FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
---
15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED: September 30, 1998
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR
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15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM N/A TO
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COMMISSION FILE NUMBER : 33-21239
TRAVEL DYNAMICS, INC.
---------------------
(Exact name of Registrant as specified in its charter)
FORMERLY KNOWN AS: GREENWAY ENVIRONMENTAL SYSTEMS, INC.
Nevada 87-0462569
------ ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification #)
7525 East Camelback Road, Suite 202
Scottsdale, AZ 85251
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(Address of principal executive offices)
(Zip Code)
(602) 949-9500
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period
that the Registrant was required to file such report(s), and (2) has been
subject to such filing requirements for the past 90 days.
YES X NO as to filing YES X NO as
--- --- --- ---
to filing requirement
The number of shares outstanding at September 30, 1998: 3,230,880
(As of the filing date there are 4,040,080 shares outstanding)
<PAGE>
TRAVEL DYNAMICS, INC.
INDEX
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements . . . . . . . . Exhibit
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 3
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of
Security Holders..........................7
Item 5. Other Information ........................7
Item 6. Exhibits .................................8
[Inapplicable Items Have Been Omitted]
2
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TRAVEL DYNAMICS, INC.
CONDENSED BALANCE SHEET
SEPTEMBER 30, 1998
(Unaudited)
ASSETS
Current Assets
Cash $ 50,838
Employee advances 2,500
Related party receivable 25,520
Inventory 5,929
Prepaid rent 5,700
Deposits and retainers 65,223
----------
Total Current Assets 155,710
----------
Property and Equipment 56,321
Less accumulated depreciation (1,227)
----------
Net Property and Equipment 55,094
----------
Intangible and Other Assets 121,003
----------
Total Assets $ 331,807
==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 51,830
Accrued liabilities 40,513
Deferred revenue 170,385
----------
Total Current Liabilities 262,728
----------
Stockholders' Equity
Common stock -$0.01 par value; 50,000,000 shares
authorized; 4,040,080 shares issued and outstanding 4,040
Additional paid-in capital 473,686
Accumulated deficit (408,647)
----------
Total Stockholders' Equity 69,079
----------
Total Liabilities And Stockholders' Equity $ 331,807
==========
See the accompanying notes to condensed financial statements.
1
<PAGE>
<TABLE>
<CAPTION>
TRAVEL DYNAMICS, INC.
CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
For the Period
March 1, 1998
For the Three (Date of Inception)
Months Ended through
September 30, September 30,
1998 1998
----------- ----------
<S> <C> <C>
Sales $ 490,514 $ 490,514
Cost of Sales 298,645 298,645
----------- -----------
Gross Profit 191,869 191,869
----------- -----------
General and Administrative Expense 292,533 292,533
----------- -----------
Merger and Reorganization Expense 307,983 307,983
----------- -----------
Net Loss $ (408,647) $ (408,647)
=========== ===========
Basic and Diluted Loss Per Common Share $ (0.24) $ (0.25)
=========== ===========
Weighted Average Common Shares Outstanding 1,698,155 1,603,859
=========== ===========
</TABLE>
See the accompanying notes to condensed financial statements.
2
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TRAVEL DYNAMICS, INC.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE PERIOD MARCH 1, 1998 (DATE OF INCEPTION)
THROUGH SEPTEMBER 30, 1998
(Unaudited)
Cash Flows From Operating Activities
Net loss $ (408,647)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization 1,881
Compensation and expenses paid with common stock 120,601
Compensation paid with stock options 3,000
Expenses paid with notes payable 166,382
Changes in assets and liabilities:
Employee advances (2,500)
Prepaid rent (5,700)
Inventory (5,929)
Deposits and retainers (65,223)
Accounts payable 51,830
Accrued liabilities 40,513
Deferred revenue 170,385
----------
Net Cash Provided By Operating Activities 66,593
----------
Cash Flows From Investing Activities
Increase in related party receivable (15,510)
----------
Net Cash Used In Investing Activities (15,510)
----------
Cash Flows From Financing Activities
Distributions to shareholder (900)
Proceeds from issuance of common stock 655
----------
Net Cash Used In Financing Activities (245)
----------
Net Increase in Cash 50,838
Cash at Beginning of Period -
----------
Cash at End of Period $ 50,838
==========
Supplemental Schedule of Noncash Investing and Financing Activities:
Notes payable in the amount of $344,360 were incurred from the payment of
$166,382 of expenses, the purchase of equipment of $56,321 and other assets
of $4,000. The Company issued 200,000 shares of common stock upon conversion
of notes payable in the amount of $344,360.
See the accompanying notes to condensed financial statements.
