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SECURITIES AND EXCHANGE COMMISSION
450 Fifth Street, N.W.
Washington, D. C. 20549
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FORM 10-SB/A-2
General Form for Registration of Securities
Pursuant to Section 12(b) or (g) of
The Securities Exchange Act of 1934
budgethotels.com, inc.
(Exact name of registrant as specific in its charter)
Nevada Applied For
(State of Incorporation) (I.R.S. Employer
Identification No.)
1449 St. Paul Street
Suite 202
Kelowna, British Columbia, Canada V1Y 2E5
(Address of executive offices, including postal code)
Registrant's telephone number: (250) 868-1171
Copies to: Conrad C. Lysiak, Esq.
601 West First Avenue
Suite 503
Spokane, Washington 99201
Securities to be registered pursuant to Section 12(b) of the Act:
NONE
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(Title of Class)
Securities to be registered pursuant to Section 12(g) of the Act:
COMMON STOCK
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(Title of Class)
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<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.
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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.
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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.
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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 sufffered by the Company's failure to pay or perform the terms
of the agreement.
Marketing of "www.budgethotels.com"
The Company intends to sell advertising space for its website
through direct and personal contact with a prospective advertiser. The
Company anticipates employing area representatives to sell advertising
space for its Internet website. The Company anticipates that its
potential advertising clients for the website will also be the same
potential clients for its display advertising boards. Accordingly, the
Company anticipates selling two product lines employing identical
telemarketers for the website, as it does for the display board
advertising in contacting potential advertisers.
Operations of "www.budgethotels.com"
Currently four hundred twenty clients lease space on the
Company's website.
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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.
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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.
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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.
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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.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.
Operations During the Fiscal Years November 30, 1998 and November 30,
1997
The Company's operations remained consistent during the last two
fiscal years. Net sales of advertising increased by approximately
$100,000 while cost of goods sold increased by $9,000. The foregoing
increase was as a direct result of the Lease Agreement with Greyhound
Lines, Inc. Sales increased from $331,953 for fiscal 1997 to
$438,272 for fiscal 1998. The Company suffered a net loss of $55,002
for fiscal 1998 as compared with a net loss of $8,782 for fiscal 1997.
The loss was directly related to an increase in administrative
expenses. General and administrative expenses increased by
approximately $160,000 from $151,483 for the fiscal year ending
November 30, 1997 to $311,283 for the fiscal year ending November 30,
1998. The increase in the general and administrative expenses was a
direct result of retaining additional employees in an attempt to
generate additional sales of advertising space and developing the
Internet Web site.
Operations During the Interim Periods of May 31, 1999 and May 31, 1998.
In the first quarter of fiscal year 1999, the Company completed
three offerings of securities pursuant to Reg. 504 of the Securities
Act of 1933 which increased its total cash from by approximately
$167,000. In December 1997, the Company sold 2,500,000 shares of its
common stock at an offering price of $0.01 per share. A total of
$25,000 was raised from the offering. From December 1997 through March
1998, the Company sold 387,000 shares of its common stock at an
offering price of $0.25 per share. A total $96,750 was raised from the
offering. In March 1999, the Company sold 800,000 shares of common
stock at an offering price of $0.25 per share and 800,000 warrant
at an offering price of $0.25 per warrant . A total of $400,000
was raised from the offering. During the first six months of fiscal
November 30, 1999 which ended on May 31, 1999, the Company had net
sales of $305,644 as compared with $280,682 the same time in 1998. As
a result of the increase in administrative expenses, the Company had a
net loss of $78,155 for the period ending May 31, 1999 as compared with
a net profit for the period ending May 31, 1998.
In the event that the Company does not substantial increase its
net sales during the next six months, the Company anticipates reducing
its employee work force.
The Company has inadequate cash to maintain operations during the
next twelve months. The amount of $2,500,000 is required to fund the
Company's plan of operation for the next twelve months. The Company's
current cash will satisfy its operation requirements for a period of
five months. As a result, its auditors, Jones, Jensen and Company have
issued a going concern opinion. In order to meet its cash requirements
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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.
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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.
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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.
<TABLE>
<CAPTION>
Name and Number of Percent of
address of owner Shares Position Class
<S> <C> <C> <C>
William Marshall 8,000,000[1] President, Secretary 56.28%
16875 Terrace Rd. Treasurer & Director
Winfield, B.C.
Canada V4V 1B2
Kenneth E. Cloak 25,000[2] Director 0.18%
8624 Janscim Park Dr.
N. Jaunich, B.C.
Canada V8V 3K3
All officers and 8,025,000 56.46%
directors as a
group (2 persons)
</TABLE>
<PAGE> 14
[1] Shares are held in the name of WJM Management Inc., a corporation
owned and controlled by William Marshall, the Company's President.
Info Center, Inc. ("ICI") is a wholly owned subsidiary corporation
of the Company. W.J. Marshall Management Inc. owned all of the
shares of ICI and exchanged those shares for 8,000,000 shares of
the Company's common stock in 1997. W.J. Marshall Management Inc.
is a corporation owned and controlled by William J. Marshall, the
Company's President. W.J. Marshall Management Inc. is a corporation
formed to hold title to certain investments of Mr. Marshall. W.J.
Marshall Management Inc. is not a subsidiary corporation of the
Company.
