 months thereafter. At any time within the period
commencing one year and ending two years after the date of this Prospectus, the
Underwriter will have the right to sell its Underwriter's Warrants or Warrant
Stock pursuant to a Registration Statement the Company files under the
Securities Act of 1933.
The obligation of the Selected Broker-Dealers to offer Units described
herein is subject to (a) the accuracy of the representations and warranties of
the Company contained in the Selected Broker-Dealer Agreement, (b) performance
by the Company of its obligations contained herein, (c) approval of certain
legal matters by the Selected Broker-Dealers or counsel for the Selected
Broker-Dealers and (d) the condition, among others, that a Registration
Statement on Form SB-2 shall have become effective with the U.S. Securities and
Exchange Commission. The Selected Broker-Dealers will agree to cross-indemnify
the Company regarding certain matters. In the opinion of the Securities and
Exchange Commission, such indemnification is contrary to public policy and
therefore, unenforceable.
The Company is offering a minimum of 25,000 Units and a maximum of
625,000 Units at a purchase price of $8.00 per unit. The Company has not entered
into any Selected Dealer Agreement with any NASD member. The Selected
Broker-Dealers will make no commitment to sell any of the Units offered hereby
and no assurance is given than any of the Units offered hereby will be sold. The
Selected Broker-Dealers will agree to use their "best efforts" to sell the Units
offered hereby.
The proceeds from the sale of Units will be held in an Escrow Account
at Wells Fargo Bank, Irvine, California or another reputable bank, until a
minimum of 25,000 Units have been sold. If at least 25,000 Units are not sold
by 120 days from the date of this Prospectus, which date may be extended for
an additional period of 60 days by the Company, the proceeds received from
investors will be promptly refunded to the investors in full without interest
thereon and or deduction of any kind therefrom, such as sales commissions or
expenses of the offering. Until the proceeds from the sale of at least 25,000
Units are deposited in escrow investors will not be security holders nor able
to demand return of their subscription proceeds.
All purchasers' checks should be made payable to "Global Outdoors, Inc.
- -Escrow Account." Certificates evidencing Common Stock and Warrants will be
issued to purchasers only if the proceeds from the sale of at least 25,000 Units
are actually deposited in escrow and released to the Company pursuant to the
Escrow Agreement. Until such time as the proceeds are actually received by the
Company and the certificates delivered to the purchasers thereof, such
purchasers will be deemed subscribers and not security holders of the Company.
During the selling
40
<PAGE> 44
period, purchasers will have no right to demand return of their subscription
proceeds. If the minimum proceeds are successfully obtained, the Offering will
be continued until completed, until the maximum period of the Offering has
elapsed or until the Offering is terminated by the Company whichever occurs
first.
The foregoing is a summary of some of the terms of the Selected
Broker-Dealer Agreement which summary does not purport to be complete, and is
deemed amplified in all respects by reference to the Selected Broker-Dealer
Agreement, copies of which may be examined in the offices of the Company,
and the Securities and Exchange Commission, Washington, D.C. See "Additional
Information."
LEGAL MATTERS
The legality of the issuance of the Shares offered hereby and certain
other legal matters will be passed upon for the Company by Richard K. Dickson
II, Newport Beach, California. Mr. Dickson is an officer and director of the
Company. He beneficially owns 301,550 shares of Common Stock of the Company. See
"Management" and "Security Ownership of Certain Beneficial Owners and
Management."
EXPERTS
The audited financial statements included in this Prospectus and
elsewhere in the Registration statement, to the extent and for the periods
indicated in their report, have been audited by Kenneth E. Walsh, certified
public accountant, and are included herein in reliance upon the authority of
said firms as experts in giving said reports.
ADDITIONAL INFORMATION
A Registration Statement on Form SB-2, including amendments thereto
(herein, the "Registration Statement") relating to the Common Stock offered
hereby has been filed by the Company with the Securities and Exchange Commission
(the "Commission"). This Prospectus does not contain all of the information set
forth in the Registration Statement and the exhibits and schedules thereto.
Statements contained in this Prospectus as to the contents of any contract or
other document referred to are not necessarily complete and in each instance
reference is made to the copy of such contract or other document filed as an
exhibit to the Registration Statement, each such statement being qualified in
all respects by such reference.
For further information with respect to the Company and the Units
offered hereby, reference is made to such Registration Statement, exhibits and
schedules.
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, and in accordance therewith, files
reports, proxy or information statements, and other information with the
Commission. Such reports, proxy statements and other information, including a
copy of the Registration Statement may be inspected by anyone without charge at
the Securities and Exchange Commission's principal office located at Room 1024,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, as well as at
the following regional offices: the New York Regional Office located at 7 World
Trade Center, 13th Floor, New York, New York 10048, and the Chicago Regional
Office located at Northwestern Atrium Center, 500 West Madison Street, Chicago
Illinois 60661-2511 and copies of all or any part thereof may be obtained from
the Public Reference Branch of the Commission upon the payment of certain fees
prescribed by the Securities and Exchange Commission.
41
<PAGE> 45
INDEX TO FINANCIAL STATEMENTS
UNAUDITED INTERIM FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30,
1996 AND 1995:
<TABLE>
<S> <C>
Consolidated Balance Sheets ............................................. FI-2
Consolidated Statements of Income........................................... FI-4
Consolidated Statements of Cash Flows....................................... FI-5
Notes to Unaudited Consolidated Financial Statements........................ FI-6
AUDITED FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994:
Independent Auditors Report ............................................. F-2
Consolidated Balance Sheets ............................................. F-3
Consolidated Statements of Income........................................... F-5
Consolidated Statements of Stockholders' Equity............................. F-6
Consolidated Statements of Cash Flows....................................... F-8
Notes to Consolidated Financial Statements.................................. F-10
</TABLE>
42
<PAGE> 46
GLOBAL OUTDOORS, INC.
Consolidated Financial Statements
for the nine months ended
September 30, 1996 and 1995
Unaudited
FI-1
<PAGE> 47
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
--------------------------- -----------
RESTATED RESTATED RESTATED
1996 1995 1995
---------- ---------- ----------
<S> <C> <C> <C>
CURRENT ASSETS
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 910,547 647,469 646,708
MINING PROPERTIES (Note 3)
ALASKA RECREATIONAL 1,535,826 1,574,052 1,550,052
MINING PROPERTIES (Note 3)
EQUIPMENT AND LEASEHOLD 420,030 88,389 226,970
IMPROVEMENTS (Note 3)
STOCKHOLDER RECEIVABLE,
Interest at 6% $5,000 per month including
interest, secured by building, less 251,642 316,834 292,616
current portion
DEPOSITS 273,231 428,872 323,226
DEFERRED INCOME TAXES 502,829 - 301,582
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
FI-2
<PAGE> 48
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
SEPTEMBER 30 DECEMBER 31
------------ -----------
RESTATED RESTATED RESTATED
1996 1995 1995
----------- ----------- -----------
<S> <C> <C> <C>
CURRENT LIABILITIES
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
----------- ----------- -----------
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
FI-3
<PAGE> 49
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
9 Months Ended
--------------
SEPTEMBER 30 DECEMBER 31
------------ -----------
RESTATED RESTATED RESTATED
REVENUES: 1996 1995 1995
----------- ---------- -----------
<S> <C> <C> <C>
Alaska/Australia Trip $ 828,901 $ 656,161 $ 673,161
Membership sales 2,652,324 2,603,623 3,157,971
Advertising 520,648 296,662 449,054
Management fees -- 25,000 30,000
Interest 19,210 25,127 30,781
----------- ---------- -----------
Total Net Revenues $ 4,021,083 $3,606,573 4,340,967
----------- ---------- -----------
EXPENSES:
Alaska/Australia trip expenses 353,090 353,075 357,570
Advertising 1,219,652 877,296 1,058,988
Bank credit card charges 44,280 35,248 45,080
Compensation & related payroll costs 1,050,501 623,447 825,874
Depreciation 93,600 103,366 137,806
Freight 96,358 39,734 69,987
Insurance 47,568 68,101 67,203
Interest 63,430 18,667 38,218
Merchandise purchases 246,759 184,262 326,502
Office supplies 31,710 23,323 30,541
Other 100,822 62,440 75,399
Outside labor 133,339 82,791 126,036
Postage & Delivery 320,446 243,669 367,301
Printing 264,249 204,616 254,051
Professional services 146,089 53,392 62,787
Property tax 7,186 3,393 8,818
Provision for doubtful contracts -- 2,759 5,906
Repairs and maintenance 50,678 29,992 33,984
Rent 99,439 54,142 87,772
Shows and seminars 228,812 118,227 150,496
Supplies and small tools 110,024 94,293 106,436
Tax and license 33,379 33,383 32,259
Telephone and utilities 183,880 103,243 152,432
TNN Show 574,700 -- --
----------- ---------- -----------
Total expenses 5,499,991 3,412,859 4,421,446
----------- ---------- -----------
Income before income taxes (1,478,908) 193,714 (80,479)
Income tax expense (502,829) 73,611 (30,582)
----------- ---------- -----------
Net income (loss) $ (976,079) $ 120,103 $ (49,897)
----------- ---------- -----------
Earnings per share (Note 6) $ (0.23) $ 0.03 $ (0.01)
=========== ========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
FI-4
<PAGE> 50
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
FI-5
<PAGE> 51
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. 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. (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 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.
FI-6
<PAGE> 52
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 sales 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 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 when trips are taken. Trips
are taken in June through August of 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
FI-7
<PAGE> 53
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
on a straight line basis 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 sales revenue, operating expenses and
profits for the nine months ended September 30, 1996 and 1995:
<TABLE>
<CAPTION>
Change in
As Previously LDMA Sales Barter
Reported Accounting Eliminated As Restated
------------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
9-30-95
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 6,363,544 (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 (218,889) -- 120,103
Earnings per share $ .19 $ (.16) $ -- $ .03
</TABLE>
FI-8
<PAGE> 54
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C> <C> <C> <C>
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 (2,606,941) (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>
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 leaseholds improvements:
Furniture and fixtures $ 63,730 $ 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>
FI-9
<PAGE> 55
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 April 1997 and every
January thereafter 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 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.
FI-10
<PAGE> 56
GLOBAL OUTDOORS, INC.
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1994 AND 1995
F-1
<PAGE> 57
KENNETH E. WALSH
CERTIFIED PUBLIC ACCOUNTANT
3820 DEL AMO BLVD.
SUITE 305
TORRANCE, CA 90503
INDEPENDENT AUDITOR'S REPORT
To the Board of Directors
Global Outdoors, Inc.
Temecula, California
I have audited the accompanying consolidated Balance sheets of Global Outdoors,
Inc. and Subsidiaries as of December 31, 1995 and 1994 and the related
consolidated statements of operations, stockholders' equity and cash flows for
the years then ended. These financial statements are the responsibility of the
Company's management. My responsibility is to express an opinion on these
statements based on my audits.
I conducted my audits in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audits provide a reasonable basis for my opinion.
In my opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Global Outdoors,
Inc. and Subsidiaries as of December 31, 1995 and 1994, and the results of their
operations and their cash flows for the years then ended, in conformity with
generally accepted accounting principles.
The accompanying 1995 and 1994 consolidated financial statements have been
restated to reflect adjustments discussed in note 2.
Kenneth E. Walsh
Certified Public Accountant
January 20, 1997
F-2
<PAGE> 58
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
ASSETS
Restated Restated
---------- ----------
1995 1994
---------- ----------
<S> <C> <C>
CURRENT ASSETS
Cash (Note 11) $ 458,448 $ 765,113
Current portion of stockholder receivable (Note 6) 40,800 25,892
Other receivables, net 135,937 76,879
Income taxes receivable 75,281 86,665
Inventories 192,268 30,000
Prepaid expenses 536,591 131,853
---------- ----------
Total current assets 1,439,325 1,116,402
MEMBERSHIP RECREATIONAL
MINING PROPERTIES (Note 3) 646,717 433,559
ALASKA RECREATIONAL
MINING PROPERTIES (Note 3) 1,550,052 1,585,302
EQUIPMENT AND LEASEHOLD
IMPROVEMENTS 226,970 69,666
STOCKHOLDER RECEIVABLE,
Interest at 6% $5,000 per month including interest,
secured by building, less current portion (Note 6) 292,616 342,570
DEPOSITS (Note 10) 323,226 38,000
OTHER ASSETS 97,949 28,640
---------- ----------
TOTAL ASSETS $4,576,855 $3,614,139
========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
F-3
<PAGE> 59
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
Restated Restated
----------- -----------
1995 1994
----------- -----------
<S> <C> <C>
CURRENT LIABILITIES
Current maturities of long-term debt (Note 4) $ 111,387 $ 29,060
Customer deposits 16,979 5,320
Accounts payable and accrued expenses 159,802 221,556
Deferred revenue, current 310,756 318,801
----------- -----------
Total current liabilities 598,924 574,737
DEFERRED REVENUE, Long term portion 1,245,852 926,307
DEFERRED INCOME TAXES (Note 7) -- 127,352
LONG TERM DEBT, Less current portion (Note 4) 288,600 181,120
----------- -----------
Total liabilities 2,133,376 1,809,716
----------- -----------
STOCKHOLDERS' EQUITY (Notes 5 and 12)
Common stock, $.02 par value; 5,000,000
shares authorized; shares issued and outstanding;
1995 4,074,988; 1994 3,843,410 81,500 76,868
Convertible preferred stock, non voting, 10%
noncumulative, no liquidation preference,
$.001 par value; 10,000,000 shares authorized;
shares issued and outstanding: 1995 63,195;
1994 65,455 63 65
Additional paid-in capital 2,793,938 2,060,520
Retained Earnings (210,772) (111,780)
Stock Subscriptions receivable (221,250) (221,250)
----------- -----------
Total stockholders' equity $ 2,443,479 $ 1,804,423
----------- -----------
TOTAL LIABILITIES AND EQUITY $ 4,576,855 $ 3,614,139
=========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
F-4
<PAGE> 60
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
Restated Restated
----------- ----------
REVENUES: 1995 1994
----------- ----------
<S> <C> <C>
Alaska/Australia Trip $ 673,161 $ 981,671
Membership sales 3,157,971 2,967,758
Advertising 449,054 338,240
Management fees (Note 6) 30,000 25,000
Gain on sale of land -- 30,983
Interest 30,781 41,450
----------- ----------
Total Net Revenues 4,340,967 4,385,102
EXPENSES:
Alaska/Australia trip expenses 357,570 453,408
Advertising 1,058,988 641,814
Bank charges 45,080 31,908
Compensation & related payroll costs 825,874 587,643
Depreciation 137,806 148,000
Freight 69,987 66,569
Insurance 67,203 24,009
Interest 38,218 19,992
Merchandise purchases 326,502 254,508
Office supplies 30,541 27,646
Other 75,399 144,976
Outside labor 126,036 49,998
Postage & Delivery 367,301 295,128
Printing 254,051 306,051
Professional services 62,787 311,367
Property tax 8,818 1,214
Provision for doubtful contracts 5,906 --
Repairs and maintenance 33,984 17,563
Rent (Note 6) 87,772 53,393
Shows and seminars 150,496 62,642
Supplies and small tools 106,436 54,741
Tax and license 32,259 8,082
Telephone and utilities 152,432 138,548
----------- ----------
Total expenses 4,421,446 3,699,200
----------- ----------
Income before income taxes (80,479) 685,902
Income tax expense (Note 7) (30,582) 260,643
----------- ----------
Net income (loss) $ (49,897) $ 425,259
----------- ----------
Earnings per share (Note 12) $ (0.01) $ 0.11
=========== ==========
</TABLE>
See Notes to Consolidated Financial Statements
F-5
<PAGE> 61
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
Common Stock Preferred Stock
------------ ---------------
Shares Amounts Shares Amounts
--------- ------- ------- -------
<S> <C> <C> <C> <C>
Balance, December 31, 1993 1,914,303 $38,286 69,515 $ 69
Preferred stock converted to
common stock 1,780 36 (3,560) (4)
Common stock issued for
services 500 10 -- --
Common stock issued as
dividend on preferred stock 3,472 69 -- --
Common stock issued for land 900 18 -- --
Two for one forward stock
split (Note 5) 1,920,955 38,419 -- --
Preferred stock converted to
common stock 500 10 (500) --
Common stock issued for
services 1,000 20 -- --
Elimination of duplicate income due
to change in year end (Note 8) -- -- -- --
Net income -- -- -- --
--------- ------- ------- ----
Balance, December 31, 1994 3,843,410 76,868 65,455 65
Preferred stock converted to 2,260 45 (2,260) (2)
common stock
Common stock issued for services 27,670 553 -- --
Common stock issued for private
placement 195,102 3,902 -- --
Common stock issued as dividend
on preferred stock 6,546 132 -- --
Net income (loss) -- -- -- --
--------- ------- ------- ----
Balance, December 31, 1995 4,074,988 $81,500 63,195 $ 63
========= ======= ======= ====
</TABLE>
See Notes to Consolidated Financial Statements
F-6
<PAGE> 62
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Continued)
YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
Additional Retained Common Stock
paid in earnings subscriptions
capital (deficit) (Receivable) TOTAL
----------- --------- --------- -----------
<S> <C> <C> <C> <C>
Balance, 12/31/93 $ 2,067,766 $(494,540) $(221,250) $ 1,390,331
Preferred stock converted to
common stock (32) -- -- --
Common stock issued for
services 2,990 -- -- 3,000
Common stock issued as
dividend on preferred
stock 20,763 (20,832) -- --
Common stock
issued for land 4,482 -- -- 4,500
Two for one forward stock
split (Note 5) (38,419) -- -- --
Preferred stock converted to
common stock (10) -- -- --
Common stock issued for
services 2,980 -- -- 3,000
Elimination of duplicate
income due to change in --
year end (Note 8) -- (21,667) (21,667)
Net income -- 425,259 -- 425,259
----------- --------- --------- -----------
Balance, 12/31/94 2,060,520 (111,780) (221,250) 1,804,423
Preferred stock converted
to common stock (43) -- -- --
Common stock issued
for services 109,871 (22,911) -- 87,513
Common stock issued
for private placement 597,538 -- -- 601,440
Common stock issued
as dividend on
preferred stock 26,052 (26,184) -- --
Net income (loss) -- (49,897) -- (49,897)
----------- --------- --------- -----------
Balance, 12/31/95 $ 2,793,938 $(210,772) $(221,250) $ 2,443,479
=========== ========= ========= ===========
</TABLE>
See Notes to Consolidated Financial Statements
F-7
<PAGE> 63
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
Restated Restated
--------- ---------
1995 1994
--------- ---------
<S> <C> <C>
Cash Flows from Operating Activities
Net income (loss) $ (49,897) $ 425,259
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Elimination of duplicated income -- (21,667)
Depreciation 137,806 148,000
Provision for doubtful accounts 5,906 --
Deferred income taxes (157,934) 127,352
Common stock issued for services 87,513 6,000
Change in assets and liabilities:
(Increase) decrease in:
Membership sales contracts receivable (247,126) (163,667)
Prepaid expenses (567,006) (55,228)
Other assets (38,736) (26,500)
Other receivables 97,794 9,568
Income taxes receivable 11,384 (86,665)
Increase in accounts payable accrued
expenses, income taxes payable, customer
deposits and deferred revenue 563,660 167,318
--------- ---------
Net cash provided by operating activities (156,636) 529,770
--------- ---------
Cash Flows from Investing Activities
Purchase of property, equipment and
leasehold improvements (250,851) (275,547)
Increase in deposits (285,226) (38,000)
Principal payments received on stockholder receivable 35,046 16,395
Purchase of membership properties (222,158) (125,246)
Gain on sale of land (30,983)
Proceeds from sale of land 32,983
--------- ---------
Net cash provided by (used in)
financing activities (723,189) (420,398)
--------- ---------
Cash Flows from Financing Activities
Proceeds from private placement 601,440 --
Principal payments on long-term debt (28,280) (26,423)
--------- ---------
Net cash (used in) financing activities 573,160 (26,423)
--------- ---------
Net increase (decrease) in cash (306,665) 82,949
Cash
Beginning 765,113 682,164
--------- ---------
Ending $ 458,448 $ 765,113
========= =========
</TABLE>
See Notes to Consolidated Financial Statements
F-8
<PAGE> 64
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
YEARS ENDED DECEMBER 31, 1995 AND 1994
<TABLE>
<CAPTION>
Restated Restated
-------- --------
1995 1994
-------- --------
<S> <C> <C>
Supplemental Disclosures of Cash Flow Information
Cash paid for:
Income taxes $11,384 $423,764
======= ========
Interest $38,218 $ 19,992
======= ========
Supplemental Disclosures of Noncash Investing and
Financing Activities
Land acquired with seller financing $93,373 $100,000
======= ========
Common stock issued in exchange for land $ - $ 4,500
======= ========
Common stock issued for services $87,513 $ 6,000
======= ========
Common stock issued as a dividend on preferred stock $26,184 $ 20,832
======= ========
</TABLE>
See Notes to Consolidated Financial Statements
F-9
<PAGE> 65
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 entitled 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:
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.
