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GFMH > SEC Filings for GFMH > Form 10-Q on 11-Mar-2014All Recent SEC Filings

Show all filings for GOLIATH FILM & MEDIA HOLDINGS

Form 10-Q for GOLIATH FILM & MEDIA HOLDINGS


11-Mar-2014

Quarterly Report


Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

Forward Looking Statement Notice

Certain statements made in this Quarterly Report on Form 10-Q are "forward-looking statements" (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the plans and objectives of management for future operations. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of Goliath Film and Media Holdings,("we", "us", "our" or the "Company") to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The forward-looking statements included herein are based on current expectations that involve numerous risks and uncertainties. The Company's plans and objectives are based, in part, on assumptions involving the continued expansion of business. 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 the control of the Company. Although the Company believes its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance the forward-looking statements included in this Quarterly Report will prove to be accurate. In light of the significant uncertainties inherent in the forward-looking statements included herein, the inclusion of such information should not be regarded as a representation by the Company or any other person that the objectives and plans of the Company will be achieved.

Description of Business

Goliath Film and Media Holdings ("Goliath" or the "Company"), through its wholly-owned subsidiary Goliath Film and Media International, intends to develop and license for distribution, domestically and internationally, quality video content with an emphasis on "niche" markets of the motion picture and television content segments of the entertainment industry, such as, without limitation, education, faith-based, horror and socially responsible minority content. Goliath does not intend to engage in domestic theatrical distribution of motion pictures to any significant extent.

In qualified cases, Goliath will develop screenplays that will be outsourced to an independent entity for production, but will be licensed for distribution through the Company. Goliath plans to distribute domestically and internationally, through a wide distribution network which includes major international theatrical exhibitors and other distributors and television networks. We plan to utilize corporate sponsorships as a means of reducing the costs of advertising and marketing in distribution. Further, we may augment our marketing efforts with a limited and strategically focused advertising campaign in traditional "print" media with press releases targeted specifically toward standard entertainment industry trade journals and publications on an "as needed" basis.

Goliath's revenue model includes receiving revenue from distribution fees. A limited number of its video properties include projects developed by Goliath and produced by an independent third party production entity.

Questions and Answers

What is your business?

We distribute motion pictures, educational videos, other video products, and digital content. We plan to distribute video properties to television stations and networks and to private groups such as religious congregations or schools. We do not intend to engage in domestic theatrical releases of motion pictures at this time, due to the high up-front costs of advertising and marketing theatrically. Also, theatrical releases of motion pictures have historically represented only 18% of domestic revenues for the industry (13% internationally) and are potentially decreasing in the future. We intend to emphasize niche markets, commencing with faith-based, educational, responsible minority content, and low budget horror movies.

We currently own 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, The Biggest Fan, and Hanging with the Iron Man. Typically, distribution agreements provide for us to receive 30% of gross revenues. In general, our distribution contracts cover both domestic and international licensing agreements; however, for the picture The Biggest Fan we obtained limited theatrical distribution rights since that film was already released theatrically.

We have also acquired distribution rights to 1,500 educational videos (primarily English, ESL and mathematics) produced by KLCS, a public television station based in Los Angeles, in cooperation with the Los Angeles Unified School District. Management estimates that each of these videos cost $20,000 or more to produce. Goliath has held preliminary discussions for international distribution of these videos. These videos have limited market potential for sale.

What is the timeline for your activities during the next 12 months?

Over the next 90 days, our efforts will be concentrated on acquiring a critical mass of motion pictures and videos in the genres of faith-based, educational, responsible minority content, and low budget horror. We hope to acquire 200 or more faith-based films, 100 or more minority films, 20 Latin films, 100 low budget horror, 50 non-niche market films, and 20,000 educational videos during this time period. We have entered into very preliminary discussions for international licensing of our Films.

