SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
Commission File Number 0-26461
SNELLING TRAVEL, INC.
-----------------------------------------------------------
(Name of small business issuer as specified in its charter)
Colorado 58-2368425
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(State of other jurisdiction (I.R.S. Employer
of incorporation) Identification No.)
55 Pharr Road, No. A-207, Atlanta, Georgia 30305
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number including area code: (404) 841-0111
--------------
Securities registered under Section 12(b) of the Exchange Act: None
----
Securities registered under Section 12(g) of
the Exchange Act:
Common Stock, $.001 par value
-----------------------------
Check whether the Issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act 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
----- -----
Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB [X].
State Issuer's revenues for its most recent fiscal year: $0.00
------
As of April 10, 2000: (a) 44,225,000 Common Shares, $.001 par value, of the
registrant were outstanding; (b) approximately 15,225,000 Common Shares
were held by non-affiliates; and (c) the aggregate market value of the
Common Shares held by non-affiliates was $1,522,500 based on the last sale
of $0.10 per share on April 10, 2000.
<PAGE>
TABLE OF CONTENTS
FORM 10-KSB ANNUAL REPORT
SNELLING TRAVEL, INC.
PAGE
Facing Page
Index
PART I 1
Item 1. Description of Business 1
Item 2. Description of Property 6
Item 3. Legal Proceedings 6
Item 4. Submission of Matters to a Vote of Security Holders 6
PART II 6
Item 5. Market for the Registrant's Common equity and Related
Stockholder Matters 6
Item 6. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
Item 7. Financial Statements F1 - F9
Item 8. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure 10
PART III 10
Item 9. Directors, Executive Officers, Promoters and
Control Persons; Compliance with Section
16(a) of the Exchange Act 10
Item 10. Executive Compensation 11
Item 11. Security Ownership of Certain Beneficial Owners and Management 12
Item 12. Certain Relationships and Related Transactions 12
PART IV 13
Item 13. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
EXHIBIT INDEX 15
ii
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PART I
This Annual Report on Form 10-KSB contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, or Section 21
E of the Securities Exchange Act of 1934, as amended, or subsequent expansions
or replacements of such sections, including information with respect to the
Company's plans and strategy for its business. For this purpose, any statements
contained herein that are not statements of historical fact may be deemed to be
forward-looking statements. Without limiting the foregoing, the words
"believes," "anticipates," "plans," "estimates," "feels," "expects" and similar
expressions are intended to identify forward-looking statements. There are a
number of important factors that could cause actual events or the Company's
actual results to differ materially from those indicated by such forward-looking
statements. These factors include, without limitation, those set forth below
under the caption "Factors That May Affect Future Results" included under
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in Part II of this Annual Report on Form 10-KSB.
ITEM 1: Description of Business
History and Organization.
-------------------------
Snelling Travel, Inc. (the "Company") is a Colorado corporation organized on
December 15, 1997. The Company was organized to develop and operate an adventure
travel business through the efforts of one of its founders, Rollins C. Snelling,
Jr. The Company is in the development stage and has no revenue to date.
Activities since inception have been limited to organizational efforts,
obtaining financing, developing the Company's business plan and designing its
Web site. The Company's executive offices are located at the home of its founder
at 55 Pharr Road, Suite A-207, Atlanta, Georgia 30305. Its telephone number is
(404) 841-0111.
The Company completed its initial capitalization in December, 1998. The Company
raised $52,500 in a private placement exempt from the registration requirements
of applicable Federal and state securities laws. Proceeds from that offering
have been used for organizational and administrative expenses, as well as
working capital for future operations. The Company currently has approximately
24 shareholders.
Narrative Description of Business.
----------------------------------
The Company had its genesis in the personal experience of its founder, Rollins
Snelling, Jr. Mr. Snelling, a former professional ski racer and travel
consultant, conceived the business plan based on a love of adventure travel
developed prior to organization of the Company. The business plan, discussed in
more detail below, is to offer adventure travel, including ski and diving
excursions, to groups of upper-income individuals. The business plan is premised
in part on the World Wide Web ("Web") as a means of marketing to affluent
individuals perceived to be the Company's market. As of the date of this filing,
the Company remains in the development stage, with no revenue and one employee.
Revenue of the Company in the future will depend substantially on the success of
its marketing plan. There is no assurance that the Company will develop its
business plan to the point that it can operate profitably or be competitive in
the travel industry.
1
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The Company currently operates a site on the Web at www.snellingtravel.com.
Since completion of a private placement in December, 1998, efforts to complete
the Web site and implement the Company's marketing plan have accelerated. These
efforts have continued throughout 1999. Visitors to the Web site are given a
brief description of the Company and teasers describing prospective travel
excursions for skiing and diving activities. Prospective clients are encouraged
to contact the Company's office for additional details on available services.
Currently in process are efforts to link the Company from various directories
maintained by third-parties on the Web. These directories would encourage
interested individuals to visit the Company's Web site for skiing and diving
travel information. Toward that end, representatives of the Company are
currently developing banner advertisements on additional Web sites in an effort
to increase traffic to the Company's Web site. Management perceives such
marketing on the Web to be an economical source of promotion for the Company's
service, although there is no assurance such efforts will result in revenue or
profit to the Company.
