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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, 1999
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
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
211 EAST 7TH STREET, 11TH FLOOR, AUSTIN, TEXAS 78701
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (512) 391-2000
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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 October 29, 1999, the Company
had outstanding 3,024,883 shares of its common stock, par value $0.0001.
<PAGE> 2
ITEM 1. FINANCIAL STATEMENTS
GRAND ADVENTURES TOUR & TRAVEL PUBLISHING
CORPORATION AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
UNAUDITED AUDITED
SEPTEMBER 30, DECEMBER 31,
1999 1998
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<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 618,230 $ 236,452
Available for sale securities 1,103,868 1,868,469
Cash-restricted 210,000 175,500
Accounts receivable, net of allowance for -- --
doubtful accounts of $43,163 in 1999 and 1998 395,461 191,226
Due from affiliate, net of allowance for -- --
doubtful accounts of $128,046 in 1999 and 1998 118,126 80,065
Accrued investment income 14,025 17,850
Prepaid other 25,074 96,613
Rooms/cabins held for sale 1,239,758 253,901
Prepaid hotel cost 165,566 135,252
Prepaid cruise and tour cost 198,321 78,944
----------- -----------
Total Current Assets 4,088,428 3,134,272
PROPERTY AND EQUIPMENT, AT COST, NET OF
Accumulated depreciation 649,945 410,504
OTHER ASSETS
Other assets 11,680 11,680
Intangible assets, net of accumulated amortization 616,532 680,543
----------- -----------
TOTAL ASSETS $ 5,366,585 $ 4,236,999
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 32,786 $ 277,802
Other current liabilities 360,705 196,908
Short-term debt 549,580 616,500
Deferred hotel revenue 333,169 471,034
Deferred cruise and tour revenue 224,037 92,209
Deferred subscription revenue 32,376 48,706
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Total Current Liabilities 1,532,652 1,703,159
OTHER LIABILITIES
Long-term debt 1,050,000 --
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Total Other Liabilities 1,050,000 --
STOCKHOLDERS' (DEFICIT)
Preferred stock, not par value; authorized
10,000,000 shares; none issued and outstanding
Common stock $.0001 par value; authorized
30,000,000 shares; issued and outstanding
3,024,883 shares in 1999 and 1998,
respectively 302 302
Additional paid-in capital 6,610,474 6,610,474
Accumulated deficit (3,826,844) (4,076,936)
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Total Stockholder's Equity 2,783,932 2,533,840
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5,366,585 $ 4,236,999
=========== ===========
</TABLE>
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
<TABLE>
<CAPTION>
UNAUDITED
THREE MONTHS ENDED
------------------------------
SEPTEMBER 30, SEPTEMBER 30,
1999 1998
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<S> <C> <C>
REVENUES
Travel revenue $ 7,227,424 $ 4,586,355
Publishing revenue 675,609 109,041
Interest income 40,066 48,921
Other revenue 10,250 6,780
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TOTAL REVENUE 7,953,349 4,751,097
COST OF SALES
Travel cost 5,893,082 3,852,863
Publishing cost 462,962 234,509
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TOTAL COST OF SALES 6,356,044 4,087,372
GROSS PROFIT 1,597,305 663,725
OPERATING EXPENSES
Selling, general & administrative expense 970,098 429,724
Salaries 464,208 620,240
Depreciation and amortization 49,497 20,999
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TOTAL OPERATING EXPENSES 1,483,802 1,070,963
NET INCOME/(LOSS) BEFORE INCOME TAX 113,503 (407,238)
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INCOME TAX EXPENSES -- --
----------- -----------
NET INCOME/(LOSS) $ 113,503 $ (407,238)
=========== ===========
NET INCOME/(LOSS) PER COMMON SHARE $ 0.04 $ (0.13)
----------- -----------
</TABLE>
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
<TABLE>
<CAPTION>
UNAUDITED
NINE MONTHS ENDED
--------------------------------
SEPTEMBER 30, SEPTEMBER 30,
1999 1998
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<S> <C> <C>
REVENUES
Travel revenue $ 19,309,902 $ 11,106,521
Publishing revenue 1,771,239 485,772
Interest income 122,682 111,846
Other revenue 24,520 16,760
------------ ------------
TOTAL REVENUE 21,228,343 11,720,899
COST OF SALES
Travel cost 15,854,318 9,291,940
Publishing cost 1,177,113 699,398
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TOTAL COST OF SALES 17,031,431 9,991,338
GROSS PROFIT 4,196,912 1,729,561
OPERATING EXPENSES
Selling, general & administrative expense 2,583,772 958,323
Salaries 1,226,130 1,561,782
Depreciation and amortization 136,916 49,809
