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GFMH > SEC Filings for GFMH > Form 10-K on 14-Aug-2013All Recent SEC Filings

Show all filings for GOLIATH FILM & MEDIA HOLDINGS

Form 10-K for GOLIATH FILM & MEDIA HOLDINGS


14-Aug-2013

Annual Report


Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS

Disclaimer Regarding Forward-Looking Statements

This Annual Report on Form 10-K contains forward-looking statements within the meaning of the federal securities laws. These include statements about our expectations, beliefs, intentions or strategies for the future, which we indicate by words or phrases such as "anticipate," "expect," "intend," "plan," "will," "we believe," "believes," "management believes" and similar language. Except for the historical information contained herein, the matters discussed in this "Management's Discussion and Analysis of Financial Condition and Results of Operations," and elsewhere in this report are forward-looking statements that involve risks and uncertainties. The factors listed in the section captioned "Risk Factors," as well as any cautionary language in this report; provide examples of risks, uncertainties and events that may cause our actual results to differ materially from those projected. Except as may be required by law, we undertake no obligation to update any forward-looking statement to reflect events after the date of this Form 10-K.


Critical Accounting Policies and Estimates

The SEC has defined a company's critical accounting policies as the ones that are most important to the portrayal of the Company's financial condition and results of operations and which require the Company to make its most difficult and subjective judgments, often as a result of the need to make estimates of matters that are inherently uncertain. Based on this definition, we have identified the critical accounting policies and judgments addressed below. We also have other key accounting policies that are significant to understanding our results. For additional information, see Note 3 - Summary of Significant Accounting Policies on page 26.

The following are deemed to be the most significant accounting policies affecting the Company.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiary. All significant inter-company balances and transactions are eliminated on consolidation.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting periods. Measurement, estimates and assumptions are used for, but not limited to, useful lives and residual value of long-lived assets, and the valuation of equity instruments. Management makes these estimates using the best information available at the time the estimates are made; however actual results when ultimately realized could differ from those estimates. The current economic environment has increased the degree of uncertainty inherent in these estimates and assumption.

Revenue Recognition and Accounts Receivable

We will recognize revenues in accordance with the guidelines of the Securities and Exchange Commission ("SEC") Staff Accounting Bulletin ("SAB") No. 104 "Revenue Recognition".

Under SAB 104, four conditions must be met before revenue can be recognized: (i) there is persuasive evidence that an arrangement exists, (ii) delivery has occurred or service has been rendered, (iii) the price is fixed or determinable, and (iv) collection is reasonably assured. The Company provides for an allowance for doubtful account based history and experience considering economic and industry trends. The Company does not have any off-Balance Sheet exposure related to its customers.

Income Taxes

We account for income taxes under the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") No. 740, Income Taxes ("ASC 740"). Under ASC 740, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Stock Compensation

In accordance with ASC No. 718, Compensation - Stock Compensation ("ASC 718"), we measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. As such, compensation cost is measured on the date of grant at their fair value. Such compensation amounts, if any, are amortized over the respective vesting periods of the option grant. We apply this statement prospectively. Equity instruments ("instruments") issued to other than employees are recorded on the basis of the fair value of the instruments, as required by ASC 718. ASC No. 505, Equity Based Payments to Non-Employees ("ASC 505") defines the measurement date and recognition period for such instruments. In general, the measurement date is (a) when a performance commitment, as defined, is reached or (b) when the earlier of (i) the non-employee performance is complete or (ii) the instruments are vested. The measured value related to the instruments is recognized over a period based on the facts and circumstances of each particular grant as defined in the ASC 505.


Accounting for Derivative Financial Instruments

We evaluate financial instruments using the guidance provided by ASC 815 and apply the provisions thereof to the accounting of items identified as derivative financial instruments not indexed to our stock.

Fair Value of Financial Instruments

We follow the provisions of ASC 820. This Topic defines fair value, establishes a measurement framework and expands disclosures about fair value measurements.

We use fair value measurements for determining the valuation of derivative financial instruments payable in shares of its common stock. This primarily involves option pricing models that incorporate certain assumptions and projections to determine fair value. These require management's judgment.

Recent Accounting Pronouncements

We have evaluated new accounting pronouncements that have been issued and are not yet effective for us and determined that there are no such pronouncements expected to have an impact on our future financial statements.

Plan of Operations

We have not yet enjoyed any revenues. The Company incurred a net loss of $114,883 for the year ended April 30, 2013 compared to a net loss of $147,131 for the year ended April 30, 2012. These factors create substantial doubt about the Company's ability to continue as a going concern. The Company's management plan to continue as a going concern revolves around its ability to execute its business strategy of distributing digital content, as well as raising the necessary capital to pay ongoing general and administrative expenses of the Company.

