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U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Three Months Ended June 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 0-
TRAVELNSTORE, INC.
(Exact name of registrant as specified in its charter)
California 77-0507163
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation)
1100 Paseo Camarillo, Camarillo, California 93010
(Address of principal executive offices and zip code)
Registrant's telephone number (805) 388-9004
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 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 [ ]
The number of shares of the registrant's common stock outstanding as of
July 31, 2000 was 9,400,000.
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<PAGE>
TRAVELNSTORE, INC.
FORM 10-QSB
THREE MONTHS ENDED JUNE 30, 2000
INDEX
PART I. FINANCIAL INFORMATION Page No.
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Item 1. Financial Statements:
Balance Sheet as of June 30, 2000 (Unaudited)....................... 2
Statements of Operations for the Three Months and Six Months Ended
June 30, 2000 and June 30, 1999 (Unaudited)..................... 3
Statements of Cash Flows for the Six Months Ended June 30, 2000 and
June 30, 1999 (Unaudited)....................................... 4
Notes to Financial Statements....................................... 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations....................................... 6
PART II. OTHER INFORMATION
Item 1. Legal Proceedings................................................... 7
Item 4. Submission of Matters to a Vote of Security Holders................. 7
Item 6. Exhibits and Reports on Form 8-K.................................... 7
Signatures ................................................................... 8
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PART I
Item 1. Financial Statements
TRAVELNSTORE, INC.
Balance Sheet
June 30, 2000
June 30,
2000
-----------
Assets (Unaudited)
Current Assets:
Cash in Banks .............................................. $ 128,944
Accounts Receivable ........................................ 385
Due from Related Parties ................................... 295,658
Prepaid Expenses and Other Current Assets .................. 356,430
-----------
Total Current Assets ..................................... 781,417
Property & Equipment .......................................... 74,770
Less: Accumulated Depreciation ............................... (7,188)
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Property & Equipment, Net ..................................... 67,582
Other Assets .................................................. 13,555
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Total Assets ............................................ $ 862,554
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Liabilities and Shareholders' Deficit
Current Liabilities:
Accounts Payable and Accrued Expenses ....................... $ 703,614
Accrued Payroll ............................................. 199,000
Interest Payable ............................................ 58,313
Current Portion, Long-Term Debt ............................. 8,572
Convertible Notes Payable ................................... 900,000
Bridge Notes Payable ........................................ 797,500
Notes Payable, Related Parties .............................. 190,123
Accrued Expenses, Related Parties ........................... 50,000
Deferred Income ............................................. 3,001
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Total Current Liabilities ............................... 2,910,123
Long-Term Debt ................................................ 38,002
Total Liabilities ........................................ 2,948,125
Commitments and Contingencies (Note 2) ........................ --
Shareholders' Deficit:
Preferred Stock, Class A, No Par Value; 8,154 Shares
Authorized; 8,154 Shares Issued and Outstanding as of
June 30, 2000 and December 31, 1999 ......................... 150,887
Preferred Stock, No Par Value; 1,000,000 Shares
Authorized; No Shares Issued or Outstanding
Common Stock, No Par Value; 20,000,000 Authorized;
9,400,000 Issued and Outstanding as of June 30, 2000;
Shares Reserved for Future Issuance, 1,730,224
Shares at June 30, 2000 .................................... 4,319,200
Common Stock Subscribed, 102,500 Shares at June 30, 2000 ...... 711,250
Accumulated Deficit ........................................... (7,266,908)
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Total Shareholders' Deficit ............................. (2,085,571)
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Total Liabilities and Shareholders' Deficit ............. $ 862,554
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See accompanying notes to financial statements.
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<TABLE>
TRAVELNSTORE, INC.
