<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 2000
--------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number: 0-17287
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GLOBAL OUTDOORS, INC.
--------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Alaska 33-0074499
------------------------- ----------------------------
(State or other Juris- (IRS Employer Identification
diction of incorporation Number)
or organization)
43445 BUSINESS PARK DRIVE, SUITE 113
TEMECULA, CALIFORNIA 92590
--------------------------------------------------------------------------------
(Address and zip code of principal executive offices)
(909) 699-4749
--------------------------------------------------------------------------------
(Issuer's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
--------------------------------------------------------------------------------
Check whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to the filing requirements for at least
the past 90 days. Yes [X ] NO [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Number of Shares Outstanding
Class at August 12, 2000
---------------------------- ----------------------------
Common Stock, $.02 par value 5,266,073
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
FINANCIAL STATEMENTS
PART I - ITEM 1
--------------------------------------------------------------------------------
FOR THE QUARTER ENDED JUNE 30, 2000
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GLOBAL OUTDOORS, INC.
-2-
<PAGE>
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
June 30 December 31
------------ ------------
2000 1999
------------ ------------
(unaudited)
Current assets:
Cash and cash equivalents $ 1,119,022 $ 750,351
Accounts receivables, net of allowance for
doubtful accounts of $39,868 and $57,766 1,449,663 965,371
Inventories 51,742 54,810
Deferred tax assets, net 86,550 86,550
Receivable from stockholders 22,128 17,700
Other current assets - prepaid trip expenses 309,972 15,035
------------ ------------
Total current assets 3,039,077 1,889,817
------------ ------------
Property, plant and equipment, net:
Membership recreational mining properties 1,368,316 1,352,373
Alaska recreational mining properties 1,308,045 1,338,988
Outdoor Channel equipment and improvements 637,831 505,063
Other equipment and leasehold improvements 338,529 328,226
------------ ------------
Property, plant and equipment, net 3,652,721 3,524,650
------------ ------------
Trademark, net of accumulated amortization of
$50,068 and $42,777 168,655 175,946
Deferred tax assets, net 1,300,000 1,000,000
Deposits and other assets 112,758 89,062
------------ ------------
Totals $ 8,273,211 $ 6,679,475
============ ============
See Notes to Condensed Consolidated Financial Statements
-3-
<PAGE>
<TABLE>
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
<CAPTION>
June 30 December 31
------------- -------------
2000 1999
------------- -------------
(unaudited)
<S> <C> <C>
Current liabilities:
Accounts payable and accrued expenses $ 1,233,181 $ 711,646
Current portion of notes and capital lease obligations payable 253,954 528,851
Current portion of stockholder loans 1,936 1,936
------------- -------------
Total current liabilities 1,489,071 1,242,433
Stockholder loans, net of current portion 614,395 435,700
Other notes and capital lease obligations payable, net of current portion 421,747 661,237
Deferred revenues 1,633,974 1,818,468
Deferred satellite rent obligations 618,590 624,700
Deferred compensation 209,750 300,751
------------- -------------
Total liabilities 4,987,527 5,083,289
------------- -------------
Commitments and contingencies
Minority interest in subsidiary 816,770 390,526
------------- -------------
Stockholders' equity:
Convertible preferred stock, nonvoting, 10% noncumulative, no
liquidation preference, $.001 par value; 10,000,000 shares
authorized; 60,675 shares issued and outstanding 61 61
Common stock, $.02 par value; 50,000,000 shares authorized;
5,266,073 shares issued and outstanding 105,283 105,283
Less common stock subscriptions receivable (221,250) (221,250)
Additional paid-in capital 3,336,233 3,336,233
Accumulated deficit (751,413) (2,014,667)
------------- -------------
Total stockholders' equity 2,468,914 1,205,660
------------- -------------
Totals $ 8,273,211 $ 6,679,475
============= =============
</TABLE>
See Notes to Condensed Consolidated Financial Statements
-4-
<PAGE>
<TABLE>
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
<CAPTION>
Three Months Ended Six Months Ended
---------------------------- ----------------------------
June 30 June 30
---------------------------- ----------------------------
