SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-KSB
[x] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 [Fee Required]
For the fiscal year ended March 31, 1998
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 [No Fee Required]
For the transition period from to
Commission file number 0-22310
LAS VEGAS AIRLINES, INC.
(Exact name of small business issuer in its charter)
DELAWARE 33-0564327
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer
Identification No.)
24901 Dana Point Harbor Drive, Suite 200
Dana Point, California 92629
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (949) 488-8494
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Securities registered pursuant to Section 12(b) of the Act: None
----------------
Securities registered pursuant to Section 12(g) of the Act: Common Stock, par
value $.001
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Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 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 reports) and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in part III of this Form 10-K
or any amendment to this Form 10-K. [ X ]
State issuer's revenues for its most recent fiscal year: None
The aggregate market value of the voting stock held by non-affiliates
of the registrant as of March 31, 1998 was not determinable since the Common
Stock was not traded.
The number of shares outstanding of the issuer's classes of Common
Stock as of March 31, 1998:
Common Stock, $.001 Par Value - 3,624,600 shares
DOCUMENTS INCORPORATED BY REFERENCE: NONE
<PAGE>
PART I
Item 1. DESCRIPTION OF BUSINESS
Background
Las Vegas Airlines, Inc., a Delaware corporation (the "Company") was
incorporated as Hermaton Company on May 4, 1992. The Company was formed for the
purpose of either merging with or acquiring an operating company with operating
history and assets.
The Company acquired 51% of the common stock of Las Vegas Airlines, Inc., a
non-affiliated Nevada corporation (the "LVA-Nevada") on April 28, 1998. LVA
Nevada has been in business for over 24 years, primarily operating Navajo
aircraft in a commuter service between Las Vegas, Nevada and the Grand Canyon
and in charter operations in the area. The Company intends to continue the Grand
Canyon business, but its primary business focus is the expansion of routes in
niche markets. The first market is the U.S. Virgin Islands to be followed by
routes in Northern California and other locations to be determined.
The Federal Aviation Administration has created steep regulatory barriers to
the issuance of the operating permits for new airlines. The regulatory regime is
known as "Part 121" after the nomenclature for that portion of the Federal
Aviation Regulations (the "FARs") LVA-Nevada has a long operating history as a
commuter air carrier under Part 135 of the FARs but, like many other Part 135
carriers, already operates in conformity with Part 121 regulations.
Under the Acquisition the Company paid $500,000 to acquire 51% of LVA-Nevada
and the rights to use the LVA-Nevada operating permit. This purchase price is
significantly less than the cost of obtaining an operating permit under the
current regulatory climate at the FAA.
The Company has completed a business plan for the initiation of an air carrier
service in the Caribbean with its hub in St. Thomas, Virgin Islands via its
subsidiary Virgin Islands International Airlines ("VIIA"). The principal carrier
in the Virgin Islands is American Eagle (an affiliate of American Airlines),
where it holds a monopoly position which to date has been unchallenged.
Management believes that the demographics and current load factor will support
its air service.
VIIA will initiate regional air carrier service to several cities in the U.S.
Virgin Islands area (St. Thomas, St. Croix, Antigua, and San Juan, Puerto Rico).
The timing of these flights will correspond to business commuter schedules
(which are determined by the schedules of the major airlines with which VIIA
flights will be connecting). The growth of the Virgin Islands' economy coupled
with strong tourist volume indicates that growth in inter-island air travel is
highly probable. The Company's primary competitor in this region, American
Eagle, only coordinates the timing of its flights with its parent, American
Airlines.
In addition, VIIA will expand its current freight division and charter
activities to supplement the passenger revenue. This service and revenues to the
Company generated therefrom would be at nominal additional direct or indirect
cost to VIIA.
