UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period ended June 30, 1997
Commission File Number 33-4734-D
GRAND ADVENTURES TOUR & TRAVEL PUBLISHING CORPORATION
(FORMERLY RILEY INVESTMENTS, INC.)
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(Exact name of registrant as specified in charter)
Oregon 93-0950786
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1120 Capital of Texas Highway South, Bldg. 3, Suite 300, Austin, Texas 78746
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (512) 329-7250
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Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of June 30, 1997, the Company had
outstanding 9,509,024 shares of its common stock, par value $0.0001.
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PART I FINANCIAL STATEMENTS
ITEM 1. FINANCIAL STATEMENTS
GRAND ADVENTURES TOUR & TRAVEL PUBLISHING
CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
Unaudited
June 30, June 30,
1997 1996
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ASSETS
CURRENT ASSETS
Cash and cash equivalents - restricted (Note 2) ........................... $ 105,640 $ 23,878
Accounts receivable, net of allowance
for doubtful accounts of $8,810 in 1997 (Note 2)..................... 50,748 35,589
Due from affiliate (Note 6) ............................................... 126,614 -
Prepaid expenses (Note 2).................................................. 24,754 -
Prepaid hotel cost (Note 2) ............................................... 376,391 208,763
Prepaid cruise and tour cost (Note 2) ..................................... 919,173 931,088
Total Current Assets .............................................. 1,603,319 1,199,318
PROPERTY AND EQUIPMENT, at cost, net of
accumulated depreciation (Notes 2 and 3)................................... 53,890 72,250
OTHER ASSETS
Deferred charges and other assets......................................... 41,848 --
Intangible assets, net of accumulated
amortization (Notes 2 and 5) ..................................... 385,757 634,749
$ 2,084,814 $ 1,906,317
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable .......................................................... $ 431,643 $ 25,614
Other current liabilities ................................................. 150,789 8,970
Current portion of long-term debt (Note 7) ................................ 257,603 52,840
Due to affiliate (Note 6).................................................. - 456,437
Deferred hotel revenue (Note 2) ........................................... 558,677 282,620
Deferred cruise and tour revenue (Note 2) ................................. 905,795 1,201,872
Deferred subscription revenue ............................................. 126,425 75,919
Total Current Liabilities ......................................... 2,430,931 2,104,272
OTHER LIABILITIES
Long-term debt (Note 7) ................................................... 847,989 300,267
Deferred discount (Note 9)................................................. 54,644 --
Total Other Liabilities ........................................... 902,633 300,267
STOCKHOLDERS' (DEFICIT)
Preferred stock, no par value; authorized
10,000,000 shares; none issued and outstanding .................... -- --
Common stock $.0001 par value; authorized
30,000,000 shares; issued and outstanding
9,509,024 and 9,100,000 shares in 1997 and 1996,
respectively (Note 11)............................................ 951 1,000
Additional paid-in capital (deficit) ...................................... 598,209 29,000
Accumulated deficit ....................................................... (1,847,910) (528,222)
Total Stockholders' (Deficit) ..................................... (1,248,750) (498,222)
$ 2,084,814 $ 1,906,317
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GRAND ADVENTURES TOUR & TRAVEL PUBLISHING
CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
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Unaudited
Three Months Ended
June 30, June 30,
1997 1996
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REVENUES
Hotel revenue ............................... $1,324,238 $1,264,958
Cruise and tour revenue ..................... 1,952,618 1,786,314
Magazine subscription and advertising revenue 101,353 158,050
Merchandise and other revenue 5,049 14,500
Total Revenues ..................... 3,383,258 3,223,822
COST OF SALES
Hotel cost .................................. 1,018,773 963,240
Cruise and tour cost ........................ 1,720,256 1,507,105
Magazine publishing cost .................... 187,437 79,490
Merchandise cost ............................ -- --
Total Cost of Sales ................ 2,926,466 2,549,835
Gross Profit ....................... 456,792 673,987
OPERATING EXPENSES
Selling, general and administrative expenses 169,797 325,150
Wages ....................................... 257,327 317,058
Depreciation and amortization ............... 9,449 17,463
Total Operating Expenses ........... 436,573 662,671
Net Income Before Income Taxes ................... 20,219 11,316
Income Tax Expense................................ -- --
Net Income ....................................... $ 20,219 $ 11,316
Net Income Per Common Share (Note 2) ............. $ 0.00 $ 0.00
Weighted Average Common Shares Outstanding ....... 9,509,024 9,100,000
The accompanying notes are an integral part of these consolidated
financial statements.
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GRAND ADVENTURES TOUR & TRAVEL PUBLISHING
CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
================================================================================
Unaudited
Six Months Ended
June 30, June 30,
1997 1996
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REVENUES
Hotel revenue ............................... $ 2,368,617 $ 2,180,135
Cruise and tour revenue ..................... 3,404,548 2,971,388
Magazine subscription and advertising revenue 161,505 230,619
Merchandise and other revenue ............... 8,276 24,985
Total Revenues ..................... 5,942,946 5,407,127
COST OF SALES
Hotel cost .................................. 1,832,621 1,674,067
Cruise and tour cost ........................ 3,000,121 2,556,155
Magazine publishing cost .................... 250,277 139,120
Merchandise cost ............................ -- 1,556
Total Cost of Sales ................ 5,083,019 4,370,898
Gross Profit ....................... 859,927 1,036,229
OPERATING EXPENSES
Selling, general and administrative expenses 398,930 593,246
Wages ....................................... 495,631 568,474
Depreciation and amortization ............... 20,469 26,739
Total Operating Expenses ........... 915,030 1,188,459
Net Loss Before Income Taxes ..................... (55,103) (152,230)
Income Tax Expense................................ -- --
Net (Loss) ....................................... $ (55,103) $ (152,230)
Net (Loss) Per Common Share (Note 2) ............. $ (0.01) $ (0.02)
Weighted Average Common Shares Outstanding ....... 9,509,024 9,100,000
The accompanying notes are an integral part of these consolidated
financial statements.
