<PAGE> 1
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 SEPTEMBER 30, 1998
------------------
COMMISSION FILE NUMBER 33-4734-D
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GRAND ADVENTURES TOUR & TRAVEL PUBLISHING CORPORATION
(FORMERLY RILEY INVESTMENTS, INC.)
-----------------------------------------------------
(Exact name of registrant as specified in charter)
OREGON 93-0950786
------------------------------- -------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
211 EAST 7TH STREET, 11TH FLOOR, AUSTIN, TEXAS 78701
- ---------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (512) 391-2000
--------------
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 November 6, 1998, the Company
had outstanding 3,021,412 shares of its common stock, par value $0.0001.
<PAGE> 2
PART I FINANCIAL STATEMENTS
ITEM 1. FINANCIAL STATEMENTS
GRAND ADVENTURES TOUR & TRAVEL PUBLISHING
CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
UNAUDITED AUDITED
SEPTEMBER 30, DECEMBER 31,
1998 1997
------------- -----------
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 2,078,355 $ --
Restricted Cash 68,486 181,375
Accounts receivable, net of allowance for
Doubtful accounts of $12,020 93,115 103,310
Note receivable from affiliate 412,047 255,361
Accrued investment income 20,797 --
Prepaid offering expenses -- 113,507
Prepaid expenses 254,411 --
Prepaid hotel cost 376,823 53,027
Prepaid cruise and tour cost 422,097 80,482
Rooms/Cabins held for sale 207,312 182,978
----------- -----------
Total Current Assets 3,933,444 970,041
----------- -----------
PROPERTY AND EQUIPMENT, AT COST, NET OF
Accumulated depreciation 324,233 58,851
----------- -----------
OTHER ASSETS
Other assets 44,917 37,179
Intangible assets, net of accumulated
Amortization 361,163 375,919
----------- -----------
$ 4,663,757 $ 1,441,990
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Cash overdraft $ -- $ 26,095
Accounts payable 73,403 420,303
Other current liabilities 99,376 335,294
Current portion of long-term debt -- 290,562
Deferred hotel revenue 533,339 284,939
Deferred cruise and tour revenue 492,878 153,056
Deferred subscription revenue 61,489 80,641
----------- -----------
Total Current Liabilities 1,260,484 1,590,890
----------- -----------
OTHER LIABILITIES
Long-term debt -- 1,282,812
----------- -----------
Total Other Liabilities -- 1,282,812
----------- -----------
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
3,021,412 and 1,431,858 shares in 1998 and 1997,
Respectively 302 143
Additional paid-in capital 6,634,624 959,447
Accumulated deficit (3,231,654) (2,391,302)
----------- -----------
Total Stockholders' Equity 3,403,272 (1,431,712)
----------- -----------
$ 4,663,757 $ 1,441,990
=========== ===========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
2
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GRAND ADVENTURES TOUR & TRAVEL PUBLISHING
CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
================================================================================
<TABLE>
<CAPTION>
UNAUDITED
THREE MONTHS ENDED
---------------------------------
SEPTEMBER 30, SEPTEMBER 30,
1998 1997
------------- -------------
<S> <C> <C>
REVENUES
Hotel revenue $ 1,664,602 $ 1,105,218
Cruise and tour revenue 2,921,753 2,317,601
Magazine subscription and advertising revenue 109,041 178,771
Interest income 48,921 --
Merchandise and other revenue 6,780 5,737
----------- -----------
Total Revenues 4,751,097 3,607,327
----------- -----------
COST OF SALES
Hotel cost 1,283,305 687,600
Cruise and tour cost 2,569,558 2,078,279
Magazine publishing cost 234,509 145,924
----------- -----------
Total Cost of Sales 4,087,372 2,911,803
----------- -----------
Gross Profit 663,726 695,524
OPERATING EXPENSES
Selling, general and administrative expenses 429,724 305,430
Wages 620,240 307,806
Depreciation and amortization 20,999 9,509
----------- -----------
Total Operating Expenses 1,070,963 622,745
----------- -----------
Net Income (Loss) Before Income Taxes (407,237) 72,779
Income Tax Expense -- --
----------- -----------
Net Income (Loss) $ (407,237) $ 72,779
=========== ===========
Net Income (Loss) Per Common Share $ (0.13) $ 0.04
----------- -----------