[2] Mr. Cloak has an option to purchase up to 25,000 shares of common
stock at an exercise price of $0.25 per share. This figure
reflects the number of shares that Mr. Cloak could acquire from
the exercise of his option within 60 days of the effective date of
this Form 10-SB. As of the date hereof, Mr. Cloak has not
exercised his option to acquire any shares of common stock and
accordingly, does not own any shares of the Company's common stock.
ITEM 5. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS.
The officers and directors of the Company are as follows:
Name Age Position
William J. Marshall 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
<PAGE> 15
same corporation currently owned by the Company, but which was engaged
in the same business as the Company. From 1977 to 1983 Mr. Marshall
served as a sales representative and sales supervisor for Moffatt
Communications, Vancouver, British Columbia. Moffatt Communications is
a medium sized communications company. From 1975 to 1977, Mr. Marshall
was a sales representative for CFCN Television in Calgary, Alberta.
CFCN is one the largest television stations in Canada. From 1972 to
1975, Mr. Marshall was employed by Rothman's of Pal Mal Tobacco
Company, located in Calgary, Alberta, Canada. Pal Mall Tobacco Company
is engaged in the business of manufacturing tobacco products. Mr.
Marshall's business experience at Info Center, Inc. relates to the
business of the Company in that the business of Info Center, Inc. is
the same business as that of the Company. Mr. Marshall's business
experience at Moffatt Communications relates to the business of the
Company in that Mr. Marshall was marketing products and/or services at
both companies. Other than the foregoing, Mr. Marshall's experiences
are not related to the business of the Company.
Kenneth E. Cloak - member of the Board of Directors
Kenneth E. Cloak was appointed to the Board of Directors of the
Company on May 25, 1999. There was no arrangement or understanding
with respect to which Mr. Cloak was appointed to the Board of
Directors. Since May 1991, Mr. Cloak has been a real estate associate
with Collins International in Victoria, British Columbia. Colliers
International is a nation wide Canadian commercial real estate broker.
Mr. Cloak is employed in the Victoria, British Columbia office. Mr.
Cloak's experience as a real estate associate does not relate to the
business of the Company.
Mr. Steward P. Scheibel, a former member of the Board of
Directors, resigned on September 21, 1999. His resignation was not as
a result of any disagreement with the Company relating to the Company's
operations, policies or practices.
ITEM 6. EXECUTIVE COMPENSATION.
Summary Compensation.
The following table sets forth the compensation paid by the
Company from January 1, 1996 through December 31, 1998, for each
officer and director of the Company. This information includes the
dollar value of base salaries, bonus awards and number of stock options
granted, and certain other compensation, if any.
<PAGE> 16
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term Compensation
Annual Compensation Awards Payouts
Securities
Names Other Under Restricted Other
Executive Annual Options/ Shares or Annual
Officer and Compen- SARs[1] Restricted LTIP[2] Compen-
Principal Year Salary Bonus sation Granted Share Payouts sation
Position Ended (US$) (US$) (US$) (#) Units (US$) (US$) (US$)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
William J. 1998 72,000 0 0 0 0 0 0
Marshall 1997 98,000 0 0 0 0 0 0
President 1996 84,000 0 0 0 0 0 0
& Director
Kenneth E. 1998 0 0 0 0 0 0 0
Cloak [1] 1997 0 0 0 0 0 0 0
Director 1996 0 0 0 0 0 0 0
</TABLE>
The Company anticipates paying the following salaries in 1999,
subject to the Company beginning profitable operations and generating
sufficient revenues to pay the same:
William J. Marshall President 1999 $ 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. 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.
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.
Option/SAR Grants.
Information concerning individual grants of stock options, whether
or not in tandem with stock appreciation rights ("SARs"), and
freestanding SARs made during fiscal 1998 and options granted to date
in fiscal 1999 to each of the Named Executive Officers is reflected in
the table below.
<PAGE> 17
Option/SAR Grants in Fiscal 1998 and to date in Fiscal 1999.
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 25,000 33.3% $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 foregoing,
Directors have not received any other compensation for serving on the
Board of Directors. There are no contractual arrangements with any
member of the Board of Directors other than Mr. Marshall. See "Certain
Relationships and Related Transaction."
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
On November 30, 1997, the Company acquired all of the issued and
outstanding shares of common stock of ICI, a corporation owned and
controlled by WJM Management Ltd., a corporation owned and controlled
by William Marshall, the Company's President and director in exchange
for 8,000,000 shares of the Company's Common Stock.
<PAGE> 18
Further, W.J. Marshall Management, Inc. transferred all of its
right, title and interest in and to certain office equipment and
furniture which was located at Mr. Marshall's home to the Company. The
Company continues to use office and 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 leasehold interests are retained by ICI and were
not transferred to the Company.
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 25,000 shares of
common stock at an exercise price of $0.50 per share. The option
provides that Mr. Cloak may acquire 12,500 shares from August 26, 1999
to November 26, 1999 and 12,500 shares from November 27, 1999 to May
24, 2000.
On May 24, 1999, the Company granted an option to Stewart
Scheibel, a member of the Board of Directors, to acquire up to 50,000
shares of common stock at an exercise price of $0.50 per share. The
option 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; 3 market makers; 300 round lot shareholders (round
lot holders are considered holders of 100 shares or more; an operating
history of 1 year or market capitalization of $50 million; and,
corporate governance. The Company currently does not meet the
foregoing requirements and there is no assurance that the Company will
meet the foregoing requirements in the future.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
The Company has 14,514,000 shares of Common Stock issued and
outstanding as of December 31, 1999. Of the 14,514,000 shares of the
Company's Common Stock outstanding, 6,214,000 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.