The Company's sole employee is Mr. Snelling. Hiring of additional employees will
be dependent on response to the Company's marketing and promotion and the
availability of working capital. As the sole employee, Mr. Snelling is
responsible for overseeing the development of the Company's Web site and links
through Web directories, as well as all operations. Mr. Snelling's experience in
the travel industry as an agent and sales associate are the basis for developing
and implementing future tours. As of the date of this filing, the Company is
awaiting its first booking.
Recent Events.
--------------
In December, 1999, the Company executed an Agreement and Plan of Merger
("Agreement") with Plus Solutions, Inc. ("Plus"), a private Texas corporation.
The Agreement contemplated a merger of Plus with the Company, such that the
Company would be the surviving entity. Plus was engaged in developing an
e-commerce solution for business applications. Management of the Company viewed
the proposed merger as a means of participating in the burgeoning e-commerce
industry.
In January, 2000, representatives of the Company were notified that Plus had
terminated the Agreement. Subsequently, the Company communicated with Plus in an
effort to resolve the issues raised in the notice of termination. However, such
efforts were unsuccessful. In February, 2000, the Company received notice
repeating the decision of Plus to terminate the Agreement. As a result,
management of the Company does not believe this transaction will be completed.
In conjunction with the proposed merger, the Company declared a 29 for 1
dividend of its common stock to all shareholders of record December 15, 1999. As
a result, and following distribution of the dividend stock, the Company had
outstanding 44,225,000 shares of common stock. All references to common stock in
this Report have been retroactively restated to reflect the dividend.
With regard to the dividend, notice was promptly provided to representatives of
the National Association of Securities Dealers, Inc. ("NASD"), the agency which
reports trading in securities, and the Company's transfer agent. It was the
Company's intention that the dividend be effective immediately for trading
purposes, as the notice to NASD stated. Despite the fact that a 10-day advance
written notice was not given, representatives of the NASD raised no objection to
the dividend in communication with the Company.
Following the announcement of the merger and dividend, the Company's common
stock realized an increase in trading volume. According to certain shareholders
and brokers, they traded common stock as if the dividend was effective
immediately. The NASD noticed the ex-dividend date as December 22, 1999. As a
result of the notice by the NASD, stock trading on or after December 16, 1999
and before December 22, 1999 was treated as pre-split stock. This required
shareholders selling during that time to deliver post-dividend stock and
afforded purchasers what appeared to be a windfall.
In an effort to address this situation, representatives of the Company contacted
the NASD and requested reconsideration of its decision to set the ex-dividend
date as December 22. Through a ruling of a standing committee of the Division of
Market Regulation of NASD, the Company's request was denied. Notice of that
decision was provided to the market via press release dated January 10, 2000.
Plan of Operation.
------------------
2
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The Company's business plan is premised on management's perception of an
increased interest in sports and adventure travel as a means of recreation. In
the opinion of management, traditional vacations centered around sight-seeing
activities are being replaced by a desire to experience a trip through active
participation. This trend appears related to the aging of the "baby boomer"
generation, their active life style and an increase in disposable income.
Management hopes to take advantage of this trend, coupled with the Web as a
means of marketing and promotion, to attract clients for its travel related
services.
The Company has commissioned no formal market or feasibility study with regard
to its plan of operation. Rather, its strategy is predicated on the personal
experience of one of its founders, Mr. Snelling. Mr. Snelling has traveled
extensively throughout the United States and portions of the Western hemisphere,
both personally and professionally, and brings a wealth of experience to the
Company. Mr. Snelling hopes to bring that experience to the benefit of
prospective clients of the Company.
Although the sports and adventure travel business is extremely competitive,
management of the Company hopes to differentiate its service in several
different ways. First, Mr. Snelling brings personal experience to the skiing and
diving recreation industry. Based on that experience, he possesses familiarity
with numerous geographic locations suited to those forms of recreation and local
amenities which can be passed to prospective clients of the Company. Second, the
Company intends to provide experienced guides on most of its trips. Mr. Snelling
himself may act as guide for early bookings. If activities increase as the
Company's business plan envisions, additional guides will be retained through
the contact of Mr. Snelling. These guides will be experienced in the sport for
which the trip is designed, although it is not anticipated they will have
special first aid or other public safety training. Such guides will be charged
with the duty of assuring the comfort, safety and enjoyment of the Company's
clients, including providing up-to-date local conditions and required equipment.
This guided service may also encourage individuals otherwise unwilling to
participate in such activities to experiment on the trip.
The Company proposes to organize, market and operate excursions and vacations
involving sports and adventure as its sole objective. Initially, management
intends to limit its excursions to two areas of specialty, including scuba
diving/snorkeling and snow skiing. This will allow the Company to avail itself
of the experience and expertise of Mr. Snelling in those sports. If initial
travel offerings prove successful, the Company may broaden its service to
include other forms of adventure, such as rafting or cycling. While no specific
tours have not yet been designed, management anticipates initial destinations
will include areas in the United States, Canada, Mexico and the Caribbean.
Diving destinations will likely include Florida, Mexico and the Caribbean, while
skiing will be focused in Colorado, Utah, California and Vermont. Mr. Snelling
has personal contacts within the resorts in those areas on which he intends to
rely in organizing trips on behalf of prospective clients. In addition, Mr.
