<PAGE> 1
=================================================================
SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street, N.W.
Washington, D. C. 20549
----------------------------------
FORM 10-SB/A-1
General Form for Registration of Securities
Pursuant to Section 12(b) or (g) of
The Securities Exchange Act of 1934
budgethotels.com, inc.
(Exact name of registrant as specific in its charter)
Nevada Applied For
(State of Incorporation) (I.R.S. Employer
Identification No.)
1449 St. Paul Street
Suite 202
Kelowna, British Columbia, Canada V1Y 2E5
(Address of executive offices, including postal code)
Registrant's telephone number: (250) 868-1171
Copies to: Conrad C. Lysiak, Esq.
601 West First Avenue
Suite 503
Spokane, Washington 99201
Securities to be registered pursuant to Section 12(b) of the Act:
NONE
- -----------------------------------------------------------------
(Title of Class)
Securities to be registered pursuant to Section 12(g) of the Act:
COMMON STOCK
-----------------------------------------------------------------
(Title of Class)
==================================================================
<PAGE> 2
ITEM 1. DESCRIPTION OF BUSINESS.
History
budgethotels.com, inc. (the "Company") was incorporated under the
laws of the State of Nevada on November 5, 1997, as Info Center
International Inc. On November 30, 1997, the Company acquired all of
the issued and outstanding shares of common stock of Info Center, Inc.,
("ICI") a corporation incorporated under the laws of the state of
Washington on November 6, 1984. ICI thereafter became a wholly owned
subsidiary corporation of the Company. On February 11, 1999, the
Company changed its name to budgethotels.com, inc. Info Center,
Inc. ("ICI") is a wholly owned subsidiary corporation of the Company.
W.J. Marshall Management Inc. owned all of the shares of ICI and
exchanged those shares for 8,000,000 shares of the Company's common
stock in 1997. W.J. Marshall Management Inc. is a corporation owned
and controlled by William J. Marshall, the Company's President. W.J.
Marshall Management Inc. is a corporation formed to hold title to
certain investments of Mr. Marshall. W.J. Marshall Management Inc. is
not a subsidiary corporation of the Company.
Operations
The Company's business operations consist of (1) display board
advertising and (2) an Internet website, www.budgethotels.com.
Display Board Advertising
The Company's primary business is to install and maintain
illuminated information boards in transportation terminals, such as bus
stations and airports. Each board is approximately 4 feet x 5 feet and
is made up of approximately 16 to 25 individual windows are
illuminated. The windows are available for advertisements.
Advertisements generally promote travel related services located near
the particular transportation terminal, such as hotels, rental cars and
restaurants. Some advertisers, however, promote such services in
destination cities. Each board is equipped with a free of charge
direct telephone line to the particular advertiser.
Advertising
Advertising rates for the spaces vary, depending upon the location
of the advertisement on the board. Assuming that each board is fully
occupied by an advertiser for a twelve month period, the board will
generate revenues of $56,000. There is no assurance, however, that a
board will be fully occupied during any twelve month period. Currently
the Company's boards are, on an average, sixty percent (60%) filled.
<PAGE> 3
Costs of Display Board Advertising
The cost of constructing and installing each board is
approximately $4,000. Fixed operating costs per board are
approximately $6,000 and consist of telephone line charges and rental
of the terminal space. Direct sales costs, primarily commissions paid
to advertising personnel, are approximately $10,800.
Marketing.
The Company currently operates sixty-six boards throughout the
United States and Canada. The boards range geographically from
Vancouver, British Columbia to Miami, Florida. Due to the Company's
limited financial condition and limited personnel, the Company has
primarily marketed advertising space on its various boards by telephone
contact with potential advertisers. The Company recognizes, however,
that the most effective method of selling its products is through
direct and personal contact with its potential customers. Accordingly,
the Company intends to establish a network of area representatives who
will sell the Company's product on a commission basis. Initially, the
Company estimates that there will be six representatives who will cover
the Northeast, Southeast, Midwest, South, Southern California and
Pacific Northwest regions of the United States.
The Company intends to concentrate its marketing efforts on
filling the vacant spaces on the existing boards, as well as obtaining
advertisers for newly installed boards.
Lease Agreement with Greyhound Lines, Inc.
On October 2, 1997, a License Agreement (the "License Agreement")
was executed between the Company and Greyhound Lines, Inc., a Delaware
corporation ("Greyhound"). The License Agreement grants to the Company
the sole right to install, operate and maintain wall-unit advertising
displays with direct dial phones in Greyhound's leased bus terminal
facilities. The License Agreement is effective beginning on February
15, 1998, and will continue in full force until February 15, 2003 (the
"Initial Term"). After the Initial Term, the License Agreement may be
renewable for two additional five-year terms.
The License Agreement authorizes the Company to install at its
sole cost one "approximately 20 square feet in area by 1 foot depth
wall-unit with an illuminated advertising display board with map and
direct dial phone" in each of the Greyhound facilities designated in
the License Agreement. The Company must also service, repair or replace
any part of the display boards within 48 hours after receipt of notice.
<PAGE> 4
Pursuant to the terms of the License Agreement, the Company must
pay Greyhound a commission of $367.50 per month for display boards
located in the following areas: (1) Chicago, Illinois; (2) Los Angeles,
California; (3) Miami, Florida; (4) Orlando, Florida; and (5)
Washington, D.C. For display boards located in: (1) Las Vegas, Nevada;
(2) Nashville, Tennessee; (3) San Diego, California; or (4) Seattle,
Washington, the Company is obligated to pay Greyhound a commission of
$157.50 per month. ^ The Company will pay Greyhound a commission of
$50.00 per month for display boards located in thirty-six additional
cities. The commission payments will increase 4% for each renewal
term of the License Agreement.
Pursuant to the terms of the License Agreement, the Company is
required to obtain and maintain the following insurance policies:
1. Commercial General Liability Insurance with combined single limits
of not less than $ 1,000,000 (naming Greyhound as an additional
insured);
2. Contractual Liability Insurance underwriting the indemnification,
hold harmless, and insurance provisions of the License Agreement
with combined single limits of not less than $1,000,000 (naming
Greyhound as an additional insured);
3. Comprehensive Automobile Liability Insurance providing coverage
for owned, non-owned, hired, contracted, and leased vehicles of
Info Center with combined single limits for injury or damage in
any one accident of $500,000 (naming Greyhound as an additional
insured); and
4. Worker's Compensation Insurance in the amounts required by
applicable state laws governing the Company's operations or
evidence that such insurance is not required.
As of the date hereof, the Company has installed sixty boards
pursuant to the aforementioned agreement.
Installation of Additional Display Boards
The Company has also installed display boards for advertising by
agreement with the New York Port Authority, New Jersey Transit
Commission, Amtrak's Chicago Union Station, the Spokane Intermodal
Center, the Toronto Transit Commission and Via Rail Canada.
Thus far, the Company has installed sixty-four boards throughout
the United States and two in Canada.
<PAGE> 5
Internet Website "www.budgethotels.com"
The Company owns and has the copyright to the website
www.budgethotels.com ("budgethotels"). The Company sells space on its
website to hotels and motels. The Company charges a fee to the hotel
or motel for maintaining a listing on the website. The fee charged for
the listing will vary depending upon the type of listing a particular
hotel or motel is interested in obtaining. Currently, the following
fee structure is being used:
1. Listing $ 240.00/year
2. Column Ad $ 480.00/year
3. Full Page Ad $ 960.00/year
4. Banner Ad $ 3,600.00/year
The Company also takes hotel reservations on-line and obtains a
commission from the respective hotel for each reservation. The Company
receives a commission. of 10% on each on-line reservation. As financial
transaction security on the Internet improves, the Company anticipates
that on-line hotel reservations will increase. There is no assurance
that the foregoing assumption will prove accurate.
On October 1, 1997, the Company engaged C & K Management Ltd. as
a consultant to advise the Company on an ongoing basis relative to
Internet applications of the Company's present and future business.
The term of the agreement is from October 1, 1997 to January 31, 2001.
The fee for the services is $80,000 payable at the rate of $2,000 per
month. Mr. Marshall, the Company's President, has agreed, personally,
to indemnify and hold C & K Management Ltd. From any loss sufffered by
the Company's failure to pay or perform the terms of the agreement.
Marketing of "www.budgethotels.com"
The Company intends to sell advertising space for its website
through direct and personal contact with a prospective advertiser. The
Company anticipates employing area representatives to sell advertising
space for its Internet website. The Company anticipates that its
potential advertising clients for the website will also be the same
potential clients for its display advertising boards. Accordingly, the
Company anticipates selling two product lines employing identical
telemarketers for the website, as it does for the display board
advertising in contacting potential advertisers.
Operations of "www.budgethotels.com"
Currently one hundred twenty clients lease space on the Company's
website.
<PAGE> 6
Competition.
The Company competes with many other board providers and Internet
travel services, most of whom have more financial resources than the
Company and there can be no assurance that in the future, the Company
will be able to compete successfully with other display board
advertisers or Internet website advertisers. The Company is a small
participant within the display board advertising arena and the Internet
website arena. The Company competes with professional advertising
agencies, television, radio, publications such as magazines and
newspapers, all of whom have more resources than the Company. The
Company intends to market its services as discussed in "Item 1.
Description of Business - Marketing" and does not believe that its
methods of marketing will effect its competitive position at all.
Government Regulation
The Company anticipates that its display board advertising will be
subject to regulation by the respective local and state authorities, as
well as federal authorities, with regard to the content of each display
board. Further, the content of the display boards will also be
regulated by the respective transportation (airport, bus, port or
train) authorities. Advertisements subject to regulation may include
socially objectionable advertisements relating to such matters as
alcoholic beverages, tobacco products, drug or sex paraphernalia,
"striptease" or topless establishments, "adult bookstores", nude
modeling studios, escort services and massage parlors.
The Company believes that the lack of financial security on the
Internet is hindering economic activity thereon. To ensure the security
of transactions occurring over the Internet, U.S. federal regulations
require that any computer software used within the United States
contain a 128-bit encoding encryption, while any computer software
exported to a foreign country contain a 40-bit encoding encryption.
There is uncertainty as to whether the 128-bit encoding encryption
required by the U.S. is sufficient security for transactions occurring
over the Internet. Accordingly, there is a danger that any financial
(credit card) transaction via the Internet will not be a secure
transaction. Accordingly, risks such as the loss of data or loss of
service on the Internet from technical failure or criminal acts are now
being considered in the system specifications and in the security
precautions in the development of the website "www.budgethotels.com."
There is no assurance that such security precautions will be
successful.
<PAGE> 7
Year 2000
The Year 2000 issue is the result of computer programs written
using two digits rather than four to define the applicable year. As a
result, date sensitive software may recognize a date using "00" as the
year 1900 rather than the year 2000. This could result in system
failures or miscalculations causing disruptions of operations,
including among others, temporary inability to process transactions,
send invoices, or engage in similar normal business activities.
^ The Company has examined all of the technology (information
and non-information) that it uses to operate its business and found it
to be Year 2000 compliant. Further, the Company has contacted its
current hardware and software suppliers and has been advised that all
hardware and software supplied to it is Year 2000 compliant. As
the Company ^ acquires new hardware and software suppliers,
the Company intends to determine the extent to which the Company's
systems may be vulnerable should those third parties fail to address
and correct their own Year 2000 issues and take measures to reduce the
Company's exposure, such as, finding alternative suppliers or requiring
the suppliers to correct Year 2000 compliance issues prior to the
Company acquiring the product. The Company anticipates that this will
be an ongoing process as the Company begins to implement its marketing
plan through 1999. There can be no assurances that the systems of
suppliers or other companies on which the Company may rely on will be
converted in a timely manner and will not have a materially adverse
effect on the Company's systems. Additionally there can be no assurances
that the computer systems necessary to maintain the viability of the
Internet will be Year 2000 compliant. The Company believes that it is
taking the steps necessary regarding Year 2000 compliance issues with
respect to matters within its control. However, no assurance can be
given that the Company's systems will be made Year 2000 compliant in
a timely manner or that the Year 2000 problem will not have a material
adverse effect on the Company's business, financial condition and
results of operations. In the event a Year 2000 failure occurs, the
Company believes that it will relate to matters outside of its control,
such as events occurring at a Greyhound Terminal. If such an event
occurs, the Company's operations could be suspended until such time as
the failure is corrected. The Company believes such an event would not
have a material adverse affect upon the Company's operations.
Company's Office
The Company's headquarters are located 1449 St. Paul Street, Suite
202, Kelowna, British Columbia, Canada V1Y 2E5 and its telephone
numbers are (250) 868-1171 and(800) 548-4432.
<PAGE> 8
Employees
The Company is a development stage company and currently has
eleven employees other than its Officers and Directors. The employees
will be paid on a commission basis (by a number of display boards each
employee is able to achieve advertising for). The Company intends to
hire additional employees as needed.
RISK FACTORS
1. Company with Limited History of Earnings. The Company has a
limited operating history and is subject to all of the risks inherent
in a developing business enterprise including lack of cash flow and
service acceptance.
2. Development and Market Acceptance of Services. The Company's
success and growth will depend upon the Company's ability to market its
services. The Company's success will depend in part upon the market's
acceptance of, and the Company's ability to deliver and support its
services.
3. Dependence on Technology Supplier. The Company is dependent
upon an outside technology supplier for the preparation and creation of
its web sites. The unavailability of such services will result in the
Company ceasing operations.
4. Liquidity; Need for Additional Financing. The Company
believes that it does not have the cash it needs for at least the next
twelve months based upon its internally prepared budget. Further, the
Company's cash requirements are not easily predictable and there is a
possibility that its budget estimates will prove to be inaccurate. If
the Company is unable to generate a positive cash flow, it will be
required to curtail operations substantially and seek additional
capital. There is no assurance that the Company will be able to obtain
additional capital if required, or if capital is available, to obtain
it on terms favorable to the Company. The Company may suffer from a
lack of liquidity in the future which could impair its short-term
marketing and sales efforts and adversely affect its results of
operations.
5. Competition. Most of the Company's competitors have
substantially greater financial, technical and marketing resources than
the Company. In addition, the Company's services compete indirectly
with numerous other suppliers of web pages and search engines. As the
market for the Company's services expand, the Company expects that
additional competition will emerge and that existing competitors may
commit more resources to those markets.
<PAGE> 9
6. Reliance Upon Directors and Officers. The Company is wholly
dependent, at the present, upon the personal efforts and abilities of
its sole Officer, William Marshall and its Directors, William Marshall,
Kenneth E. Cloak and Stewart P. Scheibel who exercise control over the
day to day affairs of the Company.
7. Issuance of Additional Shares. 35,786,000 shares of Common
Stock or 71.57% of the 50,000,000 authorized shares of Common Stock of
the Company are unissued. The Board of Directors has the power to
issue such shares, subject to shareholder approval, in some instances.
Although the Company presently has no commitments, contracts or
intentions to issue any additional shares to other persons, other than
pursuant to Mr. Marshall's employment agreement and the Founders'
Agreement, the Company may in the future attempt to issue shares to
acquire products, equipment or properties, or for other corporate
purposes. Any additional issuance by the Company, from its authorized
but unissued shares, would have the effect of diluting the interest of
existing shareholders.
8. Indemnification of Officers and Directors for Securities
Liabilities. The laws of the State of Nevada provide that the Company
could indemnify any Director, Officer, agent and/or employee as to
those liabilities and on those terms and conditions as are specified in
the Corporation Act of the State of Nevada. Further, the Company may
purchase and maintain insurance on behalf of any such
persons whether or not the corporation would have the power to
indemnify such person against the liability insured against. The
foregoing could result in substantial expenditures by the Company and
prevent any recovery from such Officers, Directors, agents and
employees for losses incurred by the Company as a result of their
actions. Further, the Company has been advised that in the opinion of
the Securities and Exchange Commission, indemnification is against
public policy as expressed in the Securities Act of 1933, as amended,
and is, therefore, unenforceable.
9. Cumulative Voting, Preemptive Rights and Control. There are
no preemptive rights in connection with the Company's Common Stock.
Shareholders may be further diluted in their percentage ownership of
the Company in the event additional shares are issued by the Company in
the future. Cumulative voting in the election of Directors is not
provided for. Accordingly, the holders of a majority of the shares of
Common Stock, present in person or by proxy, will be able to elect all
of the Company's Board of Directors.
10. No Dividends Anticipated. At the present time the Company
does not anticipate paying dividends, cash or otherwise, on its Common
Stock in the foreseeable future. Future dividends will depend on
earnings, if any, of the Company, its financial requirements and other
factors.