^
On November 30, 1997, the Company acquired all of the issued and
outstanding shares of common stock of ICI, a corporation owned and
controlled by W.J. Marshall Management Inc., a corporation owned and
controlled by William Marshall, the Company's President and director in
exchange for 8,000,000 "restricted" shares of the Company's Common
Stock. The foregoing shares were issued pursuant to Section 4(2) of
the Securities Act of 1933 (the "Act").
In November 1997, the Company issued 600,000 shares of common
stock in consideration of services valued at $28,080. The shares
were issued 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 Securities Act of 1933 (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 cancelled by the Company. Subsequently, in July 1999,
through negotiations between the Company and Phoenix Capital, Phoenix
Capital was issued 300,000 restricted shares of common stock as a
<PAGE> 21
finder's fee for introducing ICI to the Company and raising $125,000 in
working capital. The shares were issued pursuant to Section 4(2) of
the Securities Act of 1933. The shares were subsequently cancelled
and returned to the Company.
In November 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.
In March 1998, the Company issued 387,000 shares of common stock
at $0.25 per share to fifty-four persons in consideration of
$96,875. All of the shares were issued pursuant to Reg. 504 of the
Act.
In March 1999, the Company issued 1,602,000 shares of common stock
at $0.25 per share to four persons in consideration of $400,500. The
foregoing shares were issued pursuant to Reg. 504 of the Act.
In March 1999, 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 $328,000 by the Company's
board of directors. 350,000 shares 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 were
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 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
On May 24, 1999, the Company granted an option to Ken Cloak, a
member of the Board of Directors, to acquire up to 25,000 shares of
common stock at an exercise price of $0.50 per share. The option
provides that Mr. Cloak may acquire 12,500 shares from August 26, 1999
to November 26, 1999 and 12,500 shares from November 27, 1999 to May
24, 2000.
On May 24, 1999, the Company granted an option to Stewart
Scheibel, a member of the Board of Directors, to acquire up to 50,000
shares of common stock at an exercise price of $0.50 per share. The
option provides that Mr. Scheibel may acquire 12,500 shares from August
26, 1999 to November 26, 1999; 12,500 shares from November 27, 1999 to
<PAGE> 22
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 cancelled upon his resignation. No
options were exercised.
In fiscal 1999, the Company granted options to certain Company
employees to acquire up to 1,291,000 shares of common stock at varying
prices.
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.
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.
<PAGE> 23
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.
ITEM 13. FINANCIAL STATEMENTS.
Financial Statements begin on following page.
<PAGE> 24
[Letterhead]
Jones, Jensen & Company LLC
Certified Public Accountants
50 South Main Street
Suite 1450
Salt Lake City, Utah 84144
Tel: (801) 328-4408
FAX: (801) 328-4461
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Info Center International, Inc. and Subsidiaries
Kelowna, British Columbia
We have audited the accompanying consolidated balance sheet of Info
Center International, Inc. and Subsidiaries as of November 30, 1998 and
the related consolidated statements of operations, stockholders' equity
(deficit) and cash flows for the years ended November 30, 1998 and
1997. These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion
on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
consolidated financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial
position of Info Center International, Inc. and Subsidiaries as of
November 30, 1998, and the consolidated results of their operations and
their cash flows for the years ended November 30, 1998 and 1997, in
conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. The Company's capital
deficiency and significant operating losses raise substantial doubt
about the Company's ability to continue as a going concern.
Management's plans regarding these matters are described in Note 8. The
financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
/s/ Jones, Jensen & Company
Jones, Jensen & Company
Salt Lake City, Utah
February 26, 1999
F-1
<PAGE>
<PAGE> 25
INFO CENTER INTERNATIONAL, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
ASSETS
<TABLE>
<CAPTION>
November 30,
1998
<S> <C>
CURRENT ASSETS
Cash $ 13,144
Accounts receivable (Note 2) 88,518
---------
Total Current Assets 101,662
---------
PROPERTY AND EQUIPMENT (Net) (Notes 2 and 3) 64,604
---------
OTHER ASSETS
Prepaids 1,477
---------
Total Other Assets 1,477
---------
TOTAL ASSETS $ 167,743
=========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable $ 17,923
Accounts payable - related party 3,477
Unearned revenue 196,031
Note payable - related party (Note 5) 44,407
---------
Total Current Liabilities 261,838
---------
COMMITMENTS AND CONTINGENCIES (Note 4)
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock; 1,000,000 shares
authorized of $0.01 par value,
no shares issued and outstanding -
Common stock; 50,000,000 shares
authorized of $0.001 par value,
11,487,000 shares issued and
outstanding 11,487
Additional paid-in capital 61,894
Accumulated deficit (167,476)
---------
Total Stockholders' Equity (Deficit) (94,095)
---------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY (DEFICIT) $ 167,743
=========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-2
<PAGE> 26
INFO CENTER INTERNATIONAL, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
<TABLE>
<CAPTION>
For the Years Ended
November 30,
1998 1997
<S> <C> <C>
REVENUE
Net sales $ 438,272 $ 331,953
Cost of goods sold 171,086 162,229
--------- ---------
Gross Profit 267,186 169,724
--------- ---------
EXPENSES
General and administrative 311,283 151,483
Depreciation 17,118 9,246
--------- ---------
Total Expenses 328,401 160,729
--------- ---------
Income (Loss) From Operations (61,215) 8,995
--------- ---------
OTHER INCOME (EXPENSE)
Gain on exchange rate 12,415 5,252
Interest income 237 -
Interest expense - (5,772)
Bad debt expense (6,439) (17,257)
--------- ---------