Weighted Average Common Shares Outstanding 3,021,412 1,631,838
----------- -----------
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
3
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GRAND ADVENTURES TOUR & TRAVEL PUBLISHING
CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
================================================================================
<TABLE>
<CAPTION>
UNAUDITED
NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1998 1997
------------ ------------
<S> <C> <C>
REVENUES
Hotel revenue $ 4,351,970 $ 3,473,835
Cruise and tour revenue 6,754,551 5,722,149
Magazine subscription and advertising revenue 485,772 340,276
Interest income 111,846 --
Merchandise and other revenue 16,760 14,013
------------ ------------
Total Revenues 11,720,900 9,550,273
------------ ------------
COST OF SALES
Hotel cost 3,378,239 2,520,221
Cruise and tour cost 5,913,701 5,078,400
Magazine publishing cost 699,398 396,201
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Total Cost of Sales 9,991,338 7,994,822
------------ ------------
Gross Profit 1,729,562 1,555,451
OPERATING EXPENSES
Selling, general and administrative expenses 958,323 704,360
Wages 1,561,782 803,436
Depreciation and amortization 49,809 29,978
------------ ------------
Total Operating Expenses 2,569,914 1,537,774
------------ ------------
Net Income (Loss) Before Income Taxes (840,353) 17,676
Income Tax Expense -- --
------------ ------------
Net Income (Loss) $ (840,353) $ 17,676
============ ============
Net Income (Loss) Per Common Share $ (0.28) $ 0.01
------------ ------------
Weighted Average Common Shares Outstanding 3,021,412 1,631,838
------------ ------------
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
4
<PAGE> 5
GRAND ADVENTURES TOUR & TRAVEL PUBLISHING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS SEPTEMBER 30, 1998 AND 1997
<TABLE>
<CAPTION>
UNAUDITED
SEPTEMBER 30, SEPTEMBER 30,
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss $ (840,353) $ 17,676
Adjustments to reconcile net loss to cash provided by
operating activities:
Depreciation and amortization 49,809 29,978
Provision for losses on accounts receivable 0 0
Bridge loan financing charge 0 0
Changes in operating assets and liabilities:
Restricted Cash 112,889 0
Accounts receivable 10,195 (56,343)
Accrued investment income (20,797) 0
Rooms/Cabins held for sale 30,666 0
Prepaid offering expenses 113,507 0
Prepaid expenses (254,411) 0
Prepaid hotel cost (323,796) (313,400)
Prepaid cruise and tour cost (396,615) (231,406)
Other assets (7,738) 0
Accounts payable (346,900) (235,554)
Accrued expenses (235,918) 303,096
Note receivable from affiliates and other (156,686) (254,460)
Deferred hotel revenue 248,400 115,902
Deferred cruise and tour revenue 339,822 203,866
Deferred subscription revenue (19,152) 13,934
Deferred discount 0 (54,644)
----------- -----------
Net Cash Provided (Used) by Operating Activities (1,697,078) (461,355)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Business acquisitions 0 224,963
Purchase of property and equipment (300,434) 0
Proceeds from sale of equipment 0 0
----------- -----------
Net Cash Provided (Used) by Investing Activities (300,434) 224,963
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock 5,675,336 0
Proceeds from notes payable 0 786,892
Repayments of notes payable (1,573,374) (402,869)
----------- -----------
Net Cash Provided by Financing Activities 4,101,962 384,023
----------- -----------
Net Increase (Decrease) in Cash 2,104,450 147,631
Cash at Beginning of Period (Overdraft) (26,095) 43,240
Cash at End of Period (Overdraft) $ 2,078,355 $ 190,871
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION
Cash paid during the period for interest $ 24,405 $ 65,288
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
Supplemental schedule of non-cash investing and financing activities:
For the nine months ended September 30, 1998, the Company had non-cash
transactions of $30,666 which represents the net change between utilization of
room credits during the period and new room credits received under advertising
agreements.
The Company also had $863,388 of convertible notes payable that converted into
389,554 shares of the Company's common stock.