3
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TRAVEL DYNAMICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1- NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION - The accompanying consolidated financial statements
include the accounts of Travel Dynamics, L.L.C. from March 1, 1998 (date of
inception) through July 31, 1998 and the accounts of Travel Dynamics, Inc.
(Travel Dynamics) from July 31, 1998. The consolidated financial statements
include the accounts of Greenway Environmental Systems, Inc. from the date of
its acquisition for accounting purposes on September 29, 1998. These entities
are collectively referred to as "the Company." All significant intercompany
transactions and balances have been eliminated in consolidation.
NATURE OF OPERATIONS - The Company is a marketing firm which sells discount
travel packages. Direct marketing of the travel packages is through independent
sales agents and through the Internet. The Company also conducts motivational
and training seminars for its sales agents.
ORGANIZATION - Travel Dynamics, L.L.C. was organized in March 1998 as an Arizona
limited liability company. The assets and liabilities of Travel Dynamics, L.L.C.
were transferred to Travel Dynamics, Inc., a Nevada corporation, on July 31,
1998. The assets and liabilities were recorded at their historical cost.
On September 29, 1998, Travel Dynamics, Inc. entered into a reorganization
agreement with Greenway Environmental Systems, Inc. ("Greenway") whereby the
shareholders of Travel Dynamics, Inc. exchanged all of the outstanding Travel
Dynamics, Inc. common shares for 2,000,000 common shares of Greenway. The
agreement was accounted for as the reorganization on Travel Dynamics, Inc. and
the acquisition of Greenway's assets. Greenway did not have any operations and
had only nominal assets at the date of the agreement. Accordingly, the
acquisition of Greenway's assets which were recorded at their historical cost of
$10,010. In addition, Greenway changed its name to Travel Dynamics, Inc. On a
pro forma basis, assuming the reorganizations had occurred on March 1, 1998, net
sales, net loss and basic and diluted loss per share for the period from March
1, 1998 through September 30, 1998 would have been $490,514, $(516,388) and
$(0.13), respectively.
USE OF ESTIMATES - The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts in the financial statements and
accompanying notes. Actual results could differ from those estimates.
INTERIM FINANCIAL STATEMENTS - The accompanying consolidated financial
statements have been prepared by the Company and are unaudited. In the opinion
of management, all necessary adjustments (which include only normal recurring
adjustments) have been made to present fairly the financial position, results of
operations and cash flows for the periods presented. These financial statements
are condensed and, therefore, do not include all disclosures normally required
by generally accepted accounting principles. These financial statements should
be read in conjunction with the financial statements of Travel Dynamics, Inc.
and Travel Dynamics L.L.C. included in the current report on Form 8-K dated
October 13, 1998. The results of operations through September 30, 1998 are not
necessarily indicative of the operating results to be expected for the remainder
of 1998.
BUSINESS CONDITION - The accompanying financial statements have been prepared in
4
<PAGE>
TRAVEL DYNAMICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
conformity with generally accepted accounting principles, which contemplates
continuation of the Company as a going concern. However, the Company has
suffered losses from operations and has had negative cash flows from operating
activities during 1998 which conditions raise substantial doubt about the
Company's ability to continue as a going concern. The Company's continued
existence is dependent upon its ability to achieve profitable operations.
Management believes future operations will provide sufficient cash flows for the
Company to continue as a going concern.
INVENTORY - Inventory includes vacation travel discount packages and cruise
certificates. All inventory items are stated at the lower of cost (computed on a
first-in, first-out basis) or market value.
PROPERTY AND EQUIPMENT - Property and equipment is recorded at cost and
depreciated over their estimated useful live of seven years, using the
straight-line method. Depreciation for the period from March 1, 1998 through
September 30, 1998 was $1,227.
INTANGIBLE AND OTHER ASSETS - The cost of a marketing master data base has been
capitalized as intangible and other assets and is amortized over a five-year
period by the straight-line method. Amortization expense for the period from
March 1, 1998 through September 30, 1998 was $654. The reliability of intangible
and other long-lived assets is evaluated periodically when events or
circumstances indicate a possible inability to recover the carrying amount. An
impairment loss is recognized for the excess of the carrying amount over the
fair value of the assets. Fair value is determined based on estimated expected
net future cash flows or other valuation techniques available in the
circumstances. The analyses necessarily involve significant management judgement
to evaluate the capacity of an asset to perform within projections. Based upon
these analyses, no impairment losses were recognized in the accompanying
financial statements.
REVENUE RECOGNITION - Revenue includes the cash sale of travel discount packages
and marketing seminars. The Company recognizes revenue for training seminars at
the date the customer participates in a seminar. Deferred revenues (seminar
deposits) represent amounts billed in advance of such participation.
