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SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
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FORM 10-Q/A-1
[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended February 29, 2000.
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from: __________ to ___________.
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Commission file number 0-26909
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budgethotels.com, inc.
(Exact name of Registrant as specified in its charter.)
NEVADA 91-0179013
(State of other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1449 St. Paul Street
Suite 202
Kelowna, British Columbia V1Y 2E5
(Address of principal executive offices, including zip code.)
(205) 868-1171
Registrant's telephone number, including area code.
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Act of
1934 during the preceding 12 months (or for such shorter period that
the Registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Not subject
to filing until September 30, 1999.
YES [ x ] NO [ ]
The number of shares outstanding of the Registrant's Common Stock,
$0.01 par value per share, at February 29, 2000 was 13,214,000 shares.
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BUDGETHOTELS.COM, INC. AND SUBSIDIARY
Consolidated Balance Sheets
ASSETS
February 29, November 30,
2000 1999
(Unaudited)
CURRENT ASSETS
Cash $ 27,061 $ 71,143
Accounts receivable, net 141,874 129,748
Accounts receivable - related party 8,217 8,217
--------- ---------
Total Current Assets 177,152 209,108
--------- ---------
PROPERTY AND EQUIPMENT (NET) 80,620 83,558
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OTHER ASSETS
Deferred offering costs 6,648 -
Prepaid commissions 55,059 39,612
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Total Other Assets 61,707 39,612
--------- ---------
TOTAL ASSETS $ 319,479 $ 332,278
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The accompanying notes are an integral part of these consolidated
financial statements.
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BUDGETHOTELS.COM, INC. AND SUBSIDIARY
Consolidated Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
February 29, November 30,
2000 1999
(Unaudited)
CURRENT LIABILITIES
Accounts payable $ 15,506 $ 26,844
Unearned revenue 190,733 226,601
---------- ----------
Total Current Liabilities 206,239 253,445
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COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
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,
13,214,000 shares issued and
outstanding 13,214 13,214
Additional paid-in capital 834,171 834,171
Accumulated deficit (734,145) (768,552)
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Total Stockholders' Equity 113,240 78,833
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 319,479 $ 332,278
========== ==========
The accompanying notes are an integral part of these consolidated
financial statements.
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BUDGETHOTELS.COM, INC. AND SUBSIDIARY
Consolidated Statements of Operations
(Unaudited)
For the
Three Months Ended
February 29, February 28,
2000 1999
REVENUE
Net sales $ 206,589 $ 43,117
Cost of goods sold 40,905 19,589
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Gross Profit 165,684 23,528
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OPERATING EXPENSES
General and administrative 126,152 11,943
Depreciation 5,125 4,500
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Total Operating Expenses 131,277 16,443
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Income from Operations 34,407 7,085
OTHER INCOME (EXPENSE)
Loss on exchange rate - (1,710)
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Total Other Income (Expense) - (1,710)
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NET INCOME $ 34,407 $ 5,375
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BASIC EARNINGS PER SHARE $ 0.00 $ 0.00
========= ========
The accompanying notes are an integral part of these consolidated
financial statements.
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BUDGETHOTELS.COM, INC. AND SUBSIDIARY
Consolidated Statements of Stockholders' Equity
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit
Balance, 11/30/98 11,487,000 $ 11,487 $ 61,894 $ (167,476)
Cancellation of common
stock previously issued
at $0.05 per share (600,000) (600) (27,480) -
Common stock issued for
cash at $0.25 per share 1,585,000 1,585 394,665 -
Common stock issued for
cash at $0.30 to $0.50
per share 42,000 42 16,958 -
Common stock issued for
services at $0.25
per share 400,000 400 99,600 -
Options on common stock
issued below market
value at $0.01 per
share - - 240,000 -
Common stock issued for
services at $0.50
per share 300,000 300 149,700 -
Stock offering costs - - (101,166) -
Net loss for the year
ended 11/30/99 - - - (601,076)
---------- -------- --------- ----------
Balance, 11/30/99 13,214,000 13,214 834,171 (768,552)
Net income for the
three months ended
02/29/2000 (unaudited) - - - 34,407
---------- -------- --------- ----------
Balance, 02/29/2000
(unaudited) 13,214,000 $ 13,214 $ 834,171 $ (734,145)
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The accompanying notes are an integral part of these consolidated
financial statements.
