<PAGE> 1
====================================================================
SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street, N.W.
Washington, D. C. 20549
----------------------------------
FORM 10-SB/A-4
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 91-0179013
(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 seventy-one 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-one
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, the Spokane Intermodal Center, the Toronto Transit
Commission and Via Rail Canada.
Thus far, the Company has installed seventy-one 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 services to be provided or have been provided include advise
regarding Internet marketing; assistance with the development of the
Company's web-site; and, advise regarding search engine marketing. The
term of the agreement is from October 1, 1997 to January 31, 2001. The
fee for the services is US$70,000 payable at the rate of US$1,400 per
month. Mr. Marshall, the Company's President, has agreed, personally,
to indemnify and hold C & K Management Ltd. From any loss suffered 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 four 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 competes with other display board providers on the basis of
price, availability of advertising space, size of space and the
location of space. The Company competes with other Internet providers
on the basis of price and the amount of space allocated to a particular
client. 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. While the Company currently
relies upon Media Net as the Company's outside technology supplier, the
Company believes that there are numerous outside technology suppliers
that perform the same services as Media Net. Accordingly, the Company
believes that if Media Net could not or would not furnish future
services to the Company, the Company could obtain such services from
other sources without interruption of its 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
and Kenneth E. Cloak 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
as described in this registration statement, 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
the 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 issued 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 March 1998, the Company issued 387,000
shares of its common stock at an offering price of $0.19 per share. A
total $73,530 was raised from the offering. In March 1999, the Company
sold 1,585,000 shares of common stock at an offering price of $0.25 per
share for a total of $396,250. 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 substantially 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 cash requirements
<PAGE> 11
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 is unable to 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 expansion.
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
address of owner Shares Position of Class
William Marshall 8,000,000[1] President, Secretary 55.12%
16875 Terrace Rd. Treasurer & Director
Winfield, B.C.
Canada V4V 1B2
Kenneth E. Cloak 25,000[2] Director 0.17%
8624 Janscim Park Dr.
N. Jaunich, B.C.
Canada V8V 3K3
All officers and 8,025,000 55.29%
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 50,000 shares of common
stock at an exercise price of $0.50 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 52 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
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
<PAGE> 15
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 Colliers 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.
The obligation to pay Mr. Marshall's salary is not subject to the
Company beginning profitable operations and generating sufficient
revenues to pay the same, but the timing of the payment may be delayed
until funds are available.
William J. Marshall President 1999 $ 120,000
On March 31, 1999, the Company entered into an agreement with
LAC Enterprises Ltd. ("LAC"), a corporation solely owned and controlled
by Mr. Marshall, the Company's President, to provide consulting
services to the Company relating to its operation. Mr. Marshall will
provide services as President/CEO under the LAC agreement. The
agreement provides for the payment of $10,000 per month to LAC plus
expenses. The agreement also provides for annual increases of 5% each
year and provides that the Company may issue options to LAC for between
1.0 million and 1.7 million shares of common stock annually. The
option exercise price will be $0.01. The number of options will be
determined by Mr. Marshall, the sole owner of LAC and President of the
Company.
The Company and LAC have verbally agreed that if cash is
unavailable to pay LAC, the amount due LAC will be accrued by the
Company and paid to LAC when funds are available.
The Company has adopted a non-qualified incentive stock option
plan and granted options to Messrs Cloak and Scheibel. Mr. Scheibel's
options were cancelled upon his resignation. There are no other stock
option plans, retirement, pension, or profit sharing plans for the
benefit of the Company's officers and directors.
<PAGE> 17
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.
Option/SAR Grants in Fiscal 1998 and to date in Fiscal 1999.
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 [1] 1,000,000 77.46% $0.01 10/30/00
Kenneth E. Cloak 50,000 3.87% $0.50 11/26/00
[1] Options were granted to LAC pursuant to its agreement with the
Company.
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.
Kenneth Cloak 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 ones awarded to
LAC in exchange for Mr. Marshall's services as CEO and President.
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."
<PAGE> 18
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.
However, W.J. Marshall Management, Inc. retained all of its
right, title and interest in and to storage space Mr. Marshall's home.
The Company continues to use storage space at Mr. Marshall's home on a
rent free basis. There is no written agreement for the use of the
foregoing space. The Company, however, no longer conducts its
operations from Mr. Marshall's home.
