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 quarterly period ended March 31, 2001
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: 0-10124
travelbyus, Inc.
(Exact name of registrant as specified in its charter)
Texas 75-2631373
------ ------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
700 North Pearl Street, Suite 2170, Dallas, Texas 75201
-------------------------------------------------- --------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (214) 922-8100
Not Applicable
--------------
Former name, former address and former fiscal year, if changed since last report
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 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 __
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date.
23,727,698 shares of common stock were outstanding as of May 20, 2001.
Transitional Small Business Disclosure Format (check one):
Yes ___ No X
TRAVELBYUS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts)
(unaudited)
INDEX
Page
Number
PART I FINANCIAL INFORMATION..........................................................3
Item 1. Financial Statements...........................................................3
Consolidated Balance Sheet at March 31, 2001 (unaudited) ......................4
Consolidated Statements of Operations for the three and six
months ended March 31, 2001 and March 31, 2000 (unaudited).................5
Consolidated Statements of Cash Flows for the six months
ended March 31, 2001 and March 31, 2000 (unaudited)........................6
Notes to Unaudited Consolidated Financial Statements...........................7
Item 2. Management's Discussion and Analysis or Plan of Operation.....................18
PART II OTHER INFORMATION.............................................................23
Item 1. Legal Proceedings.............................................................23
Item 2. Changes in Securities and Use of Proceeds.....................................23
Item 3. Defaults Upon Senior Securities (not applicable)..............................24
Item 4. Submission of Matters to a Vote of Security Holders (not applicable)..........24
Item 5. Other Information.............................................................24
Item 6. Exhibits and Reports on Form 8-K ...........................................25
SIGNATURES
2
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
travelbyus, Inc. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in thousands except per share amounts)
(unaudited)
March 31,
2001
ASSETS:
Current assets:
Cash and cash equivalents 473
Accounts receivable, net 4,157
Inventory and barter credits 573
Prepaid expenses and other current assets 990
Marketable securities 139
Assets of discontinued operations 811
------------
------------
Total current assets 7,143
Goodwill, net 41,844
Assets of discontinued operations 1,829
Software, contracts and other intangible assets 18,965
Deposits and restricted cash 4,354
Property, plant and equipment, net 3,423
Other assets 321
------------
Total assets 77,879
============
3
TRAVELBYUS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(in thousands except per share amounts)
(unaudited)
March 31,
LIABILITIES AND STOCKHOLDERS' EQUITY: 2001
Current liabilities:
Bank indebtedness 663
Accounts payable and accrued liabilities: 14,095
Notes payable 12,193
Current portion of debt 11,753
Deferred tax liability 892
Other current liabilities 2,248
Liabilities of discontinued operations 4,666
--------------
Total current liabilities 46,510
Long-term debt, net of current maturities 4,750
Due to related parties 222
Liabilities of discontinued operations 309
--------------
Total liabilities 51,791
--------------
Stockholders' equity:
Series B 12% cumulative preferred stock, $10,000
liquidation preference 4
Common stock, $.01 par value; 250,000,000 shares
authorized; 23,727,698 shares issued and outstanding 153,064
Additional paid-in capital 63,427
Accumulated deficit (190,407)
--------------
--------------
Total stockholders' equity 26,088
--------------
--------------
Total liabilities and stockholders' equity 77,879
==============
The accompanying notes are an integral part of the unaudited consolidated
financial statements.