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Operations During the Fiscal Years November 30, 1998 and November 30,
1997
The Company's operations remained consistent during the last two
fiscal years. Net sales of advertising increased by approximately
$100,000 while cost of goods sold increased by $9,000. The foregoing
increase was as a direct result of the Lease Agreement with Greyhound
Lines, Inc. Sales increased from $331,953 for fiscal 1997 to
$438,272 for fiscal 1998. The Company suffered a net loss of $55,002
for fiscal 1998 as compared with a net loss of $8,782 for fiscal 1997.
The loss was directly related to an increase in administrative
expenses. General and administrative expenses increased by
approximately $160,000 from $151,483 for the fiscal year ending
November 30, 1997 to $311,283 for the fiscal year ending November 30,
1998. The increase in the general and administrative expenses was a
direct result of retaining additional employees in an attempt to
generate additional sales of advertising space and developing the
Internet Web site.
Operations During the Interim Periods of May 31, 1999 and May 31, 1998.
In the first quarter of fiscal year 1999, the Company completed
three offerings of securities pursuant to Reg. 504 of the Securities
Act of 1933 which increased its total cash from by approximately
$167,000. In December 1997, the Company sold 2,500,000 shares of
its common stock at an offering price of $0.01 per share. A total of
$25,000 was raised from the offering. In December 1997, the Company
sold 400,000 shares of common stock at an offering price of $0.50 per
share. A total of $200,000 was raised from the offering. From
December 1997 through March 1998, the Company sold 387,000 shares of
its common stock at an offering price of $0.25 per share. A total
$96,750 was raised from the offering. During the first six months
of fiscal November 30, 1999 which ended on May 31, 1999, the Company
had net sales of $305,644 as compared with $280,682 the same time in
1998. As a result of the increase in administrative expenses, the
Company had a net loss of $78,155 for the period ending May 31, 1999 as
compared with a net profit for the period ending May 31, 1998.
In the event that the Company does not substantial increase its
net sales during the next six months, the Company anticipates reducing
its employee work force.
The Company has inadequate cash to maintain operations during the
next twelve months. The amount of $2,500,000 is required to fund
the Company's plan of operation for the next twelve months. The
Company's current cash will satisfy its operation requirements for a
period of five months. As a result, its auditors, Jones, Jensen
and Company have issued a going concern opinion. In order to meet its
<PAGE> 11
cash requirements the Company will have to raise additional capital
through the sale of securities or loans. As of the date hereof, the
Company has not made sales of additional securities and there is no
assurance that it will be able to raise additional capital through the
sale of securities in the future. Further, the Company has not
initiated any negotiations for loans to the Company and there is no
assurance that the Company will be able to raise additional capital in
the future through loans. In the event that the Company is unable to
raise additional capital, it may have to reduce its operations.
The Company does not intend to conduct any research or development
of its services during the next twelve months other than as described
herein. See "Business."
The Company does not intend to purchase a plant or significant
equipment.
The Company will not hire additional employees during the next
twelve months, however, the Company may decrease the number of persons
it now employees.
Liquidity and Capital Resources
The Company maintains a low cash balance. This is a result of
expenses exceeding revenues. The Company maintains a low liquidity
position at November 30, 1998, with a working capital deficit of
$(160,716). This compares with a working capital deficit of $(163,298)
on November 30, 1997. The increase in working capital is as a result
of increased sales in 1998.
Current assets increased from $68,957 in November 30, 1997 to
$101,662 in November 30, 1998. This was as a result of an increase in
accounts receivables from additional sales. Current liabilities
increased from $232,285 on November 30, 1997 to $261,838 on November
30, 1998. This was as a result of increased unearned revenue for
future sales.
Because of the Company's low cash balance, it does/does not
fulfill its financial obligations of a current basis.
Results of Operations
The Company derives its revenues from two sources consisting of
the boards and the web-site.
<PAGE> 12
Fiscal 1998 compared with 1997
Boards
Revenues generated from the leasing of space on the boards for the
year ended November 30, 1998 totalled $438,272 as compared with
$331,953 for the year ending November 30, 1997. This was as a result
of Greyhound contract expenses.
Operating expenses relating to the leasing of space on the boards
was approximately $280,000 for the year ending November 30, 1998 as
compared with approximately $151,000 for the year ending November 30,
1997. This was as a result of hiring additional marketing personnel in
1998.
Other expenses relating to the leasing of space on the boards was
approximately $17,000 for the year ending November 30, 1998 as compared
with approximately $9,000 for the year ending November 30, 1997. This
was as a result of depreciation of additional assets.
Web-site
Revenues generated from the web-site for the years ended November
30, 1998 and 1997 was $-0-. This was because the web-site was not
operational.
Operating expenses relating to the web-site was approximately
$30,000 for the year ending November 30, 1998 as compared with $-0- for
the year ending November 30, 1997. This was as a result of costs
expended in fiscal 1998 to develop the web site.
Interim Periods Ended May 31, 1999 and 1998
Boards
Revenues generated from the leasing of space on the boards for the
six months ended May 31, 1999 totalled $305,644 as compared with
$289,682 for the six months ending May 31, 1998. This was as a result
of this was as a result of increased revenues generated from the
Greyhound contract.
Operating expenses relating to the leasing of space on the boards
was approximately $158,000 for the six months ended May 31, 1999 as
compared with approximately $82,000 for the six months ended May 31,
1998. This was as a result of hiring additional marketing personnel.
Other expenses relating to the leasing of space on the boards was
approximately $5,000 for the six months ended May 31, 1999 as compared
with approximately $4,000 for the six months ending May 31, 1998. This
was as a result of the depreciation of assets.
<PAGE> 13
Web-site
Revenues generated from the web-site for the six months ended May
31, 1999 and May 31, 1998 totalled $-0-. This was because the web-site
had yet to generate revenues.
Operating expenses relating to the web-site was approximately
$28,000 for the six months ending May 31, 1999 as compared with $-0-
for the six months ending May 31, 1998. This was as a result of the
development of the web-site.
ITEM 3. DESCRIPTION OF PROPERTIES.
The Company does not own any real or personal property. The
Company's only asset is cash.
The Company's headquarters are located 1449 St. Paul Street, Suite
202, Kelowna, British Columbia, Canada V1Y 2E5 and its telephone number
is (250) 868-1171. The Company leases the foregoing premises from
Cedar Grove Reality on a month to month basis. The monthly rental is
$749.00.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The following table sets forth the Common Stock ownership of each
person known by the Company to be the beneficial owner of five percent
or more of the Company's Common Stock, each director individually and
all officers and directors of the Company as a group. Each person has
sole voting and investment power with respect to the shares of Common
Stock shown, unless otherwise noted, and all ownership is of record and
beneficial.
Name and Number of Percent of
address of owner Shares Position Class
William Marshall 8,000,000[1] President, Secretary 56.28%
16875 Terrace Rd. Treasurer & Director
Winfield, B.C.
Canada V4V 1B2
Kenneth E. Cloak 12,500[2] Director 0.09%
8624 Janscim Park Dr.
N. Jaunich, B.C.
Canada V8V 3K3
All officers and 8,012,500 56.37%
directors as a
group (2 persons)
<PAGE> 14
[1] Shares are held in the name of WJM Management Inc., a corporation
owned and controlled by William Marshall, the Company's President.
Info Center, Inc. ("ICI") is a wholly owned subsidiary
corporation of the Company. W.J. Marshall Management Inc. owned
all of the shares of ICI and exchanged those shares for 8,000,000
shares of the Company's common stock in 1997. W.J. Marshall
Management Inc. is a corporation owned and controlled by William
J. Marshall, the Company's President. W.J. Marshall Management Inc.
is a corporation formed to hold title to certain investments of
Mr. Marshall. W.J. Marshall Management Inc. is not a subsidiary
corporation of the Company.
[2] Mr. Cloak has an option to purchase up to 25,000 shares of common
stock at an exercise price of $0.25 per share. This figure
reflects the number of shares that Mr. Cloak could acquire from
the exercise of his option within 60 days of the effective date of
this Form 10-SB. As of the date hereof, Mr. Cloak has not
exercised his option to acquire any shares of common stock and
accordingly, does not own any shares of the Company's common stock.
^
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The officers and directors of the Company are as follows:
Name Age Position
William J. Marshall 51 President, Treasurer, Secretary and
^ member of the Board of Directors
Kenneth E. Cloak 51 Member of the Board of Director
^
Each director serves for a term of one year and the directors are
elected at the annual meeting of shareholders. The Company's officers
are appointed by the Board of Directors and hold office at the
discretion of the Board.
William J. Marshall - President, Treasurer, Secretary and member of
the Board of Directors.
Since November 1997, Mr. Marshall has been the President,
Treasurer, Secretary and a member of the Board of Directors of the
Company. Since 1991, Mr. Marshall has been an officer and director of
the Company's wholly owned subsidiary corporation, Info Center, Inc.
From 1988 to 1991, Mr. Marshall was the Vice President of Sales for LAC
Enterprises (Advertising) in Vancouver, British Columbia, Canada. LAC
Enterprises is a Kelowna advertising agency. From 1984 to 1988, Mr.
Marshall served as President of Info Center, Inc., which is not the
<PAGE> 15
same corporation currently owned by the Company, but which was engaged
in the same business as the Company. From 1977 to 1983 Mr. Marshall
served as a sales representative and sales supervisor for Moffatt
Communications, Vancouver, British Columbia. Moffatt Communications is
a medium sized communications company. From 1975 to 1977, Mr. Marshall
was a sales representative for CFCN Television in Calgary, Alberta.
CFCN is one the largest television stations in Canada. From 1972 to
1975, Mr. Marshall was employed by Rothman's of Pal Mal Tobacco
Company, located in Calgary, Alberta, Canada. Pal Mall Tobacco Company
is engaged in the business of manufacturing tobacco products. Mr.
Marshall's business experience at Info Center, Inc. relates to the
business of the Company in that the business of Info Center, Inc. is
the same business as that of the Company. Mr. Marshall's business
experience at Moffatt Communications relates to the business of the
Company in that Mr. Marshall was marketing products and/or services at
both companies. Other than the foregoing, Mr. Marshall's experiences
are not related to the business of the Company.
Kenneth E. Cloak - member of the Board of Directors
Kenneth E. Cloak was appointed to the Board of Directors of the
Company on May 25, 1999. There was no arrangement or understanding
with respect to which Mr. Cloak was appointed to the Board of
Directors. Since May 1991, Mr. Cloak has been a real estate associate
with Collins International in Victoria, British Columbia. Colliers
International is a nation wide Canadian commercial real estate broker.
Mr. Cloak is employed in the Victoria, British Columbia office. Mr.
Cloak's experience as a real estate associate does not relate to the
business of the Company.
Mr. Steward P. Scheibel, a former member of the Board of
Directors, resigned on September 21, 1999. His resignation was not as
a result of any disagreement with the Company relating to the Company's
operations, policies or practices.
ITEM 6. EXECUTIVE COMPENSATION.
Summary Compensation.
The following table sets forth the compensation paid by the
Company from January 1, 1996 through December 31, 1998, for each
officer and director of the Company. This information includes the
dollar value of base salaries, bonus awards and number of stock options
granted, and certain other compensation, if any.
<PAGE> 16
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation Awards Payouts
Securities
Names Other Under Restricted Other
Executive Annual Options/ Shares or Annual
Officer and Compen- SARs[1] Restricted LTIP[2] Compen-
Principal Year Salary Bonus sation Granted Share Payouts sation
Position Ended (US$) (US$) (US$) (#) Units (US$) (US$) (US$)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William J. 1998 72,000 0 0 0 0 0 0
Marshall 1997 98,000 0 0 0 0 0 0
President 1996 84,000 0 0 0 0 0 0
& Director
Kenneth E. 1998 0 0 0 0 0 0 0
Cloak [1] 1997 0 0 0 0 0 0 0
Director 1996 0 0 0 0 0 0 0
</TABLE>
The Company anticipates paying the following salaries in 1999,
subject to the Company beginning profitable operations and generating
sufficient revenues to pay the same:
William J. Marshall President 1999 $ 110,000
The Company has adopted a non-qualified incentive stock option
plan and granted options to Messrs Cloak and Scheibel. There are no
other stock option plans, retirement, pension, or profit sharing plans
for the benefit of the Company's officers and directors.
Option/SAR Grants.
Information concerning individual grants of stock options, whether
or not in tandem with stock appreciation rights ("SARs"), and
freestanding SARs made during fiscal 1998 and options granted to date
in fiscal 1999 to each of the Named Executive Officers is reflected in
the table below.
<PAGE> 17
Option/SAR Grants in Fiscal 1998 and to date in Fiscal 1999.
<TABLE>
<CAPTION>
Potential
Realizable Value
at Assumed Annual
Rates of Stock
Price Appreciation
Individual Grants for Option Term
- ---------------------------------------------------------------------
Percent of
Number of Total
Securities Options/SARs
Underlying Granted to Exercise
Options/SARs Employees or Base Expiration
Name Granted (#) in Fiscal Yr Price Date
<S> <C> <C> <C> <C>
1998
William J. Marshall 0 0 $0.00 0
1999
William J. Marshall 0 0 $0.00 0
Kenneth E. Cloak 25,000 33.3% $0.50 05/24/00
</TABLE>
Long-Term Incentive Plan Awards.
The Company does not have any long-term incentive plans that
provide compensation intended to serve as incentive for performance.
Compensation of Directors.
Messrs. Cloak and Scheibel have received options to acquire shares
of the Company's Common Stock. Mr. Marshall has not received any
options to acquire any shares of the Company's common stock. Other than
the foregoing, Directors have not received any other compensation for
serving on the Board of Directors. There are no contractual
arrangements with any member of the Board of Directors other than Mr.
Marshall. See "Certain Relationships and Related Transaction."
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On November 30, 1997, the Company acquired all of the issued and
outstanding shares of common stock of ICI, a corporation owned and
controlled by WJM Management Ltd., a corporation owned and controlled
by William Marshall, the Company's President and director in exchange
for 8,000,000 shares of the Company's Common Stock. Further, WJM
Management Inc., transferred its leasehold interests in office space,
office equipment, office furniture, and storage space which is located
at Mr. Marshall's home. The Company uses the office space on a rent
free basis.
^
<PAGE> 18
On March 31, 1999 the Company engaged LAC Enterprises Ltd. ("LAC")
a corporation solely owned and controlled by Mr. Marshall, as
consultant to the Company. The agreement provides that the Company
will pay LAC a fee of $10,000 per month plus expenses with an annual
increase of 5% each year. LAC will also receive options to purchase
between 1.0 million and 1.7 million shares of common stock per year
with an exercise price of $0.01 per year. The number of options will
be determined by Mr. Marshall.
On May 24, 1999, the Company granted an option to Ken Cloak, a
member of the Board of Directors, to acquire up to 25,000 shares of
common stock at an exercise price of $0.50 per share. The option
provides that Mr. Cloak may acquire 12,500 shares from August 26, 1999
to November 26, 1999 and 12,500 shares from November 27, 1999 to May
24, 2000.
On May 24, 1999, the Company granted an option to Stewart
Scheibel, a member of the Board of Directors, to acquire up to 50,000
shares of common stock at an exercise price of $0.50 per share. The
option provides that Mr. Scheibel may acquire 12,500 shares from August
26, 1999 to November 26, 1999; 12,500 shares from November 27, 1999 to
May 24, 2000; 12,500 shares from May 25, 2000 to August 25, 2000; and,
12,500 shares from August 26, 2000 to November 27, 2000.
ITEM 8. LEGAL PROCEEDINGS.
The Company is not a party to any pending or threatened litigation
and to its knowledge, no action, suit or proceedings has been
threatened against its officers and its directors.
ITEM 9. MARKET PRICE FOR COMMON EQUITY AND OTHER SHAREHOLDER MATTERS.
The Company's shares are traded on the Bulletin Board
operated by the National Association of Securities Dealers, Inc. (the
"Bulletin Board") under the trading symbol "BUDH." The Company's
shares began trading in August 1998. Summary trading by quarter for
the 1998, and 1997 fiscal years and the first quarter of 1999 are as
follows:
Fiscal Quarter High Bid[1] Low Bid[1]
1999
Second Quarter $2.40625 $0.4375
First Quarter $0.65625 $0.28125
1998
Fourth Quarter $0.55 $0.3125
Third Quarter $0.00 $0.00
<PAGE> 19
[1] These quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commissions and may not represent actual
transactions.
As of June 15, 1999, the Company has 469 holders of record of its
Common Stock.
The Company has not paid any dividends since its inception and
does not anticipate paying any dividends on its Common Stock in the
foreseeable future.