On March 31, 1999, the Company entered into an agreement with
LAC Enterprises Ltd. ("LAC"), a corporation solely owned and controlled
by Mr. Marshall, the Company's President, to provide consulting
services to the Company relating to its operation. Mr. Marshall will
provide services as President/CEO under the LAC agreement. The
agreement provides for the payment of $10,000 per month to LAC plus
expenses. The agreement also provides for annual increases of 5% each
year and provides that the Company may issue options to LAC for between
1.0 million and 1.7 million shares of common stock annually. The
option exercise price will be $0.01. The number of options will be
determined by Mr. Marshall, the sole owner of LAC and President of the
Company.
The Company and LAC have verbally agreed that if cash is
unavailable to pay LAC, the amount due LAC will be accrued by the
Company and paid to LAC when funds are available.
On May 24, 1999, the Company granted an option to Ken Cloak, 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. Cloak 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 24, 2000 to August 26, 2000; and 12,500
shares from August 26, 2000 to November 27, 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 provided that Mr. Scheibel could have acquired 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. Mr.
Scheibel's option was cancelled upon his resignation.
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.
<PAGE> 19
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
Fourth Quarter $0.53125 $0.03125
Third Quarter $1.12500 $0.31250
Second Quarter $2.40625 $0.43750
First Quarter $0.65625 $0.28125
1998
Fourth Quarter $0.55 $0.3125
Third Quarter $0.00 $0.00
[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
<PAGE> 20
minimum bid price; three market makers; 300 round lot shareholders
(round lot holders are considered holders of 100 shares or more; an
operating history of one 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 14,514,000 shares of Common Stock issued and
outstanding as of August 31, 1999. Of the 14,514,000 shares of the
Company's Common Stock outstanding, 6,914,000 shares are freely
tradeable and 8,300,000 shares can only be resold in compliance with
Reg. 144 adopted under the Securities Act of 1933 (the "Act").
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.
The following sets forth in chronological order the sale of
unregistered securities:
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 Act.
In December 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.
The shares were issued pursuant to Section 4(2) of the Securities Act
of 1933.
<PAGE> 21
In March 1998, the Company issued 387,000 shares of common stock
at $0.19 per share to fifty-four persons in consideration of $73,530.
All of the shares were issued pursuant to Reg. 504 of the Act.
In November 1998, the Company issued 600,000 shares of common
stock in consideration of services valued at $30,000. The shares were
issued to Phoenix Capital Funding Group in consideration of Phoenix
Capital's promise to raise $500,000 for the Company. The shares were
issued pursuant to Reg. 504 of the Act.
Phoenix Capital did not raise the entire $500,000 and accordingly
the 600,000 shares were returned to the Company by Phoenix Capital and
canceled by the Company.
In fiscal 1999, the Company granted options to certain Company
employees to acquire up to 1,290,000 shares of common stock at varying
prices.
In March 1999, the Company sold 42,000 shares of common stock to
the following persons at the price per share opposite their respective
names:
Von Zurba 10,000 shares $0.40
Margaret Tolan 10,000 shares $0.30
Margaret Hutchinson 12,000 shares $0.50
John Phelan 10,000 shares $0.40
In March 1999, 50,000 shares of common stock were issued to
Elizabeth Henderson in consideration of consulting services rendered in
1999. The services were related to organization and promoting the
Company's stock and valued at $12,500 by the Company's board of
directors. The foregoing shares were issued pursuant to Reg. 504 of
the Act.
In March 1999, 350,000 shares of common stock were issued to John
Coward in consideration of consulting services rendered in 1999. The
services were related to organization and promoting the Company's stock
and valued at $87,500 by the Company's board of directors. The
foregoing shares were issued pursuant to Reg. 504 of the Act.
In March 1999, the Company issued 1,585,000 shares of common stock
at $0.25 per share to four persons in consideration of $396,250 The
foregoing shares were issued pursuant to Reg. 504 of the Act.
In March 1999, 1,300,000 shares of common stock were issued to
760343 Alberta Ltd. in consideration of consulting services rendered in
1999. The consulting services related to the Company's organization,
contracts and agreements and were valued at $325,000 by the Company's
board of directors. The shares were issued pursuant to Reg. 504 of
the Act.
