1. NATURE OF BUSINESS AND BASIS OF PRESENTATION

Global Media Corp. (the "Company") was incorporated on April 8, 1997 in the State of Nevada and is engaged in providing internet-integrated call center services from its location in Nanaimo, Canada. Until the 4th quarter of 1998, the Company was also engaged in the marketing of direct to home satellite hardware and programming services to both commercial and private individuals primarily in Western Canada [note 3]. The Company commenced its internet- integrated call center in September, 1997. The Company is also in the process of developing an electronic commerce web site for the distribution and eventual downloading of music and video over the internet.

On May 20, 1997 the Company issued 8,000,000 common shares and paid $100,000 in cash for all of the outstanding shares of Westcoast Wireless Cable Ltd. ("Westcoast Wireless"), a company which markets direct to home satellite hardware and programming services.

Westcoast Wireless contracted for the sales of certain satellite hardware and programming services, therefore the majority of the purchases were sourced from a single supplier.

These financial statements reflect the continuity of interests of the former shareholder of Westcoast Wireless, due to the continuation of common control. The consolidated statements of operations, shareholders' equity (deficiency), and cash flows for the period from August 1, 1996 to May 20, 1997 (included in the results for the year ended July 31, 1997) represent the results of operations and cash flows of Westcoast Wireless during those periods.

References to "the Company" in these financial statements include Westcoast Wireless (for events occurring prior to May 20, 1997).

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America.

JULY 31, 1998 (in US dollars)

1. NATURE OF BUSINESS AND BASIS OF PRESENTATION (cont'd.)

The Company has not yet achieved a profitable level of operations. The Company's continued operation is dependent upon achieving a profitable level of operations from its electronic commerce web site, scheduled to commence operations in March 1999, and upon obtaining additional financing and the continued support of the Company's shareholders [note 10], to fund both current operations, and web site construction.

2. SIGNIFICANT ACCOUNTING POLICIES

Inventory

Inventory is recorded at the lower of cost, using the first in, first out method, and net realizable value.

Capital assets and amortization

Capital assets are recorded at cost. Amortization has been calculated using the following methods and rates, except in the year of acquisition when one half of the rate is used.

Call center infrastructure                 3 year straight line
Office furniture and equipment             20% declining balance
Software                                   20% declining balance
Computer equipment                         30% declining balance
Leasehold improvements                     5 year straight line

JULY 31, 1998 (in US dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (cont'd.)

REVENUE RECOGNITION

Revenues from the call center are recognized on a straight line basis over the term of the contract.

Revenues are recorded at the time of installation for hardware sales, and at contract inception for sales of programming.

ADVERTISING AND MARKETING COSTS

Advertising and marketing costs are expensed as incurred.

FOREIGN CURRENCY TRANSLATION

The assets and liabilities of the Company's foreign subsidiary, Westcoast Wireless, are translated into US dollars at fiscal period end exchange rates. Income and expense items are translated at average exchange rates prevailing during the fiscal period. The resulting translation adjustments are recorded as a separate component of shareholders' equity.

Monetary assets and liabilities of the Company denominated in a foreign currency are translated at period end exchange rates. Other balances are recorded at rates in effect on the dates of the transaction. Exchange gains and losses arising are reflected in net income for the period.

USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires the Company's management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and related notes to the financial statements. Actual results may differ from those estimates.

FINANCIAL INSTRUMENTS

The carrying values of the Company's financial instruments approximate fair values, except as otherwise disclosed in the financial statements.

JULY 31, 1998 (in US dollars)

2. SIGNIFICANT ACCOUNTING POLICIES (cont'd.)

LOSS PER SHARE

The Company has adopted SFAS128, 'Earnings per share' in the current year on a retroactive basis. There is no impact on previously reported loss per share amounts.

RECENT ACCOUNTING PRONOUNCEMENTS

The Financial Accounting Standards Board has issued SFAS130, 'Reporting comprehensive income', SFAS131, 'Disclosures about segments of an enterprise and related information', SFAS132 'Employers' Disclosures about pensions and other postretirement benefits' and SFAS133 'Accounting for derivative instruments and hedging activities'. SFAS130, SFAS131 and SFAS132 are effective for financial statements for fiscal years beginning after December 15, 1997. SFAS133 is effective for financial statements for fiscal years beginning after June 15, 1999.

