SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
| x | Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended June 30, 2004
OR
| ¨ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
Commission File No. 000-50155
GLOBAL BROADCAST GROUP, INC.
(Exact name of registrant as specified in its charter)
| DELAWARE | 02-0563302 | |
| (State of Incorporation) | (I.R.S. Employer Identification Number) |
18495 U.S. Hwy 19N, Clearwater, Florida 33764
(Address of principal executive offices)
(727) 533-8300
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (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 such filing requirements for the past 90 days. YES x NO ¨
As of August 17, 2004, there were 12,567,871 shares of our common stock, $.001 par value outstanding.
TABLE OF CONTENTS
| Page | ||||
| PART I. | FINANCIAL INFORMATION | |||
| Item 1. |
1 | |||
| Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
10 | ||
| Item 3. |
14 | |||
| PART II. | OTHER INFORMATION | |||
| Item 1. |
15 | |||
| Item 2. |
15 | |||
| Item 3. |
15 | |||
| Item 4. |
15 | |||
| Item 5. |
15 | |||
| Item 6. |
16 | |||
ii
Item 1. Financial Statements (unaudited)
GLOBAL BROADCAST GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Clearwater, Florida
BALANCE SHEETS
| (Unaudited) 2004 |
December 31, 2003 |
|||||||
| ASSETS |
||||||||
| Current Assets |
||||||||
| Cash and Cash Equivalents |
$ | 63 | $ | 60,120 | ||||
| Total Current Assets |
$ | 63 | $ | 60,120 | ||||
| LIABILITIES AND STOCKHOLDERS’ DEFICIT |
||||||||
| Current Liabilities |
||||||||
| Accounts Payable |
$ | 80,780 | $ | 47,757 | ||||
| Accrued Interest Payable |
13,615 | 4,159 | ||||||
| Accrued Payroll |
64,016 | 50,559 | ||||||
| Convertible Notes Payable |
164,500 | 164,500 | ||||||
| Due to Stockholder |
64,618 | 48,378 | ||||||
| Total Current Liabilities |
387,529 | 315,353 | ||||||
| Stockholders’ Deficit |
||||||||
| Common Stock - $.001 Par Value; 50,000,000 Shares Authorized, 12,317,871 Shares Issued and Outstanding |
12,318 | 12,318 | ||||||
| Additional Paid-in Capital |
662,613 | 652,613 | ||||||
| Deficit Accumulated During Development Stage |
(1,062,397 | ) | (920,164 | ) | ||||
| Total Stockholders’ Deficit |
(387,466 | ) | (255,233 | ) | ||||
| Total Liabilities and Stockholders’ Deficit |
$ | 63 | $ | 60,120 | ||||
The accompanying notes are an integral part of these financial statements.
- 1 -
GLOBAL BROADCAST GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Clearwater, Florida
STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT
| Number of Shares |
Common Stock ($0.001 Par Value) |
Additional Paid-In Capital |
Deficit Accumulated During Development Stage |
Total Stockholders’ Deficit |
|||||||||||||||
| Balance - October 31, 2000 | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
| Common Stock Issued in Exchange for Services and Expenses Paid by Shareholders (Galli) |
11,553,100 | 11,553 | 202 | — | 11,755 | ||||||||||||||
| Common Stock Issued in Exchange for Services and Expenses Paid by Shareholders (City View) |
3,425,000 | (1) | 3,425 | — | — | 3,425 | |||||||||||||
| Common Shares Issued for Cash - Private Placement (City View) |
928,500 | (1) | 929 | 308,571 | — | 309,500 | |||||||||||||
| Common Shares Issued for Cash - Private Placement (Global Broadcast) |
267,500 | 267 | 64,734 | — | 65,001 | ||||||||||||||
| Shares Issued for Services Rendered |
640,000 | 640 | 5,360 | — | 6,000 | ||||||||||||||
| Shares Issued to Directors for Services Rendered |
100,000 | 100 | 3,900 | — | 4,000 | ||||||||||||||
| Shares Repurchased |
(5,416,229 | ) | (5,416 | ) | (144,584 | ) | — | (150,000 | ) | ||||||||||
| Capital Contribution - Shareholder |
— | — | 200,000 | — | 200,000 | ||||||||||||||
| Net Loss for the Period |
— | — | — | (628,088 | ) | (628,088 | ) | ||||||||||||
| Balance - December 31, 2002 | 11,497,871 | $ | 11,498 | $ | 438,183 | $ | (628,088 | ) | $ | (178,407 | ) | ||||||||
| (1) | Shares issued and outstanding have been adjusted to reflect the Plan of Merger effected on March 1, 2002 |
The accompanying notes are an integral part of these financial statements.