In an August 13, 1999 press release the Company advised the
public that the purpose of filing the Form 10-SB registration statement
was to achieve a full small cap listing on NASDAQ. The foregoing
statement was incorrect. The purpose for filing the Form 10-SB was to
maintain its listing on the Bulletin Board (the "Bulletin Board")
operated by the National Association of Securities Dealers, Inc.
("NASD"). The Bulletin Board is a service made available to NASD
broker-dealers in order for them to make a market in low priced penny
stocks. The NASDAQ Small Cap, on the other hand, is an automated
quotation system that is available for corporations that meet certain
listing requirements. The Company currently does not meet the listing
requirements.
In order to be listed for trading on the NASDAQ Small Cap system,
the Company must have the following: $4 million in tangible assets or
$50 million market capitalization or $750,000 in net income in the
latest fiscal year or 2 of its last 3 fiscal years; 1 million shares in
it public float (public float is defined as shares that are not held
directly or indirectly by any officer or director of the issuer or by
any other person who is the beneficial owner of more that 10% of the
total shares outstanding); $5 million market value of public float; $4
minimum bid price; 3 market makers; 300 round lot shareholders (round
lot holders are considered holders of 100 shares or more; an operating
history of 1 year or market capitalization of $50 million; and,
corporate governance. The Company currently does not meet the
foregoing requirements and there is no assurance that the Company will
meet the foregoing requirements in the future.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
The Company has 14,214,000 shares of Common Stock issued and
outstanding as of June 15, 1999. Of the 14,214,000 shares of the
Company's Common Stock outstanding, 6,214,000 shares are freely
tradeable and 8,000,000 shares can only be resold in compliance with
Reg. 144 adopted under the Securities Act of 1933 (the "Act").
<PAGE> 20
In general, under Rule 144 as currently in effect, a person (or
persons whose Shares are aggregated) who has beneficially owned Shares
privately acquired directly or indirectly from the Company or from an
affiliate, for at least one year, or who is an affiliate, is entitled
to sell within any three month period a number of such Shares that does
not exceed the greater of 1% of the then outstanding shares of the
Company's Common Stock or the average weekly trading volume in the
Company's Common Stock during the four calendar weeks, immediately
preceding such sale. Sales under Rule 144 are also subject to certain
manner of sale provisions, notice requirements and the availability of
current public information about the Company. A person (or persons
whose Shares are aggregated) who is not deemed to have been an
affiliate at any time during the 90 day preceding a sale, and who has
beneficially owned Restricted Shares for at least two years, is
entitled to sell all such Shares under Rule 144 without regard to the
volume limitations, current public information requirements, manner of
sale provisions or notice requirements.
In October 1997, the Company entered into a licensing agreement
with Greyhound Lines, Inc. (Greyhound), whereby the Company is granted
the right to install, operate and maintain its advertising boards in
all of Greyhound's owned and leased bus terminal facilities. The
agreement is for a period of 15 years (three 5 year terms) beginning in
February 1998. The cost to the Company ranges from $50 to $367 per
month for each location where an advertising board is placed. The
Company offered the shares on a "best efforts" basis, in reliance upon
Regulation D promulgated under the Securities Act of 1933, as amended
(the "Act"), and/or Sections 3(b) and 4(2) of the Act and as permitted
under the laws of various states. The offering was made without general
solicitation or general advertising.
^
On November 30, 1997, the Company acquired all of the issued and
outstanding shares of common stock of ICI, a corporation owned and
controlled by W.J. Marshall Management Inc., a corporation owned and
controlled by William Marshall, the Company's President and director in
exchange for 8,000,000 "restricted" shares of the Company's Common
Stock. The foregoing shares were issued pursuant to Section 4(2) of
the Securities Act of 1933 (the "Act").
In November 1997, the Company issued 600,000 shares of common
stock in consideration of services valued at $28,080. The shares were
issued pursuant to Reg. 504 of the Act. The shares were subsequently
cancelled and returned to the Company.
On December 18, 1997, the Company completed its first private
placement offering of 2,500,000 shares of the Company's Common Stock at
$0.01 per share, for an aggregate of $25,000. The foregoing shares
were issued pursuant to Reg. 504 of the Securities Act of 1933 (the
"Act). The 2,500,000 shares were issued to 760343 Alberta Ltd., Lance
Morginn, Terry Fields, John Coward, Ronaye Mallette, and 11124057
Investments Ltd. None of the foregoing are affiliates of the Company.
<PAGE> 21
In March 1998, the Company issued 387,000 shares of commons stock
at $0.25 per share to four persons in consideration of $96,875. All of
the shares were issued pursuant to Reg. 504 of the Act.
In March 1999, the Company issued 1,602,000 shares of common stock
at $0.25 per share to four persons in consideration of $400,500. The
foregoing shares were issued pursuant to Reg. 504 of the Act.
In March 1999, the Company issued 1,650,000 shares of common stock
to two persons in consideration of services rendered valued at $16,500.
The foregoing shares were issued pursuant to Reg. 504 of the Act.
In March 1999, the Company issued 75,000 shares of common stock at
$0.50 per share to five persons in consideration of $37,500. The
foregoing shares were issued pursuant to Reg. 504 of the Act.
On May 24, 1999, the Company granted an option to Ken Cloak, a
member of the Board of Directors, to acquire up to 25,000 shares of
common stock at an exercise price of $0.50 per share. The option
provides that Mr. Cloak may acquire 12,500 shares from August 26, 1999
to November 26, 1999 and 12,500 shares from November 27, 1999 to May
24, 2000.
On May 24, 1999, the Company granted an option to Stewart
Scheibel, a member of the Board of Directors, to acquire up to 50,000
shares of common stock at an exercise price of $0.50 per share. The
option provides that Mr. Scheibel may acquire 12,500 shares from August
26, 1999 to November 26, 1999; 12,500 shares from November 27, 1999 to
May 24, 2000; 12,500 shares from May 25, 2000 to August 25, 2000; and,
12,500 shares from August 26, 2000 to November 27, 2000.
In July 1999, the Company issued 300,000 restricted shares of
common stock to Phoenix Capital Funding Group in consideration of
service rendered. The foregoing shares were issued pursuant to Section
4(2) of the Act.
ITEM 11. DESCRIPTION OF SECURITIES.
Common Stock
The authorized Common Stock of the Company consists of 50,000,000
shares, $0.001 par value per share. All shares have equal voting
rights, are non-assessable and have one vote per share. Voting rights
are not cumulative and, therefore, the holders of more than 50% of the
Common Stock could, if they choose to do so, elect all of the directors
of the Company.
<PAGE> 22
Upon liquidation, dissolution or winding up of the Company, the
assets of the Company, after the payment of liabilities, will be
distributed pro rata to the holders of the Common Stock. The holders
of the Common Stock do not have preemptive rights to subscribe for any
securities of the Company and have no right to require the Company to
redeem or purchase their shares. The shares of Common Stock presently
outstanding are fully paid and non-assessable.
Dividends
Holders of the Common Stock are entitled to share equally in
dividends when, as and if declared by the Board of Directors of the
Company, out of funds legally available therefore. No dividend has
been paid on the Common Stock since inception, and none is contemplated
in the foreseeable future.
Preferred Stock
The authorized Preferred Stock of the Company consists of
1,000,000 shares, $0.01 par value per share. Currently, no Preferred
Shares have been issued and there are no agreements or negotiations
pending for the issuance of any Preferred Shares. The designations,
powers, preferences, rights, and limitations of the Preferred Shares
may be determined by the Board of Directors from time to time,
including rights pertaining to voting, dividends, redemptions,
liquidation and conversion.
Transfer Agent
The Company's transfer agent is American Securities Transfer &
Trust, Inc., 1825 Lawrence Street, Suite 444, Denver Colorado 80202-
1817 and its telephone number is (303) 298-5370.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The laws of the state of Nevada under certain circumstances
provide for indemnification of the Company's Officers, Directors and
controlling persons against liabilities which they may incur in such
capacities. A summary of the circumstances in which such
indemnification is provided for is contained herein, but this
description is qualified in its entirety by reference to the Company's
Articles of Incorporation and to the statutory provisions.
In general, any Officer, Director, employee or agent may be
indemnified against expenses, fines, settlements or judgments arising
in connection with a legal proceeding to which such person is a party,
if that person's actions were in good faith, were believed to be in the
Company's best interest, and were not unlawful. Unless such person is
<PAGE> 23
successful upon the merits in such an action, indemnification may be
awarded only after a determination by independent decision of the Board
of Directors, by legal counsel, or by a vote of the shareholders, that
the applicable standard of conduct was met by the person to be
indemnified.
The circumstances under which indemnification is granted in
connection with an action brought on behalf of the Company is generally
the same as those set forth above; however, with respect to such
actions, indemnification is granted only with respect to expenses
actually incurred in connection with the defense or settlement of the
action. In such actions, the person to be indemnified must have acted
in good faith and in a manner believed to have been in the Company's
best interest, and have not been adjudged liable for negligence or
misconduct.
The Company's Articles of Incorporation and Bylaws contain
provisions which provide for indemnification to the fullest extent
provided by Nevada law.
ITEM 13. FINANCIAL STATEMENTS.
Financial Statements begin on following page.
<PAGE> 24
[Letterhead]
Jones, Jensen & Company LLC
Certified Public Accountants
50 South Main Street
Suite 1450
Salt Lake City, Utah 84144
Tel: (801) 328-4408
FAX: (801) 328-4461
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Info Center International, Inc. and Subsidiaries
Kelowna, British Columbia
We have audited the accompanying consolidated balance sheet of Info
Center International, Inc. and Subsidiaries as of November 30, 1998 and
the related consolidated statements of operations, stockholders' equity
(deficit) and cash flows for the years ended November 30, 1998 and
1997. These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion
on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of Info Center International, Inc. and Subsidiaries as of
November 30, 1998, and the consolidated results of their operations and
their cash flows for the years ended November 30, 1998 and 1997, in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. The Company's capital
deficiency and significant operating losses raise substantial doubt
about the Company's ability to continue as a going concern.
Management's plans regarding these matters are described in Note 8. The
financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
/s/ Jones, Jensen & Company
Jones, Jensen & Company
Salt Lake City, Utah
February 26, 1999
F-1
<PAGE>
<PAGE> 25
INFO CENTER INTERNATIONAL, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
ASSETS
<TABLE>
<CAPTION>
November 30,
1998
<S> <C>
CURRENT ASSETS
Cash $ 13,144
Accounts receivable (Note 2) 88,518
---------
Total Current Assets 101,662
---------
PROPERTY AND EQUIPMENT (Net) (Notes 2 and 3) 64,604
---------
OTHER ASSETS
Prepaids 1,477
---------
Total Other Assets 1,477
---------
TOTAL ASSETS $ 167,743
=========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 17,923
Accounts payable - related party 3,477
Unearned revenue 196,031
Note payable - related party (Note 5) 44,407
---------
Total Current Liabilities 261,838
---------
COMMITMENTS AND CONTINGENCIES (Note 4)
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock; 1,000,000 shares
authorized of $0.01 par value,
no shares issued and outstanding -
Common stock; 50,000,000 shares
authorized of $0.001 par value,
11,487,000 shares issued and
outstanding 11,487
Additional paid-in capital 61,894
Accumulated deficit (167,476)
---------
Total Stockholders' Equity (Deficit) (94,095)
---------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 167,743
=========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-2
<PAGE> 26
INFO CENTER INTERNATIONAL, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
<TABLE>
<CAPTION>
For the Years Ended
November 30,
1998 1997
<S> <C> <C>
REVENUE
Net sales $ 438,272 $ 331,953
Cost of goods sold 171,086 162,229
--------- ---------
Gross Profit 267,186 169,724
--------- ---------
EXPENSES
General and administrative 311,283 151,483
Depreciation 17,118 9,246
--------- ---------
Total Expenses 328,401 160,729
--------- ---------
Income (Loss) From Operations (61,215) 8,995
--------- ---------
OTHER INCOME (EXPENSE)
Gain on exchange rate 12,415 5,252
Interest income 237 -
Interest expense - (5,772)
Bad debt expense (6,439) (17,257)
--------- ---------
Total Other Income (Expense) 6,213 (17,777)
--------- ---------
NET LOSS $ (55,002) $ (8,782)
========= =========
BASIC LOSS PER SHARE $ (0.01) $ (0.00)
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-3
<PAGE> 27
INFO CENTER INTERNATIONAL, INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity (Deficit)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit
<S> <C> <C> <C> <C>
Balance, November 30, 1996 - $ - $ - $ (103,692)
Common stock issued to acquire
Info Center, Inc. 8,000,000 8,000 (8,000) -
Net loss for the year ended
November 30, 1997 - - - (8,782)
---------- -------- -------- ----------
Balance, November 30, 1997 8,000,000 8,000 (8,000) (112,474)
Common stock issued for
services rendered at $0.05
per share 600,000 600 27,480 -
Common stock issued for
cash at $0.05 per share
(see Note 7) 2,887,000 2,887 95,700 -
Stock offering costs - - (53,286) -
Net loss for the year ended
November 30, 1998 - - - (55,002)
---------- -------- -------- ----------
Balance, November 30, 1998 11,487,000 $ 11,487 $ 61,894 $ (167,476)
========== ======== ======== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-4
<PAGE> 28
INFO CENTER INTERNATIONAL, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
For the Years Ended
November 30,
1998 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (55,002) $ (8,782)
Adjustments to reconcile net
income (loss) to net cash used
by operating activities:
Depreciation 17,118 9,246
Bad debt expense 6,439 17,257
Common stock issued for services 28,080 -
Changes in assets and liabilities
(Increase) decrease in accounts
receivable (26,000) (26,092)
(Increase) decrease in accounts
receivable - related party 16,745 (11,720)
(Increase) decrease in deposits
and prepaids 2,017 (1,194)
Increase (decrease) in accounts
payable 14,808 (277)
Increase (decrease) in bank overdraft (2,639) 74
Increase (decrease) in unearned
revenue 14,906 19,525
--------- ---------
Net Cash Provided (Used) by
Operating Activities 16,472 (1,963)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (51,106) (619)
--------- ---------
Net Cash Provided (Used) by
Investing Activities (51,106) (619)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from note payable -
related party 2,477 2,582
Proceeds from sales of common stock 98,587 -
Stock offering costs (53,286) -
--------- ---------
Net Cash Provided (Used) by
Financing activities 47,778 2,582
--------- ---------
NET INCREASE (DECREASE) IN CASH 13,144 -
CASH AT BEGINNING OF YEAR - -
--------- ---------
CASH AT END OF YEAR $ 13,144 $ -
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION
CASH PAID FOR
Interest $ - $ 4,202
Income Taxes $ - $ -
NON-CASH FINANCING ACTIVITIES
Common stock issued for services
rendered $ 28,080 $ -
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE> 29
INFO CENTER INTERNATIONAL, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
November 30, 1998
NOTE 1 - COMPANY BACKGROUND
The consolidated financial statements include those of Info
Center International, Inc. (ICI) and its wholly-owned
subsidiaries, Info Center, Inc. (Info) and W. J. Marshall
Management, Inc. (WJM). Collectively, they are referred to
herein as "the Company".
ICI was incorporated under the laws of the State of Nevada on
November 5, 1997. ICI was incorporated for the purpose of
acquiring Info.
Info, a wholly-owned subsidiary, was formed under the laws of
the State of Washington on November 6, 1984. Info has been in
the business of operating billboards, signboards and illuminated
signs for the purpose of placing advertisements. Info also
maintains and operates an internet website for the purpose of
making hotel reservations.
On November 30, 1997, the Company completed an Agreement and
Plan of Share Exchange whereby ICI issued 8,000,000 shares of
its common stock in exchange for all of the outstanding common
stock of Info.
The share exchange was accounted for as a recapitalization of
Info because the owners of Info, WJM, control ICI after the
acquisition. Therefore, Info is treated as the acquiring
entity. Accordingly, there was no adjustment to the carrying
value of the assets or liabilities of Info. ICI is the
acquiring entity for legal purposes and Info is the surviving
entity for accounting purposes. WJM, the sole shareholder of
Info, was incorporated under the laws of the Province of British
Columbia on August 20, 1985. WJM has been in the business of
operating billboards for the purpose of placing advertisements.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies consistently
applied in the preparation of the accompanying consolidated
financial statements follows:
a. Accounting Method
The Company's consolidated financial statements are prepared
using the accrual method of accounting. The Company has elected
a November 30 year end.