Total Other Income (Expense) 6,213 (17,777)
--------- ---------
NET LOSS $ (55,002) $ (8,782)
========= =========
BASIC LOSS PER SHARE $ (0.01) $ (0.00)
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-3
<PAGE> 27
INFO CENTER INTERNATIONAL, INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity (Deficit)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit
<S> <C> <C> <C> <C>
Balance, November 30, 1996 - $ - $ - $ (103,692)
Common stock issued to acquire
Info Center, Inc. 8,000,000 8,000 (8,000) -
Net loss for the year ended
November 30, 1997 - - - (8,782)
---------- -------- -------- ----------
Balance, November 30, 1997 8,000,000 8,000 (8,000) (112,474)
Common stock issued for
services rendered at $0.05
per share 600,000 600 27,480 -
Common stock issued for
cash at $0.05 per share
(see Note 7) 2,887,000 2,887 95,700 -
Stock offering costs - - (53,286) -
Net loss for the year ended
November 30, 1998 - - - (55,002)
---------- -------- -------- ----------
Balance, November 30, 1998 11,487,000 $ 11,487 $ 61,894 $ (167,476)
========== ======== ======== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-4
<PAGE> 28
INFO CENTER INTERNATIONAL, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
For the Years Ended
November 30,
1998 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (55,002) $ (8,782)
Adjustments to reconcile net
income (loss) to net cash used
by operating activities:
Depreciation 17,118 9,246
Bad debt expense 6,439 17,257
Common stock issued for services 28,080 -
Changes in assets and liabilities
(Increase) decrease in accounts
receivable (26,000) (26,092)
(Increase) decrease in accounts
receivable - related party 16,745 (11,720)
(Increase) decrease in deposits
and prepaids 2,017 (1,194)
Increase (decrease) in accounts
payable 14,808 (277)
Increase (decrease) in bank overdraft (2,639) 74
Increase (decrease) in unearned
revenue 14,906 19,525
--------- ---------
Net Cash Provided (Used) by
Operating Activities 16,472 (1,963)
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (51,106) (619)
--------- ---------
Net Cash Provided (Used) by
Investing Activities (51,106) (619)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from note payable -
related party 2,477 2,582
Proceeds from sales of common stock 98,587 -
Stock offering costs (53,286) -
--------- ---------
Net Cash Provided (Used) by
Financing activities 47,778 2,582
--------- ---------
NET INCREASE (DECREASE) IN CASH 13,144 -
CASH AT BEGINNING OF YEAR - -
--------- ---------
CASH AT END OF YEAR $ 13,144 $ -
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION
CASH PAID FOR
Interest $ - $ 4,202
Income Taxes $ - $ -
NON-CASH FINANCING ACTIVITIES
Common stock issued for
services rendered $ 28,080 $ -
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
F-5
<PAGE> 29
INFO CENTER INTERNATIONAL, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
November 30, 1998
NOTE 1 - COMPANY BACKGROUND
The consolidated financial statements include those of Info
Center International, Inc. (ICI) and its wholly-owned
subsidiaries, Info Center, Inc. (Info) and W. J. Marshall
Management, Inc. (WJM). Collectively, they are referred to
herein as "the Company".
ICI was incorporated under the laws of the State of Nevada on
November 5, 1997. ICI was incorporated for the purpose of
acquiring Info.
Info, a wholly-owned subsidiary, was formed under the laws of
the State of Washington on November 6, 1984. Info has been in
the business of operating billboards, signboards and illuminated
signs for the purpose of placing advertisements. Info also
maintains and operates an internet website for the purpose of
making hotel reservations.
On November 30, 1997, the Company completed an Agreement and
Plan of Share Exchange whereby ICI issued 8,000,000 shares of
its common stock in exchange for all of the outstanding common
stock of Info.
The share exchange was accounted for as a recapitalization of
Info because the owners of Info, WJM, control ICI after the
acquisition. Therefore, Info is treated as the acquiring
entity. Accordingly, there was no adjustment to the carrying
value of the assets or liabilities of Info. ICI is the
acquiring entity for legal purposes and Info is the surviving
entity for accounting purposes. WJM, the sole shareholder of
Info, was incorporated under the laws of the Province of British
Columbia on August 20, 1985. WJM has been in the business of
operating billboards for the purpose of placing advertisements.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies consistently
applied in the preparation of the accompanying consolidated
financial statements follows:
a. Accounting Method
The Company's consolidated financial statements are prepared
using the accrual method of accounting. The Company has elected
a November 30 year end.
F-6
<PAGE> 30
INFO CENTER INTERNATIONAL, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
November 30, 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
b. Property and Equipment
Property and equipment are recorded at cost. Major additions
and improvements are capitalized. The cost and related
accumulated depreciation of equipment retired or sold are
removed from the accounts and any differences between the
undepreciated amount and the proceeds from the sale are recorded
as a gain or loss on sale of equipment. Depreciation is
computed using the straight-line method over the estimated
useful lives as follows:
Useful
Description Lives
Advertising boards 7 years
Office furniture and equipment 7 years
Computer Software 3 years
Leasehold improvements 27.5 years
c. Accounts Receivable
Accounts receivable are shown net of the allowance for doubtful
accounts of $ 23,695 and $21,352 at November 30, 1998 and 1997,
respectively.
d. Provision For Taxes
At November 30, 1998, the Company has net operating loss
carryforwards of approximately $130,000 that may be offset
against future taxable income through 2012. No tax benefit has
been reported in the consolidated financial statements, because
the Company believes there is a 50% or greater chance the net
operating loss carryforwards will not be used. Accordingly, the
potential tax benefits of the net operating loss carryforwards
are offset by a valuation allowance of the same amount.
e. Principles of Consolidation
The consolidated financial statements include those of Info
Center International, Inc. and its wholly-owned subsidiaries,
Info Center, Inc. and W. J. Marshall Management, Inc.