The U.S. Virgin Islands is a robust business and tourist economy with nearly
1.8 million visitors annually (1996). Hurricanes have impacted the area in the
past few years and have stimulated the economy to fully re-build and grow. In
1996, approximately 180,000 people engaged in inter-island travel by air, and
they spent $34.7 million in the process. This averages $193 per person spent on
air travel for each of the approximately 180,000 known air travelers. The market
for inter-island travel by air is increasingly accessible and growing (Source:
Bureau of Economic Research, Virgin Islands of the United States). As the
economy continues to re-build and grow, the need for high-quality, affordable
air transportation is projected to increase.
Marketing Strategy
The Company's projected route structure affords two distinct targets for its
marketing and sales efforts;
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the leisure and business traveler. Because the Company plans to continue as a
full participant in the airline community (with inter-line ticket and baggage
agreements, joint fare agreements, and memberships in numerous industry
associations) the airline sales and reservation community will also be targeted
for specific marketing programs.
The Company will market and promote its services throughout the medium of
listings in various industry publications utilized by air carriers and travel
agencies, as well as radio commercials, newspaper advertising, billboard display
and public relations functions (including the local Chamber of Commerce
organization and related trade associations). Direct sales will be made
throughout the Company's reservation facilities and at ticket counters at the
airports served, by travel agents, corporate and government transportation
offices, and by other airlines pursuant to inter-line agreements. Packages
including variations of air transportation, ground tours, hotel accommodations,
meals, golf, and meetings will be offered.
To bring its services to the attention of the passenger, who is the end user of
its product, the Company will participate in national and international trade
shows where it has been determined that passenger originations exist or can be
developed. It is management's philosophy that an effective identity is a
tangible asset, and that a properly structured identity program will enable the
Company to maximize communication channels within the industry which will
beneficially influence the building and selling of its services.
Implementation
It is projected that a minimum of ninety days will be required to implement
scheduled operations upon funding. This time period will be required to
accomplish the following prerequisites:
1. Locate appropriate aircraft;
2. Certify aircraft for scheduled carrier use;
3. Interview and hire pilots, cabin crew, a ground personnel;
4. Complete FAA ground and flight training and operational experience; 5.
Publish, schedule and implement initial sales, promotional and advertising
activities; 6. Complete negotiations with airport administrations, set-up
reservations, office system, security system, and
related procedures;
7. Interview and hire other required personnel.
Competition
There is only one competitor who provides scheduled inter-island flights
throughout the U.S. Virgin Islands area - American Eagle, owned by American
Airlines. American Eagle operates the Alenia Turboprop aircraft, a twin-engine
turboprop with a capacity of 46 passengers. The Company intends to compete with
American Eagle on the basis of price and service and better connections,
however, there can be no assurance that the Company will be able to effectively
compete with American Eagle or other competitors which may enter the market.
Competition in the air transportation industry is intense. Any domestic air
carrier deemed fit by the DOT is allowed to operate scheduled passenger service
in the United States. Most of the Company's competitors are substantially
larger, have greater financial resources and have more extensive route systems.
Most major U.S. carriers have developed, independently or in partnership with
others, large computerized reservation systems (CRS). Due to contractual
requirements imposed by CRSs, most travel agencies contract with a single CRS to
sell tickets. Airlines are charged industry-set fees to have their flight
schedules included in the various CRS displays. These systems are currently the
predominant means of distributing airline tickets. In order to reduce
anti-competitive practices, the DOT regulates the display of all airline
schedules and fares.
Flight Crews
Las Vegas Airlines is not unionized and will utilize pilots hired specifically
for the airline on an as-needed
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basis. The Company will supplement these pilots with flight crew staff. All
pilots are required to possess a current Airline Transport Rating, the highest
rating available from the FAA (requiring a minimum of 1500 hours of total time
with priority given to military trained pilots). Maintenance and enhancement of
pilot proficiency through ongoing training programs required by the FAA. These
programs include all flight maneuvers, systems descriptions, and operating and
emergency procedures. The minimum total time for initial and transition training
is 30 hours. A minimum of ten hours of recurrent ground training, performed
annually, is required of all pilots in addition to their regular flight duties.
Aircraft Maintenance
A full maintenance and crew training program for the de Havilland Dash-8 Series
100 aircraft is presently available under contract in the Virgin Islands.
