Form 10QSB for BUDGETHOTELS NETWORK INC
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15-Jul-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 MAY 31, 2003.
(i) For the three month period ended May 31, 2003:
Net sales were $169,941 compared to sales of $145,417 for the comparative three month period ended May 31, 2002.
The Company had a net loss of $60,437 compared to a net loss of $88,850 for the comparative three month period ended May 31, 2002. The decrease is due to a decrease in general and administrative expense.
(ii) For the six month period ended May 31, 2003:
Net sales were $388,006, compared to sales of $318,023 for the comparative three month period ended May 31, 2002. The increase is due to the sale of one of the Company's domain names plus an increase in hotel bookings..
The Company had a net loss of $71,725 compared to a net loss of $209,611 for the comparative six month period ended May 31, 2002. The decrease is due to an increase in net sales and a decrease in general and administrative expenses.
LIQUIDITY AND CAPITAL RESOURCES
The Company decreased its cash overdraft by $34,360 from November 30, 2002. 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 SIX MONTHS FOR THE SIX MONTHS
ENDED MAY 31 ENDED MAY 31
------------------- -------------------
2003 2002 2003 2002
-------- -------- -------- --------
Internet travel web site revenue $ 48,265 $ 9,933 $80,334 $ 18,703
Advertising display boards 116,299 129,806 246,861 290,108
Sale of domain name -- -- 49,500 --
Internet Kiosks and other 5,377 5,678 11,311 9,212
-------- -------- -------- --------
$169,941 $145,417 $388,006 $318,023
======== ======== ======== ========
ii) GROSS PROFIT MARGINS
The Company's commission costs for the three month period ending May 31, 2003 were $38,990, or 23% of net sales compared to $15,798 or 10% of net sales for the comparative period, and as a result the Company's gross profit margins from operations amounted to 77% compared to a gross profit margin of 90% for the comparative period. The increase in commission costs is as a result of an increase in developing new display board and internet travel bookings
The Company's commission costs for the six month period ending May 31, 2003 were $80,210 or 21% of net sales compared to $33,898 or 18% of net sales for the comparative period, and as a result the Company's gross profit margins from operations amounted to 79% compared to a gross profit margin of 82% for the comparative period.
(iii) GENERAL AND ADMINISTRATIVE EXPENSES
The Company's general and administrative expenses decreased from $199,750 for the three month period ending May 31, 2002 to $171,045 for the comparative period ending May 31, 2003. The decrease in the general and administrative expenses was primarily due to a streamlining of the Company's operations.
The Company's general and administrative expenses decreased from $440,861 for the six month period ending May 31, 2002 to $338,641 for the comparative period ending May 31, 2003. The decrease in the general and administrative expenses was due to a streamlining of the Company's operations.
(iv) INCOME (LOSS) FROM OPERATIONS
As a result of decreased general and administrative costs, offset by increased commission costs, the Company's net loss decreased from $88,850 for the three month period ending May 31, 2002 to $60,437 for the three month period ending May 31, 2003
As a result of the sale of one of the Company's domain names and decreased general and administrative costs, the Company's net loss decreased from $209,611 for the six month period ending May 31, 2002 to $71,725 for the three month period ending May 31, 2003.
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