- continued -
- 2 -
GLOBAL BROADCAST GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Clearwater, Florida
STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT - continued
| Number of Shares |
Common Stock ($0.001 Par Value) |
Additional Paid-In Capital |
Deficit Accumulated During Development Stage |
Total Stockholders’ Deficit |
||||||||||||
| Balance - December 31, 2002 |
11,497,871 | $ | 11,498 | $ | 438,183 | $ | (628,088 | ) | $ | (178,407 | ) | |||||
| Common Shares Issued for Cash - Private Placement (Global Broadcast) |
295,000 | 295 | 35,955 | — | 36,250 | |||||||||||
| Issuance of Stock via Conversion of Note Payable |
450,000 | 450 | 153,550 | — | 154,000 | |||||||||||
| Shares Issued for Services Rendered |
75,000 | 75 | 24,925 | — | 25,000 | |||||||||||
| Net Loss for the Period (Unaudited) |
— | — | — | (152,200 | ) | (152,200 | ) | |||||||||
| Balance - June 30, 2003 (Unaudited) |
12,317,871 | 12,318 | 652,613 | (780,288 | ) | (115,357 | ) | |||||||||
| Net Loss for the Period (Unaudited) |
— | — | — | (139,876 | ) | (139,876 | ) | |||||||||
| Balance - December 31, 2003 |
12,317,871 | 12,318 | 652,613 | (920,164 | ) | (255,233 | ) | |||||||||
| Shares Granted for Services Rendered |
— | — | 2,000 | — | 2,000 | |||||||||||
| Shares Granted to Directors for Services Rendered |
— | — | 8,000 | — | 8,000 | |||||||||||
| Net Loss for the Period (Unaudited) |
— | — | — | (142,233 | ) | (142,233 | ) | |||||||||
| Balance - June 30, 2004 (Unaudited) |
12,317,871 | $ | 12,318 | $ | 662,613 | $ | (1,062,397 | ) | $ | (387,466 | ) | |||||
The accompanying notes are an integral part of these financial statements.
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GLOBAL BROADCAST GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Clearwater, Florida
STATEMENTS OF OPERATIONS (UNAUDITED)
| Period From Date of Inception (October 31, 2000) Through June 30, 2004 |
Three Months Ended June 30, |
|||||||||||
| 2004 |
2003 |
|||||||||||
| Revenues |
$ | 500 | $ | — | $ | — | ||||||
| Expenses |
||||||||||||
| Commissions |
11,250 | — | — | |||||||||
| General and Administrative |
32,536 | 2,798 | 1,820 | |||||||||
| Insurance |
64,628 | 2,727 | 6,449 | |||||||||
| Interest |
17,615 | 4,728 | — | |||||||||
| Investment Banker |
39,970 | — | — | |||||||||
| Management Fees |
283,392 | 28,000 | 18,000 | |||||||||
| Marketing |
51,000 | — | 25,000 | |||||||||
| Organizational Costs |
164,853 | — | — | |||||||||
| Payroll Taxes |
11,622 | 957 | 840 | |||||||||
| Production Equipment |
24,257 | — | — | |||||||||
| Professional Fees |
142,224 | 26,153 | 29,197 | |||||||||
| Rent |
15,939 | 1,757 | 1,371 | |||||||||
| Salaries |
150,596 | 14,501 | 10,983 | |||||||||
| Telephone |
18,851 | 1,856 | 1,301 | |||||||||
| Transfer Agent Fees |
6,089 | 624 | 870 | |||||||||
| Travel |
28,075 | — | 5,043 | |||||||||
| Total Expenses |
1,062,897 | 84,101 | 100,874 | |||||||||
| Loss Before Provision for Taxes |
(1,062,397 | ) | (84,101 | ) | (100,874 | ) | ||||||
| Provision for Taxes |
— | — | — | |||||||||
| Net Loss for the Period |
$ | (1,062,397 | ) | $ | (84,101 | ) | $ | (100,874 | ) | |||
| Weighted Average Number of Common Shares Outstanding - Basic and Diluted |
12,736,065 | 12,317,871 | 12,251,937 | |||||||||
| Net Loss per Common Share - Basic and Diluted |
$ | (0.08 | ) | $ | (0.01 | ) | $ | (0.01 | ) | |||
The accompanying notes are an integral part of these financial statements.