We plan to annually attend to not less than three of the major film trade fairs, such as, Sundance, Tribeca, Santa Barbara, Toronto, MIPcom, MIPTV, the European Film Market in Berlin, the Italian Film Market, the American Film Market in Santa Monica, and others, and the International Christian Trade Show. The film markets are where buyers and sellers of motion pictures meet. There are about 89 distinct international territories for film distribution. Typically, international and domestic buyers agree to license films in each territory, for a term of 3-5 years on a per-picture basis. We also plan to market the faith based films to the 315 US Christian television channels and to the various Christian assemblies for church releases (there are approximately1,400 church-operated movie theatres in the US).

What is this going to cost you?

We expect that participating in three film markets over a period of 12 months will cost approximately $100,000 and that we will spend up to $500,000 acquiring distribution rights to properties. We expect that distribution revenues will exceed our expenses.

Why are these films not being distributed already?

The main reason why good, quality motion pictures are not distributed is that the production of a motion picture requires money and creativity, and marketing a motion picture requires an entirely different set of skills. Many people dream of making a movie; few aspire to distribute them. We estimate that there are in excess of 10,000 such motion pictures "gathering dust." There also have been substantial tax incentives for motion picture production, so that many producers do not need to depend on successful marketing in order to find investors for their projects. A secondary factor is the difficulty of finding a reputable distributor. We think that our management has an excellent reputation in the industry and we will be able to obtain distribution rights for content. Finally, many distributors as well as buyers do not have an interest in niche market films, because they see the market as limited. Goliath sees the problem to be, rather, there is no market merely because no one has assembled a critical mass of films for these niches. Most participants in the motion picture industry are based in "Hollywood" and the major coastal metropolitan areas. Our "faith-based" films especially are targeted toward the "Bible Belt" and the "Flyover Country":
places that the industry has consistently overlooked.

Why are you able to identify and acquire these motion pictures and educational videos?

Management and our advisors have decades of experience and solid reputations in the motion picture industry and the Christian, horror and educational markets. We know where the motion pictures are, and within the niche, we know the appropriate persons, we believe, that they will deal with Goliath. Once we attain a critical mass of 100 properties or more, we think it will be not very difficult to be the "faith based," "minority content" etc. distributor that owners of motion pictures in these genres seek out.

What does "faith based" mean?

A "faith based" motion picture is one that has Christian themes, is uplifting, and is family friendly. Faith based motion pictures do have a "Christian" or traditional religious message underlying them, but are not "preachy." According to Gallup, more than 42% of Americans attend church regularly. Internationally, Europe has a smaller but still significant population of attending Christians; Latin America and Christian Africa are higher. This niche also conforms to the significant percentage of families worldwide who are extremely cautious regarding the viewing experiences and habits of their children.

So how are you different than Netflix, Blockbuster and Hulu, to name a few? How can you compete with them? They have a lot of money and name recognition. Why wouldn't they jump into your niches?

We have a different approach. While we may never be as large as any of the companies named above, we still believe in our potential for profitability. These larger firms must focus on a mass market for content viewing and not on specific niche strategies. They generally acquire product by licensing content from the many medium and large film libraries owned by the major distributors for motion picture as well as television product. This formula for acquiring content is extremely expensive. As an example; NETFLIX spent over $3 billion as of fiscal year-end December 31, 2013 on the licensing of content and developing and producing original programming for subscribers/members in both domestic and international markets. With personnel exceeding 2,000 employees and offices worldwide, it is apparent that in order to cover costs and generate a profit, their best strategy is to focus on targeting the mass markets.

As far as entering our space of targeted niche markets, it is an axiom of business that big companies are less nimble than smaller concerns. If one of the larger firms mentioned decides to enter our space, it is likely that their preference would be to acquire us rather than establish divisions or subsidiaries focused on niche markets, from scratch.

Don't cable and satellite networks already offer specialty channels like TBN (for faith based) and BET (Black Entertainment Television (for the African-American Community)?

By the nature of programming, these channels have only a relatively small number of movies and scripted and reality-based programming in their rotation at any one time, and broadcast them in a cycle.

What other niches are you looking at entering?