F-6
<PAGE> 30
INFO CENTER INTERNATIONAL, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
November 30, 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
b. Property and Equipment
Property and equipment are recorded at cost. Major additions
and improvements are capitalized. The cost and related
accumulated depreciation of equipment retired or sold are
removed from the accounts and any differences between the
undepreciated amount and the proceeds from the sale are recorded
as a gain or loss on sale of equipment. Depreciation is
computed using the straight-line method over the estimated
useful lives as follows:
Useful
Description Lives
Advertising boards 7 years
Office furniture and equipment 7 years
Computer Software 3 years
Leasehold improvements 27.5 years
c. Accounts Receivable
Accounts receivable are shown net of the allowance for doubtful
accounts of $ 23,695 and $21,352 at November 30, 1998 and 1997,
respectively.
d. Provision For Taxes
At November 30, 1998, the Company has net operating loss
carryforwards of approximately $130,000 that may be offset
against future taxable income through 2012. No tax benefit has
been reported in the consolidated financial statements, because
the Company believes there is a 50% or greater chance the net
operating loss carryforwards will not be used. Accordingly, the
potential tax benefits of the net operating loss carryforwards
are offset by a valuation allowance of the same amount.
e. Principles of Consolidation
The consolidated financial statements include those of Info
Center International, Inc. and its wholly-owned subsidiaries,
Info Center, Inc. and W. J. Marshall Management, Inc.
All material intercompany accounts and transactions have been
eliminated.
F-7
<PAGE> 31
INFO CENTER INTERNATIONAL, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
November 30, 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
f. 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 reporting
period. Actual results could differ from those estimates.
g. Revenue Recognition
Revenue is recognized as service is provided to the customer.
The Company amortizes revenues over the life of the contract
with the customer which range from three months to one year.
Unearned revenues reflect the percentage of the Company's
receivables for which services have not yet been provided.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
November 30,
1998
Advertising boards $ 83,243
Office furniture and equipment 26,665
Computer software 2,681
Leasehold improvements 12,714
--------
125,303
Accumulated depreciation (60,699)
--------
Net property and equipment $ 64,604
========
Depreciation expense for the years ended November 30, 1998 and
1997 and was $17,118 and $9,246, respectively
NOTE 4 - COMMITMENTS AND CONTINGENCIES
In October 1997, the Company entered into an agreement for
consulting services. The agreement runs from October 1997
through January 2001. The monthly payment for the consulting
agreement is $2,000.
F-8
<PAGE> 32
INFO CENTER INTERNATIONAL, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
November 30, 1998
NOTE 4 - COMMITMENTS AND CONTINGENCIES (Continued)
The Company leases certain office equipment used in their
operations. The lease terms expire beginning in April 2001 and
ending in January 2003. The monthly rental payment for the
leases is $553.
The Company leases office space located in Kelowna, British
Columbia. The lease term is for one year and expires in
December 1998. The monthly lease payment on the office is $749.
During April 1997, the Company entered into an operating lease
agreement for an automobile. The lease term expires in March
2001. The monthly rental payment is $851.
Minimum future lease payments on the leases as of November 30,
1998 are as follows:
Year Ended
November 30, Amount
1999 $ 40,851
2000 40,851
2001 11,989
2002 3,640
2003 and thereafter -
--------
Total $ 97,331
========
NOTE 5 - RELATED PARTY TRANSACTIONS
As of November 30, 1998, the Company owed $44,407 to the
Company's President. Interest accrues on the amount at 10% per
annum and is due yearly. The principal is due on demand.
NOTE 6 - LICENSING AGREEMENT
In October 1997, the Company entered into a licensing agreement
with Greyhound Lines, Inc. (Greyhound), whereby the Company is
granted the right to install, operate and maintain its
advertising boards in all of Greyhound's owned and leased bus
terminal facilities. The agreement is for a period of 15 years
(three 5 year terms) beginning in February 1998. The cost to
the Company ranges from $50 to $367 per month for each location
where an advertising board is placed.
F-9
<PAGE> 33
INFO CENTER INTERNATIONAL, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
November 30, 1998
NOTE 7 - COMMON STOCK
In December 1997, the Company sold 2,500,000 shares of its
common stock in an offering for $25,000 at a price of $0.01 per
share. From December, 1997 through March, 1998, the Company
sold an additional 387,000 shares of its common stock in another
offering for $96,750 at a price of $0.25 per share. The stock
offering costs related to these two offerings amounted to
$53,286 and were charged to paid-in capital.
NOTE 8 - GOING CONCERN
The Company's consolidated financial statements are prepared
using generally accepted accounting principles applicable to a
going concern which contemplates the realization of assets and
liquidation of liabilities in the normal course of business.
The Company has incurred losses which have resulted in an
accumulated deficit of $167,476 at November 30, 1998 which
raises substantial doubt about the Company's ability to continue
as a going concern. The accompanying consolidated financial
statements do not include any adjustments relating to the
recoverability and classification of asset carrying amounts or
the amount and classification of liabilities that might result
from the outcome of this uncertainty. Management believes that
the Company will generate sufficient advertising revenue and
commissions through its licensing agreements and hotel
reservation internet website to cover all operating expenses in
the future, although no assurance of this can be given.
F-10
<PAGE> 34
[LETTERHEAD]
JONES, JENSEN & COMPANY, LLC.
CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS
50 South Main Street
Suite 1450
Salt Lake City, Utah 84144
Tel: (801) 328-4408
Fax: (801) 328-4461
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Budgethotels.com, Inc. and Subsidiaries
(Formerly Info Center International, Inc.)
Kelowna, British Columbia
The accompanying balance sheet of Budgethotels.com, Inc. and
Subsidiaries (formerly Info Center International, Inc.) as of May 31,
1999 and the related statements of operations, stockholders' equity
(deficit), and cash flows for the three months and six months ended
May 31, 1999 and 1998 were not audited by us and, accordingly, we do
not express an opinion on them. The accompanying balance sheet as of
November 30, 1998 was audited by us and we express an unqualified
opinion on it in our report dated February 26, 1999.
/s/ Jones, Jensen & Company
Jones, Jensen & Company
Salt Lake City, Utah
June 29, 1999
1
<PAGE> 35
BUDGETHOTELS.COM, INC. AND SUBSIDIARIES
(Formerly Info Center International, Inc.)
Consolidated Balance Sheets
ASSETS
<TABLE>
<CAPTION>
May 31, November 30,
1999 1998
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash $ 192,460 $ 13,144
Accounts receivable (Note 2) 132,556 88,518
--------- ---------
Total Current Assets 325,016 101,662
--------- ---------
PROPERTY AND EQUIPMENT (Net)
(Notes 2 and 3) 85,712 64,604
--------- ---------
OTHER ASSETS
Prepaids 4,000 1,477
--------- ---------
Total Other Assets 4,000 1,477
--------- ---------
TOTAL ASSETS $ 414,728 $ 167,743
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
2
<PAGE> 36
BUDGETHOTELS.COM, INC. AND SUBSIDIARIES
(Formerly Info Center International, Inc.)
Consolidated Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
May 31, November 30,
1999 1998
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 4,290 $ 17,923
Accounts payable - related party 576 3,477
Unearned revenue 201,370 196,031
Note payable - related party - 44,407
--------- ---------
Total Current Liabilities 206,236 261,838
--------- ---------
COMMITMENTS AND CONTINGENCIES (Note 4)
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock: 1,000,000 shares
authorized of $0.01 par value, no
shares issued and outstanding - -
Common stock: 50,000,000 shares
authorized Of $0.001 par value,
11,879,000 and 11,487,000 shares
issued and outstanding, respectively 14,214 11,487
Additional paid-in capital 439,909 61,894
Accumulated deficit (245,631) (167,476)
--------- ---------
Total Stockholders' Equity (Deficit) 208,492 (94,095)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS
EQUITY (DEFICIT) $ 414,728 $ 167,743
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
3
<PAGE> 37
BUDGETHOTELS.COM, INC. AND SUBSIDIARIES
(Formerly Info Center International, Inc.)
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
For the For the
Three Months Ended Six Months Ended
May 31, May 31,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
REVENUE
Net sales $ 159,824 $ 140,341 $ 305,644 $ 280,682
Cost of goods sold 145,472 57,869 198,237 115,738
--------- --------- --------- ---------
Gross Profit 14,352 82,472 107,407 164,944
--------- --------- --------- ---------
EXPENSES
General and
administrative 75,506 38,936 186,791 82,055
Depreciation 2,524 2,188 5,048 4,376
--------- --------- --------- ---------
Total Expenses 78,030 41,124 191,839 86,431
--------- --------- --------- ---------
Income (Loss) from
Operations (63,678) 41,348 (84,432) 78,513
--------- --------- --------- ---------
OTHER INCOME (EXPENSE)
Gain on exchange rate 3,091 - 6,277 -
Interest income - 71 - 154
--------- --------- --------- ---------
Total Other Income
(Expense) 3,091 71 6,277 154
--------- --------- --------- ---------
NET INCOME (LOSS) $ (60,587) $ 41,419 $ (78,155) $ 78,667
========= ========= ========= =========
BASIC EARNINGS (LOSS)
PER SHARE $ 0.00 $ 0.00 $ (0.00) $ 0.00
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
4
<PAGE> 38
BUDGETHOTELS.COM, INC. AND SUBSIDIARIES
(Formerly Info Center International, Inc.)
Consolidated Statements of Stockholders' Equity (Deficit)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit
<S> <C> <C> <C> <C>
Balance, November 30, 1997 8,000,000 $ 8,000 $ (8,000) $ (112,474)
Common stock issued for
shares canceled rendered at
$0.05 per share 600,000 600 27,480 -
Common stock issued for
cash at an average of $0.05
per share (see Note 7) 2,887,000 2,887 95,700 -
Stock offering costs - - (53,286) -
Net loss for the year ended
November 30, 1998 - - - (55,002)
--------- -------- --------- ----------
Balance, November 30, 1998 11,487,000 11,487 61,894 (167,476)
Cancellation of common stock
(unaudited) (600,000) (600) (27,480) -
Common stock issued for
cash at $0.25 per share
(unaudited) 1,602,000 1,602 398,898 -
Common stock issued for
services at $0.01 per
share (unaudited) 1,650,000 1,650 14,850 -
Common stock issued for
cash at $0.50 per share
(unaudited) 75,000 75 37,425 -
Stock offering costs
(unaudited) - - (45,678) -
Net loss for the six
months ended May 31,
1999 (unaudited) - - - (78,155)
---------- ------- --------- ----------
Balance, May 31, 1999
(unaudited) 14,214,000 $ 14,214 $ 439,909 $ (245,631)
========== ======== ========= ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
5
<PAGE>
<PAGE> 39
BUDGETHOTELS.COM, INC. AND SUBSIDIARIES
(Formerly Info Center International, Inc.)
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the For the
Three Months Ended Six Months Ended
May 31, May 31,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (60,587) $ 41,419 $ (78,155) $ 78,667
Adjustments to reconcile
net income (loss) to net
cash used by operating
activities:
Depreciation - 2,188 5,048 4,376
Common stock issued
for services 16,500 - 16,500 6,000
Changes in assets and
liabilities:
(Increase) decrease in
accounts receivable (55,980) (44,665) (44,061) (89,331)
(Increase) decrease in
accounts receivable -
related party - (11,093) - (22,187)
(Increase) decease in
deposits and prepaids (1,860) (374) (2,524) (374)
Increase (decrease) in
accounts payable (9,450) (21,898) (16,621) 16,712
Increase (decrease) in
unearned revenue 34,980 (10,062) 5,369 (20,125)
--------- ---------- ---------- ---------
Net Cash Provided (Used) by
Operating Activities (76,397) (44,485) (114,444) (26,262)
--------- ---------- ---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (14,302) (18,223) (26,075) (36,446)
--------- ---------- ---------- ---------
Net Cash Provided (Used) by
Investing Activities (14,302) (18,223) (26,075) (36,446)
--------- ---------- ---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on note payable
- related party (44,407) - (44,407) -
Cancellation of common stock (28,080) - (28,080) -
Proceeds from sales of common
stock 238,000 111,642 438,000 111,642
Stock offering costs (35,773) (22,902) (45,678) (22,902)
--------- ---------- ---------- ---------
Net Cash Provided (Used) by
Financing Activities $ 129,740 $ 88,740 $ 319,835 $ 88,740
--------- ---------- ---------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statement.
6
<PAGE> 40
BUDGETHOTELS.COM, INC. AND SUBSIDIARIES
(Formerly Info Center International, Inc.)
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
<TABLE>
<CAPTION>
For the For the
Three Months Ended Six Months Ended
May 31, May 31,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
NET INCREASE (DECREASE)
IN CASH $ 39,041 $ 26,032 $ 179,316 $ 26,032
CASH AT BEGINNING OF PERIOD 153,419 - 13,144 -
--------- -------- --------- --------
CASH AT END OF PERIO $ 192,460 $ 26,032 $ 192,460 $ 26,032
========= ======== ========= ========
SUPPLEMENTAL CASH FLOW
INFORMATION
CASH PAID FOR:
Interest $ - $ - $ - $ -
Income taxes $ - $ - $ - $ -
NON-CASH FINANCING ACTIVITIES
Common stock issued for
services rendered $ - $ - $ - $ 6,000
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
7
<PAGE> 41
BUDGETHOTELS.COM, INC. AND SUBSIDIARIES
(Formerly Info Center International, Inc.)
Notes to the Consolidated Financial Statements
May 31, 1999
NOTE 1 - COMPANY BACKGROUND
The consolidated financial statements include those of
Budgethotels.com, Inc. (formerly Info Center International,
Inc.) (BCI) and its wholly-owned subsidiaries, Info Center, Inc.
(Info) and W. J. Marshall Management, Inc. (WJM). Collectively,
they are referred to herein as "the Company".
BCI was incorporated under the laws of the State of Nevada on
November 5, 1997. On February 11, 1999, the Company changed its
name to Budgethotels.com, Inc. BCI was incorporated for the
purpose of acquiring Info.
Info, a wholly-owned subsidiary, was formed under the laws of
the State of Washington on November 6, 1984. Info has been in
the business of operating billboards, signboards and illuminated
signs for the purpose of placing advertisements. Info also
maintains and operates an internet website for the purpose of
making hotel reservations.
On November 30, 1997, the Company completed an Agreement and
Plan of Share Exchange whereby ICI issued 8,000,000 shares of
its common stock in exchange for all of the outstanding common
stock of Info.
The share exchange was accounted for as a recapitalization of
Info because the owners of Info, WJM, control ICI after the
acquisition. Therefore, Info is treated as the acquiring
entity. Accordingly, there was no adjustment to the carrying
value of the assets or liabilities of Info. ICI is the
acquiring entity for legal purposes and Info is the surviving
entity for accounting purposes. WJM, the sole shareholder of
Info, was incorporated under the laws of the Province of British
Columbia on August 20, 1985. WJM has been in the business of
operating billboards for the purpose of placing advertisements.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies consistently
applied in the preparation of the accompanying consolidated
financial statements follows:
a. Accounting Method
The Company's consolidated financial statements are prepared
using the accrual method of accounting. The Company has elected
a November 30 year end.
8
<PAGE> 42
BUDGETHOTELS.COM, INC. AND SUBSIDIARIES
(Formerly Info Center International, Inc.)
Notes to the Consolidated Financial Statements
May 31, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
b. Property and Equipment
Property and equipment are recorded at cost. Major additions
and improvements are capitalized. The cost and related
accumulated depreciation of equipment retired or sold are
removed from the accounts and any differences between the
undepreciated amount and the proceeds from the sale are recorded
as a gain or loss on sale of equipment. Depreciation is
computed using the straight-line method over the estimated
useful lives as follows:
Useful
Description Lives
Advertising boards 7 years
Office furniture and equipment 7 years
Computer Software 3 years
Leasehold improvements 27.5 years
c. Accounts Receivable
Accounts receivable are shown net of the allowance for doubtful
accounts of $23,695 and $23,695 at May 31, 1999 and November 30,
1998, respectively.
d. Provision For Taxes
At May 31, 1999, the Company has net operating loss
carryforwards of approximately $221,000 that may be offset
against future taxable income through 2014. No tax benefit has
been reported in the consolidated financial statements, because
the Company believes there is a 50% or greater chance the net
operating loss carryforwards will not be used. Accordingly, the
potential tax benefits of the net operating loss carryforwards
are offset by a valuation allowance of the same amount.
e. Principles of Consolidation
The consolidated financial statements include those of Info
Center International, Inc. and its wholly-owned subsidiaries,
Info Center, Inc. and W. J. Marshall Management, Inc.
All material intercompany accounts and transactions have been
eliminated.
9
<PAGE> 43
BUDGETHOTELS.COM, INC. AND SUBSIDIARIES
(Formerly Info Center International, Inc.)
Notes to the Consolidated Financial Statements
May 31, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
f. 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 reporting
period. Actual results could differ from those estimates.
g. Revenue Recognition
Revenue is recognized as service is provided to the customer.