4
TRAVELBYUS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts)
(unaudited)
Three months ended Six months ended
March 31, March 31,
2001 2000 2001 2000
---- ---- ---- ----
Net sales 3,434 2,803 5,813 4,883
Costs and expenses:
Cost of net sales 1,311 1,498 1,738 2,399
Selling, general and administrative 7,857 3,785 14,614 7,304
Depreciation and amortization 3,431 777 9,941 1,195
------- ------- ------- -------
Total costs and expenses 12,599 6,060 26,293 10,898
------- ------- ------- -------
Operating income (9,165) (3,257) (20,480) (6,015)
Other income (expense):
Interest expense, net 1,441 807 2,339 1,462
Other income (expense) (680) (8,490)
------- ------- ------- -------
Pretax loss (11,286) (4,064) (31,309) (7,477)
Income tax provision (recovery) 24 (3,194)
------- ------- ------- -------
Loss from continuing operations (11,286) (4,088) (28,115) (7,477)
Income (loss) from discontinued operations 71 71
------- ------- ------- -------
Loss before extraordinary item (11,215) (4,088) (28,044) (7,477)
Loss on repayment of debentures (699) (699)
------- ------- ------- -------
Net loss (11,215) (4,787) (28,044) (8,176)
====== ====== ====== ======
Loss per common share:
Loss from continuing operations
($0.49) ($0.32) ($1.22) ($0.60)
Loss from discontinued operations
and -- ($0.06) -- ($0.06)
extraordinary items
Net loss per share (basic and diluted) ($0.49) ($0.38) ($1.22) ($0.66)
Weighted average shares outstanding (basic and diluted) 22,970,978 12,445,530 22,970,978 12,445,530
The accompanying notes are an integral part of the unaudited consolidated
financial statements.
5
TRAVELBYUS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months ended March 31,
2001 2000
---- ----
Cash flow from operating activities:
Net Loss for the period (28,044) (8,176)
Items not affecting cash:
Writedown of marketable securities 150
Depreciation and amortization 5,639 1,347
Interest accreted on debentures 961
Reduction of deferred income tax credit (3,200)
Valuation adjustments- goodwill 4,302
Valuation adjustments- intangibles & other assets 3,742
Extraordinary loss on repayment of debentures 699
Net change in non-cash working capital items:
Increase in security deposits (534)
Accounts Receivable and prepaid expenses (2,582) (494)
Inventory and barter credits (72) 533
Due to Related parties 16
Accounts payable and accrued liabilities 9,611 710
Customer deposits 253
Other current liabilities (847)
---------- ----------
Cash used by operations (11,301) (4,685)
Cash Flows from investing activities:
Cash paid for acquisitions (4,595)
Cash deposits on acquisitions (1,750)
Purchase of property and equipment (1,111) (1,299)
Investments (60) (4,764)
Reduction in restricted cash 523
Acquisition of Aviation Group and related valuation (12,249)
adjustments
---------- ----------
Cash used by investing activities (12,897) (12,408)
Cash flow from financing activities:
Bank borrowings 385 (134)
Non-bank borrowings 20,961
Issuance of notes payable 955
Repayment of notes payable (955)
Share issue costs (1,508)
Issue of special warrants 13,090
Issue of equity units 6,544
Exercise of options and warrants 3,032
Subscriptions received 1,910
Repayment of debentures (1,632)
Repayments to related parties (366)
---------- ----------
Cash provided by financing activities 20,980 21,302
Foreign exchange effect on cash 1,689
---------- ----------
Increase (decrease) in cash and cash equivalents (1,529) 4,209
Cash and cash equivalents, beginning of period 2,002 2,215
---------- ----------
Cash and cash equivalents, end of period 473 6,424
The accompanying notes are an integral part of the unaudited consolidated
financial statements.
6
1. Nature of operations and going concern
(a) Nature of operations
As discussed in Note 3, on January 25, 2001, Aviation Group,
Inc., a Texas corporation, completed an arrangement (the
"Arrangement") with travelbyus.com, Ltd., an Ontario
corporation. Immediately prior to completion of the
Arrangement, Aviation Group, Inc. changed its name to
travelbyus, Inc. Under the terms of the Arrangement, Aviation
Group, Inc. was the legal acquirer of travelbyus.com, Ltd. and
travelbyus.com, Ltd. was the accounting acquirer. Accordingly,
the historical financial information set forth herein is that
of the accounting acquirer, travelbyus.com., Ltd. Current
period financial results presented for the three and six month
periods ended March 31, 2001 include only the results of
travelbyus.com through January 25, 2001, the date the
Arrangement was effectuated. For the balance of the three and
six month periods ended March 31, 2001, the results of both
constituent companies to the Arrangement are included. As used
herein, the term the "Company" refers to the combined company
or, prior to the Arrangement, either of the constituent
companies, unless a distinction between the constituent
companies is required. In any instance in which such
distinction is required, the term "Aviation Group" refers to
Aviation Group, Inc. prior to the Arrangement and the term
"travelbyus.com" refers to travelbyus.com, Ltd. prior to the
Arrangement. The Company and its subsidiaries are in the
business of providing travel-related products and services
targeted primarily at the leisure customer, including airline
tickets and tour, cruise and group packages.