(unaudited) (unaudited)
Revenues: 2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Advertising $ 1,833,575 $ 954,642 $ 3,378,879 $ 1,716,318
Subscriber fees 728,451 300,280 1,335,845 442,847
Membership services 795,564 663,393 1,554,527 1,509,927
------------ ------------ ------------ ------------
Total revenues 3,357,590 1,918,315 6,269,251 3,669,092
------------ ------------ ------------ ------------
Expenses:
Satellite transmission fees 530,684 518,789 1,056,772 1,037,474
Advertising and programming 402,242 18,727 615,046 67,554
Selling, general and administrative 1,693,859 1,387,511 3,346,258 2,557,590
------------ ------------ ------------ ------------
Total expenses 2,626,785 1,925,027 5,018,076 3,662,618
------------ ------------ ------------ ------------
Income (loss) from operations 730,805 (6,712) 1,251,175 6,474
Other income (expense):
Gain on sale of common stock of subsidiary - - - 408,859
Interest, net (34,550) (34,546) (51,886) (83,009)
------------ ------------ ------------ ------------
Income (loss) before credit for income taxes
and minority interest 696,255 (41,258) 1,199,289 332,324
Credit for Federal income taxes 150,000 - 300,000 (800)
------------ ------------ ------------ ------------
Income (loss) before minority interest 846,255 (41,258) 1,499,289 331,524
Minority interest in net of
consolidated subsidiary 128,187 32,013 236,035 20,343
------------ ------------ ------------ ------------
Net income (loss) 718,068 (73,271) 1,263,254 311,181
Accumulated deficit, beginning of period (1,469,481) (2,014,667) (2,014,667) (3,921,913)
------------ ------------ ------------ ------------
Accumulated deficit, end of period $ (751,413) $(2,087,938) $ (751,413) $(3,610,732)
============ ============ ============ ============
Earnings (losses) per common share:
Basic $ 0.14 $ (0.01) $ 0.24 $ 0.06
============ ============ ============ ============
Diluted $ 0.13 $ (0.01) $ 0.23 $ 0.06
============ ============ ============ ============
Weighted average number of common
shares outstanding:
Basic 5,260,612 5,260,612 5,260,612 5,260,612
============ ============ ============ ============
Diluted 5,449,213 5,262,028 5,453,222 5,402,383
============ ============ ============ ============
See Notes to Condensed Consolidated Financial Statements
-5-
</TABLE>
<PAGE>
<TABLE>
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
Six Months Ended June 30
----------------------------
2000 1999
----------------------------
(unaudited)
<S> <C> <C>
Operating activities:
Net income $ 1,263,254 $ 311,181
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 123,464 123,486
Provision for doubtful accounts (17,898)
Deferred income taxes (300,000)
Interest on stock subscription receivable (4,425)
Gains on sale of common stock to the public:
Shares sold by the subsidiary (261,961)
Shares sold by the Company (146,898)
Issuance of subsidiary stock as compensation (190,209)
Minority interest in net income of consolidated
subsidiary 236,035 20,343
Cash supplied (used) by changes in operating assets
and liabilities:
Accounts receivable (466,394) (117,411)
Inventories 3,068 7,529
Income taxes receivable 0 1,549
Other current assets (294,937) (275,262)
Deposits and other assets (28,124) (4,425)
Accounts payable and accrued expenses (521,535) (468,204)
Deferred revenues (184,494) 55,877
Deferred satellite rent obligations (6,110) 129,890
Deferred compensation (91,001) 2,500
Net cash provided by operating activities 948,607 310,177
------------ ------------
Investing activities:
Purchases of property, plant, and equipment (244,244) (471,271)
------------ ------------
Financing activities:
Principal payments on long-term debt and capital leases (514,387) (100,812)
Principal payments on stockholder loans (28,117)
Advances from stockholders 178,695
Net proceeds from sale of subsidiary stock to the public 0 617,502
------------ ------------
Net cash provided by (used in) financing activities (335,692) 488,573
------------ ------------
Net increase in cash and cash equivalents 368,671 327,479
Cash and cash equivalents, beginning of period 750,351 326,225
------------ ------------
Cash and cash equivalents, end of period $ 1,119,022 $ 653,704
============ ============
See Notes to Condensed Consolidated Financial Statements
</TABLE>
-6-
<PAGE>
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Organization, Management Statement and Reference to Form 10-KSB
Organization
------------
Global Outdoors, Inc. (the "Company") owns a majority interest in
The Outdoor Channel, Inc. ("The Outdoor Channel" or "Channel"), a
national television network devoted primarily to traditional
