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
Background.
The
Company was incorporated in Nevada on February 16, 2010 under the name “China Advanced Technology” as the successor
by merger to Vitalcare Diabetes Treatment Centers, Inc. (“Vitalcare”). In February and March 2010, Vitalcare underwent
a holding company reorganization under Delaware law, pursuant to which it became a wholly-owned subsidiary of Vitalcare Holding
Corporation, and Vitalcare, together with its assets and liabilities, was sold to a non-affiliated third party. Vitalcare Holding
Corporation subsequently reincorporated in Nevada by merger into China Advanced.
Vitalcare
was in the business of administering medical clinics specializing in diabetes treatment. It was the successor to Network Financial
Services, Inc. (“Network”), which went public in an underwritten offering in 1987. Network was engaged in mortgage
origination, and changed its name to Westmark Group Holdings (“Westmark”) in 1993 in connection with the acquisition
of Westmark Mortgage from Primark Corporation. Westmark ceased operations at some time in 2006, and in 2006 ceased filing reports
under the Securities Exchange Act of 1934. The corporate entity was thereafter known as Viking Consolidated, Inc. (2006), Tailor
Aquaponics World Wide, Inc. (2007) and Diversified Acquisitions (2007) until it entered the medical clinic business in early 2008.
The Company has no information regarding any business activities from 2006 after the mortgage origination business closed, to
early 2008.
On
October 25, 2011, Goliath Film and Media International, a Nevada corporation, entered into an Agreement and Plan of Reorganization
(the “Exchange Agreement”), pursuant to which Goliath Film and Media International was acquired by China Advanced
Technology. Prior to the acquisition, our principal operations consisted of internet marketing, and were conducted through a wholly
owned subsidiary, Live Wise, Inc. Live Wise was disposed of on October 31, 2011 for cancellation of debt and shares described
below. At the Closing Date, there were no assets or liabilities on China Advanced Technology’s balance sheets.
The
transaction closed on October 31, 2011 (the “Closing Date”). On the Closing Date China Advanced Technology acquired
Goliath Film and Media International by issuing 47,000,000 shares of its Common Stock, constituting 70.1% of the outstanding shares
after giving effect to their issuance and the cancellation of 15,619,816 shares held by China Advanced Technology’s prior
control person. Immediately following the Closing, 67,100,000 shares were issued and outstanding. On the Closing Date, the name
of China Advanced Technology was changed to Goliath Film and Media Holdings. All share numbers herein have been adjusted for an
eight-for-1 forward stock split affected as of the Closing Date. The forward stock split was reflected in the trading market on
February 13, 2012.
Overview.
Goliath
Film and Media Holdings, through its wholly-owned subsidiaries Goliath Film and Media International and Goliath Movie Partners
1, LLC (collectively, “Goliath” or the “Company”), develops, produces and licenses for distribution, domestically
and internationally, quality digital content with an emphasis on “niche” markets of the feature 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. Also, in certain cases Goliath will produce content that is tied to working with
an established distributor that provides an advance or minimum guarantee for the production of a project that will be licensed
by the participating distributor. Goliath plans to produce content and 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 as well as the inclusion of targeted “social media” campaigns.
Goliath’s
revenue model includes receiving revenue from distribution fees. A limited number of its content properties include projects developed
and produced by Goliath and those produced by an independent third party production entity.
Questions
and Answers
What
is your business?
We
develop, produce and distribute motion pictures and digital content. At this time we do not intend to engage in theatrical releases
of motion pictures, due to the high up- front costs of advertising and marketing theatrically. However, in some specific cases
the company will consider theatrical releases based upon a “four wall, “limited release delivery that will be focused
on targeted niche audiences.
Distribution
Rights
The
Company has the following distribution rights, with previous distribution contracts expiring. The Company is focusing on its production
side of its business at the present time with the exception of the following films listed below:
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. No revenue has
been recognized to date.
Production
Agreements
On
April 30,2018, the Company recorded an impairment charge of $366,607 as no further revenues from the production of its films has
been received and there exists doubt about any possible revenue from those films in the future.
On
March 4, 2016, we signed a distribution agreement with Mar Vista Entertainment, LLC to distribute a feature length motion picture
currently completed. Per the agreement, we received $125,000 in advance payments per an agreed delivery schedule for providing
distribution rights on the motion picture “Bridal Bootcamp” a romantic comedy movie produced by Goliath for delivery
to Mar Vista Entertainment LLC for distribution. Additionally, Mar Vista Entertainment, LLC will receive 35% of the gross proceeds
for a period of 25 years on the motion picture. As of October 31, 2016, the Company has received $125,000 of the advance payments.
Bridal Boot Camp was completed in October 2016 resulting in the recognition of the advance payments as revenue of $125,000 in
October 2016. Mar Vista is distributing this film.