(b) Going Concern
These financial statements have been prepared using generally
accepted accounting principles ("GAAP") applicable to a going
concern. The Company incurred a net loss before write-off and
amortization of goodwill of approximately $18.1 million during
the six months ended March 31, 2001, had an accumulated
deficit of approximately $190.4 million and a working capital
deficiency of approximately $39.4 million at the end of the
period, and continued to incur losses subsequent to the period
end. The Company used cash of approximately $11.3 million to
fund operations during the six month period. In addition,
substantially all of the Company's assets are provided as
security for various financings. Management estimates that
financing facilities currently available are insufficient to
maintain operations and repay obligations due or coming due in
the coming year and the Company will require new sources of
financing in order to continue its operations and satisfy its
obligations in the normal course. Accordingly, the use of
accounting principles generally accepted in the United States
of America applicable to a going concern may not be
appropriate because substantial doubt exists with respect to
the Company's ability to continue as a going concern.
Management is addressing this situation by attempting to raise
additional financing, by eliminating redundant and unnecessary
costs following its recent acquisitions and by working to
realize the revenue potential of its recent acquisitions and
products and services. However, the Company's current business
model has a limited operating history and its recent
acquisitions have yet to be fully integrated. Subsequent to
period-end, the Company raised a total of $31.0 million in
various debt financings (note 12).
Although there is no assurance that the Company will be
successful in these actions, management believes that it will
be able to secure the necessary financing and improvement in
operating cash flow to enable it to continue as a going
concern. Accordingly, these financial statements do not
reflect adjustments to the carrying value of assets and
liabilities, the estimated useful lives of assets, the
reported revenues and expenses and balance sheet
classifications used that would be necessary if the going
concern assumption were not appropriate. Such adjustments
could be material.
7
2. Summary of significant accounting policies
A summary of the significant accounting principles and
practices used by the Company in preparing its consolidated
financial statements follows.
Basis of Financial Statement Presentation
The consolidated financial statements at March 31, 2001 are
unaudited and reflect all adjustments which are, in the
opinion of management, necessary for a fair presentation of
the financial position and operation results for the interim
period. All of the adjustments are of a normal recurring
nature. The results of operations for the three months ended
March 31, 2001 are not necessarily indicative of the results
for the entire year ending September 30, 2001.
The Company's consolidated financial statements include the
accounts of the Company's wholly owned subsidiaries. All
significant intercompany balances and transactions are
eliminated in consolidation.
Revenue recognition
Travel sales consist primarily of net commission revenues
derived from the sale of travel products including airline
tickets, hotel and vacation property accommodations, car
rentals, vacation packages including cruises and tours, and
volume bonuses and overrides from suppliers of these products.
The Company provides internet related software development and
support services primarily to member agents. Revenue related
to these services is recognized ratably over the period these
services are performed, provided collectibility is reasonably
assured.
Loss per share
All per share amounts and calculations have been retroactively
restated Basic loss per share is computed by dividing income
available to common shareholders by the weighted average
number of common shares outstanding during the period. Common
shares outstanding include shares issuable for little or no
cash consideration and for which all necessary conditions have
been satisfied. Diluted loss per share is computed using the
treasury stock method by including other potential common
stock from exercise of stock options and warrants in the
weighted average number of common shares outstanding for a
period, if dilutive.