Aircraft inspection and maintenance will be performed by these organization or
will be handled through inter-line agreement or contract with a major aircraft
maintenance facility. FAA inspectors may conduct ramp inspections of any
aircraft at any airport at any time. The aircraft operated by VIIA will be
inspected at 50-hour and 100-hour intervals.
Inter-line Agreements
Las Vegas Airlines is negotiating inter-line agreements with several regional
and major air carriers. The agreements include tickets, baggage handling, gate
space, reservations, other customer services, fuel, and other ground support
services.
Regulation
All airlines are subject to regulation by the Department of Transportation
(DOT) and the Federal Aviation Administration (FAA) in accordance with the
Federal Aviation Act of 1958. The DOT's regulatory authority relates primarily
to the economic aspects of air transportation. The FAA's regulatory authority
relates primarily to safety aspects of air transportation, including aircraft
operating standards, maintenance, and personnel.
Las Vegas Airlines is certificated under FAR Part 135 and is approved for all
weather operations to all of its scheduled destinations.
Aircraft
VIIA intends to lease three de Havilland Dash-8 Series 100 aircraft. Management
has determined that these aircraft have the ideal capability for the proposed
mission profile and geographical areas of operations consistent with reasonable
acquisition and operating costs and passenger appeal. There are also very well
established support organizations and facilities for the Dash-8 (for maintenance
and training) presently in the Virgin Islands. Aircraft will be permanently
stationed at St. Thomas (STT).
The de Havilland Dash-8 Series 100 aircraft has been in executive and airline
service for many years. The aircraft will be configured to have 34
forward-facing adjustable and reclining passenger seats. The aircraft is air-
conditioned and heated through and environmental control system and is de-iced
through pneumatic boots installed on wings and tail leading edge surfaces;
electric propeller and windshield de-icing is also provided. Depending on the
aircraft selected, the aircraft will be equipped with weather radar. Flight
operations are typically suspended in the event of severe weather.
The aircraft are powered by two counter-rotating Pratt & Whitney PW 120A
turboprop engines, each driving a Hamilton Standard 14SF-7 four-bladed composite
propeller. The aircraft are full IFR (Instrument Flight Rated) equipped
including the most advanced navigational and autopilot systems. These aircraft
have excellent baggage capacity.
Airports
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The primary airports used are located in St. Thomas (STT), San Juan (SJU), St.
Croix (STX), and Antigua (ANU). The Department of Transportation, since
deregulation, has adopted a policy of granting discretionary authority to all
qualified applicants for new routes. One or more regional air carriers are
currently serving all of the above airports.
Freight Operations and Charter Operations
It is projected that freight operations will comprise 5% of the total passenger
revenues. Although scheduled passenger service operations will comprise the
Company's major activities, attention will also be given to the enlargement of
the package/freight division. There appears to be a very profitable niche market
here. This revenue accruing to the Company from this service would be at minimal
additional direct or indirect costs to the Company.
Reservations
Reservations will be handled, initially, through installation of the ARINC
(Aeronautical Radio Incorporated) system, thereby providing the Company direct
communication with virtually every carrier in the nation. The Company will have
the capability virtually every carrier in the nation. The Company will have the
capability of receiving and sending reservations to airlines pursuant to
interline agreements. As requirements increase as a result of increases in
business volume, the Company will become integrated into one the major carriers'
computerized reservation systems.
Station Operations
Aircraft will be permanently stationed at St. Thomas (STT).
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Item 2. DESCRIPTION OF PROPERTY
The Company leases office, passenger and hanger space at Las Vegas North
Airport for its Las Vegas operations. Negotiations are being conducted to lease
240 square feet of office space at Cyril E. King Airport in St. Thomas for the
Virgin Islands operations.
Item 3. LEGAL PROCEEDINGS
Not Applicable.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year ended March 31, 1998.
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PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
The Company's Common Stock has not traded. As of March 31, 1998, there were
approximately 310 stockholders of record.
Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
The Company estimates that it will require approximately $1,750,000 in capital
to expand operations in the Virgin Islands. Such funds are being supplied by
placements of its securities, and are expected to be sufficient for the next
twelve months.
Item 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The consolidated financial statements of the Company required to be included in
Item 7 are set forth in the Financial Statements Index.
Item 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not Applicable. The Company is retaining Thurman Shaw & Co. LC as its
principal auditors for its next fiscal year. The Company intends to change its
fiscal year to September 30.
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PART III
Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
Directors and Executive Officers
The members of the Board of Directors of the Company serve until the next
annual meeting of stockholders, or until their successors have been elected. The
officers serve at the pleasure of the Board of Directors. The following are the
directors, executive officers and significant employees of the Company.
Name Position
Jehu Hand President, Chief Financial Officer and Director
William H. Prince Executive Vice President
Marvin Winograde Vice President-Industry Affairs
Don Donohue, Sr. President of LVA-Nevada
Don Donohue, Jr. Vice President, Sales and Marketing - LVA Nevada
The Company intends to add additional members to its board of directors
and to add a full time Chief Financial Officer.
Jehu Hand has been President and Secretary of the Company since its
inception and Chief Financial Officer since January 1, 1995. Mr. Hand has been
engaged in corporate and securities law practice and has been a partner of the
law firm of Hand & Hand since 1992. Hand & Hand incorporated as a law
corporation in May 1994. Mr. Hand has been a registered principal of SoCal
Securities, an NASD registered broker dealer, since 1992. From January 1992 to
December 1992 he was the Vice President-Corporate Counsel and Secretary of Laser
Medical Technology, Inc., which designs, manufactures and markets dental lasers
and endodontics equipment. He was a director of Laser Medical from February 1992
to February 1993. From January to October, 1992 Mr. Hand was Of Counsel to the
Law Firm of Lewis, D'Amato, Brisbois & Bisgaard. From January 1991 to January
1992 he was a shareholder of McKittrick, Jackson, DeMarco & Peckenpaugh, a law
corporation. Jehu Hand received a J.D. from New York University School of Law in
1984 and a B.A. from Brigham Young University in 1981.
William H. Prince has served as managing director of Prince Capital
Corporation since 1989. Prince Capital is an investment banking firm which
provides corporation financing services to emerging and middle market companies.
From 1985 to 1989, Mr. Prince was Director of Corporate Finance for P.B. Jameson
& Company, Inc. From 1978 to 1985 he was an institutional broker for three
national New York Stock Exchange firms: Smith Barney, Dain Bosworth and
Prudential Bache. From 1966 to 1978 he was a retail broker for an NYSE member
firm and conducted wholesale activities for a national mutual fund with assets
in excess of $1 billion. He graduated in 1966 with a BA in Business
Communications from Brigham Young University. Mr. Prince is a registered
representative of SoCal Securities.
Mr. Marvin Winograde is a graduate of the University of Southern
California with a Bachelor of Science Degree in Finance and Economics. Mr.
Winograde has had a diverse career with other regional airlines including
assignments in corporate finance, commercial aircraft financing, as well as
being an officer and director for two air carriers. Since 1987, Mr. Winograde
has served as Vice President of Las Vegas Airlines with responsibilities
including organizational and fiscal management, preparation of corporate budgets
and forecasts, and industry affairs. Further, Mr. Winograde has been responsible
for development and implementation of the Company's interline agreements,
marketing objectives of the Company, and implementation of the marketing and
development strategies.
He has also provided decision-making support to the President.
Don Donohue, Sr., has a University of Cincinnati engineering
background. He returned from the Air Force after 23 years of active duty where
he received training and experience in administrative management, Pilot
Training, Aircraft Maintenance Engineering, and Maintainability and Reliability.
