FORM 10-QSB/A
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: MARCH 31, 1999
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
---
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM N/A TO
----- -----
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
----------------------------------------
(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 MARCH 31, 1999: 4,315,080
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TRAVEL DYNAMICS, INC.
INDEX
<CAPTION>
PAGE
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<S> <C>
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............................................8
ITEM 5. OTHER INFORMATION ...........................................9
ITEM 6. EXHIBITS ....................................................9
</TABLE>
[INAPPLICABLE ITEMS HAVE BEEN OMITTED]
<PAGE>
PART I. - FINANCIAL INFORMATION
-------------------------------
ITEM 1. FINANCIAL STAtEMENTS. [UNAUDITED]
- -----------------------------
THE CONSOLIDATED FINANCIAL STATEMENTS OF TRAVEL DYNAMICS, INC. FOR THE
THREE MONTH PERIOD ENDING MaRCH 31, 1999, ARE ATTACHED AND INCORPORATED BY THIS
REFERENCE AS ITeM 1. THE ACCOMPANYING CONSOLIDATED FINANCIAL STATEMENTS INCLUDE
COMPARATIVE DATA FOR THE ACCOUNTS OF PREDECESSOR ENTITIES TRAVEL DYNAMICS,
L.L.C. FROM MARCH 1, 1998 (DATE OF INCEPTION) THROUGH JULY 31, 1998 (dATE OF
ASSET ACQUISITION) AND THE ACCOUNTS OF TRAVEL DYNAMICS, INC. (NoW KNOWN AS
TRAVEL DYNAMIC SERVICES, INC.) FROM JULY 31, 1998 (INCEpTION) TO MARCH 31, 1999.
THE CONSOLIDATED FINANCIAL STATEMENTS FOR COMPARATIVE PURPOSES ALSO INCLUDE THE
ACCOUNTS OF GREENWAY ENVIRONMENTAL SYSTEMS, INC., (NOW KNOWN AS "TRAVEL
DYNAMICS") THROUGH THE DATE OF THE REVERSE ACQUISITION ON SEPTEMBER 29, 1998.
THESE TWO ENTITIES (TRAVEL DYNAMICS, INC. AS THE PARENT COMPANY AND TRAVEL
DYNAMICS SERVICES, INC. AS THE SOLE OPERATING SUBSIDIARY) ARE COLLECTIVELY
REFERRED TO AS "THE COMPANY." ALL SIGNIFICANT INTERCOMPANY TRANSACTIONS AND
BALANCES HAVE BEEN ELIMINATED IN CONSOLIDATION.
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<CAPTION>
TRAVEL DYNAMICS, INC.
INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Page
<S> <C>
Condensed Consolidated Balance Sheet - March 31, 1999 (Unaudited).................................. F-1
Condensed Consolidated Statements of Operations for the Three and Nine Months
Ended March 31, 1999 and for the Period from March 1, 1998 (Date of
Inception) through March 31, 1998 (Unaudited)................................................... F-2
Condensed Consolidated Sta+tements of Stockholders' Deficit for the Period from March 1,
1998 (Date of Inception) through June 30, 1998 and for the Nine Months Ended
March 31, 1999 (Unaudited)...................................................................... F-3
Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March
31, 1999 and for the Period from March 1, 1998 (Date of Inception) through
March 31, 1998 and for the Nine Months Ended March 31, 1999 (Unaudited).......................... F-4
Notes to Condensed Consolidated Financial Statements............................................... F-5
</TABLE>
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<TABLE>
<CAPTION>
TRAVEL DYNAMICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
March 31, 1999
(Unaudited)
ASSETS
<S> <C>
Current Assets
Cash and cash equivalents...................................................................$ 145,788
Accounts receivable......................................................................... 17,118
Related party receivable.................................................................... 44,538
Inventory................................................................................... 79,913
Prepaid seminar expenses.................................................................... 145,245
Other prepaid expenses...................................................................... 6,168
--------------
Total Current Assets.................................................................... 438,770
--------------
Property and Equipment
Office equipment............................................................................ 110,607
Software for internal use................................................................... 203,040
Less accumulated depreciation............................................................... (10,274)
--------------
Net Property and Equipment.............................................................. 303,373
--------------
Intangible Assets
Trademarks, net of $327 accumulated amortization............................................ 5,553
Marketing master data base, net of $4,576 accumulated amortization.......................... 113,081
Other....................................................................................... 4,000
--------------
Total Intangible Assets................................................................. 122,634
--------------
Total Assets.....................................................................................$ 864,777
==============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current Liabilities
Accounts payable............................................................................$ 357,492
Accrued liabilities......................................................................... 43,330
Deferred revenue............................................................................ 592,756
Notes payable related party................................................................. 50,000
--------------
Total Current Liabilities............................................................... 1,043,578
--------------
Stockholders' Equity
Common stock -$0.001 par value; 50,000,000 shares
authorized; 4,315,080 shares issued and outstanding ..................................... 4,315
Additional paid-in capital.................................................................. 551,225
Accumulated deficit......................................................................... (734,341)
--------------
Total Stockholders' Deficit............................................................. (178,801)
--------------
Total Liabilities and Stockholders' Deficit......................................................$ 864,777
==============
</TABLE>
See the accompanying notes to condensed consolidated financial statements.
F-1
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<TABLE>
<CAPTION>
TRAVEL DYNAMICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Period
For the Three For the Nine from March 1, 1998
Months Ended Months Ended (Date of Inception)
March 31, March 31, Through
1999 1999 March 31, 1998
------------- --------------- -----------------
<S> <C> <C> <C>
Revenues..................................................$ 873,705 $ 2,134,209 $ -
Cost of Revenues.......................................... 426,533 1,205,804 -
------------- --------------- -----------------
Gross Profit......................................... 447,172 928,405 -
------------- --------------- -----------------
Expenses
General and administrative expense................... 560,475 1,354,763 -
Merger and reorganization expense.................... -- 307,983 -
------------- --------------- -----------------
Total Expenses....................................... 560,475 1,662,746 -
------------- --------------- -----------------
Net Loss..................................................$ (113,303) $ (734,341) $ -
============= =============== =================
Basic and Diluted Loss Per Common Share ..................$ (0.03) $ (0.19) $ -
============= =============== =================
Weighted Average Number of Common
Shares Used in Per Share Calculation..................... 4,314,802 3,871,350 1,532,164
============= =============== =================
</TABLE>
See the accompanying notes to condensed consolidated financial statements.
F-2
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<TABLE>
TRAVEL DYNAMICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
(Unaudited)
<CAPTION>
Additional Total
Common Stock Paid-in Accumulated Stockholders'
Shares Amount Capital Deficit Deficit
------ ------ ------- ------- -------
<S> <C> <C> <C> <C>
Balance, March 1, 1998 (Date
of Inception)......................... - $ - $ - $ - $ -
Issuance for cash, March 1998,
$0.00 per share ...................... 1,532,164 1,532 (877) - 655
----------- ----------- -------------- --------------- ---------------
Balance, June 30, 1998.................. 1,532,164 1,532 (877) - 655
Distribution to shareholder,
August 1998........................... - - (900) - (900)
Conversion of notes payable,
August 1998, $0.74 per share ......... 467,836 468 343,892 - 344,360
Issuance for assets of Greenway,
September 1998, $0.01 per share 1,236,072 1,236 8,774 - 10,010
Issuance to a consulting firm for
services, September 1998, $0.15
per share............................. 404,008 404 60,197 - 60,601
Issuance to an officer for services,
September 1998, $0.15 per share....... 400,000 400 59,600 - 60,000
Issuance to an officer for services,
December 1998, $0.15 per share........ 250,000 250 37,250 - 37,500
Issuance to a consulting firm for
services, January 1999, $0.15
per share............................. 25,000 25 3,725 - 3,750
Compensation relating to grant of
stock options......................... - - 39,564 - 39,564
Net loss................................ - - - (734,341) (734,341)
----------- ----------- -------------- --------------- ---------------
Balance, March 31, 1999................. 4,315,080 $ 4,315 $ 551,225 $ (734,341) $ (178,801)
=========== =========== ============== =============== ===============
</TABLE>
See the accompanying notes to condensed consolidated financial statements.