Statements of Operations
For the Three Months and Six Months Ended June 30, 2000 and June 30, 1999
(Unaudited)
<CAPTION>
Three Months Ended Six Months Ended
--------------------------------- ---------------------------------
June 30, 2000 June 30, 1999 June 30, 2000 June 30, 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues $ 6,377 $ 15,240 $ 9,497 $ 28,142
Selling, General and Administrative
Expenses 605,006 199,571 922,493 307,810
----------- ----------- ----------- -----------
Loss from Operations (598,629) (184,331) (912,996) (279,668)
Other Income (Expense):
Interest Expense, Net (2,591,638) (431,971) (2,591,638) (957,488)
Other 1,000 2,428
----------- ----------- ----------- -----------
Total Other (Expense) (2,590,638) (431,971) (2,589,210) (957,488)
----------- ----------- ----------- -----------
Net Loss $(3,189,267) $ (616,302) $(3,502,206) $(1,237,176)
=========== =========== =========== ===========
Basic Net Loss per Common Share $ (0.34) $ (0.06) $ (0.37) $ (0.13)
=========== =========== =========== ===========
Weighted-Average Common Shares
Outstanding 9,400,000 9,400,000 9,400,000 9,400,000
=========== =========== =========== ===========
<FN>
See accompanying notes to financial statements.
</FN>
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</TABLE>
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<TABLE>
TRAVELNSTORE, INC.
Statements of Cash Flows
For the Six Months Ended June 30, 2000 and June 30, 1999
(Unaudited)
<CAPTION>
June 30, June 30,
2000 1999
----------- -----------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Loss $(3,502,206) $(1,237,176)
Adjustments to Reconcile Net Loss to Net Cash
Used by Operating Activities:
Depreciation 2,184 1,532
Interest Expense:
Convertible Debentures 2,563,750 945,001
Changes in Assets and Liabilities:
(Increase) in Accounts Receivable (200) (200)
(Increase) in Prepaid Expenses and Other Current Assets (149,903) (66,313)
Increase in Accounts Payable and Accrued Expenses 155,180 225,224
Increase in Accrued Payroll 199,000
Increase in Interest Payable 28,635 3,081
(Decrease) in Deferred Income (6,398) (10,676)
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Net Cash Used by Operating Activities (709,958) (139,507)
Cash Flows from Financing Activities:
Purchase of Property and Equipment (6,769)
Other (10,609)
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Net Cash Used in Investing Activities (17,378)
Cash Flows from Financing Activities:
Net Borrowings from Related Parties 163,473 8,300
Proceeds from Notes Payable 812,500 265,015
Net Loans to Related Parties (116,652) (130,602)
Repayments of Long-Term Debt (3,041)
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Net Cash Provided by Financing Activities 856,280 142,713
Increase in Cash 128,944 3,206
Cash at Beginning of Period 0 18,860
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Cash at End of Period $ 128,944 $ 22,066
=========== ===========
Supplementary Disclosure:
Interest Paid $-0- $-0-
=========== ===========
Income Taxes Paid $-0- $-0-
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<FN>
See accompanying notes to financial statements.
</FN>
</TABLE>
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TRAVELNSTORE, INC.
Notes to Financial Statements
1. Basis of Presentation
The financial statements of TravelnStore, Inc. (the "Company") for the
three months and six months ended June 30, 2000 are unaudited and reflect all
adjustments (consisting of normal recurring adjustments) which are, in the
opinion of management, necessary for a fair presentation of the financial
statements for the interim periods. The financial statements should be read in
conjunction with the notes to financial statements included herein, together
with management's discussion and analysis of financial condition and results of
operations, contained in the Company's Post-Effective Amendment No. One to Form
SB-2 Registration Statement dated July 13, 2000 for the 12 months ended December
31, 1999 ("calendar year 1999").
The results of operations for the three months and six months ended
June 30, 2000 are not necessarily indicative of the results for the entire
calendar year ending December 30, 2000 ("calendar year 2000").
The Company operates on a calendar year. Each quarter consists of three
months with the first quarter ending March 31, the second quarter ending June
30, the third quarter ending September 30 and the fourth quarter ending December
31.
2. Commitments and Contingencies
Through March 2000 the Company did not carry general liability or
workers' compensation insurance, nor was it self-insured. The Company accrues
liabilities when it is probable that future costs will be incurred and such
costs can be reasonably estimated. During April 2000 the Company obtained
general liability and workers' compensation insurance coverage. Future costs
associated with absent insurance coverage could have a material effect on the
Company's future results of operations and financial condition or liquidity.