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GRAND ADVENTURES TOUR & TRAVEL PUBLISHING
CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
(Unaudited)
1. GENERAL
The accompanying unaudited consolidated financial statements have been prepared
in conformity with the accounting principles stated in the audited financial
statements for the year ended December 31, 1997 and reflect all adjustments
which are, in the opinion of management, necessary for a fair statement of the
financial position as of September 30, 1998 and the results of operations for
the periods presented. These statements have not been audited or reviewed by the
Company's independent certified public accountants. The operating results for
the interim periods are not necessarily indicative of results for the full
fiscal year.
The notes to consolidated financial statements appearing in the Company's Annual
Report on form 10-KSB for the year ended December 31, 1997 filed the Securities
Exchange Commission should be read in conjunction with this Quarterly Report on
Form 10-QSB. There have been no significant changes in the information in those
notes other than from normal business activities of the Company.
2. COMMON STOCK
On December 17, 1997, the Board of Directors approved a reverse stock split
whereby, the Company would issue 1 share of common stock for every 7 shares of
common stock held by existing shareholders at the date of the transaction. All
share transactions, outstanding shares, and related share amounts have been
adjusted to take into effect the 1-for-7 reverse stock split.
On February 5, 1998, the Company issued stock pursuant to a public offering
(Offering) whereby, 1,200,000 common shares were issued for $5.00 per share.
Gross proceeds from the Offering totaled $6,000,000 with net proceeds (after
underwriting discount, commissions and expenses) to the Company of $5,230,000.
In conjunction with the Offering, $863,388 of debt was converted into 389,554
shares of common stock.
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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.
GENERAL
The first nine months of 1998 represent aggressive expansion in critical areas
of the Company including marketing, publication circulation, technology and
product development. The successful completion of the Company's public stock
offering ("the" OFFERING") during the first quarter of 1998 contributed to the
significant expansion during the year. The Company's attempts to target in
marketing produced a steady increase in the number of field representatives
distributing the Company's marketing materials to professional airline personnel
around the world. After increasing distribution of their publications, the
Company has applied for a circulation audit of the magazine distribution list.
At completion of the audit, the Company will have a "controlled" circulation of
their publications, which should enhance the Company's in addition to the
ability to sell advertising to non-vendors. In the third quarter, the Company
installed a state-of-the-art phone system and began development of a new
multi-functional web-site with on-line reservation processing. The Company also
focused on development of their product base during the year resulting in an
increased number of properties and destinations available to the Company's
client base. The Company established a presence in two new destinations, Orlando
and Hilton Head in addition to a major upgrade of properties in Las Vegas,
Hawaii and London. As a result of the expenses associated with expansion in
these areas, the Company sustained a loss of $407,000 for the current quarter.
However, the Company realized revenue increases in cruise and tour sales, as
well as a significant increase in magazine advertising revenue.
In addition to the increased expenses related to the above mentioned expansion,
the Company recruited, hired and trained qualified sales representatives to
accommodate the increased phone volume generated from the expansion in
marketing, publishing and product development. Full-time employment at the
Company increased 66%, from 44 on January 1, 1998 to 73 at November 8, 1998.
On November 5, 1998, subsequent to the end of the quarter, the Company acquired
the interline related assets of Exclusively Cruises, Atlanta, Inc. a privately
held travel company offering cruises and tours to the retail and interline
markets. The purchase consideration will be paid in cash and accounted for using
the purchase method of accounting. This acquisition is expected to generate in
excess of $1 million in annual revenues with no material increase in related
operating expenses. Among the assets acquired included the trade name
"Exclusively Interline" and client list with over 14,000 airline employee names
that will be integrated into the Company's client base for distribution of
marketing materials.
The Company continues to hold approximately $2.1 million in cash and cash
equivalents. All long-term debt has been extinguished since the public stock
offering in February 1998. Total stockholders' equity was $3.4 million at
September 30, 1998, as compared to a deficit of $1.4 million at September 30,
1997. Revenues for the nine months ended September 30, 1998 rose 22.7% to $11.7
million compared with $9.5 million during the first nine months of 1997. Gross
profit increased 11% to $1.7 million for the period compared with $1.5 million
for the same period a year ago. The smaller increase in gross profit as compared
to sales increases was primarily the result of the increased payroll expenses
and publishing/distribution expenses associated with the Company's publications
as well as a decrease in hotel/resort margins as compared to the prior year.