Snelling has been invited to various locales by the respective Boards of
Tourism, including the Cayman Islands, the Bahamas and Jamaica, to preview
locations, accommodations, guides and outfitters. It is this direct knowledge of
the locales, the options and services offered, the personal contacts within
those areas and the relationships with the Boards of Tourism that the Company
hopes will allow it to successfully plan appropriately tailored excursions and
vacations.
Due to the Company's perceived primary market of upper-income individuals, trips
designed for this market group may be finalized immediately prior to desired
departure in an effort to afford
3
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participants optimal conditions at their destination. For example, the Company
will monitor snow conditions in the Western and Northeastern part of the United
States to avail potential clients of optimum conditions for snow and weather.
Ocean conditions will be monitored along the Atlantic and Gulf of Mexico to
determine optimal sites for diving adventure. Such attention will prove labor
intensive, especially in view of the Company's limited personnel resources,
although management hopes such service will differentiate the Company from those
of its competitors. Management does not perceive the extra cost potentially
associated with such last minute scheduling to be an obstacle in view of the
target market for its service.
In addition to locating and monitoring of potential destinations, the Company
will assist potential clients in reserving travel and lodging, as well as
specific recreational activities. Mr. Snelling's experience as a travel
consultant will assist in locating suitable flight and lodging information for
individual participants. Relationships with local guides will be developed if
the Company's business grows. The Company will also assist in traditional travel
agent responsibilities, including ground transportation, meals and amenities.
Due to the recent efforts to organize the Company and the lack of a specific
operating model, management is unable to predict with any degree of certainty
when or what magnitude of revenue to expect in the future. However, management
believes that revenue and profit will ultimately depend on the success of the
Company's marketing plan and specifically, its advertising on the Internet.
Marketing and Advertising.
--------------------------
The Company's initial marketing plan is premised primarily on the Internet as a
means of attracting potential clients. The Company's sole means of advertising
at present is the maintenance of a site on the Web. Further, the information
available at that site is limited to general information about the Company and
teasers for skiing and diving adventures. With the proceeds of a private
placement, management hopes to expand the scope and content of its Web site to
include specific description of available trips. However, those efforts are
purely developmental as of the date of this filing.
Another means of potential marketing envisioned by the Company is advertising
through directories on other Internet sites. The Company may develop banner
advertisement bearing its name and a brief description of its service for
placement on Web sites maintained by independent third parties. These
directories may provide listing of specific travel adventure companies, their
products and services to individuals with access to the Web. In recent years,
the use of the Internet as a marketing medium by companies in the travel
industry has increased dramatically. Consumers can now obtain site information,
as well as airline, lodging and other travel related services from a wide
variety of sites on the Web. To increase potential traffic to its Web site,
management has placed banners on related Web sites to direct individuals to the
Company's Web site.
The Company also hopes to market its service through personal presentations to
travel related groups. Initially Mr. Snelling, and later, circumstances
permitting, other representatives of the Company, will make weekly presentations
to groups consisting of sporting clubs, ski clubs, tennis clubs, country clubs
and other potential sources of clients. Such presentations will be designed to
acquaint participants with information about various sporting activities in
general, as well as the Company's services specifically.
4
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Depending on the success of these limited efforts, and working capital
permitting, the Company may engage in more traditional means of marketing and
advertising. Such means may include newspaper and magazine advertising, direct
mail and telemarketing. Management also hopes, based on the perceived quality of
the services offered by the Company, that a major source of its clients will be
personal referrals from earlier clients.
The travel industry is intensely competitive and margins generally small.
Accordingly, the Company's future success depends in large part upon its ability
to identify and adequately penetrate the market for its service. Virtually all
of the Company's competitors have larger budgets for marketing, advertising and
promotion. The Company is at a competitive disadvantage with regard to personnel
and financial resources vis a vis other participants in the travel industry.
(See - "Competition" below.)
Competition.
------------
Competition in the travel industry is intense. Potential competitors of the
Company include traditional travel agencies, airlines, travel clubs, hotels and
resorts. In 1992, the United States Bureau of the Census estimated that there
were over 70,000 entities which operated in the travel industry for the entire
year, of which approximately 28,000 were travel agencies. In excess of 4,000
entities claimed to be tour operators. Management believes that the Company is
at a competitive disadvantage with regard to most of these entities with regard
to personnel and financial resources. This disadvantage may increase in the
future as a result of consolidations occurring within the industry, resulting in
larger and larger entities with greater economies of scale and personnel and
financial resources. The Company was only recently organized, has limited
capitalization and no revenues to date.
The Company will also be at a competitive disadvantage, as it does not control
any travel or lodging services. Management believes airlines can offer
discounted fares to large groups through advance booking discounts. Hotels and
motels can offer packages in conjunction with airlines and other local service
providers. As the Company will offer strictly consulting and guide services, it
may be at a competitive disadvantage with regard to these other entities.
Because of its primary aim of providing optimal conditions for adventure
excursions, the Company generally will not be able to take advantage of advance
booking discounts.