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.
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
F-10
<PAGE> 66
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 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 based upon historical membership longevity taking into consideration
member defaults and withdrawals. Deposits are taken with new sales contracts,
which are fully refundable for 60 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
on a straight line basis 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.
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 1995 and 1994 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
F-11
<PAGE> 67
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 sales revenue, operating expenses and
profits:
<TABLE>
<CAPTION>
Change in
As Previously LDMA Sales Barter
Reported Accounting Eliminated As Restated
---------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
1994
- ----
Total assets $5,927,729 $(2,313,585) $ -- $ 3,614,139
Shareholder equity 3,267,398 (1,462,975) -- 1,804,423
Total net revenue 7,330,574 (1,257,653) (1,687,819) 4,385,102
Operating expenses 5,683,110 (296,091) (1,687,819) 3,699,200
---------- ----------- ----------- -----------
Net income before tax 1,647,464 (961,562) -- 685,902
Income tax expense 654,043 (393,400) -- 260,643
Net income 993,421 (568,162) -- 425,259
Earnings per share $ .26 $ (.15) $ -- $ .11
1995
- ----
Assets $8,515,312 $(3,938,457) $ -- $ 4,576,855
Shareholders equity 4,912,483 (2,469,004) -- 2,443,479
Total net revenue 9,691,736 (1,968,819) (3,381,950) 4,340,967
Operating expenses 8,174,066 (370,670) (3,381,950) 4,421,446
---------- ----------- ----------- -----------
Income before income tax 1,517,670 (1,598,149) -- (80,479)
Income tax expense 561,538 (592,120) -- (30,582)
Net income 956,132 (1,006,029) -- (49,897)
Earnings per share $ .23 $ (.24) $ -- $ (.01)
</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 Revenues 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>
F-12
<PAGE> 68
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>
1995 1994
----------- -----------
<S> <C> <C>
Membership recreational mining properties:
Land $ 604,477 $ 384,568
Buildings and improvements 66,845 64,596
----------- -----------
671,322 449,164
Less accumulated depreciation (24,605) (15,605)
----------- -----------
$ 646,717 $ 433,559
=========== ===========
Alaska recreational mining properties:
Land $ 1,202,373 $ 1,202,373
Buildings and improvements 444,549 444,549
Vehicles and equipment 842,137 796,387
----------- -----------
2,489,059 2,443,309
Less accumulated depreciation (939,007) (858,007)
----------- -----------
$ 1,550,052 $ 1,585,302
=========== ===========
</TABLE>
<TABLE>
<CAPTION>
1995 1994
----------- -----------
<S> <C> <C>
Equipment leasehold improvements:
Furniture and fixtures $ 38,914 $ 3,477
Equipment 255,259 96,688
Vehicles 94,102 89,926
Leasehold improvements 8,876 1,950
Less accumulated depreciation 170,181 122,375
----------- -----------
$ 226,970 $ 69,666
=========== ===========
</TABLE>
NOTE 4. LONG-TERM DEBT
Long-term debt consists of the following:
<TABLE>
<CAPTION>
1995 1994
-------- -------
<S> <C> <C>
Note payable to an individual, secured by first
deed of trust on land, payable in monthly
installments of $746 including interest at
9.5%, balance due August 1998. $ 65,889 $68,348
Note payable to finance companies, secured by
vehicles, payable in monthly installments
including interest ranging from 2.9% to
12.5%. 109,019 42,965
Notes payable to an individual, secured by
first deed of trust on land, payable in
monthly installments of $900 including
interest at 8.0%, balance due June 1996. 93,373 --
</TABLE>
F-13
<PAGE> 69
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C> <C>
Line of Credit payable to a bank, unsecured,
payable on a revolving payment plan
Total available balance is $500,000
Monthly installments currently at $727
including interest at 9.5%. 33,139 --
Note payable to individuals, secured by deed
of trust, payable in monthly installments
of $808 including interest at 9.5%,
balance due January 2001. 98,567 98,867
-------- --------
399,987 210,180
Less current maturities 111,387 29,060
-------- --------
Total Long Term Debt $288,600 $181,120
======== ========
</TABLE>
The aggregate maturities of long-term debt as of December 31, 1995 are as
follows:
<TABLE>
<S> <C>
1996 $111,387
1997 31,240
1998 86,590
1999 63,280
2000 46,210
Thereafter 61,280
--------
$399,987
========
</TABLE>
NOTE 5. STOCKHOLDERS' EQUITY
Preferred stock:
During 1990, the company issued 71,835 shares of 10% noncumulative, convertible,
exchangeable, nonvoting preferred stock at $.001 par value for $5 per share. The
preferred shares have no liquidation preference over the Company's common stock.
The preferred shares are convertible at any time at the option of the holder
into common stock at the rate of one share of common stock for one share of
preferred stock. The preferred stock is exchangeable at the option of the Board
of Directors, in whole or in part, at the same rate of one share of common stock
for one share of preferred stock.
Stock option plan:
On February 8, 1986, the Company granted certain stockholders and other
individuals the option to purchase 112,500 shares of $.02 par value common stock
for $5.00 per share over a period of five years. On June 28, 1990, the Company
amended its stock option plan by terminating options to purchase 16,000 shares
and granting options to purchase an additional 5,500 shares to certain
stockholders and individuals. On June 15, 1993, the Company further amended its
stock option plan by granting options to purchase additional 118,000 shares, at
$4.50 per share and extending the life of all the options through July 1, 1997.
F-14
<PAGE> 70
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Due to a two for one forward stock split authorized by the Board of Directors in
August, 1994, the options prices were revised from $5.00 and $4.50 to $2.50 and
$2.25 per share and the number of options outstanding were doubled. The stock
option plan includes a provision under which the Company will purchase the
options from the holder's estate at the agreed upon price upon death of the
holder. During 1995 a new stock option plan was adopted but no options were
granted under this stock option plan.
Transactions during the years ended December 31, 1993 through 1995 are
summarized as follows:
<TABLE>
<CAPTION>
Options
Outstanding
-----------
<S> <C>
Balance, December 31, 1993 175,000
Options exercised -
Stock split 175,000
---------
Balance, December 31, 1994 350,000
Options exercised -
Options granted 35,000
---------
Balance, December 31, 1995 385,000
=========
</TABLE>
The stock options outstanding as of December 31, 1995 totaled 385,000, at prices
ranging form $2.25 to $3.25 per share, with 345,000 exercisable as of December
31, 1995 and 40,000 exercisable during the following periods:
<TABLE>
<CAPTION>
Options
During Year Becoming
Ending December 31 Exercisable
- ------------------ -----------
<S> <C>
1996 30,000
1997 10,000
------
40,000
======
</TABLE>
Common stock subscriptions receivable:
On June 22, 1993 certain stockholders and other individuals exercised a portion
of their options available under the stock option plan above. In connection
therewith, the Company loaned these individuals a total of $221,250 in order to
provide the funds to purchase the respective shares of common stock. The notes
receivable from the individuals bear interest at 4% and are secured by the
respective shares of common stock.
F-15
<PAGE> 71
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Stock split:
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. COMMITMENTS AND RELATED PARTY TRANSACTIONS
The Company is leasing its administrative facilities from a stockholder under a
month-to-month lease agreement requiring monthly rent payments of $4,000 from
January to March and $5,000 the remaining months of the year. Rent expense
totaled $57,000 for the year ended December 31, 1995 and $48,000 for 1994. The
company holds the building as security on the stockholder note receivable and
accordingly, the rent commitment extends through the term of the note. The total
rent commitment at December 31, 1995 is ten years or $600,000.
The Company receives management fees from lost Dutchman's Mining Associations,
Inc., a nonprofit corporation related through common directors. Management fees
totaled approximately $30,000 and $25,000 for the years ended December 31, 1995
and 1994 respectively.
The Company receives interest on the stockholder receivable. Interest on the
receivable totaled approximately $21,000 and $28,000 for the years ended
December 31, 1995 and 1994, respectively. The Company initiated an agreement
with one of its directors during 1994 to receive legal services on a monthly
basis. The agreement calls for the Company to pay the director a monthly
retainer in the amount of $5,000. In the event that services rendered by the
director on behalf of the Company exceed $5,000 in any given month, the
agreement calls for the director to receive shares of the Company's common stock
at its then current fair market value as payment for the services in excess of
$5,000.
NOTE 7. INCOME TAXES
A reconciliation of income tax expense to the amount computed by applying
statutory income tax rates to earnings before income taxes is as follows:
<TABLE>
<CAPTION>
1995 1994
--------- --------
<S> <C> <C>
Federal income tax $ (22,952) $212,643
State income tax, net (7,630) 48,000
--------- --------
$ (30,582) $260,643
========= ========
</TABLE>
F-16
<PAGE> 72
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Due to the immateriality of deferred taxes, the individual components of
deferred taxes have not been included in this footnote pursuant to FAS 109. The
breakdown of the income tax expense between current and deferred are as follows:
<TABLE>
<CAPTION>
1995 1994
--------- --------
<S> <C> <C>
Current $ -- $133,291
Deferred (30,582) 127,352
--------- --------
$ (30,582) $260,643
========= ========
</TABLE>
NOTE 8. 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 commons 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, through
satellite and cable television programming d/b/a The Outdoor channel 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.
NOTE 9. LEASE AGREEMENTS
During the year ended 1995, the Company entered into several operating lease
agreements. Satellite equipment was leased under terms of an operating lease
agreement that expired on November 30, 1995 and requiring monthly payments of
$75,000. Satellite equipment is now being used under terms of an operating lease
agreement expiring on March 1, 1999 and requiring monthly payments ranging from
$115,000 for the first year with the monthly amount increasing $10,000 per year.
The agreement contains an option to lease the satellite for an additional two
years with the monthly payments increasing an additional $10,000 each year. The
Company currently has a deposit on the satellite equipment of $270,000. This
consists of a $45,000 deposit and three prepaid rent checks of $75,000 each.
Equipment is being leased under three separate operating lease agreements
expiring at various dates through February 2000. Monthly payments on the three
agreements total approximately $2,300.
The total minimum rental commitment under these operating lease agreements due
in future years as follows: 1996 $1,367,642; 1997 $1,513,609; 1998 $1,633,609;
1999 $158,609; 2000 $1,967 (total $4,675,436).
F-17
<PAGE> 73
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 10. SUBSEQUENT EVENTS
Subsequent to year-end, the Company purchased 130 acres of land in North
Carolina. This land will be used for gold mining camps. The purchase price of
the land was $250,000. A down payment of $50,000 was made. Interest only
payments are due each month with a $50,000 balloon payment due on January first
of each year until paid off.
Also subsequent to year-end, the Company began producing and airing a gold
prospecting show on TNN. The first show aired on January of 1996. During 1995
the Company paid $363,436 in expenses to produce the show. Since the show did
not air until 1996, these costs were set up in the current asset called prepaid
expenses.
NOTE 11. CASH CONCENTRATION RISK
The Company has approximately $250,000 and $147,000 in two separate financial
institutions on December 31, 1995 and approximately $288,000 and $194,000 in
two separate financial institutions on December 31, 1994. Deposits at a
financial institution in excess of $100,000 are not insured.
NOTE 12. EARNINGS PER SHARE
Earnings per share are based on the weighted average number of common and common
equivalent shares outstanding during the year. In 1995 and 1994, the weighted
average number of shares for computing primary earnings per share were 4,087,678
and 3,937,704 respectively.