The Company amortizes revenues over the life of the contract
with the customer which range from three months to one year.
Unearned revenues reflect the percentage of the Company's
receivables for which services have not yet been provided.
h. Unaudited Financial Statements
The accompanying unaudited financial statements include all of
the adjustments which, in the opinion of management, are
necessary for a fair presentation. Such adjustments are of a
normal, recurring nature.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
May 31,
1999
Advertising boards $ 100,198
Office furniture and equipment 28,905
Computer software 9,642
Leasehold improvements 12,714
---------
151,459
Accumulated depreciation (65,747)
---------
Net property and equipment $ 85,712
=========
Depreciation expense for the six months ended May 31, 1999 was
$5,048.
10
<PAGE> 44
BUDGETHOTELS.COM, INC. AND SUBSIDIARIES
(Formerly Info Center International, Inc.)
Notes to the Consolidated Financial Statements
May 31, 1999
NOTE 4 - COMMITMENTS AND CONTINGENCIES
In October 1997, the Company entered into an agreement for
consulting services. The agreement runs from October 1997
through January 2001. The monthly payment for the consulting
agreement is $2,000.
The Company leases certain office equipment used in their
operations. The lease terms expire beginning in April 2001 and
ending in January 2003. The monthly rental payment for the
leases is $553.
The Company leases office space located in Kelowna, British
Columbia. The lease term is for one year and expires in
December 1998. The monthly lease payment on the office is $749.
During April 1997, the Company entered into an operating lease
agreement for an automobile. The lease term expires in March
2001. The monthly rental payment is $579.
Minimum future lease payments on the leases as of May 31, 1998
are as follows:
Year Ended
November 30, Amount
1999 $ 40,851
2000 40,851
2001 11,989
2002 3,640
2003 and thereafter -
--------
Total $ 97,331
========
NOTE 5 - LICENSING AGREEMENT
In October 1997, the Company entered into a licensing agreement
with Greyhound Lines, Inc. (Greyhound), whereby the Company is
granted the right to install, operate and maintain its
advertising boards in all of Greyhound's owned and leased bus
terminal facilities. The agreement is for a period of 15 years
(three 5 year terms) beginning in February 1998. The cost to
the Company ranges from $50 to $367 per month for each location
where an advertising board is placed.
11
<PAGE> 45
BUDGETHOTELS.COM, INC. AND SUBSIDIARIES
(Formerly Info Center International, Inc.)
Notes to the Consolidated Financial Statements
May 31, 1999
NOTE 6 - COMMON STOCK
In December 1997, the Company sold 2,500,000 shares of its
common stock in an offering for $25,000 at a price of $0.01 per
share. From December, 1997 through March, 1998, the Company
sold an additional 387,000 shares of its common stock in another
offering for $96,750 at a price of $0.25 per share. The stock
offering costs related to these two offerings amounted to
$53,286 and were charged to paid-in capital.
In 1997, the Company sold an additional 400,000 shares of its
common stock at $0.50 per share. The offering costs of $45,678
were charged against the proceeds of the offering.
NOTE 7 - GOING CONCERN
The Company's consolidated financial statements are prepared
using generally accepted accounting principles applicable to a
going concern which contemplates the realization of assets and
liquidation of liabilities in the normal course of business.
The Company has incurred losses which have resulted in an
accumulated deficit of approximately $221,000 at May 31, 1999
which raises substantial doubt about the Company's ability to
continue as a going concern. The accompanying consolidated
financial statements do not include any adjustments relating to
the recoverability and classification of asset carrying amounts
or the amount and classification of liabilities that might
result from the outcome of this uncertainty. Management
believes that the Company will generate sufficient advertising
revenue and commissions through its licensing agreements and
hotel reservation internet website to cover all operating
expenses in the future, although no assurance of this can be
given.
12
<PAGE> 46
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
There have been no disagreements on accounting and financial
disclosures from the inception of the Company through the date of
this Registration Statement.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
(a) List of Financial Statements
Independent Auditors' Report
Balance Sheet
Statement of Income
Statement of Cash Flows
Statement of Shareholders' Equity
Notes to Financial Statements
b) List of Exhibits.
Exhibit No. Description
3.1 * Articles of Incorporation.
3.2 * Bylaws.
4.1 * Specimen Stock Certificate.
27 * Financial Data Schedule.
99.1 Licensing Agreement with Greyhound Lines, Inc.
99.2 Consulting Agreement with LAC.
99.3 Agreement and Plan of Share Acquisition.
99.4 Agreement between the Company, C&K Management Ltd. and
W.J. Marshall Inc.
99.5 Non-qualified Incentive Stock Option Agreement.
* Previously filed.
<PAGE> 47
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of
1934, the registrant caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
budgethotels.com, inc.
BY: /s/ William J. Marshall
William J. Marshall, President
Pursuant to the requirements of the Securities Exchange Act of
1934, this Amendment No. 1 to the Form 10-SB Registration Statement
has been signed by the following persons in the capacities and on the
dates indicated:
Signatures Title Date
/s/ William J. Marshall
William J. Marshall President, Treasurer, October 29, 1999
Chief Financial Officer,
Secretary and Director
/s/ Kenneth E. Cloak
Kenneth E. Cloak Director October 29, 1999
<PAGE> 48
EXHIBIT 99.1
LICENSE AGREEMENT
This License Agreement (hereinafter the "Agreement") is made this
2nd day of October, 1997 , by and between GREYHOUND LINES, INC., a
Delaware corporation, (hereinafter "Licensor") and INFO-CENTER, INC.,
a Washington State corporation, (hereinafter "Licensee").
WITNESSETH:
WHEREAS, Licensee is engaged in the business of providing services
with respect to the installation, operation, and maintenance of
wall-unit advertising displays with direct dial phones, wall mountings,
hardware, and wiring (hereinafter referred to as "Info-Center
Directories").
WHEREAS, Licensee desires, and Licensor is willing to grant to
Licensee, the right to install, operate, and maintain Info-Center
Directories in Licensor's owned and leased bus terminal facilities upon
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises hereof, the
mutual promises and agreements contained herein, and the payments to be
made to Licensor by Licensee as set forth herein, the parties hereto
intend to be bound and hereby agree as follows:
Section I
Term of Agreement
1.1 This Agreement shall be effective for a period of five (5)
years commencing on February 15, 1998, and shall continue in full force
and effect until February 15, 2003 (the "Original Term") and shall then
renew for a period of a further five (5) years (the "First Renewal
Term") and for a subsequent period of a further five (5) years (the
"Second Renewal Term") subject, however, to any provision of this
Agreement.
Section 2
Scope of Agreement
2.1 Licensor hereby grants to Licensee, subject to the terms and
conditions stated herein, the sole right to install, service, maintain,
and operate Info-Center Directories in Licensor's bus terminal
facilities as listed in Exhibits "A," "B" and "C" attached hereto and
made a pail hereof. Said Exhibits may be amended from time to time by
a mutual agreement of the parties and so indicated by a writing signed
by both parties. Said Info-Center Directories shall be installed at
locations within Licensor's bus terminal facilities as directed by
Licensor's local representative. Licensee will furnish at its sole cost
and expense all labor, supervision, and materials necessary for the
installation, maintenance, and operation of each Info-Center Directory.
<PAGE> 49
2.2 Licensee agrees to install at each facility chosen for
installation listed in Exhibits "A," "B" and "C," at Licensee's sole
cost and expense, one (1) Info-Center Directory consisting of an
approximately 20 square feet in area by 1 foot depth wall-unit with an
illuminated advertising display board with map and direct dial phone.
Licensee will not replace said Info-Center Directories with any other
equipment without Licensor's prior written consent.
2.3 Licensee agrees at its sole cost and expense to service,
repair or replace any part of any Info-Center Directory within
forty-eight (48) hours after receipt of notice, written or otherwise,
from Licensor of the need for such service, repair, or replacement.
2.4 Licensee agrees, at its sole cost and expense, to install and
maintain, or cause to be installed and maintained, the necessary
telephones, telephone lines, and interconnecting couplers through local
telephone companies. Licensee shall be solely responsible for the
payment of monthly telephone service charges and long distance charges,
if any.
Section 3
Ownership of Equipment
3.1 Subject to the provisions of Section 11, all Info-Center
Directories shall remain the sole property of Licensee. Licensee
wan-ants that the installation, service, maintenance, and operation of
any and all Info-Center Directories hereunder shall not give rise to
any third-party claim, demand, or lien against any of Licensor's
property, and Licensee agrees to indemnify, save, hold harmless, and
defend Licensor from any such third-party claim, demand, or lien.
Section 4
Right of Access
4.1 Licensee's employees and agents shall have the right to enter
upon the premises of Licensor during Licensor's normal business hours
for the purpose of installing, servicing, maintaining, and operating
the Info-Center Directories, and Licensee shall, in the performance of
its duties hereunder, be under such regulations as Licensor may
prescribe with respect to Licensee's entrance upon Licensor's premises.
Section 5
Commission Payments
5.1 In consideration of the rights herein granted, Licensee shall
pay to Licensor the following commission payments commencing upon the
installation of an Info-Center Directory pursuant to the terms of this
Agreement:
<PAGE> 50
(a) For those locations listed in Exhibit "A" (including
any locations which may be added to Exhibit "A"), Licensee
agrees to pay Licensor the sum of Three Hundred and Sixty-seven
and 50/100 Dollars ($367.50) per month.
(b) For those locations listed in Exhibit "B" (including
any locations which may be added to Exhibit "B"), Licensee
agrees to pay Licensor the sum of One Hundred and Fifty-seven
and 50/100 Dollars ($157.50) per month.
(c) For those locations listed in Exhibit "C" (including
any locations which may be added to Exhibit "C"), Licensee
agrees to pay Licensor the sum of Fifty and no/ 100 Dollars
($50.00) per month.
5.2 All of the above described commission payments shall
increase four (4%) percent at the commencement of the First Renewal
Term and an additional four (4%) percent (based on the commission
payment during the First Renewal Term) at the commencement of the
Second Renewal Term.
5.3 All commission payments payable hereunder shall be made in
U.S. dollars and shall be paid in advance on the first day of each
calendar month.
5.4 Licensee shall forward each monthly commission payment due
hereunder via U.S. mail to Greyhound Lines, Inc., Accounts Receivable
Dept., 4900 University Avenue, West Des Moines, Iowa 50266, or at
such other address as Licensor may from time to time designate by
written notice to Licensee.
Section 6
Loss, Dam Damage, and Theft
6.1 Licensor shall make reasonable efforts to protect Info-Center
Directories from, but shall not be responsible for, any loss,
damage, or theft of said Info-Center Directories.
Section 7
Indemnification and Insurance
7.1 Licensee shall indemnify, save, hold harmless, and defend
Licensor, its subsidiaries and affiliates and their directors,
officers, employees, agents, and subcontractors with respect to any
claims or demands, actions, damages, costs, and expenses (including,
without limitation, attorneys' fees and costs of litigation) arising
from the death of or injury to any person whomsoever, or any loss,
damage, or destruction of any property whatsoever, resulting directly
or indirectly from the installation, existence, servicing,
maintenance, or operation of any Info-Center Directory at any of
Licensor's bus terminal locations.
<PAGE> 51
7.2 Licensee shall indemnify, save, hold harmless, and defend
Licensor, its subsidiaries and affiliates and their directors,
officers, employees, agents, and subcontractors from and against any
and all royalties, damages, claims, suits, judgments, and costs
arising from any actual or alleged patent, copyright, trademark, or
trade secret infringements or violations that may arise in connection
with the installation, existence, servicing, maintenance, or
operation of any Info-Center Directory at any of Licensor's bus
terminal locations.
7.3 Licensee agrees to obtain and keep in force, at its sole
cost and expense, throughout the term of this agreement in a form and
with a company satisfactory to Licensor, the following policies of
insurance;
(a) Commercial General Liability Insurance with combined
single limits of not less than $1,000,000.
(b) Contractual Liability Insurance underwriting the
indemnification, hold harmless, and insurance provisions of this
agreement with combined single limits of not less than
$1,000,000.
(c) Comprehensive Automobile Liability Insurance providing
coverage for owned, non-owned, hired, contracted, and leased
vehicles of Licensee with combined single limits for injury or
damage in any one accident of $500,000.
(d) Workers' Compensation Insurance in the amounts
required by applicable state laws governing Licensee's
operations or evidence that such insurance is not required.
Licensee further agrees to name Licensor as an additional
insured on the Comprehensive General Liability, Contractual
Liability, and Comprehensive Automobile Liability polices, provided,
however, that such insurance shall contain provisions to the effect
that the naming of Licensor as an additional insured shall not affect
any recovery to which Licensor would be entitled under the policy if
it were not so named, and, that the insurance is primary and shall be
without contribution from any similar insurance effected by Licensor.
Certificates of Insurance verifying each of the above
conditions, and providing for thirty (30) days prior written notice
of any cancellation or reduced coverage, shall be submitted to
Licensor within thirty (30) days of the execution of this Agreement.
<PAGE> 52
Section 8
Fees, Taxes, and Public Authorities
8.1 Licensee agrees to pay all personal property and other taxes
ad license fees assessed against the Info-Center Directories or
against the installation, servicing, maintenance, and operation of
same, and to fully comply with and abide by all laws, rules,
ordinances, and regulations of public authorities having jurisdiction
thereof.
8.2 It is further agreed that if any question shall be raised by
any public authority, or any ordinance or statute shall be passed
raising any question as to the legality or lawfulness of any
Info-Center Directory which is not resolved by Licensee within a
reasonable period of time therefrom, Licensor shall have the right to
direct Licensee to remove said Info-Center Directly from Licensor's
bus terminal facilities. If Licensee does not comply with Licensor's
request to remove any Info-Center Directory for said reasons,
Licensor may itself remove or cause to be removed the said Info-Center
Directory. Licensor shall promptly return to Licensee any and
all items removed by Licensor under the terms of this Section,
subject however to the provisions of Section 11.
Section 9
Displays and Advertisements
9.1 It is agreed that Licensee shall provide and display without
cost to Licensor a map of the city in which each Info-Center
Directory is placed. The said map shall measure approximately 24
inches in width, 11 inches in height, and shall be situated at the
center of the display located immediately above the telephone of the
Info-Center Directory.
9.2 It is agreed that one advertising section on the illuminated
display of each Info-Center Directory installed at Licensor's bus
terminal, facilities shall be provided, at no cost to Licensor, for
Licensor's own advertisement regarding its business. Said advertising
section shall be located in a prominent position, to be approved by
both Licensor and Licensee.
9.3 It is further agreed that no other signs, legends, posters
other than a display sign, display section, or operating instructions
shall be affixed to or displayed upon any Info-Center Directory by
either party hereto without prior written approval of the other
party. No other advertisements of any kind shall be erected or
displayed by the Licensee in or upon Licensor's bus terminal
facilities without prior written consent of Licensor.
9.4 Licensee shall use its best efforts to sell all available
advertising sections on each Info-Center Directory, subject to those
sections expressly reserved by Section 9.1 and Section 9.2 hereof. In
the event that advertising sections remain unsold, Licensee shall
fill such sections with other appropriate advertisements, pictures,
diagrams, or logos.
<PAGE> 53
9.5 Licensee shall not place or cause to be placed in or on the
Info-Center Directories any advertisement or notice which Licensor
deems objectionable, including, but not limited to, any advertisement
or notice concerning alcoholic beverages, tobacco products, drug or
sex paraphernalia, "striptease" or topless establishments, "adult
bookstores," nude modelling studios, escort services, and massage
parlors. Licensee shall remove any such advertisement or notice that
Licensor finds objectionable within 24 hours of notice, written or
otherwise, from Licensor.
Section 10
Exclusivity
10.1 Licensor hereby agrees that the right, license, and
privilege granted herein is given exclusively to Licensee in those
locations listed on Exhibits "A," "B" and "C" of this Agreement.
Licensee shall have the first right of refusal for the installation
of an Info-Center Directory in any of Licensor's North American
operations in which the right to such installation or similar
installation is offered by Licensor.
10.2 The exclusive right, license, and privilege granted herein
terminates with respect to all locations listed in Exhibits "A," "B"
and "C" upon the termination of this Agreement.
10.3 The rights, licenses, and privileges granted herein are
limited and non-transferable and shall confer no other rights upon
each party other than is set forth in this Section 10.
Section 11
Removal of Equipment
11.1 Upon termination of this Agreement for any reason, Licensee
shall within five (5) business days remove all Info-Center Directors
from each of Licensor's bus terminal facility and shall restore the
area of the equipment removal to the same condition as existed prior
to the installation of the Info-Center Directors. Unless prior
written consent is given by Licensor to the contrary, any Info-Center
Directory remaining in Licensor's bus terminal facilities after five
(5) business days from the date of termination of this agreement
shall be deemed to have been abandoned by Licensee and shall become
the sole property of Licensor.