The Company's business plan contemplates competing with these other entities
through personal service and the experience of its founder. The Company hopes to
provide individual guides to most or all of its excursions to assist
participants in fully appreciating the service offered by the Company. It is
anticipated that the guides will be versed in local weather and travel
conditions. Although such personal service will be more costly to provide than
the service of the Company's competitors, management believes this service will
serve to distinguish the Company. However, the Company has yet to prove the
success of its concept.
Employees.
----------
The Company currently has one employee, its President and Chief Executive
Officer. Mr. Snelling currently devotes approximately 10 hours per week to the
affairs of the Company. One other individual serves in an executive capacity as
vice president and secretary, although he devotes only a minor portion of his
time to the Company and is not an employee. The Company
5
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may retain additional employees, either full-time or part-time, in the future as
the needs of its business dictate and working capital permits.
The Company also retains the services of independent consultants for specific
projects related to its business. The Company currently contracts with a Web
designer to assist in perfecting its Web site. The Company also retains the
services of legal and accounting firms to assist in the preparation and filing
its quarterly and annual filing requirements. Additional consultants may be
retained in the future.
Facilities.
-----------
The Company's executive offices are currently located at the home of its founder
in Atlanta, Georgia. Such space consists of approximately 300 square feet and is
utilized primarily for administration and receiving calls related to the
Company's business. The Company occupies this space on a rent-free basis, but
expenses of $100 per month have been expensed on its financial statements based
upon the estimated fair market value of the facilities provided by the
shareholder.
ITEM 2: Description of Property
The Company owns no real property as of the date of this filing. The Company
leases its executive and administrative offices pursuant to a month-to-month
arrangement with the landlord. However, management deems such arrangements to be
adequate for the Company's needs for the foreseeable future.
ITEM 3: Legal Proceedings
The Company is not aware of any other material pending or threatened legal
proceedings against the Company or its officers and directors.
ITEM 4: Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of the security holders in the fourth
quarter of 1999.
PART II
ITEM 5: Market for the Registrant's Common Equity and Related Stockholder
Matters
The following table shows the range of high and low bids for our common stock
during the past fiscal year as reported by the National Quotation Bureau, LLC.
The common stock has traded over-the-counter since approximately October 25,
1999 and is currently quoted in the OTC Bulletin Board. The quotations represent
prices between dealers, do not include retail mark-up, mark-down or commission,
and may not necessarily represent actual transactions.
6
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Fiscal Quarter Ended High Low
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1999
December 31 $ 5.875(1) $ .10
2000
January 1 - March 31 4.25 .0775
(1) The Company's stock dividend was deemed effective for trading purposes
December 22, 1999 by the NASD.
There are 24 holders of the Company's common stock, not including those persons
who hold their securities in "street name." The Company has not paid any cash
dividends on its Common Stock since its inception. The Company does not foresee
that the Company will have the ability to pay a dividend on its common stock in
the year ended December 31, 2000. Payment of future dividends, if any, will be
at the discretion of the Board of Directors after taking into account such
factors as our financial condition, results of operation, current and
anticipated cash needs and plans for expansion.
ITEM 6: Management's Discussion and Analysis of Financial Condition and Results
of Operations
Plan of Operation
-----------------
The Company's plan of operation contemplates the design, marketing and
implementation of sport and adventure travel programs. Revenues are anticipated
to be generated through fees paid by clients to the Company, which may include
commissions, fees or mark-ups payable to the Company. Commissions and other
charges payable to the Company will be determined on a case-by-case basis
depending upon such things as cost of service, travel destination and relative
demand for travel during requested time.
Capital required by the Company for commencement of operation includes expenses
anticipated in connection with further development of its Web site, additional
marketing expenses, general and administrative expenses and direct travel
program costs. Management has designed the Company's business plan in an effort
to preserve its limited capital. Accordingly, marketing costs will be kept to a
minimum through advertising primarily on the Web. Administrative overhead is
also low, as the Company's sole employee presently serves without compensation
and the Company occupies office space on a rent-free basis. Expenses therefore
include general office expenses such as courier charges, telephone and supplies,
together with Internet access fees. Start-up expenses will also include legal
and accounting fees payable in connection with the preparation and filing of
reports with the Securities and Exchange Commission.
A substantial portion of the Company's cash requirements will involve deposits
for travel bookings made on behalf of its clients. In an effort to defray such
expenses, management anticipates requesting deposits from its clients prior to
booking. Management believes such practice is common in the travel business and
will allow the Company to operate with reduced cash requirements. A portion of
the fees due in connection with booking an excursion will be payable in advance
with the balance due and payable a short period prior to departure.
Management has little or no basis to predict revenue or profitability for the
current fiscal year. Results of operation will depend in part upon the success
of the Company's marketing and
7
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promotion, as well as general economic conditions in the United States, currency
exchange values and continued demand for travel services in general. Due to the
absence of an operating history, management is unable to predict with any degree
of certainty the market for its service.
Liquidity and Capital Resources
-------------------------------
December 31, 1999
At December 31, 1999, the Company had working capital of $25,682, consisting of
$27,817 of current assets and $2,135 of current liabilities. A stock
subscription receivable existing at December 31, 1998 was paid during the year
ended December 31, 1999. The Company's financial condition did not change
significantly from December 31, 1998 to December 31, 1999.