F-18
<PAGE> 74
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 13. BUSINESS SEGMENT INFORMATION
Business segment information is summarized as follows:
<TABLE>
<CAPTION>
Additions to
Depreciation Property,
and Cost of Equipment &
Income Before Membership Leasehold
Revenues Income Taxes Assets Sold Improvements
---------- ------------ ---------- -------- ------------
<S> <C> <C> <C> <C> <C>
1994
Alaska trip
income $ 981,671 $ 438,913 $1,585,302 $100,852 $189,478
The Outdoor
Channel 167,148 (426,187) 69,033 5,811 --
Membership
sales of
recreational
prospecting
and mineral
rights and
merchandise
sales 2,967,758 1,995,960 1,212,968 -- 134,062
Corporate 268,526 (1,322,784) 1,210,482 41,337 38,228
---------- ----------- ---------- -------- --------
$4,385,102 $ 685,902 $4,077,785 $148,000 $361,768
========== =========== ========== ======== ========
</TABLE>
<TABLE>
<CAPTION>
Additions to
Depreciation Property,
and Cost of Equipment &
Income Before Membership Leasehold
Revenues Income Taxes Assets Sold Improvements
----------- ----------- ---------- -------- ------------
<S> <C> <C> <C> <C> <C>
1995
Alaska trip
income $ 673,161 $ 315,591 $1,550,052 $ 81,000 $ 45,750
The Outdoor
Channel 314,958 (816,637) 562,915 21,306 135,189
Membership
sales of
recreational
prospecting
and mineral
rights and
merchandise
sales 3,157,971 1,648,575 1,522,230 -- 222,158
Corporate 194,877 (1,228,008) 1,817,180 35,500 69,912
----------- ----------- ---------- -------- --------
$ 4,340,967 $ (80,479) $5,452,377 $137,806 $473,009
=========== =========== ========== ======== ========
</TABLE>
F-19
<PAGE> 75
NO DEALER, SALESMAN OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFER MADE BY THIS PROSPECTUS AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, THE SELLING SHAREHOLDERS OR ANY OF THE SELECTED
BROKER-DEALERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF ANY OFFER TO BUY ANY SECURITY OTHER THAN THE SHARES OF THE
COMMON STOCK OFFERED BY THIS PROSPECTUS, NOR DOES IT CONSTITUTE AN OFFER TO SELL
OR A SOLICITATION OF ANY OFFER TO BUY THE SHARES OF COMMON STOCK BY ANYONE IN
ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT AUTHORIZED, OR IN
WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR
TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................................................... 3
Risk Factors.......................................................... 5
Use of Proceeds....................................................... 10
Price Range of Common Stock........................................... 10
Dividend Policy....................................................... 11
Capitalization........................................................ 11
Selected Financial Data............................................... 12
Management's Discussion and Analysis of
Financial Condition and Results of Operations....................... 13
Business.............................................................. 18
Properties............................................................ 26
Management............................................................ 29
Security Ownership of Certain Beneficial
Owners and Management............................................... 36
Description of Securities............................................. 37
Shares Eligible for Future Sale....................................... 39
Plan of Distribution.................................................. 40
Legal Matters......................................................... 41
Experts............................................................... 41
Additional Information................................................ 41
Index to Financial Statements......................................... 42
</TABLE>
UNTIL ____________, 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.
GLOBAL OUTDOORS, INC.
625,000 UNITS
CONSISTING OF
TWO SHARES OF COMMON STOCK
AND ONE CLASS F WARRANT
PROSPECTUS
________, 1997
<PAGE> 76
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 10.06.490 of the Alaska Corporations Code provides that a corporation
may indemnify directors and officers as well as other employees and individuals
against expenses (including attorneys' fees), judgments, fines and amounts paid
in settlement actually and reasonably incurred by the person in connection with
specified actions or proceedings, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation -- a
"derivative action"), if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. A similar standard is
applicable in the case of derivative actions, except that indemnification only
extends to expenses (including attorneys' fees) actually and reasonably incurred
by the person in connection with the defense or settlement of such action, and
the statute requires court approval before there can be any indemnification
where the person seeking indemnification has been found liable for negligence or
misconduct in the performance of the person's duty to the corporation. The
statute provides that it is not exclusive of other indemnification that may be
granted by a corporation's bylaws, agreement, vote of shareholders or
disinterested directors or otherwise.
The Selected Broker-Dealer Agreement to be filed as Exhibit 1.3 to this
Registrant Statement provides for indemnification by the Selected
Broker-Dealers of the Registrant and its officers and directors for
certain liabilities arising under the Securities Act, or otherwise.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth all expenses, other than the underwriting
discounts and commissions and the non-accountable expense allowance, payable by
the Registrant in connection with the sale of the Common Stock being registered.
All the amounts are estimates except for the registration fee and the NASD
filing fee.
<TABLE>
<S> <C>
Registration fee.............................. $ 3,104.75
NASD filing fee............................... 1,327.50
Blue sky qualification fees and expenses...... 10,000.00
Printing and engraving expenses............... 25,000.00
Legal fees and expenses....................... 125,000.00
Accounting fees and expenses.................. 15,000.00
Transfer agent and registrar fees............. 10,000.00
Miscellaneous................................. 60,567.75
-----------
Total..................................... $250,000.00
===========
</TABLE>
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES.
Since August 2, 1993, the Registrant has sold and issued the following
unregistered securities pursuant to an exemption under the Securities Act:
1. In August 1993, options to purchase 45,000 shares of Common Stock were
exercised by certain key officers and employees at prices ranging from $2.25 to
$2.50 per share. The exercise of all such options was deemed to be exempt from
registration under the Securities Act by virtue of Section 4(2) of the
Securities Act.
2. In August 1993, the Registrant issued 4,650 shares of Common Stock at
approximately $2.25 per share to persons who performed various services for the
Company. The issuance of all such Common Stock was deemed to be exempt from
registration under the Securities Act by virtue of Section 4(2) of the
Securities Act.
II-1
<PAGE> 77
3. In September 1994, the Registrant issued 1,000 shares of Common Stock
at $3.00 per share to consultants who performed various services for the
Company. The issuance of all such Common Stock was deemed to be exempt from
registration under the Securities Act by virtue of Section 4(2) of the
Securities Act.
4. In January 1995, the Registrant issued 22,.667 shares of Common Stock
at $3.00 per share to consultants who performed various services for the
Company. The issuance of all such Common Stock was deemed to be exempt from
registration under the Securities Act by virtue of Section 4(2) of the
Securities Act.
5. In February 1995, the Registrant issued 2,500,000 shares of Common
Stock at $3.50 per share to the owners of Gold Prospector's Association of
America, Inc. ("GPAA") in exchange for all the stock of GPAA. The issuance of
all such Common Stock was deemed to be exempt from registration under the
Securities Act by virtue of Section 4(2) of the Securities Act.
6. In March 1995, the Registrant issued 563 shares at $4.00 per share to
an individual to repurchase a lease lot sold to him in 1986. The issuance of all
such Common Stock was deemed to be exempt from registration under the Securities
Act by virtue of Section 4(2) of the Securities Act.
7. In August 1995, the Registrant issued 2,000 shares of Common Stock at
$3.75 per share to a consultant who performed various services for the Company.
The issuance of all such Common Stock was deemed to be exempt from registration
under the Securities Act by virtue of Section 4(2) of the Securities Act.
8. In August 1995, the Registrant granted options subject to conditions to
purchase 230,000 shares of Common Stock at an exercise price of $3.25 to a
public relations firm under the Registrant's 1995 Stock Option Plan. The grant
of such options was deemed to be exempt from registration under the Securities
Act by virtue of Section 4(2) of the Securities Act.
9. In September 1995, the Registrant granted options to purchase 15,000
shares of Common Stock at an exercise price of $3.25 to a consultant under the
Registrant's 1995 Stock Option Plan. The grant of such options was deemed to be
exempt from registration under the Securities Act by virtue of Section 4(2) of
the Securities Act.
10. In October and November 1995, the Registrant issued 2,440 shares at
$4.00 per share to individuals to repurchase a lease lot sold to them in
approximately 1986. The issuance of all such Common Stock was deemed to be
exempt from registration under the Securities Act by virtue of Section 4(2) of
the Securities Act.
11. In January 1996, the Registrant consummated a private placement of
110,984 Units for cash, each Unit consisting of two shares of Common Stock of
the Company and one Class E Warrant to purchase one share of Common Stock, at
price of $7.50 per Unit, or an aggregate price of $832,380. The sale of the
Units was deemed to be exempt from registration under the Securities Act by
virtue of Rule 505 promulgated under Section 3(b) of the Securities Act.
12. In January 1996, the Registrant granted options to purchase 125,000
shares of Common Stock at an exercise price of $3.50 to a key officer under the
Registrant's 1995 Stock Option Plan. The grant of such options was deemed to be
exempt from registration under the Securities Act by virtue of Section 4(2) of
the Securities Act.
13. In April 1996, the Registrant issued 375 shares at $4.00 per share to
individuals to repurchase a lease lot sold to them in approximately 1986. The
issuance of all such Common Stock was deemed to be exempt from registration
under the Securities Act by virtue of Section 4(2) of the Securities Act.
14. In May 1996, the Registrant granted options to purchase 10,000 shares
of Common Stock at an exercise price of $3.50 to a key officer under the
Registrant's 1995 Stock Option Plan. The grant of such options was deemed to be
exempt from registration under the Securities Act by virtue of Section 4(2) of
the Securities Act.
15. In July 1996, the Registrant issued 1313 shares at $4.00 per share to
individuals to repurchase a lease lot sold to them in approximately 1986. The
issuance of all such Common Stock was deemed to be exempt from registration
under the Securities Act by virtue of Section 4(2) of the Securities Act.
II-2
<PAGE> 78
16. In July 1996, the Registrant authorized the issuance of 11,800 shares
of Common Stock at $4.00 per share to persons who performed various services for
the Company. The issuance of all such Common Stock was deemed to be exempt from
registration under the Securities Act by virtue of Section 4(2) of the
Securities Act.
17. In September 1996, the Registrant issued 1,500 shares to an individual
for certain work he performed in removing stumps at the Registrant's Oconee,
South Carolina property. The issuance of all such Common Stock was deemed to be
exempt from registration under the Securities Act by virtue of Section 4(2) of
the Securities Act.
18. In December 1996, the Registrant issued 6,580 shares of Common Stock
at $4.75 per share to consultants who performed various services for the
Company. The issuance of all such Common Stock was deemed to be exempt from
registration under the Securities Act by virtue of Section 4(2) of the
Securities Act.
The foregoing information has been adjusted to reflect a (i) two-for-one
stock split of the Common Stock effected September 12, 1994 and (ii)
one-for-twenty reverse stock split of the Common Stock effected March 4, 1992.
II-3
<PAGE> 79
ITEM 27. EXHIBITS.
The following is a list of exhibits filed as a part of this Registration
Statement:
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NUMBER DESCRIPTION OF DOCUMENT NUMBER
- ------ ----------------------- ------
<S> <C>
1.1 Form of Underwriting Agreement by and among the Registrant
and Underwriters. (5)
1.2 Form of Fund Escrow Agreement. **
1.3 Form of Selected Broker-Dealer Agreement. **
3.1 Articles of Incorporation of Registrant, as amended. (2)
3.2 Bylaws of Registrant. (2)
3.3 Articles of Incorporation of Registrant, as amended. (6)
4.1 Form of Selected Broker-Dealer Warrant Agreement by and between the
Registrant and Selected Broker-Dealers **
4.2 Form of Class F Warrant Agreement by and between the Registrant
and American Securities Transfer and Trust, Inc. **
5.1 Opinion of Richard K. Dickson II, Esq (6)
10.1 Agreement and Plan of Reorganization dated February 10, 1995,
by and between the Registrant and Gold Prospector's Association
of America, Inc. (3)
10.2 Employment Contract dated October 16, 1995, between the
Registrant and Christopher B. Forgy. (4)
10.3 1995 Stock Option Plan. (4)
21.1 Subsidiaries of the Registrant. (6)
23.1 Consent of Richard K. Dickson II, Esq. (included in the
opinion filed as Exhibit 5.1).
23.2 Consent of Kenneth E. Walsh, Certified Public Accountant. **
24.1 Power of Attorney (included on page II-5).
</TABLE>
** Filed herewith.
(1) To be filed by amendment.
(2) Previously filed as an Exhibit to the Registrant's Registration Statement
on Form S-1 as filed with the Securities and Exchange Commission,
Registration No. 33-0074499.
(3) Previously filed as an Exhibit to the Registrant's Current Report on Form
8-K dated February 13, 1995, as filed with the Securities and Exchange
Commission.
(4) Previously filed as an Exhibit to the Registrant's Current Report on Form
10-KSB dated December 31, 1995, as filed with the Securities and Exchange
Commission.
(5) Deleted.
(6) Previously filed as Exhibit to this Registration Statement filed on Form
SB-2 on January 27, 1997.
II-4
<PAGE> 80
ITEM 28. UNDERTAKINGS.
The small business issuer (the "Registrant") hereby undertakes the
following:
(1) To provide to the Selected Broker-Dealers at the closing specified in
the Selected Broker-Dealer Agreement certificates in such denominations and
registered in such names as required by the Selected Broker-Dealers to permit
prompt delivery to each purchaser.
(2) For deterprospecting any liability under the Securities Act, to treat
the information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant under Rule 424(b)(1) or (4) or 497(h) under
the Securities Act as part of this Registration Statement as of the time the
Commission declared it effective.
(3) For deterprospecting any liability under the Securities Act, to treat
each post-effective amendment that contains a form of prospectus as a new
Registration Statement for the securities offered in the Registration Statement,
and that offering of the securities at that time as the initial bona fide
offering of those securities.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
In the event that a claim for indemnification against such liabilities
(other than payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in the successful
defense of any action, suit or proceeding) is asserted by such director,
officer, or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-5
<PAGE> 81
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form SB-2 and authorizes this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Temecula, State of California, on the 29th day of
January, 1997.
GLOBAL OUTDOORS, INC.
By: /s/ Perry T. Massie
-----------------------------------------
Perry T. Massie,
Chief Executive Officer, President and
Chairman of the Board of Directors
(Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Perry T. Massie and Richard K. Dickson
II, and each of them, as his true and lawful attorneys-in-fact and agents, with
full power of substitution and resubstitution, for him and in his name, place
and stead, in any all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, with all exhibits
thereto and other documents in connection therewith, and to file the same with
the Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents, or any of
them, or their or his substitutes, may lawfully do or cause to be done by virtue
hereof.
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates stated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Perry T. Massie Chief Executive Officer, President January 29, 1997
- --------------------------- and Chairman of the Board of Directors
Perry T. Massie (Principal Executive Officer)
/s/ Thomas H. Massie Executive Vice President, Secretary January 29, 1997
- --------------------------- and Director
Thomas H. Massie
/s/ Richard K. Dickson II Senior Vice President, General January 29, 1997
- --------------------------- Counsel and Director
Richard K. Dickson II
/s/ David M. Ashwood Chief Financial Officer and January 29, 1997
- --------------------------- General Manager
David M. Ashwood (Principal Financial and Accounting Officer)
</TABLE>
II-6
<PAGE> 82
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
EXHIBIT PAGE
NUMBER DESCRIPTION OF DOCUMENT NUMBER
- ------ ----------------------- ------
<S> <C>
1.1 Form of Underwriting Agreement by and among the Registrant
and Underwriter. (5)
1.2 Form of Fund Escrow Agreement. **
1.3 Form of Selected Broker-Dealer Agreement. **
3.1 Articles of Incorporation of Registrant, as amended. (2)
3.2 Bylaws of Registrant. (6)
3.3 Articles of Incorporation of Registrant, as amended. (6)
4.1 Form of Selected Broker-Dealer Warrant Agreement by and between the
Registrant and Selected Broker-Dealers **
4.2 Form of Class F Warrant Agreement by and between the Registrant
and American Securities Transfer and Trust, Inc. **
5.1 Opinion of Richard K. Dickson II, Esq. (6)
10.1 Agreement and Plan of Reorganization dated February 10, 1995,
by and between the Registrant and Gold Prospector's Association
of America, Inc. (3)
10.2 Employment Contract dated October 16, 1995, between the
Registrant and Christopher B. Forgy. (4)
10.3 1995 Stock Option Plan. (4)
21.1 Subsidiaries of the Registrant. (6)
23.1 Consent of Richard K. Dickson II, Esq. (included in the
opinion filed as Exhibit 5.1).
23.2 Consent of Kenneth E. Walsh, Certified Public Accountant. **
24.1 Power of Attorney (included on page II-5).
</TABLE>
** Filed herewith.
(1) To be filed by amendment.
(2) Previously filed as an Exhibit to the Registrant's Registration Statement
on Form S-1 as filed with the Securities and Exchange Commission,
Registration No. 33-0074499.
(3) Previously filed as an Exhibit to the Registrant's Current Report on Form
8-K dated February 13, 1995, as filed with the Securities and Exchange
Commission.