As of June 30, 2000 there were no known liability claims.
3. Adoption of New Accounting Standards
Statement of Financial Accounting Standards ("SFAS") No. 130,
"Reporting Comprehensive Income", establishes standards for reporting and
displaying comprehensive income and its components in financial statements. The
Company adopted the provisions of SFAS No. 130 in 1998, but has not had any
elements of comprehensive income since its inception.
SFAS No. 131, "Disclosures About Segments of an Enterprise and Related
Information", establishes a new model for segment reporting, called the
"management approach" and requires certain disclosures for each segment. The
management approach is based on the way the chief operating decision-maker
organizes segments within a company for making operating decisions and assessing
performance. The Company adopted the provisions of SFAS No. 131 in 1998, but
currently operates in only one industry segment.
4. Leases
The Company entered into a five-year non-cancelable operating lease for
its office facility. The lease term began January 1, 2000 and ends December 31,
2004. The office facility is located at 1100 Paseo Camarillo, Camarillo,
California. The Company believes that the facility, approximately 5,000 square
feet in size, will be adequate for its needs for the foreseeable future.
5. Net Loss per Common Share
The Company adopted the provisions of SFAS No. 128, "Earnings Per
Share" ("EPS"), that established standards for the computation, presentation and
disclosure of earnings per share, replacing the presentation of Primary EPS with
a presentation of Basic EPS. It also requires dual presentation of Basic EPS and
Diluted EPS on the face of the statement of operations for entities with complex
capital structures. Basic EPS is based on the weighted average number of
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common shares of stock outstanding during the three months and six months ended
June 30, 2000, which totaled 9,400,000. The Company did not present Diluted EPS,
since the result was anti-dilutive.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following discussion and analysis should be read in conjunction
with the financial statements and notes thereto, included elsewhere in this Form
10-QSB.
Certain statements in this Form 10-QSB are forward-looking statements
that are made pursuant to the Safe Harbor provisions of the Private Securities
Litigation Reform Act of 1995. When used in this Form 10-QSB, the words
"believes", `anticipates", "expects", and similar words often are intended to
identify certain forward-looking statements. This Form 10-QSB includes
forward-looking statements based largely on the Company's expectations which are
subject to a number of risks and uncertainties, including, but not limited to,
economic, competitive and other factors affecting the Company's operations,
markets, products and services, risks associated with growth, risks associated
with media campaigns, the ability to obtain financing, the successful training
and retention of personnel and other factors discussed elsewhere in this Form
10-QSB and the documents filed by the Company with the Securities and Exchange
Commission. Many of these factors are beyond the Company's control. Actual
results could differ materially from these forward-looking statements. In light
of these risks and uncertainties, there can be no assurance that the
forward-looking information contained in this Form 10-QSB will, in fact, occur.
The Company does not undertake any obligation to revise these forward-looking
statements to reflect future events or circumstances.
Overview
The Company was founded in August 1998 as a limited liability company.
In April 1999 the limited liability company was acquired by TravelnStore.Com,
Inc., a California corporation. Effective May 30, 2000 the Company changed its
corporate name to TravelnStore, Inc.
The Company created, maintains and promotes the TravelnStore.com
Website which acts as a navigational site to the Web sites created by a wide
array of travel service providers, such as cruise lines, tour companies, car
rental firms, destination resorts and hotel groups. The Company's business is to
provide a vehicle though which customers can identify and contact travel service
providers and retail travel agents to purchase travel services. Online this
connection is provided by the TravelnStore.com Website. Off-line, and an
integral part of the Company's operating strategy, the Company is creating the
"World Key Agency Group" to provide this connection through branded retail
travel agencies.
The Company is currently recruiting retail travel agencies nation-wide
to join the World Key Agency Group consortium. As part of the consortium, each
agency will receive protected territories so as not to compete with other
agencies in the World Key Agency Group, each agency will receive funds from the
Company to help offset agency costs of collateral materials such as letterhead,
business cards and other promotional materials that will carry the World Key
Agency Group brand.