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GRAND ADVENTURES TOUR & TRAVEL PUBLISHING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
Six Months Ended
June 30, June 30,
1997 1996
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CASH FLOWS FROM OPERATING ACTIVITIES
Net loss .......................................................... $ (55,103) $ (152,230)
Adjustments to reconcile net loss to cash provided by
operating activities:
Depreciation and amortization ....................... 20,469 13,067
Provision for losses on accounts receivable ......... 0 0
Changes in operating assets and liabilities:
Accounts receivable ................................. (30,837) (35,589)
Prepaid expenses .................................... (24,754) 0
Prepaid hotel cost .................................. (124,047) (181,678)
Prepaid cruise and tour cost ........................ (340,258) (931,088)
Accounts payable .................................... (147,345) 18,827
Accrued expenses .................................... (29,079) 8,970
Receivable from affiliates and other ................ (256,675) (19,174)
Deferred hotel revenue .............................. 172,825 241,496
Deferred cruise and tour revenue .................... 282,080 1,201,872
Deferred subscription revenue ....................... 21,366 75,919
Deferred discount ................................... 0 0
Net Cash Provided (Used) by Operating Activities (511,358) 240,392
CASH FLOWS FROM INVESTING ACTIVITIES:
Business acquisitions ........................................ 224,963 (575,128)
Purchase of property and equipment ........................... 0 (35,000)
Proceeds from sale of equipment .............................. 0 10,507
Net Cash Provided (Used) by Investing Activities 224,963 (599,621)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock ........................... 0 30,000
Proceeds from notes payable .................................. 699,246 359,769
Repayments of notes payable .................................. (350,450) (6,662)
Net Cash Provided by Financing Activities ...... 348,796 383,107
Net Increase (Decrease) in Cash .............................. 62,400 23,878
Cash at Beginning of Period .................................. 43,240 0
Cash at End of Period ........................................ $ 105,640 $ 23,878
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for interest ..................... $ 49,585 16,133
The accompanying notes are an integral part of these consolidated financial
statements.
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GRAND ADVENTURES TOUR & TRAVEL PUBLISHING
CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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1. BUSINESS ACTIVITIES
The Company serves a portion of the travel industry known as "interliners".
Interliners are the active employees and retirees of the airline industry, who
may fly on many carriers for free or at a very significantly reduced fare, along
with their families and the friends to whom they pass along their allotments of
no-cost or low-cost flying privileges. Interliners are generally able to procure
hotel or resort accommodations in destination locations, berths on cruise ships
and other travel products at rates representing a courtesy of up to 50% off of
established rates, primarily because interliners have a high propensity to
travel and tend to travel during off-peak periods when "stand-by" space is
available at hotels and resorts and on cruise ships. These factors have led the
travel industry to view interline bookings as incremental revenue that
supplements normal marketing revenue.
The Company serves both interline travelers and operators (hotels, resort,
cruise lines and others) segments of the interline industry through three
distinct business units: Interline Adventures, a publication formerly titled
Airfair Magazine: Interline Travel, which markets hotel-resort space to
interliners and specializes in Mexican and Caribbean locations: and Interline
Representatives, Ltd., which markets cruise and escorted tour packages to
interliners.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Revenue Recognition
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Travel revenue is recognized on a "booked, paid, traveled" basis. This means
that all client funds received and all funds paid to travel suppliers prior to
the travel date are deferred for income recognition until such time as the
client has traveled and the Company has completed its commitment to the client
and the travel suppliers. Subscription sales are deferred for income recognition
until magazines are delivered to subscribers. (See Note 8.)
The assets "Prepaid Hotel Cost" and "Prepaid Cruise and Tour Cost" represent
expenses paid for tours and cruises which have been booked but not yet taken by
the customer. The liabilities "Deferred Hotel Revenue" and "Deferred Cruise and
Tour Revenue" represent payments received for tours and cruises booked but not
recognized as revenue until the customer completes the tour or cruise.
Cash and Cash Equivalents
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Substantially all of the balance in the cash account consists of an escrow
deposit required by Bank One as a reserve for credit card processing. The
Company has agreed to establish an escrow balance of $125,000 to be funded by
depositing amounts equal to 5% of the prior week's gross sales deposit activity
on a weekly basis commencing September 9, 1996, for a six week period.
Commencing the 7th week, the Company agreed to deposit $5,000 per week for a
4-week period, and commencing the 11th week, a deposit of $10,000 per week until
the reserve is fully funded. As of June 30, 1997, the Company had funded the
escrow account to a balance of $105,376.
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GRAND ADVENTURES TOUR & TRAVEL PUBLISHING
CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
2. SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (Continued)-
Cash and Cash Equivalents (continued)
- -------------------------
The Company considers all highly liquid instruments purchased with a maturity at
the time of purchase of less than three months to be cash equivalents.
Allowance for Uncollectible Accounts
- ------------------------------------
The Company provides an allowance for accounts receivable which are doubtful of
collection. The allowance is based upon management's periodic analysis of
receivables, evaluation of current economic conditions, and other pertinent
factors. Ultimate losses may vary from the current estimates and, as additions
to the allowance become necessary, they are charged against earnings in the
period in which they become known. Losses are charged and recoveries are
credited to the allowance.
Income (Loss) Per Share
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The computation of primary income (loss) per share of common stock is based on
the weighted average number of common shares outstanding during the period plus
(in periods in which they have a dilutive effect) the effect of common shares
contingently issuable from stock options and exercise of warrants.
Depreciation and Amortization
- -----------------------------
Property and equipment are stated at cost. Depreciation is computed on the
straight-line method for financial statement purposes. Estimated useful lives
range from 5 to 7 years. Intangibles, consisting of "excess of cost over net
assets acquired" and non-compete covenants are stated at cost and are being
amortized over 40- year and 3-year periods, respectively.
Principles of Consolidation
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The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiary Airfair Publishing Company, Inc. All intercompany
transactions have been eliminated.
Income Taxes
- ------------
Income taxes are provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due plus deferred taxes
related primarily to differences between the basis of certain assets and
liabilities for financial and tax reporting. The deferred taxes represent the
future tax return consequences of those differences, which will either be
taxable or deductible when the assets and liabilities are recovered or settled.
Stock-Based Compensation
- ------------------------
In October 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No.123, Accounting for Stock-Based Compensation.
The Company currently accounts for its stock-based compensation plans using the
accounting prescribed by Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees. Since the Company is not required to adopt the
fair value based recognition provisions prescribed under SFAS No. 123, it has
elected to comply with the disclosure requirements set forth in the Statement,
which includes disclosing pro forma net income as if the fair value based method
of accounting had been applied. (See Note 14.)
