<PAGE> 1
FORM 10-KSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
[ x ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended - November 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from
Commission file number 0-26909
budgethotels.com, inc.
(Exact name of registrant as specified in its charter)
Nevada Applied for
State or other jurisdiction of (IRS Employer
incorporation or organization Identification No.)
1449 St. Paul Street
Kelowna, British Columbia V1Y 2E5
(Address of principal executive offices, including zip code.)
(250) 868-1171
(Registrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
Check whether the Issuer (1) filed all reports required to be filed
by Section 13 or 15(d) of the Exchange Act during the past 12 months
(or for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
YES [ ] NO [ x ]
Check if no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B is contained herein, and no disclosure will be
contained, to the best of Registrant's knowledge, in definitive proxy
or information statements incorporated by reference in Part III of
this Form 10-KSB or any amendment to this Form 10-KSB. [ ]
Issuer's revenues for its most recent fiscal year.
November 30, 1999 - $462,147.
<PAGE> 2
The aggregate market value of the Common Stock held by non-affiliates
computed by reference to the average bid and ask prices of the stock
is as follows: 5,214,000 shares at $0.0625 for a total of $20,367.
Issuers involved in Bankruptcy Proceedings during the past Five
Years.
Not Applicable.
State the number of shares outstanding of each of the Issuer's
classes of common equity, as of the latest practicable date:
April 6, 2000 - 13,214,000 shares of Common Stock
Documents Incorporated by Reference
1. Form 10-SB Registration Statement and all amendments thereto,
which was filed with the Securities and Exchange Commission and
all exhibits thereto.
2. All reports filed with the Securities and Exchange Commission
after to August 2, 1999.
Transitional Small Business Issuer Format
YES [ ] NO [ x ]
<PAGE> 3
PART I
ITEM 1. 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> 4
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> 5
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> 6
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> 7
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> 8
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> 9
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. Going Concern. The Company has inadequate revenues to
continue as a going concern during the next twelve months. If the
Company does not obtain additional capital from earnings or through
capital raising activities, it may have to cease operations.
2. 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.
3. 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.
4. 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.
5. 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.
<PAGE> 10
6. 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.
7. 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.
8. 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.
9. 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.
10. 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.
<PAGE> 11
11. 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.
ITEM 2. 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 3. LEGAL PROCEEDINGS.
The Company is not a party to any pending or threatened
litigation and to its knowledge, no action, suit or proceedings has
been threatened against its officers and its directors.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The Company has not held a shareholders meeting during the past
year, therefore, no matters were submitted for a vote of
shareholders.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDERS MATTERS.
The Company's Common Stock is quoted on the Bulletin Board
operated by the National Association of Securities Dealers, Inc.
under the symbol "BUDH." The Company's shares began trading in August
1998. The following table sets forth the high and low bid prices for
the Common Stock for the quarters indicated, as reported by the
Bloomberg Reporting Service. Such market quotations reflect
inter-dealer prices, without retail mark-up, mark-down or commission
and may not necessarily represent actual transactions:
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Fiscal Quarter High Bid[1] Low Bid[1]
2000
First Quarter $0.25 $0.03
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
Second 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 November 30, 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.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULT OF OPERATIONS.
The following discussion should be read in conjunction with the
consolidated statements and the notes thereto:
OPERATIONS DURING THE FISCAL YEAR ENDED NOVEMBER 30, 1999.
During the fiscal year ended November 30, 1999, net sales
increased from $438,272 for the fiscal year ended November 30, 1998
to $642,105 for the fiscal year ended November 30, 1999 representing
a 46% increase in revenues.
The Company's working capital improved from a deficiency of
$160,176 for the fiscal year ended November 30, 1998 to a deficiency
of $44,337 for the fiscal year ended November 30, 1999. The increase
in the working capital was a result of additional cash raised through
the issuance of shares.
The Company suffered a net loss of $601,076 for the fiscal year
ended November 30, 1999, versus a net loss of $55,002 for the fiscal
year ended November 30, 1998. The loss was a result of higher
general and administrative expenses which increased from $331,283 for
the fiscal year ended November 30, 1998 to $1,020,638 for the fiscal
year ended November 30, 1999. The high general and administrative
expenses for 1999 was a result of increased professional services and
the development of the Company's internet website.
<PAGE> 13
LIQUIDITY AND CAPITAL RESOURCES
The Company's cash position improved during the year ended
November 30, 1999 by $57,999.
The increase in the Company's cash position was a result of
raising additional cash during fiscal 1999 by the issuances of
1,627,000 shares for net proceeds of $312,084.