Section 12
Right to Terminate
12.1 Notwithstanding the term granted herein, Licensor shall
have the right to terminate this Agreement with respect to any
certain location listed in Exhibits "A," "B" or "C" at the end of any
calendar month upon ninety (90) days written notice to Licensee if
any of the events described in paragraphs (a)-(d) occur, and thirty
(30) days written notice in the event of a default by Licensee as
described in paragraph (e):
<PAGE> 54
(a) if the Licensor shall sell or lease the building or
any part thereof and Licensor cannot relocate its use or need of
any affected Info-Center Directory location;
(b) if the Licensor shall sell or sever any part of its
estate in the land that affects the Info-Center Directory
location;
(c) if the Licensor makes or plans to make any
alterations, improvements, or modifications to the building
which makes the use of an Info-Center Directory impracticable;
(d) if the Licensor shall elect to discontinue the use of
the building for operations of a bus terminal; or
(e) if the Licensee defaults with respect to its
obligations concerning any Info-Center Directory installed in
any location listed in Exhibits, "A," "B" or "C" and if Licensee
has not remedied such default prior to the expiration of thirty
(30) days from the date upon which written notice was received
of the default.
Section 13
Rights Upon Default
13.1 If Licensee defaults in the payment of any deposit or
commission hereunder or if Licensee defaults in the performance of
any other provision, covenant, or condition of this Agreement,
Licensor may, if it so elects, terminate this agreement in whole or
in part upon thirty (30) days written notice to Licensee subject to
the right to remedy defaults as set forth in Section 12.1 (e).
Section 14
Notices
14.1 All notices from either party to the other required
hereunder, except for notice required under Section 2.3 or Section
9.3, shall be in writing and delivered either personally, by a
nationally recognized carrier service, or by certified mail, return
receipt requested, and also by telecopier, dispatched at the same
time as the dispatch of the personal delivery or certified mail. Any
such notice, request, or other communication shall be deemed to have
been given on the date of personal delivery or, if mailed, on the
date of mailing. All communications shall be addressed as follows:
If to Licensor:
Greyhound Lines, Inc.
Customer Service Department
P.O. Box 660362
Dallas, Texas 75266-0362
Telecopier No.: (to be supplied)
<PAGE> 55
If to Licensee:
Info-Center, Inc.
P.O. Box 1129
Point Roberts, Washington 98281
Telecopier No.: 1-800-548-4432
14.2 The addresses to which any such written communication may
be given or sent to either party may be changed by ten (10) days
written notice given by such party as provided above.
Section 15
Assignment
15.1 Neither party may assign its rights or obligations under
this Agreement without the prior written consent of the other party.
It is further agreed that any assignment hereof, whether voluntary,
by operation of law, or otherwise, without the prior written consent
of the other party shall be void and at the option of the non--
assigning party this Agreement shall terminate. Any rights and
obligations under this Agreement with respect to Licensor shall also
apply to Licensor's subsidiaries, and such rights and obligations
created in Licensor's subsidiaries shall not be deemed to be an
assignment under this Agreement.
Section 16
Binding Effect
16.1 This Agreement shall be binding upon and inure to the
benefit of each party hereto and their respective permitted
successors and permitted assigns.
Section 17
Governing Law
17.1 THIS AGREEMENT SHALL BE GOVERNED BY, AND ITS PROVISIONS
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TEXAS. The
parties hereto agree and consent to subject any dispute pursuant to
this Agreement to the applicable Federal and State Courts with
jurisdiction in Texas closest to the place of business of the
Licensor.
Section 18
Invalid Provisions
18.1 In the event any provision of this Agreement shall be
declared or determined by a court of law to be invalid,
unenforceable, or in conflict with applicable law, then the validity
of the other terms and provisions of this Agreement shall not be
deemed to be adversely affected but shall remain in full force and
effect.
<PAGE> 56
Section 19
Amendment and Waive
19.1 No amendment or waiver of any provision of this Agreement,
and no consent to any departure herefrom, shall be effective or
binding unless and until set forth in a writing signed by each party,
and then any such waiver or consent shall be effective only in the
specific instance and for the specific purpose for which it was
given. No notice or any other communication given by one party to the
other party shall be construed to be or constitute an approval or
ratification by the other party of any matter contained or referred
to in such notice, unless the same be consent to by the other party
in writing.
Section 20
Entire Agreement
20.1 This Agreement, together with the Exhibits attached hereto,
constitutes the entire agreement between the parties, and there
exists no other written or oral understandings, agreements or
assurances with respect to any matters except as set forth herein.
20.2 Unless expressly stated, this Agreement confers no rights
on any person or business entity that is not a party hereto.
Section 21
Attorneys' Fees
21.1 If either party named herein brings an action to enforce
the terms of this Agreement or to declare rights hereunder, the
prevailing party in any such action, on trial or appeal, shall be
entitled to reasonable attorneys' fees to be paid by the losing party
as fixed by the court.
Section 22
Relationship of Parties
22.1 This Agreement does not create the relationship of
principal and agent or partnership or joint venture, or of any
association other than that of licensor and licensee.
Section 23
Force Majeure
23.1 Either party named herein shall be excused from the
performance of its obligations hereunder for such period as either
party is prevented from performing same by reason of an Act of God,
act of war, riots, fuel boycott or embargo, labor disputes or
lockout, labor strikes, act of the other party, governmental
restrictions or prohibitions, and any other unforeseeable cause
beyond the party's control.
<PAGE> 57
Section 24
Attachments, Headings, and Terms
24.1 All attachments and exhibits referred to herein are hereby
incorporated by reference and made a part of this Agreement. The
headings and underscorings contained herein are for convenience
purposes only and shall not be used to interpret or define nor be
deemed to extend or limit the specific sections. The word or words
enclosed in quotation marks shall be construed as defined terms for
purposes of this Agreement. The terms "Licensor" and "Licensee" shall
be construed to mean, when required by context, the affiliates,
subsidiaries, directors, officers, employees, invitees, contractors,
materialmen, servants, and agents of Licensor and Licensee.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement as of the date first written above to be effective for the
period set forth in Section 1 above.
GREYHOUND LINES, INC.
By: /s/ Bernie K. Styers
Title: Director Customer Operation
(972) 789-7580
INFO-CENTER, INC.
By:/s/ William J. Marshall
Title: President
EXHIBIT "A"
Location
1. Chicago, IL
2. Los Angeles, CA
3. Miami, FL
4. Orlando, FL
5. Washington, DC
EXHIBIT "B"
Location
1. Las Vegas, NV
2. Nashville, TN
3. San Diego, CA
4. Seattle, WA
<PAGE> 58
EXHIBIT "C"
1. Anaheim, CA
2. Salt Lake City, UT
3. Atlanta, GA
4. Columbus, OH
5. Austin, TX
6. Tallahassee, FL
7. Daytona Beach, FL
8. Dallas, TX
9. Denver, CO
10. Corpus Christi, TX
11. El Paso, TX
12. Fort Worth, TX
13. Ft Lauderdale, FL
14. Laredo, TX
15. Jacksonville, FL
16. Houston, TX
17. Minneapolis, MN
18. Cincinnati, OH
19. Philadelphia, PA
20. St. Louis, MO
21. Phoenix, AZ
22. Indianapolis, IN
23. Portland, OR
24. Kissimmee, FL
25. Reno, NV
26. Albuquerque, NM
27. Sacramento, CA
28. Atlantic City, NJ
29. San Antonio, TX
30. Milwaukee, WI
31. Tampa, FL
32. Flagstaff, AZ
33. Tucson, AZ
34. Baltimore, MD
35. Kansas City
36. Detroit
<PAGE> 59
EXHIBIT 99.2
AGREEMENT
Dated the 31st day of March, 1999.
BETWEEN:
LAC Enterprises Ltd.
16875 Terrace Rd.
Winfield, BC V6V I B2
AND:
Budgethotels.com, Inc.
#202- St. Paul Street
Kelowna, BC V1Y 2E5
WHEREAS:
A. The Company wishes to engage the service of the Consultant as
an independent contractor to provide consulting services on an
ongoing basis to the Company, performing the duties as President/
C.E.O.
B. As a condition to the Company entering into this Agreement
with the Consultant, the Company requires that the Consultant provide
its services to the Company through the Consultant's President,
William J. Marshall (the" President")
C. The Company and the Consultant have reached agreement in
respect to the terms and conditions under which the Consultant agrees
to provide its services to the Company.
In consideration of the premises, covenants and agreements
contained herein the parties hereby agree as follows:
1 SCOPE OF CONSULTING SERVICES
1.1 The Company shall retain the Consultant as an independent
contractor to provide services as President/CEO running the Company
entirely.
1.2 The services to be provided by the Company shall only be
administered by the President on behalf of the Consultant, unless the
Consultant first obtains the consent of all the directors of the
Company in writing,
2. TERM OF CONSULTING SERVICES
2.1 The term of this Agreement shall begin on the 1st day of
April 1999 and shall continue until the 31st day of March 2014.
<PAGE> 60
3. FEE FOR CONSULTING SERVICES
3.1 For the services rendered by the consultant to the Company,
the Company will pay to the Consultant a consulting fee of $ 10,000
U.S. per month plus expenses with an annual increase of 5% each year.
The Consultant will also receive between 1 .0 million and 1.7 million
share options per year at . 0 1 cents each to be determined by the
said President.
4. INDEPENDENT CONTRACTOR
4.1 Notwithstanding anything in this Agreement to the contrary,
it is understood and agreed between the parties that the Consultant
is an independent contractor and not an employee of the Company.
5. GENERAL
5.1 This Agreement shall be interpreted and construed and
governed in accordance with the laws of the Province of British
Columbia.
5.2 No amendments or variations of the terms and conditions of
this Agreement shall be valid unless in writing and signed by both
parties.
5.3 The Consultant's rights and obligations under this Agreement
are not assignable without consent of the Company.
5.4 This Agreement constitutes the entire Agreement between the
parties hereto and shall bind and ensure to the benefit of both
parties and their respective successors and permitted assigned.
Signed by the parties as of the first page.
LAC Enterprises Ltd.
/s/ William J. Marshall /s/ Patricia Ceccoi
Authorized Signature Witness
Budgethotels,com, Inc.
/s/ William J. Marshall /s/ illegible
Authorized Signature Witness
<PAGE> 61
AGREEMENT AND PLAN OF SHARE EXCHANGE
AGREEMENT AND PLAN OF SHARE EXCHANGE (the "Agreement") dated this
30th day of November, 1997, by and between MO CENTER INTERNATIONAL
INC., a Nevada corporation ("INFO CENTER INTERNATIONAL"), INFO CENTER,
INC., a Washington corporation ("INFO CENTER!'), and WJ MARSHALL
MANAGEMENT INC., sole shareholder of INFO CENTER, ("WJM').
WHEREAS, the Boards of Directors of INFO CENTER INTERNATIONAL AND
INFO CENTER deem it advisable and in the best interests its of MO
CENTER INTERNATIONAL AND INFO CENTER that INFO CENTER INTERNATIONAL
acquire INFO CENTER by exchanging all of the issued and outstanding
shares of INFO CENTER for shares of INFO CENTER INTERNATIONAL (the
"Share Exchange"); and
WHEREAS, the Boards of Directors of INFO CENTER INTERNATIONAL and
INFO CENTER have approved and adopted this Agreement as a "plan of
reorganization" within the meaning of Sect-Ion 368(a)(1)(B) of the
Internal Revenue Code of 1986, as amended;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements, provisions and conditions contained herein, and for other
goods and valuable consideration, the adequacy and receipt of which are
hereby acknowledged, the parties hereto agree that INFO CENTER shall be
merged with and into INFO CENTER INTERNATIONAL, the latter of which
shall continue its corporate existence and be the corporation surviving
the Share Exchange, upon and subject to the following terms and
conditions:
ARTICLE I
GENERAL TERMS AND PROVISIONS
Section 1.01. Effectiveness. At November 30, 1997, (the "Effective
Date"), INFO CENTER INTERNATIONAL shall issue new INFO CENTER
INTERNATIONAL Common Stock in exchange for all of the outstanding INFO
CENTER Stock on the terms provided herein, and INFO CENTER shall become
a wholly-owned subsidiary of INFO CENTER INTERNATIONAL.
Section 1.02, Taking of Necessary Action, INFO CENTER
INTERNATIONAL and INFO CENTER shall take all such actions as may be
necessary or appropriate in order to effectuate the transactions
contemplated by this Agreement, If, at any time after the Effective
Date, any further action is necessary or desirable to carry out the
purpose of this Agreement or to vest INFO CENTER INTERNATIONAL with
title to any or all of the properties, assets, rights, approvals,
immunities, of INFO CENTER, the officers and directors of INFO CENTER
INTERNATIONAL and its subsidiary, at the expense of INFO CENTER
INTERNATIONAL shall take such necessary or desirable action,
ARTICLE 11
EXCHANGE OF SHARES
Section 2.01. Exchange of Shares. On the Effective Date, INFO
CENTER INTERNATIONAL shall issue 8,000,000 shares of its INFO CENTER
INTERNATIONAL Common Stock to the sole shareholder of INFO CENTER in
exchange for all of the issued and outstanding INFO CENTER Common
Stock.
<PAGE> 62
Section 2.02. Stock Legends. Certificates representing shares of
INFO CENTER INTERNATIONAL Common Stock shall bear a legend restricting
transfer of the shares of the Common Stock represented by such
certificate in substantially the form set forth below:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act") or
applicable state law, and are 66 restricted securities" as
that term is defined in Rule 144 under the Act. The
securities may not be offered for We, sold, or otherwise
transferred except pursuant to an effective registration
statement under the Act and applicable state law, the
availability of which is to be established to the
satisfaction of the Company."
INFO CENTER INTERNATIONAL shall, from time to time, make stop
transfer notations in its records to ensure compliance in connection
with any proposed transfer of the shares with the Act, and all
applicable state securities laws.
Section 2.03. Dissenting Shareholders. WJM, the sole shareholder
of INFO CENTER waives its right to dissent,
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each of INFO CENTER INTERNATIONAL and INFO CENTER represents to
the other as follows:
Section 3.01 Capitalization. It has no obligation under any
agreement with any person to register any of its securities under the
1933 Act or any applicable state securities laws and, during the three
years preceding the date of this Agreement, it has not sold or issued
any of its securities in a transaction which was not registered under
the 1933 Act or any applicable state securities law. There are no
preemptive rights with respect to any of its securities,
(a) INFO CENTER, INFO CENTER represents and warrants that its
authorized capital stock consists of 500 shares of Common Stock,
$100.00 par value, 10 of which are issued and outstanding as of
November 30, 1997. All of the issued and outstanding shares of INFO
CENTER are validly issued, fully paid, and nonassessable.
(b) INFO CENTER INTERNATIONAL. INFO CENTER INTERNATIONAL
represents and warrants that its authorized capital stock consists of
1,000,000 shares of Preferred Stock, $0.01 par value per share, none of
which are issued or Outstanding', 50,000,000 shares of Common Stock,
$0,01 par value per share, of which 0 shares were issued and
outstanding as of November 30, 1997,
Section 3.02 Principal Shareholders. No person owns of record or,
to the best of its knowledge, owns beneficially five percent or more of
any class of the issued and outstanding shares of its voting
securities, except as set forth as follows:
<PAGE> 63
(a) INFO CENTER. WJM owns 100% of the outstanding shares of INFO
CENTER, INC. Common Stock Section 3.03 No Subsidiaries, It has no
subsidiaries
Section 3.04 Options and Other Rights. There are no outstanding
options, warrants, or rights to subscribe for, purchase, or receive
shares of its common stock or any other securities convertible into
common stock.
ARTICLE IV
CONDITIONS PRECEDENT TO THE MERGER
The obligations of the parties under this Agreement are subject to
the satisfaction of the' following express conditions precedent at or
before the Effective Date,
Section 4.01 Compliance with Laws. All statutory requirements for
the valid consummation by it of the transactions contemplated by this
Agreement shall have been fulfilled,
Section 4.02 Blue Sky Filings. All Blue Sky filings and permits or
orders required to carry out the transactions contemplated by this
Agreement shall have been made and received containing no term or
condition reasonably unacceptable to it.
Section 4,03 Adequate Proceedings, All corporate and other
proceedings in connection with the transactions contemplated herein and
all documents incident thereto shall be reasonably satisfactory in form
and substance to it and its counsel.
