FORM 10-KSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ x ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT 0F 1934
For the fiscal year ended – November 30, 2003
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____________________ to _____________________
Commission file number 0-26909
Budgethotels Network, Inc.
(Exact name of registrant as specified in its charter)
Nevada 91-0179013
______________________________________________________________________________
State or other jurisdiction of (IRS Employer
incorporation or organization Identification No.)
Suite C – 1260 Hornby Street
Vancouver, British Columbia Canada V6Z 1W2
(Address of principal executive offices, including zip code)
(800) 548-4432
Registrant’s telephone number, including area code
Securities registered pursuant to Section 12 (b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock
Name of Exchange on which registered:
OTC
Check whether the Issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES [ x ] NO [ ]
Check if no disclosure of delinquent filers pursuant to Item 405 of Regulation S-B is contained herein, and no disclosure will be contained, to the best Registrant’s knowledge, in definitive proxy or information statements incorporated by reference in part III of this Form 10-KSB or any amendment to this Form 10_KSB. [ ]
Issuer’s revenues for the most recent fiscal year.
November 30, 2003 - $613,202
The aggregate market value of the Common Stock held by non-affiliates is as follows: 10,986,722 shares at $0.05 for a total of $549,336.
Issuers involved in Bankruptcy Proceedings during the past Five Years.
Not Applicable.
State the number of shares outstanding of each of the Issuer’s classes of common equity, as of the latest practicable date: November 30, 2003 – 21,486,722 shares of Common Stock.
Documents Incorporated by Reference:
1.
Form 10-QSB Registration Statement, and all amendments thereto, which was filed with the Securities and Exchange Commission and all exhibits thereto.
2.
All reports filed with the Securities and Exchange Commission after August 2, 1999.
ITEM 1. BUSINESS.
History
Budgethotels Network, Inc. (formerly budgethotels,com, Inc.) (the “Company”), was incorporated under the laws of the State of Nevada on November 5, 1997, as Info Center International Inc. On November 30, 1997, the Company acquired all of the issued and outstanding shares of common stock of Info Center, Inc. (“ICI”), a corporation incorporated under the laws of the State of Washington on November 6, 1984. ICI thereafter became a wholly owned subsidiary corporation of the Company. On February 11, 1999, the Company changed its name to budgethotels.com, Inc. Info Center, Inc. (“ICI’) is a wholly owned subsidiary of the Company. W.J. Marshall Management Inc. owned all of the shares of ICI and exchanged those shares for 8,000,000 shares of the Company’s common stock in 1997. W.J. Marshal Management Inc. is a corporation owned and controlled by William J. Marshall, the Company’s P resident. W.J. Marshall Management Inc. is a corporation formed to hold title to certain investments of Mr. Marshall. W.J. Marshall Management Inc. is not a subsidiary corporation of the Company.
Operations
The Company’s business operations consists of (1) display board advertising, and (2) an Internet online travel reservation system through its website, www.budgethotels.com During the year ended Novemeber 30, 2003, the Company elected to discontinue its internet kiosks operations
Display Board Advertising
The Company’s primary business is to install and maintain illuminated information boards in transportation terminals, primarily bus and rail stations. Each board is approximately 4 feet x 5 feet and is made up of approximately 16 to 25 individual windows, which are illuminated. These windows are available for advertisements.
Advertisements generally promote travel-related services located near the particular transportation terminal; such as hotels, rental cars and restaurants. Some advertisers, however, promote such services in destination cities. Each board is equipped with a free of charge direct telephone line to the particular advertiser.
Advertising
Advertising rates for the spaces vary, depending upon the location of the advertisement on the board. Assuming that each board is fully occupied by an advertiser for a twelve-month period, the board could generate revenues of up to approximately $60,000. This revenue is not necessarily indicative of the average board. It represents the high end of what a board can be rented out for based on the location of the board. Additionally, there is no assurance that a board will be fully occupied during any twelve-month period. Currently, the boards are approximately 25% utilized. Each board on average over the last four years has generated approximately $9,000 of revenue per year.
Costs of Display Board Adverting
The cost of constructing and installing each board is approximately $2,000. Over the life of the boards, the operating costs (which are included in general and administrative costs) can significantly add to the ‘total’ cost of each board.