F-3
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<TABLE>
TRAVEL DYNAMICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
For the Period
from March 1, 1998
For the Nine (Date of Inception)
Months Ended Through
March 31, 1999 March 31, 1998
-------------- --------------
<S> <C> <C>
Cash Flows From Operating Activities
Net loss.................................................................$ (734,341) $ -
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation and amortization.......................................... 15,177 -
Compensation and expenses paid with common stock....................... 161,851 -
Compensation paid with stock options................................... 39,564 -
Expenses paid with notes payable....................................... 166,382 -
Changes in assets and liabilities:
Accounts receivable.................................................. (17,118) -
Prepaid expenses .................................................... (151,413) -
Inventory............................................................ (79,913) -
Accounts payable..................................................... 357,492 -
Accrued liabilities.................................................. 43,330 -
Deferred revenue..................................................... 592,756 -
---------------- --------------
Net Cash and Cash Equivalents Provided by Operating Activities 393,767 -
---------------- --------------
Cash Flows From Investing Activities
Payments to purchase property and equipment.............................. (257,326) -
Increase in related party receivable..................................... (34,528) -
Payments to purchase intangible assets................................... (5,880) -
---------------- --------------
Net Cash and Cash Equivalents Used in Investing Activities............... (297,734) -
---------------- --------------
Cash Flows From Financing Activities
Distributions to shareholder............................................. (900) -
Proceeds from issuance of common stock .................................. - 655
Proceeds from notes payable - related party.............................. 50,000 -
---------------- --------------
Net Cash and Cash Equivalents Provided by Financing Activities 49,100 655
---------------- --------------
Net Increase in Cash and Cash Equivalents................................... 145,133 655
Cash and Cash Equivalents at Beginning of Period............................ 655 -
---------------- --------------
Cash and Cash Equivalents at End of Period..................................$ 145,788 $ 655
================ ==============
</TABLE>
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 $56,321 of equipment and intangible
assets of $121,657. The Company issued 467,836 shares of common stock upon
conversion of the notes payable in the amount of $344,360. The Company was
deemed to have issued 1,236,072 common shares to the shareholders of Greenway
Environmental Systems, Inc. in exchange for $10,010 of assets, which
consisted primarily of a receivable from a related party.
See the accompanying notes to condensed consolidated financial statements.
F-4
<PAGE>
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 through December 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 inter company 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 and Travel
Dynamics became a wholly-owned subsidiary of Greenway. The agreement was
accounted for as the reorganization of Travel Dynamics, Inc. and the acquisition
of Greenway's assets in exchange for 1,236,072 shares of common stock. Greenway
did not have any operations and had only nominal assets at the date of the
agreement. Accordingly, Greenway's assets were recorded at their historical cost
of $10,010. In addition, Greenway changed its name to Travel Dynamics, Inc.
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.
Business C -- The accompanying financial statements have been prepared in
conformity with generally accepted accounting principles, which contemplates
continuation of the Company as a going concern. However, the Company has
suffered losses from operations during fiscal year 1999 which conditions raise
substantial doubt about the Company's ability to continue as a going concern.
F-5
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TRAVEL DYNAMICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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.
Cash Equivalents - Highly liquid debt instruments purchased with a maturity of
three months or less are considered to be cash equivalents.
Inventory - Inventory includes vacation travel discount packages and cruise
certificates. All inventory items are stated at the lower of cost (computed by
the first-in, first-out basis) or market value.
Advertising Costs - Prepaid seminar facility and other expenses, such as
deposits for hotel use, are deferred until the related seminars are held to
match the expenses with seminar revenues. Direct-response advertising costs,
including the cost of a purchased marketing master date base, are capitalized
and amortized over the period of the related sales effort. All other advertising
costs are expensed as incurred. Advertising expense was $1,015 and $11,033 for
the three and nine months ended March 31, 1999, respectively.
Office Equipment - Office equipment is recorded at cost and depreciated over its
estimated useful live of seven years, using the straight-line method.
Depreciation for the three and nine months ended March 31, 1999 was $4,990 and
$9,211, respectively.
Software for Internal Use - In accordance with Statement of Position 98-1,
"Accounting for the Costs of Computer Software Developed or Obtained for
Internal Use" (SOP 98-1), the Company charges software evaluation and
maintenance costs to expense. Material software development costs subsequent to
the establishment of technological feasibility are capitalized, including the
costs to purchase, develop and install software for internal use. Capitalized
software costs include management information systems and the development to
date of an online store to advertise and sell travel packages accessible through
the Company's Internet web site. Costs to complete the online store will be
capitalized as incurred. Software acquisition and installation costs are
depreciated over periods from one to three years by the straight-line method
beginning when the systems are operational. Depreciation expense for the three
and nine months ended March 31, 1999 was $1,063 and $1,063, respectively.
Intangible Assets - The cost of a trademark has been capitalized and is being
amortized over a three-year period by the straight-line method. Amortization
expense for the three and nine months ended March 31, 1999 was $327 and $327
respectively. The cost of a marketing master data base used for direct-response
advertising has been capitalized and is being amortized over a five-year period
by the straight-line method. Amortization expense for the three and nine months
ended March 31, 1999 was $1,961 and $4,576, respectively.
Long-Lived Assets - The realizability of long-lived assets is evaluated
periodically when events or circumstances indicate a possible inability to
recover the carrying amounts. 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 discounted 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.
F-6
<PAGE>
TRAVEL DYNAMICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
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 collected in advance of such participation.
Organization Costs - Costs paid to organize the Company as well as costs paid in
connection with the reorganization described above were charged to operations
when incurred.
Stock-Based C -- 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 weighted-average 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
1,484,444 potentially issuable common shares which were excluded from the
calculation of diluted loss per common share.
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 - COMMITMENTS
Agreements With C-- 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 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 finding Greenway
and will provide services relating to Travel Dynamics' ongoing business
activities. Travel Dynamics paid the consulting firm $5,000 as a non refundable
retainer, $40,000 for assisting Travel Dynamics in the reorganization with
Greenway and $10,000 per month through March 31, 1999 (as currently modified).
In addition, Travel Dynamics has agreed to reimburse the consulting firm for
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
agreed to 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 or has entered into
equivalent business combinations. As of March 31, 1999, 429,008 shares of common
stock have been issued regarding this commitment and were valued at $64,351 or
F-7
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TRAVEL DYNAMICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
$0.15 per share. Also, the Company has granted options to purchase 1,336,000
shares of common stock which may require the Company to issue an additional
148,444 shares of common stock to the consulting firm. The fair value of the
common stock at the date of the agreement was $0.15 per share.
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 or obtains financing from any entity the consulting firm
introduces to Travel Dynamics, Travel Dynamics is obligated to pay the
consulting firm a finder's 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 gross proceeds from the
transaction. The consulting firm will be entitled to appoint one member of the
Board of Directors.
On January 1, 1999, the Company entered into an agreement for services with a
second consulting firm. This agreement is for a one year period. This agreement
requires the Company to pay the firm $3,000 per month through December 1999. The
firm also received 40,000 options to purchase common shares of the Company at
$0.10 per share. Options for 10,000 shares vested upon being granted and the
remaining options vest evenly at the beginning of each quarter.
Employment Agreements -- 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, the
employment agreement requires the payment of cash compensation of $250,000 per
year. The Company also granted the President options to purchase 600,000 shares
of common stock at $0.10 per share.
In connection with a three-year employment agreement with the Vice President,
the Company issued 250,000 shares of common stock on December 1, 1998 valued at
$0.15 per share or $37,500. In addition, cash compensation of $150,000 per year
will be paid to the Vice President.