<PAGE> 22
On May 24, 1999, the Company granted an option to Ken Cloak, 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. Cloak 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 24, 2000 to August 26, 2000; and, 12,500
shares from August 26, 2000 to November 27, 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. The options to
Mr. Scheibel were canceled upon his resignation. No options were
exercised.
In July 1999, through negotiations between the Company and Phoenix
Capital, Phoenix Capital was issued 300,000 restricted shares of common
stock in consideration of it raising $125,000 of the $500,000.
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.
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.
<PAGE> 23
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
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.
<PAGE> 24
ITEM 13. FINANCIAL STATEMENTS.
Financial Statements begin on following page.
CONTENTS
Independent Auditors' Report . . . . . . F-1
Consolidated Balance Sheet . . . . . . F-2
Consolidated Statements of Operations . . . . F-3
Consolidated Statements of Stockholders' Equity (Deficit) F-4
Consolidated Statements of Cash Flows . . . . F-5
Notes to the Consolidated Financial Statements . . F-6
<PAGE> 25
[Letterhead]
JONES, JENSEN & COMPANY, LLC
Certified Public Accountants and Consultants
50 South Main Street
Suite 1450
Salt Lake City, Utah 84144
(801) 328) 4408
FAX (801) 328-4461
INDEPENDENT AUDITORS' REPORT
The Board of Directors
budgethotels.com, inc. and Subsidiary
(Formerly Info Center International, Inc.)
Kelowna, British Columbia
We have audited the accompanying consolidated balance sheet of
budgethotels.com, inc. and Subsidiary (Formerly Info Center
International, Inc.) 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 budgethotels.com, inc. and Subsidiary (Formerly Info Center
International, Inc.) 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> 26
BUDGETHOTELS.COM, INC. AND SUBSIDIARY
(Formerly Info Center International, Inc.)
Consolidated Balance Sheet
ASSETS
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
==========
The accompanying notes are an integral part of these consolidated
financial statements.
F-2
<PAGE> 27
BUDGETHOTELS.COM, INC. AND SUBSIDIARY
(Formerly Info Center International, Inc.)
Consolidated Statements of Operations
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)
========= =========
The accompanying notes are an integral part of these consolidated
financial statements.
F-3
<PAGE> 28
BUDGETHOTELS.COM, INC. AND SUBSIDIARY
(Formerly Info Center International, Inc.)
Consolidated Statements of Stockholders' Equity (Deficit)
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 $0.01
per share (see
Note 7) 2,500,000 2,500 22,500 -
Common stock issued
for cash at $0.19
per share (see
Note 7) 387,000 387 73,200 -
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)
========== ======== ======== ==========
The accompanying notes are an integral part of these consolidated
financial statements.
F-4
<PAGE> 29
BUDGETHOTELS.COM, INC. AND SUBSIDIARY
(Formerly Info Center International, Inc.)
Consolidated Statements of Cash Flows
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 $ -
F-5
<PAGE> 30
BUDGETHOTELS.COM, INC. AND SUBSIDIARY
(Formerly Info Center International, Inc.)
Notes to the Consolidated Financial Statements
November 30, 1998
NOTE 1 - COMPANY BACKGROUND
The consolidated financial statements include those of
budgethotels.com, inc. (BHI) (formerly known as Info Center
International, Inc.) and its wholly-owned subsidiary, Info Center, Inc.
(Info). Collectively, they are referred to herein as "the Company."
BHI was incorporated under the laws of the State of Nevada on November
5, 1997 as Info Center Interntional, Inc. BHI was incorporated for the
purpose of acquiring Info. In February 1999, the Company changed its
name from Info Center International, Inc. to budgethotels.com, inc.
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 BHI issued 8,000,000 shares of its common stock
in exchange for all of the outstanding common stock of Info.
Therefore, Info is treated as the acquiring entity. Accordingly, there
was no adjustment to the carrying value of the assets or liabilities of
Info. BHI is the acquiring entity for legal purposes and Info is the
surviving entity for accounting purposes. BHI 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.
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:
F-6
<PAGE> 31
BUDGETHOTELS.COM, INC. AND SUBSIDIARY
(Formerly Info Center International, Inc.)
Notes to the Consolidated Financial Statements
November 30, 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
b. Property and Equipment (Continued)
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 2013. 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 subsidiary, Info Center, Inc.