The Company has adequate cash to maintain operations during the
next twelve months and expects to have profitable operations for the
fiscal year ended November 30, 2000 and does not anticipate the need
to raise additional cash through the sale of shares or debt.
RESULTS OF OPERATIONS
The Company derives its revenue form two sources consisting of
an internet web site and advertising boards.
Net sales increased from $438,272 for the fiscal year ended
November 30, 1998 to $642,105 for the fiscal year ended November 30,
1999 representing a 46% increased in net sales.
A breakdown of the net sales is as follows:
1999 1998
Internet website revenue $ 24,112 $ -
Advertising boards 617,993 438,272
--------- ---------
$ 642,105 $ 438,272
========= =========
The increase in the adverting board revenue reflects the
addition of 30 advertising boards during the year and the increase in
the interest website revenue is a result of the Company's website
becoming operational during fiscal 1999.
The Company's cost of sales (i.e.) Commissions paid were
$171,086 or 39% of net sales for the fiscal year November 30, 1998
versus $179,958 or 28% of net sales for the year ended November 3,
1999 and as a result the gross margins from operations increased from
$267,156 (i.e.) 61% of net sales for the fiscal year ended November
30, 1998 to $462,147 (i.e.) 72% for the fiscal year ended November
30, 1999. Thee increasing gross margins is a result of reduced
commissions paid on advertising renewals and no commissions paid on
internet web site revenues.
The Company's general and administrative expenses increased
during the fiscal year ended November 30, 1999 from $311,283 for
fiscal 1999 verus $1,020,638 for the year ended November 30, 1999.
The increase of $709,355 was primarily the result of professional
services incurred in the amount of $461,920 which were paid for by
the issuance of shares and initial costs to develop the Company's web
site.
<PAGE> 14
The Company's net loss for the year ended November 30, 1999 was
$601,076 compared to a loss of $55,002 for the year ended November
30, 1998, an increase of $546,074 which was primarily the result of
the increased general and administrative expenses particularly the
professional services, incurred in the amount of $461,920 and web
site development costs which the Company does not anticipate
incurring in fiscal 2000.
The net loss of $601,076 was financed by the Company issuing
stock in the amount of $461,920 for professional services rendered
and the balance of $139,156 was financed by the issuance of shares
for cash.
ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Financial statements begin on following page.
<PAGE> 15
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 as of November 30, 1999 and the
related consolidated statements of operations, stockholders' equity
and cash flows for the years ended November 30, 1999 and 1998. 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, 1999, and the
consolidated results of their operations and their cash flows for the
years ended November 30, 1999 and 1998, in conformity with generally
accepted accounting principles.
Accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. The Company's
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
Salt Lake City, Utah
February 4, 2000
F-1
<PAGE> 16
BUDGETHOTELS.COM, INC. AND SUBSIDIARY
(Formerly Info Center International, Inc.)
Consolidated Balance Sheet
ASSETS
<TABLE>
<CAPTION>
November 30,
1999
<S> <C>
CURRENT ASSETS
Cash $ 71,143
Accounts receivable (Note 2) 129,748
Accounts receivable - related party 8,217
----------
Total Current Assets 209,108
----------
PROPERTY AND EQUIPMENT (Net) (Notes 2 and 3) 83,558
----------
OTHER ASSETS
Prepaid commissions (Note 2) 39,612
----------
Total Other Assets 39,612
----------
TOTAL ASSETS $ 332,278
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 26,844
Unearned revenue (Note 2) 226,601
----------
Total Current Liabilities 253,445
----------
COMMITMENTS AND CONTINGENCIES (Note 4)
STOCKHOLDERS' EQUITY
Preferred stock; 1,000,000 shares authorized
of $0.01 par value, no shares issued and
outstanding -
Common stock; 50,000,000 shares authorized
of $0.001 par value, 13,214,000 shares
issued and outstanding 13,214
Additional paid-in capital 834,171
Accumulated deficit (768,552)
----------
Total Stockholders' Equity 78,833
----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 332,278
==========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
F-2
<PAGE> 17
BUDGETHOTELS.COM, INC. AND SUBSIDIARY
(Formerly Info Center International, Inc.)