- 4 -
GLOBAL BROADCAST GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Clearwater, Florida
STATEMENTS OF OPERATIONS (UNAUDITED)
| Six Months Ended June 30, |
||||||||
| 2004 |
2003 |
|||||||
| Revenues |
$ | — | $ | — | ||||
| Expenses |
||||||||
| General and Administrative |
4,126 | 4,162 | ||||||
| Insurance |
6,457 | 13,046 | ||||||
| Interest |
9,456 | — | ||||||
| Management Fees |
48,000 | 36,000 | ||||||
| Marketing |
— | 25,000 | ||||||
| Payroll Taxes |
2,102 | 1,680 | ||||||
| Professional Fees |
37,361 | 29,945 | ||||||
| Rent |
3,514 | 2,742 | ||||||
| Salaries |
27,002 | 21,966 | ||||||
| Telephone |
2,313 | 3,299 | ||||||
| Transfer Agent Fees |
1,224 | 1,490 | ||||||
| Travel |
678 | 12,870 | ||||||
| Total Expenses |
142,233 | 152,200 | ||||||
| Loss Before Provision for Taxes |
(142,233 | ) | (152,200 | ) | ||||
| Provision for Taxes |
— | — | ||||||
| Net Loss for the Period |
$ | (142,233 | ) | $ | (152,200 | ) | ||
| Weighted Average Number of Common Shares Outstanding - Basic and Diluted |
12,317,871 | 12,142,001 | ||||||
| Net Loss per Common Share - Basic and Diluted |
$ | (0.01 | ) | $ | (0.01 | ) | ||
The accompanying notes are an integral part of these financial statements.
- 5 -
GLOBAL BROADCAST GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Clearwater, Florida
STATEMENTS OF CASH FLOWS (UNAUDITED)
| Period
From June 30, 2004 |
Six Months Ended June 30, |
|||||||||||
| 2004 |
2003 |
|||||||||||
| Cash Flows from Operating Activities |
||||||||||||
| Net Loss for the Period |
$ | (1,062,397 | ) | $ | (142,233 | ) | $ | (152,200 | ) | |||
| Non-Cash Adjustments |
||||||||||||
| Organizational Costs Paid by Shareholders |
14,853 | — | — | |||||||||
| Franchise Taxes and Filing Fees Paid by Shareholders |
202 | — | — | |||||||||
| Contributed Services by Shareholders |
125 | — | — | |||||||||
| Common Stock Issued for Services Rendered |
35,000 | — | 25,000 | |||||||||
| Common Stock Granted for Services Rendered |
10,000 | 10,000 | — | |||||||||
| Changes in Assets and Liabilities |
||||||||||||
| Accounts Receivable |
— | — | 1,160 | |||||||||
| Accounts Payable |
80,780 | 33,023 | 29,491 | |||||||||
| Accrued Interest Payable |
17,615 | 9,456 | — | |||||||||
| Accrued Payroll |
64,016 | 13,457 | 23,646 | |||||||||
| Due to Stockholder |
64,618 | 16,240 | 37,200 | |||||||||
| Net Cash Flows from Operating Activities |
(775,188 | ) | (60,057 | ) | (35,703 | ) | ||||||
| Cash Flows from Investing Activities |
— | — | — | |||||||||
| Cash Flows from Financing Activities |
||||||||||||
| Contribution by Shareholder |
200,000 | — | — | |||||||||
| Proceeds from the Issuance of Convertible Notes Payable |
164,500 | — | — | |||||||||
| Proceeds from the Issuance of Note Payable |
150,000 | — | — | |||||||||
| Proceeds from the Issuance of Common Stock |
410,751 | — | 36,250 | |||||||||
| Common Stock Repurchased |
(150,000 | ) | — | — | ||||||||
| Net Cash Flows from Financing Activities |
775,251 | — | 36,250 | |||||||||
| Net Change in Cash and Cash Equivalents |
63 | (60,057 | ) | 547 | ||||||||
| Cash and Cash Equivalents - Beginning of Period |
— | 60,120 | 1,462 | |||||||||
| Cash and Cash Equivalents - End of Period |
$ | 63 | $ | 63 | $ | 2,009 | ||||||