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GRAND ADVENTURES TOUR & TRAVEL PUBLISHING
CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Estimates and Assumptions
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Management uses estimates and assumptions in preparing financial statements in
accordance with generally accepted accounting principles. Those estimates and
assumptions affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported revenues and
expenses. Actual results could vary from the estimates that were assumed in
preparing the financial statements.
3. PROPERTY AND EQUIPMENT
Property and equipment at June 30, 1997 and 1996 is as follows:
1997 1996
Property and equipment $93,795 $93,795
Less accumulated depreciation (39,905) (21,545)
Net property and equipment $53,890 $72,250
Depreciation expense for the quarters ending June 30, 1997 and 1996 was $4,590
and $4,599, respectively. Depreciation expense for the six months ending June
30, 1997 and 1996 was $9,180 and $7,600, respectively.
4. ACQUISITIONS
On December 1, 1994, Inventory Merchandising Services, Inc. (IMS) (a wholly
owned subsidiary of Barter Exchange, Inc. (BEI)), acquired the net assets of a
business owned by Lou and Claudia Nackos (Nackos) for the assumption of certain
liabilities in the amount of $144,394. This resulted in a new operating division
called Interline Travel (Interline).
Assets acquired from Nackos consist of the following:
Cash $ 814
Excess of cost over net assets acquired 74,278
Furniture and fixtures 69,302
Total assets acquired $144,394
Airfair Publishing, Inc. (Airfair) is a Delaware corporation formed on January
6, 1996. Immediately subsequent to incorporation of Airfair, the assets and
liabilities of Interline were transferred by IMS into Airfair. Additionally,
existing shareholders of BEI received four shares of Airfair for each share held
in BEI, resulting in 8,500,000 shares issued. An additional 600,000 shares were
authorized by the Board of Directors and issued to two shareholders, resulting
in a total of 9,100,00 shares issued pursuant to the spin-off of the Interline
division in IMS to Airfair. Capital of $30,000 was contributed to Airfair by
BEI.
On January 13, 1996, (Closing Date) [effective December 31, 1995 (Effective
Date)] Airfair acquired certain assets and assumed certain liabilities of
Interline Representatives Ltd. and Airfair Publishing Corp. (IRL/APC) for
$593,791.
Assets acquired from IRL/APC consist of the following:
Furniture and equipment $ 35,000
Covenant-not-to compete 30,000
Excess of cost over net assets acquired 528,791
Total assets acquired $593,791
Liabilities (unadjusted) assumed from IRL/APC consist of the following:
Subscription, prepaid advertising, and tour ledger $204,326
Net assets acquired $389,465
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GRAND ADVENTURES TOUR & TRAVEL PUBLISHING
CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Payment for the net assets acquired from IRL/APC is as follows:
Cash $ 30,000
Note payable #1 (see below) 201,879
Note payable #2 (see below) 157,586
Total payments (unadjusted) $389,465
Both of the promissory notes described above, have identical terms (except as
specified) as follows: The annual interest rate on unpaid principal is 12% per
annum. Interest only will be due on the unpaid balance on January 31, 1996,
February 29, 1996, and March 31, 1996. Thereafter, principal and interest shall
be due and payable in monthly installments of $5,593 on Note #1 and $4,366 on
Note #2, each payable on the last day of each month, beginning April 30, 1996,
until December 31, 1999, when the entire principal and accrued interest
remaining unpaid, shall be due and payable in full. These notes were settled in
full with a cash payment of $75,000 in April, 1997, when the remaining unpaid
balance was $299,963. The difference between the unpaid balance and the
settlement of $224,963 was credited to Goodwill which was created at
acquisition.
The purchase method of accounting was used to account for the above
transactions.
Effective July 19, 1996, Riley Investments, Inc. (Riley) and Airfair executed an
Agreement that provided for the merger of MergerCo, a newly-created,
wholly-owned subsidiary of Riley, with and into Airfair, which became the
surviving corporation, and the conversion of the issued and outstanding Airfair
stock into shares of Riley stock on the basis of one share of Riley stock for
each share of Airfair stock outstanding on the Effective date. On October 7,
1996, articles of amendment were filed on behalf of Riley wherein the name was
changed to Grand Adventures Tour & Travel Publishing Corporation (the Company)
with authority to issue 10,000,000, no par, preferred shares and 30,000,000
common shares with a par value of $.0001. The transaction was accounted for as a
reverse acquisition.
5. INTANGIBLE ASSETS
Intangible assets at June 30, 1997 and 1996 are as follows:
As explained in Note 4 to the financial statements, on December 31, 1994, IMS
acquired the net assets of a business owned by Nackos (referred to herein as
Interline) and assumed certain liabilities. Of the $144,394 total purchase
price, $74,278 represented the excess of the cost over the fair value of net
assets acquired. The excess of cost over net assets acquired is amortized on a
straight-line basis over 40 years.
As explained in Note 4 to the financial statements, on January 13, 1996,
(Closing Date) [effective December 31, 1995 (Effective Date)] Airfair acquired
certain assets and assumed certain liabilities of Interline Representatives Ltd.
and Airfair Publishing Corp. (IRL/APC) . Of the $593,791 total purchase price,
$528,791 represented the excess of the cost over the fair value of net assets
acquired and $30,000 represented a covenant-not-to compete. Also amortizable are
$16,336 of additional legal and acquisition costs. The excess of cost over net
assets acquired is amortized on a straight-line basis over 40 years and the
covenant is amortized over 3 years. Also, as explained in Note 4, Goodwill was
reduced by $224,963 upon the reduced settlement of the debt incurred in the
acquisition.
At June 30, 1997 and 1996, the unamortized cost consists of the following:
1997 1996
Cost $424,442 $649,405
Less accumulated amortization (38,685) (14,656)
Net $385,757 $634,749
Amortization expense for the quarters ended June 30, 1997 and 1996, was $4,919
and $6,370, respectively.
Amortization expense for the six months ended June 30, 1997 and 1996, was
$11,289 and $12,645, respectively.