8
The following table sets forth the computation of loss per
share:
Three Months Ended Six Months Ended
March 31, March 31,
------------------------------------- ---------------------------------
2001 2000 2001 2000
-------------------- ---------------- ----------------- ---------------
Numerator:
-------------------- ---------------- ----------------- ---------------
Net income (loss) (11,215,000) (4,787,000) (28,044,000) (8,176,000)
==================== ================ ================= ===============
Denominator:
Weighted-average shares 22,970,978 11,958,516 22,970,978 11,958,516
Effect of dilutive securities:
Warrants and Employee stock options -0- 487,014 -0- 487,014
-------------------- ---------------- ----------------- ---------------
Denominator for diluted income (loss) per
share - adjusted weighted average
shares and assumed conversions 22,970,978 12,445,530 22,970,978 12,445,530
==================== ================ ================= ===============
Diluted loss per common share for the three and six months
ended March 31, 2001 excludes 16,489,285 common shares
issuable pursuant to various option, warrant, debenture and
acquisition agreements because the effect would be
anti-dilutive.
3. Arrangement with Aviation Group
In February 2000, Aviation Group entered into letters of
intent and publicly announced a proposed three-way business
combination with Global Leisure, Inc. and travelbyus.com.
Travelbyus.com and Aviation Group held shareholder meetings on
December 20, 2000 to vote on the business combination, which
was approved. On January 25, 2001, the Company completed the
statutory Arrangement in accordance with Ontario, Canada law
pursuant to which travelbyus.com was acquired by Travelbyus
Canada Holdings Ltd., formerly known as Aviation Group Canada
Limited, a Canadian subsidiary of Aviation Group. In
connection with the consummation of the Arrangement, on
January 24, 2001, Aviation Group also changed its name to
travelbyus, Inc., effected a one-for-five reverse split of its
common stock and increased its authorized number of shares of
common stock from 10,000,000 to 250,000,000. Aviation Group's
pre-existing shareholders retained beneficial ownership of
approximately 5% of the combined entity. The accompanying
financial statements reflect the reverse split from the
earliest period presented.
As part of the Arrangement, the outstanding common shares of
travelbyus.com were converted into exchangeable shares of
travelbyus.com on a one-for-one basis. Under the terms of the
exchangeable shares and related agreements, every five
exchangeable shares are exchangeable, at the holder's
election, into one share of the Company's common stock. Any
remaining exchangeable shares not previously exchanged will
automatically be exchanged into the Company's common stock on
January 1, 2003, or earlier upon the occurrence of certain
events. Each share of common stock of the Company that was
outstanding prior to the Arrangement remains outstanding and
unchanged by the Arrangement, except that every five shares
now represent one share in accordance with the reverse split.
The combined companies have accounted for the transaction
under the purchase method of accounting as if travelbyus.com
had acquired Aviation Group and had recapitalized under the
capital structure of Aviation Group. Accordingly, the combined
company will record the assets and liabilities of the Aviation
Group as being acquired by travelbyus.com in the Arrangement.
This acquisision resulted in goodwill of $6.8 million. As a
matter of practice, the Company obtains an independent
appraisal of the acquired assets to use as a basis to
allocate goodwill among the various components acquired.
Management has not made an allocation at the date of the
accompanying financial statements, but will secure an
appraisal as soon as practicably possible.
The following unaudited condensed results of operations for
the six months ended March 31, 2001 and 2000 were prepared
assuming the Arrangement had occurred on October 1, 2000 and
1999, respectively (in thousands):
For the six months ended
2001 2000
---- ----
Revenue 16,942 11,113
Net loss (35,696) (9,721)
Basic and diluted net
loss per share ($1.55) ($0.42)
The Company intends to dispose of all remaining non-travel
related operations that were historically a part of Aviation
9
Group. These non-travel related assets, liabilities and
operations are presented as held for sale or discontinued in
the accompanying financial statements at their estimated
liquidation value.
4. Programming library
The Company acquired a media library. During the three months
ended December 31, 2000, the Company received the balance of
the first 40 episodes and has therefore reclassified the
remaining balance of advances for programming services to the
programming library. In addition, the Company capitalized and
accrued for the remaining balance of advances due of $1.5
million with respect to the 40 new episodes. These advances
were written off during the period to bring the carrying value
of the programming library down to the estimated fair value.
The costs of the unreleased but completed programs have been
capitalized, and are reflected in the financial statements at
net realizable value of approximately $1.8 million.
