As filed with the Securities and Exchange Commission on August 18, 1999.
Registration No.333-85467
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1 TO FORM SB-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
INSIDER TRAVEL DEALS.COM, INC.
(Exact name of registrant as specified in its charter)
Nevada 87-063399
(State or jurisdiction of ________________________ (I.R.S.
incorporation or organization) (Primary Standard Industrial Identification)
Classification Code Number)
2051 North Kingston Road
Farmington, UT 84025
(801) 451-6583
(Address, including zip code, and telephone number, including area code, of
principal executive offices)
James E. Solomon
2051 North Kingston Road
Farmington, UT 84025
(801) 451-6583
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
Copies to:
Gregory E. Lindley
Ray, Quinney & Nebeker
79 South Main, Suite 500
Salt Lake City, UT 84111
(801) 532-1500
Approximate date of proposed
sale to the public: As soon as practicable following
effectiveness of the Registration
Statement.
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
- --------------------------- ---------------------- ----------------------- ---------------------- --------------------
Proposed Proposed
Title of Each Maximum Maximum
Class of Securities Dollar Amount Offering Price Aggregate Amount of
to be Registered To be Registered Per Unit Offering Price Registration Fee
---------------- ---------------- -------- -------------- ----------------
<S> <C> <C> <C> <C>
Common Stock $200,000 $0.05 $200,000 $100*
- --------------------------- ---------------------- ----------------------- ---------------------- --------------------
</TABLE>
*Minimum Fee
The registrant hereby amends this registration statement on such date or dates
as may be necessary to delay its effective date until the registration shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the registration statement
shall become effective on such date as the Commission, acting pursuant to said
Section 8(a), may determine.
<PAGE>
PROSPECTUS
INSIDER TRAVEL DEALS.COM, INC.
2051 North Kingston Road
Farmington, UT 84025
(801) 451-6583
4,000,000 Shares of Common Stock
Price per security (share): $0.05 per share
Maximum Number of Minimum Number of
Securities Offered: Securities Offered:
4,000,000 shares 2,000,000 shares
Investing in Insider Travel Deals.Com involves significant risks.
Investors need to read the "Risk Factors" beginning on page 3.
<TABLE>
<CAPTION>
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Offering Proceeds to
Price to Public Commissions Insider Travel Deals
--------------- ----------- --------------------
<S> <C> <C> <C>
Per Share $0.05 $0.004 $0.046
Total Minimum $100,000 $8,000 $92,000
Maximum $200,000 $16,000 $184,000
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
</TABLE>
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities, or determined if
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
o At least 2,000,000 shares of common stock must be sold by January
__, 2000 for this offering to close. If at least 2,000,000 shares
are not sold by that date, the offering will be canceled and all
investor funds will be refunded without interest or deduction of
any kind.
o This offering is not underwritten. However, shares will be sold
through Travis Morgan Securities, Inc., as placement agent, at an
8% commission rate. Commissions apply only to shares actually sold
by the placement agent.
o The net proceeds to Insider Travel Deals.Com shown above is before
deduction of offering expenses estimated at $38,000, including
legal and accounting fees and printing costs.
o There is no public market for our common stock.
1
<PAGE>
The date of this prospectus is September ___ 1999.
PROSPECTUS SUMMARY
This is a brief summary of the information in this prospectus. We
encourage you to read the entire prospectus before you decide whether and how to
invest in the shares offered.
Insider Travel Deals.Com
- ------------------------
Insider Travel Deals.Com was organized as a Nevada corporation on June
11, 1999 to market several travel-related products, including our flagship
product, the ITD Travel Club. We are a development stage company and have not
had any significant operations or revenues to date. The ITD Travel Club differs
from most travel clubs because it will notify its members via e-mail and fax
about new, discounted travel opportunities several times each week. Members will
also receive a monthly newsletter, discounts on most airlines, a free resort
stay and discount coupons for rental cars, etc. For these services, ITD Travel
Club members will pay a monthly subscription fee of $9.95. Members will be
secured directly through the Internet or indirectly through associations and
large groups who wish to promote ITD Travel Club as a member benefit. From its
customer base of club members, ITD will market other travel-related products. We
have not yet begun to offer any services nor do we have any members.
The Offering
- ------------
o Securities Offered: Up to 4,000,000 shares of Insider Travel
Deals.Com common stock.
o Use of Proceeds: Net proceeds from this offering of up to
$147,300 will be used to pay:
o James Solomon, our CEO, for consulting
services
o General and administrative expenses
o Marketing and promotional expenses
o Employee salaries
o Escrow Account: Subscription proceeds will be deposited
into an escrow account pending receipt of
subscriptions totaling $100,000 or
termination of the offering.
o This Offering This offering will close whenever at least
Will Expire: 2,000,000 shares of common stock are sold,
or on January ____, 2000.
o Summary Financial Insider Travel Deals.Com was only recently
Data: formed and has had no revenues. We have
cash on hand of $1,300 as of July 21, 1999.
o 8% Brokerage Our shares will be sold through Travis
Commissions: Morgan Securities, Inc. at an 8% commission
rate. Commissions apply only to shares
actually sold by Travis Morgan Securities,
Inc.
2
<PAGE>
RISK FACTORS RELATING TO OUR BUSINESS
o Insider Travel Deals.Com's limited operating history increases the risk of
loss to investors.
We were organized in June 1999 and have only been in operation since August
1999. We will not commence active research or marketing until we have received
funds from this offering. To date, our activities have been limited to planning
our business, designing the layout of our fax transmissions and e-mails that
will contain our travel information, and planning our initial marketing and
sales efforts. We have not been in business long enough to enable an investor to
make an informed judgment as to our future performance. We expect to operate at
a loss until we have signed up several hundred members, which will likely
require several months. Even then it will still be uncertain as to whether we
can continue to implement our business plan, maintain members, increase
membership, operate profitably, or continue as a going concern.
o If Insider Travel Deals.Com does not obtain enough money to continue to
operate, investors will lose their investment.
Our ability to implement business activities is dependent on obtaining
funding through this offering. If we sell all 4,000,000 shares offered, we will
raise enough money to fund our operation for six months. If we sell only the
minimum amount, or 2,000,000 shares, we will only raise enough money to fund our
operation for about five months at which time we will not have money available
from the proceeds of this offering to pay our principal employee, Rick Haviland.
While we believe the funds from the offering will be sufficient to fund a
portion of the initial operating equipment, to cover certain general and
administrative expenses and marketing costs, for a period of up to six months,
and pay James E. Solomon, CEO, for his consulting services, the proceeds will be
insufficient to sustain operations unless we are able to enroll several hundred
members. Unless we are able to enroll several hundred members within a few
months from the date of this prospectus, we will be in need of additional funds.
We cannot be sure that we can enroll several hundred members, and unforeseen
circumstances could occur which could compel us to seek additional funds,
particularly if only the minimum offering is sold. Even if we do enroll several
hundred members within a few months from the date of this prospectus, of which
we are uncertain, we will have very limited funds available for expanded
operations and marketing. Additional financing may not be available if needed,
or if available, may not be available on favorable terms.
o Investors must rely on the performance of two people for the success of
their investment.
We will be dependent on Rick Haviland, President, for the development and
management of our business. Once the minimum amount of shares is purchased and
escrow is broken, Mr. Haviland will devote all of his working hours to our
business. In addition to Mr. Haviland, our success will depend, in large part,
on the efforts of Mr. James Solomon, CEO. Mr. Solomon, who draws hourly fees as
a contracted consultant, has been the primary person responsible for the
creation and initial development of Insider Travel Deals.Com. While Mr. Haviland
will handle our travel deal research and day to day operations, Mr. Solomon will
continue to act as a consultant. Mr. Solomon's future role will consist of
guiding our marketing efforts. Mr. Solomon has varied marketing experience, but
does not have extensive experience in the particular business we are
undertaking. We have not obtained keyman insurance on the lives of either of
these individuals, and do not intend to do so in the foreseeable future. The
loss of the services of either one of these individuals could have a substantial
detrimental impact on our operations.
3
<PAGE>
o Investors' money may be lost if Insider Travel Deals.Com's products and
services are not accepted in the market place.
We have not conducted any formal independent research or market study to
ascertain whether, and to what extent, our products will be accepted by
consumers. Our business is being undertaken solely on management's evaluation
that we have a product that will be attractive to consumers in the travel
market. It is uncertain whether our products will be well received in the
marketplace, or that we will be able to create, through our marketing efforts, a
demand for our products.
o Insider Travel Deals.Com must persuade consumers to accept our membership
product or Insider Travel Deals.Com will not be able to generate sufficient
revenues to cover costs.