All material intercompany accounts and transactions have been
eliminated.
f. Cash Equivalents
For the purposes of the statement of cash flows, the Company considers
all highly liquid investments with an original maturity of three months
or less to be cash equivalents.
g. 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.
h. 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 and collected fees
for which services have not yet been provided.
F-7
<PAGE> 32
BUDGETHOTELS.COM, INC. AND SUBSIDIARY
(Formerly Info Center International, Inc.)
Notes to the Consolidated Financial Statements
November 30, 1998
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 $1,360.
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 $732.
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 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
========
F-8
<PAGE> 33
BUDGETHOTELS.COM, INC. AND SUBSIDIARY
(Formerly Info Center International, Inc.)
Notes to the Consolidated Financial Statements
November 30, 1998
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.
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 $73,587 at
a price of $0.19 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-9
<PAGE> 34
BUDGETHOTELS.COM, INC.
AND SUBSIDIARY
(Formerly Info Center International, Inc.)
CONSOLIDATED FINANCIAL STATEMENTS
May 31, 1999 and November 30, 1998
<PAGE> 35
BUDGETHOTELS.COM, INC. AND SUBSIDIARY
(Formerly Info Center International, Inc.)
Consolidated Balance Sheets
ASSETS
May 31, November 30,
1999 1998
(Unaudited)
CURRENT ASSETS
Cash $ 192,460 $ 13,144
Account 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
========= =========
The accompanying notes are an integral part of these consolidated
financial statements.
1
<PAGE> 36
BUDGETHOTELS.COM, INC. AND SUBSIDIARY
(Formerly Info Center International, Inc.)
Consolidated Balance Sheets (Continued)
May 31, November 30,
1999 1998
(Unaudited)
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
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,
12,914,000 and 11,487,000 shares
issued and outstanding, respectively 12,914 11,487
Additional paid-in capital 684,471 61,894
Accumulated deficit (488,893) (167,476)
---------- ----------
Total Stockholders' Equity
(Deficit) 208,492 (94,095)
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY (DEFICIT) $ 414,728 $ 167,743
========== ==========
The accompanying notes are an integral part of these consolidated
financial statements.
2
<PAGE> 37
BUDGETHOTELS.COM, INC. AND SUBSIDIARY
(Formerly Info Center International, Inc.)
Consolidated Statements of Operations
(Unaudited)
For the For the
Three Months Ended Six Months Ended
May 31, May 31,
1999 1998 1999 1998
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 324,950 38,936 430,053 82,055
Depreciation 2,524 2,188 5,048 4,376
---------- --------- ---------- ---------
Total Expenses 327,474 41,124 435,101 86,431
---------- --------- ---------- ---------
Income (Loss) from
Operations (313,122) 41,348 (327,694) 78,513
---------- --------- ---------- ---------
OTHER INCOME (EXPENSE)
Gain (loss) on
exchange rate 3,091 - 6,277 -
Interest income - 71 - 154
---------- --------- ---------- ---------
Total Other Income
(Expense) 3,091 71 6,277 154
---------- --------- ---------- ---------
NET INCOME (LOSS) $ (310,031) $ 41,419 $ (321,417) $ 78,667
========== ========= ========== =========
BASIC EARNINGS (LOSS)
PER SHARE $ (0.03) $ (0.00)$ (0.04) $ 0.00
========== ========= ========== =========
The accompanying notes are an integral part of these consolidated
financial statements.
3
<PAGE> 38
BUDGETHOTELS.COM, INC. AND SUBSIDIARY
(Formerly Info Center International, Inc.)
Consolidated Statements of Stockholders' Equity (Deficit)
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit
Balance, 11/30/97 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 an average
of $0.01 per share
(see Note 7) 2,500,000 2,500 22,500 -
Common stock issued for
cash at an average of
$0.19 per share
(see Note 7) 387,000 387 73,200 -
Stock offering costs - - (53,286) -
Net loss for the year
ended 11/30/98 - - - (55,002)
---------- -------- ---------- ----------
Balance, 11/30/98 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) 1,585,000 1,585 394,665 -
Common stock issued for
services at $0.25 per
share (unaudited) 400,000 400 99,600 -
Common stock issued
for cash at $0.30 to
$0.50 per share
(unaudited) 42,000 42 16,958 -
Options on common
stock issued below
market value at $0.01
per share (unaudited)
(see Note 9) - - 240,000 -
Stock offering
costs (unaudited) - - (101,166) -
Net loss for the six
months ended 05/31/99
(unaudited) - - - (321,417)
---------- -------- ---------- ----------
Balance, 05/31/99
(unaudited) 12,914,000 $ 12,914 $ 684,471 $ (488,893)
========== ======== ========== ==========
The accompanying notes are an integral part of these consolidated
financial statements.