5. Software and other assets
Pursuant to the terms of the share purchase agreement for
Muffin Communications Ltd., the share consideration given for
the rights to the wireless contract was subject to adjustment
based on the trading price of the common shares of
travelbyus.com on December 15, 2000. The combination of shares
and/or cash to be paid or given to maintain the total
consideration of $6.7 million or $6.70 per share pursuant to
the adjustment formula, has not yet been decided by
travelbyus.com. The required value of additional consideration
of $6.3 million has been included in accrued liabilities as at
December 31, 2000 and expensed in the period due to the
continued significant uncertainty about the level of revenues
expected to be derived from the underlying wireless customer
base.
6. Credit facilities, Notes and Debt
(a) Credit facilities
Bank indebtedness totaled $2.4 million as of March 31, 2001,
and was comprised of $663,000 from continued operations and
$1.7 million from discontinued operations. Following is a
brief discussion of each credit facility:
The Aviation Group subsidiaries of the Company have a $3.0
million line of credit facility with the CIT Group/Credit
Finance, Inc. for working capital management purposes. The
line of credit bears interest at prime plus 1.5% and extends
through August 2001. Amounts available for borrowings are
based on the level and composition of the Company's accounts
receivable and inventory. Outstanding borrowings under this
line of credit at March 31, 2001 were $1.7 million. The line
of credit is collateralized by substantially all of the assets
of the Company's aviation related operating subsidiaries and
guaranteed by the Company. This amount is recorded as
Liabilities of Discontinued Operations in the Balance sheet.
The Company has a note payable to a bank under a revolving
credit agreement with a balance of $568,000 at March 31, 2001.
Interest is at the bank's index rate plus 0.25%. The facility
is cross-collateralized by equipment, inventory and accounts
receivable of General Electrodynamics, a former subsidiary of
the Company.
A US subsidiary of the Company has an operating line of credit
available of approximately U.S. $250,000, bearing interest at
the bank's prime lending rate plus 2.5%. As at March 31, 2001,
$89,000 was outstanding. This facility has been fully paid and
canceled in May, 2001.
A Canadian subsidiary of the Company has an operating line of
credit available of approximately U.S. $431,000 (Cdn.
$650,000), bearing interest at the bank's prime lending rate
plus 2.5%. During the prior year, the facility was terminated
and the subsidiary agreed to repay $43,000 per month.
10
At March 31, 2001, $7,000 was outstanding.
(b) Notes
March 31, 2001
--------------
DCM Asylum LLC 2,500
(i)
DCM KG LLC convertible loan 1,500
(ii)
Doerge credit facility (iii) 4,106
Aberdeen Capital (iv) 1,000
Pelham Funds (v) 3,087
Other - discontinued operations 111
------------
12,304
Less discontinued operations 111
------------
12,193
============
(i) In December 2000, the Company executed agreements relating
to a $2.5 million loan from DCM Asylum LLC, a company related
to Doerge Capital Management ("Doerge"). This loan matured on
February 15, 2001 and has been extended until September 30,
2001. All other terms of the loan remain unchanged. In
connection with the original loan, the Company issued warrants
to purchase 250,000 of its common shares at an exercise price
of $2.00 per share expiring in December 2005. The fair value
of the warrants was expensed during the period as a financing
fee. As consideration for the amendment of the maturity date a
further 250,000 warrants were issued with an exercise price of
$0.50 per share, expiring April 2004. The loan is
collateralized by security interests in 150 shares of Series B
preferred stock of the Company and substantially all of the
assets of Mr. Cheaps Travel, Ltd., Gotham Media Group, Ltd.
and travelbyus-Travel Magazine Incorporated, which are
subsidiaries of the Company.