All material intercompany accounts and transactions have been
eliminated.
F-7
<PAGE> 31
INFO CENTER INTERNATIONAL, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
November 30, 1998
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
f. Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
g. Revenue Recognition
Revenue is recognized as service is provided to the customer.
The Company amortizes revenues over the life of the contract
with the customer which range from three months to one year.
Unearned revenues reflect the percentage of the Company's
receivables for which services have not yet been provided.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
November 30,
1998
Advertising boards $ 83,243
Office furniture and equipment 26,665
Computer software 2,681
Leasehold improvements 12,714
--------
125,303
Accumulated depreciation (60,699)
--------
Net property and equipment $ 64,604
========
Depreciation expense for the years ended November 30, 1998 and
1997 and was $17,118 and $9,246, respectively
NOTE 4 - COMMITMENTS AND CONTINGENCIES
In October 1997, the Company entered into an agreement for
consulting services. The agreement runs from October 1997
through January 2001. The monthly payment for the consulting
agreement is $2,000.
F-8
<PAGE> 32
INFO CENTER INTERNATIONAL, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
November 30, 1998
NOTE 4 - COMMITMENTS AND CONTINGENCIES (Continued)
The Company leases certain office equipment used in their
operations. The lease terms expire beginning in April 2001 and
ending in January 2003. The monthly rental payment for the
leases is $553.
The Company leases office space located in Kelowna, British
Columbia. The lease term is for one year and expires in
December 1998. The monthly lease payment on the office is $749.
During April 1997, the Company entered into an operating lease
agreement for an automobile. The lease term expires in March
2001. The monthly rental payment is $851.
Minimum future lease payments on the leases as of November 30,
1998 are as follows:
Year Ended
November 30, Amount
1999 $ 40,851
2000 40,851
2001 11,989
2002 3,640
2003 and thereafter -
--------
Total $ 97,331
========
NOTE 5 - RELATED PARTY TRANSACTIONS
As of November 30, 1998, the Company owed $44,407 to the
Company's President. Interest accrues on the amount at 10% per
annum and is due yearly. The principal is due on demand.
NOTE 6 - LICENSING AGREEMENT
In October 1997, the Company entered into a licensing agreement
with Greyhound Lines, Inc. (Greyhound), whereby the Company is
granted the right to install, operate and maintain its
advertising boards in all of Greyhound's owned and leased bus
terminal facilities. The agreement is for a period of 15 years
(three 5 year terms) beginning in February 1998. The cost to
the Company ranges from $50 to $367 per month for each location
where an advertising board is placed.
F-9
<PAGE> 33
INFO CENTER INTERNATIONAL, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
November 30, 1998
NOTE 7 - COMMON STOCK
In December 1997, the Company sold 2,500,000 shares of its
common stock in an offering for $25,000 at a price of $0.01 per
share. From December, 1997 through March, 1998, the Company
sold an additional 387,000 shares of its common stock in another
offering for $96,750 at a price of $0.25 per share. The stock
offering costs related to these two offerings amounted to
$53,286 and were charged to paid-in capital.
NOTE 8 - GOING CONCERN
The Company's consolidated financial statements are prepared
using generally accepted accounting principles applicable to a
going concern which contemplates the realization of assets and
liquidation of liabilities in the normal course of business.
The Company has incurred losses which have resulted in an
accumulated deficit of $167,476 at November 30, 1998 which
raises substantial doubt about the Company's ability to continue
as a going concern. The accompanying consolidated financial
statements do not include any adjustments relating to the
recoverability and classification of asset carrying amounts or
the amount and classification of liabilities that might result
from the outcome of this uncertainty. Management believes that
the Company will generate sufficient advertising revenue and
commissions through its licensing agreements and hotel
reservation internet website to cover all operating expenses in
the future, although no assurance of this can be given.
F-10
<PAGE> 34
[LETTERHEAD]
JONES, JENSEN & COMPANY, LLC.
CERTIFIED PUBLIC ACCOUNTANTS AND CONSULTANTS
50 South Main Street
Suite 1450
Salt Lake City, Utah 84144
Tel: (801) 328-4408
Fax: (801) 328-4461
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Budgethotels.com, Inc. and Subsidiaries
(Formerly Info Center International, Inc.)
Kelowna, British Columbia
The accompanying balance sheet of Budgethotels.com, Inc. and
Subsidiaries (formerly Info Center International, Inc.) as of May 31,
1999 and the related statements of operations, stockholders' equity
(deficit), and cash flows for the three months and six months ended
May 31, 1999 and 1998 were not audited by us and, accordingly, we do
not express an opinion on them. The accompanying balance sheet as of
November 30, 1998 was audited by us and we express an unqualified
opinion on it in our report dated February 26, 1999.
/s/ Jones, Jensen & Company
Jones, Jensen & Company
Salt Lake City, Utah
June 29, 1999
1
<PAGE> 35
BUDGETHOTELS.COM, INC. AND SUBSIDIARIES
(Formerly Info Center International, Inc.)