Our success is dependent upon our ability to deliver our travel
information, and to successfully introduce our membership product into the
marketplace. Demand and market acceptance of new products is subject to
substantial uncertainty. Achieving market acceptance for our products may
require substantial marketing and other efforts and the expenditure of
significant funds to create product awareness, appeal and acceptance. We have
very limited funding for such purposes. The failure of our membership product to
gain market acceptance would be detrimental to our operations.
o Insider Travel Deals.Com does not have long term agreements with suppliers
of discount travel products and services and could lose its sources of
information at any time.
Our primary resource is travel bargain information. We will rely on
transportation carriers, lodging properties and resort properties to supply
travel bargain information. Much of this information is supplied voluntarily to
companies in the travel services business. Other information will be obtained by
our direct contact with carriers and properties. However, we do not have any or
expect to have any agreements with suppliers of travel discount information. If
we lose these sources, customers could cancel their memberships, reducing our
revenue and profitability.
GENERAL RISKS RELATING TO THE TRAVEL INDUSTRY
o Insider Travel Deals.Com must be able to compete with larger, more
established travel companies to be successful or Insider Travel Deals.Com
will not be able to operate profitably.
Competition in the travel industry is intense. We will be competing with
over twenty sizable companies marketing travel clubs in the United States, which
are extremely large and financially healthy companies, have a substantial market
share and name recognition, and easy access to marketing outlets and capital
markets. Many of these companies are able to frequently update and expand
products and services and introduce new products and services, and to diversify
product and service offerings. These other companies with substantially greater
financial, creative and marketing resources, and proven histories, may decide to
enter and effectively compete in this market, which could adversely affect our
operations.
4
<PAGE>
o A downward economic cycle could be detrimental to our membership numbers.
The travel industry is cyclical and expands and contracts with economic
cycles. Our memberships could be considered a luxury item and our ability to
obtain and maintain members could be negatively affected by economic and travel
industry downturns.
GENERAL RISKS RELATING TO THE INVESTMENT
o Investors will not have use of their subscription amounts until the
offering closes or is terminated.
The common stock we are offering is offered by Insider Travel Deals.Com,
and no individual, firm, or corporation has agreed to purchase any of the
offered shares. We are not certain that any or all of the shares will be sold.
Provisions have been made to deposit the funds received from the purchase of
shares in escrow, and in the event $100,000 is not received by January__, 2000,
proceeds so collected will be promptly refunded to investors without paying
interest and without deducting expenses. During this escrow period, you will
not have use of or derive benefits from your escrowed funds.
o Investors may have to hold their stock indefinitely because there is no
public market for the stock.
At the present time, there is no public market for our securities. We do
not know if a public market for our common stock will develop following the
offering. As a result, purchasers of the common stock offered hereby may not be
able to liquidate their investment readily, if at all.
o Future sales of our common stock in the public market could adversely
affect our stock price and our ability to raise funds in new stock
offerings.
All of our 13,000,000 shares of common stock presently outstanding are
"restricted securities" within the meaning of the Securities Act of 1933. As
such, in the event a public market for the common stock develops in the future,
a portion of such stock may be sold as early as June 11, 2000, in reliance on
Rule 144 adopted under the Securities Act. Investors should be aware that sales
under Rule 144 may result in a drop in the price of the stock in any market
that may develop.
o Investors who purchase shares will benefit the stockholder.
The existing stockholder now owns all 13,000,000 shares of Insider Travel
Deals.Com's common stock, for which he paid an aggregate total of $1,300 in
cash. If all 4,000,000 shares are sold, the current stockholder will still own
approximately 76% of the common stock, and the other purchasers in this offering
will own the other 24%, for which they will have paid $200,000 cash. Thus,
purchasers in this offering will contribute to the capital of Insider Travel
Deals.Com a disproportionately greater percentage than the ownership they
receive. The present stockholder will benefit from a greater share of Insider
Travel Deals.Com if successful, while investors in the offering risk a greater
loss of cash invested if Insider Travel Deals.Com is not successful.
5
<PAGE>
o Our offering price is arbitrary and does not necessarily reflect the value
of our stock.
Since we have no prior operating history, the offering price of $0.05 per
share has been arbitrarily set by our Board of Directors, and is not based upon
earnings or operating history, and bears no relation to our earnings, assets,
book value, net worth or any other recognized criteria of value. No independent
investment banking firm has been retained to assist in determining the offering
price for the shares. Accordingly, the offering price should not be regarded as
an indication of any future market price of our capital stock.
o The "penny stock" rules could make it more difficult for investors who want
to resell their shares.
Because our common stock may be construed to be a "penny stock", sales of
the common stock by stockholders may be subject to many requirements. These
requirements may discourage a stockholder's broker-dealer from selling the
stockholder's common stock and make it more difficult for a stockholder to sell
his or her shares into any secondary trading market for the common stock. See
"Plan of Distribution."
o Because we have not engaged an underwriter, we may not be able to sell all
of the stock and raise all the money we need and no market for our stock
may develop.
The stock we are offering will be sold by Travis Morgan Securities, which
will not underwrite the offering, or agree to purchase any shares, but will act
as a placement agent. Because Travis Morgan may have insufficient incentive to
sell our stock, it may not sell enough stock for us to meet the minimum, in
which case, all investor funds will be returned. It may also not sell all of the
stock and we will only have enough money to operate for less than six months. We
would then have to try and raise additional funds, which we may not be able to
do. If we could not, we could not continue in operation. In addition, since we
have not engaged an underwriter, there is a greater risk that no public market
for our stock will develop and investors may not be able to sell their shares.
o Our Board can issue additional stock without shareholder approval.
Our bylaws allow the board to issue both common and preferred stock without
shareholder approval. Currently, our board is authorized to issue a total of
100,000,000 shares of common stock of which only 17% will have been issued if
the maximum offering is sold. Our board is also authorized to issue a total of
5,000,000 shares of preferred stock of which no shares have been issued.
Issuance of additional stock may dilute stockholders' interest and value of
their investment.
o Due to our lack of assets, there will be no liquidation value if our
business fails.
We currently have no significant assets or equipment, nor do we plan to
have any in the future. In the event our business is liquidated, investor money
will have been spent on operations, services and equipment with insignificant
salvage value.
6
<PAGE>
DILUTION
As of June 23, 1999, our net tangible book value (total tangible assets
less total liabilities) was $1,300, or approximately $0.0001 per share. The
following table sets forth the dilution to persons purchasing shares in this
offering without taking into account any changes in our net tangible book value
after June 23, 1999, except the sale of the minimum and maximum number of
shares offered at the public offering price and receipt of the net proceeds
therefrom.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------- ---------------------- -------------------
Assuming Assuming
Minimum Maximum
Shares Sold Shares Sold
- --------------------------------------------------------------------------- ---------------------- -------------------
<S> <C> <C>
Public offering price per share $0.050 $0.050
Net tangible book value before offering(1) $0.0001 $0.0001
Increase attributable to purchase of shares by new investors $0.0037 $0.0087
Pro forma net tangible book value after offering(2, 3) $0.0036 $0.0086
Dilution per share to new investors $0.0464 $0.0414
Percent dilution to new investors 92.8% 82.8%
- --------------------------------------------------------------------------- ---------------------- -------------------
</TABLE>
1 Determined by dividing the number of shares of common stock outstanding into
the net tangible book value.
2 After deduction of offering expenses estimated at $38,000, plus 8% placement
fees.
3 These figures do not take into account any events after June 23, 1999. (See
"BUSINESS" and "INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS").
COMPARATIVE DATA
The following chart illustrates percentage ownership held by the
present stockholder and by the public investors in this offering and sets forth
a comparison of the amounts paid by the present stockholder and by the public
investors.
7
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------- ------------------------------ ---------------------------- -----------------
Total Shares Purchased Total Consideration Average
Price
Number Percent Amount Percent Per Share*
----------------- ------------ --------------- ------------ -----------------
<S> <C> <C> <C> <C> <C>
Present Shareholder
Minimum Offering 13,000,000 86.7 $1,300 1.3 $0.0001
Maximum Offering 13,000,000 76.4 $1,300 0.6 $0.0001
New Investors
Minimum Offering 2,000,000 13.3 $100,000 98.7 $0.0500
Maximum Offering 4,000,000 23.6 $200,000 99.35 $0.0500
- --------------------------------------- ----------------- ------------ --------------- ------------ -----------------
</TABLE>
* The price per share of the present stockholder considers only the cash
contribution by the stockholder, and does not take into account other
contributions by the stockholder, including the contribution of services
USE OF PROCEEDS
We estimate net proceeds from the sale of all 4,000,000 shares of
common stock to be approximately $146,000, if the entire offering is sold, after
deducting expenses of this offering. If only the minimum offering is sold, we
will receive net proceeds of approximately $54,000, after deduction of such
offering expenses.