Consolidated Statements of Operations
<TABLE>
<CAPTION>
For the Years Ended
November 30,
1999 1998
<S> <C> <C>
REVENUE
Net sales $ 642,105 $ 438,272
Cost of goods sold 179,958 171,086
----------- ----------
Gross Margin 462,147 267,186
----------- ----------
EXPENSES
General and administrative 1,020,638 311,283
Depreciation 20,297 17,118
----------- ----------
Total Expenses 1,040,935 328,401
----------- ----------
Loss From Operations (578,788) (61,215)
----------- ----------
OTHER INCOME (EXPENSE)
Gain (loss) on exchange rate (2,698) 12,415
Interest income 3,635 237
Bad debt expense (23,225) (6,439)
----------- ----------
Total Other Income (Expense) (22,288) 6,213
----------- ----------
NET LOSS $ (601,076) $ (55,002)
=========== ==========
BASIC LOSS PER SHARE $ (0.05) $ (0.01)
=========== ==========
</TABLE>
The accompanying notes are an integral part of these financial
statements
F-3
<PAGE> 18
BUDGETHOTELS.COM, INC. AND SUBSIDIARY
(Formerly Info Center International, Inc.)
Consolidated Statements of Stockholders' Equity
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit
<S> <C> <C> <C> <C>
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 $0.01
per share 2,500,000 2,500 22,500 -
Common stock issued
for cash at $0.19
per share 387,000 387 73,200 -
Stock offering costs - - (53,286) -
Net loss for the
year ended
November 30, 1998 - - - (55,002)
---------- -------- ---------- ----------
Balance, 11/30/98 11,487,000 11,487 61,894 (167,476)
Cancellation of
common stock
previously
issued at $0.05
per share (600,000) (600) (27,480) -
Common stock issued
for cash at $0.25
per share 1,585,000 1,585 394,665 -
Common stock issued
for cash at $0.30 to
$0.50 per share 42,000 42 16,958 -
Common stock issued
for services at
$0.25 per share 400,000 400 99,600 -
Options on common
stock issued below
market value at
$0.25 per share - - 240,000 -
Common stock issued
for services at
$0.50 per share 300,000 300 149,700 -
Stock offering costs - - (101,166) -
Net loss for the year
ended 11/20/99 - - - (601,076)
---------- -------- ---------- ----------
Balance, 11/30/99 13,214,000 $ 13,214 $ 834,171 $ (768,552)
========== ======== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial
statements.
F-4
<PAGE> 19
BUDGETHOTELS.COM, INC. AND SUBSIDIARY
(Formerly Info Center International, Inc.)
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
For the Years Ended
November 30,
1999 1998
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (601,076) $ (55,002)
Adjustments to reconcile net loss to
net cash used by operating activities:
Depreciation 20,297 17,118
Bad debt expense 22,379 6,439
Common stock issued for services 221,920 28,080
Options on common stock issued
below market value 240,000 -
Changes in assets and liabilities
(Increase) decrease in accounts receivable (63,609) (26,000)
(Increase) decrease in accounts
receivable-related party (8,217) 16,745
(Increase) decrease in deposits and prepaids (38,135) 2,017
Increase (decrease) in accounts payable 8,921 14,808
Increase (decrease) in accounts
payable - related party (3,477) -
Increase (decrease) in bank overdraft - (2,639)
Increase (decrease) in unearned revenue 30,570 14,906
---------- ---------
Net Cash Provided (Used) by
Operating Activities (170,427) 16,472
---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (39,251) (51,106)
---------- ---------
Net Cash Provided (Used) by
Investing Activities (39,251) (51,106)
---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from note payable - related party - 2,477
Payments on note payable - related party (44,407) -
Proceeds from sales of common stock 413,250 98,587
Stock offering costs (101,166) (53,286)
---------- ---------
Net Cash Provided (Used) by
Financing activities 267,677 47,778
---------- ---------
NET INCREASE (DECREASE) IN CASH 57,999 13,144
CASH AT BEGINNING OF YEAR 13,144 -
---------- ---------
CASH AT END OF YEAR $ 71,143 $ 13,144
========== =========
The accompanying notes are an integral part of these financial
statements.
F-5a
<PAGE> 20
BUDGETHOTELS.COM, INC. AND SUBSIDIARY
(Formerly Info Center International, Inc.)
Consolidated Statements of Cash Flows
For the Years Ended
November 30,
1999 1998
<S> <C> <C>
SUPPLEMENTAL CASH FLOW INFORMATION
CASH PAID FOR
Interest $ - $ -
Income taxes $ - $ -
NON-CASH FINANCING ACTIVITIES
Common stock issued for services rendered $ 221,920 $ 28,080
Options on common stock issued
below market value $ 240,000 $ -
</TABLE>
The accompanying notes are an integral part of these financials
statements
F-5b
<PAGE> 21
BUDGETHOTELS.COM, INC. AND SUBSIDIARY
(Formerly Info Center International, Inc.)
Notes to the Consolidated Financial Statements
November 30, 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 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> 22
BUDGETHOTELS.COM, INC. AND SUBSIDIARY
(Formerly Info Center International, Inc.)