outdoor activities, such as hunting, fishing, shooting sports,
rodeo and recreational gold prospecting. The Company has a variety
of other business activities. The Company receives revenues from
the sale of memberships in a gold prospecting club, Gold
Prospectors' Association of America, Inc. ("GPAA") and from the
sale of memberships in Lost Dutchman's (LDMA-AU, Inc.) which
entitle members to engage in recreational prospecting on its
California, Oregon, Alaska, Nevada, Arizona, Colorado, Georgia,
North Carolina and South Carolina properties. The Company has
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 receives revenues from its
trips and outings division which includes its "Alaska Trip," a
recreational gold mining expedition to the Company's Cripple River
property located near Nome, Alaska, advertising revenue in a
bi-monthly magazine, advertising revenues through cable television
programming on The Outdoor Channel, Inc. and through merchandise
sales. Effective July 23, 1996, the Company changed its name from
Global Resources, Inc. to Global Outdoors, Inc.
Note 2. Unaudited Interim Financial Statements
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements reflect all adjustments,
consisting of normal recurring accruals, necessary to present
fairly the financial position of the Company as of June 30, 2000
and its results of operations for the three and six months ended
June 30, 2000 and 1999 and cash flows for the six months ended
June 30,2000 and 1999. Information included in the condensed
consolidated balance sheet as of December 31, 1999 has been
derived from, and certain terms used herein are defined in, the
audited financial statements of the Company as of December 31,
1999 and for the years ended December 31, 1999 and 1998 (the
"Audited Financial Statements") included in the Company's Annual
Report on Form 10-KSB (the "10-KSB") for the year ended December
31, 1999 that was previously filed with the Securities and
Exchange Commission (the "SEC"). Pursuant to the rules and
regulations of the SEC, certain information and disclosures
normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed
or omitted from these financial statements unless significant
changes have taken place since the end of the most recent fiscal
year. Accordingly, these unaudited condensed consolidated
financial statements should be read in conjunction with the
Audited Financial Statements and the other information also
included in the 10-KSB.
The results of the Company's operations for the three and six
months ended June 30, 2000 are not necessarily indicative of the
results of operations for the full year ending December 31, 2000.
Note 3. Stockholders' Equity
On September 12, 1994, the company effected a 2 for 1 forward
split of its common stock. On March 4, 1992, the company effected
a 1 for 20 reverse split of its common stock. On May 1, 1989, the
Company distributed a 10% common stock dividend. Share amounts
herein reflect the foregoing activity.
-7-
<PAGE>
Note 4. Earnings (loss) per share
The Company has presented "basic" earnings per common share in the
accompanying consolidated statements of (loss) operations in
accordance with the provisions of Statement of Financial
Accounting Standards No. 128, "Earnings per Share" ("SFAS 128").
Basic earnings (loss) per common share is calculated by dividing
net income (loss) applicable to common stock by the weighted
average number of common shares outstanding during each period.
The calculation of diluted earnings per common share is similar to
that of basic earnings per common share, except that the
denominator is increased to include the number of additional
common shares that would have been outstanding if all potentially
dilutive common shares, such as those that could be issued upon
the exercise of stock options and warrants and the conversion of
preferred stock, were issued during the period.
The computation of diluted earnings per common share for the three
and six months ended June 30, 2000 and the six months ended June
30, 1999 takes into account the effects on the weighted average
number of common shares outstanding of the assumed exercise of all
of the Company's outstanding stock options and warrants, adjusted
for the application of the treasury stock method, and the
conversion of all of the Company's outstanding shares of preferred
stock. The diluted loss per common share for the three months
ended June 30, 1999 is equal to the basic loss per common share
because the assumed effects of the exercise of outstanding stock
options and warrants and the conversion of preferred stock would
have been anti-diluted.