During the year ended December 31, 1999, the Company used approximately $24,500
of cash. The Company spent a minor portion of its cash on operations. Most of
the cash that was expended was in connection with filing of the Company's
Registration Statement with the SEC. Since the only existing commitment for cash
includes fees and expenses payable in connection with filing of the Company's
annual and quarterly reports, management estimates a substantial portion of such
working capital will be available for operations. Based on the Company's current
business plan, management estimates that such capital and liquidity should be
sufficient for the Company's needs until June 30, 2000. Thereafter, the Company
will be dependent on obtaining additional financing from outside sources or
generating revenue and profit from operations to continue as a going concern.
Additional needs for liquidity include payment of general and administrative
expenses, as well as prepayment of travel excursions by the Company. Any
additional financing required will likely be sought from equity or private debt
financing. However, management has no current plans or commitment for such
funding. Management does not believe the Company is a candidate for conventional
debt financing, as the Company's operations are extremely limited and few assets
exist to collateralize any indebtedness.
Results of Operation
--------------------
During the year ended December 31, 1999, the Company realized a net loss of
$33,926 on no revenues. During the prior year ended December 31, 1998, the
Company had not undertaken any activity and accordingly, experienced little
expense. During 1999, significant expenses include professional services in
connection with the preparation and filing of a Registration Statement with the
SEC and $6,000 of accrued expense for officer compensation. Both the officer
compensation and rent are non-cash expenses, as the Company's president provides
service and office space without charge. It is anticipated that the Company will
continue to incur losses until such time, if ever, the Company can successfully
implement its business plan and achieve profitability.
December 31, 1998
At December 31, 1998, the Company had working capital of $52,408, consisting of
$52,508 of current assets and $100 of current liabilities. Working capital
acquired by the Company through December 31, 1998 consisted primarily of the
proceeds of a private stock offering and a stock
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subscription receivable. The Company sold an aggregate of 15,225,000 shares of
Common Stock for cash of $51,000 and a stock subscription for $1,500 to a small
group of investors pursuant to exemptions from the registration requirements of
the Securities Act and applicable state securities laws. The proceeds of that
offering represent substantially all of the Company's capitalization as of
December 31, 1998. Prior to that date, the Company had issued 29,000,000 shares
of Common Stock to its two founders for services rendered to the Company valued
at $1,000.
ITEM 7: Financial Statements
The Company's financial statements for the fiscal years ending December 31,
1999, and 1998 are included herein and consist of:
Index to financial statements F-1
Independent Auditors' Report F-2
Balance Sheets F-3
Statements of Operations and Deficit F-4
Statements of Stockholders' Equity (Deficit) F-5
Statements of Cash Flows F-6
Notes to Financial Statements F-7 - F-9
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SNELLING TRAVEL, INC.
(a development stage company)
I. INDEX TO FINANCIAL STATEMENTS
A. Page
Independent Auditors' Report F-2
Balance sheet as of December 31, 1999 F-3
Statements of operations for the years ended December 31, 1999 and
1998 and for the period December 15, 1997 (inception) through
December 31, 1999 F-4
Statement of stockholders' equity for the years ended December 31,
1999 and 1998 and for the period December 15, 1997 (inception)
through December 31, 1997 F-5
Statements of cash flows for the years ended December 31, 1999 and
1998 and for the period December 15, 1997 (inception) through
December 31, 1999 F-6
Notes to financial statements F-7 - F-9
F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT
Board of Directors
Snelling Travel, Inc.
Atlanta, Georgia
We have audited the accompanying balance sheet of Snelling Travel, Inc., (a
development stage company), as of December 31, 1999, and the related statements
of operations, stockholders' equity, and cash flows for the year then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit. The financial statements of Snelling Travel, Inc. for the year
ended December 31, 1998 and the period December 15, 1997 (inception) through
December 31, 1997, were audited by other auditors whose report dated March 29,
1999, expressed an unqualified opinion on those statements.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Snelling Travel, Inc. (a
development stage company) at December 31, 1999, and the results of its
operations and its cash flows for the year then ended, in conformity with
generally accepted accounting principles.
HORTON & COMPANY, L.L.C.
Wayne, New Jersey
March 24, 2000
F-2
<PAGE>
SNELLING TRAVEL, INC.
(a development stage company)
BALANCE SHEET
December 31, 1999
ASSETS
Current assets:
Cash $ 27,817
-----------
Total current assets $ 27,817
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 2,135
-----------
Total current liabilities 2,135
-----------
Stockholders' equity:
Common stock, $.001 par value
100,000,000 shares authorized,
44,225,000 shares issued and outstanding 44,225
Additional paid-in capital 16,475
Deficit accumulated during the development stage (35,018)
-----------
Total stockholders' equity 25,682
-----------
Total liabilities and stockholders' equity $ 27,817
===========
See notes to financial statements
F-3
<PAGE>
<TABLE>
<CAPTION>
SNELLING TRAVEL, INC.