In the year ending April 30, 2012, a note payable in the amount of $38,000 was advanced by a related party; in addition $103,000 raised from the sale of stock was advanced from business prospects for future business projects with the Company. The note carries three percent interest and is due on October 27, 2013. The note has been repaid as of June 30, 2012.

Results of Operations

Fiscal Year Ended April 30, 2013 Compared to Fiscal Year Ended April 30, 2012

Revenue

For the fiscal year ended April 30, 2013 and April 30, 2012, we have not generated any revenues.

Operating expenses

Operating expenses decreased by $31,908, or 21.9%, to $113,873 in the year ended April 30, 2013 from $145,781 in the year ended April 30, 2012 primarily due to a decrease in professional fees.

Operating expenses for the year ended April 30, 2013 were comprised primarily of $29,474 in consulting services costs; travel costs of $29,895, equipment rental costs of $15,480, stock based compensation expense of $11,000, office rent of $14,210, professional fees of $10,955, and $2,859 of other operating expenses.

Operating expenses for the year ended April 30, 2012 were comprised primarily of $43,718 in professional fees; $26,100 in consulting services costs, stock based compensation expense of $36,000; travel costs of $11,388; rent of $14,767, advertising costs of $5,650, website setup costs of $6,500, and $1,658 of other operating expenses.

Net loss before income taxes

Net loss before income taxes for the year ended April 30, 2013 totaled $114,063 primarily due to consulting services costs, travel costs, equipment rental costs, stock based compensation expenses, office rent, and professional fees compared to $146,351 for the year ended April 30, 2012 primarily due to professional fees, consulting services costs, stock based compensation expense, office rent, travel costs, advertising costs, and website setup costs.


Assets and Liabilities

Total assets were $42,046 as of April 30, 2013 compared to $22,299 as of April 30, 2012 primarily the result of an increase in prepaid assets of $12,768, investment of documentary of $4,535, and cash of $2,444. Total liabilities as of April 30, 2013 were $54,710 compared to $66,430 as of April 30, 2012, or a decrease of $11,720 or 17.6%. The decrease was primarily the result of decreases in accounts payable to a related party in the amount of $24,944 and long term note payable to a related party of $7,250, offset primarily by accounts payable of $21,044.

Stockholders' Deficit

Stockholders' deficit was $(12,664) as of April 30, 2013. Stockholder's deficit consisted primarily of shares issued for services rendered in the amount of $57,750, shares issued for fundraising totaling $191,600, offset primarily by the deficit accumulated during the development stage of $262,014 at April 30, 2013.

Liquidity and Capital Resources

General - Overall, we had an increase in cash flows of $2,444 in the year ending April 30, 2013 resulting from cash provided by financing activities of $81,350, offset partially by cash used in operating activities of $74,371 and cash used in investing activities of $4,535.

The following is a summary of our cash flows provided by (used in) operating, investing, and financing activities during the periods indicated:

                                              Year Ended April 30,
                                               2013           2012

Cash at beginning of period                 $      483     $        2
Net cash used in operating activities          (74,371 )     (107,333 )
Net cash used in investing activities           (4,535 )       (2,550 )
Net cash provided by financing activities       81,350        110,251
Cash at end of period                       $    2,927     $      483

Net cash used in operating activities was $74,371 for the year ending April 30, 2013 compared to net cash used in operations for the year ending April 30, 2012 of $107,333 primarily due to a net loss of $114,883 for the year ending April 30, 2013, issuance of common stock to related party for services rendered of $57,750, and the change in operating assets and liabilities of $17,238. Net cash provided by financing activities was $81,350 for the year ending April 30, 2013, compared to net cash provided by financing activities of $110,251 for the year ending April 30, 2012. Net cash used in investing activities was $4,535 for the year ending April 30, 2013, compared to net cash used in investing activities of $2,550 for the year ending April 30, 2012.

During the year ended April 30, 2013, we entered into a private placement memorandum with each of two affiliates under which we issued them 1,772,000 shares of our common stock, restricted in accordance with Rule 144, in exchange for $88,600. The issuance was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, and the investor was sophisticated and familiar with our operations at the time of the issuance of the shares.

Our cash needs in the year ending April 30, 2014 are estimated to be $200,000. This budget is based on the assumption that we will carry out one project at a time for which we will need about $50,000 in working capital; general and administrative expenses of $150,000 for the costs related to being public, and miscellaneous office expenses. We sold 2,115,334 shares for net proceeds of $191,600 in offerings conducted in fiscal years 2013 and 2012. Additionally, we raised $38,000 through a related party note in fiscal year 2012. As we move forward with our business plan we will need to raise additional capital either through the sale of stock or funding from shares and or officers and directors to cover our cash needs through the end of the 2014 fiscal year.