<PAGE>
GRAND ADVENTURES TOUR & TRAVEL PUBLISHING
CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
6. DUE TO AFFILIATE
The Company entered into a Management Services Agreement with BEI and IMS
whereby BEI agreed to permit the Company to use office space and certain
computer and telephone equipment leased by the Company, BEI and IMS agreed to
provide to the Company certain services including accounting, payroll, services,
and the services of certain executive officers and personnel who perform
services for Airfair, BEI, and IMS. The Company agreed to pay to BEI and IMS,
collectively, a cash sum equal to 1/2% of the Company's gross cash receipts
during any month in which the Agreement remains in effect.
The Company and IMS have also entered into an Inventory Marketing Agreement
whereby the Company sells certain IMS inventories. The Company is required to
make monthly payments to IMS equaling (i) the cash value of the inventory sold
plus (ii) 25% of the collected revenue generated from such sales less such cash
value. At June 30, 1997, BEI/IMS owed the Company $126,614. At June 30, 1996,
the Company owed BEI/IMS $456,437.
7. LONG-TERM DEBT
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At June 30, 1997 and 1996 long-term debt consisted of the following: 1997 1996
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Notes payable to shareholders, due April 30, 2000 including accrued
interest at 12% per annum payable in, in monthly installments, convertible into
common stock
at a conversion price of $0.50 principal amount for each share ................. $ 381,336 $ --
Note payable at $1,163 per month, including
interest at 14% per annum, convertible into common stock at the conversion price
of $1.00 principal amount for each share of common
stock, subordinated to senior indebtedness ..................................... 46,416 --
Note payable with a payment schedule based on
sales of advertising room credits, including interest
at 12% per annum, maturity date is May 15, 1997 ............................... 35,107 --
Note payable (acquisition of IRL/APC - see Note
4) at $5,593 per month, including interest at
12% per annum, collateralized by assets acquired ............................... 0 198,276
Note payable (acquisition of IRL/APC - see Note
4) at $4,366 per month, including interest at
12% per annum, collateralized by assets acquired ............................... 0 154,831
Convertible debentures due April, 2000
7% interest only due on each anniversary with principal due at maturity,
interest may be paid in shares of common stock at the option of the Company at
the rate one share for each $0.50 of interest due, unpaid principal is
convertible into common stock at a conversion price of $0.25 per share...... 500,000 --
Note payable at $1,000 per month for six months beginning April 25,1997,
then $1,500 per month for six months, the $2,000 per month until paid in full,
with interest at 8% per annum .................................................. 50,502 --
Note payable at $4,246 per month beginning April, 1997,
with interest at 6% per annum .................................................. 35,759 --
Note payable at $1,154 per month beginning April, 1997, with interest at
10% per annum, maturity date of March, 1999,
unpaid balance can be converted into common stock at $0.50 per share ........... 22,140 --
Note payable at $1,000 per month beginning May 15,1997
remaining unpaid balance due June 15, 1998, interest at 9% per annum ........... 25,609 --
Note payable at $300.00 per month beginning June 15, 1997
for 35 months at 10% interest per annum ........................................ 8,723 --
1,105,592 353,107
Less current portion ........................................................... (257,603) (52,840)
Total .......................................................................... $ 847,989 $ 300,267
</TABLE>
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GRAND ADVENTURES TOUR & TRAVEL PUBLISHING
CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
8. DEFERRED SUBSCRIPTION REVENUE
Subscription sales are deferred as unearned income at the time of sale. Magazine
customers normally pay for a one-year or two-year subscription in advance. As
magazines are delivered to subscribers, the proportionate share of the
subscription price is taken into revenue. Magazine subscription selling expenses
are deferred and charged to operations over the same period as the related
subscription income is earned.
9. DEFERRED DISCOUNT
In April of 1996, the Company entered into an agreement with a telephone
long-distance service provider wherein the Company receives a discount (credit)
against its telephone charges provided that its annual volume of telephone usage
is equal to at least $240,000 for a period of three years. If the Company fails
to meet the minimum usage requirement, the discount will be forfeited.
The discount credit balance as of June 30, 1997 is $54,644.
10 . INCOME TAXES
The Company had no provision for income taxes at June 30, 1997 and 1996.
There are no reconciling items between the statutory U.S. federal rate and
effective rates for the quarters ended June 30, 1997 and 1996.
At June 30, 1997, Interline has a net operating loss carryforward totaling
approximately $880,000 that may be offset against future taxable income. If not
used, the carryforward will expire in 2011.
11. COMMON STOCK
Riley Investments, Inc. was incorporated as Pace Group International, Inc.,
("Pace") in October, 1987 under the laws of the State of Oregon. On September
20, 1995, the stockholders approved a name change of the Company to Riley
Investments, Inc. As of November 1, 1995, after the effects of the transaction
described below, the Company had no operating assets and was dormant.
On May 23, 1995, the Chairman of the Board, Edwin T. Cornelius, Jr.
("Cornelius"), the Secretary/Treasurer, Joanne Cornelius, and two sons of Mr.
and Mrs. Cornelius entered into an option agreement to sell 2,905,486 common
shares of Pace they owned to Bridgeworks Capital. The above shareholders,
together with another shareholder who was also the son of Mr. and Mrs.
Cornelius, owned an aggregate of 3,984,000 common shares of Pace. The option
agreement, among other provisions, was subject to shareholder approval of a
1-for-15 reverse stock split of the outstanding shares of Pace common stock and
an exchange of substantially all net assets of Pace, including its ownership of
100% of the outstanding common stock of Pace International Research, Inc., for
notes payable and unpaid accrued interest thereon owed to Cornelius which
approximated $422,000 as of October 31, 1995. The above transaction was approved
by the shareholders on September 20, 1995 and became effective November 1, 1995.
Prior to the consummation of the option agreement, Cornelius also transferred
450,000 shares of Pace common stock to two investors who had previously advanced
the Company $525,000 in 1987 pursuant to profit-sharing agreements. Under the
term of those profit-sharing agreements, the investors were to be paid in full
from certain Pace profits. As of October 31, 1995, those investors had not been
repaid for their advances.
The remaining Pace common stock owned by the Cornelius family, which aggregated
628,514 shares, were returned to the Company and 588,674 shares were canceled as
of December 31, 1996.