Consolidated Balance Sheets
<TABLE>
<CAPTION>
ASSETS
May 31, November 30,
1999 1998
(Unaudited)
<S> <C> <C>
CURRENT ASSETS
Cash $ 192,460 $ 13,144
Accounts receivable (Note 2) 132,556 88,518
--------- ---------
Total Current Assets 325,016 101,662
--------- ---------
PROPERTY AND EQUIPMENT (Net)
(Notes 2 and 3) 85,712 64,604
--------- ---------
OTHER ASSETS
Prepaids 4,000 1,477
--------- ---------
Total Other Assets 4,000 1,477
--------- ---------
TOTAL ASSETS $ 414,728 $ 167,743
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
2<PAGE> 36
BUDGETHOTELS.COM, INC. AND SUBSIDIARIES
(Formerly Info Center International, Inc.)
Consolidated Balance Sheets (Continued)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
<TABLE>
<CAPTION>
May 31, November 30,
1999 1998
(Unaudited)
<S> <C> <C>
CURRENT LIABILITIES
Accounts payable $ 4,290 $ 17,923
Accounts payable - related party 576 3,477
Unearned revenue 201,370 196,031
Note payable - related party - 44,407
--------- ---------
Total Current Liabilities 206,236 261,838
--------- ---------
COMMITMENTS AND CONTINGENCIES (Note 4)
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock: 1,000,000 shares
authorized of $0.01 par value, no
shares issued and outstanding - -
Common stock: 50,000,000 shares
authorized Of $0.001 par value,
11,879,000 and 11,487,000 shares
issued and outstanding, respectively 14,214 11,487
Additional paid-in capital 439,909 61,894
Accumulated deficit (245,631) (167,476)
--------- ---------
Total Stockholders' Equity (Deficit) 208,492 (94,095)
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS
EQUITY (DEFICIT) $ 414,728 $ 167,743
========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
3
<PAGE> 37
BUDGETHOTELS.COM, INC. AND SUBSIDIARIES
(Formerly Info Center International, Inc.)
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<CAPTION>
For the For the
Three Months Ended Six Months Ended
May 31, May 31,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
REVENUE
Net sales $ 159,824 $ 140,341 $ 305,644 $ 280,682
Cost of goods sold 145,472 57,869 198,237 115,738
--------- --------- --------- ---------
Gross Profit 14,352 82,472 107,407 164,944
--------- --------- --------- ---------
EXPENSES
General and administrative 75,506 38,936 186,791 82,055
Depreciation 2,524 2,188 5,048 4,376
--------- --------- --------- ---------
Total Expenses 78,030 41,124 191,839 86,431
--------- --------- --------- ---------
Income (Loss)
from Operations (63,678) 41,348 (84,432) 78,513
--------- --------- --------- ---------
OTHER INCOME (EXPENSE)
Gain on exchange rate 3,091 - 6,277 -
Interest income - 71 - 154
--------- --------- --------- ---------
Total Other Income (Expense) 3,091 71 6,277 154
--------- --------- --------- ---------
NET INCOME (LOSS) $ (60,587) $ 41,419 $ (78,155) $ 78,667
========= ========= ========= =========
BASIC EARNINGS (LOSS)
PER SHARE $ 0.00 $ 0.00 $ (0.00) $ 0.00
========= ========= ========= =========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
4
<PAGE> 38
BUDGETHOTELS.COM, INC. AND SUBSIDIARIES
(Formerly Info Center International, Inc.)
Consolidated Statements of Stockholders' Equity (Deficit)
<TABLE>
<CAPTION>
Additional
Common Stock Paid-in Accumulated
Shares Amount Capital Deficit
<S> <C> <C> <C> <C>
Balance, November 30, 1997 8,000,000 $ 8,000 $ (8,000) $ (112,474)
Common stock issued for
shares canceled rendered at
$0.05 per share 600,000 600 27,480 -
Common stock issued for
cash at an average of $0.05
per share (see Note 7) 2,887,000 2,887 95,700 -
Stock offering costs - - (53,286) -
Net loss for the year ended
November 30, 1998 - - - (55,002)
--------- -------- --------- ----------
Balance, November 30, 1998 11,487,000 11,487 61,894 (167,476)
Cancellation of common stock
(unaudited) (600,000) (600) (27,480) -
Common stock issued for
cash at $0.25 per share
(unaudited) 1,602,000 1,602 398,898 -
Common stock issued for
services at $0.01 per
share (unaudited) 1,650,000 1,650 14,850 -
Common stock issued for
cash at $0.50 per share
(unaudited) 75,000 75 37,425 -
Stock offering costs
(unaudited) - - (45,678) -
Net loss for the six
months ended May 31,
1999 (unaudited) - - - (78,155)
---------- -------- --------- ----------
Balance, May 31, 1999
(unaudited) 14,214,000 $ 14,214 $ 439,909 $ (245,631)
========== ======== ========= ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
5
<PAGE> 39
BUDGETHOTELS.COM, INC. AND SUBSIDIARIES
(Formerly Info Center International, Inc.)