The accompanying notes are an integral part of these financial statements.
- 6 -
GLOBAL BROADCAST GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Clearwater, Florida
STATEMENTS OF CASH FLOWS (UNAUDITED) - continued
| Period From June 30, 2004 |
Six Months Ended June 30, | ||||||||
| 2004 |
2003 | ||||||||
| Supplemental Disclosures |
|||||||||
| Interest Paid |
$ | — | $ | — | $ | — | |||
| Income Taxes Paid |
$ | — | $ | — | $ | — | |||
| NON-CASH INVESTING AND FINANCING ACTIVITIES |
|||||||||
| Organizational Costs Paid by Shareholders in Exchange for Common Stock |
$ | 14,853 | $ | — | $ | — | |||
| Franchise Taxes and Filing Fees Paid by Shareholder |
$ | 202 | $ | — | $ | — | |||
| Contributed Services by Shareholders |
$ | 125 | $ | — | $ | — | |||
| Common Stock Issued for Services Rendered |
$ | 35,000 | $ | — | $ | — | |||
| Issuance of Common Stock via Conversion of Note Payable and Accrued Interest Payable |
$ | 154,000 | $ | — | $ | 154,000 | |||
| Common Stock Granted for Services Rendered |
$ | 10,000 | $ | 10,000 | $ | — | |||
The accompanying notes are an integral part of these financial statements.
- 7 -
GLOBAL BROADCAST GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Clearwater, Florida
NOTES TO FINANCIAL STATEMENTS
Note A - Basis of Presentation
The condensed financial statements of Global Broadcast Group, Inc. (the “Company”) included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in conjunction with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These condensed financial statements should be read in conjunction with the annual audited financial statements and the notes thereto included in the Company’s annual report on Form 10-KSB.
The accompanying unaudited interim financial statements reflect all adjustments of a normal and recurring nature which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows of the Company for the interim periods presented. The results of operations for these periods are not necessarily comparable to, or indicative of, results of any other interim period or for the fiscal year taken as a whole. Factors that affect the comparability of financial data from year to year and for comparable interim periods include non-recurring expenses associated with the Company’s registration with the SEC, costs incurred to raise capital, and stock awards.
Note B - Common Stock
In April 2004, the Company granted 200,000 shares of its common stock to directors for services rendered. The Company charged operations in 2004 for $8,000 for the fair value of services rendered and credited additional paid-in-capital for $8,000. As of June 30, 2004, these shares have not been issued.
In April 2004, the Company granted 50,000 shares of its common stock to an employee for services rendered. The Company charged operations in 2004 for $2,000 for the fair value of services rendered and credited additional paid-in-capital for $2,000. As of June 30, 2004, these shares have not been issued.
Note C - Going Concern
The Company’s financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has reported net losses of $1,062,397 through June 30, 2004. As a result, there is an accumulated deficit of $1,062,397 at June 30, 2004.