Marketing
The Company currently operates 81 boards throughout the United States and Canada. The boards range geographically from Vancouver, British Columbia, Canada to Miami, Florida. Due to the Company’s financial condition and limited personnel, the Company has primarily marketed advertising space on its various boards by telephone contact with potential advertisers. The Company recognizes, however, that the most effective method of selling its products is through direct and personal contact with potential customers. Accordingly, the Company originally intended to establish a network of area representatives who will sell the Company’s product on a commission basis. This plan, formulated at November 30, 2002, and held in abeyance for approximately one year, is being revised and may concentrate on direct sales rather than telemarketing. The Company tentatively plans to target up to 8 areas, yet to be defined, however, the ma rketing plan is still in the planning stage.
The Company intends to concentrate its marketing efforts on filling the vacant spaces on existing boards, filling spaces on any additional boards installed and targeting strategic hotels to act as a wholesaler of rooms.
License Agreement with Greyhound Lines, Inc. (“Greyhound”)
On October 2, 1997, a License Agreement (the “License Agreement”) was executed between the Company and Greyhound Lines, Inc., a Delaware corporation. The License Agreement grants to the Company the sole right to install, operate and maintain wall-unit advertising displays with direct dial phones in Greyhound’s leased bus terminal facilities. The License Agreement is effective beginning on February 15, 1998, and will continue in full force until February 15, 2003 (the “Initial Term”). After the Initial Term, the License agreement may be renewable for two additional five-year terms. The License Agreement has been renewed for an additional five years, expiring on February 15, 2008.
The License Agreement authorizes the Company to install at its sole cost “approximately 20 square feet in area by 1 foot depth wall-unit with an illuminated advertising display board with map and direct dial phone” in each of the Greyhound facilities designated in the License Agreement. The Company must also service, repair or replace any part of the display boards within 48 hours after receipt of notice.
Pursuant to the terms off the License Agreement, the Company must pay Greyhound a commission of $367.50 per month for display boards located in the following areas: (1) Chicago, Illinois; (2) Los Angeles, California; (3) Miami, Florida; (4) Orlando, Florida; and (5) Washington, D.C. For display boards located in: (1) Las Vegas, Nevada; (2) Nashville, Tennessee; (3) San Diego, California; and (4) Seattle, Washington, the Company is obligated to pay Greyhound a commission of $157.50 per month. The Company will pay Greyhound a commission of $50.00 per month for display boards located in thirty-six additional cities. The commission payments will increase 4% for each renewal term of the License Agreement.
Pursuant to the terms of the License Agreement, the Company is required to obtain and maintain the following insurance policies:
1. Commercial General Liability Insurance with combined single limits of not less than
$1,000,000 (naming Greyhound as an additional insured):
2. Contingent Liability Insurance underwriting the indemnification, hold harmless, and
insurance provisions of the License Agreement with combined single limits of not less than
$1,000,000 (naming Greyhound as an additional insured);
3. Comprehensive Automobile Liability Insurance providing coverage for owned, non-owned,
hired, contracted, and leased vehicles of Info Center with combined single limits for injury or damage in any one accident of $500,000 (naming Greyhound as an additional insured); and
4. Workers’ Compensation Insurance in the amounts required by applicable state laws
Governing the Company’s operations or evidence that such insurance is not required.
License Agreement with National Railroad Passenger Corporation (“Amtrak”)
Effective August 21, 2001, the Company’s subsidiary, Info Center, Inc. negotiated a license to lease a portion of certain Amtrak owned and non owned railway properties for the purposes of providing an advertising display board with courtesy telephone.
The term of this agreement is five (5) years and is cancelable only for non compliance with the parameters of the contract, or non payment of license fees. The agreement concerns three (3) Amtrak owned and seven (7) non owned railroad stations in key United States cities. The agreement allows for additional locations for display advertising boards if agreed to by the parties.
Info Center, Inc. pays monthly a predetermined license fee ranging from $250 to $833 in year one, and increasing to $281 to $938 by year five. Additionally, Info Center, Inc. pays a royalty of five percent (5%) of all gross sales generated from each location.
All installation, maintenance and support costs are the responsibility of Info Center, Inc. Also, Info Center, Inc. is required to maintain a liability policy of $2,000,000 to protect Amtrak.
Installation of Additional Display Boards
The Company has also installed display boards for advertising by agreement with the New York Port Authority (2), New Jersey Transit Commission in Atlantic City, the Toronto Transit Commission, and Via Rail (Ottawa and Vancouver), and in the Amtrak rail station in Penn Station in New York, New York.
As at November 30, 2003, the Company operates 78 boards throughout the United States and 3 in Canada.