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
For the For the
Three Months Ended Six Months Ended
May 31, May 31,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (60,587) $ 41,419 $ (78,155) $ 78,667
Adjustments to reconcile
net income (loss) to net
cash used by operating
activities:
Depreciation - 2,188 5,048 4,376
Common stock issued
for services 16,500 - 16,500 6,000
Changes in assets and
liabilities:
(Increase) decrease in
accounts receivable (55,980) (44,665) (44,061) (89,331)
(Increase) decrease in
accounts receivable -
related party - (11,093) - (22,187)
(Increase) decease in
deposits and prepaids (1,860) (374) (2,524) (374)
Increase (decrease) in
accounts payable (9,450) (21,898) (16,621) 16,712
Increase (decrease) in
unearned revenue 34,980 (10,062) 5,369 (20,125)
--------- ---------- ---------- ---------
Net Cash Provided (Used) by
Operating Activities (76,397) (44,485) (114,444) (26,262)
--------- ---------- ---------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets (14,302) (18,223) (26,075) (36,446)
--------- ---------- ---------- ---------
Net Cash Provided (Used) by
Investing Activities (14,302) (18,223) (26,075) (36,446)
--------- ---------- ---------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on note payable
- related party (44,407) - (44,407) -
Cancellation of
common stock (28,080) - (28,080) -
Proceeds from sales of
common stock 238,000 111,642 438,000 111,642
Stock offering costs (35,773) (22,902) (45,678) (22,902)
--------- ---------- ---------- ---------
Net Cash Provided (Used) by
Financing Activities $ 129,740 $ 88,740 $ 319,835 $ 88,740
--------- ---------- ---------- ---------
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statement.
6
<PAGE> 40
BUDGETHOTELS.COM, INC. AND SUBSIDIARIES
(Formerly Info Center International, Inc.)
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
<TABLE>
<CAPTION>
For the For the
Three Months Ended Six Months Ended
May 31, May 31,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
NET INCREASE (DECREASE)
IN CASH $ 39,041 $ 26,032 $ 179,316 $ 26,032
CASH AT BEGINNING OF PERIOD 153,419 - 13,144 -
--------- -------- --------- --------
CASH AT END OF 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 issued for
services rendered $ - $ - $ - $ 6,000
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
7
<PAGE> 41
BUDGETHOTELS.COM, INC. AND SUBSIDIARIES
(Formerly Info Center International, Inc.)
Notes to the Consolidated Financial Statements
May 31, 1999
NOTE 1 - COMPANY BACKGROUND
The consolidated financial statements include those of
Budgethotels.com, Inc. (formerly Info Center International,
Inc.) (BCI) and its wholly-owned subsidiaries, Info Center, Inc.
(Info) and W. J. Marshall Management, Inc. (WJM). Collectively,
they are referred to herein as "the Company".
BCI was incorporated under the laws of the State of Nevada on
November 5, 1997. On February 11, 1999, the Company changed its
name to Budgethotels.com, Inc. BCI was incorporated for the
purpose of acquiring Info.
Info, a wholly-owned subsidiary, was formed under the laws of
the State of Washington on November 6, 1984. Info has been in
the business of operating billboards, signboards and illuminated
signs for the purpose of placing advertisements. Info also
maintains and operates an internet website for the purpose of
making hotel reservations.
On November 30, 1997, the Company completed an Agreement and
Plan of Share Exchange whereby ICI issued 8,000,000 shares of
its common stock in exchange for all of the outstanding common
stock of Info.
The share exchange was accounted for as a recapitalization of
Info because the owners of Info, WJM, control ICI after the
acquisition. Therefore, Info is treated as the acquiring
entity. Accordingly, there was no adjustment to the carrying
value of the assets or liabilities of Info. ICI is the
acquiring entity for legal purposes and Info is the surviving
entity for accounting purposes. WJM, the sole shareholder of
Info, was incorporated under the laws of the Province of British
Columbia on August 20, 1985. WJM has been in the business of
operating billboards for the purpose of placing advertisements.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A summary of the significant accounting policies consistently
applied in the preparation of the accompanying consolidated
financial statements follows:
a. Accounting Method
The Company's consolidated financial statements are prepared
using the accrual method of accounting. The Company has elected
a November 30 year end.
8
<PAGE> 42
BUDGETHOTELS.COM, INC. AND SUBSIDIARIES
(Formerly Info Center International, Inc.)
Notes to the Consolidated Financial Statements
May 31, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
b. Property and Equipment
Property and equipment are recorded at cost. Major additions
and improvements are capitalized. The cost and related
accumulated depreciation of equipment retired or sold are
removed from the accounts and any differences between the
undepreciated amount and the proceeds from the sale are recorded
as a gain or loss on sale of equipment. Depreciation is
computed using the straight-line method over the estimated
useful lives as follows:
Useful
Description Lives
Advertising boards 7 years
Office furniture and equipment 7 years
Computer Software 3 years
Leasehold improvements 27.5 years
c. Accounts Receivable
Accounts receivable are shown net of the allowance for doubtful
accounts of $23,695 and $23,695 at May 31, 1999 and November 30,
1998, respectively.
d. Provision For Taxes
At May 31, 1999, the Company has net operating loss
carryforwards of approximately $221,000 that may be offset
against future taxable income through 2014. No tax benefit has
been reported in the consolidated financial statements, because
the Company believes there is a 50% or greater chance the net
operating loss carryforwards will not be used. Accordingly, the
potential tax benefits of the net operating loss carryforwards
are offset by a valuation allowance of the same amount.
e. Principles of Consolidation
The consolidated financial statements include those of Info
Center International, Inc. and its wholly-owned subsidiaries,
Info Center, Inc. and W. J. Marshall Management, Inc.
All material intercompany accounts and transactions have been
eliminated.