(ii) In December 2000, the Company borrowed $1.5 million from
DCM KG LLC, a company related to Doerge. The loan matured
February 5, 2001. The Company has amended the loan agreement
and extended the maturity date to June 5, 2001. All other
terms remain unchanged. The loan is secured by the guaranty of
Travelbyus Cruise Operations, Inc. and Cheap Seats, Inc.,
which are subsidiaries of the Company, and the grant of a
security interest on substantially all of the assets of
Travelbyus Cruise Operations and Cheap Seats. In connection
with the original loan, the Company granted warrants to
purchase 300,000 common shares at an exercise price of $1.00
per share expiring on December 29, 2003. As consideration for
the amendment of the maturity date a further 150,000 warrants
were issued with an exercise price of $0.50 per share,
expiring April 2004. The fair value of the warrants was
expensed during the period as a financing fee. The loan is
also convertible at the option of the lender into common
shares of the Company at a conversion price of the lesser of
$1.00 per exchangeable share or the seven-day weighted average
trading price of the Company's common stock.
(iii) In March 2001, the Company borrowed $3.4 million from
DCM/Funding III LLC, a company related to Doerge. Under the
agreement, Doerge is entitled to 300,000 share purchase
warrants on terms to be agreed upon.
(iv) In January 2001, the Company borrowed $1.0 million from
Aberdeen Strategic Capital LP. This loan matured in February
2001. The Company has subsequently extended the maturity date.
In connection with the original loan, the Company
granted warrants to purchase 200,000 common shares at an
exercise price of $1.00 per share expiring on December 29,
2003.
These warrants were exercised in March, 2001 for which an
additional 300,000 warrants were issued at exercise prices
ranging from $0.50 to $0.63 per share, expiring in April 2004.
The loan is guaranteed by Cheap Seats, Inc. and Travelbyus
Cruise Operations, Inc. and collateralized by a security
interest in essentially all the assets of Cheap Seats and
Travelbyus Cruise Operations Inc., which are subsidiaries of
11
the Company. The loan is convertible into common shares of the
Company at a conversion price of the lesser of $1.00 per
exchangeable share or the seven-day weighted average trading
price of the Company's common stock, calculated on a
pre-reverse stock split basis, plus a premium of 5%.
(v) The Company borrowed $3.0 million from Pelham Investment
Fund on May 9, 2000. The promissory note requires quarterly
interest payments at an annual rate of 12%, and matured in
February 2001. The loan was extended and is now due on demand.
In connection with the promissory note, the Company issued
warrants to purchase 225,000 shares of its common stock at an
exercise price of $7.50 per share. As part of the extension,
the exercise price was reduced to $1.00 per share. The value
of the warrants of $257,000 has been recorded as a discount,
which is being amortized to interest expense over the term of
the note. Additional warrants for 250,000 shares were issued
in connection with the extension of the maturity of the loan
at an exercise price of $1.00 per share and for a term
expiring in March 2005.
(c) Other Debt
March 31, 2001
--------------
Senior redeemable debenture (i) 5,741
Travel 24.com convertible debenture (ii) 3,750
Amadeus NMC Holding convertible
debenture (iii) 2,000
Related Party (iv) 1,291
Doerge Capital Management (v) 3,635
Discontinued operations(vi) 683
Other 86
-------------
17,186
Less: Discontinued operations 683
Less: Current portion 11,753
-------------
Long-term portion 4,750
=============
(i) In September, 1999, the Company issued $8.1 million
principal amount of its senior redeemable debentures. The
debentures bear interest at a rate of 12.5% per annum, payable
semi-annually, and mature on September 9, 2001. The Company
may repay the debentures at any time. A lien on substantially
all assets of travelbyus, Ltd. has been granted as security.
(ii) During November 2000, an additional $750,000 was
advanced to the Company by Travel24.com. At that time, the
conversion price on the total balance of the Company's
indebtedness to Travel24.com ($3.75 million) was reduced to
$2.00 per share. These debentures mature in June 2002.
(iii) In December 2000, the Company borrowed $2.0 million from
Amadeus NMC Holding, Inc. This loan bears interest at 8% per
year and is repayable in eight equal installments payable
quarterly commencing on March 31, 2001 and with a final
installment due November 30, 2002. The loan is convertible
into common stock based upon a weighted average trading price
to be determined at the time of conversion. The balance of the
loan will be automatically converted into common shares or
exchangeable shares of the Company if and when Amadeus makes
an equity investment in the Company. The Company's chief
executive officer, William Kerby, pledged 6,083,334 common
shares in the Company beneficially owned by him to
collateralize this loan. As consideration for this pledge, Mr.