We propose to use the net proceeds from this offering in the following
general amounts and order of priority:
<TABLE>
<CAPTION>
- --------------------------------------------------------- ------------------------------ ----------------------------
Assuming Minimum Assuming Maximum
Shares Sold(1) Shares Sold(1)
------------------------------ ----------------------------
Number Percent Amount Percent
----------------- ------------ ---------------- -----------
<S> <C> <C> <C> <C>
1. General administrative expenses, lease, telephone,
reproduction, and general office costs(2, 3) $15,000 27.8 $ 19,500 13.4
2. Payments to James E. Solomon for prior business
consulting. $ 7,500 13.9 $ 7,500 5.1
3. Payments to James E. Solomon for future
marketing consulting $ 1,500 2.8 $ 5,000 3.4
4. Marketing and promotional costs(4) $ 5,000 9.2 $ 72,000 49.3
5. Management compensation(5) $25,000 46.3 $ 30,000 20.6
6. Additional Employee Compensation -- -- $ 12,000 8.2
TOTAL $54,000 100% $146,000 100%
- --------------------------------------------------------- ----------------- ------------ ---------------- -----------
</TABLE>
8
<PAGE>
1 These expenditures represent estimates based on our present intentions for
the first six months of our operations. We may make minor changes in the use
of proceeds if dictated by market conditions.
2 We contemplate these costs will increase if more than the minimum offering
is sold, in order to cover additional general and administrative costs
necessary as a result of expanded operations.
3 Our current overhead is limited to telephone, telefax, reproduction, mailing
and other miscellaneous expenses.
4 Represents amounts for travel to establish a distributor network; the
preparation and production of promotional materials; and other general
marketing and promotional activities. (See "BUSINESS--Marketing").
5 Rick Haviland's salary will be $5,000 per month from the time that he
commences full-time work with us. He will be assured a minimum salary of
$5,000 per month for five months if the minimum offering is sold and $5,000
for his sixth month of full-time work if the maximum offering is sold.
The net proceeds from this offering will fund operations for period of
up to six months. If only the minimum offering is sold, the net proceeds will
fund Insider Travel Deals.Com for an even shorter period. Therefore, within a
few months from the completion of the offering, we will either need to be
operating profitably so as to fund our operations from cash flow, or be required
to seek additional debt or equity capital. In addition, financial circumstances
could occur that could compel us to seek additional funds even sooner. Moreover,
we will need additional capital should we decide to significantly expand
operations. We cannot be certain that additional funds will be available when
needed, or if available, on favorable terms.
We do not intend to become an investment company under the Investment
Company Act of 1940 and, therefore, may be limited in the temporary investments
we can make with the proceeds of this offering. To the extent that the net
proceeds of this offering are not utilized immediately, they will be invested in
money market accounts, savings deposits, short-term obligations of the United
States government, or other temporary interest bearing investments in commercial
financial institutions.
BUSINESS
General
- -------
Insider Travel Deals.Com was organized as a Nevada corporation on June
11, 1999. We are a development stage company and have had no significant
operations or revenues to date. The purpose for our organization is to market
several travel-related products, including our flagship ITD Travel Club. The ITD
Travel Club differs from most travel clubs because it will actively notify its
members via e-mail and fax about new, discounted travel opportunities several
times each week. Members will also receive a monthly newsletter, discounts on
most airlines, a free resort stay and discount coupons for rental cars, etc. For
these services, ITD Travel Club members will pay a monthly subscription fee.
Insider Travel Deals.Com will attempt to secure members directly through the
Internet or indirectly through associations and large groups who wish to promote
the ITD Travel Club as a benefit to members of their Association. We will seek
to make additional profits from our members by marketing other travel-related
products to them.
9
<PAGE>
Our service is delivery of travel bargain information. We gather this
information from three major sources of travel bargain information. The first
source is telephone calls directly to transportation carriers, lodging
properties and resort properties, and other travel suppliers. We expect these
calls to frequently lead to reduced rates that we can pass along to our members.
However, we have no guarantee that this approach will result in reduced rates.
The second source is promotions listed on the Internet and in major newspapers.
The third source is information received from travel suppliers who notify travel
agents of special promotions. We believe that we will be able to provide travel
bargain information to our customers. However, we may not be successful in any
of these efforts. We are a newly organized corporation and have no history of
operations.
Plan of Operations
- ------------------
We plan to devote our efforts in the next twelve months to marketing
and promoting our memberships and enrolling members. Prior to the time of this
offering, we have been engaged in conceptualizing and developing our business
model. We will not commence marketing efforts to enroll members until we obtain
funds to do so from the proceeds of this offering. Once the minimum offering is
sold, Rick Haviland will commence full-time work, which will include researching
and gathering travel deals, preparing our e-mails and faxes to be sent to our
members and working with Mr. Solomon to implement our marketing plan. In the
event that the maximum offering is sold, Mr. Solomon will take a larger role in
the marketing of our services. Proceeds from the sale of the maximum offering
will increase our marketing budget and require that an additional employee be
hired to assist in the implementation of the marketing plan and to assist with
servicing a larger number of anticipated members.
If the maximum offering is completed, we believe we will have
sufficient funding to satisfy our cash requirements for the next six months. If
only the minimum offering is sold, our funds will be very limited, and we may
need to seek additional debt or equity capital to meet our cash requirements
unless we enroll and maintain enough members to create net revenues to generate
sufficient operating capital. Revenue from operations may not be sufficient to
provide us with funds to meet our cash requirements.
Industry and Market Overview
- ----------------------------
The travel industry is an approximately $500 billion industry. Travel
revenues have increased 41% over the past decade. Approximately six million
travelers currently book trips online each year. Some estimates anticipate that
number to double in the next three years.
Although we have not conducted any formal market studies or analyses of
the travel industry in undertaking our business, management believes a few
trends are apparent. First, the travel industry in general has enjoyed eight
consecutive years of growth and it appears that it will continue to grow.
Secondly, the use of the Internet to obtain information regarding travel and to
book trips has expanded considerably over the past several years. Consequently,
management believes that frequently updated supply of travel bargain information
over the Internet has profit potential.
10
<PAGE>
The travel industry is cyclical with consumer spending tending to
decline during periods of recession when discretionary income decreases. Our
travel products could be considered as luxury items. With any decline in
consumer spending, there exists the possibility that we may not be able to
successfully market our products. Our industry and the market for the end
products we develop are also subject to changing consumer demands and trends and
while travel has grown significantly over the past several years, we cannot be
certain that such growth will continue or that these trends will not be
reversed. Our success will depend on our ability to anticipate and respond to
changing consumer demands and trends and other factors affecting the travel
industry. Failure to respond to such factors in a timely manner could have a
material adverse effect.
Products
- --------
Travel clubs normally provide their members with a directory of hotels
offering discounted rates as well as some coupons for savings on rental cars and
theme parks. Members receive these printed materials for an annual membership
fee. We will provide similar services, plus, the additional service of actively
supplying our members with updates of travel bargain information of which the
public is generally unaware. Many travel carriers, lodging properties and resort
properties will only offer discounted prices through "quiet" distribution
channels for fear that public advertising of dramatic discounts would generate a
fury from the travelers who already paid full price. We, as a "quiet"
distributor, intend to supply our customers with such discounted prices. We will
also supply to our members information about travel deals where there is no
travel agent commission available. These non-commisionable discounts are usually
not sold by conventional agencies because there is no profit potential. We are
able to supply non-commission travel discounts because we earn our money from
membership fees, not commissions.
We believe that these types of travel bargains will be continually
found by our principal researcher, Rick L. Haviland, who will be the sole
employee until the maximum offer is sold or sales justify additional personnel.
New travel bargains will be communicated to our members via e-mail or fax
transmission as soon as they become available, often several times each week.
Members will also receive monthly, multi-page newsletters listing hundreds of
travel bargains plus travel suggestions and hints. Members will also receive
discount coupons of 5% to 50% off tickets of major airlines and cruise
companies, including Delta, Continental, TWA, Northwest, Royal Caribbean and
Carnival Cruises. A member will also receive a free two night resort stay at one
of 140 luxury time-share resorts. These resort stays cost Insider Travel Deals
less than $5 because the resort stays are part of the promotional program of the
time-share companies. We are able to secure the airline and cruise discount
coupons for free.
We do not currently have, and do not expect to have, any long-term
contracts with any transportation carriers, lodging properties, resort
properties or other sources of travel bargain information and deals. We cannot
be certain that our relationships with transportation carriers, lodging
properties, resort properties or other sources of travel bargain information
will continue or that alternative sources can be established.