The Company’s continued existence is dependent upon its ability to raise capital or to successfully market and sell its products. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.
- 8 -
GLOBAL BROADCAST GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
(A DELAWARE CORPORATION)
Clearwater, Florida
NOTES TO FINANCIAL STATEMENTS
Note D - Subsequent Events
During July 2004, the Company received $10,000 in cash from a shareholder in exchange for 100,000 additional shares of common stock.
During August 2004, the Company entered into a loan agreement with an unrelated third party in the amount of $200,000. The note bears interest at 12% per annum and is secured by 800,000 restricted shares of the Company’s common stock. The note is due in full, together with accrued interest, on September 9, 2005.
At the note holder’s option, the note is convertible into shares of the Company’s common stock equal in number to the amount determined by dividing each $1,000 of note principal to be converted by the Conversion Price at any time during the term of the note. The Conversion Price is $0.25.
- 9 -
Item 2: Management’s Discussion and Analysis of Financial Condition and Results of Operations
Overview of the Company
We were incorporated under the laws of Delaware on October 31, 2000, as Galli Process, Inc. On February 7, 2002, we changed our name to Global Broadcast Group, Inc. (“GBG”). Our executive offices are located at 18495 U.S. Hwy 19N, Clearwater, Florida 33764 and our telephone number is (727) 533-8300.
On July 22, 2004, the NASD cleared us to trade our common stock on the OTC Bulletin Board. Our symbol is GBCG.
We have developed an innovative advertising and informational platform that incorporates satellite and Internet-based technology. The platform enables advertisers, businesses and educators to promote their products and services on television sets and electronic displays in retail stores, hotels, offices, high traffic areas and other facilities. Programming will consist of short format full motion video such as music videos, video ads and short infomercials which usually take two days to produce. Animated graphics will be used for headline news, sports and both national and local weather. All programming and content is designed to entertain, inform and educate consumers, employees, and students.
We have developed a platform known as GBG Medical to focus on a new use of our technology which is to transmit data used by radiologists in the diagnosis (and in some cases, treatment) of disease. We can transmit X-rays, MRI, CT scans, and ultrasound in a process known as “teleradiology”. Teleradiology is the transmission of x-rays and other images from diagnostic tests to radiologists who are in a different location. We believe this is a needed service due to a chronic shortage of radiologists worldwide . Currently, a high-speed telephone line is needed to utilize this service. Our platform uses a 12” satellite dish, which is the same dish that is used in homes, and a computer, making our solution efficient and economical. Initially, we will focus our selling efforts on the medical field.
The following discussion is based upon, and should be read in conjunction with our financial statements as of and for the six months and quarter ended June 30, 2004 and 2003, together with the notes to the financial statements. When used in the following discussions, the words “believes,” “anticipates,” “intends,” “expects,” and similar expressions are intended to identify forward-looking statements. Such statements are subject to certain risks and uncertainties, which could cause results to differ materially from those projected.
- 10 -
Results of Operations
Quarter ended June 30, 2004 as compared to quarter ended June 30, 2003:
Selling Expenses
Selling expenses for the quarter ended June 30, 2004 were $0 as compared to $30,000 for the quarter ended June 30, 2003. The decrease was due to a decrease in marketing and travel expenses.
General and administrative expenses
General and administrative expenses for quarter ended June 30, 2004 were $79,000, an increase of $8,000, or 10% as compared to $71,000 for the quarter ended June 30, 2003. General and administrative expenses primarily include salaries, investment banker fees, management fees, professional fees and general operating expenses. The increase is primarily due to an increase in management fees and salaries.
Interest expense
Interest expense for quarter ended June 30, 2004 was $5,000 compared to $0 for the quarter ended June 30, 2003. The increase is due to interest on the convertible notes payable entered into during 2003.
Total expenses for the quarter ended June 30, 2004 were $84,000, an overall decrease of $17,000, or 17%, from $101,000 for the quarter ended June 30, 2003.