On January 1, 1999, the Company entered into employment agreements with three
non-executive employees. Each of these employment agreements is for three years
and may be automatically renewed for an additional year. In connection with
these employment agreements, the Company granted options to purchase 85,000
shares of common stock at $0.15 per share. On the anniversary date of each
individual's employment, they will each receive an option to purchase an
additional 10,000 options exercisable at $0.15 per share. Cash compensation to
be paid to these individuals totals $354,000 annually.
NOTE 4 - STOCK OPTIONS
On October 1, 1998, the Company granted options to purchase 400,000 shares of
common stock at $0.10 per share to members of the Board of Directors. The
options vest at the rate of 25% upon being granted and 25% per year over the
following three years. Compensation relating to the options granted to the Board
of Directors, based upon the fair value of the options, is being recognized over
the period the options vest. As of March 31, 1999, one of the members of the
Board of Directors resigned and forfeited 75,000 options.
The Company granted stock options to two consulting companies under the terms of
agreements with those consultants. One of the consultants was granted options on
October 1, 1998 to purchase 100,000 shares of stock at $0.10 per share. Options
F-8
<PAGE>
TRAVEL DYNAMICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
to purchase 30,000 shares vested upon execution of the agreement and an
additional 35,000 options vest each of the following two anniversary dates of
the agreement. The second consultant was granted options to purchase 96,000
shares of stock at $0.10 per share. Options for 12,000 shares vested on February
28, 1999 and 12,000 options vest each of the following seven quarters.
Compensation relating to these options, based upon the fair value of the
options, is being recognized over the period the options vest.
The Company granted options to purchase 600,000 shares of common stock at $0.10
per share to its president on October 1, 1998 in connection with a three-year
employment agreement. Options to purchase 200,000 shares will vest on the
anniversary date of the agreement and an additional 200,000 options vest each
year of employment. Compensation relating to these options, based upon the
intrinsic value of the options of $30,000 or $0.05 per option, is being
recognized over the period the options vest.
The Company granted options to purchase 175,000 shares of common stock at $0.10
per share to three employees in connection with employment agreements. Options
to purchase 85,000 shares vested upon being granted with the remainder vesting
through 2001. Compensation relating to these options, based upon the intrinsic
value of the options, is being recognized over the period the options vest. The
Company granted 40,000 options to purchase common shares of the Company to a
firm in conjunction with an agreement for services dated January 1, 1999. The
options vest at the rate of 10,000 shares per quarter during 1999.
A summary of the status of the Company's stock options as of March 31, 1999 and
changes during the nine month-period then ended is presented below:
Weighed
Average
Shares Exercise Price
------ --------------
Outstanding at beginning of period.... - $ -
Granted............................... 1,411,000 0.11
Forfeited............................. 75,000 0.10
-----------
Outstanding at period end............. 1,336,000 0.10
===========
Options exercisable at period end..... 237,000 0.12
===========
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 $39,564 during the nine months ended
March 31, 1999. Had compensation cost for the Company's options granted to
employees been determined based on the fair value at the grant dates consistent
with the alternative method set forth under Statement of Financial Accounting
Standards No. 123, net loss and loss per share would have increased for the
three and nine months ended March 31, 1999 to the pro forma amounts indicated
below:
F-9
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TRAVEL DYNAMICS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
<TABLE>
<CAPTION>
For the Three For the Nine
Months Ended Months Ended
March 31, March 31,
1999 1999
------------- -------------
<S> <C> <C>
Net loss:
As reported.......................$ (113,303) $ (734,341)
Pro forma......................... (128,678) (755,216)
Basic and diluted loss per share:
As reported.......................$ (0.03) $ (0.19)
Pro forma......................... (0.03) (0.20)
</TABLE>
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
- - 4.9 years, expected volatility - 75% and risk-free interest rate - 4.5%.
F-10
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------------------------------------------------------------------------
RESULTS OF OPERATIONS.
- ----------------------
MANAGEMENT'S DISCUSSION AND ANALYSIS MAY CONTAIN FORWARD-LOOKING
STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. THE STATEMENTS CONTAINED IN
THIS 10-QSB REPORT ThAT ARE NOT PURELY HISTORICAL ARE FORWARD-LOOKING STATEMENTS
WITHIN tHE MEANING OF SECTION 21 E OF THE EXCHANGE ACT, INCLUDING, WITHOUT
LIMITATION, STATEMENTS REGARDING THE COMPANY'S EXPECTATIONS, BELIEFS, EStIMATES,
INTENTIONS, AND STRATEGIES ABOUT THE FUTURE. WORDS SUCH AS, "aNTICIPATES,"
"EXPECTS," "INTENDS," "PLANS," "BELIEVES," "SEEKS," "ESTIMATES," "PREDICTS,"
"FORECASTS," OR VARIATIONS OF SUCH WORDS AND SIMiLAR EXPRESSIONS ARE INTENDED TO
IDENTIFY SUCH FORWARD-LOOKING STATeMENTS, BUT THEIR ABSENCE DOES NOT MEAN THE
STATEMENT IS NOT FORWARD-lOOKING. THESE STATEMENTS ARE NOT GUARANTEES OF FUTURE
PERFORMANCE aND ARE SUBJECT TO CERTAIN RISKS, UNCERTAINTIES, AND ASSUMPTIONS
THAT aRE DIFFICULT TO PREDICT; THEREFORE, ACTUAL RESULTS MAY DIFFER MATERIALLY
FROM THOSE EXPRESSED OR FORECASTED. ANY SUCH FORWARD-LOOKING STATEMENTS ARE
SUBJECT TO CERTAIN UNFORESEEN FACTORS, AS WELL AS DIFFERENCES IN ACTUAL RESULTS.
THE FOLLOWING CONSTITUTES MANAGEMENT'S SUMMARY OF WHAT IT BELIEVES TO
BE CERTAIN SIGNIFICANT FINANCIAL DATA, BUT IS LIMITED BY AND SUBJECT TO THE MORE
3
<PAGE>
COMPLETE FINANCIAL STATEMENTS ATTACHED AS ITEM I AND SHOULD BE REVIEWED IN
CONJUNCTION THEREWITH.
(A) OPERATIONS & LIQUIDITY - AS MORE FULLY DESCRIBED BELOW,
THE COMPANY UNDERWENT A REVERSE ACQUISITION REORGANIZATION IN SEPTEMBER 1998.
THE COMPANY EARLIER REPORTED ITS INITIAL FINANCIAL DATA FOR THE START-UP QUARTER
ENDING DECEMBER 31, 1998. MANAGEMENT IS PLEASED TO ANNOUNCE AN INCREASE IN
REVENUES FROM THE FOURTH QUARTER OF 1998 TO THE FIRST QUARTER OF 1999, ENDING
MARCH 31ST, FROM $769,990 TO $873,705, OR APPROXIMATELY 13%. DURING THIS SAME
COMPARATIVE PERIOD, THE COMPANY REPORTED A DECREASE IN NET LOSSES FROM $212,391
FOR THE LAST QUARTER OF 1998 TO ($113,303) FOR THE FIRST QUARTER OF 1999.
MANAGEMENT REMAINS OPTIMISTIC THAT IT CAN CONTINUE TO ACHIEVE FUTURE
GROWTH IN REVENUES AND WILL AT SOME FUTURE DATE ACHIEVE PROFITABILITY, THOUGH NO
FORECAST OR WARRANTY OF SUCH DATE IS CURRENTLY MADE. BY SECTOR COMPARISON, THE
FOURTH QUARTER OF 1998 REVENUES CAN BE CONTRASTED WITH THE FIRST QUARTER OF 1999
REVENUES AS FOLLOWS:
<TABLE>
SELECTED FINANCIAL DATA
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
FOURTH QUARTER FIRST PERCENTAGE
1998 QUARTER CHANGE IN
(INITIAL QUARTER) 1999 REVENUES
Revenues Revenues
- -------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TRAVEL PACKAGES $443,514 $483,071 + 9%
- -------------------------------------------------------------------------------------------------------------------
SEMINARS* $175,866 $132,454 - 25%
- -------------------------------------------------------------------------------------------------------------------
ON LINE SALES & MISC. $150,610 $258,180 + 71%
- -------------------------------------------------------------------------------------------------------------------
TOTAL: $769,990 $873,705 + 13%
- -------------------------------------------------------------------------------------------------------------------
</TABLE>
*IT SHOULD BE NOTED THAT SEMINARS ARE NOT UNIFORMLY SCHEDULED, HENCE
THERE MAY BE SIGNIFICANT VARIATIONS IN SEMINAR REVENUES BETWEEN QUARTERS.