(a development stage company)
STATEMENTS OF OPERATIONS
December 15, 1997
(inception)
Year ended December 31, through
---------------------------------- December 31, 1999
1999 1998
---------------- -------------- -------------------
<S> <C> <C> <C>
Revenue $ - $ - $ -
---------------- -------------- -------------------
Operational expenses:
Professional services 19,909 - 20,909
Stock transfer 2,843 - 2,843
Filing fees 1,770 - 1,770
Officer compensation 6,000 - 6,000
Rent 1,200 - 1,200
Website design 1,933 - 1,933
Travel 249 - 249
Office 22 92 114
---------------- -------------- -------------------
33,926 92 35,018
---------------- -------------- -------------------
Net loss $ (33,926) $ (92) $ (35,018)
================ ============== ===================
Basic loss per share $ (0.001) $ (0.000) $ (0.001)
================ ============== ===================
Weighted average shares outstanding 44,225,000 29,667,397 36,796,673
================ ============== ===================
</TABLE>
See notes to financial statements
F-4
<PAGE>
<TABLE>
<CAPTION>
SNELLING TRAVEL, INC.
(a development stage company)
STATEMENT OF STOCKHOLDERS' EQUITY
Years ended December 31, 1999 and
1998 and for the period December 15, 1997
(inception) through December 31, 1997
Deficit
accumulated
Additional during the
Common stock paid-in development
---------------------------- capital stage
Shares Amount
------------ ------------ --------------- -------------
<S> <C> <C> <C> <C>
Stock issued at inception
(December 15, 1997) 29,000,000 $ 29,000 $ (28,000) $ -
Net loss - - - (1,000)
------------ ------------ --------------- -------------
Balance at December 31, 1997 29,000,000 29,000 (28,000) (1,000)
Stock issued in connection with private
placement 15,225,000 15,225 37,275 -
Net loss - - - (92)
------------ ------------ --------------- -------------
Balance at December 31, 1998 44,225,000 44,225 9,275 (1,092)
Rent and salary contributed by officer - - 7,200 -
Net loss - - - (33,926)
------------ ------------ --------------- -------------
Balance at December 31, 1999 44,225,000 $ 44,225 $ 16,475 $ (35,018)
============ ============ =============== =============
</TABLE>
See notes to financial statements
F-5
<PAGE>
<TABLE>
<CAPTION>
SNELLING TRAVEL, INC.
(a development stage company)
STATEMENTS OF CASH FLOWS
December 15, 1997
Year ended December 31, (inception)
-------------------------------- through
1999 1998 December 31, 1999
------------- --------------- -----------------
<S> <C> <C> <C>
Net loss $ (33,926) $ (92) $ (35,018)
Adjustments to reconcile net loss to net cash
used in operating activities:
Stock issued for services - - 1,000
Rent and salary contributed by officer 7,200 - 7,200
Increase in accounts payable 2,135 - 2,135
------------- --------------- -----------------
Net cash used in operating activities (24,591) (92) (24,683)
------------- --------------- -----------------
Cash flows from financing activities:
Advances received from (repaid to) shareholders (100) 100 -
Proceeds from issuance of common stock 1,500 51,000 52,500
------------- --------------- -----------------
Net cash provided by financing activities 1,400 51,100 52,500
------------- --------------- -----------------
Net increase (decrease) in cash (23,191) 51,008 27,817
Cash, beginning of period 51,008 - -
------------- --------------- -----------------
Cash, end of period $ 27,817 $ 51,008 $ 27,817
============= =============== =================
</TABLE>
See notes to financial statements
F-6
<PAGE>
SNELLING TRAVEL, INC.
(a development stage company)
NOTES TO FINANCIAL STATEMENTS
Years ended December 31, 1999 and 1998
1. Summary of significant accounting policies
This summary of significant accounting policies of Snelling Travel, Inc. (a
development stage company) (hereinafter the "Company") is presented to
assist in understanding the financial statements. The financial statements
and notes are representations of the management of the Company, which is
responsible for their integrity and objectivity. These accounting policies
conform to generally accepted accounting principles and have been
consistently applied in the preparation of the financial statements.
Use of estimates
The preparation of financial statements in conformity with generally
accepted accounting principles 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 revenues and expenses
during the period. Actual results could differ from those estimates.
History and business activity
On December 15, 1997, the Company was incorporated under the laws of
Colorado. The Company's primary purpose is to engage in the travel
business, specializing in adventure travel within the United States,
Canada, Mexico, and the Caribbean.
During August 1999, the Company filed a registration statement with the
U.S. Securities and Exchange Commission on Form 10-SB, thereby registering
its common stock under the Securities and Exchange Act of 1934, as amended
("34 Act").
Development stage
The Company is currently in the developmental stage and has no significant
operations to date.
F-7
<PAGE>
1. Summary of significant accounting policies (continued)
Basic loss per common share
Basic loss per common share is computed by dividing the net loss applicable
to common shareholders by the weighted average number of shares outstanding
during the period. Diluted loss per share amounts are not presented because
they are anti-dilutive.
Reclassifications
Certain accounts in the prior year financial statements have been
reclassified for comparative purposes to conform with the presentation in
the current year financial statements. These reclassifications have no
effect on previously reported income.
2. Stockholders' deficit
Stock dividend
During December 1999, the Board of Directors authorized a
twenty-nine-for-one dividend of the Company's common stock. The Company's
capital structure, including all references to common stock, additional
paid-in capital, common shares outstanding, average number of common stock
shares outstanding, stock options and per share amounts, have been restated
for all periods presented to reflect the stock dividend on a retroactive
basis.
