10QSB 1 ctq3.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarter Ended March 31, 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 000-33315 CONSOLIDATED TRAVEL SYSTEMS, INC. (Exact name of small business issuer as specified in its charter) DELAWARE 13-3968990 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 56 West 400 South, Suite #220, Salt Lake City, Utah 84101 (Address of principal executive offices) (801) 322-3401 (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 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 APPLICABLE ONLY TO CORPORATE ISSUERS State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date. Class Outstanding as of March 31, 2003 Common Stock, $.01 par value 7,499,480 Transitional Small Business Disclosure Format (Check one): Yes [ ] No [ X ] TABLE OF CONTENTS Heading Page PART I. FINANCIAL INFORMATION Item 1. Financial Statements 3 Balance Sheets - March 31, 2003 (unaudited) and December 31, 2002 4 Statements of Operations - three months ended March 31, 2003 and 2002 and the period from inception of the development stage on September 19, 1983 to March 31, 2003 (unaudited) 6 Statements in Changes in Stockholders' Equity (Deficit) - from inception of the development stage on September 19, 1983 to March 31, 2003 (unaudited) 7 Statements of Cash Flows -- three months ended March 31, 2003 and 2002 and the period from inception of the development stage on September 19, 1983 to March 31, 2003 (unaudited) 9 Notes to Financial Statements 11 Item 2. Management's Discussion and Analysis and Results of Operations 12 Item 3. Controls and Procedures 13 PART II. OTHER INFORMATION Item 1. Legal Proceedings 13 Item 2. Changes in Securities and Use of Proceeds 13 Item 3. Defaults Upon Senior Securities 13 Item 4. Submission of Matters to a Vote of Securities Holders 13 Item 5. Other Information 14 Item 6. Exhibits and Reports on Form 8-K 14 Signatures 15 Certifications 16 PART I Item 1. Financial Statements The accompanying balance sheets of Consolidated Travel Systems, Inc. at March 31, 2003 and December 31, 2002, related statements of operations, stockholders' equity (deficit) and cash flows for the three months ended March 31, 2003 and 2002 and the period September 19, 1983 (date of inception of the development stage) to March 31, 2003, have been prepared by management in conformity with accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments considered necessary for a fair presentation of the results of operations and financial position have been included and all such adjustments are of a normal recurring nature. Operating results for the period ended March 31, 2003, are not necessarily indicative of the results that can be expected for the fiscal year ending December 31, 2003. CONSOLIDATED TRAVEL SYSTEMS, INC. (A Development Stage Company) FINANCIAL STATEMENTS March 31, 2003 and December 31, 2002 CONSOLIDATED TRAVEL SYSTEMS, INC. (A Development Stage Company) Balance Sheets ASSETS -------- March 31, December 31, 2003 2002 ---------- ---------- (Unaudited) CURRENT ASSETS Cash $ - $ - ---------- ---------- Total Current Assets - - ---------- ---------- TOTAL ASSETS $ - $ - ========== ==========
The accompanying notes are an integral part of these financial statements. CONSOLIDATED TRAVEL SYSTEMS, INC. (A Development Stage Company) Balance Sheets (Continued) LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) ---------------------------------------------- March 31, December 31, 2003 2002 ---------- ---------- (Unaudited) CURRENT LIABILITIES Accounts payable $ 4,492 $ 2,006 Payable to related party 19,973 19,466 Accrued interest related party 487 - ---------- ---------- Total Current Liabilities 24,952 21,472 ---------- ---------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY (DEFICIT) Common stock at; $0.01 par value; authorized 20,000,000 common shares, 7,499,480 common shares issued and outstanding 74,995 74,995 Additional paid-in capital 816,134 816,134 Deficit accumulated prior to the development stage (822,748) (822,748) Deficit accumulated during the development stage (93,333) (89,853) ---------- ---------- Total Stockholders' Equity (Deficit) (24,952) (21,472) ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $ - $ - ========== ==========
The accompanying notes are an integral part of these financial statements. CONSOLIDATED TRAVEL SYSTEMS, INC. (A Development Stage Company) Statements of Operations (Unaudited) From For the Inception of the Three Months development stage Ended on September 19, March 31, 1983 through ----------------------- March 31, 2003 2002 2003 ---------- ---------- ---------- REVENUES $ - $ - $ - OPERATING EXPENSES 2,993 2,086 92,846 ---------- ---------- ---------- LOSS FROM OPERATIONS $ (2,993) $ (2,086) $ (92,846) ---------- ---------- ---------- OTHER EXPENSES Interest expense (487) - (487) ---------- ---------- ---------- Total Other Expenses (487) - (487) ---------- ---------- ---------- NET LOSS $ (3,480) $ (2,086) $ (93,333) ========== ========== ========== BASIC LOSS PER SHARE $ (0.00) $ (0.00) ========== ========== WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING 7,499,480 7,499,480 ========== ==========
The accompanying notes are an integral part of these financial statements. CONSOLIDATED TRAVEL SYSTEMS, INC. (A Development Stage Company) Statements of Stockholders' Equity (Deficit) From Inception on September 19, 1983 through March 31, 2003 Deficit Accumulated Additional During the Common Stock Paid-In Development Shares Amount Capital Stage ---------- ---------- ---------- ---------- Balance at inception on September 19, 1983 1,499,480 $ 14,995 $ 809,889 $ (822,748) Net loss from inception on September 19,1983 through December 31, 1996 - - - (4,136) ---------- ---------- ---------- ---------- Balance, December 31, 1996 1,499,480 14,995 809,889 (826,884) Issuance of common stock for services and debt at $0.01 per share on March 17, 1997 6,000,000 60,000 - - Net loss for the year ended December 31, 1997 - - - (58,000) ---------- ---------- ---------- ---------- Balance, December 31, 1997 7,499,480 74,995 809,889 (884,884) Net loss for the year ended December 31, 1998 - - - - ---------- ---------- ---------- ---------- Balance, December 31, 1998 7,499,480 74,995 809,889 (884,884) Capital contributed for expenses paid by shareholder - - 1,500 - Net loss for the year ended December 31, 1999 - - - (2,500) ---------- ---------- ---------- ---------- Balance, December 31, 1999 7,499,480 $ 74,995 $ 811,389 $ (887,384) ---------- ---------- ---------- ----------