(4) Previously filed as an Exhibit to the Registrant's Current Report on Form
10-KSB dated December 31, 1995, as filed with the Securities and Exchange
Commission.
(5) Deleted.
(6) Previously filed as Exhibit to this Registration Statement filed on
Form SB-2 on January 27, 1997
<PAGE> 1
EXHIBIT 1.2
FORM OF FUND ESCROW AGREEMENT
<PAGE> 2
EXHIBIT 1.2
FUND ESCROW AGREEMENT
GLOBAL OUTDOORS, INC., an Alaska corporation, with principal offices
located at 43445 Business Park Drive, Suite 113, Temecula, California 92590
("Issuer"); Wells Fargo Bank, ___________________________ ("Escrow Agent"); and
offices located at ____________________________________ and the Selected
Broker-Dealers (NASD members) who execute this agreement below ("Selected
Broker-Dealers'; mutually agree as follows:
1. Purpose. This agreement is for the purpose of providing an
arrangement which will insure that proceeds from the sale of Units of the Issuer
consisting of two share of Common Stock, $0.02 par value, one Class F Warrant
under an offering pursuant to a Registration Statement on Form SB-2 filed with
the United States Securities and Exchange Commission pursuant to the Securities
Act of 1933, as amended, will not be used until at least the Escrow Amount as
defined below has been received from the sale of the Units and is available to
the Issuer, and if such amount has not been paid by the date specified below,
that such funds that have been paid for the Units will be returned to the
original purchasers and the securities transactions terminated.
2. Escrow Amount. The amount which must be deposited in California
cleared funds with the Escrow Agent before it shall deliver to the Issuer the
proceeds from the sale of the Units herein is called the "Escrow Amount." The
Escrow Amount shall be $200,000 in California cleared funds, that is, funds that
have been collected and credited to the Escrow Agent's account, which shall be
the proceeds from the sale of 25,000 Units. Notwithstanding that the Escrow
Amount shall be deposited, additional amounts not in excess of $4,800,000 may
be, but are not required to be, deposited with the Escrow Agent.
3. Plan of Distribution. The Issuer intends on entering into Selected
Broker-Dealer Agreements with the Selected Broker-Dealers according to which the
Selected Broker-Dealers will offer 625,000 Units at $8.00 per Unit. The
Underwriter is to receive 2% of the proceeds of the offering as sales
commissions and 2% of the proceeds of the offering as reimbursement for Selected
Broker-Dealer's offering expenses on a nonaccountable basis from sales of the
Units from referrals by the Company. The Selected Broker-Dealer is to receive
10% of the proceeds of the offering as sales commissions and 2% of the proceeds
of the offering as reimbursement for the Selected Broker-Dealer's offering
expenses on a nonaccountable basis from sales of all other Units. The 2%
reimbursement for the Underwriter's offering expenses on a nonaccountable basis
shall be limited to $20,000. The Issuer may also offer the Units referred to
herein.
4. Appointment. The Issuer hereby appoints the Escrow Agent to serve as
Escrow Agent for the purposes set forth herein and the Escrow Agent hereby
accepts the appointment. The Underwriter hereby agrees to such appointment.
5. Delivery of Proceeds. The Selected Broker-Dealer or Issuer shall
deliver, or cause to be delivered, to the Escrow Agent in accordance with Rule
15c2-4 promulgated under the Securities Exchange Act of 1934, as amended, all
proceeds from the sale of the Units under the proposed offering. The delivery
of the proceeds shall be accompanied by a document which shall contain the
purchaser's name and address, the number of Units purchased and the amount
paid therefor. "Purchaser" for
<PAGE> 3
the purposes of this Agreement may be a broker-dealer who is selling Units to
its customers as agent for the Issuer.
6. Separate Account. All monies delivered to or collected by the Escrow
Agent pursuant to this agreement shall be deposited immediately by the Escrow
Agent in a separate non-interest bearing account designated substantially as
follows: "Wells Fargo Bank/Global Outdoors, Inc., Escrow Account" (hereinafter
sometimes referred to as "Escrow Account"). Upon request of either the Issuer or
Underwriter, the Escrow Agent agrees to provide information concerning the
amount of monies that have been deposited in the Escrow Account and the amount
of such monies that have become Denver cleared funds.
7. Inspection. The parties agree that all records relating to
transactions made pursuant to this Agreement and the Escrow Account shall be
available, at all reasonable times, for inspection, examination and reproduction
by the securities authorities in any state in which this offering is registered,
such person's delegate or representative, or any party hereto, or any
representative of any of the parties hereto, and such persons are authorized to
examine and audit the Escrow Account pursuant hereto and the Escrow Agent hereby
is expressly authorized and directed to permit such examination and audit.
8. Ownership of Fund. Until the Escrow Amount has been reached, all
amounts deposited in the Escrow Account shall be considered the property of the
various Unit purchasers in proportion to the amount contributed by each Unit
purchaser, except insofar as such funds subsequently may be transferred pursuant
to the terms of this Agreement. The proceeds from the sale of such Units shall
not become the property or assets of the Issuer or Selected Broker-Dealer, nor
subject to their debts or obligations, unless and until such proceeds have
been distributed in accordance with the provisions of this Agreement.
9. Terms and Return of Deposited Monies. If the Escrow Amount is not
deposited on or before a maximum of 120 days (which period may be extended for
an additional 60 days by the Issuer) after the date of the definitive
Prospectus, or if this offering is terminated , in accordance with the
provisions of the Selected Broker-Dealer Agreements, the Escrow Agent shall
return to each purchaser the amount of money paid and deposited by such
purchaser into the Escrow Account and the disbursement shall be the property of
such purchaser, free and clear of any and all claims of the parties hereto or of
any of their creditors. Upon the disposition of monies in accordance with this
paragraph, the Escrow Agent shall be completely discharged and released of any
and all further liabilities, obligations and responsibilities hereunder.
Further, the Escrow Agent, upon receipt of and in accordance with
written instructions from the Selected Broker-Dealer, shall return to any
designated purchaser the amount of money paid and deposited by such purchaser
into the Escrow Account.
10. Certificates. The Issuer and Selected Broker-Dealer agree that no
certificates evidencing securities purchased (other than confirmations of sale)
shall be issued except simultaneously with the release of the funds from the
Escrow Account to the Issuer and Underwriter. Funds shall not
-2-
<PAGE> 4
be released by the Escrow Agent to the Issuer or Selected Broker-Dealer unless
the Selected Broker-Dealer acknowledges in writing to the Escrow Agent that it
has received or has made arrangements satisfactory to the Escrow Agent to
issue Unit certificates evidencing Units purchased with the amounts deposited
in the Escrow Account.
11. Escrow Agent's Costs. If it is necessary for the Escrow Agent to
return funds to purchasers of the Units, the Issuer shall pay to the Escrow
Agent an additional amount sufficient to reimburse it for its actual costs in
disbursing such funds. However, no such fee, reimbursement for costs and
expenses, indemnification for any damages incurred by the Escrow Agent, or any
other monies whatsoever, shall be paid out of or be chargeable to the funds on
deposit in the Escrow Account.
12. Escrow Agent's Responsibility. The parties agree to provide to the
Escrow Agent all information necessary to facilitate the administration of this
Agreement and the Escrow Agent may rely upon any representation so made. In
performing any of its duties hereunder the Escrow Agent may not be held to take
notice of any terms of any agreement or rights with respect thereto unless
specifically stated herein. The Issuer hereby agrees to indemnify and hold
harmless the Escrow Agent against any and all claims, losses, damages,
liabilities, costs and expenses, including litigation arising hereunder, which
might be imposed or incurred for any acts or omissions of the Escrow Agent,
except for acts or omissions of the Escrow Agent that involved gross negligence
or willful misconduct.
13. Disputes. If at any time a dispute shall exist as to the duty of
the Escrow Agent under the terms hereof or if the funds deposited hereunder are
not withdrawn on or before 180 days after the date of the definitive Prospectus,
the Escrow Agent may deposit the funds in the Escrow Account with the Clerk of
the District Court of the City of Irvine and County of Orange, State of
California, and may interplead the parties hereto. Upon so depositing such funds
and filing its complaint in interpleader, the Escrow Agent shall be released
from all liability under the terms hereof as to the funds so deposited. The
parties hereto consent and agree to the jurisdiction of said Court and do hereby
appoint the Clerk of the said Court as their agent for the service of all
process in connection with the processings mentioned in this paragraph.
14. Captions. The captions in this Agreement are included for
convenience of reference only and in no way define or limit any of the
provisions hereof or otherwise affect the construction of effect of this
agreement.
-3-
<PAGE> 5
15. Counterparts and Applicable Law. This Agreement may be executed in
two or more counterparts, each of which shall constitute one and the same
instrument. This Agreement shall be construed in accordance with the laws of the
State of California.
Dated: _______________, 1997
GLOBAL OUTDOORS, INC. (Issuer)
By: ____________________________
Wells Fargo Bank (Escrow Agent)
By:_______________________________
__________________________________
(Selected Broker-Dealer)
By:_______________________________
-4-
<PAGE> 1
EXHIBIT 1.3
GLOBAL OUTDOORS, INC.
FORM OF SELECTED BROKER-DEALER AGREEMENT
____________, 1997
Gentlemen:
Global Outdoors, Inc. (the "Company"), incorporated under the laws of
Alaska hereby confirms its agreement with you, as follows:
1. Description of the Offering. The Company proposes to sell a maximum of
625,000 and a minimum of 25,000 of its authorized but unissued Units consisting
of two common shares, par value $0.02 per share, and one Class F Warrant at
$8.00 per Unit. If the minimum of 25,000 Units have not been sold within 120
days of the date of the Prospectus and any extension thereto, the offering will
terminate and all funds received from purchasers of Units will be promptly
returned to them without interest or deduction therefrom. The Company may
terminate the Offering at any time after the 25,000 Units have been sold, and
the Company reserves the right to reject any orders in whole or in part, for
the purchase of any of the offered Units. Persons purchasing Units and
becoming shareholders and Warrant holders of the Company are herein referred to
as "Shareholders." The Company and the Offering are more fully described in
the Prospectus described in Paragraph 2(a). All terms used herein, unless
specifically defined herein, shall have the meanings as ascribed in the
Prospectus. For the purposes of this Agreement an "affiliate" of any person
shall have the meaning ascribed in Rule 405 of the Rules and Regulations of the
Securities and Exchange Commission (the "Commission").
2. Representation and Warranties of the Company. The Company represents,
covenants, warrants and agrees with you for your benefit that:
(a) The Company has prepared or caused to be prepared a Prospectus
(the "Prospectus"), which furnishes all information required to be furnished to
offerees under the Securities Act of 1933, as amended (the "1933 Act"). The
Prospectus does not contain an untrue statement of any material fact or omit to
state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they are made, not misleading;
(b) The performance of this Agreement and the consummation of the
transactions herein contemplated will not result in a material breach or
violation of any of the terms and provisions of, or constitute a default under,
any statute (except federal and state securities laws, compliance with which is
elsewhere provided for in particular detail), indenture, mortgage or other
agreement or instrument to which the Company is a party or by which it is
bound, or any order, rule or regulation directed to the Company, or its
affiliates by any court or governmental agency or body having jurisdiction over
it or its affiliates; and no other consent, approval, authorization or action
is required for the consummation of the transactions herein contemplated other
than such as have been obtained;
<PAGE> 2
(c) The Units, consisting of Common Shares and Class F Warrants, to
be issued will conform in all material respects to all statements concerning
them contained in the Prospectus, and the Units, when issued, will be duly
authorized, validly and legally issued, not subject to assessment or further
payment to the Company except as to the Warrants;
(d) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of the State of Alaska with full
power and authority to own its properties and conduct its business as described
in the Prospectus;
(e) The Company will become qualified to do business as a foreign
corporation or similar entity in those jurisdictions where such qualification is
necessary, and will take such other action as is necessary, and will take such
other action as is necessary in any jurisdiction where the Company engages in
business or owns property;
(f) Since the respective dates as of which information is given in
the Prospectus and other than as therein contemplated, the Company has not, nor
during the period of the Offering will it have incurred any material liabilities
or obligations contingent or otherwise, except in the ordinary course of
business, and there has not been, and during the period of the Offering there
will not have been, any material adverse change in the condition of the Company,
financial or otherwise;
(g) The Company will notify you immediately and confirm the notice in
writing of the issuance by the Securities and Exchange Commission or by any
state securities administration of any stop order suspending the effectiveness
of any qualification of the Units for sale or enjoining the sale of the Units or
of the initiation of any proceedings for that purpose. The Company will make
every reasonable effort to prevent the issuance of any such stop order and, if
any such stop order shall at any time be issued, to obtain the lifting thereof
at the earliest possible moment; and
(h) During the course of the Offering, and to the extent any
representations other than those set forth in the Prospectus are made by the
Company and its affiliates, they will not make any untrue statements of a
material fact or omit to state a material fact required to be stated or
necessary to make any statement made, in light of the circumstances in which
they are made, not misleading concerning the Offering or any matters set forth
in or contemplated by the Prospectus.
3. Representations and warranties of Selected Broker-Dealer. You
represent and warrant to the Company and to each other Broker-Dealer firm
who has or may enter into a Selected Broker-Dealer Agreement with the Company
that:
(a) You are a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction in which you are incorporated,
with all requisite power and authority to enter into this Agreement and to
carry out your obligations hereunder;
-2-
<PAGE> 3
(b) This Agreement has been duly authorized, executed and delivered
by you and is a valid and binding agreement on your part;
(c) The consummation of the transactions contemplated herein and
those contemplated by the Prospectus will not result in any breach of any of the
terms or conditions of or constitute a default under any indenture, agreement or
other instrument to which you are a party, to violate any law or any order,
directed to you, of any court or any federal or state regulatory body or
administrative agency having jurisdiction over you or over your property;
(d) You are duly registered pursuant to the provisions of the
Securities Exchange Act of 1934, as amended (the "1934 Act"), as a Broker-
Dealer and you are a member in good standing of the National Association of
Securities Dealers, Inc. ("NASD") and are duly registered as a Broker-Dealer in
those states in which you are required to be so registered in order to carry out
the Offering contemplated by the Prospectus;
(e) Pursuant to your appointment made in Paragraph 6 below, insofar
as is under your control, you will in good faith use your best efforts to
conduct the Offering in a manner intended to be in compliance with the
Prospectus. Furthermore, you agree to comply with all applicable federal laws
including, but not limited to, the 1933 Act and 1934 Act and the Rules and
Regulations of the Commission thereunder; the laws of the state or other
jurisdictions in which Units may be offered or sold; and the Rules of Business
Conduct of the NASD. Further, you agree that you will not offer or sell the
Units in any state or jurisdiction except in those jurisdictions in which they
may lawfully be sold. You also acknowledge you understand that you shall not be
entitled to any compensation hereunder for any period during which you have been
suspended or expelled from membership in NASD; and
(f) By accepting this Agreement, you assume full responsibility for
through and proper training of your employees and other agents and
representatives concerning the selling methods to be used in connection with the
Public Offering of the Units, giving special emphasis to the principles of full
and fair disclosure to prospective investors and the prohibitions against
"Free-Riding and Withholding" as set forth the Interpretation in the Rules of
Business Conduct of the Association.
(g) You undertake to comply with Rules of Business Conduct contained
in Section 2000 of the NASD Manual.
4. Covenants of the Company. The Company represents, covenants,
warrants and agrees with you for your benefit that:
(a) The Company has delivered or will deliver to you such number of
Prospectuses as you may reasonably require from time to time during the course
of the Offering;
(b) Until the Closing Date, if any event affecting the Company or any
of its affiliates shall occur which, in the Company's or your opinion should be
set forth in a supplement or an amendment to the Prospectus, the Company will
forthwith at its own expense prepare and
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<PAGE> 4
furnish to you a reasonable number of copies of a supplement or amendment to
the Prospectus so that it, as so supplemented or amended, will not contain any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they are made, not misleading; and
(c) The Company will apply the net proceeds from the sale of the
Units substantially in accordance with the terms and conditions of the
Prospectus.