Common stock
The Company initially authorized 10,000,000 shares of $.001 par value
common stock. During June 1999, the authorized common stock was increased
to 100,000,000 shares.
In December 1997, the Company issued 29,000,000 shares of common stock
valued at $.001 per share for services rendered to the Company. Such
services were valued at $1,000.
In December 1998, the Company conducted a private placement to sell shares
of its common stock on a best efforts basis. The shares of common stock
contained in the offering were issued pursuant to an exemption from
registration under Section 3(b) and Regulation D, Rule 504, of the
Securities Act of 1933, as amended. In December 1998, the Company had sold
15,225,000 shares for $52,500. The Company declared no dividends through
December 31, 1999.
F-8
<PAGE>
2. Stockholders' deficit (continued)
Preferred stock
The Company has authorized 10,000,000 shares of $.01 par value preferred
stock. The voting powers, rights and preferences of the preferred stock are
to be determined by the Board of Directors at the time of issuance. No
preferred shares have been issued to date.
3. Related party events
An officer of the Company loaned money to the Company at various times
during the year. All such loans were repaid as of December 31, 1999.
The Company's executive offices are located in Atlanta, Georgia, where
space is provided by an officer of the Company. During 1999, the Company
recorded rent expense of $100 per month for the use of this space. The
amount expensed was contributed by the officer back to the Company.
During 1999, compensation expense for services provided by an officer of
the Company was recorded in the amount of $500 per month. The amount
expensed was contributed by the officer back to the Company.
4. Income taxes
The Company accounts for income taxes using the liability method in
accordance with Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes." Under this method, deferred tax assets and
liabilities are determined based on differences between financial reporting
and tax bases of assets and liabilities and are measured using enacted tax
rates and laws that will be in effect when the differences are expected to
reverse.
As of December 31, 1999, the Company has a deferred tax asset of $7,000
which arises from a net operating loss carryforward of approximately
$35,000. The Company's net operating loss carryforward expires in the years
2013 and 2014. Because of the uncertainty of the Company's ability to
generate taxable income in the future to utilize the net operating loss
carryforward, such deferred tax asset has been fully reserved through a
valuation allowance. The net increase in the valuation allowance for the
year ended December 31, 1999 was $6,982.
F-9
<PAGE>
ITEM 8: Changes In and Disagreements With Accountants on Accounting and
Financial Disclosure
On March 22, 2000, Snelling Travel, Inc. (the "Company"), as approved by the
Board of Directors, engaged Horton & Company, LLC as its principal accountant
and independent auditors for the year ending December 31, 1999, and
simultaneously accepted the resignation of Kish Leake & Associates, P.C. as its
principal accountant and auditors. Kish Leak & Associates, P.C. stated as its
reason for its resignation that it would no longer engage in providing audit
services to public companies.
The reports of Kish Leake & Associates, P.C. for the past two fiscal years did
not contain an adverse opinion or a disclaimer of opinion and were not qualified
or modified as to uncertainty, audit scope or accounting principles.
In connection with the audits of the Company's financial statements for the
fiscal year ended December 31, 1998, and the period from inception (December 15,
1997) to December 31, 1997, there were no disagreements with Kish Leak &
Associates, P.C. on any matters of accounting principles or practices, financial
statement disclosure, or auditing scope and procedure which, if not resolved to
the satisfaction of Kish Leake & Associates, P.C., would have caused Kish Leake
& Associates, P.C. to make reference to the matter in their report. Further,
there were no reportable events as that term is described in Item 304(a)(1)(v)
of Regulation S-K.
During the two most recent fiscal years and any subsequent interim period, the
Company has not consulted Horton & Company, LLC, regarding any matter requiring
disclosure.
PART III
ITEM 9: Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section 16(a) of the Exchange Act
The following individuals presently serve as officers and directors of the
Company:
Name Age Position
- ---- --- --------
Rollins C. Snelling, Jr. 51 President, Treasurer, Chief Executive
Officer, Chief Financial Officer and Director
Brian T. Mallon 46 Vice President, Secretary and Director
Messrs. Snelling and Mallon should be considered "founders" and "parents" of the
Company (as such terms are defined by rule under the Securities Exchange Act of
1934, as amended), inasmuch as each has taken initiative in founding and
organizing the business of the Company.
Messrs. Snelling and Mallon serve as directors of the Company until the next
annual meeting of shareholders and until their successors are elected and
qualify. Each individual serves as an
10
<PAGE>
officer at the will of the Board of Directors. Each individual has served in his
current capacity since the Company's inception in December 1997.
The following represents a summary of the business history of each of the
foregoing individuals for the last five years:
ROLLINS C. SNELLING, JR. From January, 1991 to the present, Mr. Snelling has
been the president, a director and sole shareholder of Rollins C. Snelling,
Jr., Inc. ("RSI"), a privately held Florida corporation engaged in the
marketing and distribution of a wide variety of products including seafood,
exercise equipment and technology for the medical waste industry. RSI
presently has no employees other than Mr. Snelling. For most of its
history, Mr. Snelling has been the only employee of RSI. He has had a few
employees sporadically over the years, depending on the product being
marketed and distributed at that time. Numbers of customers have also
varied with the product. RSI has often relied on single or a few select
major customers. Since March, 1996, Mr. Snelling has also served as a sales
consultant to Lynk Systems, Inc., a national credit card marketing company
ranking as the tenth largest credit card processor in the United States and
headquartered in Atlanta. From February, 1995 to January, 1998, Mr.