Internet Website “ www.budgethotels.com”
The Company owns and has the copyright to the website www.budgethotels.com (‘budgethotels”).
The Company takes hotel reservations on-line and obtains a commission from the respective hotel for each reservation. The Company receives a commission of 10% on each on-line reservation. As financial transaction security on the Internet improves, the Company anticipates that on-line reservations will increase. There is no assurance that the foregoing assumption will prove accurate.
On November 20, 2000, the Company entered into an Agreement with Pegasus Systems Inc. of Dallas, Texas under which approximately 37,000 hotels on the Pegasus system became accessible to visitors to the Company’s website. The agreement runs to November 30, 2003. The Company paid Pegasus Systems an initial $10,000 and pays an additional $2,500 per month unless 2,500 reservations for the month are booked through the Company’s website. This agreement has expired and has not been replaced.
Competition
The Company competes with many other board providers and Internet travel services, most of whom have more financial resources than the company and there can be no assurance that, in the future, the Company will be able to compete successfully with other display board advertisers or Internet website advertisers. The Company is a small participant within the display board advertising arena and the Internet website arena. The Company competes with professional advertising agencies, television, radio and publications such as magazines and newspapers, all of which have more resources than the Company. The Company competes with other display board advertisers on the basis of price, availability of advertising space, size of space and the location of space. The Company competes with other Internet providers on the basis of price and the amount of space allocated to a particular client. The Company intends to market it services as d iscussed in “Item 1. Description of Business – Marketing” and does not believe that its methods of marketing will adversely affect its competitive position.
Government Regulation
The Company anticipates that its display board advertising will be subject to regulation by the representative local and state authorities, as well as federal authorities, with regard to the content of each display board. Further, the content of the display boards will also be regulated by the respective transportation (airport, bus, port or train) authorities. Advertisements subject to regulation may include socially objectionable advertisements relating to such matters as alcoholic beverages, tobacco products, drug or sex paraphernalia, “striptease” or topless establishments, “adult book stores”, nude modeling studios, escort services and massage parlors.
The Company believes that the lack of financial security on the Internet is hindering economic activity thereon. To ensure the security of transactions occurring over the Internet, U.S. federal regulations require that any computer software used within the United States contain a 128-bit encoding encryption, while any computer software exported to a foreign country contain a 40-bit encoding encryption. There is uncertainty as to whether the 128-bit encoding encryption required by the U.S. is sufficient security for transactions occurring over the Internet. Accordingly, there is a danger that any financial (credit card) transaction via the Internet will not be a secure transaction. Accordingly, risks such as the loss of data or loss of service on the Internet from technical failure or criminal acts are now being considered in the system specifications and in the security precautions in the development of the website “www .budgethotels.com” . There is no assurance that such security precautions will be successful.
Company Offices
The Company’s headquarters are located at 1260 Hornby Street, Suite C, Vancouver, British Columbia, Canada, V6Z 1W2 and its telephone number is (800) 548-4432.
Employees
The Company currently has 4 employees and consultants other than its President and Director. The employees are paid on both a commission and salary basis depending upon their duties. The Company intends to hire additional employees as working capital permits, and as required.
Risk Factors
1.
Going Concern. The Company has experienced operating losses and its ability to continue as a going concern in the future is dependent upon achieving profitability and/or securing sufficient additional capital at terms economically acceptable to the Company.
2.
Company with Limited History of Earnings. The Company has a limited operating history and is subject to all of the risks inherent in a developing business enterprise, including lack of cash flow and service acceptance.
3.
Development and Market Acceptance of Services. The Company’s success and growth will depend in part upon the market’s acceptance of, and the Company’s ability to deliver and support, the Company’s services.
4.
Dependence on Technology Suppliers. While the Company currently relies upon certain outside technology suppliers, the Company believes that there are numerous other outside technology suppliers that perform the same services. Accordingly, the Company believes that if current technology suppliers could not, or would not, furnish future services to the Company, the Company could obtain such services from other sources without interruption of its operations.
5.
Liquidity; Need for Additional Financing. The Company believes that it does not have the cash it needs for the next twelve months based upon its internally prepared budget and expansion plans. Further, the Company’s cash requirements are not easily predictable and there is a possibility that its budget estimates will prove to be inaccurate. If the Company is unable to generate a positive cash flow, it will be required to curtail operations substantially and seek additional capital. There is no assurance that the Company will be able to obtain additional capital if required, or if capital is available, or can be obtained on terms favorable to the Company. The Company may suffer from a lack of liquidity in the future, which could impair its short-term marketing and sales efforts and adversely affect its results of operations.