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BUDGETHOTELS.COM, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
For the
Three Months Ended
February 29, February 28,
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 34,407 $ 5,375
Adjustments to reconcile net income to
net cash used by operating activities:
Depreciation 5,125 4,500
Cancellation of common stock issued
for services - (28,080)
Changes in assets and liabilities:
(Increase) decrease in accounts receivable (12,126) 11,713
(Increase) decrease in deferred
offering costs (6,648) (9,905)
(Increase) decrease in deposits
and prepaids (15,447) (2,697)
Increase (decrease) in accounts payable (11,338) (16,021)
Increase (decrease) in unearned revenue (35,868) 7,643
Increase (decrease) in notes
payable - related parties - 172,885
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Net Cash Provided (Used) by
Operating Activities (41,895) 145,413
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (2,187) (5,159)
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Net Cash Provided (Used) by
Investing Activities (2,187) (5,159)
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CASH FLOWS FROM FINANCING ACTIVITIES - -
--------- ---------
NET INCREASE (DECREASE) IN CASH (44,082) 140,254
CASH AT BEGINNING OF PERIOD 71,143 13,144
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CASH AT END OF PERIOD $ 27,061 $ 153,398
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SUPPLEMENTAL CASH FLOW INFORMATION
CASH PAID FOR:
Interest $ - $ -
Income taxes $ - $ -
NON-CASH FINANCING ACTIVITIES
Common stock issued for services rendered $ - $ -
The accompanying notes are an integral part of these consolidated
financial statements.
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BUDGETHOTELS.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
February 29, 2000 and November 30, 1999
NOTE 1 - CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by the Company
without audit. In the opinion of management, all adjustments (which
include only normal recurring adjustments) necessary to present fairly
the financial position, results of operations and cash flows at
February 29, 2000 and February 28, 1999 and for all periods presented
have been made.
Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. It is suggested
that these condensed financial statements be read in conjunction with
the financial statements and notes thereto included in the Company's
November 30, 1999 audited financial statements. The result of
operations for the three months ended February 29, 2000 and February
28, 1999 are not necessarily indicative of the operating results for
the full years.
NOTE 2 - 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
$734,000 at February 29, 2000 which raises substantial doubt about the
Company's ability t 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.
NOTE 3 - OUTSTANDING STOCK OPTIONS
The Company applies Accounting Principles board ("APB") Option 25,
"Accounting for Stock issued to Employees," and related interpretations
in accounting for all stock option plans. Under APB Option 25,
compensation costs is recognized for stock options granted to employees
when the option price is less than the market price of the underlying
common stock on the date of grant.
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BUDGETHOTELS.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
February 29, 2000 and November 30, 1999
NOTE 3 - OUTSTANDING STOCK OPTIONS (Continued)
FASB Statement 123, "Accounting for Stock-Based Compensation" ("SFAS
No. 123"), requires the Company to provide proforma information
regarding net income and net income per share as if compensation costs
for the Company's stock option plans and other stock awards had been
determined in accordance with the fair value based method prescribed in
SFAS No. 123. The Company estimates the fair value of each stock award
at the grant date by using the Black-Scholes option pricing model with
the following weighted average assumptions used for grants,
respectively; dividend yield of zero percent for all years; expected
volatility of 32 percent for all years; risk-free interest rates of
10.0 percent and expected lives of 4 years.
Under the accounting provisions of SFAS No. 123, the Company's net loss
would have been unchanged during the three months ended February 29,
2000 and the year ended November 30, 1999.