Airfair Publishing, Inc. (Airfair) is a Delaware corporation formed on January
6, 1996. Immediately Subsequent to incorporation of Airfair on January 6, 1996,
the existing shareholders of BEI received four shares of Airfair for each share
held in BEI, resulting in 8,500,000 shares issued. An additional 600,000 shares
were authorized by the Board of Directors and issued to two shareholders,
resulting in a total of 9,100,000 shares issued pursuant to the spin-off of the
Interline division in IMS to Airfair. (See Note 4.) Capital of $30,000 was
contributed to Airfair by BEI.
In September of 1996, 25,000 shares of common stock were issued for $25,000.
<PAGE>
GRAND ADVENTURES TOUR & TRAVEL PUBLISHING
CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Effective July 19, 1996, Riley and Airfair executed an Agreement that provided
for the merger of MergerCo, a newly-created, wholly-owned subsidiary of Riley,
with and into Airfair, which became the surviving corporation, and the
conversion of the issued and outstanding Airfair stock into shares of Riley
stock on the basis of one share of Riley stock for each share of Airfair stock
outstanding on the Effective date. Airfair shares outstanding on the Effective
date totaled 9,125,000. On October 7, 1996, articles of amendment were filed on
behalf of Riley wherein the name was changed to Grand Adventures Tour & Travel
Publishing Corporation with authority to issue 10,000,000, no par, preferred
shares and 30,000,000 common shares with a par value of $.0001.
Existing shareholders in Riley at the date of conversion held 384,024 shares.
12. LEASING ARRANGEMENTS
As part of the Management Services Agreement with BEI (see Note 6), the Company
is allowed access and use of (i) approximately 8,000 square feet of space leased
by BEI and (ii) all common areas within the building to which BEI is permitted
access. The fees for usage are included in the management services fee
calculation under the Management Services Agreement.
13. SUBSEQUENT EVENTS
Subsequent to the end of the June 30,1997 quarter, the Company raised an
additional $80,000 through short-term borrowings from an existing
shareholder/noteholder. The Company also entered into an agreement with a new
Visa/Mastercard credit card processor as of July 1, 1997. The new processor
requires the Company to fund a new reserve account that will eventually contain
a six month rolling reserve balance equal to 5% of each months Visa/Mastercard
charges.
14. STOCK OPTION PLAN
The Company has a long-term stock incentive plan (LTSIP) that authorizes an
aggregate of 1,000,000 shares of common stock for future grants. Options to
purchase shares of Airfair common stock granted under the previous Airfair stock
option plan were exchanged for comparable options granted under the LTSIP for an
equivalent number of shares pursuant to the terms of the Merger as explained in
Note 4 to the financial statements. Under the plan, the exercise price of each
employee option is $1.00 and the exercise price of options granted to
shareholders range from $.50 to $1.00. An option's maximum term is five years.
Employee options were granted on August 1, 1996, and February 1, 1997, and vest
in three years. Other options are fully vested. The fair value of each option
grant is estimated on the grant date using an option-pricing model with the
following weighted-average assumptions used for grants in 1996: risk-free
interest rate of 6%, and expected lives of 5 years for the options.
A summary of the status of the Company's outstanding stock options as of June
30, 1997 is presented below:
Outstanding Options Exercisable Options
Weighted-
Average
Number Remaining Weighted- Number Weighted-
Range of Outstanding Contractual Average Exercisable Average
Exercise Prices 6/30/97 Life Exercise Price at 6/30/97 Exercise Price
$1.00 1,014,466 4 years $ .94 1,014,466 $ .94
1.00 361,000 4 years 1.00 101,667 1.00
1.00 449,000 4 years 1.00 110,000 1.00
1,824,466 1,226,133
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OR PLAN OF OPERATION
The financial information set forth in the following discussion should be read
in conjunction with, and qualified in its entirety by, the financial statements
of the Company included elsewhere herein.
On December 1, 1994, IMS, a subsidiary of BEI, acquired from an unrelated third
party the net assets that resulted in the IT division in consideration of the
assumption of $144,394 in liabilities. BEI formed Airfair as a subsidiary on
January 5, 1996, in which to consolidate its interline industry activities. On
January 13, 1996, Airfair acquired certain assets and assumed certain
liabilities that became the IRL and Magazine divisions of Airfair in
consideration of the assumption of $593,791 in liabilities, effective December
31, 1995. Following the organization of Airfair, IMS transferred the IT division
to Airfair, effective January 1, 1996. Effective October 10, 1996, Airfair
merged into a newly created, wholly-owned subsidiary of Grand Adventures Tour &
Travel Publishing Corporation (formerly Riley Investments, Inc.). Airfair became
the surviving operating corporation following the merger . In view of the
foregoing acquisitions and merger and its new management team, operating
strategies, expansion plans, resources, and other factors, management does not
believe that a discussion of the operations of the prior operating entity
(Riley) would be meaningful.
Financial Condition and Changes in Financial Condition
The Company had a negative working capital of $827,612 as of June 30,1997, as
compared to a negative working capital of $904,954 at June 30, 1996. The primary
cause for this large deficit in working capital was the loss from operations of
$775,528 for the twelve month interim period from June 1996 to June 1997. The
Company ended the second quarter with $2,430,931 in current liabilities as
compared to $2,104,272 for the prior year comparable quarter. This was a result
of not being able to generate enough cash funds during the year to adequately
sustain the acquisitions and management's intent to grow sales through
increasing the number of publications, size, distribution and quality of the
magazine. The largest components of current liabilities are accounts payable of
$431,643 (of which $294,413 are greater than 90 days past due); accrued expenses
of $150,789; current portion of notes payable of $257,603, and deferred revenues
relating to hotels, cruises and tours and magazine subscriptions of $1,590,897.
A large portion of accounts payable are made up of amounts due for telephone
services, publication of the magazine and attorneys' fees incurred in connection
with the aforementioned merger. The Company has been diligently working with its
primary vendors to work out payment schedules. During the quarter ended June 30,
1997, five of the Company's vendors agreed to convert to notes payable. Accrued
expenses of $150,789 are comprised mainly of payroll, vacation, commissions,
note interest , negative cash balances, and general administrative expenses.