The following table reconciles the calculation of basic earnings
per share to diluted earnings per share in the three and six
months ended June 30, 2000:
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, 2000 June 30, 2000
-------------------------- --------------------------
Earnings Earnings
Per Per
Shares Share Shares Share
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Weighted average common shares outstanding and basic
earnings per common share 5,260,612 $ .14 5,260,612 $ .24
============ ============
Dilutive effect of potential common shares issuable
upon conversion of preferred stock 60,675 60,675
Dilutive effect of potential common shares issuable
upon exercise of stock options and warrants,
as adjusted for the application of the treasury
stock method 127,926 131,935
------------ ------------
Diluted weighted average common shares
outstanding and diluted earnings per
common share 5,449,213 $ .13 5,453,222 $ .23
============ ============ ============ ============
</TABLE>
-8-
<PAGE>
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 5. Income taxes
The credits for income taxes of $150,000 and $300,000 included in
the accompanying condensed consolidated statements of operations
for the three months and six months ended June 30, 2000,
respectively, was comprised of a deferred credit for Federal
income taxes. The Company had no provision or credit for income
taxes for the three or six months ended June 30, 1999, (see Note 7
in the 10-KSB).
During the six months ended June 30, 2000, the Company was able to
increase revenues substantially, generate pre-tax income for
financial statement and tax reporting purposes and utilize a
portion of its net operating loss carryforwards as shown above. In
addition, management believes that it is more likely than not that
the Company will be able to generate sufficient future taxable
income to enable it to utilize all of the company's remaining net
operating loss carryforwards available of approximately $2,600,000
as of June 30, 2000. Accordingly, the Company reduced its
valuation allowance by approximately $250,000 and $400,000 and
recognized a credit for Federal income taxes in the three and six
months ended June 30, 2000, respectively.
The credit for income taxes reflected in the accompanying
condensed consolidated statements of operations for the three and
six months ended June 30, 2000 is different than it would be
computed based on the applicable statutory Federal income tax rate
of 34% primarily as a result of the changes in the valuation
allowance as shown below:
<TABLE>
<CAPTION>
Three months ended Six months ended
June 30, June 30,
2000 2000
------------ ------------
<S> <C> <C>
Federal income tax provisions
at statutory income tax rate $ 236,727 $ 407,758
Effect of utilization of net operating
loss carryforwards (136,727) (307,758)
Effect of reduction in valuation
allowance for recognition of future
utilization of net operating loss
carryforwards (250,000) (400,000)
------------ ------------
Credit for income taxes $ (150,000) $ (300,000)
============ ============
</TABLE>
Note 6. Segment information
The Company has adopted the provisions of Statement of Financial
Accounting Standards No. 131, DISCLOSURES ABOUT SEGMENTS OF AN
ENTERPRISE AND RELATED INFORMATION ("SFAS 131"). Pursuant to the
provisions of SFAS 131, the Company is reporting segment
information in the same format reviewed by the Company's
management (the "management approach"). The Company segregates its
business activities into the major areas that generate revenues.
LDMA-AU and GPAA membership sales and related activities are
reported separately as they deal with recreational prospecting and
rights to use land and facilities for camping and recreational
vehicle parking. Trips and outings constitute another business
activity of the Company whereby members can participate in a group
prospecting activity at a Company site, usually lasting for a week
or less. The annual Alaska trip, included in this category, allows
members to travel to the Company's Alaska property from one to six
weeks to participate in prospecting activities. The Outdoor
Channel is a separate business activity whereby the subsidiary
broadcasts television programming on "The Outdoor Channel" 24
hours a day, seven days a week, and recognizes advertising and
subscription revenues.