He has also been an instructor in T-33's of
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the German Air Force and F-4s in the Far East. His maintenance management
experience include route line maintenance (both reciprocating and jet overhaul
facilities), fabrication shops, production control analysis, quality control,
and experimental aircraft (which include the SR-71 at Kelley Johnson's "Skunk
Works" and electronics systems testing). Civilian pilot ratings include Airline
Transport Pilot and Instructor/Instrument Flight Instructor, single and
multi-engine. Mr. Donohue founded Las Vegas Airlines in 1973 and currently
performs all airline pilot checkouts and test flights and actively flies
scheduled flights.
Don Donohue, Jr., is a Political Science major from the University of
Idaho. After graduation, he worked for Woolworth's Food and Beverage Division.
In 1978, he was promoted to a management level position with the Woolworth
organization. In February 1979, he resigned from Woolworth to join Las Vegas
Airlines, Inc. as Managing Director with oversight in the Marketing and Business
Development areas.
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Item 10. EXECUTIVE COMPENSATION
The Company currently does not pay any compensation to its executive
officers and director. No compensation is expected to be paid until Virgin
Islands operations commences.
Directors currently receive no compensation for their duties as
directors.
The Company, by resolution of its Board of Directors and stockholders,
adopted a 1992 Stock Option Plan (the "Plan") on May 4, 1992. The Plan enables
the Company to offer an incentive based compensation system to employees,
officers and directors and to employees of companies who do business with the
Company.
In the discretion of a committee comprised of non-employee directors
(the "Committee"), directors, officers, and key employees of the Company and its
subsidiaries or employees of companies with which the Company does business
become participants in the Plan upon receiving grants in the form of stock
options or restricted stock. A total of 2,000,000 shares are authorized for
issuance under the Plan, of which 780,000 shares are issuable under the Plan as
of June 30, 1998 at an exercise price of $2.50 per share. The Company may
increase the number of shares authorized for issuance under the Plan or may make
other material modifications to the Plan without shareholder approval. However,
no amendment may change the existing rights of any option holder.
Any shares which are subject to an award but are not used because the
terms and conditions of the award are not met, or any shares which are used by
participants to pay all or part of the purchase price of any option may again be
used for awards under the Plan. However, shares with respect to which a stock
appreciation right has been exercised may not again be made subject to an award.
Stock options may be granted as non-qualified stock options or
incentive stock options, but incentive stock options may not be granted at a
price less than 100% of the fair market value of the stock as of the date of
grant (110% as to any 10% shareholder at the time of grant); non-qualified stock
options may not be granted at a price less than 85% of fair market value of the
stock as of the date of grant. Restricted stock may not be granted under the
Plan in connection with incentive stock options.
Stock options may be exercised during a period of time fixed by the
Committee except that no stock option may be exercised more than ten years after
the date of grant or three years after death or disability, whichever is later.
In the discretion of the Committee, payment of the purchase price for the shares
of stock acquired through the exercise of a stock option may be made in cash,
shares of the Company's Common Stock or by delivery or recourse promissory notes
or a combination of notes, cash and shares of the Company's common stock or a
combination thereof. Incentive stock options may only be issued to directors,
officers and employees of the Company.
Stock options may be granted under the Plan may include the right to
acquire an Accelerated Ownership Non-Qualified Stock Option ("AO"). If an option
grant contains the AO feature and if a participant pays all or part of the
purchase price of the option with shares of the Company's common stock, then
upon exercise of the option the participant is granted an AO to purchase, at the
fair market value as of the date of the AO grant, the number of shares of common
stock the Company equal to the sum of the number of whole shares used by the
participant in payment of the purchase price and the number of whole shares, if
any, withheld by the Company as payment for withholding taxes. An AO may be
exercised between the date of grant and the date of expiration, which will be
the same as the date of expiration of the option to which the AO is related.