Deferred revenues for hotels and cruises represent the moneys received from
passengers that are deferred for revenue recognition purposes until the
passenger has completed travel. Amounts deferred for hotels were $558,677 and
for cruises $905,795 at June 30, 1997. Deferred subscription revenue of $126,425
represents subscription moneys received but not earned at quarter end. Magazine
subscriptions are normally paid in full in advance for the one- or two-year
subscription period. Revenue is earned on a prorata basis as the magazines are
printed and shipped to the subscribers. Total notes payable of $1,105,592 is a
combination of eight notes totaling $381,336 due shareholders of the Company, a
$46,416 note from a potential future investor, a short-term note of
approximately $35,107.
The holder of the acquisition notes agreed to a substantially discounted
payoff on these notes in April, 1997. The Company completely extinguished this
debt through the payment of $75,000 in cash in April, 1997. The discount
amounted to a reduction of $224,792 in the debt balance with the offset being a
reduction in the amount of goodwill created in the acquisition. The Company
obtained an additional $500,000 in financing during the quarter through the
issuance of convertible debentures due April, 2000. These debentures bear a 7%
annual interest rate due on each anniversary. The Company may pay the interest
due with shares of the Company's common stock at the rate of one share for each
$0.50 of interest due. The holders of the debentures may convert the unpaid
principal into shares of the Company's common stock at a conversion price of
$0.25 per share. These debentures also carry warrants which allows for the
purchase of 1,000,000 of the Company's common stock at a exercise price of $1.00
per share. During the quarter, the Company also negotiated with five different
vendors that allowed for the conversion of several accounts payable into notes
payable of various terms and conditions. The remaining balances of these notes
at quarter end amounted to $142,733 ( see Note 7 Long-term Debt of the financial
statements). Of the total of $1,105,592 in notes, the current portion amounts to
$257,603 and the long term portion equals $847,989. Included in other
liabilities besides the long term debt is a deferred discount of $54,644 that
was received as a service discount from the Company's long distance telephone
carrier in 1996 upon the execution of a long term agreement. The agreement
requires the Company to use a minimum of $240,000 in annual long distance
services for a period of three years. If the Company fails to utilize the
required minimum usage, the discount will be forfeited. The Company anticipates
that it will exceed the annual requirements and will earn all discounts by the
end of the agreement term.
The Company had $2,084,814 in total assets at June 30, 1997 compared to assets
of $1,906,317 at the end of June 30, 1996. Substantially all of the balance in
the cash account of $105,640 consists of an escrow deposit required by the
Company's bank as a reserve for Visa/Mastercard credit card processing. The
Company has ceased processing Visa/Mastercard charges through this processor.
The previous processor will return all unused escrow funds to the Company by
May, 1998. The Company has had a history of minimal chargebacks. The Company has
contracted with a another credit card processor as of July 1, 1997, to continue
credit card processing. The new processor is requiring a six month rolling
reserve of 5% of monthly credit card receipts. Approximately 70% of the
Company's hotel and resort sales are generated through credit cards. The
accounts receivable of $50,748 is comprised primarily of advertising revenue
from vendors that advertised in the magazine and updates. Prepaid tour cost and
prepaid cruise cost of $376,391 and $919,173, respectfully, represent funds paid
to hotels and cruise lines as of June, 1997, for travel dates that occur after
that date. Goodwill consist of the excess of purchase price over net assets
acquired during the aforementioned acquisitions. However, goodwill associated
with the cruise and magazine divisions was reduced by $224,963 during the
quarter due to a reduced lump sum settlement of the notes due the prior owner of
these entities.
Results of Operations
Overall Operating Results
The Company had net income for the quarter ended June 30, 1997 of $20,219 as
compared to a loss of $75,323 for the first quarter of 1997. The primary cause
for the second quarter gain was an increase in revenue of $823,570 over the
previous quarter while maintaining control over expenses. For the six months
ended June 30, 1997 the Company had a net loss of $55,103 as compared to a net
loss $152,927 for the comparable period of 1996. The decreased loss in 1997 is
the result of an increase in sales of approximately $500,000 over the 1996
period as well a reduction in operating expenses of approximately $200,000 over
the same period. The increase in sales is primarily attributed to being able to
more consistently produce and distribute the Company's advertising publications
during the current year. The funding of these publications has come primarily
from funding provided by the debt instruments mentioned previously. Management
also set a goal in the latter part of 1996 of increasing sales through
increasing the size, quality and distribution of the magazine. The magazine's
production schedule was increased to every two months as opposed to every three
months before the Company's acquisition. The magazine also produces an update
brochure promoting hotel and cruise specials in the months in which the magazine
is not produced. Management believes that increased circulation will increase
the value of the publications to both advertisers and subscribers. The Company
intends for the magazine division to increase both advertising and subscription
revenue to the point where this division will at least break even in 1997. The
anticipated value of these publications should be felt through increased sales
in both the hotel and cruise and tour divisions.
Revenue
Gross revenue for the quarter ended June 30, 1997, was $3,383,258 an increase of
$823,570 over the March, 1997 quarter revenues of $2,559,688. Hotel sales
increased 26% for the June, 1997 quarter from $1,044,379 at March, 1997 to
$1,324,238 at June, 30 1997. This increase in hotel sales was primarily caused
by the Company being able to better advertise its products and services in the
magazine and update publications which were more consistently produced and
distributed during the second quarter. The marketing department also
substantially increased the number of available properties to sell to the
interline market during the year. Gross cruise and tour revenue equaled
$1,952,618 for the 1997 June quarter, an increase of $500,688 over the first
quarter. The Company also began selling cruise bump protection insurance to
passengers as a auxiliary product. The Company recognizes hotel and cruise
revenues on a "booked, paid, traveled" basis, (i.e. revenue is not earned until
the passenger has completed travel).
Gross revenue for the six months ended June 30, 1997 increased $535,819 over the
comparable six months of 1996. Cruise and tour revenues accounted for $433,160
of this increase while hotels increased $188,482 over this time frame. These
increases are also attributable to the increased number of publications over
1996.