On
September 18, 2015, we signed a distribution agreement with Mar Vista Entertainment, LLC to distribute a feature length motion
picture currently completed. Per the agreement, we received $125,000 in advance payments per an agreed delivery schedule for providing
distribution rights on the motion picture “Merry Exes” retitled “Girlfriends of Christmas Past” a Christmas
holiday movie produced by Goliath and delivered to Mar Vista Entertainment LLC. for distribution. Additionally, Mar Vista Entertainment,
LLC will receive 35% of the gross proceeds for a period of 25 years on the motion picture. As of July 31, 2016, we have received
$125,000 of the advance payments. “Merry Exes” “Girlfriends of Christmas Past was completed June 6, 2016 resulting
in the recognition of the advance payments as revenue of $125,000 in June 2016. Mar Vista distributed this movie to UPTV.
On
May 20, 2015, we signed a distribution agreement with Mar Vista Entertainment, LLC to distribute a feature length motion picture
currently completed by us and being licensed by Mar Vista Entertainment, LLC. Per the agreement, we received $175,000 in advance
payments per an agreed delivery schedule for providing distribution rights on the motion picture “Terror Birds” a
science fiction movie produced by Goliath and delivered to Mar Vista Entertainment LLC. for distribution. Additionally, Mar Vista
Entertainment, LLC will receive 30% of the gross proceeds for a period of 25 years on the film. As of April 30, 2016, the Company
had received $175,000 of the advance payments. Terror Birds was completed December 14, 2015 resulting in the recognition of the
advance payments as revenue of $175,000 in February 2016. Mar Vista is continuing to distribute this film.
On
April 15, 2015 Goliath signed an agreement whereby the Company agreed to invest $15,000 to KKO Productions to produce a feature
length motion picture known as “Forgiven”. Per the agreement Goliath will receive 15% of adjusted gross proceeds after
its initial investment has been entirely recouped through adjusted gross proceeds. Additionally, the Company received two on screen
credits as Executive Producer as well as receiving credit on all advertising, publicity and packaging of the motion picture. The
investment of $15,000 presented in other assets on the balance sheet has not yet been repaid, due to the fact that no revenues
will be generated until this motion picture’s released.
What
is the timeline for your activities during the next 12 months?
Over
the next 90 days to one year, our efforts will be concentrated on developing and producing content with distributors for licensing
by them of at least three projects.
What
is this going to cost you?
We
expect that producing the aforementioned content will cost approximately $150,000 per project, however licensing and distribution
will be handled by an experienced distributor for a fee of anywhere from 30 – 35% and the costs of advertising and marketing
will be handled by them and charged against gross distribution licensing proceeds.
Why
are these motion pictures not being distributed already?
The
motion pictures that are being produced by the Company and distributed by Mar Vista Entertainment, LLC take anywhere from six
to nine months from completion of production and delivery to obtain licensing agreements.
Generically,
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 and continue to be substantial tax incentives for motion picture production in many States and international
Territories, 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. As an example, 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?
After
attending all the major content acquisition markets around the world over the last three years, our Staff has developed relationships
with numerous quality filmmakers who need assistance in marketing and distributing their product. Goliath has also developed vital
relationships with many of the major content buyers, distributors, networks and sales agents. Many of the filmmakers have requested
the Company’s assistance in marketing and distributing their product. Goliath will continue to pursue the marketing and
distribution of product that is demanded in the marketplace and desired by major aggregators, distributors, networks and studios.
So
how are you different than Amazon, Netflix, 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?
As
a content provider we are not competing with these entities but rather are working on providing them with quality content. As
an example, NETFLIX using its “streaming platform” has such a high demand for programming content, they are spending
in excess of $8 billion this year for the acquisition of completed programming as well as for the development of original content
by them. Therefore, as is mentioned, part of their resources are directed toward acquiring content and part is targeting “in-house”
and joint venture productions of quality content. This content will be targeted to their subscription base on a domestic and international
level.
There
are a number of quality content producers that work with the major networks and content distributors, Goliath is moving toward
becoming one of these content providers. We believe there exists significant opportunities for our company in that the demand
for programming is increasing almost exponentially. Irrespective of the platform for viewing by the consumer/subscriber, the demand
for quality content is continuing to expand. As an example there are currently, approximately 416 original scripted programs being
aired in the entire television universe – a cancellation rate of 10% reflects a number that represents the entire programming
universe in the late 1990’s and early 2000’s. The upward trend is ongoing, which is where we see an opportunity for
Goliath to provide product to reach many components of the overall market.
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)?
As
mentioned above about NETFLIX, even though these channels maybe in niche markets they must expand the type, genre and format of
the content that they are showing in order to remain viable, therefore the opportunity to assist them by providing quality programming
is ongoing and expanding.
What
other niches are you looking at entering?
We
believe that there is an increasing and ongoing trend in home entertainment in 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. The significant type
of niche we are targeting are the numerous immigrant groups in the United States. Other than Spanish speaking immigrants, coverage
is scarce.
There
are many interest groups that might be interested in specialty movies or programming. As an example in Hawaii and 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 and marketing through social media and traditional outlets to the highest degree possible.