-9-
<PAGE>
GLOBAL OUTDOORS, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 6. Segment information (concluded)
Information with respect to these reportable business segments for
the three months and six months ended June 30, 2000 is as follows:
<TABLE>
<CAPTION>
Income (Loss) Depreciation Additions to
Before Total and Property, Plant
Revenues Income Taxes Assets Amortization and Improvements
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Three months ended June 30, 2000
Trips and Outings $ 1,308,045 $ 19,272
The Outdoor Channel $ 2,434,754 $ 822,402 3,229,230 35,816 $ 84,716
Membership sales
of recreational
prospecting and
mineral rights and
merchandise sales 922,836 (126,147) 3,735,936 7,830 22,436
------------ ------------ ------------ ------------ ------------
Totals $ 3,357,590 $ 696,255 $ 8,273,211 $ 62,918 $ 107,152
============ ============ ============ ============ ============
Six months ended June 30, 2000
Trips and Outings $ 1,308,045 $ 38,544
The Outdoor Channel $ 4,526,658 $ 1,446,637 3,229,230 69,260 $ 204,261
Membership sales
of recreational
prospecting and
mineral rights and
merchandise sales 1,742,593 (247,348) 3,735,936 15,660 39,983
------------ ------------ ------------ ------------ ------------
Totals $ 6,269,251 $ 1,199,289 $ 8,273,211 $ 123,464 $ 244,244
============ ============ ============ ============ ============
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This report on Form 10-QSB contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section 21E of the
Securities Exchange Act of 1934. The Company intends that such forward-looking
statements be subject to the safe harbors created thereby. This report should be
read in conjunction with the Company's report on Form 10-KSB for the year ended
December 31, 1999.
COMPARISON OF QUARTERS ENDED JUNE 30, 2000 AND JUNE 30, 1999
REVENUES. The Company's revenues include revenues from advertising fees,
subscriber fees, GPAA and Lost Dutchman's membership sales, product sales and
trips and outings sales. Advertising fees result from the sale of advertising
time on The Outdoor Channel and from advertising space in publications such as
the Gold Prospector magazine. Revenues for the quarter ended June 30, 2000 were
$3,357,590, an increase of $1,439,275, or 75%, compared to revenues of
$1,918,315 for the quarter ended June 30, 1999. This increase was the result of
changes in several items composing revenue. Advertising almost doubled to
$1,833,575 for the quarter ended June 30, 2000 from $954,642 for the quarter
ended June 30, 1999, primarily due to an increase in advertising revenue on The
Outdoor Channel. Subscriber fees increased dramatically to $728,451 for the
quarter ended June 30, 2000 from $300,280 for the quarter ended June 30, 1999,
primarily due to carriage of The Outdoor Channel on the Dish Network. Membership
services increased to $795,564 for the quarter ended June 30, 2000 from $663,393
for the quarter ended June 30, 1999, due principally to the Company devoting
increased resources to membership development and retention.
-11-
<PAGE>
EXPENSES. The Company's expenses consist primarily of the cost of satellite
transponder and uplink facilities, programming, advertising and promotion, trips
and outings expenses, sales and administrative salaries, office expenses and
general overhead. Expenses for the quarter ended June 30, 2000 were $2,626,785,
an increase of $701,758, or 36%, compared to $1,925,027 for the quarter ended
June 30, 1999. This increase was primarily the result of an increase in selling,
general and administrative expenses which increased significantly to $1,693,859
for the quarter ended June 30, 2000, compared to $1,387,511 for the quarter
ended June 30, 1999. This increase was due primarily to growth at The Outdoor
Channel. Advertising and programming increased to $402,242 for the quarter ended
June 30, 2000, compared to $18,727 for the quarter ended June 30, 1999, due to
The Outdoor Channel's consumer and trade awareness campaigns. Satellite
transmission fees remained near the same level at $530,684 for the quarter ended
June 30, 2000 compared to $518,789 for the quarter ended June 30, 1999, due to
satellite transponder expenses plateauing.
INCOME (LOSS) BEFORE INCOME TAXES AND MINORITY INTEREST. Income (loss)
before credit for income taxes and minority interest was significantly higher as
a percentage of revenues at 21% for the quarter ended June 30, 2000 compared to
(2)% for the quarter ended June 30, 1999. This was due primarily to the Company
having income from operations of $730,805 for the quarter ended June 30, 2000,
compared to loss from operations of $(6,712) for the quarter ended June 30,
1999.