COST RECOGNITION - Costs paid to organize the Company as well as costs paid in
connection with the reorganization described above were charged to operations
when incurred. Advertising costs are expensed as incurred. Advertising expense
was $6,009 for the period from March 1,1 998 through September 30,1998.
STOCK-BASED COMPENSATION - Stock-based compensation to employees is measured by
the intrinsic value method. This method recognizes compensation based on the
difference between the fair value of the underlying common stock and the
exercise price of the stock option on the date granted. Compensation relating to
options granted to non-employees is measured by the fair value of the options,
computed by an option pricing model.
BASIC AND DILUTED LOSS PER SHARE -Basic loss per common share is computed by
dividing net loss by the number of common shares outstanding during the period.
Diluted loss per share is calculated to give effect to potentially issuable
common shares except during loss periods when those potentially issuable common
shares would decrease the loss per share. There were 1,111,111 potentially
issuable common shares which were excluded from the calculation of diluted loss
per common share.
5
<PAGE>
TRAVEL DYNAMICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 2 - REORGANIZATION OF TRAVEL DYNAMICS L.L.C.
The assets and liabilities transferred from Travel Dynamics L.L.C. at July 31,
1998 were accounted for at historical cost in a manner similar to that of
pooling of interests as follows:
Historical cost of assets $ 177,544
Short-term notes payable (195,000)
Deferred revenue (83,115)
----------
Net Liabilities Assumed $ (100,571)
==========
NOTE 3 - STOCKHOLDERS' EQUITY
The reorganization of Travel Dynamics L.L.C. into Travel Dynamics, Inc. and
the reorganization of Travel Dynamics, Inc. in connection with the
acquisition of Greenway have been accounted for as stock splits. The
accompanying financial statements have been restated for the effects of the
stock splits for all periods presented. The following is a summary of the
changes to stockholders' equity:
<TABLE>
<CAPTION>
Common Stock Additional Total
----------------------- Paid-in Accumulated Stockholders'
Shares Amount Capital Deficit Equity
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Balance March 1, 1998 - $ - $ - $ - $ -
Issuance for cash, March 1, 1998,
$0.00 per share 1,532,164 1,532 (877) - 655
Distribution to shareholder,
August 31, 1998 - - (900) - (900)
Conversion of notes payable,
August 31, 1998, $0.74 per share 467,836 468 343,892 - 344,360
Issuance for assets of Greenway,
September 29, 1998 1,236,072 1,236 8,774 - 10,010
Issuance to a consulting firm for
services, September 30, 1998 404,008 404 60,197 - 60,601
Issuance to an officer for services,
September 30, 1998 400,000 400 59,600 - 60,000
Compensation relating to grant of
stock options - - 3,000 - 3,000
Net loss - - - (408,647) (408,647)
---------- ---------- ---------- ---------- ----------
Balance September 30, 1998 4,040,080 $ 4,040 $ 473,686 $ (408,647) $ 69,079
========== ========== ========== ========== ==========
</TABLE>
NOTE 4 - COMMITMENTS
Travel Dynamics entered into an agreement on June 26, 1998 with a business
consulting firm which agreement was mutually rescinded on October 17, 1998 and a
6
<PAGE>
TRAVEL DYNAMICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
new agreement was entered into on October 19, 1998. Under the terms of the new
agreement, the consulting firm has provided services and benefits relating to
the reorganization of Travel Dynamics and the finding of Greenway and shall
provide services relating to Travel Dynamics' ongoing business activities.
Travel Dynamics has agreed to pay the consulting firm $5,000 as a non-refundable
retainer, $40,000 for assisting Travel Dynamics in the reorganization with
Greenway, $10,000 per month for a period of 24 months unless terminated earlier
by a 60-day notice of termination, reimbursement of out-of-pocket, printing, and
legal expenses, the cost to hire certain professionals on a temporary or
contract basis which may range from $1,500 to $2,500 per day to execute some of
the consulting firm's recommendations, and the issuance of common stock of
Travel Dynamics equal to 10% of all outstanding equity securities, computed on a
fully-diluted basis, until Travel Dynamics has raised up to $5,000,000 of
investment capital and/or entered into equivalent business combinations.