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, Days
of Redemption, On Borrowed Time, Tumbleweed, Virus X, Farewell, Buddies, and The Pit
. 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
enter into a Distribution Agreement for each motion picture. Terms may be perpetual or limited by years. The motion pictures that
we are acquiring with the proceeds of these offerings will have a term of five years. We will generally obtain a fee of 20% to
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 no employees. Our administrative office is in Carson City, Nevada.
Do
you have a website?
Our
website is www.goliathfilmandmediainternational.com. We have a mirror site at
www.goliathfilmandmedia.com
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
had a net loss of $11,124 and $23,184 for the three and six months ended October 31, 2018, we have had historical losses and an
accumulated deficit of $1,021,849 as of October 31, 2018. 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 films, as well as raising the necessary capital to pay ongoing general and administrative
expenses of the Company.
Results
of Operations
Three
Months Ended October 31, 2018 Compared to Three Months Ended October 31, 2017
Film
Production Revenue
For
the three months ended October 31, 2018 and 2017, we had no revenues.
Cost
of Sales
For
the three months ended October 31, 2018 and 2017, we had no cost of sales.
Operating
expenses
Operating
expenses decreased by $10,820, or 49.3%, to $11,124 in the three months ended October 31, 2018 from $21,944 in the three months
ended October 31, 2017 primarily due to decreases in consulting services and professional fees.
Operating
expenses for the three months ended October 31, 2018 were comprised primarily of professional fees of $11,040, and $84 of other
operating expenses.
Operating
expenses for the three months ended October 31, 2017 were comprised primarily of professional fees of $19,511, office rent of
$597, and other operating expenses of $1,836.
Net
loss before income taxes
Net
loss before income taxes for the three months ended October 31, 2018 totaling $11,124 is primarily due to professional fees and
other operating expenses compared to a net loss for the three months ended October 31, 2017 totaling $21,944 primarily due to
professional fees, rent, and other operating expenses.
Assets
and Liabilities
Total
assets were $625 as of October 31, 2018 compared to $793 as of April 30, 2018, or a decrease of $168, primarily the result of
a decrease in cash of $168. Total liabilities were $53,566 and $30,550 as of October 31, 2018 and April 30, 2018, respectively.
Six
Months Ended October 31, 2018 Compared to Six Months Ended October 31, 2017
Film
Production Revenue
For
the six months ended October 31, 2018 and 2017, we had no revenues.
Cost
of Sales
For
the six months ended October 31, 2018 and 2017, we had no cost of sales.
Operating
expenses
Operating
expenses decreased by $573, or 2.4%, to $23,184 in the six months ended October 31, 2018 from $23,757 in the six months ended
October 31, 2017 primarily due to decreases in professional fees and rent.
Operating
expenses for the six months ended October 31, 2018 were comprised primarily of consulting services of $5,000, professional fees
of $17,419, rent of $597, and $168 of other operating expenses.
Operating
expenses for the six months ended October 31, 2017 were comprised primarily of professional fees of $19,511, office rent of $1,194,
travel costs of $615, and $2,437 of other operating expenses.
Net
loss before income taxes
Net
loss before income taxes for the six months ended October 31, 2018 totaling $23,184 is primarily due to consulting services costs,
professional fees, and rent compared to net loss for the six months ended October 31, 2017 totaling $23,757 primarily due to professional
fees, travel costs, rent, and other operating expenses.
Liquidity
and Capital Resources
General
– Overall, we had a decrease in cash flows of $168 in the six months ended October 31, 2018 resulting from cash
used in operating activities of $168.
The
following is a summary of our cash flows provided by (used in) operating, investing, and financing activities during the periods
indicated:
|
|
|
Six
Months Ended October 31,
|
|
|
|
|
2018
|
|
|
2017
|
|
|
|
|
|
|
|
|
|
|
Cash at beginning of
period
|
|
$
|
494
|
|
|
$
|
2,468
|
|
|
Net cash used in operating activities
|
|
|
(168
|
)
|
|
|
(1,919
|
)
|
|
Net cash used in investing activities
|
|
|
—
|
|
|
|
—
|
|
|
Net cash provided by financing activities
|
|
|
—
|
|
|
|
—
|
|
|
Cash at end of period
|
|
$
|
326
|
|
|
$
|
549
|
|
Net
cash used in operating activities was $168 for the six months ended October 31, 2018 compared to net cash used in operations for
the six months ended October 31, 2017 of $1,919 primarily due to a net loss of $23,184 for the six months ended October 31, 2018,
offset partially by expenses paid on behalf of the Company by a related party of $23,016.
Our
cash needs for the year ended April 30, 2019 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. During the six months ended October 31, 2018
and 2017, the Company did not enter into any private placement memorandums. 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 2019 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.
Equity
Financing
On
December 5, 2018, we agreed to issue a total of 309,000 restricted common shares to Kevin Frawley, affiliate, in accordance with
Rule 144, in exchange for expenses paid on behalf of the Company for $3,090. 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 three and six months ended October 31, 2018 and 2017, the Company did not enter into any private placement memorandums.
Contractual
Obligations and Off-Balance Sheet Arrangements
We
do not have any contractual obligations or off balance sheet arrangements.