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TOTAL OPERATING EXPENSES 3,946,819 2,569,914
NET INCOME/(LOSS) BEFORE INCOME TAX 250,093 (804,353)
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INCOME TAX EXPENSE -- --
------------ ------------
NET INCOME/(LOSS) $ 250,093 $ (840,353)
============ ============
NET INCOME/(LOSS) PER COMMON SHARE $ 0.08 $ (0.28)
------------ ------------
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
4
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GRAND ADVENTURES TOUR & TRAVEL PUBLISHING CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
<TABLE>
<CAPTION>
UNAUDITED
------------------------------
SEPTEMBER 30, SEPTEMBER 30,
1999 1999
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<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
NET INCOME/(LOSS) $ 250,093 $ (840,353)
Adjustments to reconcile net income/loss to cash provided
by operating activities:
Depreciation and amortization 136,916 49,809
Changes in operating assets and liabilities:
Cash-restricted (34,500) 112,889
Accounts receivable (204,235) 10,195
Receivable from affiliates and other (38,061) (156,686)
Accrued investment income 3,825 (20,797)
Rooms/cabins held for sale (985,857) 30,666
Prepaid offering expenses -- 113,507
Prepaid expenses 71,539 (254,411)
Prepaid hotel cost (30,314) (323,796)
Prepaid cruise and tour cost (119,377) (396,615)
Other assets -- (7,738)
Accounts payable (245,016) (346,900)
Accrued expenses 163,797 (235,918)
Short term debt (66,920) --
Deferred hotel revenue (137,865) 248,400
Deferred cruise and tour revenue 131,828 339,822
Deferred subscription revenue (16,330) (19,152)
----------- -----------
Net cash provided (used) by investing activities (1,120,476) (1,697,078)
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of marketable short-term investments 764,601 --
Purchase of property and equipment (312,346) (300,434)
----------- -----------
Net cash provided (used) by investing activities 452,255 (300,434)
CASH FLOW FROM FINANCING ACTIVITIES:
Proceeds from sale of common stock -- 5,675,336
Proceeds from long term debt 1,050,000 --
Repayments of notes payable -- (1,573,374)
----------- -----------
Net cash provided (used) by financing activities 1,050,000 4,101,962
Net increase (decrease) in cash 381,779 2,104,450
----------- -----------
Cash at beginning of period 236,452 (26,095)
Cash at end of period $ 618,231 $ 2,078,355
=========== ===========
</TABLE>
The accompanying notes are an integral part of
these consolidated financial statements.
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
The Company had net non-cash transactions for the nine months ended September
30, 1999 in the amount of $985,857 which represents the net change between
utilization of room credits used during the quarter and new room credits
acquired under advertising agreements. For the nine months ended September 30,
1998, the net change in the room credits was $(30,666). For the nine months
ended September 30, 1998, the Company had a non-cash transaction whereby
$863,388 of convertible notes payable were converted into 389,554 shares of the
Company's common stock at the date of offering.
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GRAND ADVENTURES TOUR & TRAVEL PUBLISHING
CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1999
(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, 1998 and reflect all adjustments
which are, in the opinion of management, necessary for a fair statement of the
financial position as of September 30, 1999 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 the consolidated financial statements appearing in the Company's
Annual Report on form 10-KSB for the year ended December 31, 1998 filed with 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 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.
3. LONG-TERM DEBT
Beginning on September 18, 1999, the Company offered $1,500,000 of convertible
debentures for sale in a private placement to accredited investors. The
debentures bear interest at 10% per annum, payable quarterly in arrears. For a
period of one year from the date of issuance, the debentures are convertible
into the Company's common stock at the rate of 1 share of common stock for each
$2.625 of debentures. After one year from the date of issue, the debentures are
convertible into the Company's common stock at the rate of 1 share of common
stock for each $2.50 of debentures. If not converted, the debentures are due and
payable in four years. If all of the debentures are converted, the Company will
issue 600,000 shares of common stock. As of September 30, 1999, the Company had
received a total of $1,050,000 from the sale of debentures. Management projects
that an additional $450,000 will be received prior to December 31, 1999.