5. State Securities Registration. The Company further covenants, warrants
and agrees that:
(a) It will use its best efforts to either take all necessary action
and file all necessary forms and documents in order to qualify or register all
625,000 Units in the various states in which the Units are proposed to be
offered and to register such number of Units for sale as you shall from time to
time request during the course of the Offering or will take any necessary action
and file any and all forms which are required to obtain an exemption from such
qualification or registration in such states as you and the Company mutually
agree upon;
(b) In each jurisdiction where the Units have been registered or
qualified or offered in an exempt transaction as provided above, the Company
will make and file such statements, documents, materials and reports in each
year and take all other actions as are or may be required to be made or filed by
the Company by the laws of such jurisdictions, and you will similarly make and
file such statements and reports as are required of you after receipt by you of
written advice of such requirements by the Company; and
(c) The Company will promptly provide to you for delivery to all
offerees and purchasers and their representatives any additional information,
documents and instruments which you or the Company deems necessary to comply
with the rules, regulations and judicial and administrative interpretations
respecting compliance with such exemptions or qualifications and registration
requirements in those states where the Units are to be offered or sold.
6. Selling Agreement. On the basis of the representations and warranties
herein contained and subject to the terms and conditions herein set forth:
(a) The Company hereby engages you as its agent to sell the Units in
accordance with the terms of the Prospectus and this Agreement, and you agree to
use your best efforts to sell the Units. You may, however, discharge your
responsibilities under this Agreement by forming a group of securities dealers
to find purchasers for the Units. Any allocation of Units among you that the
other Broker-Dealers selected by you shall be made by you;
(b) As compensation for the Selected Broker-Dealer's services
hereunder, the Company shall allow to the Selected Broker-Dealer a sales
commission or discount of $0.16 per Unit and a $0.16 per Unit nonaccountable
expense allowance on Offered Units sold from referrals by the Company hereunder
and a sales commission or discount of $0.80 per Unit and a $0.16 per Unit
nonaccountable expense allowance on all other Offered Units sold hereunder. The
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<PAGE> 5
nonaccountable expense allowance is limited to a maximum of $20,000 on all
Offered Units sold. It shall be conclusively presumed that the following
persons who purchase offered Units are from referrals by the Company: Any past
or present shareholder of the Company; any member of Gold Prospectors
Association of America, any subscriber to the Gold Prospector Magazine; any
member of Lost Dutchmans Mining Association; any viewer of The Outdoor Channel;
and any shareholder of the Company. At the Closing, the company will sell to
the Selected Broker-Dealer for $0.001 per Warrant, Warrants (the "Selected
Broker-Dealer's Warrants") entitling the Selected Broker-Dealer to purchase one
Unit for each ten Units sold in the public offering for the first 125,000 Units
sold. Thereafter, the Selected Broker-Dealer shall be entitled to purchase one
Unit for each 20 Units sold. The Selected Broker-Dealer's Warrants will be
exercisable ninety (90) days after the date of the definitive Prospectus and
for two years thereafter. The exercise price of the Selected Broker-Dealer's
Warrants shall be $4.80 per Unit. Such payment shall be made to you by the
Company at the time of Closing. You may reallow any portion of you commission
to other Broker-Dealers with whom you may have contracted for the sale of the
Units, which payment shall be made as compensation for their services;
(c) The above-described commission shall be considered compensation
for your brokerage services rendered during the course of the Offering pursuant
to this Agreement. You will not be considered to have any continuing or future
duty or obligation of any kind to the Company or to any of the shareholders as a
consequence of this right. You have not assumed, will not assume nor be
permitted to assume any duties, responsibilities or obligations regarding the
management, operations or any of the business affairs of the Company after the
Closing Date. You shall be held harmless by the Company from and against any
claim, suit, loss, damage, liability or action by or of the Company based upon
or arising out of the assertion by it that you have any continuing duty or
obligation after the Closing Date to the Company or any shareholder arising out
of your right to receive or your receipt of the commission;
(d) Unless a minimum of 25,000 Units are sold and paid for under the
terms hereof within 120 days of the date of the Prospectus and any extension
thereto, the Offering shall be terminated, in which event no fee shall be
payable to you and all funds advanced by subscribers shall be returned to them
without interest. Prior to the Closing Date, all proceeds received by you from
the sale of shares will be held in an escrow account until Closing in accordance
with Paragraph 8 hereof; and
(e) Closing of the sale of Units shall be within five business days
following the date of the termination of your offering efforts specified in
subparagraph (d) hereof ("Closing Date").
7. Delivery of Funds. YOU SHALL TRANSMIT PROMPTLY (BY NOON OF THE FIRST
BUSINESS DAY FOLLOWING RECEIPT), AND ONLY TO THE ESCROW AGENT, ALL FUNDS
RECEIVED FROM THE PURCHASERS IN THE PUBLIC OFFERING (WITHOUT DEDUCTION FOR ANY
COMMISSION OR CONCESSION), IN COMPLIANCE WITH RULE 15c2-4 UNDER THE 1934 ACT
AND A CONFIRMATION OR A RECORD OF EACH SALE WHICH SHALL SET FORTH THE NAME,
RESIDENCE ADDRESS AND SOCIAL SECURITY NUMBER OF EACH INDIVIDUAL PURCHASER, THE
NUMBER OF
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<PAGE> 6
UNITS PURCHASED AND, IF THERE SHALL BE MORE THAN ONE REGISTERED OWNER, WHETHER
THE CERTIFICATE OR CERTIFICATES EVIDENCING THE UNITS PURCHASED ARE TO BE ISSUED
TO THE PURCHASERS IN JOINT TENANCY OR OTHERWISE. On the Closing Date, you
shall report in writing to the Company the number of Units which have been sold
in each state and the number of persons in each state who purchased Units from
you. Any sale may be rejected by the Company and, if so rejected, all funds
paid by the purchaser which have been received by the Escrow Agent from you,
shall be returned to the purchaser by the Escrow Agent. In such event, the
Escrow Agent shall return to the purchaser (within 5 business days after
notification of rejection) the full purchase price paid for the Units
subscribed for by the purchaser.
8. Escrow of Proceeds. The proceeds from the sale of the minimum of
25,000 Units in the Public Offering consisting of $200,000 will be escrowed (the
"Escrow Deposit"). If the Escrow Deposit has not been deposited with the Escrow
Agent within 120 days from the date of the Prospectus and any extension thereto,
the full amount paid will be refunded to the purchaser by the Escrow Agent. No
certificate evidencing the Units will be issued unless and until the Escrow
Deposit has been deposited with the Escrow Agent and such funds released and the
net proceeds thereof delivered to the Company at the Closing. If the Escrow
Deposit is deposited within the time period provided above, all amounts to be
deposited will be delivered to the Company. No commission will be paid by the
Company to you unless and until the Escrow Deposit shall have been deposited
with the Escrow Agent and such funds releases and the net proceeds thereof
delivered to the Company.
9. Form of Payment of Subscriptions. PAYMENTS FOR ALL 625,000 UNITS SHALL
ACCOMPANY ALL CONFIRMATIONS AND APPLICATIONS, AND SHALL BE DELIVERED TO THE
ESCROW AGENT. All checks and other orders for payment of subscriptions to Units
in the Public Offering shall be made payable to: "Global Outdoors, Inc., Escrow
Account."
10. Expenses of Sale. The Company will pay all expenses incident to the
performance of its obligations, including but not limited to the fees and
expenses of the Company's counsel and accountants and the cost of qualifying the
offer and sale of the securities in various states or obtaining an exemption
from state registration requirements. Except as may be reimbursed or paid to
you under Paragraph 6(b) hereof, you will pay all expenses incident to your
obligations including your expenses directly related to the offering of the
shares and your counsel fees.
11. Conditions of Your Obligations. Your obligations hereunder shall be
subject to the accuracy of and compliance with, as of the date hereof and on the
Closing Date, of the representations and warranties contained in Paragraphs 2, 4
and 5 hereof, to the performance by the Company of its obligations hereunder
required to be performed on or before the Closing Date, and to the following
further conditions:
(a) This Agreement has been duly authorized, executed and delivered
by the Company and is a valid and binding agreement of the Company and the
Company has adequate
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<PAGE> 7
authorization and has taken all action necessary to authorize the
indemnification provisions contained in Paragraph 13 herein; and
(b) To the best of the knowledge of Richard K. Dickson II, counsel to
the Company, there is not in existence, pending or threatened any action, suit
or proceeding to which the Company is a party, except as set forth in the
Prospectus, before any court or governmental agency or body, which might, if
decided adversely, affect the subject matter of this Agreement or the financial
condition, business or prospects of the Company.
12. Conditions to Company's Obligations. The obligations of the Company
shall be subject to the accuracy as of the date hereof and on the Closing Date
of the representations and warranties contained in Paragraph 3 hereof, to the
performance by you of your obligations hereunder required to be performed on or
before the Closing Date. It is understood and agreed that neither you nor any
of your representatives nor any other Broker-Dealer is authorized to make any
representations on behalf of the Company other than those contained in the
Offering Circular or to act as the agent of the Company in any other capacity
except as expressly set forth herein, and you shall deliver to the Company on
the Closing Date a certificate executed by a responsible officer of your firm to
the effect that you have complied with the foregoing to the best of the
knowledge of the officer executing the certificate.
13. Indemnification.
(a) The Company will indemnify and hold you harmless against any
losses, claims, damages or liabilities, joint or several, to which you may
become subject under the Act, the various state securities acts or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue or alleged untrue statement
of any material fact contained in the Prospectus, any other offering
documentation prepared on behalf of the Company or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; and will reimburse you for any legal or
other expenses reasonably incurred in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, however, that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in the Prospectus,
in any other offering documentation prepared on behalf of the Company or such
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by you specifically for use in the
preparation thereof.
The foregoing indemnity agreement shall extend upon the same terms and
conditions to, and shall inure to the benefit of, your officers and directors,
and each person, if any who "controls" you within the meaning of the Act.
(b) You will indemnify and hold harmless the Company against any
losses, claims, damages, liabilities, joint or several, to which any of them may
become subject, under the Act or otherwise insofar as such losses, claims,
damages or liabilities (or actions in respect
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<PAGE> 8
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Prospectus, in any other
offering documentation prepared on behalf of the Company or any amendment or
supplement thereto, or arise out of or are based upon the omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Prospectus, in any other offering
documentation prepared on behalf of the Company or such amendment or
supplement, in reliance upon and in conformity with written information
furnished to the Company by you specifically for use in the preparation
thereof. You also will reimburse the Company for such legal or other expenses
reasonably incurred in connection with investigating or defending such loss,
claim, damage, liability or action as to which you are required to indemnify
the Company.
The foregoing indemnity agreement shall extend upon the same terms and
conditions to, and shall inure to benefit of, the officers, directors and each
person, if any, who "controls" the Company within the meaning of the Act.
(c) Promptly after receipt by an indemnified person of notice of the
commencement of any action, such indemnified personal shall, if a claim in
respect thereof is to be made against the indemnifying party under such
subparagraph, notify the indemnifying party in writing of the commencement
thereof; but the omission to so notify the indemnifying party shall not relieve
it from any liability which it may have to any indemnified party otherwise than
under such subparagraph. In case any such action shall be brought against such
indemnified party, and it shall notify the indemnifying party of the
commencement hereof, the indemnifying party shall be entitled to participate in,
and, to the extent that it shall wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel selected by the
indemnifying party but satisfactory to such indemnified party, and after the
indemnified party shall have received notice from the agreed upon counsel that
the defense under such paragraph has been assumed, the indemnifying party shall
not be responsible for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof, other than reasonable
cost of investigation.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for above is for any reason
held by a court of competent jurisdiction to be unenforceable as to the Company
or you, the Company and you shall contribute to the aggregate losses and other
expenses incurred in connection with, and any amount paid in settlement of, any
action, suit or proceedings or any claims asserted which would have been covered
by the foregoing indemnification provisions to which the Company and you may be
subject in such proportion so that you shall be responsible for that portion
represented by the percentage that the aggregate amounts received by you
pursuant to Section 6 of the Agreement bear to the aggregate of the capital
contribution made to the Company, the Company is responsible for the balance;
provided, however, that in no case shall you be responsible for any amount in
excess of the fees paid to you pursuant to Section 6 of this Agreement.
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<PAGE> 9
14. Representation and Agreements to Survive Delivery. All representation,
warranties, and agreements of the Company and you herein or in certificates
delivered pursuant hereto, and the indemnity and contribution agreements
contained in Paragraph 13 hereof, shall survive the delivery, execution and
Closing hereof and shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of you or any controlling
person, the Company, or any of its officers, directors, partners, or any
controlling persons, and shall survive delivery of the Units hereunder. The
indemnification and contribution provisions of Paragraph 13 hereof are in
addition to any and all remedies or rights any of the parties hereto may have,
including the right to sue and recover damages for any breach of any
representation, warranty or covenant made or given by one or more parties to any
other party.
15. Termination. You shall have the right to terminate this Agreement by
giving notice as hereinafter specified any time at or prior to the Closing Date
if:
(a) The Company shall have failed, refused, or been unable to fully
comply with any of the provisions of this Agreement its parts to be performed
prior to the Closing Date, or if any of the agreements, conditions, covenants,
representations or warranties of the Company herein contained should have been
performed or fulfilled within the times specified;
(b) Prior to the Closing Date, the Congress of the United States or
any state legislative body passes any act or measure, or any order, rule or
regulation is adopted by any governmental body or any authoritative accounting
institute or board, or any governmental executive, which is believed in good
faith by you to have a material impact on the markets for securities in general,
or if a general banking moratorium should have been declared;
(c) Prior to the Closing Date, there should have occurred the
outbreak of any war or any other event or calamity which, in your reasonable
judgement, materially disrupts the financial markets of the United States; or
(d) Prior to the Closing Date, any materially adverse change occurs,
since the date of this Agreement, in the conditions (financial or other),
business, operations, income, properties, earnings, affairs or business
prospects of the Company, whether or not arising in the ordinary course of
business.
If you elect to terminate this Agreement the Company shall be notified
promptly by you by telephone or telegram, and confirmed by letter.
16. Notices. All notices or communications hereunder, except as herein
otherwise specifically provided, shall be in writing and if sent to you shall
be mailed, delivered or telegraphed and confirmed by you at your address listed
below and if sent to the Company shall be mailed, delivered or telegraphed and
confirmed to it at the address contained in the Prospectus. You or the Company
may change such address for receiving notices by written notice to the other
parties.
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<PAGE> 10
17. Parties. This Agreement shall inure to the benefit of and be binding
upon you, the Company and each of your and its respective successors and assigns
and, if expressly applicable, its affiliates. Nothing expressed or mentioned in
this Agreement is intended or shall be construed to give any person or
corporation, other than the parties hereto and their respective successors and
assigns, affiliates, and the controlling persons, officers and directors
referred to in Paragraph 13, any legal or equitable right, remedy or claim under
or in respect to this Agreement or any provision herein contained; this
Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of the parties hereto, and their
respective successors, assigns, affiliates, and said controlling persons and
officers and directors and for the benefit of no other person or corporation. No
purchaser of any of the Units from you shall be construed a successor or assign
by reason merely of such purchase.
18. Severability. Every provision in this Agreement is intended to be
severable. If any term or provision hereof is illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the validity of the
remainder hereof.
19. Captions. The captions or headings in this Agreement are inserted for
convenience and identification only and are in no way intended to describe,
interpret, define, or limit the scope, extent, or intent of this Agreement or
any provisions hereof.
20. Applicable Law. This Agreement shall be governed by and construed
under Colorado law.
21. Prior Agreements. This Agreement supersedes all prior agreements, oral
or written, covering the same subject matter.
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<PAGE> 11
If the foregoing correctly sets forth our understanding, please so indicate
in the space provided below for that purpose whereupon this letter shall
constitute a binding agreement among us.
Very truly yours,
GLOBAL OUTDOORS, INC.
By: _____________________________
Richard K. Dickson II,
General Counsel
ACCEPTED AS OF THE DATE FIRST
ABOVE WRITTEN:
_________________________________
Selected Broker-Dealer
By: _____________________________
Authorized Representative
_________________________________
Street Address
_________________________________
City, State, Zip Code
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<PAGE> 1
EXHIBIT 4.1
FORM OF SELECTED BROKER-DEALER'S UNIT PURCHASE WARRANT
<PAGE> 2
EXHIBIT 4.1
THIS WARRANT MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED PRIOR TO
_____________________________________, 1997, EXCEPT AS OTHERWISE PROVIDED IN
SECTION 2 OF THE STATEMENT OR RIGHTS OF WARRANT HOLDER. THE REGISTERED HOLDER OF
THIS WARRANT, BY ITS ACCEPTANCE HEREOF, AGREES THAT IT WILL NOT SELL, TRANSFER
OR ASSIGN THIS WARRANT PRIOR TO THAT DATE, EXCEPT AS OTHERWISE PROVIDED IN SAID
SECTION 2.