During the prior year quarter, the Company repriced the hotel rooms it purchased
from IMS in accordance with the Inventory Marketing Agreement which resulted in
a distortion of the prior year margins and margin percentages. Please see the
September 30, 1997 Form 10QSB where this repricing was disclosed. The net loss
for the nine-month period was $840,000, or $0.28 a share, compared with net
income of $17,000, or $0.01 a share, during the prior year.
Because of the losses that have been incurred to date, management of the Company
implemented a plan of internal reorganization in September, 1998, with the
intent of reducing operating expenses. Included in this plan was a reduction of
support personnel and of non-income producing related expenses while not
jeopardizing the areas associated with product revenue.
THE OFFERING
On February 5, 1998, the Company completed an underwritten public offering
("Offering") for 1,200,000 shares of its Common Stock, $.0001 par value at $5.00
per share through an underwriting syndicate led by Capital West Securities, Inc.
The gross proceeds of the offering were $6,000,000. After underwriting discount
and commissions, the net proceeds to the Company were $5,230,000. From February
through September, 1998, the Company utilized a portion of these proceeds to:
(a) pay off all notes payable that did not convert to common stock in an amount
of approximately $821,000; (b) to pay offering expenses of $425,000; (c) to
purchase computer and telephone equipment and furniture of $250,000; (d) to pay
past due vendor payables and operating and publishing expenses of $690,000; and
(e) the funding of operations since the Offering. The remaining funds are being
used for implementing the Company's business plan, which focuses primarily on
building the marketing and publishing areas of the Company. The Company is now
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<PAGE> 8
substantially debt free, with the exception of normal operating expenses and
accruals and holds a substantial cash reserve. See "LIQUIDITY AND CAPITAL
RESOURCES."
FINANCIAL CONDITION AND CHANGES IN FINANCIAL CONDITION
The Company had a positive working capital of $2.7 million as of September
30, 1998, as compared to a negative working capital of $829 thousand at
September 30, 1997. The cause for this increase in working capital between years
was the cash infusion from the Offering. Total current assets increased $2.1
million between years to $3.9 million with the largest increase being in cash.
The Company ended the quarter with $1.3 million in current liabilities as
compared to $2.6 million for the prior year quarter. This decrease in current
liabilities was primarily a result of the Company's previously mentioned debt
and vendor payments.
Accrued expenses are comprised mainly of payroll, vacation, commissions,
publishing 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. These
deferred liabilities are very short-term in nature due to the short time frame
between booking date and travel date. Deferred subscription revenue 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.
The Company had $1.6 million in notes payable and convertible debentures at
December 31, 1997. Subsequent to the Offering, holders of $863,000 of
convertible debt elected to convert their debt into approximately 389,554 shares
of Common Stock. All of the remaining debt was repaid subsequent to the
Offering.
The Company had $4.7 million in total assets at September 30, 1998 compared
to assets of $2.2 million at the end of September 30, 1997. The Company had $2.1
million in cash and cash equivalents at the end of the period. The restricted
cash balance of $68,000, represents escrow deposits required by the Company's
previous banks as a reserve for charge backs against the Company's
Visa/MasterCard credit card processing. The Company changed banking and credit
card relationships during the prior quarter whereby no separate escrow deposit
will be required. The currently held escrow deposits will be returned to the
Company over the next few months.
The accounts receivable balance is comprised primarily of advertising
revenue due from vendors that advertised in the Magazine and Updates. Prepaid
tour cost and prepaid cruise cost represents funds paid to hotels and cruise
lines as of September 30, 1998, for travel dates that occur after that date.
These prepaid items relate directly to the previously discussed deferred
revenues and are also very short-term in nature. Room/Cabins held for sale
arises out of advertising agreements where hotels and cruise lines allot rooms
and cabins in exchange for advertising in the Company's publications. There was
also a balance due from affiliates (BEI/IMS) which is secured by a short term
promissory note bearing interest and collateralized by shares in a publicly
traded company. The agreement calls for the shares to be sold on the open market
over time with the proceeds being used to pay off the balance due the Company.