The consulting firm has been granted registration rights regarding their common
stock commencing nine months from the date of the agreement and piggyback
registration rights to register their stock as part of any other registration of
Travel Dynamics' equity securities. If Travel Dynamics merges with, acquires
assets or property from or obtains financing from any entity the consulting firm
introduces to Travel Dynamics, Travel Dynamics is obligated to pay the
consulting firm a finders' fee of 5% of the first $3,000,000, 4% of the next
$2,000,000 and 3% of the amount above $5,000,000 of the gross proceeds of the
transaction. The consulting firm shall be entitled to appoint one member of the
Board of Directors. The Company is obligated under the agreement to issue
404,008 shares of common stock to the consulting firm, based upon the common
stock presently outstanding. In addition, the Company has granted options to
purchase 1,000,000 shares of common stock which may require the Company to issue
an additional 111,111 shares of common stock to the consulting firm. There is no
market for the Company's common stock; however, management of the Company and
the consulting firm have determined that the fair value of the common stock at
the date of the agreement was $0.15 per share. The 404,008 shares of common
stock issued to the consulting firm were valued at $60,601 for purposes of these
financial statements.
In connection with a three-year employment agreement with the Company's
President, the Company issued 400,000 shares of common stock on September 30,
1998 valued at $0.15 per share, or $60,000. In addition, cash compensation of
$250,000 per year will be paid to the President. The Company also granted the
President options to purchase 600,000 shares of commons stock at $0.10 per
share.
NOTE 5 - STOCK OPTIONS
The Company has granted options to purchase 100,000 shares of common stock at
$0.10 per share to each of the four members of the Board of Directors. The
options vest at the rate of 25% upon being granted, and 25% per year over three
years. Compensation relating to the options granted to the Board of Directors is
recognized based upon the fair value of the options which is being recognized
over the vesting period.
The Company also granted options to the President of the Company in connection
with a three-year employment agreement. Options to purchase 600,000 shares of
commons stock at $0.10 per share were granted under the agreement. Options to
purchase 200,000 shares vested upon execution of the agreement and an additional
200,000 options vest each year of employment. Compensation relating to these
options is recognized based upon the intrinsic value of the options and is being
recognized over the period the options vest.
A summary of the status of the Company's stock options as of September 30, 1998
and changes during the period then ended are presented below:
7
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TRAVEL DYNAMICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Weighted-Average
Shares Exercise Price
---------- --------------
Outstanding at beginning of period - $ -
Granted 1,000,000 0.10
---------
Outstanding at period end 1,000,000 0.10
=========
Options exercisable at period end 300,000 0.10
=========
Weighted-average fair value of
options granted during the period $ 0.11
=========
The Company measures stock-based compensation from options granted to
non-employees by the fair value method set forth under Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" and
measures compensation from options granted to employees using the intrinsic
value method prescribed in Accounting Principles Board Opinion 25, "Accounting
for Stock Issued to Employees", and related Interpretations. Stock-based
compensation charged to operations was $3,000 during the periods ended September
30, 1998. Had compensation cost for the Company's options granted to an employee
been determined based on the fair value at the grant dates consistent with the
alternative method set forth under Statement of Financial Accounting Standards
No. 123, "Accounting for Stock-Based Compensation", net loss and loss per share
would have increased for the period from March 31, 1998 through September 30,
1998 to the pro forma amounts indicated below:
Net loss:
As reported $ (408,647)
Pro forma (438,647)
Basic and diluted loss per share:
As reported $ (0.25)
Pro forma (0.27)
The fair value of each option granted was estimated on the date of grant using
the Black-Scholes option-pricing model with the following weighted-average
assumptions: underlying common stock value - $0.15, expected life of the options
- - 5 years, expected volatility - 75% and risk-free interest rate - 4.4%.
8
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PART I. - Financial Information
-------------------------------
Item 1. Financial Statements. [Unaudited]
- -----------------------------
The Financial Statements of Travel Dynamics, Inc. for the three month and
seven month periods ending September 30, 1998, are attached and incorporated by
this reference as Item 1. The accompanying consolidated financial statements
include the accounts of Travel Dynamics, L.L.C. from March 1, 1998 (date of
inception) through July 31, 1998 and the accounts of Travel Dynamics, Inc.
(Travel Dynamics) from July 31, 1998. The consolidated financial statements
include the accounts of Greenway Environmental Systems, Inc. from the date of
the acquisition for accounting purposes on September 29, 1998. These entities
are collectively referred to as "the Company." All significant intercompany
transactions and balances have been eliminated in consolidation.
Item 2. Management's Discussion and Analysis of Financial
- ----------------------------------------------------------
Condition and Results of Operations.
- ------------------------------------
(a) Operations & Liquidity - The Financial Statements
and business operations of Travel Dynamics, Inc. ("TDI" and
formally known as Greenway Environmental Systems, Inc. "Greenway")
can not be understood apart from the Reorganization of Greenway to
become known as TDI through the acquisition of Travel Dynamics,
Inc. as a wholly owned subsidiary, which subsidiary is now known as
Travel Dynamic Services, Inc. ("TDSI").