GENERALLY NO SIGNIFICANT SEMINARS WILL BE SCHEDULED FOR THE FIRST QUARTER OF
EACH YEAR.
(B) HISTORICAL BACKGROUND - 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 RECENT REORGANIZATION OF GREENWAY TO BECOME KNOWN AS TDI THROUGH THE
4
<PAGE>
ACQUISITiON OF TRAVEL DYNAMICS, INC. AS A WHOLLY OWNED AND EXCLUSIVE OPERATInG
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 THE 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
CLOSED 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
DYNAmIC 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.
THE PRINCIPAL BUSINESS OF THE COMPANY 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 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.
THIRDLY, THE COMPANY IS GAINING INCREASING REVENUES THROUGH VARIOUS
DIRECT "INTERNET" MARKETING ACTIVITIES.
THE FOREGOING GENERAL DESCRIPTION OF BUSINESS IS MORE PARTICULARLY SET
OUT IN THE LAST FiLED 10-KSB REPORT FOR THE COMPANY WHICH WAS FILED AS OF
OCTOBER 23, 1998. A COPY OF THIS FILING OR OTHER FILINGS TO DATE UNDER THE
SECURITIES ACT OF 1934 BY THE COMPANY WILL BE MADE AVAILABLE BY THE COMPANY TO
ANY SHAREHOLDER REQUESTING THE SAME, OR TO OTHER INTERESTED PARTIES. ALL FILED
DOCUMENTS OF THE COMPANY MAY FURTHER BE RETRIEVED "On LINE" THROUGH THE INTERNET
AT THE SEC HOMEPAGE AT: HtTP://WWW.SEC.GOV.
5
<PAGE>
THE FOLLOWING WERE APPOINTED AND ELECTED PURSUANT TO THE REORGANIZATION
AND PRESENTLY CONsTITUTE THE CURRENT OFFICERS AND DIRECTORS OF THE COMPANY:
(A) JAMES PICCOLO, PRESIDENT, DIRECTOR
(B) BRIAN K SERVICE, EXECUTIVE DIRECTOR,
SECRETARY, CFO
(C) THOMAS (TOM) DENNIS, DIRECTOR
(D) THOMAS VERGITH, DIRECTOR
MR. GARY DAVIES WAS ORIGINALLY APPOINTED TO THE BOARD
AFTER THE REORGANIZATION, BUT SUBSEQUENTLY RESIGNED.
OTHER PRINCIPAL OFFICERS WHO ARE NOT DIRECTORS
INCLUDE:
(A) JOHN P. PICCOLO, VICE PRESIDENT
(B) MELINDA FEHRINGER, TREASURER
BIOGRAPHICAL INFORMATION, SHAREHOLD INTEREST AND
COMPENSATION PERTAINING TO THE FOREGOING OFFICERS AND
DIRECTORS IS CONTAINED IN THE LAST FILED 10-KSB
REPORT OF THE COMPANY AND WILL BE UPDATED IN THE NEXT
10-KSB TO BE FILED IN SEPTEMBER, 1999.
ALL CURRENT DEBTS AND OBLIGATIONS OF THE PRIOR GREENWAY ENVIRONMENTAL
SYSTEMS WERE PAID OR OTHERWISE DISCHARGED AS OF THE TIME OF THE COMPLETION OF
THE REVERSE ACQUISITION.
THE PLACE OF OPERATION OF THE BUSINESS CHANGED TO THE PRINCIPAL PRIOR
BUSINESS LOCATION OF TRAVEL DYNAMICS, INC. IN SCOTTSDALE, AZ. THE COMPANY HAS
ASSUMED, AS ITS SOLE OPERATIONS, THE FORM OF BUSINESS PRESENTLY CONDUCTED BY
TRAVEL DYNAMIC SERVICES, INC., AS DESCRIBED ABOVE.
IN REVIEWING THE STATEMENT OF OPERATIONS FOR THE COMPANY, IT SHOULD 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 OF THE LLC 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 OPERATING
SUBSIDIARY COMPANY.
6
<PAGE>
THERE IS, AS OF MARCH 31, 1999, COMBINED TOTAL ASSETS OF $864,777;
CURRENT LIABILITIES OF $1,043,578 RESULTING IN A SHAREHOLDERS DEFICIT OF
($178,801) IN THE COMPANY.
COSTS OF SALES IN THE QUARTER ENDING MARCH 31, 1999, WERE $426,533 OR
APPROXIMATELY 49% OF SALES. THE RESULTING GROSS PROFIT WAS $447,172 OR A GROSS
PROFIT MARgIN OF APPROXIMATELY 51%. GENERAL AND ADMINISTRATIVE EXPENSES OF
$560,475 FOR THIS PERIOD RESULTING IN THE QUARTERLY NET LOSS OF ($113,303) OR
APPROXIMATELY $0.03 PER SHARE.
THE COMPANY IN THE THREE MONTHS ENDING MARCH 31, 1999, PAID $37,500 TO
ITS CONSULTANTS AND ISSUED TO SUCH THIRD PARTIES 25,000 SHARES OF RESTRICTED
COMMON STOCK PURSUANT TO A PRIOR AGREEMENT. THE CONSULTANTS ALSO HAVE THE RIGHT
TO BE iSSUED ADDITIONAL SHARES, WITHOUT CONSIDERATION, IN THE EVENT OF FUTURE
STOCK ISSUANCES SO THAT THEIR SHAREHOLD INTEREST WOULD EQUAL TEN PERCENT OF ALL
ISSUED AND OUTSTANDING SHARES UNTIL THE COMPANY HAD RAISED $5,000,000 IN NEW
CAPITAL.
MANAGEMENT COMPENSATION FOR THE THREE MONTHS ENDING MARCH 31, 1999,
AGGREGATED $158,958 OR APPROXIMATELY 18% OF REVENUES. MANAGEMENT ALSO RECEIVED
NO SHARES OF STOCK IN THIS PERIOD, BUT HAVE OPTIONS TO ACQUIRE 996,000 SHARES
AT AN EXERCISE PRICE OF $0.10/SHARE. IF FULLY EXERCISED, MANAGEMENT SHARES AND
OPTIONS WOULD CONSTITUTE APPROXIMATELY 20% OF ALl PRESENTLY ISSUED AND
OUTSTANDING STOCK.
UNTIL THE COMPANY ACHIEVES A SUSTAINED LEVEL OF PROFITABILITY, IT MUST
BE CONSIDERED A START-UP ENTITY. WHILE MANAGEMENT CONSIDERS THE GROWTH OF
REVENUES AND REDUCTION OF LOSSES TO BE POSITIVE, MANAGEMENT IS UNABLE TO MAKE
ANY CURRENT PROJEcTION OF WHEN, OR IF, PROFITABILITY CAN BE CONSISTENTLY
OBTAINED.
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.
IT SHOULD ALSO BE NOTED THAT AS A START UP ENTITY, THE COMPANY HAS AND
WILL NECESSARILY CONTINUE TO 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
7
<PAGE>
ONGOING FEES; OR, IF ONGOING, MAY NOT BE INCURRED AT THE SAME LEVEL OR
PERCENTAGE OF REVENUES AS EXPERIENCED IN THE START-UP PERIOD.
MANAGEMENT'S GENERAL DISCUSSION OF OPERATIONS IS LIMITED BY AND SHOULD
BE CONSIDERED WITHIN THE CONTEXT OF THE ACTUAL FINANCIAL STATEMENTS AND NOTES
ATTACHED THERETO AND INCORPORATED AS PART OF ITEM 1 ABOVE.