Stock appreciation rights and/or restricted stock may be granted in
conjunction with, or may be unrelated to stock options. A stock appreciation
right entitles a participant to receive a payment, in cash or common stock or a
combination thereof, in an amount equal to the excess of the fair market value
of the stock at the time of exercise over the fair market value as of the date
of grant. Stock appreciation rights may be exercised during a period of time
fixed by the Committee not to exceed ten years after the date of grant or three
years after death or disability, whichever is later. Restricted stock requires
the recipient to continue in service as an officer, director, employee or
consultant for a fixed period of time for ownership of the shares to vest. If
restricted shares or stock appreciation
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<CAPTION>
rights are issued in tandem with options, the restricted stock or stock
appreciation right is canceled upon exercise of the option and the option will
likewise terminate upon vesting of the restricted shares.
Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information relating to the beneficial
ownership of Company common stock by those persons beneficially holding more
than 5% of the Company capital stock, by the Company's directors, executive
officers and significant employees and by all of the Company's directors and
executive officers as a group, as of March 31, 1998.
Percentage
Name of Number of of Outstanding
Stockholder Shares Owned Common Stock
<S> <C> <C>
Jehu Hand(2) 1,410,000 34.1%
24901 Dana Point Harbor Drive, #200
Dana Point, CA 92629
William H. Prince(3) 620,000 16.4%
Marvin Winograde 400,000 11.0%
Don Donohue Sr. -- --
Don Donohue Jr. -- --
All officers and directors as
a group (2 persons)(2)(3) 2,030,000 47.4%
</TABLE>
(1) Unless otherwise noted below, the Company believes that all persons named
in the table have sole voting and investment power with respect to all
shares of Common Stock beneficially owned by them. For purposes hereof, a
person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from the date hereof upon the
exercise of warrants or options or the conversion of convertible
securities. Each beneficial owner's percentage ownership is determined by
assuming that any such warrants, options or convertible securities that are
held by such person (but not those held by any other person) and which are
exercisable within 60 days from the date hereof, have been exercised.
(2) Includes 500,000 shares issuable upon exercise of options at $2.50 per
share.
--
(3) Includes 150,000 shares issuable upon exercise of options at $2.50 per
share.
--
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Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
An officer of the Corporation has advanced certain expenses on behalf
of the Company. As of March 31, 1995, 1996, 1997 and 1998 such expenses totalled
$1,877, $2,411, $2,604 and $15,188.
The Company was originally incorporated in Delaware under the name
Hermaton Company on May 4, 1992 for the purpose of seeking out various
acquisitions.
On January 23, 1998, the Company loaned $50,000 to LVA Nevada. The note
is due on demand and bears interest of 6% per annum. An officer and director of
the Company, Jehu Hand, has advanced $50,000 to the Company for the loan. An
additional $100,000 was loaned to LVA-Nevada on the same terms in April 1998.
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PART IV
Item 13. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits. The following exhibits of the Company are included
herein.
Exhibit No. Document Description
2. Plan of acquisition, reorganization,
arrangement, liquidation or succession.
2.1. Share Purchase Agreement, between the
Registrant and David J. Donohue, Sr.(2)
3. Certificate of Incorporation and Bylaws
3.1. Articles of Incorporation(1)
3.2 Bylaws(1)
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<CAPTION>
LAS VEGAS AIRLINES, INC.
(A Development Stage Company)Statements of Financial Position
ASSETS
March 31, March 31,
1997 1998
CURRENT ASSETS
<S> <C> <C>
CASH $ $
--------- -
NOTE RECEIVABLE 50,000
OTHER ASSETS
Organization costs, net of accumulated amortization of $266 and $271
(Note 1)
TOTAL ASSETS $ 5 $ 50,000
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 2,604 $ 15,188
Note payable - related party 50,000
Total Current Liabilities $ 2,604 $ 65,188
STOCKHOLDERS' EQUITY
Preferred Stock, $.001 par value; 1,000,000 shares
authorized; no shares issued and outstanding
Common Stock, $.001 par value; 20,000,000 shares
authorized; 3,624,600 shares issued and outstanding 3,625 3,625
Additional paid-in Capital 821 821
Accumulated deficit during the development stage (7,045) (19,634)
TOTAL STOCKHOLDERS' EQUITY (2,599) (15,188)
--------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 5 $ 50,000
The accompanying notes are an integral part of the
financial statements.