Six months ended June 30, 2004 as compared to six months ended June 30, 2003:
Selling Expenses
Selling expenses for the six months ended June 30, 2004 were $1,000 a decrease of $37,000, or 97%, from $38,000 for the six months June 30, 2003. The decrease was due to a decrease in marketing and travel expenses.
General and administrative expenses
General and administrative expenses for six months ended June 30, 2004 were $132,000, an increase of $18,000, or 16%, from $114,000 for the six months June 30, 2003. General and administrative expenses primarily include salaries, investment banker fees, management fees, professional fees and general operating expenses. The increase is primarily due to an increase in management fees, salaries and professional fees. The increase is offset by a decrease in insurance expense.
- 11 -
Interest expense
Interest expense for six months ended June 30, 2004 was $9,000 compared to $0 for the six months June 30, 2003. The increase is due to interest on the convertible notes payable entered into during 2003.
Total expenses for the six months ended June 30, 2004 were $142,000, an overall decrease of $10,000, or 7%, from $152,000 for the six months ended June 30, 2003.
Liquidity and Capital Resources
As reflected in the Statement of Cash Flows for the six months ended June 30, 2004 and 2003, net cash flows from operating activities for the six months ended June 30, 2004 was ($60,000), an increase of $24,000 or 68% from ($36,000) for the six months ended June 30, 2003. The decrease is primarily the result a decrease in accrued payroll of $11,000, a decrease in the amount due to stockholder of $11,000 and a decrease in common stock issued/granted of $15,000. This is offset by an increase in accrued interest payable of $9,000 and an increase in accounts payable of $4,000.
Net cash flows from financing activities for the six months ended June 30, 2004 was $0, a decrease of $36,000, or 100%, from $36,000 for the six months ended June 30, 2003. The decrease is due to proceeds from issuance of common stock in the six months ended June 30, 2003 that did not reoccur during the six months ended June 30, 2004.
Due to the lack of any significant revenues, we have relied upon proceeds realized from the private sale of our common stock, cash contributions from shareholders, advances from a shareholder and the issuance of a note payable to meet our funding requirements. Funds raised by us have been expended primarily in connection with the costs to acquire Galli Process, Inc. and administrative costs.
During the next 12 months, we expect to spend between $200,000 and $250,000 on operating expenses. Our significant expenses will be management fees, salaries, marketing, professional fees and insurance. As of June 30, 2004, we had cash on hand of $63. To fund operations, we entered into a loan agreement in August 2004 in the amount of $200,000. The note bears interest at 12% per annum and is secured by 800,000 restricted shares of our common stock. The note is due on September 9, 2005 and interest will be paid quarterly. The note can be converted into shares of our common stock at the note holder’s option at any time during the term of the note.
We plan to use our existing financial resources, the proceeds from the sale of additional common stock, as needed, and shareholder infusion of cash, as needed, to fund our operating expenses during this period.
Our shareholders have committed the additional funds that may be needed during the next 12 months to fund operations if funding is not available from any other sources. There is no formal agreement for our shareholders to provide this funding. If deemed necessary by management, we may conduct a private placement of our stock to raise $2,000,000 in capital to fund operations.
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Other than funding our operating expenses, we have not entered into any material capital commitments.
Off-Balance Sheet Items
We have no material off-balance sheet arrangements.
Application of Critical Accounting Policies
Our financial statements and accompanying notes are prepared in accordance with generally accepted accounting principles in the United States. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. Our critical accounting policies include revenue recognition and accounting for income taxes.
Revenue Recognition
We recognize revenue in accordance with Staff Accounting Bulletin No. 101, “Revenue Recognition in Financial Statements.” We will recognize revenue when realized or realizable and earned, which is when the following criteria are met: persuasive evidence of arrangement exists; delivery has occurred; the sales price is fixed and determinable; and the ability to collect is reasonably assured. We will provide for the estimated costs of warranties and reduce revenue for estimated returns.