(C) YEAR 2000 DISCLOSURE - AS MANY OF OUR SHAREHOLDERS AND
OTHER INTERESTED PARTIES MAY BE AWARE, THERE IS SIGNIFICANT CONCERN THAT CERTAIN
COMPUTER PROGRAMS AND COMPUTERS ARE NOT PRESENTLY CONFIGURED TO RECOGNIZE THE
YEAR 2000 OR SUCCEEDING YEARS. THIS DEFECT IN COMPUTER FUNCTIONS COULD HAVE A
SERIOUS ADVERSE IMPACT UPON YOUR COMPANY AND OTHER INDUSTRIES IF VARIOUS
COMPUTER PROGRAMS AND APPLICATIONS CEASE TO FUNCTION OR FUNCTION ERRONEOUSLY AS
WE APPROACH THE YEAR 2000.
BY WAY OF PRACTICAL ILLUSTRATION, SOFTWARE PROGRAMS DEALING WITH
ACCOUNTING AND BANKING FUNCTIONS WITHIN THE COMPANY COULD MISFUNCTION OR CEASE
TO FUNCTION IF NOT YEAR 2000 COMPLIANT. THE COMPANY VIEWS THE YEAR 2000, OR Y2K,
COMPLIANCE PROBLEMS IT MAY FACE TO FALL WITHIN THREE GENERAL CATEGORIES:
(1) THE POTENTIAL IMPACT ON THE COMPANY'S OWN INFORMATION
TECHNOLOGY (IT SYSTEMS) CONSISTING OF LOCALLY NETWORKED COMPUTERS, ALONE
COMPUTERS, AND THEIR INTEGRAL SOFTWARE.
(2) THE POTENTIAL IMPACT OF THE POSSIBILITY OF COLLATERAL
FAILURE OR MISFUNCTION IN NON-IT SYSTEMS DUE TO THEIR COMPUTER COMPONENTS SUCH
AS TELEPHONE SYSTEMS, SECURITY SYSTEMS, COMPANY VEHICLES, ETC.
(3) THE POTENTIAL ADVERSE EFFECT UPON THE COMPANY FROM YEAR
2000 FAILURE AMONG THIRD PARTY SERVICE AND PRODUCT SUPPLIERS UPON WHICH THE
COMPANY DEPENDS FOR ITS CORE TRAVEL PRODUCTS AND SERVICES. THE THIRD PARTIES
WOULD INCLUDE, THOUGH ARE NOT LIMITED TO, CRUISE LINES, TRAVEL COMPANIES,
AIRLINES, AND GOVERNMENTALLY OWNED OR MANAGED TRAVEL FACILITIES SUCH AS
AIRPORTS, TERMINALS, AND DOCKS.
THE COMPANY BELIEVES IT IS ADDRESSING ITS YEAR 2000 PROBLEMS RELATED TO
ITS OWNED OR LEASED IT SYSTEMS. THE COMPANY HAS RECENTLY HIRED AN IN-HOUSE IT
SPECIALIST WHO WILL COMPLETE REVIEWS AND UPDATES, WITHIN THE NEXT 90 DAYS, OF
ALL COMPANY OPERATING SYSTEMS AND PROGRAM APPLICATIONS TO INSURE THEY ARE Y2K
8
<PAGE>
COMPLIANT OR THEY WILL BE UPGRADED TO BE COMPLIANT, OR ALTERNATIVE COMPLIANT
SYSTEMS OR SOFTWARE ACQUIRED. PRELIMINARILY, IT APPEARS THAT MOST OF THE
COMPANY'S CURRENT OPERATING SYSTEMS WERE ACQUIRED RECENTLY ENOUGH TO BE FULLY
Y2K COMPLIANT.
AS TO NON-IT SYSTEMS, THE COMPANY IS REVIEWING WITH ITS TELEPHONE, FAX,
AND OTHER VENDORS IF THERE ARE ANY ANTICIPATED PROBLEMS OR UPDATES REQUIRED FOR
Y2K COMPLIANCE. PRELIMINARILY, THE COMPANY HAS BEEN TOLD THERE SHOULD BE NO
PROBLEM WITH THESE NON-IT SYSTEMS.
THE COMPANY IS MOST CONCERNED WITH POTENTIAL Y2K PROBLEMS IN ITS THIRD
PARTY PRODUCT AND SERVICE PROVIDERS SUCH AS CRUISE LINES, HOTEL COMPANIES, AND
AIRLINES FROM WHOM IT PURCHASES AND ASSEMBLES THE TRAVEL PACKAGES IT RESELLS TO
INDEPENDENT SALES AGENTS. IT IS POSSIBLE UNCURED Y2K PROBLEMS IN THe
TELECOMMUNICATIONS INDUSTRIES, OR AMONG TRAVEL PROVIDERS, COULD SUBSTANTIALLY
IMPAIR OR SHUT DOWN THE COMPANY'S OPERATIONS. FURTHER, THE COMPANY DOES NOT
BELIEVE IT HAS OR MAY EXERCISE ANY REALISTIC CONTROL OVER, OR PROVIDE ANY
ASSISTANCE TO THESE THIRD PARTY PROVIDERS.
WHILE IT IS TOO PRELIMINARY TO FULLY ASSESS THE COMPANY'S COST OF Y2K
COMPLIANCE, PRELIMINARY INDICATIONS ARE THAT THE COMPANY WILL INCUR LITTLE COSTS
IN UPGRADING INTERNAL IT SOFTWARE OR SYSTEMS.
THE ANTICIPATED COSTS TO THE COMPANY WILL BE PRIMARILY THE SALARY AND
OTHER COMPENSATION PAiD TO THE IT COMPLIANCE OFFICER. SINCE THE COMPLIANCE
OFFICER WILL HAVE OTHER CORPORATE DUTIES, IT IS DIFFICULT TO ESTIMATE DIRECT
COSTS, BUT THEY ARE BELIEVED TO BE LESS THAN $15,000 PER ANUM.
THE COMPANY'S PLANS TO DEAL WITH POTENTIAL Y2K PROBLEMS ARE AS OUTLINED
ABOVE. THE COMPANY BELIEVES THE PLANNING IS ADEQUATE TO HANDLE ANY INTERNAL Y2K
PROBLEMS, IT DOES NOT BELIEVE IT CAN DEVELOP ANY REALISTIC CONTINGENCY PLAN TO
ADEQUATELY DEAL WITH POTENTIAL THIRD PARTY Y2K PROBLEMS.
PART II. - OTHER INFORMATION
----------------------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- -----------------------------------------------------------
9
<PAGE>
NO MATTERS WERE REQUIRED TO BE SUBMITTED TO SHAREHOLDER VOTE DURING THE
QUARTER ENDING MARCH 31, 1999 OR ARE ANTICIPATED TO BE SUBMITTED DURING THE
SECOND QUARTER OF 1999. HOWEVER, DURING THE QUARTER ENDING DECEMBER 31, 1998 THE
BOARD HAS ADOPTED A COMPREHENSIVE QUALIFIED EMPLOYEE INCENTIVE STOCK OPTION
PLAN, AS GENERALLY DESCRIBED ABOVE, WHICH WILL BE SUBMITTED FOR A SHAREHOLDER
VOTE.
IF PRESENTLY EXERCISED, THESE MANAGEMENT OPTION SHARES WOULD CONSTITUTE
APPROXIMATELY 20% OF THE CURRENTLY ISSUED SHARES WHEN AGGREGATED WITH ALL OTHER
CURRENTLY ISSUED SHARES. SINCE THE INCENTIVE OPTIONS COULD NOT BE ADOPTED BY
DISINTERESTED DIRECTORS, THE DIRECTORS HAVE DECIDED TO CONDITIONALLY GRANT THE
MANAGEMENT OPTIONS SUBJECT TO SHAREHOLDER RATIFICATION OR REJECTION OF THE
INCENTIVE STOCK OPTION PLAN AT THE NEXT SHAREHOLDERS' GENERAL MEETING. NO DATE
FOR THE NEXT SHAREHOLDERS' MEETING HAS BEEN SET, BUT IS ANTICIPATED TO BE HELD
PRIOR TO CALENDAR YEAR END 1999.