Cost of Goods Sold
The gross margin for travel sales ( excluding publishing revenue and cost ) for
the second quarter of 1997 was $537,827, or 16.4% of gross travel sales. This
compares to a gross margin of $402,596 or 16.1% of gross sales, for the 1997
first quarter. While cruises typically have a much higher dollar value per sale,
the margin percentages are lower on the average than hotel sales. The hotel
division had cost of sales of $1,018,773 on sales of $1,324,238 for the current
quarter producing a gross margin of $305,465, or 23.1% of sales. The comparable
first quarter hotel cost of sales were $813,848 generating a gross margin of
$230,531, or 22.1% of sales of $1,044,379. The margins on hotel sales have
remained very consistent. The cruise division generated a gross margin of
$232,362 or 11.9% on sales of $1,952,618 for the quarter ended June 30, 1997.
This compares to the prior quarterly margin of $172,065 or 11.9% on sales of
$1,451,930. Average margins on cruises can range from 10% to 18% depending on
which cruise line is booked. The magazine division produced a negative margin of
$86,084 for the current quarter. This was the result of increasing the number of
publications produced and distributed during the quarter. The Company only
recognizes those publishing costs directly associated with the subscriber and
advertising commitments as cost of goods sold. Any publishing cost for excess
production and distribution is recorded as Company advertising expense as it for
the benefit of the hotel and cruise sales.
The gross margin for hotel sales for the six months ended June 30, 1997, was
$535,996 or 22.6% of sales. Cruise and tour gross margin for the same period was
$404,427 or 11.9% of sales. The comparable 1996 margin for hotels was $505,068
or 23.2% of hotel sales. Cruises in 1996 produced a $415,233 margin or 13.9% of
sales. The larger 1996 cruise margin percentage was the result of one unusual
underbooked cruise in June 1996 that the Company contracted with that was able
to produce a margin of approximately $84,000 on sales of approximately $110,000.
Operating Expenses
Operating expenses for the quarter ended June 30, 1997 were $436,573 as compared
to $478,458 for the first quarter. This resulted in a decrease of $41,000 for
the quarter. This was the result of Management's continuing efforts to control
expenses that do not effect the production of revenue. The largest expense item
for the Company is wages which equaled $257,327 for the June 1997 quarter as
compared to $238,304 for the previous quarter. Salaries for the six month period
ended June 30, 1997 equaled $495,631 as compared to $568,474 fro the previous
year. The Company reduced salary expenses as of January 1, 1997 through the
reduction of personnel and attrition. Another major expense category for the
Company is telephone expenses which ran approximately $124,000 for the six
months ended June 30, 1997 compared to $160,000 for the 1996 period. The last
major expense area were management fees. Airfair entered into a management
agreement with BEI and IMS effective March 1, 1996. Under this agreement, BEI
permits Airfair to use office space and certain equipment leased by BEI, and BEI
and IMS provide Airfair insurance, payroll services, office supplies and other
minor office services. IMS and BEI charge Airfair a management fee equal to 0.5%
of Airfair's gross revenue per month for these services. In addition, pursuant
to the terms of the management agreement, IMS, BEI, and Airfair agreed that
Airfair would reimburse BEI for a portion of the direct payroll expenses of
certain members of management who serve BEI, IMS, and Airfair (the "Shared
Management Members"). The proportion is intended to correspond with the amount
of time expended by the Shared Management Members on the business matters of
Airfair. These management fees and the payroll reimbursements for Shared
Management Members totaled $110,168 for the six months ended June 30, 1997, as
compared to a $49,365 credit for the six months of 1996.. Prior to the
management agreement, all general and administrative expenses of BEI were
allocated to Airfair and IMS on a ratio basis. In February 1996, BEI incurred a
large one-time gain which exceeded its expenses. As such, both Airfair and IMS
were the beneficiaries of an expense credit for that month. Airfair's portion of
that allocation was a credit of approximately $142,000.
Liquidity and Capital Resources
Since Airfair's inception, it has financed its business growth through
internally generated revenue, borrowings from its former sole stockholder, BEI,
and borrowings from new stockholders subsequent to its spin-off from BEI. In
September, 1996, the Company borrowed $400,000 from seven shareholders ("bridge
loans") that were collateralized with 130,868 shares of equity securities that
are owned by BEI. BEI executed a Security Pledge Agreement in favor of the
lenders. In November, 1996, the Company initiated a private placement to
qualified investors and offered up to 2,000,000 shares of its common stock at a
price of $1.00 per share. The Company has not raised any funds through this
offering as of this filing. Thereafter, management has taken a different
strategy in raising and conserving funds needed for operations in 1997 and
thereafter. Since January 1, 1997, management has reduced expenses by
approximately $40,000 per month through a reduction in nonessential personnel,
changing to a lower priced package delivery service, obtaining more services
such as small printing jobs on a trade basis and reducing any other expenses
that are not considered absolutely necessary to the ongoing needs of the
operation.
During the current quarter, the Company has raised funds through additional
long-term borrowings. The bridge loans were restructured in a transaction
whereby the loanholders agreed to the release of the pledged equity securities
in exchange for the following: (1) payment of all accrued interest through April
10, 1997, which was paid in the amount of approximately $29,000, (2) the loan
broker received a fee of $20,000, (3) 40,000 Company common stock warrants were
issued to the loan broker and 20,000 stock warrants were issued to a principal
of the loan broker, all exercisable at $1.00 per share, (4) the bridge loans
were converted to 3-year notes bearing 12% annual interest , with principal and
interest payable monthly, beginning in May, 1997, the outstanding principal
balance is convertible (at note holders' option) into Company common stock at
$.50 per share, and no prepayment penalties. Also in April and May, 1997, the
Company raised an additional $500,000 from ten investors through the issuance of
three-year convertible debentures. The debentures carry an annual interest rate
of 7%. Interest and principal are due and payable in annual installments on each
anniversary. At the option of the Company, interest payments due prior to the
maturity date may be made in shares of common stock of the Company at the rate
one share for each $0.50 of interest accrued and payable. The debenture holder
has the right at any time prior to maturity to convert all or any portion of the
then outstanding principal balance into fully paid and non-assessable shares of
common stock of the Company at a conversion price of $0.25 per share of such
outstanding principal amount, subject to adjustment from time to time as
provided for in the debenture.