9
<PAGE> 43
BUDGETHOTELS.COM, INC. AND SUBSIDIARIES
(Formerly Info Center International, Inc.)
Notes to the Consolidated Financial Statements
May 31, 1999
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
f. Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
g. Revenue Recognition
Revenue is recognized as service is provided to the customer.
The Company amortizes revenues over the life of the contract
with the customer which range from three months to one year.
Unearned revenues reflect the percentage of the Company's
receivables for which services have not yet been provided.
h. Unaudited Financial Statements
The accompanying unaudited financial statements include all of
the adjustments which, in the opinion of management, are
necessary for a fair presentation. Such adjustments are of a
normal, recurring nature.
NOTE 3 - PROPERTY AND EQUIPMENT
Property and equipment consists of the following:
May 31,
1999
Advertising boards $ 100,198
Office furniture and equipment 28,905
Computer software 9,642
Leasehold improvements 12,714
---------
151,459
Accumulated depreciation (65,747)
---------
Net property and equipment $ 85,712
=========
Depreciation expense for the six months ended May 31, 1999 was
$5,048.
10
<PAGE> 44
BUDGETHOTELS.COM, INC. AND SUBSIDIARIES
(Formerly Info Center International, Inc.)
Notes to the Consolidated Financial Statements
May 31, 1999
NOTE 4 - COMMITMENTS AND CONTINGENCIES
In October 1997, the Company entered into an agreement for
consulting services. The agreement runs from October 1997
through January 2001. The monthly payment for the consulting
agreement is $2,000.
The Company leases certain office equipment used in their
operations. The lease terms expire beginning in April 2001 and
ending in January 2003. The monthly rental payment for the
leases is $553.
The Company leases office space located in Kelowna, British
Columbia. The lease term is for one year and expires in
December 1998. The monthly lease payment on the office is $749.
During April 1997, the Company entered into an operating lease
agreement for an automobile. The lease term expires in March
2001. The monthly rental payment is $579.
Minimum future lease payments on the leases as of May 31, 1998
are as follows:
Year Ended
November 30, Amount
1999 $ 40,851
2000 40,851
2001 11,989
2002 3,640
2003 and thereafter -
--------
Total $ 97,331
========
NOTE 5 - LICENSING AGREEMENT
In October 1997, the Company entered into a licensing agreement
with Greyhound Lines, Inc. (Greyhound), whereby the Company is
granted the right to install, operate and maintain its
advertising boards in all of Greyhound's owned and leased bus
terminal facilities. The agreement is for a period of 15 years
(three 5 year terms) beginning in February 1998. The cost to
the Company ranges from $50 to $367 per month for each location
where an advertising board is placed.
11
<PAGE> 45
BUDGETHOTELS.COM, INC. AND SUBSIDIARIES
(Formerly Info Center International, Inc.)
Notes to the Consolidated Financial Statements
May 31, 1999
NOTE 6 - COMMON STOCK
In December 1997, the Company sold 2,500,000 shares of its
common stock in an offering for $25,000 at a price of $0.01 per
share. From December, 1997 through March, 1998, the Company
sold an additional 387,000 shares of its common stock in another
offering for $96,750 at a price of $0.25 per share. The stock
offering costs related to these two offerings amounted to
$53,286 and were charged to paid-in capital.
In 1997, the Company sold an additional 400,000 shares of its
common stock at $0.50 per share. The offering costs of $45,678
were charged against the proceeds of the offering.
NOTE 7 - GOING CONCERN
The Company's consolidated financial statements are prepared
using generally accepted accounting principles applicable to a
going concern which contemplates the realization of assets and
liquidation of liabilities in the normal course of business.
The Company has incurred losses which have resulted in an
accumulated deficit of approximately $221,000 at May 31, 1999
which raises substantial doubt about the Company's ability to
continue as a going concern. The accompanying consolidated
financial statements do not include any adjustments relating to
the recoverability and classification of asset carrying amounts
or the amount and classification of liabilities that might
result from the outcome of this uncertainty. Management
believes that the Company will generate sufficient advertising
revenue and commissions through its licensing agreements and
hotel reservation internet website to cover all operating
expenses in the future, although no assurance of this can be
given.
12
<PAGE> 46
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE.
There have been no disagreements on accounting and financial
disclosures from the inception of the Company through the date of
this Registration Statement.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
(a) List of Financial Statements
Independent Auditors' Report
Balance Sheet
Statement of Income
Statement of Cash Flows
Statement of Shareholders' Equity
Notes to Financial Statements
b) List of Exhibits.
Exhibit No. Description
3.1 * Articles of Incorporation.
3.2 * Bylaws.
4.1 * Specimen Stock Certificate.
27 * Financial Data Schedule.
99.1 * Licensing Agreement with Greyhound Lines, Inc.
99.2 * Consulting Agreement with LAC.
99.3 * Agreement and Plan of Share Acquisition.
99.4 * Agreement between the Company, C&K Management Ltd. and
W.J. Marshall Inc.
99.5 * Non-qualified Incentive Stock Option Agreement.
* Previously filed.
<PAGE>
<PAGE> 47
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of
1934, the registrant caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
budgethotels.com, inc.
BY: /s/ William J. Marshall
William J. Marshall, President
Pursuant to the requirements of the Securities Exchange Act of
1934, this Amendment No. 2 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, January 04, 2000
Chief Financial Officer,
Secretary and Director
/s/ Kenneth E. Cloak
Kenneth E. Cloak Director January 04, 2000