ITEM 5. - OTHER INFORMATION.
- ----------------------------
THE COMPANY KNOWS OF NO OTHER MATERIAL INFORMATION OTHER THAN AS
DESCRIBED AND SET OUT ABOVE AND UNDER THIS ITEM 5. FOR THE INTERIM PERIOD, THE
COMPANY WILL BE ENGAGED IN ATTEMPTING TO ASSIMILATE CHANGES RESULTING FROM THE
REORGANIZATION AND TO WORK TO ACHIEVE A LEVEL OF SUSTAINED PROFITaBLE
OPERATIONS.
THE COMPANY FURTHER NOTES THAT TRADING IN ITS STOCK COMMENCED IN
JANUARY, 1999 UNDER THE TRADING SYMBOL "TDNM" AFTER SUBMISSION TO AND CLEARANCE
BY THE NATIONAL ASSOCIATION OF SECURITIES DEALERS (NASD). AS OF THE DATE OF THIS
REPORT THE STOCk WAS TRADING ON A LIMITED BASIS IN THE RANGE OF A $1.50 TO $2.50
PER SHARE.
THE COMPANY IS PRESENTLY SELLING A PRIVATE PLACEMENT CONVERTIBLE
DEBENTURE OFFERING TO PROVIDE NEEDED CAPITAL FOR THE COMPANY. THE MAXIMUM GROSS
PROCEEDS WILL NOT EXCEED $750,000 AND THE MINIMUM AMOUNT WHICH MUST BE SOLD TO
CLOSE THE OFFERING WILL BE $250,000. WHILE SUBSCRIPTIONS ARE LIMITED TO CERtAIN
SOPHISTICATED OR ACCREDITED INVESTOR, ANY SHAREHOLDER WISHING A COPY OF THE
PRIVATE PLACEMENT OFFERING MEMORANDUM CAN OBTAIN A COPY FROM THE COMPANY UPON
REQUEST. THE COMPLETION OF THIS PRIVATE PLACEmENT MAY HAVE A DILUTIVE IMPACT
UPON CURRENT SHAREHOLDERS IN AN AMOUNT NOT PRESENTLY DETERMINED.
THE COMPANY HAS ALSO COMPLETED SUBSCRIPTION TO A HOLD-OFF AGREEMENT
WHEREIN CERTAIN PRINCIPAL SHAREHOLDERS HAVING FREE TRADING SHARES (OFFICERS,
10
<PAGE>
DIRECTORS, AND THOSE HOLDING 10% OR MORE OF THE ISSUED SHARES) WOULD BE ASKED TO
VOLUNTARILY AGREE TO REMAIN AS SHAREHOLDERS AND NOT SELL ANY SHARES FOR SIX
MONTHS FROM THE EXECUTION DATE OF THE AGREEMENT IN MAY, 1999 AND WOULD NOT,
THEREAFTER, SELL THEIR SHARES AT A RATE GREATER THAN 10% OF THEIR HOLDINGS PER
MONTH FOR THE 10 MONTHS FOLLOWING THE INITIAL "NO SALE" PERIOD. A COPY OF THIS
AGREEMENT IN UNEXECUTED FORM IS ATTACHED. AT PRESENT, TEN PRINCIPAL SHAREHOLDERS
HAVE SIGNED THE AGREEMENT. THE COMPANY CURRENTLY HAS A TOTAL OF APPROXIMATELY
411 SHAREHOLDERS.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
- ------------------------------------------
(1) THE ATTACHED UNAUDITED FINANCIALS FOR THE PERIOD ENDING MARCH 31,
1999, ARE INCORPORATED AS PART I.
(2) THE COMPANY MADE NO 8-K FILINGS IN THE QUARTER ENDING MARCH 31,
1999.
..........................
OTHER EXHIBITS:
HOLD-OFF AGREEMENT
11
<PAGE>
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: MAY 14, 1999 BY /S/JAMES PICCOLO
---------------------------
JAMES PICCOLO
PRESIDENT/DIRECTOR
DATE: MAY 14, 1999 BY /S/BRIAN SERVICE
----------------------------
BRIAN SERVICE
SECRETARY
TDI/1QTR99.10Q CHIEF FINANCIAL OFFICER
12
HOLD OFF AGREEMENT
AGREEMENT MADE AND ENTERED INTO AS OF THE 29TH DAY OF APRIL, 1999, (THE
"EFFECTIVE DATE"), BY AND BETWEEN THE FOLLOWING SHAREHOLDERS OF TRAVEL DYNAMICS,
INC. OF 7525 EAST CAMELBACK ROAD, SUITE 202, SCOTTSDALE, ARIZONA 85251("TDI"):
ANDREW LIMPERT, STEVEN MADSEN, DENNIS MADSEN, THOMAS F. HINKLE AND LOIS M.
HINKLE, LESLYE STRATTON, JAMES SCHEIDELL, BOB SNYDER, HOLLY SNYDER,
("SHAREHOLDERS"). THIS AGREEMENT IS DEEMED TO BE MADE AND IN FORCE AND EFFECT
BETWEEN THE rESPECTIVE SHAREHOLDERS WITH EACH OTHER AND THE SHAREHOLDERS
COLLECTIVELY AND INDIVIDUALLY WITH TDI. WHENEVER BOTH THE CLASS OF SHAREHOLDERS
AND TDI ARE COLLECTIVELY REFERRED TO IN THIS AGREEMENt THEY SHALL BE REFERRED TO
AS THE "PARTIES."
RECITALS
WHEREAS, VARIOUS PRINCIPAL SHAREHOLDERS OF TDI, PRIMARILY HOLDING
RESTRICTED SHARES, DESIRE TO INSURE THE CONTINUING PARTICIPATION IN AND
AFFiLIATION OF THESE PRINCIPAL SHAREHOLDERS WITH THE COMPANY DURING ITS
REORGANIZATIONAL aND START-UP PHASES AS SHAREHOLDERS;
WHEREAS, TDI IS WILLING TO ACCOMMODATE, ASSIST, AND ENFORCE (AS
NECESSARY) THE VOLUNTARY EFFORTS OF SOME OF ITS PRINCIPAL SHAREHOLDERS APPEaRING
IN THIS AGREEMENT TO RESTRICT SALES OF THEIR SHARES;
WHEREAS, BOTH THE SHAREHOLDERS AND TDI AGREE AND CONSENT THAT
PARTICIPATION IN THIS AGREEMENT IS FULLY AND COMPLETELY VOLUNTARY AND THaT NO
INCENTIVES, SANCTIONS, OR OTHER CONSEQUENCES OR CONSIDERATION HAVE BEEN PROPOSED
OR SUGGESTED To REQUIRE THE PARTICIPATION BY ANY SHAREHOLDER AND EACH
SHAREHOLDER HAS INDIVIDUALLY DECIDED TO PARTiCIPATE IN THE INTEREST OF INSURING
THE CONTINUED AFFILIATION OF THE PRINCIPAL SHAREHOLDERS DURING THE
REORGANIZATION AND START-UP PHASES.. EACH SHAREHOLDER HAS INFORMED THE COMPANY
OF THEIR INDEPENDENT DECISION AND REQUESTED THE COMPANY TO PARTICIPATE IN
COORDINATING AND ASSISTING IN THE IMPLEMENTATION, ENFORCEMENT, AND SUPERVISION
OF THIS AGREEmENT;
NOW THEREFORE, THE PARTIES MUTUALLY AGREE AND COVENANT AS FOLLOWS:
WITNESSETH
1.0 CONSIDERATION. THIS AGREEMENT IS FULLY AND ADEQUATELY SUPPORTED BY
THE VOLUNTARY CONSIDERATION OF THE SHAREHOLDERS MUTUAL AGREEMENT TO REFRAIN FROM
TRADING IN THEIR TDI STOCK FOR THE PERIOD DEFINED BY THIS AGREEMENT; AND,
INDEPEnDENTLY, BY THE MUTUAL PROMISES AND COVENANTS CONTAINED HEREIN.