NOT EXERCISABLE PRIOR TO _____________________________________, 1997, VOID AFTER
5:00 P.M., _____________________________________, 1999.
FORM OF SELECTED BROKER-DEALER'S UNIT PURCHASE WARRANT
For the Purchase of _______________Units, each Unit consisting of two
shares of Common Stock, and one Class F Warrant,
of
GLOBAL OUTDOORS, INC.
(An Alaska corporation)
THIS CERTIFIES THAT, for value received, _______________________ (the
"Holder"), as registered owner of this Warrant, is entitled to at any time or
from time to time at or after _____________________________________, 1997, and
at or before 5:00 P.M., Mountain Time, ____________________________________,
1999, but not thereafter, to subscribe for, purchase and receive ______________
fully paid and nonassessable Units, each Unit consisting of one share of Common
Stock, $0.02 par value, one Class F Warrant of Global Outdoors, Inc., an Alaska
corporation (the "Company"), upon presentation and surrender of this Warrant and
upon payment of the Exercise Price for such of the Units to be purchased to the
Company at the principal office of the Company; provided, however, that upon the
occurrence of any of the events specified in the Statement of Rights of Warrant
Holders, a copy of which is attached as Annex I hereto and by this reference
made a part hereof, the rights granted by this Warrant shall be adjusted as
therein specified. Upon exercise of this Warrant, the form of election
hereinafter provided must be duly executed and the instructions for registration
of the Units acquired by such exercise must be completed. If the subscription
rights represented hereby shall not be exercised at or before 5:00 P.M.,
Mountain Time, on _________________________, 1999, this Warrant shall become and
be void without further force of effect, and all rights represented hereby shall
cease and expire.
Subject to the terms contained herein, this Warrant may be assigned by
the Holder in whole or in part, by execution by the Holder of the form of
assignment attached hereto, or may be exercised by the Holder in whole or in
part by execution by the Holder of the form of exercise attached hereto.
<PAGE> 3
In the event of any assignment made as aforesaid, the Company, upon
request and upon surrender of this Warrant by the Holder at the principal office
of the Company accompanied by payment of all transfer taxes, if any, payable in
connection therewith, shall transfer this Warrant on the books of the Company.
If the assignment is in whole, the Company shall execute and deliver a new
Warrant or Warrants of like tenor to this Warrant to the appropriate assignee
expressly evidencing the right to purchase the aggregate number of Units
purchasable hereunder; and if the assignment is in part, the Company shall
execute and deliver to the appropriate assignee a new Warrant or Warrants of
like tenor expressly evidencing the right to purchase the portion of the
aggregate number of Units as shall be contemplated by any such agreement, and
shall concurrently execute and deliver to the Holder a new Warrant of like tenor
to this Warrant evidencing the right to purchase the remaining portion of Units
purchasable hereunder which have not been transferred to the assignee.
This Warrant may be exercised in whole or in part. In the event of the
exercise hereof in part only, the Company shall cause to be delivered to the
Holder a new Warrant of like tenor to this Warrant in the name of the Holder
evidencing the right of the Holder to purchase the number of Units purchasable
hereunder as to which this Warrant has not been exercised.
In no event shall this Warrant (or the Units issuable upon full or
partial exercise hereof) be offered or sold except in conformity with the
Securities Act of 1933, as amended.
IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by
its duly authorized officers and to be sealed with the seal of the Company. This
Warrant shall not be valid or obligatory until countersigned by the Transfer
Agent and Registrar.
GLOBAL OUTDOORS, INC.
By______________________________
President
(S E A L)
By______________________________
Secretary
Countersigned by American Securities Transfer, Incorporated
By:_________________________________________________________
Authorized Representative of Transfer Agent and Registrar
___________________________
Date
Transfer of the warrants represented by this certificate is subject to certain
restrictions set forth in Annex I to Underwriter's Warrant attached hereto. No
Transfer to these Warrants or of this certificate, or of any securities or
certificates issued in exchange therefore, shall be effective unless the terms
and conditions of such restrictions shall have been complied with.
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<PAGE> 4
Form to be used to exercise Warrant:
EXERCISE FORM
Date:__________, 19__
The Undersigned hereby elects irrevocably to exercise the within
Warrant and to purchase _______ Units of Global Outdoors, Inc., called for
thereby, and hereby makes payment of $_________ (at the rate $4.80 per Unit) in
payment of the Exercise Price pursuant thereto. Please issue the Units as to
which this Warrant is exercised in accordance with the instructions given below.
Signature:______________________________
Signature Guaranteed:________________________
INSTRUCTIONS FOR REGISTRATION OF UNITS
Name_____________________________________________________________
(Print in Block Letters)
Address__________________________________________________________
- -------------------------------------------------------------------------------
Form to be used to assign Warrant:
ASSIGNMENT
FOR VALUE RECEIVED, ___________________ does hereby sell, assign and transfer
unto ___________________ the right to purchase _____ Units of Global Outdoors,
Inc., evidenced by the within Warrant, and does hereby irrevocably constitute
and appoint attorney to transfer such right on the books of Global Outdoors,
Inc., with full power of substitution in the premises.
Dated:_______________, 19__.
Signature:__________________________________
Signature Guaranteed:________________________
NOTICE: The signature to the form to exercise or form a assign must correspond
with the name as written upon the face of the within Warrant in every particular
without alteration or enlargement or any change whatsoever, and must be
guaranteed by a bank, other that a savings bank, or by a trust company or by a
firm having membership on a registered national securities exchange.
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<PAGE> 5
ANNEX I
TO SELECTED BROKER-DEALER'S UNIT PURCHASE WARRANT
GLOBAL OUTDOORS, INC.
STATEMENT OF RIGHTS OF WARRANT HOLDER
1. Exchange of Warrants. This Warrant, at any time prior to the
exercise hereof, upon presentation and surrender to the Company, may be
exchanged, alone or with other Warrants of like tenor registered in the name of
the same owner, for another Warrant or other Warrants of like tenor in the name
of such owner or permissible assignee, exercisable for the same aggregate number
of Units, each Unit consisting of two shares of Common Stock, and one Class F
Warrant (the "Warrant Units") as the Warrant or Warrants surrendered.
2. Purchase and Exercise of Warrant.
(a) This Warrant or any part thereof may not be sold,
transferred, exercised, assigned, hypothecated or allotted prior to
___________________, 1997, (which date is 90 days from the effective date of
Registration Statement No. 333-9599), except to officers of ____________________
(a "Selected Broker-Dealer") and members of the selling group and/or their
officers or partners (as selling group is defined in the Selected Broker-Dealer
Agreement dated _______________, 1997 by and between the Company and the
Selected Broker-Dealer). In case the owner shall desire to exercise the purchase
right evidenced by this Warrant, the owner shall surrender this Warrant with the
form of subscription attached hereto duly executed by the owner to the Company
c/o American Securities Transfer and Trust, Inc., 1825 Lawrence Street, Suite
444, Denver, Colorado 80202; attention of the President, accompanied by payment
of the total Exercise Price (hereinafter defined). This Warrant may be exercised
in whole or in part. In case of the exercise hereof in part only, the Company
will deliver to the owner a new Warrant of like tenor in the name of the owner
evidencing the right to purchase the number of shares as to which this Warrant
has not been exercised. Unless the Company receives an opinion from counsel
satisfactory to it that such a legend is not required in order to assure
compliance with the Securities Act of 1933, as amended (the "1933 Act"), or any
applicable State Securities Laws, each certificate for Warrant Units issued
hereunder shall bear a legend reading substantially as follows:
"Transfer of the Units represented by this certificate is subject to
certain restrictions set forth in Annex I to Warrant, Statement of
Rights of Warrant Holder. Copies of such restrictions are available
upon request at the offices of the Company's Transfer Agent at American
Securities Transfer, Incorporated, 1825 Lawrence Street, Suite 444,
Denver, Colorado 80202. No transfer of these Units or of this
certificate, or of any securities or certificates issued in exchange
therefore, shall be effective unless the terms and conditions of such
restrictions shall have been complied with."
(b) The purchase price of this Warrant is $.001 per Unit,
receipt of which is hereby acknowledged.
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<PAGE> 6
(c) The exercise price (the "Exercise Price") per Warrant Unit
issuable upon the exercise of this Warrant shall be $4.80.
(d) The warrant period (the "Warrant Period") is a two year
period commencing on __________________, 1997, and ending on __________________.
1999.
3. Disposition of Warrants or Warrant Shares. The registered owner of
this Warrant, by acceptance hereof, agrees for himself and any subsequent
owner(s) that, before any disposition is made of any Warrant or Warrant Units,
the owner(s) shall give written notice to the Company describing briefly the
manner of any such proposed disposition. No such disposition shall be made
unless and until:
(a) The Company has received an opinion from counsel for the
owner(s) of the Warrant or Warrant Units stating that no registration under the
1933 Act is required with respect to such disposition; or
(b) A Registration Statement or post-effective amendment to a
Registration Statement under the 1933 Act has been filed by the Company and made
effective by the Commission covering such proposed disposition.
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<PAGE> 7
4. Share Dividends, Reclassification, Reorganization, Provisions, Etc.
(a) If, prior to the expiration of this Warrant by exercise or
by its terms, the Company shall issue any of its shares of Common Stock as a
share dividend, other than a stock dividend on its Preferred Stock, or subdivide
the number of outstanding shares of Common Stock into a greater number of
shares, then in either of such cases, the Exercise Price per share of the shares
of Common stock purchasable pursuant to this Warrant in effect at the time of
such action shall be proportionately reduced and the number of shares at the
time purchasable pursuant to this Warrant shall be proportionately increased;
and conversely, if the Company shall contract the number of outstanding shares
of Common Stock by combining such shares into a smaller number of shares, then,
in such case, the Exercise Price per share of the shares of Common Stock
purchasable pursuant to this Warrant in effect at the time of such action shall
be proportionately increased and the number of shares of Common Stock at that
time purchasable pursuant to this Warrant shall be proportionately decreased. If
the Company shall, at any time during the life of this Warrant, declare a
dividend payable in cash on its shares of Common Stock and shall at
substantially the same time offer its shareholder a right to purchase new shares
of Common Stock
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<PAGE> 8
from the proceeds of such dividend or for an amount substantially equal to the
dividend, all shares of Common Stock so issued shall, for the purpose of this
Warrant, be deemed to have been issued as a share dividend. Any dividend paid or
distributed upon the shares of Common Stock in shares of any other class of
securities convertible into share of Common Stock shall be treated as a dividend
paid in shares of Common Stock to the extent that shares of Common Stock are
issuable upon the conversion thereof.
(b) If, prior to the expiration of this Warrant by exercise or
by its terms, the Company shall be recapitalized by reclassifying its
outstanding shares of Preferred or Common Stock into shares with a different par
value, or the Company or a successor corporation shall consolidate or merge with
or convey all or substantially all of its or of any successor corporation's
property and assets to any other corporation or corporations (any such
corporation being included within the meaning of the term "successor
corporation" used above in the event of any consolidation or merger of any such
corporation with, or the sale of all or substantially all of the property of any
such corporation to another corporation or corporations), the holder of this
Warrant shall thereafter have the right to purchase, upon the basis and on the
terms and conditions during the time specified in this Warrant, in lieu of the
shares of Preferred or Common Stock of the Company theretofore purchasable upon
the exercise of this Warrant, such shares, securities, or assets as may be
issued or payable with respect to, or in exchange for, the number of shares of
Preferred or Common Stock of the Company theretofore purchasable upon the
exercise of this Warrant had such recapitalization, consolidation, merger or
conveyance not taken place, and, in any such event, the rights of the holder of
this Warrant to an adjustment in the number of shares of Preferred or Common
Stock purchasable upon the exercise of this Warrant as herein provided shall
continue and be preserved in respect of any shares, securities, or assets which
the holder of this Warrant becomes entitled to purchase.
(c) If: (i) The Company shall take a record of the holders of
its shares of Preferred or Common Stock for the purpose of entitling them to
receive a dividend payable otherwise than in cash, or any other distribution in
respect of the shares of Preferred or Common Stock (including cash), pursuant
to, without limitation, any spin-off, split-off, or distribution of the
Company's assets; or (ii) the Company shall take a record of the holders of its
shares of Preferred or Common Stock for the purpose of entitling them to
subscribe for or purchase any shares of any class or to receive any other
rights; or (iii) in the event of any classification, reclassification, or other
reorganization of the shares which the Company is authorized to issue,
consolidation or merger of the Company with or into another corporation, or
conveyance of all or substantially all of the assets of the Company; or (iv) in
the event of the voluntary or involuntary dissolution liquidation or winding up
of the Company; then, and in any such case, the Company shall mail to the holder
of this Warrant, at least thirty (30) days prior thereto, a notice stating the
date or expected date on which a record is to be taken for the purpose of such
dividend, distribution or rights, or the date on which such classification,
reclassification, reorganization, consolidation, merger, conveyance,
dissolution, liquidation, or winding up, as the case may be. Such notice shall
also specify the date or expected date, if any is to be fixed, as of which
holders of shares of Preferred or Common Stock of record shall be entitled to
participate in such dividend, distribution, or rights, or shall be entitled to
exchange their shares of Preferred or Common Stock for securities or other
property deliverable upon such classification, reclassification,
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<PAGE> 9
reorganization, merger, consolidation, conveyance, dissolution, liquidation, or
winding up, as the case may be.
(d) If the Company, at any time while this Warrant shall
remain unexpired and unexercised, shall sell all or substantially all of its
property, dissolve, liquidate, or wind up its affairs, the holder of this
Warrant may thereafter receive upon exercise hereof, the lieu of each Unit of
the Company which it would have been entitled to receive, the same kind and
amount of any securities or assets as may be issuable, distributable, or payable
upon any such sale, dissolution, liquidation, or winding up with respect to each
Unit of the Company.
5. Reservation of Shares Issuable on Exercise of Warrants. The Company
will, at all time, reserve and keep available out of its authorized shares,
solely for issuance upon the exercise of this Warrant and other similar
Warrants, such number of shares of Preferred and Common Stock and other shares
as from time to time shall be issuable upon the exercise of this Warrant and all
other similar Warrants at the time outstanding.
6. Loss, Theft, Destruction or Mutilation. Upon receipt by the Company
of evidence satisfactory to it (in the exercise of its reasonable discretion) of
the ownership of and the loss, theft, destruction, or mutilation of this
Warrant, the Company will execute and deliver, in lieu thereof, a new Warrant of
like tenor.
7. Warrant Holder Not a Shareholder. Any holder of this Warrant, as
such, shall not be entitled by reason of this Warrant to any rights whatsoever
of a shareholder of the Company.
8. Taxes. The Company will pay all taxes in respect of the issue of
this Warrant or the Units issuable upon exercise thereof.
9. Mailing of Notice. All notices and other communications from the
Company to the holder of this Warrant shall be mailed by first class, certified
mail, postage prepaid, to the address furnished to the Company in writing by the
holder of this Warrant.
DATED this_____day of _________________, 1997.
GLOBAL OUTDOORS, INC.
By:________________________________
President
(S E A L)
Attest:
____________________________________
Secretary
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<PAGE> 1
EXHIBIT 4.2
FORM OF CLASS F WARRANT AGREEMENT BY AND BETWEEN THE REGISTRANT AND
AMERICAN SECURITIES TRANSFER AND TRUST, INC.
<PAGE> 2
EXHIBIT 4.2
WARRANT AGREEMENT
GLOBAL OUTDOORS, INC.
AND
AMERICAN SECURITIES TRANSFER AND TRUST, INC.
Warrant Agent
<PAGE> 3
THIS AGREEMENT dated as of _____________________________, 1997, between GLOBAL
OUTDOORS, INC., an Alaska corporation (the "Company") and AMERICAN SECURITIES
TRANSFER AND TRUST, INC., a Colorado corporation (the "Warrant Agent").
WHEREAS:
1. In connection with the Company's public offering of a maximum of
625,000 Units (the "Units"), each Unit consisting of two shares of Common Stock,
$0.02 par value, and one Class F Warrant (a "Warrant" or the "Warrants"). The
Company proposes to issue 625,000 Units consisting of 1,250,000 shares of Common
Stock and 625,000 Class F Warrants to purchase 625,000 shares of Common Stock.
The Company also proposes to issue up to 37,500 Units to the Underwriter for an
additional potential issuance of up to 37,500 Class F Warrants.