11
<PAGE>
Marketing
- ---------
The profile of the targeted club member is an individual who takes more
than two trips per year other than by automobile. Travel Institute of America
indicates 104.2 million Americans take two such trips annually. Industry data
shows that the average American family of four makes 2.4 trips per year with an
average stay of 7.4 nights and that 25% of travelers in this category already
use the Internet. This trend of Internet usage is expected to increase to 65% by
2002. We will attempt to reach these targeted individuals via the following
three major distribution channels:
o direct to consumers via the Internet;
o indirectly through associations/groups that use our Club as a member
benefit; and
o indirectly through independent distributors who wish to own their own
Internet-based, travel-related business.
We will offer a free, thirty day trial membership in the Club. Members
may keep the benefits they have received, including the free three day, two
night resort stay even if they do not extend their trial membership beyond the
free trial period. To assure high retention, we will capture the member's credit
card information upon the initial enrollment. Under those terms, members wishing
to continue their membership need not take any action. Rather, their credit card
is automatically charged each month until their membership is canceled.
Internet Sales. The Internet is impacting the travel industry because
of the ease of obtaining information. Twenty-five percent of our target market
uses the Internet for travel information. We intend to profit from this trend by
directly enrolling members via the Internet. Display ads in numerous magazines
read by frequent travelers and website banners on travel related websites will
be used to attract traffic to our website. We will also seek free publicity
through press releases and editorial features.
Sales Through Associations and Groups. We will attempt to attract new
customers through existing associations and groups. Such entities may give us
access to large databases and provide endorsements of our services. We will seek
to have our services detailed in the communiques of these entities as an
inexpensive source of exposure for our Club. As an incentive, we may offer
commissions to associations and groups that promote our Club as a benefit to
their members.
Sales Through Independent Distributors. We will also utilize home-based
businesses to market our services by recruiting independent distributors who
wish to own their own travel-related business. Those distributors can purchase a
distributorship kit for under $200 that will allow them to enroll new members
utilizing the free 30 day membership. Distributors receive ongoing commissions
of 20% of membership fees of people they enroll. These distributors will be
recruited via display ads in business opportunity magazines as well as direct
mailings to targeted mailing lists.
12
<PAGE>
We may be unsuccessful in our efforts to establish sales via print and
Internet advertising, through associations and groups or through a network of
broker representatives, as described above. Due to our extremely limited
resources, we may not be able to pursue many of these marketing strategies
simultaneously without substantial additional capital.
Pricing and Profit. We will attempt to price our products so as to
achieve a gross profit margin of 50% or more. We anticipate that a monthly
membership will cost $9.95.
Competition
- -----------
Competition in the travel industry is intense. We will be competing
with several sizable companies marketing travel clubs in the United States,
which are extremely large and financially healthy, have substantial market
share, name recognition, and easy access to marketing outlets and capital. Some
of these competitors include Travelocity, Preview Travel, Best Fares and
Expedia, all of which are non-traditional travel agencies. Many of these
companies are able to frequently update and expand products and services,
introduce new products and services, and diversify product and service
offerings. Because of the uniqueness of actively disseminating time sensitive
travel bargain information, we believe there is a good possibility we will be
able to initially capture a portion of this "niche" market for members only
travel bargain information. However, other companies with substantially greater
financial, creative and marketing resources, and proven histories, including
traditional travel companies such as Carlson Wagonlit Travel, may enter into and
effectively compete in this market.
Our method of actively disseminating time sensitive travel bargain
information via the Internet and fax is almost identical to the method used by a
travel club developed in 1998 and owned by Columbus Companies, Inc. in
Bountiful, Utah. Columbus Companies sends e-mail and fax messages regarding time
sensitive travel bargain information to approximately 700 members. We will be in
direct competition with Columbus Companies. We believe our marketing efforts and
services will be superior to Columbus Companies' travel club because its club
appears to be undercapitalized and lacks the marketing budget to be reasonably
successful. We will have a marketing budget of $72,000 if the maximum offering
is sold. We do not believe that Columbus has spent anywhere near this amount on
marketing. Also Columbus does not use the Internet as a major part of its
marketing effort. Most of its memberships are secured through direct mail. Based
on our marketing plan, we expect to establish a membership base that will be
sufficient to meet our cash flow requirements. There is no assurance that
Columbus Companies will not improve its marketing efforts and services and
maintain its market position or its current marketing efforts and services may
be sufficient to maintain its market position regardless of our efforts.
Employees
- ---------
Our President, Rick Haviland, will become our full-time employee once
the minimum offering is sold. James Solomon, our CEO, is not an employee, but
has a contract with us under which he charges consulting fees. See "Interest of
Management and Others In Certain Transactions". As our business grows, we
anticipate that we will need to employ additional salaried clerical staff and
sales personnel.
13
<PAGE>
Offices
- -------
Currently, we are being operated from the personal residence of our
sole shareholder and CEO. We do not currently own any computers or other
equipment. As soon as funding is secured, we intend to rent or lease
approximately 1,000 square feet of office space and related equipment and
resources, including computers, a web/e-mail server, a blast fax, printers,
typewriters, desk, conference table and cabinets. The monthly rental/lease rate
will be approximately $1,500 per month. We believe this office space and related
equipment is adequate for our foreseeable needs.
Computer and Internet Services
- ------------------------------
We will need a web/e-mail server to send e-mail to our members. In the
event we cannot lease such equipment, we will need to allocate $2,500 to $15,000
for a web/e-mail server that can adequately disseminate information to up to
50,000 members while simultaneously supporting our web-site.
MANAGEMENT'S DISCUSSION
AND ANALYSIS OR PLAN OF OPERATION
Results of Operations
- ---------------------
Insider Travel Deals.Com was organized on June 11, 1999 and has not had
any revenues. Our business and marketing plans have been formed and we are now
waiting for the proceeds of this offering to implement our plans.
Financial Condition
- -------------------
We had cash of $1,300 on hand on June 23, 1999, far less than required
to pay the expenses of this offering and other operating costs we may incur.
If Insider Travel Deals.Com is unsuccessful at raising the $200,000
sought from this offering, it will be unable to continue in the development and
implementation of its business without some other source of equity funding.
Additional equity funding may consist of another public or private offering
which would further dilute our stockholders' interest, including the interest of
stockholders who invest in the present offering. It is unlikely that debt
funding will be possible in amounts necessary to achieve the business plan.
We do not anticipate that general administrative and related expenses
will exceed $3,250 per month, especially where our number of members is low.
Management compensation will be $30,000 over the first six months as only Rick
Haviland will be salaried. Our marketing budget is based on the amount of
proceeds from the offering. If we receive maximum proceeds, our marketing budget
will be increased to approximately $77,000, including $5,000 to be paid to James
Sullivan for consulting services. We believe a $77,000 increase in marketing
will require the hiring of an additional employee to manage our marketing
efforts and support additional members.
14
<PAGE>
Year 2000
- ---------
Our anticipated management information system will be very modest and
will not be utilized to communicate electronically either with our suppliers or
distributors. As a result, we do not need to update our operating systems to
address many of the complex Year 2000 issues. While our current software used
internally is not fully Year 2000 compliant, we believe that software that is
fully compliant is available for purchase on reasonable terms and such software
can be implemented with only minor expenditures. Moreover, since we will not be
dependent on a single travel information source, any source who is not Year 2000
compliant could be replaced.
SECURITY OWNERSHIP OF MANAGEMENT
AND CERTAIN SECURITYHOLDERS
The following table sets forth, as of the date of this prospectus, the
aggregate number of shares of common stock owned of record or beneficially by
each person who owned of record, or is known by us to own beneficially, more
than 5% of our common stock, and the name and holdings of each officer and
director and all officers and directors as a group:
<TABLE>
<CAPTION>
- ----------------------------------------------------------- --------------- -------------- ---------------------------
After Offering
Before
Offering Minimum Maximum
- ----------------------------------------------------------- --------------- -------------- ---------------------------
<S> <C> <C> <C> <C>
Principal Shareholder:
James E. Solomon 13,000,000(1) 100.0% 86.6% 76.4%
2051 North Kingston Road
Farmington, UT 84025
Officers and Directors:
James E. Solomon " " " "
See above
Rick L.Haviland 0 0 0 0
2051 North Kingston Road
Farmington, UT 84025
All officers and directors as a group (3 persons) 13,000,000 100% 86.6% 76.4%
- ----------------------------------------------------------- --------------- -------------- ------------- -------------
</TABLE>
1 All shares are held beneficially and of record, and the record shareholder
has sole voting, investment, and dispositive power.
15
<PAGE>
DIRECTORS, EXECUTIVE OFFICERS
AND SIGNIFICANT EMPLOYEES AND PARTIES
Officers and Directors
- ----------------------
The following table sets forth the names, age, and position of each of
our directors and executive officers.