We believe that the trend in home entertainment is servicing niches. Many viewers have cable or satellite service with hundreds of channels, but view only a few channels that cater to their particular interests. One significant type of niche we might target is the numerous immigrant groups in the United States. Other than Spanish speaking immigrants, coverage is scarce. The last official data (2004) from the US Census Bureau is that 34.2 million persons in the US are foreign born, with 54% from Latin America, 25% from Asia and 14% from Europe. Foreign-born immigrants like to watch movies from their home countries.

Also, there are many interest groups that might be interested in specialty movies or programming. In Southern California, for instance, Surfing is quite popular, and there exists a huge body of surfing films which would be of interest.

What about ancillary markets?

We plan to incorporate advertising in some unobtrusive fashion where possible. Some specialty interest groups (e.g., Surfing) could have their own online shopping for related consumer products.

What films do you have now in inventory?

We presently have 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, The Biggest Fan, and Hanging with the Iron Man. Under the distribution agreements Goliath will receive 30% of the gross revenues for each of the pictures we distribute. In general, our distribution contracts cover both domestic and international licensing agreements; however, for the picture The Biggest Fan we obtained limited distribution rights.

How do these distribution rights work?

We will enter in to a distribution Agreement for each motion picture. Terms may be perpetual or limited by years. The licensing rights that we are acquiring will generally have a term of five years. We will generally obtain a fee of 30% of gross revenues. Licensing will be flexible for usage applications on a yearly or multi-year basis. Most markets, especially foreign territories have a tendency to continuously renew content licensing.

How many employees do you have? Do you have an office?

We have just 3 employees and we believe that is sufficient during the "content aggregation" phase of our development. Our administrative office is in Los Angeles near Beverly Hills.

Do you have a website?

Our website is www.goliathfilmandmediainternational.com. We have a mirror site at www.goliathfilmandmedia.com.

Plan of Operations

We have not yet enjoyed any revenues. The Company incurred a net loss of $19,464 and $66,495 for the three and nine months ended January 31, 2014, respectively, compared to a net loss of $11,397 and $57,595 for the three and nine months ended January 31, 2013, respectively. 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 motion pictures and digital content, as well as raising the necessary capital to pay ongoing general and administrative expenses of the Company.

In the fiscal years ending April 30, 2013 and 2012, $88,600 and $103,000, respectively, was raised from the sale of stock for future business projects with us.

Results of Operations

Three Months Ended January 31, 2014 Compared to Three Months Ended January 31, 2013

Revenue

For the three months ended January 31, 2014 and January 31, 2013, we have not generated any revenues.

Operating expenses

Operating expenses increased by $8,067, or 72.1%, to $19,254 in the three months ended January 31, 2014 from $11,187 in the three months ended January 31, 2013 primarily due to an increase in audit costs, offset partially by decreases in rent and general and administration costs.

Operating expenses for the three months ended January 31, 2014 were comprised primarily of audit and other professional fees of $2,013, rent of $1,413, $8,350 in consulting services costs; travel costs of $2,666, stock based compensation expense of $2,625, and $2,187 of other operating expenses.

Operating expenses for the three months ended January 31, 2013 were comprised primarily of $6,800 in consulting services costs; travel costs of $1,531, stock based compensation expense of $2,625, and $231 of other operating expenses.

Net loss before income taxes

Net loss before income taxes for the three months ended January 31, 2014 totaled $19,254 primarily due to rent, consulting services costs, travel costs, audit costs and other professional fees, and stock based compensation expenses compared to $11,187 for the three months ended January 31, 2013 primarily due to consulting services costs, travel costs, and stock based compensation expenses.

Assets and Liabilities

Total assets were $12,260 as of January 31, 2014 compared to $42,046 as of April 30, 2013 primarily the result of a decrease in prepaid assets of $32,159. Total liabilities as of January 31, 2014 were $32,519 compared to $54,710 as of April 30, 2013, or a decrease of $22,191 or 40.6%. The decrease was primarily the result of a decrease in accounts payable in the amount of $20,135.

Stockholders' Deficit

Stockholders' deficit was $20,259 as of January 31, 2014. Stockholder's deficit consisted primarily of shares issued for services rendered in the amount of $57,750, shares issued for fundraising totaling $245,500, these were offset primarily by the deficit accumulated during the development stage of $328,509 at January 31, 2014.