2. The Company desires to provide for the issuance of warrant
certificates (the "Warrant Certificates") representing the Warrants.
3. The Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing to so act, in connection with the
issuance, registration, transfer and exchange of Warrant Certificates and
exercise of the Warrants.
NOW, THEREFORE, in consideration of the promises and the mutual
agreements hereinafter set forth and for the purpose of defining the terms and
provisions of the Warrant Certificates and the Warrants, and the respective
rights and obligations thereunder of the Company, the registered holder of the
Warrant Certificates and the Warrant agent, the parties hereto agree as follows:
1. Definitions. As used herein:
(a) "Common Shares" shall mean the shares of Common Stock the
Company as authorized by the Company's amended Articles of Incorporation, which
have a par value of $0.02.
(b) "Corporate Office" shall mean the place of business of the
Warrant Agent (or its successor) located in Denver, Colorado, which office is
presently located at 1825 Lawrence Street, Suite 444, Denver, Colorado 80202.
(c) "Class F Exercise Period" shall mean __________________,
1997 to __________________, 1999, being the 24-month period commencing the date
the proposed public offering of the Company's Units is declared effective by the
Securities and Exchange Commission, which was ___________________, 1997. Such
24-month period may be extended by the Company as provided in Section 5 hereof.
(d) "Expiration Date" shall mean, with respect to the Class F
Exercise period, 5:00 p.m. Mountain Standard or Daylight Time two years after
the date the proposed public offering of the Company's Units is declared
effective by the Securities and Exchange Commission
<PAGE> 4
(unless extended by the Company in accordance with Section 5 hereof, in which
case the Expiration Date shall be fixed by the Company), or if such day shall be
a holiday or a day on which banks are authorized to close, then 5:00 p.m.,
Mountain Standard or Daylight Time on the next following day which in the State
of Colorado is not a holiday or a day on which banks are authorized to close.
(e) "Exercise Price" shall mean (i) with respect to the Class
F Warrants, a purchase price of $4.80 per Share. The Company may elect to lower
the Exercise Price but cannot raise the Exercise Price above $4.80 per share.
(f) "Registered Holder" shall mean the person in whose name
any Warrant Certificates shall be registered on the books maintained by the
Warrant Agent pursuant to Section 6 of this Agreement.
(g) "Subsidiary" shall mean any corporation of which shares
having ordinary voting power to elect a majority of the Board of Directors of
such corporation (regardless of whether the shares of any other class or classes
of such corporation shall have or may have voting power by reason of the
happening of any contingency) is at the time directly or indirectly owned by the
Company or one or more subsidiaries of the Company.
(h) "Trading Date" shall mean 8:00 a.m., Mountain Standard or
Daylight Time, 240 days and two years, for the Class F Warrants following the
date the proposed offering of the Company's Units, as described in the
Registration statement filed with the Securities and Exchange Commission, is
declared effective by the Commission, which was _________________________, 1997.
(i) "Transfer Agent" shall mean the Company's transfer agent,
American Securities Transfer and Trust, Inc., or its successor.
(j) "Warrant" or the "Warrants" shall mean and include from
25,000 to 662,500 Class F Warrants to purchase a like number of shares of the
authorized and unissued Common Shares of the Company.
(k) "Warrant Shares" shall mean and include (i) up to 662,500
shares of authorized and unissued Common Shares initially reserved for issuance
on exercise of the Warrants, and (ii) any additional Common Shares or other
property which may hereafter be issuable or deliverable on exercise of the
Warrants pursuant to Section 10 of this Agreement.
2. Warrants and Issuance of Warrant Certificates. Each Class F Warrant
shall initially entitle the Registered Holder of the Warrant Certificate
representing such warrant to purchase one Common Share on exercise thereof,
subject to modification and adjustment as hereinafter provided in Section 10.
Warrant Certificates representing an aggregate of from 25,000 to 662,500 Common
Shares of the Company shall be executed by the proper officers of the Company
and delivered to the Transfer Agent of the Company's Common Shares for
countersignature on execution of the Agreement. Each Class F Warrant Certificate
shall be attached to a certificate
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<PAGE> 5
representing two Common Shares of the Company; the Warrant Certificates to be
delivered to the Transfer Agent shall be from 25,000 Class F Warrant
Certificates (minimum) to 662,500 Class F Warrant Certificates (maximum), in
direct relation to the number of Units sold in the Company's public offering.
The Warrant Certificates will be issued and delivered by the Warrant Agent on
written order of the Company signed by its president and attested by its
Secretary or Assistant Secretary. The Warrant agent shall deliver Warrant
Certificates in required whole number denominations to the persons entitled
thereto in connection with any transfer or exchange permitted under this
Agreement.
Except as provided in Section 8 hereof, certificates representing the
Warrant Shares shall be issued only on or after the Exercise Date (hereinafter
defined) on exercise of the Warrants or on transfer or exchange of the Warrant
Shares.
3. Form and Execution of Warrant Certificates. The Warrant Certificates
shall be substantially in the form attached as Exhibit "A" and may have such
letters, numbers or other marks of identification and such legends, summaries or
endorsements printed, lithographed or engraved thereon as the Company may deem
appropriate and as are not inconsistent with the provisions of this Agreement.
The Warrant Certificates shall be dated as of the date of issuance, whether on
initial issuance, transfer, exchange or in lieu of mutilated, lost, stolen or
destroyed Warrant Certificates.
One Warrant Certificate representing one Class F warrant shall be
initially issued only when attached to a certificate representing two Common
Stock Shares. The Warrant Certificates shall be numbered serially in accordance
with the Common Shares attached thereto with the letter "W" appearing on each
Warrant Certificate. Following initial issuance, the Warrant Shares may be
issued by number preceded by the letter "W" without regard to the number of
Common Shares initially attached thereto.
The Warrant Certificates shall be executed on behalf of the Company by
its President and Secretary, by manual signatures or by facsimile signatures
printed thereon, and shall have imprinted thereon a facsimile of the Company's
seal. The Warrant Certificates shall be manually countersigned by the Warrant
Agent and shall not be valid for any purpose unless so countersigned. In the
event any officer of the Company who executed the Warrant Certificates shall
cease to be an officer of the Company before the date of issuance of the Warrant
Certificates or before countersignature and delivery by the Warrant Agent, such
Warrant Certificates may be countersigned, issued and delivered by the Warrant
Agent with the same force and effect as though the person who signed such
Warrant Certificates had not ceased to be an officer of the Company.
4. Exercise. The Class F Warrants shall become exercisable beginning on
the Trading Date and for the duration of the Class F Exercise Period (subject)
to extension in accordance with Section 5 below. A Warrant represented by a
Warrant Certificate may be exercised in whole or in part during the Exercise
Period, but in no event after the expiration Date. A Warrant shall be deemed to
have been exercised immediately prior to the close of business on the date of
the surrender for exercise (the "Exercise Date") of the Warrant Certificate. The
exercise form shall
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<PAGE> 6
be executed by the Registered Holder thereof or his attorney duly authorized in
writing and shall be delivered together with any other documents required by the
Company and payment to the Warrant Agent, in cash or by official bank or
certified check, of an amount in lawful money of the United States of America.
Such payment shall be an amount equal tot he Class F Exercise Price per Warrant
as hereinabove defined.
The person entitled to receive the number of Warrant Shares deliverable
on such exercise shall be treated for all purposes as the holder of such Warrant
Shares as of the close of business on the Exercisable Date. The Company shall
not be obligated to issue any fractional share interests in Warrant Shares
issuable on exercise of a Warrant. If more than one Warrant shall be exercised
at one time by the same Registered Holder, the number of full shares which shall
be issuable on exercise thereof shall be computed on the basis of the aggregate
number of full shares issuable on such exercise.
As soon as practicable on or after the Exercise Date and in any event
within 30 days after such date, the Warrant agent shall cause to be issued and
delivered to the person or persons entitled to receive the same, a certificate
or certificates for the number of Warrant Shares deliverable on such exercise.
No adjustment shall be made in respect of cash dividends on Warrant Shares
deliverable on exercise of any Warrant. The Warrant Agent shall promptly notify
the Company in writing of any exercise and of the number of Warrant Shares
delivered and shall cause payment of an amount in cash equal to the Exercise
Price to be made promptly to the order of the Company. The parties contemplate
such payments will be made by the Warrant Agent to the Company on a weekly basis
and will consist of collected funds only. The Warrant Agent shall hold any
proceeds collected and not yet paid to the Company in a Federally-insured escrow
account at a commercial bank selected by agreement of the Company and the
Warrant agent, at all times relevant hereto. Following a determination by the
Warrant Agent that collected funds have been received, the Warrant Agent shall
cause share certificates to be issued representing the number of Warranties
exercised by the holder.
Expenses incurred by the Warrant Agent, including administrative costs,
costs of maintaining records and other expenses, shall be paid by the Company
according to the standard fees imposed by the Warrant Agent for such services. A
$15.00 fee shall be paid to the Warrant Agent by the Registered holder of any
Warrants on exercise of such Warrants and will be retained by the Warrant agent
over and above expenses. All expenses incurred by the Warrant Agent and to be
paid by the Company shall be deducted from the Escrow Account prior to
distribution of funds to the Company.
A detailed accounting statement setting forth the number of Warrants
exercised, the net amount of exercised funds and all expenses incurred by the
Warrant agent shall be transmitted to the Company on payment of each exercise
amount. Such accounting statement shall serve as an interim accounting for the
Company during the Class F Exercise Periods. The Warrant Agent shall render to
the Company a complete accounting setting forth the number of Warrants
exercised, the identity of persons exercising such Warrants, the number of
shared issued, the amounts to be distributed to the Company, and all other
expenses incurred by the Warrant Agent, at the completion of the Class F
Exercise Period.
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<PAGE> 7
5. Extension of Expiration Date. If at any time prior to the Expiration
Date, the Company should desire to extend the Expiration Date and the Class F
Exercise Period, the Board of Directors of the Company may extend the Class F
Exercise Periods on 30 days prior written notice to the holders of the Class F
Warrants. A copy of the resolution of the Board of Directors of the Company for
inspection by the Warrant holders during such 30-day notice period. Following
proper notice to the Warrant Holders, an extension in the Class F Exercise
Period shall automatically become effective, assuming the Company has bet the
conditions set forth above. The Company shall also notify the warrant agent at
the time notice is given to the Warrant Holders of a proposed extension in the
Warrant exercise periods. The duties and responsibilities of the Warrant Agent
shall continue in force and without modification as set forth elsewhere herein
during any extension period and until the Expiration Date, as extended.
6. Redemption of Warrants.
(a) The Company will be entitled to call all of its Class F
Warrants for redemption at a price (the "Redemption Price") of $0.02 per
Warrant. The Warrants are callable upon notice specified herein at any time
after such Warrants become exercisable. On the redemption date, the Warrant
Holders of record of redeemed Warrants shall be entitled to payment of the
Redemption price for such redeemed Warrants to the Company at the principal
office of the Warrant Agent.
(b) Notice of redemption of any Warrants shall be given at
lease twenty (20) days prior to any redemption date ("Redemption Date") by
mailing, by registered or certified mail, return receipt requested, a copy of
such notice to all of the affected Warrant Holders of record as of two days
prior to the mailing date at their respective addresses appearing on the books
or transfer records of the Company or such other address designated in writing
by the Warrant Holder of record to the Warrant Agent not less than seventy-five
(75) days prior to the Redemption Date and shall be effective upon receipt.
(c) Notwithstanding any other provision of this Agreement,
from and after the Redemption Date, all rights of the affected Warrant Holders
(except the right to receive the Redemption Price) shall terminate, but only if
(i) on or prior to the Redemption Date the Company shall have irrevocably
deposited with the Warrant Agent, as paying agent (who is hereby appointed as
such) a sufficient amount to pay on the Redemption Date the Redemption Price for
all warrants called for redemption and (ii) the notice of redemption shall have
stated the name and address of the Warrant Agent and the intention of the
Company to deposit such amount with the Warrant Agent on or before the
Redemption Date.
(d) The Warrant Agent shall pay to the Warrant Holders of
record of redeemed Warrants all monies received by the Warrant agent from the
Company for the redemption of Warrants to which the Warrant Holders of record of
such redeemed Warrants are entitled under the provisions of this Agreement.
(e) Any amounts deposited with the Warrant agent which are not
required for redemption of the Warrants may be withdrawn by the Company. Any
amounts deposited with the Warrant Agent which shall be unclaimed after six (6)
months after the Redemption Date may be
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<PAGE> 8
withdrawn by the Company, and thereafter the Warrant Holders of the Warrants
called for redemption for which such funds were deposited shall look solely to
the Company for payment. The Company shall be entitled to the interest, if any,
on funds deposited with the Warrant Agent, and the Warrant Holders of redeemed
warrants shall have no right to any such interest.
(f) If the Company fails to made a sufficient deposit with the
Warrant Agent as provided above, the Warrant Holder of any Warrants called for
redemption may at the option of the Warrant Holder (i) by notice to the Company
declare the notice of redemption a nullity, or (ii) maintain an action against
the Company for the Redemption Price. If the Warrant holder brings such an
action, the Company will pay reasonable attorneys' fees of the Warrant Holder.
If the Warrant Holder fails to bring an action against the Company for the
Redemption Price within ninety (90) days after the Redemption Date, the Warrant
Holder shall be deemed to have elected to declare the notice of redemption to be
a nullity and such notice shall be without any force or effect.
7. Reservation of Shares and Payment of Taxes. The Company covenants
that it will at all times reserve and have available from its authorized Common
Shares such number of Common Shares as shall then be issuable on exercise of all
outstanding Warrants. The Company covenants that all Warrant Shares issuable
shall be duly and validly issued, fully paid and nonassessable, and free from
all taxes, liens and charges with respect to the issue thereof.
If any Warrant Shares require an exemption from registration with any
government authority under any Federal or State law before such shares may be
validly issued or delivered, the Company covenants it will in good faith and as
expeditiously as possible endeavor to secure such exemption from registration
except that the Company will not attempt to seek an exemption from registration
of the Warrant Shares in certain states that the Company, on advice of Counsel,
believes in good faith cannot be exempted from registration.
A Warrant Holder residing in a state where a required exemption from
registration of issuance of the Shares has not been obtained within a reasonable
time after the surrender date of the Warrant Certificate for exercise shall not
be entitled to exercise Warrants, unless in the opinion of counsel such
exemption from registration in such state shall not be required, or the Company
authorizes the issuance. In such event, the Warrant Holder shall be entitled to
transfer the Warrants to others, but only prior to the Expiration Date for the
Warrants being transferred.
The Warrant holder shall pay all documentary, stamp or similar taxes
and other government charges that may be imposed with respect to the issuance of
the Warrants, or the issuance, transfer or delivery of any Warrant shares on
exercise of the Warrant. In the event the Warrant Shares are to be delivered in
a name other than the name of the Registered holder of the Warrant Certificate,
no such delivery shall be made unless the person requesting the same has paid to
the Warrant agent the amount of any such taxes or charges incident thereto. No
issuance of Warrant Shares shall be made unless an exemption from registration
has been obtained from jurisdictions that require said exemption.
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<PAGE> 9
The Warrant Agent is hereby irrevocably authorized to requisition
certificates for Warrant Shares from the Company's Transfer Agent as required
from time to time. In addition, the Company will supply the Warrant Agent with
blank warrant certificates, so as to maintain an inventory satisfactory to the
Warrant Agent. The Company will authorize the Transfer agent to comply with all
such requisitions. The Company will file with the Warrant Agent as statement
setting forth the name and address of its Transfer Agent for Common Shares
issuable on exercise of the Warrants and of each successor Transfer Agent, if
any.
8. Registration of Transfer. The Warrant Certificates may be
transferred in whole or in part. Warrant Certificates to be exchanged shall be
surrendered to the Warrant Agent at its Corporate Office. The Company shall
execute and the Warrant Agent shall countersign, issue and deliver in exchange
therefor, the Warrant Certificates which the holder making the transfer shall be
entitled to receive.
The Warrant Agent shall keep transfer books at its Corporate Office
which shall register Warrant Certificates and the transfer thereof. On due
presentment for registration of transfer of any Warrant Certificate at such
office, the Company shall execute and the Warrant Agent shall issue and deliver
to the Transferees a new Warrant Certificate of Certificates representing an
equal aggregate number of Warrants.