Name Age Position and Office Held
---- --- ------------------------
Rick L. Haviland 39 President, Chief Accounting Officer
Chief Financial Officer
James E. Solomon 49 CEO, Secretary/Treasurer
Each of the above individuals became an officer and director in
connection with our organization. The term of office of each officer and
director is one year or until his successor is elected and qualified.
Biographical Information
- ------------------------
Set forth below is biographical information for each officer and
director. No person other than officers and directors will currently perform any
of our management functions.
James E. Solomon
----------------
James E. Solomon is an entrepreneur specializing in business startups,
turn arounds, mergers and acquisitions. He is a Certified Public Accountant and
is currently the Principal in Solomon Advisory Services as well as Tarkenton &
Solomon. Mr. Solomon serves as an Adjunct Professor in the Graduate School of
Business at the University of Utah where he teaches entrepreneurism. Mr. Solomon
is also a Director of Hart Technologies (a publicly held scientific measurement
company).
From 1993 to1995 and 1997 to present, Mr. Solomon has served as a
consultant with Solomon Advisory Services. From 1995 to 1997, he was President
of Borges Lamont, a premium/incentive company with annual revenues of $29
million and 120 employees. From 1989 to 1993, Mr. Solomon was General Manager of
Paragrave Corporation, an engraving equipment marketer with annual sales of $3
million. From 1985 to 1988, Mr. Solomon was President of Rich Automation, a
manufacturer of factory automation equipment with yearly sales of $6 million and
60 employees. Prior to that, he was General Manager of Fountain Fresh, Inc., a
producer of beverage dispensing equipment from 1984 to 1985 at which time the
company entered a joint venture arrangement with General Foods Corporation. At
that time the company had 40 employees and had annual revenues of $4 million.
From 1980 to 1983, Mr. Solomon was a Vice President of Farm Management Company,
an agricultural company with over 150 farms and 700 employees. From 1972 to
1980, Mr. Solomon held several management positions at Exxon Corporation. Mr.
Solomon graduated in Finance, magna cum laude, from the University of Utah.
16
<PAGE>
Rick L. Haviland
----------------
Since December 1997 to present, Rick L. Haviland has served as Vice
President, Product Research and Development for Columbus Companies, Inc., a
broadcasting company and traditional travel supplier. From 1994 to November
1997, he was Director of Supplier Relations for Morris Travel, a national travel
network where he directed all supplier-related activities over a $200 million,
six state, 550 employee corporate network. Mr. Haviland holds a degree in
Business Administration and Management from the University of Phoenix.
Remuneration of Officers and Directors
- --------------------------------------
Rick Haviland will devote his full-time efforts to Insider Travel
Deals.Com but does not have a written employment agreement. We have an
employment agreement with Rick Haviland. His compensation will be based on our
number of members. To date, no officers have received remuneration. A member is
defined as a person who has paid the monthly membership fee in the most recent
month. Compensation calculations shall be as follows:
<TABLE>
<CAPTION>
- ---------------------------------------- -------------------------------------- --------------------------------------
Total
Officer Number of Customers Monthly Compensation
- ---------------------------------------- -------------------------------------- --------------------------------------
<S> <C> <C>
Rick L. Haviland, 0 - 5,000 $5,000
President 5,000 - 10,000 $5,500
over 10,000 $6,000
- ---------------------------------------- -------------------------------------- --------------------------------------
</TABLE>
We have an agreement with James Solomon for him to provide hourly fee
based business and marketing consulting. To date, Mr. Solomon's fees total
$7,500 and will be paid from the proceeds of this offering. We anticipate
additional consulting services from Mr. Solomon resulting in fees payable of
approximately $1,500 to $5,000. There are no other agreements or arrangements,
express or implied, between us and any other officer or director, regarding any
other form of compensation, including stock options, warrants, employment
incentives, or the like.
Significant Employee
- --------------------
Except for our officers and directors, we have no significant
employees.
17
<PAGE>
Significant Parties
- -------------------
Set forth below are the names and business and residential addresses,
as applicable, for the following "significant parties":
<TABLE>
<CAPTION>
- ---------------------------------------------- -----------------------------------------------------------------------
(1) Officers and Directors Address
- ---------------------------------------------- -----------------------------------------------------------------------
<S> <C> <C>
James E. Solomon Business: 2051 North Kingston Road
Farmington, UT 84025
Residence: 2051 North Kingston Road
Farmington, UT 84025
- ---------------------------------------------- -----------------------------------------------------------------------
Rick L. Haviland Business: 2051 North Kingston Road
Farmington, UT 84025
Residence: 11086 Sandy Dunes Drive
Sandy, UT 84094
- ---------------------------------------------- -----------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C>
(2) Record owners and beneficial owners of See "SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS".
5% or more of any class of our
securities:
(3) Promoters: None, except for officers and directors.
(4) Affiliates: None, except for officers and directors.
(5) Counsel to the Issuer: Ray, Quinney & Nebeker
79 South Main, Suite 500
Salt Lake City, UT 84145
Craig Wangsgard
3106 Homestead
Park City, UT 84098
</TABLE>
18
<PAGE>
INTEREST OF MANAGEMENT AND
OTHERS IN CERTAIN TRANSACTIONS
Purchase of Stock at Organization and Capital Contributions
- -----------------------------------------------------------
James Solomon, our CEO and Secretary, currently owns all 13,000,000
shares of our stock for which he paid $1,300. All of the shares of common stock
presently issued and outstanding are "restricted securities" as that term is
defined under the Securities Act and, as such, may not be sold in the absence of
registration under the Securities Act or the availability of an exemption
therefrom. Under current law, such shares could not be sold for a period of at
least one year from the date on which they are purchased, and then, only under
limited circumstances.
There have been no additional capital contributions since the purchase
of the 13,000,000 shares of stock.
DESCRIPTION OF SECURITIES
General
- -------
Insider Travel Deals.Com is authorized to issue 105,000,000 shares,
consisting of 100,000,000 shares of common stock, par value $0.0001 per share,
of which 13,000,000 shares are issued and outstanding, and 5,000,000 shares of
preferred stock, par value $0.001 (the "preferred stock"), of which no shares
have been issued.
Common Stock
- ------------
Holders of common stock are entitled to one vote per share on each
matter submitted to a vote at any meeting of stockholders. Shares of common
stock do not carry cumulative voting rights and, therefore, holders of a
majority of the outstanding shares of common stock will be able to elect the
entire board of directors, and, if they do so, minority stockholders would not
be able to elect any members to the board of directors. Our board of directors
has authority, without action by the stockholders, to issue all or any portion
of the authorized but unissued shares of common stock, which would reduce the
percentage ownership of the stockholders and which may dilute the book value of
the common stock.
Shareholders have no pre-emptive rights to acquire additional shares of
common stock. The common stock is not subject to redemption and carries no
subscription or conversion rights. In the event of liquidation, the shares of
common stock are entitled to share equally in corporate assets after
satisfaction of all liabilities. The shares of common stock, when issued, will
be fully paid and non-assessable.
Holders of common stock are entitled to receive dividends as the board
of directors may from time to time declare out of funds legally available for
the payment of dividends. We have not paid dividends on common stock and do not
anticipate that we will pay dividends in the foreseeable future.
19
<PAGE>
Preferred Stock
- ---------------
The board of directors has authority, without action by the
stockholders, to issue all or any portion of the authorized but unissued
preferred stock in one or more series and to determine the voting rights,
preferences as to dividends and liquidation, conversion rights, and other rights
of such series. The preferred stock, if and when issued, may carry rights
superior to those of the common stock.
We do not have any plans to issue any shares of preferred stock.
However, we consider it desirable to have one or more classes of preferred stock
to provide us with greater flexibility in the future in the event that we elect
to undertake an additional financing and in meeting corporate needs that may
arise. If opportunities arise that would make it desirable to issue preferred
stock through either public offerings or private placements, the provision for
these classes of stock in our certificate of incorporation would avoid the
possible delay and expense of a shareholder's meeting, except as may be required
by law or regulatory authorities. Issuance of the preferred stock would result,
however, in a series of securities outstanding that may have certain preferences
with respect to dividends, liquidation, redemption, and other matters over the
common stock which would result in dilution of the income per share and net book
value of the common stock. Issuance of additional common stock pursuant to any
conversion right that may be attached to the preferred stock may also result in
the dilution of the net income per share and net book value of the common stock.
The specific terms of any series of preferred stock will depend primarily on
market conditions, terms of a proposed acquisition or financing, and other
factors existing at the time of issuance. As a result, it is not possible at
this time to determine the respects in which a particular series of preferred
stock will be superior to Insider Travel Deals.Com's common stock. The board of
directors does not have any specific plan for the issuance of preferred stock at
the present time and does not intend to issue any such stock on terms which it
deems are not in our best interest or the best interests of our stockholders.