Section 4.04 Certificate of President and Secretary. Each
corporation shall have furnished to the other a certificate of the
President or Vice President and the Secretary of the respective
company, dated as of the Effective Date, to the effect that the
representations and warranties of the respective company in this
Agreement are true and correct at and as of the Effective Date, that no
error, misstatement, or omission has been discovered or is known with
respect to such representations and warranties, and that the respective
company has complied with all the agreements and has satisfied all the
covenants on its part to be performed at or prior to the Effective
Date.
Section 4.05 No Adverse Change. Between the date of execution of
this Agreement and the Effective Date, INFO CENTER INTERNATIONAL and
INFO CENTER (a) except in the ordinary course of its business, shall
not have incurred any liabilities or obligations (direct or contingent)
or disposed of any of its assets, or entered into any material
transaction or suffered or experienced any materially adverse change in
its condition, financial or otherwise, and (b) shall not have increased
its issued and outstanding shares of common stock or any other
securities, except as noted in Section 5.03 above.
<PAGE> 64
ARTICLE V
MISCELLANEOUS
Section 5,01 Assignment- This Agreement may not be assigned nor
any of the performances hereunder delegated by operation of law or
otherwise by any party hereto, and any purported assignment or
delegation shall be void.
Section 5.02 Headings. The article and section headings of this
Agreement are inserted for convenience of reference only and do not
constitute a part of this Agreement,
Section 5,03 Binding Effect. This Agreement shall be binding upon
and inure to the benefit of the par-ties hereto and their respective
heirs, successors, legal representatives, assigns, and transferors.
Section 5.04 Entire Agreement, This Agreement constitutes the
entire agreement of the parties hererto with respect to the subject
matter hereof There are no representations, warranties, conditions, or
other obligations except as herein specifically provided- Any waiver,
amendment, or modification hereof must be in writing. A waiver in one
instance shall not be deemed to be a continuing waiver or waiver in
other instance,
Section 5.05 Counterparts, This Agreement may be executed in
counterparts and each counterpart hereof shall be deemed to be an
original, but all such counterparts together shall constitute but one
agreement an original, but all such counterparts together shall
constitute but one agreement.
Section 5.06 Notices. All notices, requests, instructions, or
other documents to, be given hereunder shall be deemed given if in
writing, sent registered mail
to INFO CENTER INTERNATIONAL:
William J. Marshall
16875 Terrace Road
Winfield, B.C. V4V IB2
Canada
to INFO CENTER:
William J. Marshall
16875 Terrace Road
Winfield, B.C. V4V IB2
Canada
to WJ MARSHALL MANAGEMENT, INC.:
William J. Marshall
16875 Terrace Road
Winfield B.C. V4V IB2
Canada
<PAGE> 65
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement On the day and year first above written.
INFO CENTER INTERNATIONAL INC.
BY: /s/ William J. Marshall
William J. Marshall
Its: President
INFO CENTER, INC.
BY: /s/ William J. Marshall
William J. Marshall
Its: President
WJ MARSHALL MANAGEMENT, INC.
BY: /s/ William J.. Marshall
William J. Marshall
Its: President
<PAGE> 66
EXHIBIT 99.4
AGREEMENT
Dated effective the 1st day of October, 1997.
BETWEEN:
INFO CENTER INC.
16875 Terrace Road
Winfield, British Columbia
V4V 1B2
(the "Company")
AND:
C & K MANAGEMENT LTD.
#11 - 1301 Johnston Street
Vancouver, British Columbia V6H 3R9
(the "Consultant")
AND:
W. J. MARSHALL MANAGEMENT INC.
16875 Terrace Road Winfield
British Columbia V4V IB2
(the "Indemnifier")
WHEREAS:
A. The Company wishes to engage the services of the Consultant as
an independent contractor to provide consulting services on an ongoing
basis to give advice to the Company regarding internet applications to
the Company's present and future business.
B. As a condition to the Company entering into this Agreement with
the Company, the Company requires that the Consultant provide its
services to the Company through the Consultant's president Carey Linde
(the "President").
C. The Company and the Consultant have reached agreement in
respect to the terms and conditions under which the Consultant agrees
to provide its services to the Company.
D. The Consultant has agreed to enter into this agreement with the
Company on the condition that the within indemnity be executed by the
Indemnifier.
In consideration of the premises, covenants and agreements
contained herein the parties hereby agree as follows:
1. SCOPE OF CONSULTING SERVICES
1.1 The Company shall retain the Consultant as an independent
contractor to provide consulting services on an ongoing basis to give
advice to the Company regarding internet applications to the Company's
present and future business (the "services").
<PAGE> 67
1.2 The services to be provided by the Consultant to the Company
shall only be administered by the President on behalf of the Consultant
unless the Consultant first obtains the consent of all the directors of
the Company in writing.
2. TERM OF CONSULTING SERVICES
2.1 The term of this Agreement shall begin on the Ist day of
October, 1997 and shall continue until the 31st day of January, 2001.
3. FEE FOR CONSULTING SERVICES
3.1 For the services rendered by the Consultant to the Company,
the Company will pay to the Consultant a consulting fee of $80,000-00
(the "Consulting Fee") payable by monthly instalments of $2,000.00 on
the last day of each month commencing the 31st day of October, 1997.
4. INDEPENDENT CONTRACTOR
4.1 Notwithstanding anything in this Agreement to the contrary, it
is understood and agreed between' the parties that the Consultant is an
independent contractor and not an employee of the Company.
5. INDEMNITY
5.1 For good and valuable consideration now had and received, the
Indemnifier hereby covenants, promises and agrees to and with the
Consultant that the Indemnifier shall indemnify and save harmless the
Consultant from any loss, costs or damages arising out of any failure
either to pay the Consulting Fee or to perform any of the terms,
covenants and provisions on the part of the Company to be kept,
observed and performed. In the event of a default under this Agreement
the Indemnifier waives any right to require the Consultant to proceed
against the Company or pursue any rights or remedies whatsoever in the
Consultant's power with respect to this Agreement. The indemnity is
absolute and unconditional and the obligation of the Indemnifier shall
not be nor be deemed to have been waived, released, discharged,
litigated, impaired or affected by any extension of time, indulgences
or modifications which the Consultant may extend or make with the
Company in respect to the performance of any of the Company's
obligations in this Agreement, or by reason of the release or discharge
of the Company in any receivership, bankruptcy, winding up or other
creditor's proceeding or the rejection or disclaimer of this Agreement
in any proceeding, and the liability of the Indemnifier shall continue
with respect to the periods prior thereto and thereafter, for and with
respect to the term of this Agreement.
6. GENERAL
6.1 This Agreement shall be interpreted and construed and governed
in accordance with the laws of the Province of British Columbia.
6.2 No amendments or variations of the terms and conditions of
this Agreement shall be valid unless in writing and signed by both
parties.
<PAGE> 68
6.3 The Consultant's rights and obligations under this Agreement
are not assignable without consent of the Company.
6.4 This Agreement constitutes the entire Agreement between the
parties hereto and shall bind and enure to the benefit of both parties
and their respective successors and permitted assigns.
Signed by the parties as of the date on the first page.
INFO CENTER INC.
Per: /s/ William J. Marshall
Authorized Signatory
C & K MANAGEMENT LTD.
Per: /s/ illegible
W. J. MARSHALL MANAGEMENT INC.
Per: /s/ William J. Marshall
Authorized Signatory
<PAGE> 69
budgethotels.com, inc.
1999 NONQUALIFYING STOCK OPTION PLAN
ARTICLE I
Purpose of Plan
This 1999 NONQUALIFYING STOCK OPTION PLAN (the "Plan") of
budgethotels.com, inc. (the "Company") for persons employed or
associated with the Company, including without limitation any employee,
director, general partner, officer, attorney, accountant, consultant or
advisor, is intended to advance the best interests of the Company by
providing additional incentive to those persons who have a substantial
responsibility for its management, affairs, and growth by increasing
their proprietary interest in the success of the Company, thereby
encouraging them to maintain their relationships with the Company.
Further, the availability and offering of Stock Options under the Plan
supports and increases the Company's ability to attract, engage and
retain individuals of exceptional talent upon whom, in large measure,
the sustained progress growth and profitability of the Company for the
shareholders depends.
ARTICLE II
Definitions
For Plan purposes, except where the context might clearly
indicate otherwise, the following terms shall have the meanings set
forth below:
"Board" shall mean the Board of Directors of the Company.
"Code" shall mean the Internal Revenue Code of 1986, as
amended, and the rules and regulations promulgated thereunder.
"Committee" shall mean the Compensation Committee, or such
other committee appointed by the Board, which shall be designated by
the Board to administer the Plan. The Committee shall be composed of
two or more persons as from time to time are appointed to serve by the
Board and may be members of the Board.
"Common Shares" shall mean the Company's Common Shares $0.001
par value per share, or, in the event that the outstanding Common
Shares are hereafter changed into or exchanged for different shares or
securities of the Company, such other shares or securities.
"Company" shall mean budgethotels.com, inc., a Nevada
corporation, and any parent or subsidiary corporation of
budgethotels.com, inc., as such terms are defined in Section 425(e) and
425(f), respectively of the Code.
"Optionee" shall mean any person employed or associated with
the affairs of the Company who has been granted one or more Stock
Options under the Plan.
"Stock Option" or "NQSO" shall mean a stock option granted
pursuant to the terms of the Plan.
<PAGE> 70
"Stock Option Agreement" shall mean the agreement between the
Company and the Optionee under which the Optionee may purchase Common
Shares hereunder.
ARTICLE III
Administration of the Plan
1. The Committee shall administer the plan and accordingly,
it shall have full power to grant Stock Options, construe and interpret
the Plan, establish rules and regulations and perform all other acts,
including the delegation of administrative responsibilities, it
believes reasonable and proper.
2. The determination of those eligible to receive Stock
Options, and the amount, price, type and timing of each Stock Option
and the terms and conditions of the respective stock option agreements
shall rest in the sole discretion of the Committee, subject to the
provisions of the Plan.
3. The Committee may cancel any Stock Options awarded under
the Plan if an Optionee conducts himself in a manner which the
Committee determines to be inimical to the best interest of the Company
and its shareholders as set forth more fully in paragraph 8 of Article
X of the Plan.
4. The Board, or the Committee, may correct any defect,
supply any omission or reconcile any inconsistency in the Plan or in
any granted Stock Option, in the manner and to the extent it shall deem
necessary to carry it into effect.
5. Any decision made, or action taken, by the Committee or
the Board arising out of or in connection with the interpretation and
administration of the Plan shall be final and conclusive.
6. Meetings of the Committee shall be held at such times
and places as shall be determined by the Committee. A majority of the
members of the Committee shall constitute a quorum for the transaction
of business, and the vote of a majority of those members present at any
meeting shall decide any question brought before that meeting. In
addition, the Committee may take any action otherwise proper under the
Plan by the affirmative vote, taken without a meeting, of a majority of
its members.
7. No member of the Committee shall be liable for any act
or omission of any other member of the Committee or for any act or
omission on his/her own part, including, but not limited to, the
exercise of any power or discretion given to him/her under the Plan
except those resulting from his/her own gross negligence or willful
misconduct.
8. The Company, through its management, shall supply full
and timely information to the Committee on all matters relating to the
eligibility of Optionees, their duties and performance, and current
information on any Optionee's death, retirement, disability or other
termination of association with the Company, and such other pertinent
<PAGE> 71
information as the Committee may require. The Company shall furnish
the Committee with such clerical and other assistance as is necessary
in the performance of its duties hereunder.
ARTICLE IV
Shares Subject to the Plan
1. The total number of shares of the Company available for
grants of Stock Options under the Plan shall be 5,000,000 Common
Shares, subject to adjustment as herein provided, which shares may be
either authorized but unissued or reacquired Common Shares of the
Company.
2. If a Stock Option or portion thereof shall expire or
terminate for any reason without having been exercised in full, the
unpurchased shares covered by such NQSO shall be available for future
grants of Stock Options.
ARTICLE V
Stock Option Terms and Conditions
1. Consistent with the Plan's purpose, Stock Options may be
granted to any person who is performing or who has been engaged to
perform services of special importance to management in the operation,
development and growth of the Company.
2. Determination of the option price per share for any
stock option issued hereunder shall rest in the sole and unfettered
discretion of the Committee.
3. All Stock Options granted under the Plan shall be
evidenced by agreements which shall be subject to applicable provisions
of the Plan, and such other provisions as the Committee may adopt,
including the provisions set forth in paragraphs 2 through 11 of this
Article V.
4. All Stock Options granted hereunder must be granted
within ten years from the date this Plan is adopted.
5. No Stock Option granted hereunder shall be exercisable
after the expiration of ten years from the date such NQSO is granted.
The Committee, in its discretion, may provide that an option shall be
exercisable during such ten year period or during any lesser period of
time. The Committee may establish installment exercise terms for a
Stock Option such that the NQSO becomes fully exercisable in a series
of cumulating portions. If an Optionee shall not, in any given
installment period, purchase all the Common Shares which such Optionee
is entitled to purchase within such installment period, such Optionee's
right to purchase any Common Shares not purchased in such installment
period shall continue until the expiration or sooner termination of
such NQSO. The Committee may also accelerate the exercise of any NQSO.
6. A Stock Option, or portion thereof, shall be exercised
by delivery of (i) a written notice of exercise to the Company
specifying the number of Common Shares to be purchased, and (ii)
payment of the full price of such Common Shares, as fully set forth in
<PAGE> 72
paragraph 7 of this Article V. No NQSO or installment thereof shall be
reusable except with respect to whole shares, and fractional share
interests shall be disregarded. Not less than 100 Common Shares may be
purchased at one time unless the number purchased is the total number
at the time available for purchase under the NQSO. Until the Common
Shares represented by an exercised NQSO are issued to an Optionee,
he/she shall have none of the rights of a shareholder.
7. The exercise price of a Stock Option, or portion
thereof, may be paid:
A. In United States dollars, in cash or by cashier's
check, certified check, bank draft or money order, payable to
the order of the Company in an amount equal to the option
price; or,
B. At the discretion of the Committee, through the
delivery of fully paid and nonassessable Common Shares, with
an aggregate fair market value (determined as the average of
the highest and lowest reported sales prices on the Common
Shares as of the date of exercise of the NQSO, as reported by
such responsible reporting service as the Committee may
select, or if there were not transactions in the Common
Shares on such day, then the last preceding day on which
transactions took place), as of the date of the NQSO exercise
equal to the option price, provided such tendered shares, or
any derivative security resulting in the issuance of Common
Shares, have been owned by the Optionee for at least thirty
(30) days prior to such exercise; or,
C. By a combination of both A and B above.
The Committee shall determine acceptable methods for
tendering Common Shares as payment upon exercise of a Stock Option and
may impose such limitations and prohibitions on the use of Common
Shares to exercise an NQSO as it deems appropriate.
8. With the Optionee's consent, the Committee may cancel
any Stock Option issued under this Plan and issue a new NQSO to such
Optionee.
9. Except by will, the laws of descent and distribution, or
with the written consent of the Committee, no right or interest in any
Stock Option granted under the Plan shall be assignable or
transferable, and no right or interest of any Optionee shall be liable
for, or subject to, any lien, obligation or liability of the Optionee.
Upon petition to, and thereafter with the written consent of the
Committee, an Optionee may assign or transfer all or a portion of the
Optionee's rights and interest in any stock option granted hereunder.
Stock Options shall be exercisable during the Optionee's lifetime only
by the Optionee or assignees, or the duly appointed legal
representative of an incompetent Optionee, including following an
assignment consented to by the Committee herein.
<PAGE> 73
10. No NQSO shall be exercisable while there is outstanding
any other NQSO which was granted to the Optionee before the grant of
such option under the Plan or any other plan which gives the right to
the Optionee to purchase stock in the Company or in a corporation which
is a parent corporation (as defined in Section 425(e) of the Code) of
the Company, or any predecessor corporation of any of such corporations
at the time of the grant. An NQSO shall be treated as outstanding
until it is either exercised in full or expires by reason of lapse of
time.
11. Any Optionee who disposes of Common Shares acquired on
the exercise of a NQSO by sale or exchange either (i) within two years
after the date of the grant of the NQSO under which the stock was
acquired, or (ii) within one year after the acquisition of such Shares,
shall notify the Company of such disposition and of the amount realized
upon such disposition. The transfer of Common Shares may also be
restricted by applicable provisions of the Securities Act of 1933, as
amended.