All Warrant Certificates presented for registration of transfer or
exercise shall be duly endorsed or be accompanied by a written instrument or
instruments of transfer in form satisfactory to the Company and the Warrant
Agent. A $15.00 fee shall be paid to the Warrant agent by the Registered holder
for any registration or transfer of Warrant Certificates. In addition, the
Company may require payment of a sum by the Registered Holder sufficient to
cover any tax or other government charge that may be imposed in connection
therewith. At the time of exercise of the Warrant(s), the transfer fee is to be
paid by the Warrant holder. In the event Warrant holder must pay the fee and
fails to remit same, the fee will be deducted from the proceeds prior to
distribution to the Company.
Prior to due presentment for registration of transfer thereof, the
Company and the Warrant Agent may treat the Registered Holder of any Warrant
Certificate as the absolute owner thereof (notwithstanding any notations of
ownership or writing thereon made by anyone other than the Company or the
Warrant Agent) and the parties hereto shall not be affected by any notice to the
contrary.
9. Loss or Mutilation. On receipt by the Company and the Warrant Agent
of evidence satisfactory as to the ownership of and the loss, theft, destruction
or mutilation of any Warrant Certificate, the Company shall execute and the
Warrant Agent shall countersign and deliver in lieu thereof, a new Warrant
Certificate representing an equal aggregate number of Warrants. In the case of
loss, theft or destruction of any Warrant Certificate, the individual requesting
issuance of a new Warrant Certificate shall be required to indemnify the Company
and Warrant Agent in an amount satisfactory to each of them. In the event a
Warrant Certificate is mutilated, such Certificate shall be surrendered and
cancelled by the Warrant Agent prior to delivery of a new
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<PAGE> 10
Warrant Certificate. Applicants for a substitute Warrant Certificate shall also
comply with such other regulations and pay such other reasonable charges as the
Company may prescribe.
10. Adjustment of Exercise Price and Shares.
(a) In the event, prior to the expiration of the Warrants by
exercise or by their terms, the Company shall issue any of its Common Shares as
a stock dividend or shall subdivide the number of outstanding common Shares into
a greater number of shares, then, in either of such events, the then applicable
Exercise Price per Common Share purchasable pursuant to the Warrants in effect
at the time of such action shall be reduced proportionately and the number of
Common Shares purchasable pursuant tot he Warrants shall be increased
proportionately. Conversely, in the event the Company shall reduce the number of
its outstanding Common Shares by combining such shares into a smaller number of
shares, then, in such event, the then applicable Exercise Price per Common Share
purchasable pursuant to the Warrants in effect at the time of such action shall
be increased proportionately and the number of Common Shares at that time
purchasable pursuant to the Warrants shall be decreased proportionately. Any
dividend paid or distributed on the Common Shares in shares of any other class
of the Company or securities convertible into Common Shares shall be treated as
a dividend paid in Common Shares to the extent Common Shares are issuable on the
payment of conversion thereof.
(b) In the event, prior to the expiration of the Warrants by
exercise or by their terms, the Company shall be recapitalized by reclassifying
its outstanding Common Shares into shares with a different par value, or by
changing its outstanding Common Shares into shares with a different par value,
or by changing its outstanding Common Shares to shares without par value or in
the event of any other material change of the capital structure of the Company
or of any successor corporation by reason of any reclassification,
recapitalization or conveyance, prompt, proportionate, equitable, lawful and
adequate provision shall be made whereby any holder of the Warrants shall
thereafter have the right to purchase, on the basis and the terms and conditions
specified on this Agreement, in lieu of the Common Shares of the Company
theretofore purchasable on the exercise of any Warrant, such securities or
assets as may be issued or payable with respect to or in exchange for the number
of Common Shares of the Company theretofore purchasable on exercise of the
Warrants had such reclassification, recapitalization or conveyance not taken
place; and in any such event, the rights of any holder of a Warrant to any
adjustment in the number of Common Shares purchasable on exercise of such
Warrant, as set forth above, shall continue and be preserved in respect of any
stock, securities or assets which the holder becomes entitled to purchase;
provided, however, a merger, acquisition, stock exchange, stock for asset
exchange or like transaction by the Company will not be considered a material
change for purposes of this paragraph, and no adjustment shall be made under
this paragraph by reason of any merger, acquisition, stock exchange or like
transaction.
(c) In the event the Company, at any time while the Warrants
shall remain unexpired and unexercised, shall sell all or substantially all of
its property, or dissolves, liquidates or winds up its affairs, prompt,
proportionate, equitable, lawful and adequate provision shall be made as part of
the terms of such sale, dissolution, liquidation or winding up such that the
holder of a Warrant may thereafter receive, on exercise thereof, in lieu of each
Common Share of the
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<PAGE> 11
Company which he would have been entitled to receive, the same kind and amount
of any stock, securities or assets as may be issuable, distributable or payable
on any such sale, dissolution, liquidation or winding up with respect to each
Common Share of the Company; provided however, that in the event of any such
sale, dissolution, liquidation or winding up, the right to exercise the Warrants
shall terminate on a date fixed by the Company, such date to be not earlier than
5:00 p.m., Mountain Time, on the 30th day next succeeding the date on which
notice of such termination of the right to exercise the Warrants has been given
by mail to the holders thereof at such addressed as may appear on the books of
the Company.
(d) On exercise of the Warrants by the holders, the Company
shall not be required to deliver fractions of Common Shares; provided, however,
that prompt, proportionate, equitable, lawful and adequate adjustment in the
Exercise Price payable shall be made in respect of any such fraction of one
Common Share on the basis of the applicable Exercise Price per share.
(e) In the event, prior to expiration of the Warrants by
exercise or by their terms, the Company shall determine to take a record of the
holders of its Common Shares for the purpose of determining shareholders
entitled to receive any stock dividend, distribution or other right which will
cause any change or adjustment in the number, amount, price or nature of the
Common Shares or other stock, securities or assets deliverable on exercise of
the Warrant pursuant to the foregoing provisions, the Company shall give to the
Registered Holders of the Warrants at the addresses as may appear on the books
of the Company at least 30 days' prior written notice to the effect that it
intends to take such a record. Such notice shall specify the date as of which
such record is to be taken; the purpose for which such record is to be taken;
and the number, amount, price and nature of the Common Shares or other stock,
securities or assets which will be deliverable on exercise of the Warrants after
the action for which such record will be taken has been completed. Without
limiting the obligation of the Company to provide notice to the Registered
Holders of the Warrant Certificates of any corporate action hereunder, the
failure of the Company to give notice shall not invalidate such corporate action
of the Company.
(f) The Warrants shall not entitle the holder thereof to any
of the rights of shareholders or to any dividend declared on the Common Shares
unless the Warrant is exercised and the Common Shares purchased prior to the
record date fixed by the Board of Directors of the Company for the determination
of holders of Common Shares entitled to such dividend or other right.
(g) No adjustment of the Exercise Price shall be made as a
result of or in connection with (i) the issuance of Common Shares of the Company
pursuant to options, warrants and share purchase agreements outstanding or in
effect on the date hereof, (ii) the establishment of additional option plans of
the Company, the modification, renewal or extension of any plan now in effect or
hereafter created, or the issuance of Common Shares on exercise of any options
pursuant to such plans, (iii) the issuance of Common Shares in connection with
compensation arrangements for officers, employees or agents of the Company and
any subsidiary, and the like, (iv) the issuance of Common Shares in connection
with an acquisition, merger, stock exchange or stock for asset exchange of a
similar transaction by or with the Company of any entity, as contemplated by the
Company's plan of operation.
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<PAGE> 12
(h) The foregoing subparagraphs (a) through (g) shall be
included on the reverse side of the Warrant Certificate as a "Statement of
rights of Warrant Holders."
11. Duties, Compensation and Termination of Warrant Agent. The Warrant
Agent shall act hereunder as agent and in a ministerial capacity for the
Company, and its duties shall be determined solely by the provisions hereof. The
Warrant Agent shall not, by issuing and delivering Warrant Certificates or by
any other act hereunder, be deemed to make any representations as to the
validity, value or authorization of the Warrant Certificate or the Warrants
represented thereby or of the Common Shares or other property delivered on
exercise of any Warrant. The Warrant Agent shall not be under any duty or
responsibility to any holder of the Warrant Certificates to make or cause to be
made any adjustment of the Exercise Price or to determine whether any fact
exists which may require any such adjustments.
The Warrant Agent shall not (i) be liable for any recital or statement
of fact contained herein or for any action taken or omitted by it in reliance on
any Warrant Certificate or other document or instrument believed by it in good
faith to be genuine and to have been signed or presented by the proper party or
parties, (ii) be responsible for any failure on the part of the Company to
comply with any of its covenants and obligations contained in this Agreement or
in the Warrant Certificates, or (iii) be liable for any act or omission in
connection with this Agreement except for its own negligence or willful
misconduct.
The Warrant Agent may at any time consult with counsel satisfactory to
it (who may be counsel for the Company) and shall incur no liability or
responsibility for any action taken or omitted by it in good faith accordance
with the opinion or advice of such counsel.
Any notice, statement, instruction, request, direction, order or demand
of the Company shall be sufficiently evidenced by and instrument signed by its
President and attested by its Secretary of Assistant Secretary. The Warrant
Agent shall not be liable for any action taken or omitted by it in accordance
with such notice, statement, instruction, request, direction, order or demand.
The Company agrees to pay the Warrant Agent reasonable compensation for
its services hereunder and to reimburse the Warrant agent for its reasonable
expenses. The Company further agrees to indemnify the Warrant Agent against any
and all losses, expenses and liabilities, including judgments, costs and counsel
fees, for any action taken or omitted by the Warrant Agent in the execution of
its duties and powers hereunder, excepting losses, expenses and liabilities
arising as a result of the Warrant Agent's negligence or willful misconduct.
The Warrant Agent may resign its duties or the Company may terminate
the Warrant agent and the Warrant Agent shall be discharged from all further
duties and liabilities hereunder (except liabilities arising as a result of the
Warrant Agent's own negligence or willful misconduct) on 30 days' prior written
notice to the other party. At lease 15 days prior to the date such resignation
is to become effective, the Warrant Agent shall cause a copy of such notice of
resignation to be mailed to the Registered Holder of each Warrant Certificate.
On such resignation or termination, the Company shall appoint a new Warrant
Agent. If the Company shall fail to make such
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<PAGE> 13
appointment within a period of 30 days after it has been notified in writing of
the resignation by the Warrant Agent, then the Registered Holder of any Warrant
Certificate may apply to any court of competent jurisdiction for the appointment
of a new Warrant Agent.
After accepting in writing of an appointment of a new Warrant Agent is
received by the Company, such new Warrant Agent shall be vested with the same
powers, rights, duties and responsibilities as if it had been originally named
herein as the Warrant Agent, without any further assurance, conveyance, act or
deed; provided, however, if it shall be necessary or expedient to execute and
deliver any further assurance, conveyance, act or deed, the same shall be done
at the expense of the Company and shall be legally and validly executed. The
Company shall file a notice of appointment of a new Warrant Agent with the
resigning Warrant Agent and shall forthwith cause a copy of such notice to be
mailed to the Registered Holder of each Warrant Certificate.
Any corporation into which the Warrant Agent or any new Warrant Agent
may be converted or merged, or any corporation resulting from any consolidation
to which the Warrant Agent or any new Warrant Agency shall be a party, or any
corporation succeeding to the corporate trust business of the Warrant Agent
shall be a successor Warrant Agent under this Agreement, provided that such
corporation is eligible for appointment as a successor to the Warrant Agent. Any
such successor Warrant Agent shall promptly cause notice of its succession as
Warrant agent to be mailed to the Company and to the Registered Holder of each
Warrant Certificate. No further action shall be required for the establishment
and authorization of such successor Warrant Agent.
The Warrant Agent, its officers, directors and its subsidiaries or
affiliates may buy, hold or sell Warrants or other securities of the Company and
otherwise deal with the Company in the same manner and to the same extent and
with like effect as though it were not Warrant Agent. Nothing herein shall
preclude the Warrant Agent from acting in any other capacity for the Company.
12. Modification of Agreement. The Warrant Agent and the Company may by
supplemental agreement make any changes or corrections in this Agreement they
shall deem appropriate to cure any ambiguity or to correct any defective or
inconsistent provision or mistake or error herein contained. Additionally, the
parties may make any changes or corrections deemed necessary which shall not
adversely affect the interests of the holders of Warrant Certificates; provided,
however, this Agreement shall not otherwise be modified, supplemented or altered
in any respect except with the consent in writing of the Registered Holders of
Warrant Certificates representing not less than 66 2/3% of the Warrants
outstanding. Additionally, no change in the number or nature of the Warrant
Shares purchasable on exercise of a warrant shall be made without the consent in
writing of the Registered holder of the Warrant Certificate representing such
Warrant, other than such changes as are specifically prescribed by this
Agreement.
13. Notices. All notices, demands, elections, opinions or requests
(however characterized or described) requiring or authorized hereunder shall be
deemed given sufficiently
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<PAGE> 14
in writing and sent by registered or certified mail, return receipt requested
and postage prepaid, or by tested telex, telegram or cable to, in the case of
the Company:
Richard K. Dickson II, Esq.
Global Outdoors, Inc.
43445 Business Park Dr., Suite 113
Temecula, CA 92590
and in the case of the Warrant Agent:
American Securities Transfer and Trust, Inc.
1825 Lawrence Street, Suite 444
Denver, Colorado 80202
and if to the Registered Holder of a Warrant Certificate, at the address of such
holder as set forth on the books maintained by the Warrant Agent.
14. Persons Benefiting. This Agreement shall be binding upon and inure
to the benefit of the Company, the Warrant Agent and their respective successors
and assigns, and the holders from time to time of the Warrant Certificates.
Nothing in this Agreement is intended or shall be construed to confer on any
other person any right, remedy or claim or to impose on any other person any
duty, liability or obligation.
15. Further Instruments. The parties shall execute and deliver any and
all such other instruments and shall take any and all such other actions as may
be reasonable or necessary to carry out the intention of this Agreement.
16. Severability. If any provision of this Agreement shall be held,
declared or pronounced void, voidable, invalid, unenforceable or inoperative for
any reason by any court of competent jurisdiction, government authority or
otherwise, such holding, declaration or pronouncement shall not affect adversely
any other provision of this Agreement, which shall otherwise remain in full
force and effect and be enforced in accordance with its terms, and the effect of
such holding, declaration or pronouncement shall be limited to the territory or
jurisdiction in which made.
17. Waiver. All the rights and remedies of either party under this
Agreement are cumulative and not exclusive of any other rights and remedies as
provided by law. No delay or failure on the part of either party in the exercise
of any right or remedy arising from a breach of this Agreement shall operate as
a waiver of any subsequent right or remedy arising from a subsequent breach of
this Agreement. The consent of any party where required hereunder to any act or
occurrence shall not be deemed to be a consent to any other action or
occurrence.
18. General Provisions. This Agreement shall be construed and enforced
in accordance with, and governed by, the laws of the State of Colorado. Except
as otherwise expressly stated herein, time is of the essence in performing
hereunder. This Agreement embodies the entire
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<PAGE> 15
agreement and understanding between the parties and supersedes all prior
agreements and understandings relating to the subject matter hereof, and this
Agreement may not be modified or amended or any term or provision hereof waived
or discharged except in writing signed by the party against whom such amendment,
modification, waiver or discharge is sought to be enforced. The headings of this
Agreement may be executed in any number of counterparts, each of which shall be
deemed an original, but all of which taken together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above mentioned.
THE COMPANY:
GLOBAL OUTDOORS, INC.
(CORPORATE SEAL) By:_________________________________
Perry Massie, President
ATTEST:
_________________________________
Secretary
THE WARRANT AGENT:
AMERICAN SECURITIES TRANSFER AND
TRUST, INC.
By:_________________________________
ATTEST:
_________________________________
Secretary
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<PAGE> 1
EXHIBIT 23.2
CONSENT OF KENNETH E. WALSH, CERTIFIED PUBLIC ACCOUNTANT
<PAGE> 2
EXHIBIT 23.2
KENNETH E. WALSH
CERTIFIED PUBLIC ACCOUNTANT
3820 DEL AMO BLVD.
SUITE 305
TORRANCE, CA 90503
CONSENT OF INDEPENDENT AUDITOR
I Consent to the use in this Registration Statement No. 333-9599 of my reports
on the consolidated financial statements of Global Outdoors, Inc. (formerly
Global Resources, Inc.) and subsidiaries included herein and to the reference
made to me under the captions "Experts" and "Selected Financial Data" in the
Prospectus.
Kenneth E. Walsh
Certified Public Accountant
January 29, 1997