COMPARISON OF SIX MONTHS ENDED JUNE 30, 2000 AND JUNE 30, 1999
REVENUES. The Company's revenues include revenues from advertising fees,
subscriber fees, GPAA and Lost Dutchman's membership sales, product sales and
trips and outings 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 six months ended June 30, 2000
were $6,269,251, an increase of $2,600,159, or 71%, compared to revenues of
$3,669,092 for the six months ended June 30, 1999. This increase was the result
of changes in several items composing revenue. Advertising almost doubled to
$3,378,879 for the six months ended June 30, 2000 from $1,716,318 for the six
months ended June 30, 1999, primarily due to an increase in advertising revenue
on The Outdoor Channel. Subscriber fees increased dramatically to $1,335,845 for
the six months ended June 30, 2000 from $442,847 for the six months ended June
30, 1999, primarily due to carraige of The Outdoor Channed on the Dish Network.
Membership services increased to $1,554,527 for the six months ended June
30,2000 from $1,509,927 for the six months ended June 30, 1999, due principally
to the Company devoting increased resources to membership development and
retention.
EXPENSES. The Company's expenses consist primarily of the cost of satellite
transponder and uplink facilities, programming, advertising and promotion, trips
and outings expenses, sales and administrative salaries, office expenses and
general overhead. Expenses for the six months ended June 30, 2000 were
$5,018,076, an increase of $1,355,458, or 37%, compared to $3,662,618 for the
six months ended June 30, 1999. This increase was primarily the result of an
increase in selling, general and administrative expenses which increased
significantly to $$3,346,258 for the six months ended June 30, 2000, compared to
$2,557,590 for the six months ended June 30, 1999. This increase was due
primarily to growth at The Outdoor Channel. Advertising and programming
increased to $615,046 for the six months ended June 30, 2000, compared to
$67,554 for the six months ended June 30, 1999, due to The Outdoor Channel's
consumer and trade awareness campaigns. Satellite transmission fees remained
near the same level at $1,056,772 for the six months ended June 30, 2000
compared to $1,037,474 for the six months ended June 30, 1999, due to satellite
transponder expenses plateauing.
INCOME (LOSS) BEFORE INCOME TAXES AND MINORITY INTEREST. Income (loss)
before income taxes and minority interest was significantly higher as a
percentage of revenues at 19% for the six months ended June 30, 2000 compared to
9% for the six months ended June 30, 1999. This was due primarily to the Company
having income from operations of $1,251,175 for the six months ended June 30,
2000, compared to $6,474 for the six months ended June 30, 1999.
-12-
<PAGE>
GENERAL
Global Outdoors, Inc. (the "Company" or "Global") is the principal owner of
The Outdoor Channel, Inc. which owns and operates The Outdoor Channel ("The
Outdoor Channel" or "Channel"), the first national television network devoted
primarily to traditional outdoor activities, such as hunting, fishing, shooting
sports, rodeo 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 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. GPAA also sells
products and services related to recreational gold prospecting and is the
publisher of the Gold Prospector magazine. The Company's Trips and Outings
Division sponsors unique recreational prospecting trips to the historic Mother
Lode area of California and to the Company's 2,300 acre camp, located 11 miles
west of Nome, Alaska.
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 principally through The Outdoor Channel.
The Company intends that The Outdoor Channel be used as a primary vehicle to
promote the Company's services and products and anticipates that it will be a
factor in the future growth of GPAA, Lost Dutchman's and the Trips Division. In
that regard, in 1998 the Company entered into a long term contract with The
Outdoor Channel whereby the Company has the rights to ten hours of programming
time and thirty sixty second advertising spots per week. The Outdoor Channel
became profitable and cash flow positive in the second quarter of 1999.
Subsequently, the Company has directed more resources to other Company
divisions. For example, in September 1999, the Company commenced airing
"Prospecting America" on The Outdoor Channel. Prospecting America, hosted by
Perry Massie, is a new series produced by the Company's television production
unit.
Although The Outdoor Channel is not aligned with any sizable entertainment
or cable company, as are many emerging channels, it has achieved substantial
visibility in the cable industry. The Outdoor Channel is committed to converting
visibility for the Channel's programming into greater distribution in cable
households. Greater distribution will allow The Outdoor Channel to charge higher
advertising rates, command higher subscriber fees from cable affiliates, attract
more advertisers and receive greater revenues for the Company's products.