As currently constituted, the prior public entity, Greenway, is now known
as Travel Dynamics, Inc. (TDI) which has a singular acquired operating
subsidiary primarily engaged in the purchase and retail marketing, through
independent agents, of various travel packages and operation of travel marketing
seminars. This operating company, Travel Dynamics Services, Inc. (TDSI), acts as
the sole operating division and subsidiary for the parent company, (TDI).
On September 29, 1998, a formal Reverse Acquisition Agreement was entered
by which all of the issued and outstanding shares of the prior Travel Dynamics,
Inc. were acquired by Greenway, with Greenway then changing its name to Travel
Dynamics, Inc. and the acquired subsidiary changing its name to Travel Dynamics
Services, Inc. The acquired entity then was allowed to nominate from its members
the new Board of Directors for the parent company Greenway/TDI, which then
subsequently appointed officers.
3
<PAGE>
The principal business then became the continuing acquisition and marketing
of travel packages (consisting of travel, lodging, and usually a rental car or
other concessions for entertainment) which are sold as a package unit after
acquisition and assembly by the Company through various independent sales
agents. The Company attempts to make a profit by re-selling the various travel
components as a travel package on a mark-up basis to the various independent
agents. The agents then attempt to re-sell the travel package at a retail level
for a profit.
Secondarily, the Company engages in the organization and hosting of various
travel marketing seminars related to the foregoing marketing plan on a profit
basis.
The foregoing general description of business is more particularly set out
in the recently filed 10-KSB Report for the Company which was filed as of
October 23, 1998. A copy of this filing will be made available by the Company to
any shareholder requesting the same, or to other interested parties.
In outline fashion, the Reorganization implemented the following
significant terms and provisions:
1. The Company agreed to reverse split its stock on a nineteen and
one-half to one (19.5:1) reverse split ratio. Accordingly, of the
approximately 24,159,895 issued and outstanding shares of
Greenway/T DI existing prior to the execution and closing of the
Reverse Acquisition Agreement, there is now issued and
outstanding approximately 4,040,080 reverse split shares. Of
these shares, approximately 811,042 are held by prior
shareholders of Greenway excluding management (20%); 15,000 are
held by prior management of Greenway (.37%); approximately
400,000 are held by Mr. Andrew Limpert or assigns (9.9%);
2,000,000 are held by the prior TDI shareholders (49.5%); Mr.
James Piccolo, the president, holds 400,000 (9.9%) and
McKenenzie/Shea, a management consultant, holds 404,008 (10%).
2. The Company changed its name of record from Greenway
Environmental Systems, Inc. to Travel Dynamics, Inc. The acquired
subsidiary corporation has changed its name of record to Travel
Dynamics Services, Inc.
3. The following were elected as the new Board of Directors of the
company and were then appointed to the following offices:
4
<PAGE>
(a) James Piccolo, President
(b) Brian K Service, Executive Director
(c) Thomas (Tom) Dennis
(d) Gary Davies
(e) Thomas Vergith
Other principal officers who are not directors include:
(a) John P. Piccolo, Vice President
(b) Melinda Fehringer, Secretary & Treasurer
Biographical information, shareholder interest and compensation
pertaining to the foregoing officers and directors is contained
in the recently filed 10-KSB Report of the Company.
4. All current debts and obligations of the prior Greenway
Environmental Systems were to be paid or otherwise discharged as
of the time of the completion of the Reverse Acquisition on or
before September 29, 1998.
5. The place of operation of the business ch anged to the principal
prior business location of Travel Dynamics, Inc. in Scottsdale,
AZ, with the Company to assume, as its sole operations, the form
of business presently conducted by Travel Dynamics principally
being the composition and resale of various travel packages as
generally described above and more particularly described and
set-out in the recent 10-KSB as filed.
In reviewing the Statement of Operations for the Company, it must be
understood that the acquired operating subsidiary is itself a start-up entity
which was organized only in March of 1998 as an Arizona limited liability
company. On July 31, 1998, the members transferred their interests for cash to
the acquired subsidiary entity, then known as Travel Dynamics, Inc. and which
has now become Travel Dynamics Services, Inc., the subsidiary company.
There is, as of the date of the unaudited consolidated Financial
Statements, combined total assets of $331,807; current liabilities of $262,728
and a total stockholder equity of $69,079 for the combined Company. For this
initial consolidated period, the combined Company had net losses of ($408,647)
which are largely attributable to start-up and reorganization costs.
5
<PAGE>
Sales for the three months ended September 30, 1998 and for the period from
March 1, 1998 (date of inception) through September 30, 1998 were $490,514.