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<TABLE>
<CAPTION>
LAS VEGAS AIRLINES, INC.
(A Development Stage Company)Statements of Operations
CUMULATIVE
FROM
FOR THE INCEPTION
YEAR ENDED (May 4, 1992)
TO TO
March 31, 1997 March, 31, 1998 March 31, 1998
-------------- --------------- --------------
<S> <C> <C> <C>
REVENUES $ $ $
-------------- --------------- -
OPERATING EXPENSES
General and Administrative 193 12,584 19,363
Amortization 54 5 271
-------------- --------------- ---------------
TOTAL OPERATING EXPENSES 247 12,589 19,634
NET (Loss) $ (247) $ (12,589) $ (19,634)
NET (Loss) PER SHARE $ (Nil) $ (Nil) $ (Nil)
WEIGHTED AVERAGE NUMBER OF
SHARES OUTSTANDING 3,624,600 3,624,600 2,867,364
The accompanying notes are an integral part of the
financial statements.
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<TABLE>
<CAPTION>
LAS VEGAS AIRLINES, INC. Statement of Changes in Stockholders'
(A Development Stage Company) Equity From Inception (May 4, 1992)
Through March 31, 1998
Accumulated
Deficit
Common Stock Additional During the
Paid-In Development
Shares Amount Capital Stage Total
Issuance of common stock
<S> <C> <C> <C> <C> <C>
for cash 400,000 $ 400 $ 100 $ $ 500
Net (loss) (269) (269)
Balances at
March 31, 1993 400,000 400 100 (269) 231
Net (loss) (1,661) (1,661)
Contribution to capital 500 500
Sale of shares in private placement
on September 30, 1993 24,600 25 221 246
Balances at
March 31, 1994 (Unaudited) 424,600 $ 425 $ 821 $ (1,930) $ (684)
Net (Loss)(Unaudited) (4,280) (4,280)
Issuance of Shares - Failed
Acquisition - June 1, 1994 3,200,000 3,200 3,200
Balances at
March 31, 1995 (Unaudited) 3,624,600 $ 3,625 $ 821 $ (6,210) $ (1,764)
Net (Loss) (Unaudited) (588) (588)
Balances at
March 31, 1996 (Unaudited) 3,624,600 $ 3,625 $ 821 $ (6,798) $ (2,352)
Net (Loss)(Unaudited) (247) (247)
Balances at
March 31, 1997 (Unaudited) 3,624,600 $ 3,625 $ 821 $ (7,045) $ (2,599)
Net (Loss)(Unaudited) (13,589) (12,589)
Balances at
March 31, 1998 (Unaudited) $ 3,625,600 $ 3,625 $ 821 $ (19,634) $ (15,188)
The accompanying notes are an integral part of these
financial statements.
16
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
LAS VEGAS AIRLINES, INC.
(A Development Stage Company) Statements of Cash Flows
CUMULATIVE
FOR THE FOR THE FROM INCEPTION
YEAR YEAR May 4, 1992
ENDED ENDED TO
March 31, 1997 March 31, 1998 March 31, 1998
-------------- -------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C> <C>
Net (Loss) $ (247) $ (247) $ (19,634)
Add item not requiring the use of cash
Amortization 54 54 271
Increase (decrease) in accounts payable 193 193 15,188
Net cash flows from operating activities (4,175)
CASH FLOWS FROM INVESTING ACTIVITIES
Loan to Subsidiary (50,000) (50,000)
Organization Costs (271)
(50,271)
CASH FLOWS FROM FINANCING ACTIVITIES
Contribution to Capital 500
Sale of common stock 3,946
Proceeds from related party loan 50,000 50,000
Net Cash flows from financing activities 50,000 54,446
NET INCREASE IN CASH
CASH BALANCE AT BEGINNING OF PERIOD
CASH BALANCE AT END OF PERIOD $ $ $
The accompanying notes are an integral part of the
financial statements.
17
</TABLE>
<PAGE>
LAS VEGAS AIRLINES, INC.