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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
Gross revenue for the quarter ended September 30, 1999 increased 68% over the
comparable quarter for 1998. The Company realized gross revenue of approximately
$8 million and net income of $113 thousand as compared to gross revenue of $4.8
million and a loss of $(407) thousand for the prior year quarter. Gross earned
revenues for all product lines registered significant increases over the
comparable third quarter of 1998. Hotel and resort travel sales increased 107%,
cruise and tour travel sales increased 27% and advertising sales increased 519%.
For the nine months ended September 30, 1999, gross revenue was $21.2 million,
which represents an 81% increase over the first nine months of 1998 revenue of
$11.7 million. Net income for the current nine months was $250 thousand or $.08
per share as compared to a loss of $(840) thousand or $(0.28) per share for the
prior year comparable time frame.
During the first nine months of 1999, the Company experienced significant
increases in phone call volume, web site transactions and advertising contracts
negotiated through the end of third quarter 2000. As a result, the Company added
new personnel primarily in the reservations and advertising areas in order to
accommodate this increase in business. The Company had 91 full-time employees at
September 30, 1999.
During the third quarter, the Company began implementation of two significant
technology related systems, a new call center telephone system and a new
reservation software system. As of the end of the quarter, the new telephone
system was installed and operational. The new telephone system will allow for a
smoother flow of reservation center calls as well as provide management improved
reporting. Management anticipates that this data will reduce personnel related
expenses in the future in that the information provided by this system will
enable the Company to better adapt to staffing levels needed during peak and
non-peak telephone volume periods as well as channel calls to agents more
experienced in the destination being requested by the client. The other
significant system implementation during the quarter was new reservation system
software which will not only enable easier booking for reservations but which
also will provide a vehicle for customers to book reservations directly on-line
via the Company's web site. It is anticipated that the reservation system will
be fully operational before the end of the year.
New travel bookings with money (either paid in full or a deposit received) were
approximately $19.6 million for the first nine months of 1999 and new
advertising contracts for the Company's publications were approximately $2.2
million. The Company does not recognize travel revenue as earned until travel
has occurred, therefore some of the revenue from the new bookings mentioned
above may have been recognized during the first nine months of 1999 while some
of the revenue will be recognized the future. The Company attempts to require
some form of payment at the time of booking. Most of the advertising contracts
cited are twelve-month commitments and therefore are recognized into income over
the contract period. Expenses associated with generating these bookings and
advertising contracts were expensed as incurred.
The Company believes this increase in business was a direct result of increased
marketing efforts including increasing the number of field representatives
distributing the Company's marketing materials to professional airline personnel
around the world as well as increasing the number of publications distributed.
The Company has also focused on development of its product base resulting in an
increased number of properties and destinations available. In addition, the
Company's web site has experienced a substantial increase in the number of
requests for travel information. The Company believes that the benefits of these
efforts will not be limited to the periods in which these efforts were made but
will provide a foundation for continued future growth.
FINANCIAL CONDITION AND CHANGES IN FINANCIAL CONDITION
Total current assets increased $3 thousand during the quarter to $4.1 million
and current liabilities decreased approximately $1 million to $1.6 million. The
primary cause for the slight increase in current assets and the significant
decrease in current liabilities resulted from a repayment of a short-term loan
during the quarter. Due to the large increase in vendor advertising contracts
negotiated during the quarter, the total value of room inventory increased by
approximately $464 thousand. A substantial number of hotel vendors exchange room
or person night credits for advertising space in the Company's publications.
Total cash and investment securities net of related short-term borrowings
decreased approximately $1.1 million during the current quarter. This decrease
in net cash balances was the result of the increase in rooms/cabins held for
sale, increased number of publications issued during the quarter and the
purchase of equipment necessary to handle the increase in business. The
restricted cash balance of $210 thousand represents a portion of the Company's
certificates of deposit pledged as a reserve for charge backs against the
Company's Visa/MasterCard credit card processing and also pledged against
various letters of credit to hotel/cruise vendors. The
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letters of credit serve as security for the vendors to allow the Company to make
last minute bookings with these vendors without having to pay in advance of
travel. None of these letters of credit have been drawn on to date.