Resale of Outstanding Shares
- ----------------------------
All 13,000,000 shares of the common stock presently issued and
outstanding are "restricted securities" as that term is defined in Rule 144
adopted under the Securities Act. Rule 144 provides, in essence, that as long as
there is publicly available current information about an issuer, a person
holding restricted securities for a period of at least one year may sell in each
90 day period, provided he is not part of a group acting in concert, an amount
equal to the greater of the average weekly trading volume of the stock during
the four calendar weeks preceding the sale or 1% of the issuer's outstanding
common stock. Consequently, in June 2000, 6,500,000 shares of common stock
currently issued and outstanding will have been held for one year within the
meaning of Rule 144 and may be eligible for resale in accordance with such
volume restrictions. The remaining 6,500,000 will be eligible for resale under
Rule 144 in September 2000. In addition, by September 2001, all 13,000,000
shares now issued and outstanding will be eligible for resale without regard to
such restrictions if the holders of such shares are not then affiliates of the
issuer and have not been so for three months prior to such sale. We contemplate
that James E. Solomon, officer, director and holder of the outstanding shares,
will continue to be our affiliate over the next several years, and will be,
therefore, subject to the restrictions described above. Sales under Rule 144 or
otherwise may, in the future, cause the price of the common stock to drop in any
market that may develop.
20
<PAGE>
Transfer and Warrant Agent
- --------------------------
Our transfer agent is Interwest Transfer Company, Inc., 1981 East
Murray-Holladay Road, Holladay, UT 84117.
PLAN OF DISTRIBUTION
We are offering the common stock to the public on a "2,000,000 share
minimum, 4,000,000 share maximum" basis. There can be no assurance that any of
the shares will be sold. If we fail to sell at least 2,000,000 shares by January
___, 2000, the offering will be terminated and subscription payments will be
promptly refunded in full to subscribers, without paying interest or deducting
expenses. If the minimum number of shares is sold by January ___, 2000, the
offering will continue until five months following the date of this prospectus,
all offered shares are sold, or terminated by us, whichever occurs first.
All subscription payments should be made payable to "Brighton Bank--
INSIDER TRAVEL DEALS.COM, Inc. Escrow Account." We will deposit subscription
payments no later than Noon of the next business day following receipt in the
escrow account maintained by Brighton Bank, 311 South State Street, Salt Lake
City, UT 84111, as escrow agent, pending the sale of at least 2,000,000 shares
by January ___, 2000. The subscription payments will only be released from the
escrow account if the minimum number of shares is sold or for the purpose of
refunding subscription payments to the subscribers. Subscribers will not have
the use or right to return of such funds during the escrow period, which may
last as long as four months.
The shares of common stock in this offering will be offered and sold by
our officers and directors who will receive no compensation, except
reimbursement of expenses actually incurred in connection with such activities
and by Travis Morgan Securities, Inc., as placement agent, which will receive an
8% commission on shares that it sells.
There are no formal arrangements between us and our officers and
directors pursuant to which shares in the offering will be reserved for sale to
person(s) designated by the officers and directors or their affiliates. However,
officers and directors and their affiliates, may purchase shares in the offering
in an aggregate amount of not more than 20% of all offered shares. Since shares
may be offered and sold by officers and directors, it is likely that officers,
directors, or their affiliates desiring to purchase shares in the offering will
be able to do so.
Since we are not utilizing the services of an underwriter for the offer
and sale of the shares in this offering, the independent "due diligence" review
of our affairs and financial condition that is usually performed by an
underwriter has not been performed with respect to this offering. In addition,
since the offering is not being underwritten by a broker-dealer which would
ordinarily be expected to publish quotations for and make a market in the
offered securities following the offering, no assurance can be given that any
market for the common stock will develop following the offering or, that if such
a market should develop, it will be maintained. We have not had any discussions
with any broker-dealer firms regarding the possibility of making a market in the
common stock following the offering.
21
<PAGE>
Insider Travel Deals.Com common stock might be defined as a "penny stock"
pursuant to Rule 3a51-1 under the Securities and Exchange Act of 1934 if the
shares were to be traded at a price less than $5 per share, if Insider Travel
Deals.Com had not yet met certain financial size and volume levels, and if the
shares were not registered on a national securities exchange or quoted on the
NASDAQ system. A "penny stock" is subject to Rules 15g-1 through 15g-10 of the
Securities and Exchange Commission. Those rules require securities
broker-dealers, before effecting transactions in any "penny stock," to (a)
deliver to the customer and obtain a written receipt for a disclosure document
set forth in Rule 15g-10 (Rule 15g-2), (b) disclose certain price information
about the stock (Rule 15g-3), (c) disclose the amount of compensation received
by the broker-dealer (Rule 15g-4) or any "associated person" of the
broker-dealer (Rule 15g-5), and (d) send monthly statements to customers with
market and price information about the "penny stock" (Rule 15g-6). Insider
Travel Deals.Com's common stock could also become subject to Rule 15g-9, which
requires the broker-dealer, in some circumstances, to approve the "penny stock"
purchaser's account under certain standards and deliver written statements to
the customer with information specified in the rules. (Rule 15g-9) These
requirements discourage broker-dealers from effecting transactions in "penny
stocks" and may limit the ability of purchasers in this offering to sell their
shares into any secondary market for Insider Travel Deals.Com's common stock.
We have arbitrarily determined the initial public offering price of the
shares and it bears no relationship to our book value, earnings, or any other
recognized criteria of value.
LEGAL PROCEEDINGS
We are not a party to any pending legal proceedings, or governmental
agency proceedings, and no such action by or, to the best of our knowledge,
against us has been threatened.
EXPERTS
We have not engaged any expert or attorney on a contingent basis, nor
is any expert or attorney to receive a direct or indirect interest in our
securities. In addition, no expert or attorney is, or was, a promoter,
underwriter, voting trustee, director, officer or employee.
Wangsgard & Associates, LLC, 3108 Homestead Drive, Park City, UT 84068,
rendered an opinion that the common stock being offered hereby, when issued,
will be fully paid and non-assessable under the Nevada Revised Statutes.
The financial statements included in this prospectus, to the extent and
for the periods indicated in its report, have been included herein and in the
Registration Statement in reliance on the report of Child & Company, PC, our
independent certified public accountants, given on the authority of such firm as
experts in accounting and auditing.
22
<PAGE>
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to our directors, officers, and controlling persons
pursuant to the foregoing provisions, or otherwise, we have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable.
In the event that a claim for indemnification against such liabilities
(other than our payment of expenses incurred or paid by a director, officer or
controlling person in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection with
the securities being registered, we will, unless in the opinion of our counsel
the matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such indemnification by us is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
FURTHER INFORMATION
We have filed with the Securities and Exchange Commission, a
registration statement on Form SB-1, SEC File No. 333-85467 under the Securities
Act with respect to the securities offered by this prospectus. This prospectus
omits certain information contained in the registration statement. For further
information, reference is made to the registration statement and to the exhibits
and other schedules filed therewith. Statements contained in this prospectus as
to the contents of any contract or other document referred to are not
necessarily complete, and where such contract or other document is an exhibit to
the registration statement, each such statement is deemed to be qualified and
amplified in all respects by the provisions of the exhibit. Copies of the
complete registration statement, including exhibits may be examined at the
office of the Securities and Exchange Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, or copies may be obtained from this office on payment of
the usual fees for reproduction. In addition, the Commission maintains a web
site (address is http.//www.sec.gov), that contains reports, proxy and
information statements and other information regarding issuers, including
Insider Travel Deals.Com, Inc., that file electronically with the SEC.
483089
23
<PAGE>
Letterhead of Child & Company, P.C.
Certified Public Accountants
INDEPENDENT AUDITORS' REPORT
Shareholders and Officers
Insider Travel Deals.Com, Inc.
We have audited the accompanying balance sheet of Insider Travel
Deals.Com, Inc. (a development stage enterprise) as of June 23, 1999,
and the related statement of operations and retained earnings and cash
flows for the period from June 11, 1999 (date of inception) to June 23,
1999. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on
these 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 financial statements
are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe
that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Insider
Travel Deals. Com, Inc. as of June 23, 1999, and the results of its
operations and its cash flows for the period from June 11, 1999 (date
of inception) to June 23, 1999 in conformity with generally accepted
accounting principles.
/s/ Child & Company
June 24, 1999
24
<PAGE>
INSIDER TRAVEL DEALS.COM, INC.