Nine Months Ended January 31, 2014 Compared to Nine Months Ended January 31, 2013

Revenue

For the nine months ended January 31, 2014 and January 31, 2013, we have not generated any revenues.

Operating expenses

Operating expenses increased by $10,615, or 19.2%, to $65,865 in the nine months ended January 31, 2014 from $55,250 in the nine months ended January 31, 2013 primarily due to increases in consulting services costs and audit costs, offset primarily by decreases in rent, travel costs, and general and administration costs.

Operating expenses for the nine months ended January 31, 2014 were comprised primarily of rent of $4,239, $23,158 in consulting services costs, travel costs of $10,869, audit costs and other professional fees of $14,285, stock based compensation expense of $8,125, and $5,189 of other operating expenses.

Operating expenses for the nine months ended January 31, 2013 were comprised primarily of rent of $11,923, $10,745 in consulting services costs, travel costs of $16,649, audit costs of $6,000, stock based compensation expense of $8,625, interest costs of $1,735, and $1,308 of other operating expenses.

Net loss before income taxes

Net loss before income taxes for the nine months ended January 31, 2014 totaled $65,865 primarily due to rent, consulting services costs, audit costs and other professional fees, travel costs, and stock based compensation expense compared to $56,985 for the nine months ended January 31, 2013 primarily due to rent, consulting services costs, audit costs, travel costs, and stock based compensation expense.

Liquidity and Capital Resources

General - Overall, we had a decrease in cash flows of $2,627 in the nine months ending January 31, 2014 resulting from cash used in operating activities of $56,527, offset partially by cash provided by financing activities of $53,900.

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

                                                  Nine Months Ended January 31,
                                                   2014                  2013

  Cash at beginning of period                 $         2,927       $           483
  Net cash used in operating activities               (56,527 )             (43,229 )
  Net cash used in investing activities                     -                (4,535 )
  Net cash provided by financing activities            53,900                51,350
  Cash at end of period                       $           300       $         4,069

Net cash used in operating activities was $56,527 for the nine months ending January 31, 2014 compared to net cash used in operations for the nine months ending January 31, 2013 of $43,229 primarily due to a net loss of $66,495 for the nine months ending January 31, 2014, offset primarily by the change in operating assets and liabilities of $9,968. Net cash provided by financing activities was $53,900 for the nine months ending January 31, 2014, compared to net cash provided by financing activities of $51,350 for the nine months ending January 31, 2013. Net cash used in investing activities was none for the nine months ending January 31, 2014, compared to net cash used in investing activities of $4,535 for the nine months ending January 31, 2013.

During the nine months ended January 31, 2014, we entered into separate private placement memorandums with an affiliate shareholder under which we issued 1,768,000 shares of our common stock, restricted in accordance with Rule 144, in exchange for $53,900. 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 for the year ended April 30, 2014 are estimated to be $200,000. This budget is based on the assumption that we will carry out one to several projects at a time to content markets 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 3,388,334 shares for net proceeds of $220,750 in offerings conducted in fiscal years 2013 and 2012 and the first nine months of fiscal year 2014. 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 2013 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.

Since we have not yet generated any revenues, 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 nine months ended January 31, 2014, we entered into a private placement memorandum with an affiliate shareholder under which we issued him 1,768,000 shares of our common stock, restricted in accordance with Rule 144, in exchange for $53,900. 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.

During the year ended April 30, 2013, we entered into separate private placement memorandums with two affiliate shareholders 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 shareholder, 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 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 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 our Chief Operating Officer pursuant to her employment contract dated May 1, 2012.

Sale of Asset

On November 18, 2013, the Company sold the script Gothic Harvest to an affiliate of the Company for $15,000, resulting in a gain of $5,000. The Company recorded the gain as a capital contribution. As of January 31, 2014, the Company had received deposits totaling $12,750.

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, The Biggest Fan, and Hanging with the Iron Man. 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. Ending January 31, 2014, the Company has not impaired the asset.

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 . . .

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