Accounts receivable balances are comprised primarily of cash advertising revenue
due from vendors that advertised in the Magazine and Updates as well as
commissions due from cruise lines for clients that have already traveled. The
balance due from affiliates 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 net income for the quarter ended September 30, 1999 of $113
thousand, as compared to a loss of $(407) thousand for the comparable prior year
quarter. Net income for the quarter resulted from increased traveled revenue and
advertising sales associated with the expansion of its marketing distributions.
The Company believes that the benefits of this expansion were not fully realized
in 1998 when significant funds were expended in all of these areas, and will
continue to be realized in subsequent periods. The amount of travel booked,
travel revenue and advertising sales for the first nine months of 1999 were
substantially in excess of comparable quarters in 1998.
Revenue
Gross revenue for the quarter ended September 30, 1999 increased $3.2 million or
68% over the comparable 1998-quarter levels. Hotel and resort sales increased
$1.8 million while cruises/tours sales increased $795 thousand over the 1998
quarter. In addition, advertising and subscription revenues increased $566
thousand over this same time frame. A substantial number of these advertising
contracts call for the Company to receive a number of room or person nights
credits in lieu of cash payment. Management anticipates that both travel and
advertising sales should continue to grow with the aid of a stronger
distribution network for its publications and a consistent and increased
publishing schedule. Management also believes that the revenues from the
publishing and travel portions of its business are integrally tied to one
another - improved hotel sales, for example, facilitate sales of advertising to
hotels and increased hotel advertising improves the likelihood of sales of rooms
within the hotels that advertise.
The first nine months of 1999 produced gross revenue of $21.2 million, which
represents an 81%, or $9.5 million increase over the first nine months of 1998.
All product lines experienced increases over 1998 levels. Hotels and resort
revenue increased $5 million or 118%, cruise and tour revenue increased
approximately $3 million or 43% and advertising revenue increased $1.2 million
or 264%. In addition, the Company has earned $144 thousand in air and rail
revenue during 1999.
The Company recognizes hotel and cruise revenues on a "booked, paid, traveled"
basis (i.e. revenue is not earned until the passenger has traveled). The Company
sells advertising over a given number of issues and advertising revenues are
recognized as the applicable publications are printed and distributed. In the
case of annual advertising contracts, revenue is recognized pro-rata over the
term of the contract.
Cost of Goods Sold
The gross margin for hotel and resort sales for the quarter ended September 30,
1999 was 25.2% which represents approximately a two point increase over the 1998
third quarter margin of 22.9%. Cruise and tour gross margin was 12.4% for the
current quarter as compared to 12.1% for the prior year. Margins for both hotels
and cruises can fluctuate depending on a number of factors relative to the
properties being sold including, but not limited to, competition, location, and
availability of supply. Publishing cost which includes the costs associated with
pre-production, printing, paper and delivery of the Company's Magazine and
Update increased as a result of the increase in the number of publications being
distributed. Publishing margin for the current quarter was a positive 31% as
compared to a negative 115% for the prior year quarter. The major turnaround in
margin was attributable to the growth in advertising revenue. The Company
anticipates that the number of Magazines and Updates issued in the future will
continue to increase as the Company increases its airline employee database
through its marketing efforts as well as possible future acquisitions of
interline related companies.
Operating Expenses
Operating expenses for the current quarter increased 38% over the prior year
quarter. The primary increases in expenses relate to increased staffing at both
the support and reservation personnel levels. Over the past eighteen months the
Company added reservation, sales, marketing, accounting, and information
services personnel in order to service both the increase in telephone and web
site inquiries. The Company has an interactive, searchable web site
(http://perx.com) containing information and rates for the majority of the
properties offered to interliners.
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Due to the increase in booking volume, the Company also experienced a
significant increase in credit card fees, telephone, 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.
With the anticipated increase in sales, the Company believes that the following
types of operating expenses will vary with travel sales and generally increase
as travel sales increase: reservation personnel costs, credit card fees,
telephone, and postage and delivery expenses. The actual levels of these
expenses will be a function of numerous factors including but not limited to the
experience, closing capabilities and product knowledge of the reservation staff.