RESULTS OF OPERATIONS
Overall Operating Results
The Company had a net loss for the quarter ended September 30, 1998 of
$407,000, as compared to a loss of $147,000 for the prior quarter ended June 30,
1998. The comparable quarters for 1997 resulted in a gain of $72,000 for
September, 1997 and a gain of $20,000 for June, 1997. The current quarter loss
is primarily a result of increased expenses associated with the aggressive
expansion of its marketing distributions, which is expensed as incurred although
revenues generated from these expenditures will primarily be recognized in
future periods. During the current quarter, the Company hired a National
Director of Advertising to increase the advertising revenue for the Company's
publications. It is anticipated the results of creating this position will not
be felt until the first part of the 1999 fiscal year. The Company plans on
having sufficient 1999 advertising and subscription revenue to more than offset
the cost of producing and distributing the Company's publications.
Gross profit decreased $32,000 to $664,000 for the quarter compared with
$696,000 for the prior year quarter. This was primarily the result of the cost
associated with increasing the number of publications produced and distributed
over the prior year quarter as well as the prior year repricing of hotel rooms
purchased from IMS which has been referred to above under the caption titled
"General". The Company's operating expenses increased to $1,070,000 or 72% from
the 1997 third quarter. Staffing increases in reservations and technology
personnel also caused expense growth to outpace the increase in recognized
revenues. Increased revenue this quarter was primarily the result of bookings
generated with the expansion of the Company's marketing distributions.
Revenue
Gross revenue for the quarter ended September 30, 1998, was $4.8 million,
an increase of $1.1 million or 32% over the 1997 third quarter. Hotel and resort
sales increased 50% while cruises/tours increased 26% over the comparable
quarters. For the first nine
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months of 1998 gross revenue increased 23% to $11.7 million over comparable 1997
revenue of $9.5 million. Since the Offering, the Company has increased the
quantity, distribution and frequency in the production of its publications and
has utilized a portion of the proceeds of the Offering in this effort.
Management anticipates that sales should continue to grow with the aid of a
stronger distribution network and a consistent and increased publishing
schedule. 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).
Cost of Goods Sold
The average margins for hotel and resort sales continues to range between
22% to 23%. The prior year margins appear higher due to the IMS repriced hotel
rooms referred to under the "General" caption above. Average cruise and tour
gross margins ranged between 12% to 14%. Margins for both hotels and cruises can
fluctuate depending on the mix of properties being sold and the varying margins
associated with these properties. Publishing cost increased due to a large
increase in the number of publications being distributed. The Company
anticipates that the number of Magazines and Updates issued in the future will
continue to increase as the Company continues to increase its airline employee
database through its marketing efforts as well as the aforementioned
acquisition.
Operating Expenses
Operating expenses for the quarter ended September 30, 1998, were
$1,071,000 as compared to $623,000 for the prior year comparable quarters an
increase of 72%. The primary increases in expenses relate to marketing, sales,
training and increased staffing at both the support and reservation personnel
levels. The Company added reservation, marketing, accounting, and management
information services personnel in order to service both the increase in
telephone and Web site inquiries. The Company brought an interactive, searchable
web site (http://perx.com) containing information and rates for most of the
properties it sells on-line during the prior quarter. There were also increases
in depreciation due to the aforementioned furniture and equipment purchases.
Because of the increase in new bookings previously mentioned, the Company also
experienced a significant increase in credit card fees, telephone and postage
and delivery charges. The revenue associated with these expenditures will be
recognized when travel has occurred which may or may not be in the same quarter
as the expense. As previously mentioned, management has undergone a plan of
reorganization to control operating expenses.
The Company anticipates that future expense increases will be primarily in
adding reservation and marketing staff to accommodate increased sales growth.
LIQUIDITY AND CAPITAL RESOURCES
The Company has an accumulated deficit of $3.2 million ($544,000 of this
deficit is attributable to periods prior to the Company's commencement of
operations within the interline travel industry and $357,000 is attributable to
a one-time non-cash charge incurred December 1997 in connection with the
Offering).
The Company borrowed approximately $1.4 million from various parties during
the 1997 calendar year in order to fund operations. All notes have subsequently
been repaid or converted to stock. Since the Offering, the Company is virtually
debt free except for normal recurring vendor payables, leases as described
herein and client receipts for reservations in advance of travel. The Company
continues to hold a substantial cash reserve in order to implement future plans
of the Company.