(A Development Stage Enterprise)
Balance Sheet
-------------
June 23, 1999
ASSETS
Current Assets:
Cash and cash equivalents $ 1,300
--------------
Total assets $ 1,300
==============
STOCKHOLDERS' EQUITY
Stockholders' equity - Note 2
Common stock, $.0001 par value
100,000,000 shares authorized,
13,000,000 shares issued and outstanding 1,300
--------------
Total stockholders' equity $ 1,300
==============
25
<PAGE>
INSIDER TRAVEL DEALS.COM, INC.
(A Development Stage Enterprise)
Statement of Operations and Retained Earnings
---------------------------------------------
For the period from June 11, 1999 (date of
inception) to June 23, 1999
Revenues $ 0
Expenses $ 0
Net Income/loss $ 0
Retained earnings during development stage $ 0
26
<PAGE>
INSIDER TRAVEL DEALS.COM, INC.
(A Development Stage Enterprise)
Statement of Cash Flows
-----------------------
For the period from June 11, 1999 (date of
inception) to June 23, 1999
Cash flows from operating activities $ 0
-------
Net income/loss
Net cash provided by operating activities 0
Cash flows from investing activities 0
Cash flows from financing activities
Capital contributions from stockholders 1,300
-------
Net cash provided by financing activities 1,300
-------
Net increase in cash 1,300
Cash at beginning of period 0
-------
Cash at June 23, 1999 $ 1,300
-------
Supplemental disclosures
Cash interest paid $ 0
Income taxes paid $ 0
Non-cash investing and financing activities $ 0
27
<PAGE>
INSIDER TRAVEL DEALS.COM, INC.
(A Development Stage Enterprise)
Notes to Financial Statements
-----------------------------
June 23, 1999
NOTE 1: Summary of Significant Accounting Policies and Business Activity
- ------- ----------------------------------------------------------------
The summary of significant accounting policies of Insider Travel
Deals.Com, Inc. (the Company) is presented to assist in understanding the
Company's financial statements. The financial statements and notes are
representations of the Company's management, which is responsible for their
integrity and objectivity. These accounting policies conform to generally
accepted accounting principles and have been consistently applied in the
preparation of the financial statements.
Business Activity
- -----------------
The Company was organized in the state of Nevada on June 11, 1999 for
the purpose of providing wholesale travel services over the Internet. The
Company has adopted a December 31 accounting year end.
The Company has not realized revenues from the sale of products or
services and, accordingly, is considered to be in its development stage.
Management makes no representations regarding the Company's ability to continue
as a going concern if, or when, it commences its primary business activity. The
Company's business is expected to take place primarily in the State of Utah
where its headquarters will be located.
Significant Accounting Policies
- -------------------------------
Revenue Recognition
- -------------------
The Company records revenues as services are performed and as the
customer is billed or payment received.
Cash and Cash Equivalents
- -------------------------
The Company considers all highly liquid short-term investments with a
maturity of three months or less to be cash equivalents.
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Fixed Assets
- ------------
Depreciable fixed assets will be stated at cost and depreciated using
the straight-line method based on estimated useful lives.
Estimates
- ---------
The preparation of financial statements in accordance with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts of assets and liabilities as well as
footnote disclosures included in the financial statements.
Taxes Bases on Income
- ---------------------
Deferred taxes are provided for items recognized in different periods
for financial and tax reporting purposes in accordance with Financial Accounting
Standards Board Statement No. 109, Accounting for Income Taxes.
Recently Issued Pronouncements
- ------------------------------
In June 1997, the FASB issued SFAS 130, Reporting Comprehensive Income.
The Statement establishes standards for reporting and display of comprehensive
income and its components in a full set of general purpose financial statements.
SFAS 130 is effective for fiscal years beginning after December 15, 1997. The
Company has adopted SFAS 130 with no financial statement impact.
In June 1997, the FASB issued SFAS 131, Disclosures about Segments of
an Enterprise and Related Information. The Statement requires public business
enterprises to report certain information about operation of segments in
complete sets of financial statements of the enterprise and in condensed
financial statements of interim periods issued to shareholders. It also requires
that public business enterprises report certain information about their products
and services, the geographic areas in which they operate, and their major
customers. SFAS 131 will be effective for fiscal years beginning after December
15, 1997. The Company had adopted SFAS 131.
Credit Risk
- -----------
The Company's customers may include individuals and companies that may
be affected by changing economic conditions. The Company will establish policies
that will mitigate its credit risk.
NOTE 2: Shareholders' Equity
- ------- --------------------
The Company has issued 13,000,000 shares of common stock in return for
$1,300 cash equal to par value.
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The Company is authorized to issue 5,000,000 shares of .001 par value
preferred stock. The Company's board of directors has not yet designated voting
rights, liquidation preferences or redemption rights as well as convertibility
features with regards to the preferred stock. To date, no shares of preferred
stock have been issued.
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No dealer, salesman or other person is authorized to give any information or to
make any representations other than those contained in this Prospectus in
connection with the offer made hereby. If given or made, such information or
representations must not be relied upon as having been authorized by Insider
Travel Deals. Com. This Prospectus does not constitute an offer to sell or a
solicitation of an offer to buy any of the securities covered hereby in any
jurisdiction or to any person to whom it is unlawful to make such offer or
solicitation in such jurisdiction. Neither the delivery of this Prospectus nor
any sale made hereunder shall, in any circumstances, create any implication that
there has been no change in the affairs of Insider Travel Deals. Com since the
date hereof.
TABLE OF CONTENTS
Page
PROSPECTUS SUMMARY.............................................................2
RISK FACTORS RELATING TO OUR BUSINESS..........................................3
GENERAL RISKS RELATING TO TRAVEL INDUSTRY......................................4
GENERAL RISKS RELATING TO INVESTMENT...........................................5
DILUTION.......................................................................7
COMPARATIVE DATA...............................................................7
USE OF PROCEEDS................................................................8
BUSINESS.......................................................................9
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.....................14
SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN SECURITYHOLDERS..................15
DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT EMPLOYEES AND PARTIES...........16
INTEREST OF MANAGEMENT AND OTHERS IN CERTAIN TRANSACTIONS.....................19
DESCRIPTION OF SECURITIES.....................................................19
PLAN OF DISTRIBUTION..........................................................21
LEGAL PROCEEDINGS.............................................................22
EXPERTS.......................................................................22
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES.......................................23
FURTHER INFORMATION...........................................................23
Until ___________, 1999 (90 days after the date of this prospectus),
all dealers effecting transactions in the registered securities, whether or not
participating in this distribution, may be required to deliver a prospectus.
Insider Travel Deals.Com, Inc.
4,000,000 shares of common stock
PROSPECTUS
September __, 1999
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 1. INDEMNIFICATION OF DIRECTORS AND OFFICERS
- ------- -----------------------------------------
Section 78.7502 of the Nevada Revised Statutes provides in relevant
part as follows:
1. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by reason of the fact
that he is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses, including attorneys' fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with the action, suit or proceeding if he acted in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, does not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation and that, with respect to any criminal action or
proceeding, he had reasonable cause to believe that his conduct was unlawful.
2. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses, including amounts paid in
settlement and attorneys' fees actually and reasonably incurred by him in
connection with the defense or settlement of the action or suit if he acted in
good faith and in a manner which he reasonably believed to be in or not opposed
to the best interests of the corporation. Indemnification may not be made for
any claim, issue or matter as to which such a person has been adjudged by a
court of competent jurisdiction, after exhaustion of all appeals therefrom, to
be liable to the corporation or for amounts paid in settlement to the
corporation, unless and only to the extent that the court in which the action or
suit was brought or other court of competent jurisdiction determines upon
application that in view of all the circumstances of the case, the person is
fairly and reasonably entitled to indemnity for such expenses as the court deems
proper.
3. To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections 1 and 2, or in defense of
any claim, issue or matter therein, the corporation shall indemnify him against
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expenses, including attorneys' fees, actually and reasonably incurred by him in
connection with the defense. Our articles of incorporation do not contain a
specific indemnification provision for its officers, directors and employees.
However, Article V of our articles of incorporation provides that our officers
and directors do not have any personal liability to the Corporation or its
stockholders for breach of fiduciary duty as a director or officer, except for
damages for breach of fiduciary duty resulting from (a) acts or omissions which
involve intentional misconduct, fraud, or a knowing violation of law; or (b) the
payment of dividends in violation of section 78.300 of the Nevada Revised
Statutes as amended from time to time. Accordingly, we intend to limit the
liability of its officers and directors to the full extent allowed under Nevada
corporate law.
Insofar as indemnification by the Insider Travel Deals for liabilities
arising under the Securities Act may be permitted to our officers and directors
we are aware that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by Insider Travel Deals of
expenses incurred or paid by an officer or director in the successful defense of
any action, suit, or proceeding) is asserted by such officer or director in
connection with the securities being registered hereby, Insider Travel Deals
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue. (See "ITEM 26. UNDERTAKINGS").