Snelling was also employed as a travel agent by 21st Century Travel in
Atlanta. At the time Mr. Snelling worked for 21st Century Travel, it
operated nationwide with more than 500 employees. Mr. Snelling was also a
professional ski racer based in Colorado from 1973 through 1980.
BRIAN T. MALLON. Since January, 1993, Mr. Mallon has served as the president and
principal shareholder of Infovision, Inc., a privately held Georgia
corporation based in Atlanta. Mr. Mallon is the founder of this company,
which provides advertising space and display time on visual displays at
sports complexes and other indoor and outdoor events. As of the date of
this Filing, Infovision employed two individuals. From May, 1992 to
January, 1993, Mr. Mallon served as the president and principal shareholder
of American Mobile Communications, Inc., also a privately held corporation
which provided advertising time and display information at various sporting
events and other venues.
No family relationships exist between either of the officers and directors of
the Company.
ITEM 10: Executive Compensation
Neither of the Company's executive officers received any compensation or other
remuneration in his capacity as such during the year ended December 31, 1999,
and it is not expected that such individuals will be paid compensation in the
foreseeable future. Mr. Snelling, the Company's sole employee, presently serves
without compensation. During 1999, the Company expensed $500 per month on its
financial statements based upon the estimated fair market value of the services
provided by the President. However, he may be compensated in the future,
depending upon such things as the Company's revenues, profitability and services
rendered to the Company.
The Company's directors presently serve without compensation, but are entitled
to be reimbursed for reasonable and necessary expenses incurred on behalf of the
Company.
ITEM 11: Security Ownership of Certain Beneficial Owners and Management
11
<PAGE>
As of the date of this filing, there were a total of 44,225,000 shares of Common
Stock of the Company outstanding, the only class of voting securities of the
Company currently outstanding.
The following tabulates holdings of Common Stock of the Company by each person
who holds of record, or is known by management of the Company to own
beneficially, more than 5% of the voting securities outstanding and, in
addition, by all directors and officers of the Company individually and as a
group. The shareholders listed below have sole voting and investment power. All
ownership of securities is direct ownership unless otherwise indicated.
Name and Address Number of Shares Percent of Voting Securities
- ---------------- ---------------- ----------------------------
Rollins C. Snelling, Jr. 14,500,000 32.79%
55 Pharr Road #A-207
Atlanta, GA 30305
Brian T. Mallon 14,500,000 32.79%
425 Lindberg Dr. #A-3
Atlanta, GA 30305
All Officers and Directors
as a Group (2 persons) 29,000,000 65.57%
Each of the individuals listed in the foregoing table are officers and directors
of the Company.
Changes In Control.
-------------------
The Company knows of no arrangements, including the pledge by any person of
securities of the Company, which may result in a change of control of the
Company in the future.
ITEM 12: Certain Relationships and Related Transactions
Initial Capitalization.
-----------------------
On December 17, 1997, the Company issued 14,500,000 shares each to Messrs.
Snelling and Mallon, the founders of the Company. Such shares were issued for
services rendered by each individual in connection with the organization of the
Company valued at $500 each for purposes of that transaction. Messrs. Snelling
and Mallon were the only members of the Board of Directors approving that
transaction. The Company is of the opinion that the foregoing transaction was no
less favorable than could have been obtained from an unaffiliated third party.
PART IV
ITEM 13: Exhibits and Reports on Form 8-K
(a) Exhibits
12
<PAGE>
Financial Data Schedule
(b) Reports on Form 8-K
None
<PAGE>
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the Company caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, on April 13, 2000.
SNELLING TRAVEL, INC.
(Registrant).
By:/s/ Rollins C. Snelling, Jr.
-------------------------------
Rollins C. Snelling, Jr., President
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities indicated on
April 13, 2000.
/s/ Rollins C. Snelling, Jr.
- ---------------------------
Rollins C. Snelling, Jr., President, Treasurer and Director
/s/ Brian T. Mallon
- -------------------
Brian T. Mallon, Vice President, Secretary and Director
14
<PAGE>
SNELLING TRAVEL, INC.
Exhibit Index to Annual Report on Form 10-KSB
For the Year ended December 31, 1999
EXHIBITS
EX-27 Financial Data Schedule
FINANCIAL DATA SCHEDULE FOR YEAR ENDED 12/31/99
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE AUDITIED
FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 1999 AND FOR THE YEAR THEN
ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
15
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> DEC-31-1999
<CASH> 27,817
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 27,817
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 27,817
<CURRENT-LIABILITIES> 2,135
<BONDS> 0
0
0
<COMMON> 44,225
<OTHER-SE> (18,018)
<TOTAL-LIABILITY-AND-EQUITY> 27,817
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 33,926
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (33,926)
<INCOME-TAX> 0
<INCOME-CONTINUING> (33,926)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (33,926)
<EPS-BASIC> (0.001)
<EPS-DILUTED> (0.001)
</TABLE>