Notes to the Consolidated Financial Statements
November 30, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (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 $ 46,074 and $23,695 at November 30, 1999 and 1998,
respectively.
d. Provision For Taxes
At November 30, 1999, the Company has net operating loss
carryforwards of approximately $750,000 that may be offset against
future taxable income through 2019. 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.
F-7
<PAGE> 23
BUDGETHOTELS.COM, INC. AND SUBSIDIARY
(Formerly Info Center International, Inc.)
Notes to the Consolidated Financial Statements
November 30, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
g. Basic Loss Per Share
<TABLE>
<CAPTION>
For the Year Ended
November 30, 1999
----------------------------------------
<S> <C> <C> <C>
(Denominator)
(Numerator) Weighted
Income Average Basic
(Loss) Number of (Loss) Per
Amounts Shares Share
Net loss $ (601,076) 12,481,479 $ (0.05)
---------- ---------- -------
$ (601,076) 12,481,479 $ (0.05)
========== ========== =======
For the Year Ended
November 30, 1998
----------------------------------------
Net loss $ (55,002) 10,743,333 $ (0.01)
--------- ---------- -------
$ (55,002) 10,743,333 $ (0.01)
========= ========== =======
</TABLE>
The basic income per share of common stock is based on the weighted
average number of shares issued and outstanding at the date of the
consolidated financial statements. Common stock equivalents are
not presented as they are antidilutive in nature.
h. 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.
i. 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.
The Company pays its salesmen in full from the initial sales
proceeds. The commissions are capitalized and amortized over the
estimated life of the contracts. Prepaid commissions at November
30, 1999 were $39,612.
F-8
<PAGE> 24
BUDGETHOTELS.COM, INC. AND SUBSIDIARY
(Formerly Info Center International, Inc.)
Notes to the Consolidated Financial Statements
November 30, 1999
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
November 30,
1999
Advertising boards $ 105,305
Office furniture and equipment 44,106
Computer software 2,430
Leasehold improvements 12,714
---------
164,555
Accumulated depreciation (80,997)
---------
Net property and equipment $ 83,558
=========
Depreciation expense for the years ended November 30, 1999 and 1998
and was $20,297 and $17,118, 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.
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 under non-cancelable operating leases. The lease terms
expire beginning in April 2001 and ending in September 2003. The
monthly rental payment for the leases is $985.
The Company leases office space located in Kelowna, British
Columbia on a month-to-month basis. 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.
F-9
<PAGE> 25
BUDGETHOTELS.COM, INC. AND SUBSIDIARY
(Formerly Info Center International, Inc.)
Notes to the Consolidated Financial Statements
November 30, 1999
NOTE 4 - COMMITMENTS AND CONTINGENCIES (Continued)
Minimum future lease payments on the leases and contracts as
of November 30, 1999 are as follows:
Year Ended
November 30, Amount
1999 $ 155,088
2000 135,064
2001 128,930
2002 124,749
2003 and thereafter 1,240,000
-----------
Total $ 1,783,831
===========
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.
The Company has advanced to a major shareholder $8,217 against
future commissions at 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 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.
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.
F-10
<PAGE> 26
BUDGETHOTELS.COM, INC. AND SUBSIDIARY
(Formerly Info Center International, Inc.)
Notes to the Consolidated Financial Statements
November 30, 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 $768,552 at November 30, 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 - OPTIONS
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 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.
F-11
<PAGE> 27
ITEM 8. 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 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS; COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE
ACT.
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 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.
<PAGE> 28
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.
Involvement in Certain Legal Proceedings
During the past five years, no present or former director,
executive officer or person nominated to become a director or an
executive officer of the Company has been the subject matter of any
legal proceedings, including bankruptcy, criminal proceedings, or
civil proceedings. Further, no legal proceedings are known to be
contemplated by governmental authorities against any director,
executive officer and person nominated to become a director.
Compliance with Section 16(a) of the Exchange Act.
Directors, executive officers and ten percent stockholders did
not make filings as required under Section 16(a) of the Securities
Exchange Act of 1934, but intend to do so.
ITEM 10. EXECUTIVE COMPENSATION.
Summary Compensation.
The following table sets forth the compensation paid by the
Company from January 1, 1996 through November 30, 1999, 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> 29
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. 1999 124,517 0 0 1,000,000 0 0 0
Marshall 1998 72,000 0 0 0 0 0 0
President 1997 98,000 0 0 0 0 0 0
& Director 1996 84,000 0 0 0 0 0 0
Kenneth E. 1999 0 0 0 50,000 0 0 0
Cloak 1998 0 0 0 0 0 0 0
Director 1997 0 0 0 0 0 0 0
1996 0 0 0 0 0 0 0
</TABLE>
The Company anticipates paying the following salaries in 2000.