For sales related to services, we will recognize revenue upon the completion of the installation of all equipment necessary to provide the satellite transmission services. The fees that will be billed monthly to these customers will then be recognized on a monthly basis after the services have been provided. We will only recognize our portion of any such services that relate to a revenue sharing agreement.
For equipment sales, revenue will be recognized when the equipment is shipped to the customer. For equipment leases, rental revenue will be recognized as earned over the term of the lease.
Income Taxes
We account for income taxes in accordance with SFAS No. 109, “Accounting for Income Taxes,” using the asset and liability approach, which requires recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of such assets and liabilities. This method utilizes enacted statutory tax rates in effect for the year in which the temporary differences are expected to reverse and gives immediate effect to changes in income tax rates upon enactment. Deferred tax
- 13 -
assets are recognized, net of any valuation allowance, for temporary differences and net operating loss and tax credit carry forwards. Deferred income tax expense represents the change in net deferred assets and liability balances.
Plan of Operation
We are in the process of marketing our product to companies that are suppliers to our target industries which includes retail stores, hotels, corporate offices and education providers, as well as the companies in industries that we believe can best benefit from our product. During the next nine months we will enter into distribution agreements with a marketing company that supplies equipment and entertainment products to our target industries. We will also attempt to enter into agreements with major hotel chains and enter into joint ventures with companies supplying television sets and television services to hotels and commercial establishments.
We will also develop our capabilities to expand our GBG Medical services to the medical field where we can deliver teleradiology and other information via satellite and avoid the use of expensive high-speed phone lines. We will also explore opportunities and identify acquisitions and companies that are synergistic with our business and that will provide us with a positive cash flow.
Employees
We currently have two full-time employees. During the next 12 months, we do not anticipate hiring more than two additional employees.
Financing/Capital Commitments
Unless we receive adequate outside financing to fund our capital commitments, our operations will be limited to those that can be effected through shareholder infusions of cash and from proceeds from the sale of additional common stock.
Item 3: Controls and Procedures
As of the end of the period covered by this report, we carried out an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures pursuant to Exchange Act Rule 13a-14. This evaluation was done under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer. Based upon that evaluation, he concluded that our disclosure controls and procedures are effective in gathering, analyzing and disclosing information needed to satisfy our disclosure obligations under the Exchange Act.
There were no significant changes in our internal controls or in other factors that could significantly affect those controls since the most recent evaluation of such controls.
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None.
Item 2. Change in Securities and Use of Proceeds
In April, 2004, we granted 200,000 shares of our common stock to two directors for services rendered, valued at $8,000. Additionally in April, we granted 50,000 shares of our common stock to an employee for services rendered, valued at $2,000. All of these shares were issued to the three individuals in July, 2004.
During July, 2004, we sold 100,000 shares of our common stock to an unaffiliated party for total proceeds of $10,000.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
None.
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Item 6. Exhibits and Reports on Form 8-K
| (a) | Index to Exhibits. |
The exhibits required by Item 601 of Regulation S-B, as described in the following index of exhibits, are incorporated by reference in, or filed with, this report, as follows:
| EXHIBIT NO. |
DESCRIPTION OF EXHIBIT | |
| 2 | Agreement and Plan of Merger of City View, Inc., a Florida corporation and Global Broadcast Group, Inc., formerly known as Galli Process, Inc., a Delaware corporation(1) | |
| 3.1 | Certificate of Incorporation(1) | |
| 3.2 | Certificate of Amendment(1) | |
| 3.3 | Authorization to Transact Business in Florida(1) | |
| 3.4 | Bylaws(1) | |
| 31 | Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 32 | Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| (1) | Incorporated by reference to exhibits with the corresponding numbers filed with our registration statement on Form 10-SB (File No. 000-50155) filed January 17, 2003. |
| (b) | Reports on Form 8-K. |
No reports on Form 8-K were filed during the quarter for which this Form 10-QSB is filed.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned authorized officers.
| Date: August 19, 2004 |
/s/ Sam Winer | |
| Sam Winer, | ||
| Chief Executive Officer, Chief Financial Officer, Secretary and Chairman of the Board of Directors | ||
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