6.
Competition. Most of the Company’s competitors have substantially greater financial, technical and marketing resources than the Company. In addition, the Company’s services compete indirectly with numerous other suppliers of web pages and search engines. As the market for the Company’s services expands, the Company expects that additional competition will emerge and that existing competitors may commit more resources to those markets.
7.
Reliance upon Directors and Officer. The Company is primarily dependent, at the present, upon the personal efforts and abilities of its President and Director, William P. McLaws, who exercises complete control over the daily management of the Company.
8.
Issuance of Additional Shares: 28,513,278 shares of Common Stock, or 57% of the 50,000,000 authorized shares of common Stock of the Company, are not issued. The Board of Directors has the power to issue such shares, subject to shareholder approval, in some instances. Although the Company presently has no commitments, contracts or intentions to issue additional shares to other persons, other than is described in this registration statement, the Company may in the future attempt to issue shares to acquire products, equipment or properties, or for other corporate purposes. Any additional issuance by the Company from its authorized, but not issued shares, would have the effect of diluting the interest of existing shareholders.
9.
Indemnification of Officers and Directors for Securities Liabilities. The laws of the State of Nevada provide that the Company could indemnify any Director, Officer, agent and/or employee as to those liabilities, and on those terms and conditions, as are specified in the Corporation Act of the State of Nevada. Further, the Company may purchase and maintain insurance on behalf of such persons whether or not the corporation would have the power to indemnify such persons against the liability insured against. The foregoing could result in expenditures by the Company and prevent any recovery from such Officers, Directors, agents and employees for losses incurred by the Company as a result of their actions. Further, the Company has been advised that, in the opinion of the Securities and Exchange Commission, indemnification is against public policy as expressed in the Securities Act of 1933, as amended, and is, therefore, unenforceable.
10.
Cumulative Voting, Preemptive Rights and Control. There are no preemptive rights in connection with the Company’s Common Stock. Shareholders may be further diluted in their percentage ownership of the Company in the event that additional shares are issued by the Company in the future. Cumulative voting in the election of Directors is not provided for. Accordingly, the holders of a majority of the shares of Common Stock, present in person or by proxy, will be able to elect all of the Company’s Board of Directors.
11.
No Dividends Anticipated. At the present time, the Company does not anticipate paying dividends, cash or otherwise, on its Common Stock in the foreseeable future. Future dividends will depend on earnings, if any, of the Company, its financial requirements and other factors.
ITEM 2. DESCRIPION OF PROPERTIES.
The Company does not own any real or personal property.
The Company’s headquarters are located at 1260 Hornby Street, Suite C, Vancouver, British Columbia, Canada, V6Z 1W3 and its telephone number is (800) 548-4432. The Company leases these from Vancouver Estates Ltd. on a month-to-month basis at a cost of approximately $200.
ITEM 3. LEGAL PROCEEDINGS.
The Company is not a party to any pending or threatened litigation and to its knowledge, no action, suit or proceedings has bee threatened against it officers and directors.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
The company has not held a shareholders’ meeting during the past year, therefore, no matters were submitted for a vote of shareholders.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED
STOCLHOLDERS’ MATTERS
The Company’s Common Stock is quoted on the Bulletin Board operated by the National Association of Securities Dealers, Inc. under the symbol “BUDH”. The Company’s shares began trading in August 1998. The following table sets forth the high and low bid prices for the Common Stock for the quarters indicated, as reported by the Bloomberg Reporting Service. Such market quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions and may not necessarily represent actual transactions.
Fiscal Quarter | High Bid [1] | Low Bid [1] |
2003 | ||
Fourth Quarter | $0.08 | $0.03 |
Third Quarter | $0.09 | $0.03 |
Second Quarter | $0.14 | $0.05 |
First Quarter | $0.12 | $0.05 |
| ||
2002 | ||
Fourth Quarter | $0.11 | $0.05 |
Third Quarter | $0.09 | $0.04 |
Second Quarter | $0.11 | $0.05 |
First Quarter | $0.22 | $0.05 |
[1]
These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions and may not represent actual transactions.
As of November 30, 2003, the Company has identified 482 holders of record of its Common Stock.
The Company has not paid any dividends since its inception and does not anticipate paying dividends on its Common Stock in the foreseeable future.