The accompanying notes are an integral part of these financial statements. CONSOLIDATED TRAVEL SYSTEMS, INC. (A Development Stage Company) Statements of Stockholders' Equity (Deficit) (Continued) From Inception on September 19, 1983 through March 31, 2003 Deficit Accumulated Additional During the Common Stock Paid-In Development Shares Amount Capital Stage ---------- ---------- ---------- ---------- Balance, December 31, 1999 7,499,480 $ 74,995 $ 811,389 $ (887,384) Capital contributed for expenses paid by shareholder - - 1,232 - Net loss for the year ended December 31, 2000 - - - (1,232) ---------- ---------- ---------- ---------- Balance, December 31, 2000 7,499,480 74,995 812,621 (888,616) Capital contributed for expenses paid by shareholder - - 3,513 - Net loss for the year ended December 31, 2001 - - - (11,336) ---------- ---------- ---------- ---------- Balance, December 31, 2001 7,499,480 74,995 816,134 (899,952) Net loss for the year ended December 31, 2002 - - - (12,649) ---------- ---------- ---------- ---------- Balance December 31, 2002 7,499,480 74,995 816,134 (912,601) Net loss for the three months ended March 31, 2003 (Unaudited) - - - (3,480) ---------- ---------- ---------- ---------- Balance, March 31, 2003 (Unaudited) 7,499,480 $ 74,995 $ 816,134 $ (916,081) ========== =========== ========== ========== Deficit accumulated prior to the development stage $ (822,748) Deficit accumulated during the development stage (93,333) ---------- Total accumulated deficit $ (916,081) ==========
The accompanying notes are an integral part of these financial statements. CONSOLIDATED TRAVEL SYSTEMS, INC. (A Development Stage Company) Statements of Cash Flows (Unaudited) From Inception of the Development Stage For the Three Months Ended on September 19, March 31, 1983 Through ------------------------ March 31, 2003 2002 2003 ---------- ---------- ---------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (3,480) $ (2,086) $ (93,333) Adjustments to reconcile net loss to net cash used by operating activities: Shares issued for services & debt - - 60,000 Expenses paid by shareholders - - 27,847 Changes in operating assets and liabilities: Increase in accounts payable 2,486 2,086 4,492 Increase in payable to related party 507 - 507 Increase in accrued interest related party 487 - 487 ---------- ---------- ---------- Net Cash Used in Operating Activities - - - ---------- ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES - - - ---------- ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES - - - ---------- ---------- ---------- NET INCREASE IN CASH - - - ---------- ---------- ---------- CASH AT BEGINNING OF PERIOD - - - ---------- ---------- ---------- CASH AT END OF PERIOD $ - $ - $ - ========== ========== ==========
The accompanying notes are an integral part of these financial statements. CONSOLIDATED TRAVEL SYSTEMS, INC. (A Development Stage Company) Statements of Cash Flows (continued) (Unaudited) From Inception of the Development Stage For the Three Months Ended on September 19, March 31, 1983 Through ------------------------ March 31, 2003 2002 2003 ---------- ---------- ---------- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION CASH PAID FOR: Interest $ - $ - $ - Income Taxes $ - $ - $ - NON CASH FINANCING ACTIVITIES Expenses paid by shareholders $ - $ - $ 27,847 Common stock issued for services $ - $ - $ 60,000
The accompanying notes are an integral part of these financial statements. CONSOLIDATED TRAVEL SYSTEMS, INC. (A Development Stage Company) Notes to the Financial Statements March 31, 2003 and December 31, 2002 NOTE 1 - CONDENSED FINANCIAL STATEMENTS The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at March 31, 2003 and 2002 and for all periods presented have been made. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's December 31, 2002 audited financial statements. The results of operations for the periods ended March 31, 2003 and 2002 are not necessarily indicative of the operating results for the full years. NOTE 2 - GOING CONCERN The Company's financial statements are prepared using accounting principles generally accepted in the United States of America, applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations. In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plans to obtain such resources for the Company include (1) obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses, and (2) seeking out and completing a merger with an existing operating company. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Item 2. Management's Discussion and Analysis or Plan of Operations The following information should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this Form 10-QSB. We are considered a development stage company with no assets or capital and with no material operations or income. The costs and expenses associated with the preparation and filing of this report and other reports and our registration statement in 2001 have been paid for by advances from shareholders, which are evidenced on our financial statements as contributed capital and accounts payable-related parties. It is anticipated that we will require only nominal capital to maintain our corporate viability and necessary funds will most likely be provided by our officers and directors in the immediate future. However, unless we are able to facilitate an acquisition of or merger with an operating business or are able to obtain significant outside financing, there is substantial doubt about our ability to continue as a going concern. In the opinion of management, inflation has not and will not have a material effect