4
<PAGE> 39
BUDGETHOTELS.COM, INC. AND SUBSIDIARY
(Formerly Info Center International, Inc.)
Consolidated Statements of Cash Flows
For the For the
Three Months Ended Six Months Ended
May 31, May 31,
1999 1998 1999 1998
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income (loss) $ (310,031) $ 41,419 $ (321,417) $ 8,667
Adjustments to reconcile
net income (loss) to net
cash used by operating
activities:
Depreciation 2,524 2,188 5,048 4,376
Common stock and options
issued for services 311,920 - 311,920 6,000
Changes in assets and
liabilities:
(Increase) decrease in
accounts receivable (55,980) (44,665) (44,038) (89,331)
(Increase) decrease in
accounts receivable -
related party - (11,093) - (22,187)
(Increase) decrease in
deposits and prepaids (1,860) (374) (2,523) (374)
Increase (decrease) in
accounts payable (9,450) (21,898) (16,534) 16,712
Increase (decrease) in
unearned revenue 34,980 (10,062) 5,339 (20,125)
---------- --------- ---------- --------
Net Cash Provided (Used) by
Operating Activities (27,897) (44,485) (62,205) (26,262)
---------- --------- ---------- --------
CASH FLOWS FROM INVESTING
ACTIVITIES
Purchase of fixed assets (16,826) (18,223) (26,156) (36,446)
---------- --------- ---------- --------
Net Cash Provided (Used) by
Investing Activities (16,826) (18,223) (26,156) (36,446)
---------- --------- ---------- --------
CASH FLOWS FROM FINANCING
ACTIVITIES
Principal payments on note
payable - related party (44,407) - (44,407) -
Proceeds from sales of
common stock 213,250 111,642 413,250 111,642
Stock offering costs (85,079) (22,902) (101,166) (22,902)
---------- --------- ---------- --------
Net Cash Provided (Used) by
Financing Activities $ 83,764 $ 88,740 $ 267,677 $ 88,740
---------- --------- ---------- --------
The accompanying notes are an integral part of these consolidated
financial statements.
5
<PAGE> 40
BUDGETHOTELS.COM, INC. AND SUBSIDIARY
(Formerly Info Center International, Inc.)
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
For the For the
Three Months Ended Six Months Ended
May 31, May 31,
1999 1998 1999 1998
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 PERIOD $ 192,460 $ 26,032 $ 192,460 $ 26,032
========= ======== ========= ========
SUPPLEMENTAL CASH FLOW
INFORMATION
CASH PAID FOR:
Interest $ - $ - $ - $ -
Income taxes $ - $ - $ - $ -
NON-CASH FINANCING
ACTIVITIES
Common stock and options
issued for services
rendered $ 311,920 $ - $ 311,920 $ 6,000
The accompanying notes are an integral part of these consolidated
financial statements.
6
<PAGE> 41
BUDGETHOTELS.COM, INC. AND SUBSIDIARY
(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. (BHI) (formerly known as Info Center International, Inc.) and its
wholly-owned subsidiary, Info Center, Inc. (Info). Collectively, they are
referred to herein as "the Company."
BHI was incorporated under the laws of the State of Nevada on November 5,
1997 as Info Center International, Inc. BHI was incorporated for the
purpose of acquiring Info. In February 1999, the Company changed its name
from Info Center International, Inc. to budgethotels.com, inc.
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 BHI 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 transfer under common control since WJ
Marshall Management Inc. was the controlling shareholder of Info and BHI
prior to the share exchange. Accordingly, there was no adjustment to the
carrying value of the assets or liabilities of Info. BHI is the acquiring
entity for legal purposes and Info is the surviving entity for accounting
purposes. BHI 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.
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:
7
<PAGE> 42
BUDGETHOTELS.COM, INC. AND SUBSIDIARY
(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 (Continued)
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 budgethotels.com,
Inc. and its wholly-owned subsidiary, Info Center, Inc.