LIQUIDITY AND CAPITAL RESOURCES
The Company continues to hold cash reserves in order to implement its future
plans. The proceeds of the private placement of debentures provided the Company
with sufficient additional cash resources to complete the implementation of its
updated telephone and reservation systems, finance the increase in room/cabin
inventory and fund the expenses related to sales growth. The Company does not
currently foresee any liquidity problems in funding its future growth with these
cash reserves and funds generated from operations; sales generated from acquired
entities and private placement proceeds.
NEW ACCOUNTING PRONOUNCEMENTS
The Company has adopted FASB Statement 128. 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 new 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 PREPAREDNESS
The Company recognizes that computer systems and all forms of electronic
technology, information technologies and non-information technologies, could be
adversely affected by the year 2000 date. This is because many systems and
technology components use a two-digit field to represent the year in dates
(e.g., "98" rather than "1998"). With the advent of year 2000, systems and
programs may fail or produce incorrect data believing it is the year 1900,
causing not just information technology problems but also business and
operations problems.
The Company is currently in the process of evaluating its information technology
infrastructure for Year 2000 compliance. The Company's accounting and
reservation systems have been upgraded to accommodate the Year 2000 and beyond.
As previously mentioned, the Company has also invested in new telephone and
reservation software systems both of which are Year 2000 compliant. 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 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.
FOREIGN CURRENCY RISK
The Company has entered into contracts with certain hotels/resorts located
primarily in Europe which stipulate conversion of U.S. dollars into different
foreign currencies at time of travel. The Company is currently evaluating its
foreign currency risk in regard to these contracts. To date, the amount of
Company sales of these properties has been immaterial to the Company's financial
operations and the Company has not experienced any erosion of margins on sales
of these properties due to currency conversion rates. There can be no assurance
given that foreign currency risk will not have a material adverse affect on
future foreign travel sales.
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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 6. EXHIBITS AND REPORTS ON FORM 8-K
b. Reports on Form 8-K
On October 29, 1999, the Company filed a form 8-K disclosing the issuance of
$1,500,000 of convertible debentures in a private placement. The debentures bear
interest at the rate of 10% per annum, payable quarterly in arrears. For a
period of one year from the date of issuance, the debentures are convertible
into the Company's common stock at the rate of 1 share of common stock for each
$2.625 of debentures. After one year from the date of issue, the debentures are
convertible into the Company's common stock at the rate of 1 share of common
stock for each $2.50 of debentures. If not converted the debentures are due and
payable four years after issuance. If all of the debentures are converted, the
Company will issue 600,000 shares of common stock. As of September 30, 1999, the
Company had received a total of $1,050,000 from the sale of the debentures.
Management believes that an additional $450,000 will be received by December 31,
1999.
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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 October 29, 1999
----------------
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 October 29, 1999
----------------
By /s/ Matthew O'Hayer
----------------------
Matthew O'Hayer, Chairman of the Board and Chief
Executive Officer
Date October 29, 1999
----------------
By /s/ Robert Sandner
----------------------
Robert Sandner, Director
Date October 29, 1999
----------------
By /s/ Robert Rader
----------------------
Robert Rader, Director
Date October 29, 1999
----------------
By /s/ Duane K. Boyd
----------------------
Duane K. Boyd, Director
Date October 29, 1999
----------------
<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-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 618,230
<SECURITIES> 1,103,868
<RECEIVABLES> 513,587
<ALLOWANCES> (171,209)
<INVENTORY> 1,239,758
<CURRENT-ASSETS> 4,088,428
<PP&E> 649,945
<DEPRECIATION> (136,916)
<TOTAL-ASSETS> 5,366,585
<CURRENT-LIABILITIES> 1,532,652
<BONDS> 0
0
0
<COMMON> 302
<OTHER-SE> (3,826,844)
<TOTAL-LIABILITY-AND-EQUITY> 5,366,585
<SALES> 21,081,141
<TOTAL-REVENUES> 21,228,343
<CGS> 17,031,431
<TOTAL-COSTS> 17,031,431
<OTHER-EXPENSES> 3,946,819
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 250,093
<INCOME-TAX> 0
<INCOME-CONTINUING> 250,093
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 250,093
<EPS-BASIC> 0.08
<EPS-DILUTED> 0.08
</TABLE>