ARTICLE VI
Adjustments or Changes in Capitalization
1. In the event that the outstanding Common Shares of the
Company are hereafter changed into or exchanged for a different number
of kinds of shares or other securities of the Company by reason of
merger, consolidation, other reorganization, recapitalization,
reclassification, combination of shares, stock split-up or stock
dividend:
A. Prompt, proportionate, equitable, lawful and
adequate adjustment shall be made of the aggregate number and
kind of shares subject to Stock Options which may be granted
under the Plan, such that the Optionee shall have the right
to purchase such Common Shares as may be issued in exchange
for the Common Shares purchasable on exercise of the NQSO had
such merger, consolidation, other reorganization,
recapitalization, reclassification, combination of shares,
stock split-up or stock dividend not taken place;
B. Rights under unexercised Stock Options or portions
thereof granted prior to any such change, both as to the
number or kind of shares and the exercise price per share,
shall be adjusted appropriately, provided that such
adjustments shall be made without change in the total
exercise price applicable to the unexercised portion of such
NQSO's but by an adjustment in the price for each share
covered by such NQSO's; or,
C. Upon any dissolution or liquidation of the Company
or any merger or combination in which the Company is not a
surviving corporation, each outstanding Stock Option granted
hereunder shall terminate, but the Optionee shall have the
right, immediately prior to such dissolution, liquidation,
merger or combination, to exercise his/her NQSO in whole or
in part, to the extent that it shall not have been exercised,
without regard to any installment exercise provisions in such
NQSO.
<PAGE> 74
2. The foregoing adjustment and the manner of application
of the foregoing provisions shall be determined solely by the
Committee, whose determination as to what adjustments shall be made and
the extent thereof, shall be final, binding and conclusive. No
fractional Shares shall be issued under the Plan on account of any such
adjustments.
ARTICLE VII
Merger, Consolidation or Tender Offer
1. If the Company shall be a party to a binding agreement
to any merger, consolidation or reorganization or sale of substantially
all the assets of the Company, each outstanding Stock Option shall
pertain and apply to the securities and/or property which a shareholder
of the number of Common Shares of the Company subject to the NQSO would
be entitled to receive pursuant to such merger, consolidation or
reorganization or sale of assets.
2. In the event that:
A. Any person other than the Company shall acquire
more than 20% of the Common Shares of the Company through a
tender offer, exchange offer or otherwise;
B. A change in the "control" of the Company occurs, as
such term is defined in Rule 405 under the Securities Act of
1933;
C. There shall be a sale of all or substantially all
of the assets of the Company;
any then outstanding Stock Option held by an Optionee, who is deemed by
the Committee to be a statutory officer ("insider") for purposes of
Section 16 of the Securities Exchange Act of 1934 shall be entitled to
receive, subject to any action by the Committee revoking such an
entitlement as provided for below, in lieu of exercise of such Stock
Option, to the extent that it is then exercisable, a cash payment in an
amount equal to the difference between the aggregate exercise price of
such NQSO, or portion thereof, and, (i) in the event of an offer or
similar event, the final offer price per share paid for Common Shares,
or such lower price as the Committee may determine to conform an option
to preserve its Stock Option status, times the number of Common Shares
covered by the NQSO or portion thereof, or (ii) in the case of an event
covered by B or C above, the aggregate fair market value of the Common
Shares covered by the Stock Option, as determined by the Committee at
such time.
3. Any payment which the Company is required to make
pursuant to paragraph 2 of this Article VII, shall be made within
fifteen (15) business days, following the event which results in the
Optionee's right to such payment. In the event of a tender offer in
which fewer than all the shares which are validity tendered in
compliance with such offer are purchased or exchanged, then only that
portion of the shares covered by an NQSO as results from multiplying
such shares by a fraction, the numerator of which is the number of
Common Shares acquired purchase to the offer and the denominator of
<PAGE> 75
which is the number of Common Shares tendered in compliance with such
offer, shall be used to determine the payment thereupon. To the extent
that all or any portion of a Stock Option shall be affected by this
provision, all or such portion of the NQSO shall be terminated.
4. Notwithstanding paragraphs 1 and 3 of this Article VII,
the Company may, by unanimous vote and resolution, unilaterally revoke
the benefits of the above provisions; provided, however, that such vote
is taken no later than ten business days following public announcement
of the intent of an offer of the change of control, whichever occurs
earlier.
ARTICLE VIII
Amendment and Termination of Plan
1. The Board may at any time, and from time to time,
suspend or terminate the Plan in whole or in part or amend it from time
to time in such respects as the Board may deem appropriate and in the
best interest of the Company.
2. No amendment, suspension or termination of this Plan
shall, without the Optionee's consent, alter or impair any of the
rights or obligations under any Stock Option theretofore granted to
him/her under the Plan.
3. The Board may amend the Plan, subject to the limitations
cited above, in such manner as it deems necessary to permit the
granting of Stock Options meeting the requirements of future amendments
or issued regulations, if any, to the Code.
4. No NQSO may be granted during any suspension of the Plan
or after termination of the Plan.
ARTICLE IX
Government and Other Regulations
The obligation of the Company to issue, transfer and deliver
Common Shares for Stock Options exercised under the Plan shall be
subject to all applicable laws, regulations, rules, orders and
approval which shall then be in effect and required by the relevant
stock exchanges on which the Common Shares are traded and by
government entities as set forth below or as the Committee in its sole
discretion shall deem necessary or advisable. Specifically, in
connection with the Securities Act of 1933, as amended, upon exercise
of any Stock Option, the Company shall not be required to issue Common
Shares unless the Committee has received evidence satisfactory to it
to the effect that the Optionee will not transfer such shares except
pursuant to a registration statement in effect under such Act or
unless an opinion of counsel satisfactory to the Company has been
received by the Company to the effect that such registration is not
required. Any determination in this connection by the Committee shall
be final, binding and conclusive. The Company may, but shall in no
event be obligated to take any other affirmative action in order to
cause the exercise of a Stock Option or the issuance of Common Shares
purchased thereto to comply with any law or regulation of any
government authority.
<PAGE> 76
ARTICLE X
Miscellaneous Provisions
1. No person shall have any claim or right to be granted
a Stock Option under the Plan, and the grant of an NQSO under the Plan
shall not be construed as giving an Optionee the right to be retained
by the Company. Furthermore, the Company expressly reserves the right
at any time to terminate its relationship with an Optionee with or
without cause, free from any liability, or any claim under the Plan,
except as provided herein, in an option agreement, or in any agreement
between the Company and the Optionee.
2. Any expenses of administering this Plan shall be borne
by the Company.
3. The payment received from Optionee from the exercise of
Stock Options under the Plan shall be used for the general corporate
purposes of the Company.
4. The place of administration of the Plan shall be in the
State of Nevada and the validity, contraction, interpretation,
administration and effect of the Plan and its rules and regulations,
and rights relating to the Plan, shall be determined solely in
accordance with the laws of the State of Nevada.
5. Without amending the Plan, grants may be made to
persons who are foreign nationals or employed outside the United
States, or both, on such terms and conditions, consistent with the
Plan's purpose, different from those specified in the Plan as may, in
the judgment of the Committee, be necessary or desirable to create
equitable opportunities given differences in tax laws in other
countries.
6. In addition to such other rights of indemnification as
they may have as members of the Board or Committee, the members of the
Committee shall be indemnified by the Company against all costs and
expenses reasonably incurred by them in connection with any action,
suit or proceeding to which they or any of them may be party by reason
of any action taken or failure to act under or in connection with the
Plan or any Stock Option granted thereunder, and against all amounts
paid by them in settlement thereof (provided such settlement is
approved by independent legal counsel selected by the Company) or paid
by them in satisfaction of a judgment in any such action, suit or
proceeding, except a judgment based upon a finding of bad faith;
provided that upon the institution of any such action, suit or
proceeding a Committee member shall in writing, give the Company
notice thereof and an opportunity, at its own expense, to handle and
defend the same before such Committee member undertakes to handle and
defend it on his/her own behalf.
7. Stock Options may be granted under this Plan from time
to time, in substitution for stock options held by employees of other
corporations who are about to become employees of the Company as the
result of a merger or consolidation of the employing corporation with
the Company or the acquisition by the Company of the assets of the
employing corporation or the acquisition by the Company of stock of
<PAGE> 77
the employing corporation as a result of which it become a subsidiary
of the Company. The terms and conditions of such substitute stock
options so granted my vary from the terms and conditions set forth in
this Plan to such extent as the Board of Director of the Company at
the time of grant may deem appropriate to conform, in whole or in
part, to the provisions of the stock options in substitution for which
they are granted, but no such variations shall be such as to affect
the status of any such substitute stock options as a stock option
under Section 422A of the Code.
8. Notwithstanding anything to the contrary in the Plan,
if the Committee finds by a majority vote, after full consideration of
the facts presented on behalf of both the Company the Optionee, that
the Optionee has been engaged in fraud, embezzlement, theft,
commission of a felony or proven dishonesty in the course of his/her
association with the Company or any subsidiary corporation which
damaged the Company or any subsidiary corporation, or for disclosing
trade secrets of the Company or any subsidiary corporation, the
Optionee shall forfeit all unexercised Stock Options and all exercised
NQSO's under which the Company has not yet delivered the certificates
and which have been earlier granted the Optionee by the Committee.
The decision of the Committee as to the case of an Optionee's
discharge and the damage done to the Company shall be final. No
decision of the Committee, however, shall affect the finality of the
discharge of such Optionee by the Company or any subsidiary
corporation in any manner. Further, if Optionee voluntarily
terminates employment with the Company, the Optionee shall forfeit all
unexercised stock options.
ARTICLE XI
Securities Regulations
The securities issued pursuant to this Plan are "restricted
securities" as defined in Rule 144 of the Securities Act of 1933 and
may not be resold except in compliance with the registration
requirements of the Securities Act of 1933 or an exemption therefrom.
Ninety (90) days after the Company becomes subject to the reporting
requirements of Section 13 of 15(d) of the Securities Exchange Act of
1934, securities issued pursuant to the Plan may be resold by persons
other than affiliates in reliance upon Rule 144 without compliance
with paragraphs (c), (d), (e) and (h) thereof, and affiliates without
compliance with paragraph (d) thereof. The Company is currently not
subject to the reporting requirements of the Securities Exchange Act
of 1934.
ARTICLE XII
Written Agreement
Each Stock Option granted hereunder shall be embodied in a
written Stock Option Agreement which shall be subject to the terms and
conditions prescribed above and shall be signed by the Optionee and by
the President or any Vice President of the Company, for and in the
name and on behalf of the Company. Such Stock Option Agreement shall
contain such other provisions as the Committee, in its discretion
shall deem advisable.
<PAGE> 78
ARTICLE XIII
Effective Date
This Plan shall become unconditionally effective as of the
date of approval of the Plan by the Board of Directors of the Company.
No Stock Option may be granted later than ten (10) years from the
effective date of the Plan; provided, however, that the Plan and all
outstanding Stock Options shall remain in effect until such NQSO's
have expired or until such options are canceled.
<PAGE> 79
Number of Shares: _______________ Date of Grant: __________
NONQUALIFYING STOCK OPTION AGREEMENT
AGREEMENT made this _____ day of ______________________, 19___,
between ________________________________________ (the "Optionee"), and
budgethotels.com, inc., a Nevada corporation (the "Company").
1. Grant of Option. The Company, pursuant to the
provisions of the budgethotels.com, inc. 1999 Nonqualifying Stock
Option Plan (the "1999 Plan"), set forth as Attachment A hereto,
hereby grants to the Optionee, subject to the terms and conditions set
forth or incorporated herein, an Option to purchase from the Company
all or any part of an aggregate of _____________________ Common
Shares, as such Common Shares are now constituted, at the purchase
price of $___________ per share. The provisions of the 1999 Plan
governing the terms and conditions of the Option granted hereby are
incorporated in full herein by reference.
2. Exercise. The Option evidenced hereby shall be
exercisable in whole or in part (but only in multiples of 100 Shares
unless such exercise is as to the remaining balance of this Option) on
or after ________________________ and on or before ______________,
provided that the cumulative number of Common Shares as to which this
Option may be exercised (except as provided in paragraph 1 of Article
VI of this 1999 Plan) shall not exceed the following amounts:
Cumulative Number Prior to Date
of Shares (Not Inclusive of)
The Option evidenced hereby shall be exercisable by the delivery to
and receipt by the Company of (i) a written notice of election to
exercise, in the form set forth in Attachment B hereto, specifying the
number of shares to be purchased; (ii) accompanied by payment of the
full purchase price thereof in case or certified check payable to the
order of the Company, or by fully-paid and nonassessable Common Shares
of the Company properly endorsed over to the Company, or by a
combination thereof; and, (iii) by return of this Stock Option
Agreement for endorsement of exercise by the Company on Schedule I
hereof. In the event fully paid and nonassessable Common Shares are
submitted as whole or partial payment for Shares to be purchased
hereunder, such Common Shares will be valued at their Fair Market
Value (as defined in the 1999 Plan) on the date such Shares are
received by the Company and applied to payment of the exercise price.
3. Transferability. The Option evidenced hereby is NOT
assignable or transferable by the Optionee other than by the
Optionee's will, by the laws of descent and distribution, as provided
in paragraph 9 of Article V of the 1999 Plan. The Option shall be
exercisable only by the Optionee during his/her lifetime.
<PAGE> 80
4. Securities Regulations. The securities issued pursuant
to this Plan are "restricted securities" as defined in Rule 144 of the
Securities Act of 1933 and may not be resold except in compliance with
the registration requirements of the Securities Act of 1933 or an
exemption therefrom. Ninety (90) days after the Company becomes
subject to the reporting requirements of Section 13 of 15(d) of the
Securities Exchange Act of 1934, securities issued pursuant to the
Plan may be resold by persons other than affiliates in reliance upon
Rule 144 without compliance with paragraphs (c), (d), (e) and (h)
thereof, and affiliates without compliance with paragraph (d) thereof.
The Company is currently not subject to the reporting requirements of
the Securities Exchange Act of 1934.
budgethotels.com, inc.
BY: _________________________________
William J. Marshall, President
ATTEST:
___________________________
Secretary
Optionee hereby acknowledges receipt of a copy of the 1999
Plan, attached hereto and accepts this Option subject to each and
every term and provision of such Plan. Optionee hereby agrees to
accept as binding, conclusive and final, all decisions or
interpretations of the Compensation Committee of the Board of
Directors administering the 1999 Plan on any questions arising under
such Plan. Optionee recognizes that if Optionee's employment with the
Company or any subsidiary thereof shall be terminated with cause, or
by the Optionee, all of the Optionee's rights hereunder shall
thereupon terminate; and that, pursuant to paragraph 10 of Article V
of the 1999 Plan, this Option may not be exercised while there is
outstanding to Optionee any unexercised Stock Option, granted to
Optionee before the date of grant of this Option, to purchase Common
Shares of the Company or any parent or subsidiary thereof.
Dated: ___________________
______________________________________
Optionee
______________________________________
Type or Print Name
______________________________________
Address
______________________________________
______________________________________
Social Security No.
<PAGE> 81
Attachment B
(Suggested form of letter to be used for notification of election to
exercise.)
Date:
Secretary,
budgethotel.coms, inc.
Dear Sir/Madame:
In accordance with paragraph 2 of the Nonqualifying Stock Option
Agreement evidencing the Option granted to me on _____________________
under the budgethotels.com, inc. 1999 Nonqualifying Stock Option Plan,
I hereby elect to exercise this Option to the extent of
_________________ Common Shares.
Enclosed are (i) Certificate(s) No.(s) ____________________
representing fully-paid Common Shares of budgethotels.com, inc.
endorsed to the Company with signature guaranteed, and/or a certified
check payable to the order of budgethotels.com, inc. in the amount of
$_____________ as the balance of the purchase price of $_____________
for the Shares which I have elected to purchase and (ii) the original
Stock Option Agreement for endorsement by the Company as to exercise
on Schedule I thereof. I acknowledge that the Common Shares (if any)
submitted as part payment for the exercise price due hereunder will be
valued by the Company at their Fair Market Value (as defined in the
1999 Plan) on the date this Option exercise is effected by the
Company. In the event I hereafter sell any Common Shares issued
pursuant to this option exercise within one year from the date of
exercise or within two years after the date of grant of this Option,
I agree to notify the Company promptly of the amount of taxable
compensation realized by me by reason of such sale for federal income
tax purposes.
When the certificate for Common Shares which I have elected to
purchase has been issued, please deliver it to me, along with my
endorsed Stock Option Agreement in the event there remains an
unexercised balance of Shares under the Option, at the following
address:
________________________________________________________
________________________________________________________
________________________________________________________
______________________________________
Signature of Optionee
______________________________________
Type or Print Name
<PAGE> 82
Optionee Date of Grant
SCHEDULE I
Unexercised Issuing
Shares Payment Shares Officer
Date Purchased Received Remaining Initials