(A Development Stage Company) Notes to Financial Statements
NOTE 1 ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
The Company was incorporated under the laws of the State of Delaware
on May 4, 1992, for the purpose of seeking out business
opportunities, including acquisitions. The Company is in the
development stage and will be very dependent on the skills, talents,
and abilities of management to successfully implement its business
plan. Due to the Company's lack of capital, it is likely that the
Company will not be able to compete with larger and more experienced
entities for business opportunities which are lower risk and are
more attractive for such entities. Business opportunities in which
the Company may participate will likely be highly risky and
speculative. Since inception, the Company's activities have been
limited to organizational matters. Organizational costs are
amortized on a straight-line basis over five years.
The financial statements as of and for the years ended March 31,
1998 and 1997 are unaudited, pursuant to the exemption provided by
Rule 3-11 of Regulation S-X.
NOTE 2 CASH AND CASH EQUIVALENTS
The Company considers all short-term investments with an original
maturity of three months or less to be cash equivalents.
NOTE 3 RELATED PARTY TRANSACTIONS
The officers and director of the Company currently serve without
compensation.
An officer of the Corporation has advanced certain expenses on
behalf of the Company. As of March 31, 1996, 1997 and 1998 such
expenses totalled $2,411, $2,604 and $15,188.
An officer and director has loaned $50,000 to the Company due on
demand at 6% interest.
NOTE 4 INCOME TAXES
The fiscal year end of the Company is March 31st and an income tax
return has not been filed.
NOTE 5 STOCK OPTION PLAN
The Company has stock option plans for directors, officers,
employees, advisors, and employees of companies that do business
with the Company, which provide for non-qualified and qualified
stock options. The Stock Option Committee of the Board determines
the option price which cannot be less than the fair market value at
the date of the grant of 110% of the fair market value if the
Optionee holds 10% or more of the Company's common stock. The price
per share of share subject to a Non-Qualified Option shall not be
less than 85% of the fair market value at the date of the grant.
Options generally expire either three months after termination of
employment, or ten years after date of grant (five years if the
optionee holds 10% or more of the Company's common stock at the time
of grant).
18
<PAGE>
LAS VEGAS AIRLINES, INC.
(A Development Stage Company) Notes to Financial Statements
Options outstanding:
Shares allocated 2,000,000
Option price $ .50
Balance at Inception --
Granted 40,000
Balance outstanding at
March 31, 1993 40,000
Granted --
----------
Balance outstanding at
March 31, 1994 40,000
----------
Lapsed 40,000
Balance outstanding at
March 31, 1995 --
Year Exercisable:
1997 --
NOTE 6. SUBSEQUENT EVENT
On April 28, 1998 the Company acquired 51% of Las Vegas Airlines,
Inc., a Nevada Corporation, as disclosed in a Form 8-K dated April
28, 1998, as amended on July 9, 1998.
19
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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 July 13, 1998.
LAS VEGAS AIRLINES, INC.
By: /s/ Jehu Hand
Jehu Hand
President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities on July 13, 1998.
By: /s/ Jehu Hand President, Secretary, Chief Financial
Jehu Hand Officer and Director
20
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE STATEMENTS FOR THE YEAR ENDED MARCH 31, 1998 AND AS OF
MARCH 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000911317
<NAME> LAS VEGAS AIRLINES, INC.
<MULTIPLIER> 1
<CURRENCY> US dollars
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> Mar-31-1998
<PERIOD-START> Apr-01-1997
<PERIOD-END> Mar-31-1998
<EXCHANGE-RATE> 1
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 50,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 50,000
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 50,000
<CURRENT-LIABILITIES> 65,188
<BONDS> 0
0
0
<COMMON> 4,446
<OTHER-SE> (19,634)
<TOTAL-LIABILITY-AND-EQUITY> 5,000
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 12,589
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (12,589)
<INCOME-TAX> 0
<INCOME-CONTINUING> (12,589)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (247)
<EPS-PRIMARY> (.00)
<EPS-DILUTED> (.00)
</TABLE>