ITEM 6. MANAGEMENT’S DISCUSSIONS AND ANAYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.
The following should be read in conjunction with the consolidated financial statements and the notes thereto:
OPERATIONS DURING THE FISCAL YEAR ENDED NOVEMBER 30, 2003.
The Company reports a net loss of $0.02 per share as compared to $0.02 per share in the prior year ended November 30, 2002. In dollar terms, the net loss decreased by $58,911 mainly due a significant decrease in general and administrative costs and the sale of one of the Company’s domain names offset by a decrease in advertising revenues and an increase in commission costs.
Sales for the year ended November 30, 2003 were $613,202, a decline of $58,949,or 8.8%, from the year ended November 30, 2002. A decrease of $78,029 in advertising revenues was offset by an increase of $18,080 in on-line bookings. Much of the decrease in advertising revenues can be attributed to the negative effect that the war in Iraq and the SARS epidemic has had on the hospitality industry in general, and the Company in particular.
The Company sold one of its domain names and received proceeds of $49,500.
Commissions relating to the generation of advertising revenues increased by $114,120, or 134%, mainly as a result of the change of William J. Marshall’s remuneration from a salary, which was previously included in general and administrative costs, to a 10% commission on all cash collected from the Company’s advertising revenues. This change occurred effective December 1, 2002.
The Company’s general and administrative costs decreased materially ($313,527 or 37.5%) as a result in the change of William J. Marshall’s remuneration from a salary to a commission, as noted above, together with a streamlining of the Company’s operations.
The Company repaid certain related party liabilities, incurring a loss of $50,000. Additionally, the Company discontinued it intenet kiosk operations, recording a loss of $30,062.
Non-cash charges relating to the depreciation increased by $25,345. In addition, the Company recorded non-cash charges of $3,786 relating to the impairment of long-lived assets.
LIQUIDITY AND CAPITAL RESOURCES
The Company’s cash position at November 30, 2003 is $15,857. Excluding items relating to the deferral of revenues and related commissions, the Company had a working capital deficiency of $100,028 as compared to a working capital deficiency of $50,776 at November 30, 2002. The increase in working capital deficiency compared to the previous year resulted primarily from a reduction in assets held for resale of $38,084, an increase in cash of $15,857 and an increase in accounts payable of $39,429 offset by a decrease in cash overdraft of $52,160 and a decrease in related party payables of $6,906. The Company’s accumulative deficit at November 30, 2003 was $1,581,938 as compared to $1,297,201 at November 30, 2002.
ITEM 7. CONSOLIDATED FINANCIAL STATEMENTS
BUDGETHOTELS NETWORK, INC.
AND SUBSIDIARIES
CONSOLIDATED FINANCIAL STATEMENTS
November 30, 2003
C O N T E N T S
Independent Auditors’ Report
3
Consolidated Balance Sheet
4
Consolidated Statements of Operations
5
Consolidated Statements of Stockholders’ Equity (Deficit)
6
Consolidated Statements of Cash Flows
7
Notes to the Consolidated Financial Statements
8
INDEPENDENT AUDITORS’ REPORT
The Board of Directors
Budgethotels Network, Inc. and Subsidiaries
Vancouver, British Columbia
We have audited the accompanying consolidated balance sheet of Budgethotels Network, Inc. and Subsidiaries as of November 30, 2003 and the related consolidated statements of operations, stockholders’ equity (deficit) and cash flows for the years ended November 30, 2003 and 2002. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall consolidated financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Budgethotels Network, Inc. and Subsidiaries as of November 30, 2003, and the consolidated results of their operations and their cash flows for the years ended November 30, 2003 and 2002, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 9 to the financial statements, the Company has suffered recurring losses from operations and its total liabilities exceeds its total assets. These items raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 9. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
HJ & Associates, LLC
Salt Lake City, Utah
February 10, 2004
BUDGETHOTELS NETWORK, INC. AND SUBSIDIARIES
Consolidated Balance Sheet
ASSETS
November 30,
2003
CURRENT ASSETS
Cash
$
15,857
Accounts receivable (Note 2)
53,851
Prepaid commissions (Note 2)
32,149
Total Current Assets
101,857
PROPERTY AND EQUIPMENT, (Net) (Notes 2 and 3)
54,221
TOTAL ASSETS
$
156,078
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
CURRENT LIABILITIES
Accounts payable
$
80,215
Bank overdraft loans
47,630
Payroll taxes payable
9,224
Leases payable - current portion (Note 8)
7,667
Related party payable (Note 10)
25,000
Unearned revenue (Note 2)
175,637
Total Current Liabilities
345,373
LONG-TERM LIABILITIES
Leases payable - noncurrent portion (Note 8)
705
Total Long-Term Liabilities
705
TOTAL LIABILITIES
346,078
COMMITMENTS AND CONTINGENCIES (Note 4)
STOCKHOLDERS’ EQUITY (DEFICIT)
Preferred stock; 1,000,000 shares authorized of
$0.01 par value, no shares issued and outstanding
-
Common stock; 50,000,000 shares authorized of
$0.001 par value, 21,486,722 shares issued and outstanding
21,487
Additional paid-in capital
1,370,451
Accumulated deficit
(1,581,938
)
Total Stockholders’ Equity (Deficit)
(190,000
)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
$
156,078
The accompanying notes are an integral part of the consolidated financial statements.