All material intercompany accounts and transactions have been eliminated.
f. Cash Equivalents
For the purposes of the statement of cash flows, the Company considers all
highly liquid investments with an original maturity of three months or less
to be cash equivalents.
g. 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.
h. 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 and collected fees for which
services have not yet been provided.
<PAGE> 43
BUDGETHOTELS.COM, INC. AND SUBSIDIARY
(Formerly Info Center International, Inc.)
Notes to the Consolidated Financial Statements
May 31, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
i. 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.
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 $1,360.
In March 1999, the Company entered into an agreement with its president
for consulting services. The agreement runs from March 1999 through March
2014. The monthly payment for the consulting agreement is $10,000.
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 $732.
9
<PAGE> 44
BUDGETHOTELS.COM, INC. AND SUBSIDIARY
(Formerly Info Center International, Inc.)
Notes to the Consolidated Financial Statements
May 31, 1999
NOTE 4 - COMMITMENTS AND CONTINGENCIES (continued)
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, 1999 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 accrued on the amount at 10% per annum and was due
yearly. The principal was due on demand. This note was repaid in full by
the Company during the year ended November 30, 1999.
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
Greyhounds'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.
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 $73,587 at a price of $0.19 per share.
The stock offering costs related to these two offerings amounted to $53,286
and were charged to paid-in capital.
In November 1998, the Company issued 600,000 shares of its common stock for
services rendered valued at $28,080, or $0.05 per share. These shares were
subsequently canceled by the Company in December 1998.
12
<PAGE> 45
BUDGETHOTELS.COM, INC. AND SUBSIDIARY
(Formerly Info Center International, Inc.)
Notes to the Consolidated Financial Statements
May 31, 1999
NOTE 7 - COMMON STOCK (Continued)
In March 1999, the Company sold 1,585,000 shares of its common stock in an
offering for $396,250 at a price of $0.25 per share. In March 1999, the
Company sold an additional 42,000 shares of its common stock in another
offering for $17,000 at prices ranging from $0.30 to $0.50 per share. The
stock offering costs related to these two offerings amounted to $101,166
and were charged to paid-in capital.
In May 1999, the Company issued 400,000 shares of its common stock for
services rendered valued at $100,000, or $0.25 per share.
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
options were issued, the Company's common stock was trading at $0.25 per
share. Accordingly, the Company recognized compensation expense of
$240,000, which was charged to paid-in capital (Note 9).
In July 1999, the Company issued 300,000 shares of its common stock for
services rendered valued at $150,000, or $0.50 per share.
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 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.
NOTE 9 - 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
cost 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.
11
<PAGE> 46
BUDGETHOTELS.COM, INC. AND SUBSIDIARY
(Formerly Info Center International, Inc.)
Notes to the Consolidated Financial Statements
May 31, 1999
NOTE 9 - 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 six months ended May 31, 1999 and the
year ended November 30, 1998.
A summary of the status of the Company's stock option plans as of May 31,
1999 and November 30, 1998, and changes during the six months ended May
31, 1999 and the year ended November 30, 1998 are presented below:
May 31, November 30,
1999 1998
Weighted Weighted
Average Average
Exercise Exercise
Shares Price Shares Price
Outstanding,
beginning of period - $ - - $ -
Granted 1,100,000 0.05 - -
Canceled - - - -
Exercised - - - -
--------- ------ ---- ----
Outstanding,
end of period 1,100,000 $ 0.05 - $ -
--------- ------ ---- ----
Exercisable,
end of period 1,000,000 $ 0.01 - $ -
--------- ------ ---- ----
Weighted average fair
value of options and
warrants granted
during the year $ 0.25 $ -
====== ====
12
<PAGE> 47
BUDGETHOTELS.COM, INC. AND SUBSIDIARY
(Formerly Info Center International, Inc.)
Notes to the Consolidated Financial Statements
May 31, 1999
NOTE 9 - OUTSTANDING STOCK OPTIONS (Continued)
Outstanding Exercisable
Weighted
Average Weighted Weighted
Number Remaining Average Number Average
Outstanding Contractual Exercise Exercisable Exercise
Exercise Prices at 5/31/99 Life Price at 5/31/99 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.
13
<PAGE> 48
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> 49
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 and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of
1934, this Amendment No. 4 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, May 9, 2000
Chief Executive Officer,
Chief Financial Officer,
Secretary and Director
/s/ Kenneth E. Cloak
Kenneth E. Cloak Director May 9, 2000