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 2000 $ 124,517
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. 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. Mr. Marshall will provide services as
President/CEO under the agreement. The agreement terminates on
March 31, 2014.
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 Mr. Cloak. There are no other stock
option plans, retirement, pension, or profit sharing plans for the
benefit of the Company's officers and directors.
<PAGE> 30
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 1999, to each of the Named
Executive Officers is reflected in the table below. No options
have been exercised as of the date hereof.
Option/SAR Grants in Fiscal 1999.
<TABLE>
<CAPTION>
Potential
Realizable Value
at Assumed Annual
Rates of Stock
Price Appreciation
Individual Grants for Option Term
- ------------------------------------------------------------------------
Percent of
Number of Total
Securities Options/SARs
Underlying Granted to Exercise
Options/SARs Employees or Base Expiration
Name Granted (#) in Fiscal Yr Price Date
<S> <C> <C> <C> <C>
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
</TABLE>
[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."
No additional amounts are payable to the members of the
Company's Board of Directors for committee participation or special
assignments.
<PAGE> 31
ITEM 11. 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 9,000,000[1] President, Secretary 63.32%
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 63.49%
directors as a
group (2 persons)
[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. In 1999, the Company granted Mr. Marshall an
option to acquire up to 1,000,000 shares of Common Stock at an
exercise price of $0.01 per share. Said option is included in
the 9,000,000 shares set forth herein.
[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 from
November 30, 1999. 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.
Changes in Control
To the knowledge of management, there are no present
arrangements or pledges of securities of the Company which may
result in a change in control of the Company.
<PAGE> 32
ITEM 12. 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. 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 LAC will receive options to purchase
between 1.0 million and 1.7 million shares of common stock. 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.
The Company has 13,214,000 shares of Common Stock issued and
outstanding as of November 30, 1999. Of the 13,214,000 shares of
the Company's Common Stock outstanding, 4,914,000 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").
<PAGE> 33
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.
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.
<PAGE> 34
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.
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.
In 1999, the Company granted LAC an option to acquire up to
1,000,000 shares of Common Stock at an exercise price of $0.01 per
share.
<PAGE> 35
PART IV
ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K.
Reports on Form 8-K
No reports on Form 8-K have been filed during the last quarter
of the period covered by this report.
Exhibits
The following documents are incorporated herein by reference from
the Registrant's Form 10-SB Registration Statement and all
amendments thereto, which was filed with the Securities and
Exchange Commission, and all exhibits thereto:
Exhibit
No. Description
3.1 Articles of Incorporation.
3.2 Bylaws.
4.1 Specimen Stock Certificate.
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.
The following documents are incorporated herein:
27.2 Financial Data Schedule
<PAGE> 36
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities and Exchange Act of 1934, the Registrant has duly caused
this report to be signed on its behalf by the undersigned,
thereunto duly authorized, on this 5th day of April, 2000.
budgethotels.com, inc.
(Registrant)
BY: /s/ William J. Marshall
William J. Marshall, President
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following person on
behalf of the Registrant and in the capacities and on this 5th day
of April, 2000.
SIGNATURES TITLE DATE
/s/ William J. Marshall President, Secretary- April 5, 2000
William J. Marshall Treasurer, Chief
Financial Officer and
a member of the Board
of Directors
/s/ Kenneth E. Cloak Member of the Board April 5, 2000
Kenneth E. Cloak Board of Directors
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Statement of Financial Condition at November 30, 1999 Audited
and the Consolidated Statement of Income for the year ended November 30,
1999 Audited and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1999
<PERIOD-END> NOV-30-1999
<CASH> 71,143
<SECURITIES> 0
<RECEIVABLES> 184,039
<ALLOWANCES> 46,074
<INVENTORY> 0
<CURRENT-ASSETS> 209,108
<PP&E> 164,555
<DEPRECIATION> 80,997
<TOTAL-ASSETS> 332,278
<CURRENT-LIABILITIES> 253,445
<BONDS> 0
0
0
<COMMON> 13,214
<OTHER-SE> 65,619
<TOTAL-LIABILITY-AND-EQUITY> 332,278
<SALES> 642,105
<TOTAL-REVENUES> 645,740
<CGS> 179,958
<TOTAL-COSTS> 1,040,935
<OTHER-EXPENSES> 25,923
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (601,076)
<INCOME-TAX> 0
<INCOME-CONTINUING> (601,076)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (601,076)
<EPS-BASIC> (0.05)
<EPS-DILUTED> (0.05)
</TABLE>