2.0 SHARES & SHAREHOLDERS SUBJECT TO AGREEMENT. ATTACHED HERETO AND
INCORPORATED BY THIS REFERENCE IS A SCHEDULE "A" SETTING FORTH THE NAME OF EACH
LEGAL AND BENEFICIAL SHAREHOLDER WHO HAS VOLUNTARILY ENTERED INTO AND EXECUTED A
1
<PAGE>
COPY OF ThIS AGREEMENT, TOGETHER WITH THE NUMBER OF SHARES SUBJECT TO THIS
AGREEMENT AND THE CERTIFICATE NO(S). FOR THOSE SHARES. SCHEDULE A SHALL
CONSTITUTE AN ESSENTIAL AnD INTEGRAL PART OF THIS AGREEMENT AND IS FULlY
INCORPORATED BY THIS REFERENCE.
3.0 HOLD-OFF AGREEMENT.
3.1 EACH OF THE SCHEDULE A SHAREHOLDERS AGREES THAT AS TO THOSE SHARES
LISTED IN SCHEDULE A, THAT SUCH SHAREHOLDER WILL NOT PUBLICLY SELL, TRANSFER, OR
IN ANY WAY ASSIGN THE TDI STOCK SUBJECT TO THIS AGREEMENT, OR ANY INTEREST
THEREIN, FOR OnE HUNDRED AND EIGHTY (180) DAYS FROM THE DATE OF THIS AGREEMENT.
THEREAFTER, EACH SHAREHOLDER AGREES THAT IT WILL NOT SELL IN ANY PUBLIC
TRANSACTION MORE THAN 10% PER MONTH OF THOSE SHARES LISTED IN SChEDULE A AS
OWNED BY THE SHAREHOLDER COMMENCING 180 DAYS FROM THE DATE OF THIS AGREEMENT.
3.2 EACH SHAREHOLDER SUBJECT TO THIS AGREEMENT FURTHER AGREES THAT THEY
WILL NOT ENGAGE IN ANY PRIVATE SALE, ASSIGNMENT, OR DISTRIBUTION BY GiFT OR
CONSIDERATION OF TDI SHARES DURING SUCH 180 DAY PERIOD UNLESS THE BUYER,
ASSIGNEE, OR DONEE OF SUCH SHARES FULLY AGREES IN WRITING TO ACCEPT THE TERMS
AND PROVISIONS OF THIS HOLD-OFF AGREEMENT AS TO THE SHARES TRANSFERRED FOR THE
REMAINING TERM OF THIS AgREEMENT.
3.3 EACH SHAREHOLDER AND TDI MUTUALLY AGREE AND STIPULATE THAT THIS
AGREEMENT SHALL NOT HAVE ANY DIRECT APPLICATION OR EFFECT UPON THE REQUIREMENTS
OF SEC RULE 144 AS TO THE SALE OR DISTRIBUTION OF RESTRICTED STOCK, WHICH RULE
MAY IMPOSE FURTHER OR ADDITIONAL HOLDING PERIODS OR RESTRICTIONS ON SUCH STOCK
PRIOR TO ITS SALE OR ASSIGNMENT. PROVIDED, HOWEVER, THAT ANY SHARES WHICH
OTHERWISE WOULD BECOME FREE TRADING AND COULD BE TRANSFERRED OR SOLD PURSUANT TO
RULE 144 AS LISTED ON SCHEDULE A WILL BE FURTHER SUBJECT TO THIS HOLD OFF
AGREEMENT AS OF THE DATE ELIGIBLE FOR SUCH SALE AND THE REMAINING TERMS OF THIS
AGREEMENT SHALL BE FULLY APPLICABLE TO SUCH SHARES AS IF THEY WERE FREE TRADING
SHARES AS OF THE DATE OF THE EXECUTION OF THIS AGREEMENT.
4.0 ENFORCEMENT & REMEDIES.
4.1 IT IS AGREED BY AND BETWEEN THE SHAREHOLDERS AND TDI THAT A COPY OF
THIS AGREEMENT, INCLUDING THE SCHEDULE A, SHALL BE SUPPLIED TO ANY TRANSFER
AGENT EMPLOYED OR RETAINED BY TDI FOR THE PURPOSES OF ENFORCING THIS AGREEMENT
AND THAT SUCH TRANSFER AGENT SHALL NOT ALLOW TRANSFERS IN ANY OF THE SECURITIES
LISTED IN SCHEDULE A OF THIS AGREEmENT FOR A PERIOD OF SIXTEEN (16) MONTHS FROM
THE EXECUTION DATE OF THIS AGREEMENT WITHOUT CHECKING THE ATTEMPTED SALE OR
TRANSFER OF ANY SECURITY LISTED IN SCHEDULE A AGAINST THE TERMS OF THIS
AGREEMENT AND OBTAINING THE CONSENT AND APPROVAL FOR TRANSFER FROM A DESIGNATED
OFFICER OR AGENT OF TDI TO ENSuRE COMPLIANCE WITH THE TERMS OF THIS AGREEMENT.
4.2 FURTHER, EACH OF THE SHAREHOLDERS DESIGNATE AND AUTHORIZE TDI TO
ACT AS AN ENFORCEMENT AGENT FOR THE PURPOSES OF THIS AGREEMENT AND FuLLY AGREE
THAT TDI MAY SEEK, AS NECESSARY, AN INJUNCTIVE ORDER FROM A COURT OF COMPETENT
JURISDiCTION TO PREVENT THE SALE OR TRANSFER OF ANY TDI SHARES IN VIOLATION OF
THE TERMS OF THIS AGREEMENT AND SHALL FURTHER HAVE STANDING TO BRING AN ACTION
FOR AND ON BEHALF OF ITSELF AND ALL OF THE SHAREHOLDERS SUBJECT TO THIS
AGREEMENT FOR DAMAGES AGAINST ANY SHAREHOLDER WHO MAY VIOLATE THE TERMS OF THIS
AGREEMENT. IT IS FURTHER MUTUALLY STIPULATED AND AGREED THAT ANY SHAREHOLDER WHO
2
<PAGE>
COMPLETES A SALE, TRANSFER, OR ASSIGNMENT IN VIOLATION OF THE TERMS OF THIS
AGREEMENT SHALL BE LIABLE FOR DAMAGES EQUAL To THE TRANSFERRED VALUE OF THE
SECURITIES AT THE TIME OF TRANSFER BASED UPON MARKET VALUATION AND THAT THE
PROCEEDS OF SUCH SALE SHALL BE FORFEITED AND TENDERED TO TDI AS A CAPITAL
CONTRIBUTION, TOGETHER WITH ANY COSTS OF ATTORNEY FEES INCURRED IN COLLECTION AS
SET-OUt BY THIS AGREEMENT.
5.0 EMERGENCY RELEASE. IT IS UNDERSTOOD AND AGREED BY ALL PARTIES TO
THIS AGREEMENT THAT SHOULD A SHAREHOLDER HAVE A FINANCIAL OR FAMILY EMeRGENCY
REQUIRING THE SALE OF SHARES UNDER EXIGENT CIRCUMSTANCES TO PAY FOR SUCH
EMERGENCY, HE MAY rEQUEST OF TDI, WITHOUT NOTICE TO OR APPROVAL OF THE OTHER
SHAREHOLDERS SUBJECT TO THIS AGREEMENT, A RELEASE FROM THIS AGREEMENT FOR SUCH
EMERGENCY PURPOSES. EACH SHAREHOLDER AGREES AND UNDERSTANDS THAT TDI WILL BE
VESTED WITH FULL AND INDEPENDENT DISCRETION TO DETERMINE WHEN, IF, AND THE
AMOUNT Of SHARES REASONABLY NECESSARY IN THE EVENT OF SUCH PETITION NECESSARY TO
MEET SUCH EMERGENCY WHICH SHALL BE RELEASED FROM THE HOLD OFF PROVISIONS OF THIS
AGREEMENT. ALL APPLICATIONS FOR EMERGENCY RElEASE SHALL BE ADDRESSED TO TDI IN
WRITING AND TDI SHALL MAKE SUCH DETERMINATION IN WRITING AND ATTACH A COPY
NOTICING SUCH APPLICATION AND ITS REVIEW AND DETERMINATION TO THIS AGREEMENT.