Since operations began in July 1998, there were no comparable sales or
operations for the prior year. Cost of sales were $298,645 or 61% of sales. The
resulting gross profit was $191,869 or 39% of sales. General and administrative
expense of $292,533 includes $123,601 of expenses paid by the issuance of common
stock and stock options. Merger and reorganization expense relates to
organization costs and costs associated with the agreement with Greenway. These
expenses are non-recurring expenses. However, additional future expenses will be
incurred due to the commitment of the Company to pay cash and common stock for
the services of a consulting firm for a minimum of 24 months. The minimum annual
commitment under the agreement is approximately $120,000 of cash payments plus a
commitment to pay future concessions. The Company is also obligated to issue
common stock to the firm so as to keep their interest in the Company's common
stock equal to 10% of the outstanding common stock.
The Company is marginally capitalized to carry on its intended activities
and will be dependent upon continuing cash flows to meet operating expenses. No
assurance of financial success or the economic survival of the enterprise can be
assured during this start-up period.
For the next projected quarter ending December 31, 1998, the Company
projects a small initial net profit from its operations, though no assurance or
warranty of these projections can be made.
In all events, the Company must be considered a start up entity and would
continue to operate as a start up entity for approximately the first year of its
intended operations. As a result, reasonable or consistent projections of future
profitability based upon historical accounting and operations can not be made at
this time, nor should future earnings be projected or represented at this time
by any person, whether affiliated with the Company or not.
It should also be noted that as a start up entity, the Company will
necessarily incur certain types of start up costs, including: costs related to
the commencement of business, legal and accounting fees, initial filing fees,
and advertising and marketing fees which may not constitute ongoing fees; or, if
ongoing, may not be incurred at the same level or percentage of revenues as
experienced in the start-up period.
6
<PAGE>
Management's general discussion of operations is limited by and should be
considered within the context of the actual Financial Statements attached hereto
and incorporated as part of Item 1 above.
(b) Significant Events - See Above
------------------
PART II. - Other Information
Item 4. Submission of Matters to a Vote of Security Holders
- -----------------------------------------------------------
Various aspects of the Reorganization described above required shareholder
consent and approval under Nevada law. The Company deemed that the change of
name of the corporation and the election of the new directors were material
items requiring shareholder approval under Nevada law. The Company also elected
to submit for shareholder ratification the general terms of the Reorganization,
including the reverse split of its shares.
Under Nevada law, the foregoing matters were allowed to be submitted and
approved by a majority of the shareholders pursuant to a Majority Shareholder
Consent Resolution without the necessity of calling or noticing a formal
shareholder meeting. Accordingly, on September 24, 1998, a Majority Shareholder
Consent Resolution was entered by shareholders of the Company (that is the prior
Greenway Environmental Systems, Inc.) holding in excess of fifty per cent of the
issued and outstanding shares. Those shareholders then approved by Majority
Shareholder Consent, with the essential terms requiring shareholder ratification
as outlined above. A copy of this Majority Shareholder Consent is attached
hereto and incorporated by this reference as non-financial Exhibit A. The
Company then caused, in accordance with its bylaws, to be mailed to all its
shareholders of record, a Shareholder Notice.
A copy of this Shareholder Notice is attached hereto and incorporated by
this reference as non-financial Exhibit B.
Item 5. - Other Information.
- ----------------------------
The Company knows of no other material information other than the
Reorganization and initial Financial Statements described and set out above. For
the interim period, the Company will be engaged in attempting to complete the
Reorganization and initiate and expand its principal business operations.
7
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Item 6. Exhibits and Reports on Form 8-K.
- ------------------------------------------
(1) Attached hereto and incorporated by this reference are the
unaudited consolidated financial statements for the Company (TDI/Greenway) as of
September 30, 1998.
(2) The Company filed an 8-K Information Statement on October 14,
1998, essentially describing the terms and events of the Reorganization as
outlined above. It is not believed by the Company that the 8-K filing contains
any further or additional information other than set out in this 10-QSB and
attached exhibits. However, the Company will make available a copy of the 8-K
filing to any shareholder of record, or other interested party upon request.
..........................
OTHER EXHIBITS:
(A) Majority Shareholder Consent
(B) Shareholder Notice
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRAVEL DYNAMICS, INC.
Date: By /s/James Piccolo
--------------------
James Piccolo
President/Director
Date: By /s/Melinda Fehringer
--------------------
Melinda Fehringer
Secretary/Treasurer
Chief Financial
Officer
8
MAJORITY SHAREHOLDER CONSENT
Greenway Environmental Systems, Inc.
September 24, 1998
The undersigned collectively represent the holders of a majority of the
issued and outstanding shares of Greenway Environmental Systems, Inc., a Nevada
Corporation ("Greenway").