NEW ACCOUNTING PRONOUNCEMENTS
The Company has adopted FASB Statement 128, a recently issued accounting
standard. It is not expected that the Company will be impacted by other recently
issued standards. FASB Statement 128 presents new standards for computing and
presenting earnings per share (EPS). The Statement is effective for financial
statements for both interim and annual periods ending after December 15, 1997.
FASB Statement 131 presents news standards for disclosures about segment
reporting. The Company does not believe that this accounting standard applies to
the Company as all operations of the Company are integrated for financial
reporting and decision making purposes.
YEAR 2000
The Company is currently in the process of evaluating its information
technology infrastructure for Year 2000 compliance. The Company's accounting
system has been upgraded to accommodate the Year 2000 and beyond. The Company
currently does not expect that the cost of its Year 2000 compliance program will
be material to its financial condition or results of operations or that its
business will be adversely affected by the Year 2000 issue in any material
respect. Nevertheless, achieving Year 2000 compliance is dependent on many
factors, some of which are not completely within the Company's control. Should
either the Company's internal systems or the internal
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<PAGE> 10
systems of one or more significant vendors or suppliers fail to achieve Year
2000 compliance, the Company's business and its results of operations could be
adversely affected.
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.
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PART II OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
a. The annual Shareholders' meeting was held at the Company's corporate
offices in Austin, Texas on July 8, 1998. The number of qualified shareholder
votes attending the meeting either in person or by proxy totaled 1,264,552
shares. The total outstanding number of common shares of the Company as of April
9, 1998, the date of record for the Shareholder meeting totaled 3,021,412
shares. Therefore, a quorum was present.
b. The Shareholders elected the following individuals to the Board of
Directors to serve until the next annual meeting:
Matthew O'Hayer, Chairman of the Board
Robert Sandner, Director
Robert G. Rader, Director
Duane K. Boyd, Director
Mr. O'Hayer received 1,262,552 votes for, 2,000 votes abstaining, and no votes
against
Mr. Sandner received 1,262,552 votes for, 2,000 votes abstaining, and no votes
against
Mr. Rader received 1,262,552 votes for, 2,000 votes abstaining, and no votes
against
Mr. Boyd received 1,262,552 votes for, 2,000 votes abstaining, and no votes
against
There being no further business, the Shareholder meeting was adjourned.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
b. Reports on Form 8-K
None
11
<PAGE> 12
SIGNATURES
In accordance with Section 13 or 15(d) 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
By /s/ Joseph S. Juba
-----------------------------------------
Joseph S. Juba, President/Chief Operating
Officer
Date November 12, 1998
-----------------------------------------
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By /s/ Darrell W. Barker
---------------------------------------------
Darrell W. Barker, Chief Financial Officer
Date November 12, 1998
---------------------------------------------
By /s/ Matthew O'Hayer
---------------------------------------------
Matthew O'Hayer, Chairman of the Board
and Chief Executive Officer
Date November 12, 1998
---------------------------------------------
By /s/ Robert Sandner
---------------------------------------------
Robert Sandner, Director
Date November 12, 1998
---------------------------------------------
By /s/ Robert Rader
---------------------------------------------
Robert Rader, Director
Date November 12, 1998
---------------------------------------------
By /s/ Duane K. Boyd
---------------------------------------------
Duane K. Boyd, Director
Date November 12, 1998
---------------------------------------------
12
<PAGE> 13
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
27.1 Financial Data Schedule
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 2,078,355
<SECURITIES> 0
<RECEIVABLES> 517,182
<ALLOWANCES> (12,020)
<INVENTORY> 0
<CURRENT-ASSETS> 3,933,444
<PP&E> 407,292
<DEPRECIATION> (83,059)
<TOTAL-ASSETS> 4,663,757
<CURRENT-LIABILITIES> 1,260,484
<BONDS> 0
0
0
<COMMON> 302
<OTHER-SE> (3,231,654)
<TOTAL-LIABILITY-AND-EQUITY> 4,663,757
<SALES> 11,704,140
<TOTAL-REVENUES> 11,720,900
<CGS> 9,991,338
<TOTAL-COSTS> 9,991,338
<OTHER-EXPENSES> 2,569,914
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (840,353)
<INCOME-TAX> 0
<INCOME-CONTINUING> (840,353)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (840,353)
<EPS-PRIMARY> (0.28)
<EPS-DILUTED> (0.28)
</TABLE>