The Company also extinguished (in April, 1997) the $299,963 of notes payable
that were incurred in connection with the acquisition of the cruise and magazine
division for a cash settlement of $75,000 (See Financial Condition and Changes
in Financial Condition above). As a result of the above, the Company has been
able to expand the distribution and number of publications advertising the
Company's hotel and cruise and tour packages which should substantially increase
sales in both areas. During the current quarter, the Company also negotiated the
conversion of five accounts payable vendors into notes payable with various
terms and conditions ( see Note 7 to the financial statements ). The remaining
unpaid balance of these vendor notes was $142,733 at June 30,1997. Management
has and is continuing to negotiate with its accounts payable vendors in order to
work out acceptable payment schedules for all parties.
As a result of the transactions described in the preceding paragraph, management
believes that its existing working capital levels, supplemented by cash expected
to be generated by existing operations and cash generated through stock sales or
other financing arrangements, will be sufficient to fund the Company's needs
over the next 12 months. Management's belief is based on a number of assumptions
including, without limitation, that increased gross sales will result from
increased distribution (both in terms of frequency and number of issues) of the
Company's publications and that the Company can continue to operate effectively
at reduced levels of operating expenses. There can be no assurance that the
foregoing assumptions and the other assumptions relied upon by management will
prove accurate and any such inaccuracy may cause the Company to need working
capital. Moreover, there are no assurances that the Company will be able to
procure any such capital should it be needed and any such inability may have an
adverse effect on the Company's business, financial condition and future
operating results.
Inflation
The Company's results of operations have not been affected by inflation and
management does not expect inflation to have a significant effect on its
operations in the future because of the short time frame between reservation
bookings and the dates of travel.
Forward -Looking Information
From time to time, the Company or its representatives have made or may make
forward-looking statements, orally or in writing. Such forward-looking
statements may be included in, but not limited to, press releases, oral
statements made with the approval of an authorized executive officer or in
various filings made by the Company with the Securities and Exchange Commission.
Words or phases "will likely result", "are expected to", "will continue", "is
anticipated", "estimate", "project or projected", or similar expressions are
intended to identify "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995 ("the Reform Act"). The Company
wishes to ensure that such statements are accompanied by meaningful cautionary
statements, so as to maximize to the fullest extent possible the protections of
the safe harbor established in the Reform Act. Accordingly, such statements are
qualified in their entirety by reference to and are accompanied by the following
discussion of certain important factors that could cause actual results to
differ materially from such forward-looking statements.
Management is currently unaware of any trends or conditions other than those
previously mentioned in this management's discussion and analysis that could
have a material adverse effect on the Company's consolidated financial position,
future results of operations, or liquidity.
However, investors should also be aware of factors that could have a negative
impact on the Company's prospects and the consistency of progress in the areas
of revenue generation, liquidity, and generation of capital resources. These
include: (i) variations in the mix of hotel, cruise, and magazine revenues, (ii)
possible inability to attract investors for its equity securities or otherwise
raise adequate funds from any source should the Company seek to do so, (iii)
increased governmental regulation, (iv) increased competition, (v) unfavorable
outcomes to litigation involving the Company or to which the Company may become
a party in the future and, (vi) a very competitive and rapidly changing
operating environment. Furthermore, reference is also made to other sections of
this report that include factors that could adversely impact the Company's
business and financial performance.
The risks identified here are not all inclusive. New risk factors emerge from
time to time and it is not possible for Management to predict all of such risk
factors, nor can it assess the impact of all such risk factors on the Company's
business or the extent to which any factor or combination of factors may cause
actual results to differ materially from those contained in any forward-looking
statements. Accordingly, forward-looking statements should not be relied upon as
a prediction of actual results.
<PAGE>
PART II OTHER INFORMATION
ITEM 6. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
a. An annual Shareholders' meeting was held at the Company's corporate offices
in Austin, Texas on June 24, 1997. The number of qualified shareholder votes
attending the meeting either in person or by proxy totaled 6,642,992 shares. The
total outstanding number of common shares of the Company at the time of the
Shareholder meeting totaled 9,509,024 shares. Therefore, a quorum was present.
b. The Shareholders re-elected the following incumbents to the Board of
Directors for the ensuing year:
Matthew O'Hayer, Chairman of the Board
Robert Sandner, Director
Mark Waller, Director
Mr. O'Hayer received 6,642,992 votes for with no votes against or abstentions.
Mr. Sandner received 6,642,992 votes for with no votes against or abstentions.
Mr. Waller received 6,642,992 votes for with no votes against or abstentions.
c. The Shareholders elected Andersen, Andersen & Strong as the Company's outside
auditors for the ensuing year. The votes for were 6,642,992 with no votes
against or abstentions.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
b. Reports on Form 8-K
None
<PAGE>
Signatures
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
(Registrant) Grand Adventures Tour & Travel Publishing Corporation
Date August 11,1997 By /s/ Joseph S. Juba
--------------- ----------------------
Joseph S. Juba, President/
Chief Operating Officer
Date August 11, 1997 By /s/ Darrell W.Barker
--------------- ---------------------
Darrell W. Barker, Chief Financial Officer
Date August 11, 1997 By /s/ Matthew O'Hayer
--------------- -----------------------
Matthew O'Hayer, Chairman of the Board and
Chief Executive Officer
<PAGE>
EXHIBIT INDEX
Exhibit
Number Exhibit Description
27.1 Financial Data Schedule.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary information extracted from Balance Sheet at
6/30/97, Statement of Income and Accumulated Deficit at 6/30/97 and is qualified
in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 105,640
<SECURITIES> 0
<RECEIVABLES> 59,558
<ALLOWANCES> (8,810)
<INVENTORY> 0
<CURRENT-ASSETS> 1,603,319
<PP&E> 93,795
<DEPRECIATION> (39,905)
<TOTAL-ASSETS> 2,084,814
<CURRENT-LIABILITIES> 2,430,931
<BONDS> 0
0
0
<COMMON> 951
<OTHER-SE> (1,249,701)
<TOTAL-LIABILITY-AND-EQUITY> 2,084,814
<SALES> 5,934,670
<TOTAL-REVENUES> 5,942,946
<CGS> 5,083,019
<TOTAL-COSTS> 5,083,019
<OTHER-EXPENSES> 915,030
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 41,248
<INCOME-PRETAX> (55,103)
<INCOME-TAX> 0
<INCOME-CONTINUING> (55,103)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (55,103)
<EPS-PRIMARY> (0.01)
<EPS-DILUTED> (0.00)
</TABLE>