BUDGETHOTELS NETWORK, INC. AND SUBSIDIARIES
Consolidated Statements of Operations
For the Years Ended
November 30,
2003
2002
REVENUE
Net sales
$
613,202
$
672,151
Commission expense
199,280
85,160
Gross Margin
413,922
586,991
EXPENSES
General and administrative
523,015
836,542
Bad debt
42,372
27,087
Depreciation
81,578
56,233
Impairment expense
3,786
-
Total Expenses
650,751
919,862
Loss From Operations
(236,829
)
(332,871
)
OTHER INCOME (EXPENSES)
Gain on sale of domain name
49,500
-
Loss on extingushment of debt
(50,000
)
-
Interest expense
(17,346
)
(9,151
)
Total Other Expenses
(17,846
)
(9,151
)
Loss before discontinued operations
(254,675
)
(342,022
)
LOSS FROM DISCONTINUED OPERATIONS
Loss from discontinued operations (Note 13)
(30,062
)
(1,626
)
Total loss from discontinued operations
(30,062
)
(1,626
)
NET LOSS
$
(284,737
)
$
(343,648
)
BASIC LOSS PER SHARE
Continuing operations
$
(0.02
)
(0.02
)
Discontinued operations
(0.00
)
(0.00
)
Total loss per share
$
(0.02
)
$
(0.02
)
WEIGHTED AVERAGE NUMBER OF SHARES
OUTSTANDING
17,581,428
15,100,994
The accompanying notes are an integral part of the consolidated financial statements.
BUDGETHOTELS NETWORK, INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders’ Equity (Deficit)
Additional
Common Stock
Paid-in
Accumulated
Shares
Amount
Capital
Deficit
Balance, November 30, 2001
14,054,230
$
14,054
$
912,783
$
(953,553
)
Common stock issued for cash
at $0.10 per share
100,000
100
9,900
-
Common stock issued for
services at an average of $0.10
per share
1,741,051
1,741
166,682
-
Net loss for the year ended
November 30, 2002
-
-
-
(343,648
)
Balance, November 30, 2002
15,895,281
15,895
1,089,365
(1,297,201
)
Common stock issued for fixed
assets at $0.08 per share
150,000
150
11,850
-
Common stock issued for services
at $0.035 to $0.10 per share
2,941,441
2,942
171,736
-
Common stock issued to extinguish
debt at $0.04 per share
2,500,000
2,500
97,500
-
Net loss for the year ended
November 30, 2003
-
-
-
(284,737
)
Balance, November 30, 2003
21,486,722
$
21,487
$
1,370,451
$
(1,581,938
)
The accompanying notes are an integral part of the consolidated financial statements.
BUDGETHOTELS NETWORK, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Years Ended
November 30,
2003
2002
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss
$
(284,737
)
$
(343,648
)
Adjustments to reconcile net loss to net cash provided (used) by
operating activities:
Depreciation
81,578
56,233
Bad debt
42,372
27,087
Common stock issued for services
174,678
168,423
Impairment loss on fixed assets
15,262
-
Loss on disposition of debt
50,000
-
Gain on sale of domain name
(49,500
)
-
Changes in assets and liabilities
(Increase) decrease in accounts receivable
2,709
(30,449
)
(Increase) decrease in assets held for resale
38,084
7,777
(Increase) decrease in prepaid commissions
971
-
(Increase) decrease in prepaids and other receivables
(2,372
)
68,195
Increase (decrease) in accounts payable
39,429
22,352
Increase (decrease) in accrued expenses
8,171
1,492
Decrease in unearned revenue