SFAS130 establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income is defined to include all changes in equity except those resulting from investments by owners and distributions to owners. Among other disclosures, SFAS130 requires that all items that are required to be recognized under current accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements.

SFAS131, SFAS132 and SFAS133 currently have no impact on the Company.

JULY 31, 1998 (in US dollars)

3. DISCONTINUED OPERATION

In November 1997, a decision was made by the Canadian Federal Court of Appeal of, ruling that sale of US satellite and programming services in Canada was not permitted. Following a period of trading in Canadian satellite and programming services the management of Westcoast Wireless decided to withdraw completely from the home satellite business in late fiscal 1998. The home satellite business includes all operations of Westcoast Wireless.

This subsidiary company has been accounted for as a discontinued operation, and accordingly, its operations have been segregated in the accompanying consolidated statements of operations.

Revenues of the discontinued company for the year ended July 31, 1998 were $591,938 [1997 - $1,617,528]. At July 31, 1998, net current liabilities of the discontinued operation were $130,076 [1997 - $31,578] consisting principally of accounts payable and balances due to shareholder. Net non- current assets at July 31, 1998 were $15,352 [1997 - $8,504].

4. RELATED PARTY TRANSACTIONS

All related party balances as disclosed in the balance sheet are non-interest bearing and without specific terms of repayment.

The affiliated companies are related to Global Media Corp. by virtue of control by officers of the Company. The fair values of the balances are not determinable since they have no fixed repayment terms.

The Company's consolidated statement of operations for the year ended July 31, 1998 includes the following related party transactions:
- wages and benefits expense of $81,747 [1997 - $45,565], to a shareholder and spouse.
- income from recharge of wages of $nil [1997 - $72,610], to a company related by virtue of control by an officer of the Company.

JULY 31, 1998 (in US dollars)

4. RELATED PARTY TRANSACTIONS (cont'd.)

During the year ended July 31, 1998 the following capital asset additions were purchased from related parties:

- $32,909 [1997 - $nil] for call center development from shareholders of the Company.
- $2,454 [1997 - $nil] for call center development from an officer of the Company.
- $5,709 [1997 - $nil] for office equipment, $4,171 [1997 - $nil] for leasehold improvements and $12,170 [1997 - $nil] for call center development from a company controlled by an officer of the Company.

5. INCOME TAXES

At July 31, 1998, the Company had a domestic net operating loss of $240,407 which will begin to expire in 2011, and foreign net operating loss carryforwards of $250,671 which will expire in 2005. Utilization of these carryforwards depends on the recognition of future taxable income.

For financial reporting purposes, a valuation allowance has been established for all deferred tax assets due to the uncertainty of realization. As a result of certain stock transactions, utilization of the Company's net operating loss carryforwards may be subject to certain limitations in the event that a change in ownership has occurred, as defined in Section 382 of the Internal Revenue Code of 1986, as amended.

                                                                     July 31,
                                                                        1998
                                                                         $
_____________________________________________________________________________
Deferred tax assets:
  Net operating loss carryforwards                                   196,094
  Tax vs. accounting value in fixed assets                             5,431
  Unrealized foreign exchange loss                                     4,155
_____________________________________________________________________________
Total gross deferred tax assets                                      205,680
Less valuation allowance                                            (205,680)
Deferred tax liability                                                   -
_____________________________________________________________________________
Net deferred tax assets                                                  -
_____________________________________________________________________________
_____________________________________________________________________________

6. CAPITAL ASSETS
                                                     Accumulated    Net Book
                                            Cost     Amortization   Value
                                             $           $             $
_____________________________________________________________________________
July 31, 1998
Office furniture and equipment              18,859       4,842        14,018
Computer equipment                          70,107      13,117        56,990
Leasehold improvements                       8,594       4,905         3,689
Call center infrastructure                  91,575      17,325        74,250
Software                                    27,209       3,520        23,689
_____________________________________________________________________________
                                           216,344      43,702       172,635
_____________________________________________________________________________
_____________________________________________________________________________