on our operations until such time as we successfully complete an acquisition or merger. At that time, management will evaluate the possible effects of inflation related to our business and operations. Plan of Operation During the next 12 months, we intend to actively seek out and investigate possible business opportunities for the purpose of acquiring or merging with one or more business ventures. We do not intend to limit our search to any particular industry or type of business. Because we lack funds, it may be necessary for our officers and directors to either advance funds or to accrue expenses until such time as a successful business consolidation can be made. Management intends to hold expenses to a minimum and to obtain services on a contingency basis when possible. Further, our directors will defer any compensation until such time as an acquisition or merger can be accomplished and will strive to have the business opportunity provide their remuneration. However, if we engage outside advisors or consultants in its search for business opportunities, it may be necessary to attempt to raise additional funds. As of the date hereof, we have not made any arrangements or definitive agreements to use outside advisors or consultants or to raise any capital. In the event we need to raise capital, most likely the only method available to us would be the private sale of our securities. Because we are a development stage company, it is unlikely that we could make a public sale of securities or be able to borrow any significant sum from either a commercial or private lender. There can be no assurance that we will be able to obtain additional funding when and if needed, or that such funding, if available, can be obtained on acceptable terms. We do not intend to use any employees, with the possible exception of part-time clerical assistance on an as-needed basis. Outside advisors or consultants will be used only if they can be obtained for minimal cost or on a deferred payment basis. Management is confident that it will be able to operate in this manner and to continue its search for business opportunities during the next twelve months. Management further believes that we will not have to make any equipment purchases in the immediate future. Forward-Looking and Cautionary Statements This report contains certain forward-looking statements. These statements relate to future events or our future performance and involve known and unknown risks and uncertainties. Actual results may differ substantially from such forward-looking statements, including, but not limited to, the following: * our ability to search for an appropriate business opportunity and to subsequently acquire or merge with such entity; * to meet our cash and working capital needs; * our ability to maintain our corporate existence as a viable entity; and * other risks detailed in our periodic report filings with the SEC. In some cases, you can identify forward-looking statements by terminology such as "may," "will" "should," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "potential," "continue," or the negative of these terms or other comparable terminology. These statements are only predictions. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Item 3. Controls and Procedures. Evaluation of Disclosure Controls and Procedures. Based on their evaluation, as of a date within 90 days prior to the date of the filing of this Form 10-QSB, of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-14(c) and 15d-14(c) of the Securities Exchange Act of 1934, our principal executive officer and principal financial officer have each concluded that such disclosure controls and procedures are effective and sufficient to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified by the SEC's rules and forms. Changes in Internal Controls. Subsequent to the date of their evaluation, there have not been any significant changes in our internal controls or in other factors that could significantly affect these controls, including any corrective action with regard to significant deficiencies and material weaknesses. PART II Item 1. Legal Proceedings There are no material pending legal proceedings to which we are a party or to which any of our property is subject and, to the best of our knowledge, no such actions against us are contemplated or threatened. Item 2. Changes In Securities and Use of Proceeds This Item is not applicable. Item 3. Defaults Upon Senior Securities This Item is not applicable. Item 4. Submission of Matters to a Vote of Security Holders This Item is not applicable. Item 5. Other Information This Item is not applicable. Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 99.1 Certification of C.E.O. Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes- Oxley Act of 2002. Exhibit 99.2 Certification of Principal Accounting Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (b) Reports on Form 8-K No report on Form 8-K was filed during the three month period ended March 31, 2003. SIGNATURES In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. CONSOLIDATED TRAVEL SYSTEMS, INC. Date: May 15, 2003 By: /S/ Geoff Williams Geoff Williams President, C.E.O. and Director Date: May 15, 2003 By: /S/ J. Rockwell Smith J. Rockwell Smith Vice President and Director (Principal Accounting Officer) Certifications CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, Geoff Williams, Chief Executive Officer of the Consolidated Travel Systems, Inc. (the "registrant"), certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Consolidated Travel Systems, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 15, 2003 /s/ Geoff Williams Geoff Williams Chief Executive Officer CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 I, J. Rockwell Smith, Principal Accounting Officer of the Consolidated Travel Systems, Inc. (the "registrant"), certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Consolidated Travel Systems, Inc.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: May 15, 2003 /s/ J. Rockwell Smith J. Rockwell Smith Principal Accounting Officer