Information included in this report includes forward looking statements, which can be identified by the use of forward-looking terminology such as may, expect, anticipate, believe, estimate, or continue, or the negative thereof or other variations thereon or comparable terminology. The statements in "Risk Factors" and other statements and disclaimers in this report constitute cautionary statements identifying important factors, including risks and uncertainties, relating to the forward-looking statements that could cause actual results to differ materially from those reflected in the forward-looking statements.


Development Stage Company

Since we have not yet generated any revenues until after April 30, 2013, we were a development stage company as that term is defined in Section 915 - Development Stage Entities, of the FASB Accounting Standards Codification. Our activities have mostly been devoted to seeking capital; seeking supply contracts and development of a business plan. Our auditors have included an explanatory paragraph in their report on our financial statements, relating to the uncertainty of our business as a going concern, due to our lack of operating history or current revenues, its nature as a start up business, management's limited experience and limited funds. We do not believe that conventional financing, such as bank loans, is available to us due to these factors. We have no bank line of credit available to us. Management believes that it will be able to raise the required funds for operations from one or more future offerings, in order to affect our business plan.

Our future operating results are subject to many factors including:

? our success in obtaining contracts for our services;

? the success of any joint marketing agreements;

? our ability to obtain additional financing; and

? other risks which we identify in future filings with the SEC.

Any or all of our forward looking statements in this filing and in any other public statements we make may turn out to be wrong. They can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Consequently, no forward looking statement can be guaranteed. In addition, we undertake no responsibility to update any forward-looking statement to reflect events or circumstances which occur after the date of this prospectus.

Equity Financing

During the year ended April 30, 2013, we entered into separate private placement memorandums with two affiliates under which we issued them 1,772,000 shares of our common stock, restricted in accordance with Rule 144, in exchange for $88,600. The issuance was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, and the investors were sophisticated and familiar with our operations at the time of the issuance of the shares.

During the year ended April 30, 2012, we entered into a stock purchase agreement with an affiliate, under which we issued him a total of 243,334 shares of our common stock, restricted in accordance with Rule 144, in exchange for $73,000. These shares were issued on May 1, 2012. The issuance was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, and the investor was a sophisticated investor at the time of the issuance of the shares.

On November 16, 2011, we entered into a stock purchase agreement with a non-affiliated third party, under which we issued him 100,000 shares of our common stock, restricted in accordance with Rule 144, in exchange for $30,000. These shares were issued on May 1, 2012. The issuance was exempt from registration pursuant to Section 4(2) of the Securities Act of 1933, and the investor was sophisticated and familiar with our operations at the time of the issuance of the shares.

On May 1, 2012 we issued 250,000 restricted common shares to a non-affiliated third party pursuant to a consulting agreement to assist us in the distribution of certain films. In addition, we issued 5,266,667 restricted common shares to John Ballard, our Chief Financial Officer pursuant to his consulting contract dated October 27, 2011 and amended May 1, 2012. We also issued 633,333 restricted common shares for professional services per consulting contracts dated October 27, 2011 and amended May 1, 2012.

We issued 6,000,000 restricted common shares to Lamont Roberts, our President and Chief Executive Officer, pursuant to his employment contract dated May 1, 2012. Further, we issued 10,000,000 restricted common shares to Kaila Criscione, our Chief Operating Officer pursuant to her employment contract dated May 1, 2012.


Distribution Rights

On February 13, 2012 the company announced that it has acquired the distribution rights to the following motion pictures: Seducing Spirits, The Perfect Argument, Marina Murders, Film Struggle, Divorce in America, A Wonderful Summer, The Truth About Layla, Living with Cancer and The Biggest Fan. Under the distribution agreements, Goliath will receive 30% of the gross revenues for each picture it distributes. In general, the Company's distribution contracts cover both domestic and international licensing agreements; however, for the picture The Biggest Fan, the Company obtained limited distribution rights.

On July 29, 2012, the Company acquired a 30% exclusive interest for three years of a documentary on the career of, former National Basketball Association star,
A.C. Green.

The Company paid $7,085 to acquire this interest, of which a deposit of $2,550 was paid as of April 30, 2012 and the remaining $4,535 has been paid as of July 29, 2012.

Amendment to Articles of Incorporation

On February 26, 2013, the Company filed a Certificate of Amendment to its Restated Certificate of Incorporation with the Secretary of State of the State of Nevada to increase the number of authorized common shares from 149 million to 300 million.

On February 26, 2013, through resolutions adopted by unanimous written consent of the board of directors, the Company approved the increase of authorized common shares from 149 million to 300 million common shares.

Contractual Obligations and Off-Balance Sheet Arrangements

We do not have any contractual obligations or off balance sheet arrangements.

Commitments and Contingencies

We did not record any legal contingencies as of April 30, 2013.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Inflation

Management believes that inflation has not had a material effect on the Company's results of operations.

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