EACH SHAREHoLDER AGREES TO FULLY HOLD HARMLESS AND INDEMNIFY TDI ITS OFFICERS
AND AGENTS FOR ANY DISCRETIONARY DECISION WHICH IT SHALL MAKE UNDER THE TERMS
AND PROVISIONS OF THIS SECTION AND TDI AGREES TO ACT WITH THE UTMOST GOOD FAITH
AND IMPARTIALITY IN APPROVING ANY RELEASES UNDER THIS SECTION, AS LIMITED TO
LEGITIMATE EMERGENCIES REQUIRING THE SALE OF SHARES. FOR ILLUSTRATION PURPOSES
ONLY, SUCH EMERGENCIES WOULD INCLUDE: MEDICAL TREATMENT, STAY OR FORECLOSURE OF
PERSONAL RESIDENCE, OR LIKE EXIGENT CIRCUMSTANCES. FINALLY, EACH SHAREHOLDER
RECOGNIZES AND CONSENTS THAT TDI HAS DESIGNATED MR. BRIAN SERVICE, A DIRECTOR,
TO ACT AS ITS AGENT FOR ALL REVIEWS AND DETERMINATION TO BE MADE PURSUANT TO
THIS PARAGRAPH.
6.0 NOTICES & SIGNATURES. IT IS AGREED AND UNDERSTOOD BETWEEN EACH OF
THE PARTIES TO THIS AGREEMENT THAT ANY NOTICE OR SERVICE REQUIRED TO BE MADE ON
ANY INDIVIDUAL SHAREHOLDER, SHALL BE GIVEN AT THE ADDRESS SET-OUT IN THE
SCHEDULE A ATTACHMENT. AS FOR TDI, NOTICE SHALL BE GIVEN AT ITS PRINCIPAL
EXECUTIVE OFFICES AT 7525 CAMELBACK ROAD, SUITE 202, SCOTTSDALE, ARIZONA 85251.
SHOULD ANY PARTY CHANGE OR ALTER ITS ADDRESS, IT WILL BE THE RESPONSIBILITY OF
SUCH PARTY TO PROMPTLY PROVIDE TDI, OR IN THE CASE OF TDI TO THE OTHER PARTIES,
WITH A NOTICE AND CERTIFICATION OF CHANGE OF ADDRESS IN WRITING, WHICH WRITING
SHALL BE ATTACHED TO THIS AGREEMENT. IT IS FURTHER UNDERSTOOD AND AGREED THAT
THIS AGREEMENT MAY BE EXECUTED IN MULTIPLE PARTS BY THE vARIOUS SHAREHOLDERS AND
THAT ALL OF SUCH SIGNATURE PAGES SHALL BE ATTACHED AND INTEGRATED AS IF THEY
WERE A SINGLE SIGNATURE PAGE. FACSIMILE SIGNATURES , UNLESS CHALLENGED, SHALL BE
DEEMED EQUIVALENT TO ORIGINAL SIGNATURES.
7.0 MISCELLANEOUS.
7.1 THIS AGREEMENT SHALL BE BINDING UPON OR INURE TO THE BENEFIT OF ANY
HEIRS, ASSIGNS, OR SUCCESSORS IN INTEREST OF ANY PARTY HERETO.
7.2 THIS AGREEMENT SHALL BE APPLIED AND CONSTRUED IN ACCORDANCE WITH
NEVADA LAW.
7.3 SHOULD ANY TERM OR PROVISION OF THIS AGREEMENT BE FOUND VOID OR
VOIDABLE, THE BALANCE SHALL BE GIVEN FULL APPLICATION AND APPLIED SO FAR AS
POSSIBLE.
3
<PAGE>
7.4 ANY ERROR IN SYNTAX, USAGE, GRAMMAR, SPELLING, OR GENDER SHALL BE
GIVEN REASONABLE INTERPRETATION AND APPLIED IN ACCORDANCE WITH THE MANIFEST
INTENT OF THE PARTIES TO THIS AGREEMENT.
7.5 THIS AGREEMENT CONSTITUTES AN INTEGRATED AND FINAL AGREEMENT AND
SHALL NOT BE MODIFIED OR CHANGED BY PAROLE EVIDENCE. ANY AMENDMENT TO THIS
AGREEMENT IS REQUIRED IN WRITING AND SIGNED BY THE EFFECtED PARTIES.
7.6 THE RECITALS ARE INCORPORATED AS NECESSARY TERMS AND PROVISIONS OF
THIS AGREEMENT.
7.7 ANY CORPORATE ENTITY SIGNING THIS AGREEMENT REPRESENTS THAT IT HAS
FULLY AND DULY AUTHORIZED ITS UNDERSIGNED EXECUTIVE OFFICER TO EXeCUTE THIS
AGREEMENT PURSUANT TO RESOLUTION OF ITS BOARD OF DIRECTORS.
7.8 SHOULD ANY ACTION AT LAW OR EQUITY BE NECESSARY TO ENFORCE ANY TERM
OR PROVISION OF THIS AGREEMENT THE PREVAILING PARTY SHALL BE ENTITLED TO ALL
COSTS OF COURT AND REASONABLE ATTORNEY FEES INCURRED IN SUCH ACTION. ANY ACTION
OR CLAIM FOR INJUNCTIVE RELIEF UNDER THIS AGREEMENT SHALL NOT PREVENT THE
SEPARATE OR CONCURRENT AcTION OR CLAIM FOR MONETARY DAMAGES.
7.9 THIS AGREEMENT SHALL AUTOMATICALLY TERMINATE AND BE OF NO FORCE OR
EFFECT NO LATER THAN SIXTEEN MONTHS FROM THE DATE OF EXECUTION, PROVIDED THAT
ANY REMEDIES SHALL SURVIVE THE TERMINATION DATE.
DATED THE DAY AND DATE FIRST ABOVE WRITTEN.
SHAREHOLDERS:
ANDREW LIMPERT STEVEN MADSEN
- ------------------------------- -------------------------------
SIGNATURE SIGNATURE
80,000 SHARES 49,795 SHARES
DENNIS MADSEN THOMAS AND LOIS HINKLE
- ------------------------------- -------------------------------
SIGNATURE SIGNATURE
29,291 SHARES 83,077 SHARES
LESLYE STRATTON JAMES SCHEIDELL
- ------------------------------- -------------------------------
SIGNATURE SIGNATURE
224,080 SHARES 10,000 SHARES
4
<PAGE>
BOB SNYDER HOLLY SNYDER
- ------------------------------- -------------------------------
SIGNATURE SIGNATURE
32,500 SHARES 20,000 SHARES
TRAVEL DYNAMICS, INC:
- -------------------------------
BY: JAMES PICCOLO
ITS: PRESIDENT
TDI/HOLDOFF.AGR
5
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 145788
<SECURITIES> 0
<RECEIVABLES> 44538
<ALLOWANCES> 0
<INVENTORY> 79913
<CURRENT-ASSETS> 438770
<PP&E> 313647
<DEPRECIATION> 10274
<TOTAL-ASSETS> 864777
<CURRENT-LIABILITIES> 1043578
<BONDS> 0
0
0
<COMMON> 4315
<OTHER-SE> (183116)
<TOTAL-LIABILITY-AND-EQUITY> 864777
<SALES> 2134209
<TOTAL-REVENUES> 2134209
<CGS> 1205804
<TOTAL-COSTS> 1205804
<OTHER-EXPENSES> 1662746
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (734341)
<INCOME-TAX> 0
<INCOME-CONTINUING> (734341)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (734341)
<EPS-PRIMARY> (0.19)
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</TABLE>