The Company also expects to issue a certain number of its shares of
common stock to each retail travel agency that joins the consortium. In addition
the Company expects to advertise the World Key Agency Group in order to increase
revenues of its consortium members.
The agreement between World Key Agency Group and the retail travel
agencies that join the World Key Agency Group is not a franchisor/franchisee
relationship. World Key Agency group does not receive either franchise fees or
royalties from any member agency in the consortium. While World Key Agency Group
will provide management and marketing support to its member agency group it does
not require member agencies to follow any type of pre-set policies and
procedures in the operation of their individual travel agency business.
TravelnStore, Inc. has also entered into a number of contracts with
travel service providers such as cruise lines, tour companies, car rental firms,
destination resorts and hotel groups for the benefit of its members in the World
Key Agency Group consortium. The Company expects that as the consortium grows in
the number of member retail travel agencies, it will be able to provide the
member agencies with greater commission income than they currently receive from
travel service providers as an independent retail travel agency or, in some
cases, as a part of another travel agency consortium.
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The Company's primary anticipated revenue model is reliant upon the receipt of
overrides and commissions through the World Key Agency Group members. The
Company expects to receive commissions and overrides from travel service
providers for travel that is booked by customers through the consortium members.
Results of Operations
The Company is still in the early stages of its strategic business plan
and is expected to incur substantial future losses. The Company has not, to
date, generated any significant revenues from its operations. The ability of the
Company to generate significant revenues and positive cash flows will depend on
several factors, including the recruitment of a substantial number of retail
travel agencies into the World Key Agency Group and entering into favorable
override and commission contracts with significant travel service providers.
No assurances can be given, however, that the Company can successfully
execute its strategic business plans, including recruitment of a significant
number of retail travel agencies into the World Key Agency Group and executing
favorable commission and override contracts with significant travel service
providers.
From its inception in August 1998 through June 30, 2000 the Company has
incurred substantial operating losses. As of June 30, 2000 the Company has
accumulated a deficit of $7,266,908. For the six months ended June 30, 2000 the
Company incurred a net loss of $3,502,206.
Liquidity and Capital Resources
Since its inception, TravelnStore, Inc. has funded its operations and
capital expenditures primarily through private placement of debt and equity
securities. The Company will require additional capital to continue operations.
However, there can be no assurance that capital will be available on terms
acceptable to the Company, if at all. The ability to obtain additional capital
is dependent upon many factors, including the condition of the general economy
and specific considerations about the Company and its prospects at the point in
time when funding is sought.
Recent Developments
On July 17, 2000 the Company was declared effective by the Securities
and Exchange Commission to proceed with a Direct Public Offering ("DPO"). The
Company had previously filed an SB-2 Registration Statement to offer for sale a
minimum of 315,790 shares and a maximum of 1,500,000 shares of its common stock
at a price per share of $9.50. The anticipated net proceeds to the Company from
the DPO is a minimum of $3 million and a maximum of $14.25 million.
Year 2000
The principal Year 2000 issue was whether previously written software
applications and operating programs would properly recognize dates beginning in
the Year 2000. As of June 30, 2000, the Company has not experienced any
significant information technology systems issues or any material adverse impact
on the Company's results of operations, financial condition or cash flows as a
result of the Year 2000.
PART II
Item 1. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 10.1: Lease Agreement for offices at 1100 Paseo Camarillo
Exhibit 27.1: Financial Data Table
(b) The Company did not file any reports on Form 8-K during the period covered
by this Form 10-QSB.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf on August 21 2000, by the undersigned, thereunto duly authorized.
TRAVELNSTORE, INC.
(Registrant)
/s/ Jim B. Tyner President, Chief Executive August 21 2000
------------------------ Officer and Director
Jim B. Tyner (Principal Executive Officer)
/s/ Glenn E. Glasshagel Chief Financial Officer August 21 2000
------------------------ (Principal Financial Officer
Glenn E. Glasshagel and Principal
Accounting Officer)
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