In 1998, The Outdoor Channel signed an affiliation agreement with EchoStar
Satellite Corporation ("EchoStar"), one of the largest direct broadcast
satellite companies ("DBS") in the U.S. with approximately four million
subscribers. The Outdoor Channel's launch on EchoStar's Dish Network occurred in
December 1998. Commencing February 1, 1999, The Outdoor Channel has been
available on the Dish Network on an a la carte basis (i.e stand alone) for a fee
of $1.99 per month. Through July 21, 2000, there were approximately 260,000 a la
carte subscribers to The Outdoor Channel on the Dish Network. The Channel
receives a significant portion of the monthly a la carte subscriber fees. In
April 2000, The Outdoor Channel was also launched on the Dish Network's
America's Top 150 package. As of July 21, 2000 there were approximately 300,000
subscribers to the Top 150 package.
In May 2000, The Outdoor Channel signed a national affiliation agreement
with Cox Communications one of the largest multi-system operators ("MSOs") in
the U.S.
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<PAGE>
A primary objective of the Company is for The Outdoor Channel to obtain
distribution. To accomplish this objective the Channel seeks to sign national
carriage agreements with MSOs and thereafter carriage agreements with the MSOs'
individual cable affiliates. 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. As of
July 2000 The Outdoor Channel was launched on approximately 2,000 cable systems
with approximately 5.6 million subscribers. The Outdoor Channel is under
contract with or has signed national carriage agreements with over 75 of the top
100 multi-system cable operators representing over 40 million potential
households.
As of July 2000, the Company is generating sufficient cash flow from
operations to meet its short-term cash flow requirements. The Outdoor Channel is
also meeting its short-term cash flow requirements and is profitable. Management
believes that the Company's existing cash resources and anticipated cash flow
from operations will be sufficient to fund the Company's operations at current
and moderately expanded levels for the next twelve months. In the event that the
Company desires to grow at an accelerated rate, to the extent that its
anticipated cash flow is insufficient to finance the Company's working capital
requirements, the Company could be required to seek financing. There can be no
assurance that equity or debt financing will be available if needed, or, if
available, will be on terms favorable to the Company or its shareholders.
Significant dilution may be incurred by present shareholders as a result of any
such financing. At the current level of operations, the Company is retiring some
of its existing debt and intends to make further improvements to some of its
other properties. At the current level of operations, the Channel has increased
its promotional activities and has augmented its professional staff. The Outdoor
Channel has retired some of its debt with the Company in the first half of 2000
and intends on retiring the remaining portions of said debt in the second half
of 2000. The Company presently intends to utilize such funds for working
capital, to be in a position to retire a portion of its loans and to make Lost
Dutchman's and GPAA acquisitions and improvements.
Since July 30, 1997, the Company's Common Stock has been traded on the
NASD's over the counter Bulletin Board under the symbol "GLRS." Price quotes on
the Company's Common Stock can be obtained from any stockbroker. Also, price
quotes can be obtained from a number of other sources including internet sites
on America On Line, Yahoo Finance and cnbc.com.
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<PAGE>
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The annual meeting of shareholders was held on May 20, 2000. The
only matter voted upon, except for adjournment, was the election of
directors. Perry T. Massie, Thomas H. Massie and Richard K. Dickson II
were reelected as directors of the Company. For Perry T. Massie there were
4,424,120 votes for, 0 votes against and 0 votes withheld. For Thomas H.
Massie there were 4,424,120 votes for, 0 votes against and 0 votes
withheld. For Richard K. Dickson II there were 4,424,120 votes for, 0
votes against and 0 votes withheld.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
--------
Exhibit
Number
------
27 Financial Data Schedule (SEC filing only).
(b) Reports on Form 8-K
-------------------
None.
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<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GLOBAL OUTDOORS, INC.
(Registrant)
Dated: August 14, 2000 By: /s/ PERRY T. MASSIE
-----------------------------------
PERRY T. MASSIE,
President and Chief
Executive Officer
Dated: August 14, 2000 By: /s/ RICHARD K. DICKSON II
-----------------------------------
RICHARD K. DICKSON II,
Chief Operating Officer and interim
Chief Financial Officer
(Principal Financial Officer)
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