July 31, 1997
Office furniture and equipment               9,794       2,576         7,218
Computer equipment                           8,814       2,187         6,627
Leasehold improvements                       2,029         709         1,320
Software                                     6,001         600         5,401
_____________________________________________________________________________
                                            26,638       6,072        20,566
_____________________________________________________________________________
_____________________________________________________________________________

_____________________________________________________________________________
GLOBAL MEDIA CORP.

                               NOTES TO CONSOLIDATED
                               FINANCIAL STATEMENTS
_____________________________________________________________________________

JULY 31, 1998                                                 (in US dollars)

7. SHARE CAPITAL
                                                  1998           1997
                                                   #              #
_____________________________________________________________________________

Authorized
Common shares, par value $0.001 each           200,000,000    200,000,000

Issued
Common shares                                   19,890,831     11,059,400
Unissued common shares                               -          8,288,000
_____________________________________________________________________________

As at July 31, 1997, 8,000,000 shares issued in consideration for the shares in Westcoast Wireless and 288,000 of the shares issued for cash had not been issued; however, legal agreements for the issue of these shares were in place at July 31, 1997. The amounts were recorded as unissued share capital of $1 and $144,000 respectively as at July 31, 1997. All of these shares were issued in the year ended July 31, 1998.

Effective April 8, 1997 the Company adopted the 1997 Directors and Officers Stock Option Plan (the "Plan"). The Plan is administered by the Board of Directors who have sole discretion and authority to determine individuals eligible for awards under the Plan. The Plan provides for issuance of a total of 500,000 options, within a period of 10 years from the effective date. The conditions of exercise of each grant are determined individually by the Board at the time of the grant. During the current year, this plan was amended to increase the number of options from 500,000 to 1,000,000 shares.

At July 31, 1998, no options were outstanding under the Plan.

8. SEGMENTED INFORMATION

The Company's business segment which derived revenue from the marketing of direct to home satellite hardware and programming services, has been presented as a discontinued operation in the current year [note 3].

The remaining segment of the business relates to call center services. The Global Media call center provides internet integrated call center services to US based clients from its location in Nanaimo, Canada. The Global Media call center commenced operations in September of 1997 and comprises all continuing operations of the Company.

JULY 31, 1998 (in US dollars)

9. COMMITMENTS AND CONTINGENCIES

Global Media entered into a commercial lease for office space effective October 1, 1997, and will pay a total of $52,939 per year until July 31, 2002.

10. SUBSEQUENT EVENT

On November 5, 1998, the Company entered into a loan agreement with Rolling Oaks Enterprises, LLC allowing the Company to draw on a line of credit of up to $500,000, repayable within one year. The interest rate on the credit facility is 24% per annum, with an origination fee of 1% payable on the receipt of funds.

The loan is collateralized by a first charge on all available fixed assets of the Company, and 1,000,000 of common shares in the Company at a price of $1 per share currently in issue.

Since July 31, 1998, two principal shareholders of the Company have advanced funds of $218,000 to the Company. The shareholder loans at July 31, 1998, and advanced since the balance sheet date, have no fixed terms of repayment and therefore are classified as current liabilities in the balance sheet. However, the shareholders have indicated their intent to continue to support the operations of the Company, and to not request repayment of the loans until a profitable level of operations have been achieved.

In accordance with the requirements of the Securities Act of 1933, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

GLOBAL MEDIA CORPORATION

By /s/ Michael Metcalfe
   ____________________
   Michael Metcalfe,
   President and Director

By /s/ Robert Fuller
   ____________________
   Robert Fuller
   CEO and Director

By /s/ Winston Barta
   ____________________
   Winston Barta
   V.P. of Marketing and Business Development
   Director

By /s/ Dennis Morgan
   ____________________
   Dennis Morgan
   Director

By /s/ Jack D. MacDonald
   ____________________
   Jack D. MacDonald


   Director