ITEM 2. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
- ------- -------------------------------------------
The following table sets forth an itemized estimate of expenses to be
incurred in connection with the sale and distribution of the securities being
registered, other than discounts and commissions:
1. SEC filing fee $ 100
2. Auditing fees* 2,000
3. Legal fees* 25,000
4. Blue Sky fees and expenses (including counsel fees)* 3,000
5. Transfer agent's fees* 1,900
6. Printing, including registration statement and prospectus* 4,000
7. Miscellaneous costs and expenses** 2,000
-------
TOTAL $38,000
=======
* Except for the SEC filing fees, all of the foregoing items are estimates.
** Includes fees for electronic (Edgar) filings
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ITEM 3. UNDERTAKINGS
- ------- ------------
POST-EFFECTIVE AMENDMENTS [Regulation S-B, Item 512(a)]
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration
Statement:
(i) To include any prospectus require by Section 10(a)
(3) of the Securities Act;
(ii) To reflect in the prospectus any fact or events
arising after the effective date of the Registration
Statement (or the most recent post- effective
amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the
information set forth in the Registration Statement;
and
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in
the Registration Statement or any material change to
such information in the Registration Statement,
including (but not limited to) addition or deletion
of a managing underwriter.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be
deemed to be a new registration statement relating to the
securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain
unsold at the termination of the offering.
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers, and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
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jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
ITEM 4. UNREGISTERED SECURITIES ISSUED OR SOLD WITHIN ONE YEAR
- ------- ------------------------------------------------------
We sold 13,000,000 shares of our common stock to Mark Faldmo and James
E. Solomon, officers and directors in connection with our organization. The
common stock was sold for cash at an aggregate price of $1,300, and no
commissions or discounts were paid or given in connection therewith. In
September 1999, Mr. Faldmo sold all of his stock to James E. Solomon. See
prospectus under the caption, "INTRODUCTION" and "CERTAIN TRANSACTIONS: Purchase
of Stock at Organization," which is incorporated herein by reference.
The common stock was issued in the transactions described above in
reliance on the exemption from registration and the prospectus delivery
requirements of the Securities Act provided in Section 4(2) thereof and
applicable exemptions thereunder. The two persons who purchased our common stock
in these transactions were officers and directors, and are sophisticated and
experienced investors. Both purchasers were aware at the time of their purchase
of all material information concerning our proposed business and financial
affairs at the time of the transactions and were, in fact, in possession of all
pertinent information regarding Insider Travel Deals. These two individuals were
instrumental in our organization and creating all such information. Both of
these individuals executed an investment letter in connection with his purchase
of our shares, whereby each of them acknowledged that he was obtaining
"restricted securities" as defined in Rule 144 under the Securities Act; that
such shares cannot be transferred without appropriate registration or exemption
therefrom; that they must bear the economic risk of the investment for an
indefinite period of time; that they would not sell the securities without
registration or exemption therefrom; and that we would restrict the transfer of
the securities in accordance with such representations. Each person agreed that
any certificate representing such shares would be stamped with the usual legend
restricting the transfer of such shares. Each certificate representing such
shares bears a legend prohibiting the sale of such shares pursuant to Rule 144
until one year after the purchase of such shares and full payment therefor.
ITEM 5. INDEX TO EXHIBITS
- ------- -----------------
Copies of the following documents are included as exhibits to this
Registration Statement pursuant to Item Part III of Form I-A and Item 6 of Part
II.
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- --------------------------------------------------------------------------------
Exhibit No. SEC Reference No. Title of Document
----------- ----------------- -----------------
3.1 Articles of Incorporation
3.2 Bylaws
5 Opinion Regarding Legality on Shares
10 James E. Solomon Consulting Contract
24.1 Consents
24.1 Consent of Counsel to Issuer
29.1 Subscription Agreement
29.2 Escrow Agreement
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ITEM 6. DESCRIPTION OF EXHIBITS
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Exhibit No. Description of Exhibit
----------- ----------------------
3.1 Articles of Incorporation*
3.2 Bylaws*
5 Opinion on Legality of Shares
10 Consulting Contract with James E. Solomon
24.1 Consent of Child & Co.*
24.2 Consent of Counsel to Issuer (included in Exhibit 5)
29.1 Subscription Agreement*
29.2 Escrow Agreement*
* Previously filed in Registration Statement No. 333-85467
SIGNATURES
- ----------
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form SB-1 and authorized this Amendment No. 1
registration statement to be signed on its behalf by the undersigned, in the
City of Provo, State of Utah, on September 23, 1999.
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REGISTRANT:
By: /s/ James E. Solomon
------------------------------------
James E. Solomon
Chief Executive Officer, Secretary/Treasurer
In accordance with the requirements of the Securities Act of 1933, this
amended registration statement was signed by the following persons in the
capacities and on the dates stated.
/s/ Rick L. Haviland
------------------------------------
Rick L. Haviland
Chief Financial Officer, Chief Accounting
Officer, President
Date: 09/21/99
/s/ James E. Solomon
------------------------------------
James E. Solomon
Chief Executive Officer, Secretary/Treasurer
Date: 09/21/99
Dated Filed: August 18, 1999
SEC File No. 333-85467
483089
37
Wangsgard
& Associates, LLC
Attorneys at Law
P.O. Box 982194-2194
Park City, UT 84098
Phone/Fax (435) 647-3063
Phone (801) 222-0883
Fax (801) 222-9414
August 2, 1999
The Board of Directors
Insider Travel Deals.Com, Inc.
5252 Edgewood Drive
Provo, UT 84604
Re: Insider Travel Deals.Com, Inc.
Gentlemen:
We have been retained by Insider Travel Deals.Com, Inc. (the "Company") in
connection with the Registration Statement on Form SB-l filed by the Company
with the Securities and Exchange Commission (the "Registration Statement")
relating to 4,000,000 shares of Common Stock (the "Common Stock"). You have
requested that we render an opinion as to whether the Common Stock to be issued
upon the terms set forth in the Registration Statement will be validly issued,
fully paid and non-assessable.
In connection with this agreement we have examined the following:
1. Articles of Incorporation of the Company;
2. The Bylaws of the Company; and
3. Unanimous consents of the board of directors.
We have examined such other corporate records and documents and have made such
other examinations as we deemed relevant.
Based upon the above examination, we are of the opinion that the Common Stock to
be issued pursuant to the Registration Statement, are validly authorized and,
when issued in accordance with the terms set forth therein, will be validly
issued, fully paid, and non-assessable.
We hereby consent to being named in the Prospectus included in the Registration
Statement as having rendered the foregoing opinion and as having represented the
Company in connection with the Registration Statement.
Sincerely yours,
/s/ Craig J. Wangsgard
Wangsgard & Associates, LLC
485977
CONSULTING AGREEMENT
This consulting agreement dated this 20th day of August, 1999 is by and between
Solomon Advisory Services (here-in-after referred to as Consultant) and Insider
Travel Deals.com (here-in-after referred to as Company), a Nevada Corporation.
WHEREAS Consultant has expertise in strategic planning, marketing, accounting
and other important aspects of business,
AND WHEREAS Company is in need of said expertise,
NOW THEREFORE, the parties do hereby enter into this agreement for $10 and other
good and valuable consideration.
Term
- ----
The term of this agreement shall be for a period of three years from the
execution of this agreement. The agreement may be extended for an additional
year upon the mutual consent of both parties.
Compensation
- ------------
Consultant shall be paid at an hourly rate of $100. Company will determine the
amount of hours as well as scope of work to be performed, not to exceed 40 hours
of service in any given month.
Expenses
- --------
Consultant will be reimbursed for travel expenses and other normal costs
incurred in the course of work for the Company. These expenditures will be
approved by Company in advance of being incurred by Consultant.
Independent Agent
- -----------------
Consultant is an independent agent and not an employee of Company. As such,
Consultant shall not represent himself as an employee nor shall he use his
relationship as consultant to bind the Company to any contractual obligations.
Billings/Payments
- -----------------
After the last day of each month, Consultant shall submit a detailed statement
of hours worked and services performed. Company shall review said statement and
remit payment to Consultant within five working days after receipt.
Termination
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This agreement may be terminated by either party upon 90 days written notice.
<PAGE>
Governing Law
- -------------
This agreement shall be governed under the laws of the State of Utah.
Enforcement
- -----------
If this enforcement of this agreement results in litigation between the parties,
the party determined to be in error shall pay for all reasonable attorney fees
incurred by the prevailing party.
SOLOMON ADVISORY SERVICES
/s/ James E. Solomon
By: ___________________________
President
Its: ___________________________
INSIDER TRAVEL DEALS.COM
/s/ Rick Haviland
By: ____________________________
President
Its: ____________________________