A summary of the status of the Company's stock option plans as of
February 29, 2000 and November 30, 1999, and changes during the three
months ended February 29, 2000 and the year ended November 30, 1999 are
presented below:
February 29, 2000 November 30, 1999
Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price
Outstanding,
beginning of period 1,100,000 $ 0.05 - $ -
Granted - - 1,100,000 0.05
Canceled - - - -
Exercised - - - -
--------- ------ --------- ------
Outstanding,
end of period 1,100,000 $ 0.05 1,100,000 $ 0.05
--------- ------ --------- ------
Exercisable,
end of period 1,000,000 $ 0.01 1,000,000 $ 0.01
--------- ------ --------- ------
Weighted average fair
value of options and
warrants granted
during the year $ - $ 0.25
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BUDGETHOTELS.COM, INC. AND SUBSIDIARY
Notes to the Consolidated Financial Statements
February 29, 2000 and November 30, 1999
NOTE 3 - OUTSTANDING STOCK OPTIONS (Continued)
Outstanding Exercisable
Weighted
Average Weighted Weighted
Number Remaining Average Number Average
Outstanding Contractual Exercise Exercisable Exercise
Exercise Prices at 2/29/00 Life Price at 2/29/00 Price
$ 0.01 1,000,000 35 $ 0.01 1,000,000 $ 0.01
$ 0.25 100,000 45 0.25 - -
--------- ----- ------- --------- ------
$ 0.01 - $ 0.25 1,100,000 35.91 $ 0.05 1,000,000 $ 0.01
========= ===== ======= ========= ======
In 1999, the Company issued options to a member of management to purchase
1,000,000 shares of its common stock at $0.01 per share. At the time, the
Company's common stock was trading at $0.25 per share. Accordingly,
compensation expense of $240,000 has been recognized. The Company also
issued options to another employee to purchase 100,000 shares of its common
stock at $0.50 per share, which exceeded the trading price of the shares at
the date of issuance.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
The following discussion should be read in conjunction with the
consolidated statements and the notes thereto:
OPERATIONS DURING THE INTERIM PERIODS OF FEBRUARY 29, 2000 AND FEBRUARY 28,
1999.
Net sales for the three month period ended February 29, 2000 were
$206,589 compared to $43,117 for the three month period ended February 28,
1999.
The Company's working capital improved from a deficiency of $44,337 as
of November 30, 1999 to a deficiency of $29,087 as of February 29, 2000.
The improvement in the working capital was a result of the Company's
profitable operations for the three month period ended February 29, 2000.
The Company had a net profit of $34,307 for the three month period
ending February 29, 2000 compared to a net profit of $5,375 for the
comparative period ending February 28, 1999. The increase in the Company's
net income is primarily a result of the Company's increased sales.
LIQUIDITY AND CAPITAL RESOURCES
The Company's working capital improved by $15,250 for the three month
period ending February 28, 2000 and management expects to have adequate
cash to maintain operations for the balance of its fiscal year and does not
anticipate the need to raise additional cash through the sale of shares or
debt.
RESULTS OF OPERATIONS
The Company derives its revenue from two sources consisting of an
Internet web site and advertising boards.
Net sales for the three month period ending February 29, 2000 were
$206,589 compared to $43,117 for the comparative period ending February 28,
1999.
The increase in the net sales is a result of the Company owning more
advertising boards and earning revenue from the Company's web site that
was operational during the three month period ending February 29, 2000.
The Company's cost of sales (ie) commissions paid were $40,905 or 20%
of net sales for the three month period ended February 29, 2000 compared to
$19,589 or 46% of net sales for the three month period ended February 28,
1999 and as a result the Company's gross margins from operations were
$165,684 (ie) 80% for the period ended February 29, 2000 versus $23,528
(ie) 54% for the three month period ended February 28, 1999. The increased
gross margins is a result of reduced commissions paid on advertising
renewals and no commissions paid on Internet web site revenues.
The Company's general and administrative expenses were $126,152 for
the three month period ended February 29, 2000 compared to $11,943 for the
three month period ended February 28, 1999. The increase in the general
and administrative expenses is the result of additional operating costs
associated with the additions of more advertising boards and the
development of the Company's web site.
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PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Registrant is not a party to any legal proceedings.
ITEM 2. RECENT SALES OF UNREGISTERED SECURITIES
During the quarter ended February 29, 2000, the Registrant did not
issue any unregistered securities.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
There have been no defaults upon securities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
During the quarter ended February 29, 2000, no matters were submitted
to the Registrant's security holders.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits
Exhibit
No. Description
27* Financial Data Schedule
* Previously filed.
No reports on Form 8-K have been filed during the period ending February
29, 2000.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
Dated this 9th day of May, 2000.
budgethotels.com, inc.
(the "Registrant")
BY: /s/ William J. Marshall
William J. Marshall, President, Chief
Executive Officer, Treasurer, Chief
Financial Officer and a member of the
Board of Directors.