In accordance with Nevada Law, the undersigned majority shareholders
understand and agree that they may waive notice of a shareholders' meeting and
agree to the adoption of any action or election of directors which could be
enacted or voted upon by a majority of the Greenway shareholders at a
shareholder meeting regularly called for such purposes. The undersigned hereby
wish to exercise such right and do hereby waive notice of a Special Shareholders
Meeting and the opportunity to vote at such meeting and hereby express, by their
majority consent, approval to the following corporate actions and elections
requiring shareholder consent and approval::
1. Approval that the Board of Directors (as now constituted or as may
subsequently be constituted pursuant to the Reverse Acquisition
Agreement) has proposed the change of name of the corporation of record
to Travel Dynamics, Inc., or any reasonable derivation of such name as
determined by the Board.
2. Even though not required under Nevada Law, the undersigned shareholders
wish to ratify, as part of the Reverse Acquisition Agreement, the
reverse split by the Board of Directors of the Company's shares on a
nineteen and one half to one (19.5:1) ratio, including the shares of
the undersigned.
3. The change of business purpose and location of Greenway to the business
currently conducted by Travel Dynamics at its current place of business
in or around Scottsdale, Arizona.
4. Increasing the number of Directors to five. The election of the
following nominees by the travel dynamics corporation to be the new
Board of Directors of the Company (Greenway/Travel Dynamics):
(a) James Piccolo
(b) Brian K. Service
(c) Thomas (Tom) Dennis
(d) Gary Davies
(e) Thomas Vergith
5. All other terms and provisions of the Reverse Acquisition Agreement
between the Company and Travel Dynamics, Inc.
Each of the undersigned fully cast all of their votes which they are entitled
to vote in favor of the election and appointment of the foregoing to the Board
of Directors, subject only to the closing of the Reverse Acquisition Agreement
with Greenway.
-1-
<PAGE>
While not requiring shareholder approval, the undersigned also wish to
ratify and affirm the Board's decision to issue out, as part of the
reorganization with Travel Dynamics, two million shares of the Company stock is
reverse split to the Travel Dynamics shareholders as part of the Reverse
Acquisition Agreement.
The undersigned represent that they have been fully informed of the terms of
the Reverse Acquisition Agreement and have been given an opportunity to review
such Agreement before entering this informed consent. The undersigned
shareholders further represent that they have had full opportunity to ask
questions of and discuss the proposed matters listed above, and the other terms
and conditions of the Reverse Acquisition, with Greenway management and are
fully satisfied with the fact that they have been given full and complete
disclosure of such transaction and herewith voluntarily and willfully approve
such transaction of their free will and accord. Further, the undersigned
represent that they understand that they may consent to such action or may
withhold their consent and that they are fully entitled to review this decision
with outside legal or accounting experts of their own choosing and have either
done so or knowingly elected not to do so.
Finally, the undersigned shareholders understand and agree that with their
majority approval of these matters, a formal meeting and proxy will not be
solicited of the other shareholders in the Company; but, in accordance with the
By-Laws of the Company, notice of the undersigned majority consent and the
actions taken pursuant to this consent will be distributed to all shareholders
of the Company by the new management group.
WITNESS the signature and date of each of the undersigned shareholders of
the Company constituting a majority of all issued and outstanding shares on this
24 day of September, 1998.
SHAREHOLDERS:
/s/Andrew Limpert 9/24/98 7,800,000
- ----------------- ---------------- ----------------
Andrew Limpert Date # of
Shares
Thomas Hinckle Date # of
Shares
Fred O. Walden Date # of
Shares
Yorktown Ltd. Date # of
Shares
By:__________________
Its:__________________
-2-
[letterhead] Travel Dynamics, Inc.
7525 E. Camelback Road, Suite 202, Scottsdale, AZ 85251
Tel: 602-949-9500 Fax 602-425-7700
www.traveldynamics.org
October 12, 1998
Shareholders
Travel dynamics, Inc., Formerly Known As
Greenway Environmental Systems, Inc.
RE: Information Concerning Recent Reorganization of your Company
Dear Fellow Shareholder:
As some of you may be aware, Greenway Environmental Syhstems, inc. Is
now known as Travel Dynamics, Inc. pursuant to a recent reorganization of the
company. My name is Mr. James Piccolo and I am writing to you as your new
President who was elected and installed as part of the Reverse Acquisition of
Travel Dynamics by your company.
Let me take a moment to explain the nature of this reorganization.
