Form 10QSB for BUDGETHOTELS NETWORK INC
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15-Oct-2003
Quarterly Report
ITEM 6. MANAGEMENT'S DISCUSSIONS AND ANALYSIS OR PLAN OF OPERATIONS.
The following discussion should be read in conjunction with the consolidated statements and the notes thereto:
OPERATIONS DURING THE INTERIM PERIOD OF AUGUST 31, 2003.
(i) For the three month period ended August 31, 2003.
Net sales were $165,743 compared to sales of $210,266 for the comparative three month period ended August 31, 2002. The decrease is due to a decrease in display board and on-line bookings during the summer months.
The Company had a net loss of $70,506 compared to a net loss of $58,886 for the comparative three month period ended August 31, 2003. The increase was as a result of a decrease in net sales.
(ii) For the nine month period ended August 31, 2003.
Net sales were $553,749, compared to sales of $ 528,289 for the comparative nine month period ended August 31, 2002. The increase is due to the sale of one of the Company's domain names offset by a decrease in display board and on-line bookings during the summer months.
The Company had a net loss of $142,231 compared to a net loss of $268,497 for the comparative nine month period ended August 31, 2002. The decrease is due to a significant decrease in general and administrative expenses.
LIQUIDITY AND CAPITAL RESOURCES
The Company's decreased its cash overdraft by $15,498 from November 30, 2002, by settling certain expenses by the issuance of stock. The Company expects to raise the necessary additional working capital to sustain operations until profitability is achieved from a combination of: reduction of expenses, settling certain liabilities through the issuance of stock and, possibly, a private placement.
RESULTS OF OPERATIONS
i) SALES
A breakdown of the net sales is as follows:
FOR THE THREE MONTH FOR THE NINE MONTHS
ENDED AUGUST 31 ENDED AUGUST 31
---------------------- ----------------------
2003 2002 2003 2002
-------- -------- -------- --------
Internet travel web site revenue $ 26,263 $ 23,183 $ 68,126 $ 69,268
Advertising display boards 137,251 183,215 429,474 445,941
Sale of domain name -- -- 49,500 --
Internet Kiosks $ 2,229 3,868 6,649 13,080
-------- -------- -------- --------
$165,743 $210,266 $553,749 $528,289
======== ======== ======== ========
Revenues from the Company's Internet travel based web sites increased for the three month period ended August 31, 2003 in the amount of $3,080 (i.e.) 13% compared to the three month period ending August 31, 2002 and a decrease of $1,142 (i.e.) 2% for the nine month period ended August 31, 2003 compared to the nine month period ending August 31, 2002.
Revenues from the Company's advertising display boards decreased for the three month period ended August 31, 2003 in the amount of $45,964 (i.e.) 25% compared to the three month period ending August 31, 2002 and a decrease of $16,467 (i.e.) 4% for the nine month period ended August 31, 2003 compared to the nine month period ending August 31, 2002.
ii) GROSS PROFIT MARGINS
The Company's commission costs for the three month period ending August 31, 2003 were $24,624 or 15% of net sales compared to $21,032 or 10% of net sales for the comparative period, and, as a result, the Company's gross profit margins from operations amounted to 85% compared to a gross profit margin of 90% for the comparative period.
The Company's commission costs for the nine month period ending August 31, 2003 were $104,834 or 19% of net sales compared to $70,728 or 13% of net sales for the comparative period, and, as a result, the Company's gross profit margins from operations amounted to 81% compared to a gross profit margin of 87% for the comparative period.
iii) GENERAL AND ADMINISTRATIVE EXPENSES
The Company's general and administrative expenses decreased from $228,799, for the three month period ending August 31, 2002 to $191,507 for the comparative period ending August 31, 2003. The decrease in the general and administrative expenses was primarily due to a continued streamlining of the Company's operations.
The Company's general and administrative expenses decreased from $669,660 for the nine month period ending August 31, 2002 to $530,148 for the comparative period ending August 31, 2003. The decrease in the general and administrative expenses was primarily due to a streamlining of the Company's operations.
iv) INCOME (LOSS) FROM OPERATIONS
As a result of the decrease in display board and on-line bookings, the Company's net loss increased from $58,886 for the three month period ending August 31, 2002 to $70,506 for the three month period ending August 31, 2003. As a result of the sale of one of the Company's domain names and reduced general and administrative costs, the Company's net loss decreased from $268,497 for the nine month period ending August 31, 2002 to $142,231 for the nine month period ending August 31, 2003.
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