Greenway, as a public entity in which you are are a shareholder, acquired a
privately held Nevada corporation known as Travel Dynamics, Inc. which is
engaged in the exciting and growing business of direct and Internet based
marketing of travel services and packages. As part of the reverse acquisition,
your company agreed to changes its name to Travel Dynamics, Inc., relocate its
office and principal place of business to our existing operations in Scottsdale,
Arizona and to install a new Board of Directors as nominated by Travel Dynamics,
Inc. While technically the surviving corporation was the existing Greenway
entity, for most practical purposes you may consider the reverse acquisition as
a reorganization wherby the parent (Greenway) takes on all of the
characteristics, including the name, of its acquired subsidiary (Travel
Dynamics). The acquired company will continue operations as Travel Dynamics
Services, Inc.
As you know, Greenway had no assets or business, and-frankly-had no
business prospects prior to this reorganization. As a result, we believe the net
effect of this reorganization will be beneficial not only to the new
shareholders, which acquired shares by tendering all their existing Travel
Dynamics Shares to Greenway to become a wholly owned operating subsidiary, but
also to those of you who were existing shareholders. As you may also know, or
should be informed, there was a nineteen and one-half to one reverse split of
the existing Greenway shares (19.5:1) as part of the reorganization. This means
that for every 19.5 shares of Greenway held by you, you now have one shares of
Travel Dynamics. This reverse split was necessary in order to afford equity to
the new shareholders who were putting in a business which we believe has
<PAGE>
substantial assets and future potential, as contrasted to those of you who were
shareholders in a corporation that had no prospects or assets. Accordingly,
while existing Greenway shareholders have suffered a substantial reduction in
their shares pursuant to the foregoing reverse split, we believe that such
reverse split is fair and equitable based upon the value of the subsidiary
acquired. Roughly, the prior shareholders in Greenway now own approximately 38%
of the shares after the reverse split.
It will not be necessary for you to tender to our newly designated
transfer agent your existing Greenway shares if you elect to keep them. The
proper reverse split of those shares and the reissuance of Travel Dynamic Shares
will occur from any future request for assignment or reconveyance of those
certificates. However, if you wish, you may tender your shares and pay a small
transfer fee to receive back Travel Dynamics Shares at the present time by
contacting our transfer agent directly. The newly designated transfer agent is
as follows:
Oxford Transfer and Registrar
317 S.W. Alder, Suite 1120
Portland, OR 97204
(503) 225-0375
Let me now introduce you to your new Officers and Directors:
Mr. James Piccolo, Director/President/CEO
Brian K. Service, Director
Thomas (Tom) Dennis, Director
Gary Davies, Director
Thomas Vergith, Director
Melinda Fehringer, Secretary/Treasurer
John P. Piccolo, Vice President
Some of you may be wondering why you did not receive a prior notice and
proxy solication related to this reverse acquisition. In short, there existed a
majority of shareholders in the prior Greenway Company which approved and wished
to move forward with this reorganization so that, under Nevada Law, this action
could be taken without a formal shareholder meeting. While our counsel advises
us that under Nevada Law, we are not even reuired to give notice to shareholders
of the results of the majority consent action, we believe it is fair and
equitable, as well as required in Our By-Laws, that you receive this letter
explaining the reverse acquisition, the results of such acquisition on your
individual shareholder interest and its general purposes for the future of your
company. Please be assured that the new management of Travel Dynamics is going
to do everything possible to move forward in a profitable and ethical manner to
increase the share valuation and profitability of the company in the exciting
travel related industries. Should you have any questions as a shareholder,
please feel free to call our corporate offices as indicated above at any time if
you have questions regarding the company or its future.
-2-
<PAGE>
Finally, you should be advised that our offices will shortly be filing required
Reports with the Securities and Exchange Commission (SEC) to report all of the
foregoing transactions and with an anticipation that we may be able to shortly
establish a public trading market for the securities through one or more broker
dealers. Any shareholder wishing to obtain a copy of the 10-KSB Report may do so
by contacting management at the above listed address. For your information,
while not precently effective, it is anticipated that Alpine Securities in Salt
Lake City, Utah will act as one of the initial broker dealers attempting to make
a market in our shares. We pass this information on to you in the hope that in
the near future, if you are interested in trading your shares, you would have at
least one option to call as far as a market maker is concerned. Again, we
emphasize that as of the date of this letter, the necessary fil;ings with the
SEC and the National Associaiton of Securities Dealers has not been completed so
that a trading market is not presently available. Further, when trading is
established, you should be able to trade the shares through a broker/dealer of
your choice.
Again, new management wishes to welcome you aboard our new travel
vehicle for what we hope is a voyage that will profitable for all concerned.
Sincerely,
James Piccolo
President
Travel Dynamics, Inc.
-3-
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