Kerby received warrants to purchase 1,500,000 common shares at
$0.50 per share, expiring April 2006. The installment payment
became past due on April 1, 2001. The Company is in
discussions with the lender regarding the settlement of this
payment.
(iv) This represents a demand note in the original principal
amount of $1.3 million entered into to satisfy the demand of
the former chairman of Aviation Group for severance payments.
(v) Comprised of advances and fees due to Doerge, the
repayment terms and conditions are under negotiation.
12
(vi) The Company received funds from Louisiana Economic
Development Corporation ("LEDC"). The LEDC note matures in
July 2003 and requires quarterly interest payments at an
annual rate of 12%. This amount is included in Liabilities of
Discontinued Operations on the Balance Sheet at March 31,
2001.
7. Common stock
Number of Common $Amount
Shares
---------------- --------------
Balance September 30, 2000 96,804,569 141,710,000
Shares issued on exercise of warrants 200,000 166,000
Shares issued on exercise of special warrants 7,692,300 7,196,000
--------------- --------------
Balance December 31, 2000 104,696,869 149,072,000
Shares sold 1,417,444 3,982,000
Acquisition of Aviation Group shares 4,956,722 10,000
Conversion of Series A Preferred shares 2,750,000 -0-
Issuance pursuant to acquisition price minimums 4,817,712 -0-
Adjustment for 1:5 reverse share split (94,911,049) -0-
--------------- --------------
Balance March 31, 2001 23,727,698 153,064,000
8. Commitments and contingencies
(a) During June 2000, the Company entered into an agreement
with HealthyConnect.com Inc. ("HC.com"), a private health care
related internet technology company. Pursuant to the terms of
the agreement, HC.com will issue 1,200,000 common shares to
the Company upon confirmation of necessary technical
specifications to establish links between their respective web
sites. The Company will issue 1,000,000 common shares in
exchange for a further 1,400,000 common shares of HC.com upon
certain conditions. Under the terms of the agreement, HC.com
may request the Company to acquire up to 1,200,000 common
shares of HC.com at $2.50 per share for total cash
consideration of $3.0 million subject to satisfactory due
diligence by and board approval of the Company. The completion
of these transactions is subject to the necessary regulatory
approvals. Through March 31, 2001, 17,500,000 shares have been
exchanged. On August 8, 2000, the Company provided a demand
loan to HC.com for $175,000 at 6% interest. The loan is
secured by 1,200,000 common shares of HC.com and is included
in advances.
(b) The Company received a financing and loan commitment from
Doerge whereby Doerge directly and through its affiliates
("Doerge") agreed to purchase from the Company up to $1.5
million liquidation value of Series B preferred stock of the
Company and to provide to the Company financing of up to $10.0
million. See Note 12.
9. Segment information
The Company operates within three operating segments: Travel,
Technology and Other. The Travel segment provides a broad
range of travel products, targeted primarily at the leisure
customer, including airfare, hotel rooms, cruise packages, and
13
ground packages. Products and services are offered through the
traditional travel agency base, 1-800 call centers and the
internet. Included in the Travel segment are the operations of
the following subsidiaries: Mr. Cheaps Travel, International
Tours, GalaxSea Cruises and Tours, Express Vacations, Cheap
Seats, Bell Travel, Global Leisure and Travelbyus Cruise
Operations.
The Technology segment designs and manufactures electronic
data storage systems, develops internet accessible travel
reservations systems, custom programming services, and a
distributed website marketing system. Included in this segment
are the operations of Legacy, Epoch, Prosoft and
SiteRabbit.com.
Included in the Other segment are advertising and associate
marketing operations of International Tours Inc., GalaxSea
Cruises and Tours, Travelbyus Cruise Operations, and the
operations of Aviation Group.
The accounting policies of the segments are the same as those
described in Note 2. The Company evaluates the performance of
its segments and allocates resources to them based on
operating contribution, which represents segment revenues less
direct costs of operations, excluding the allocation of
corporate general and administrative expenses. Assets of the
operating segments reflect primarily net accounts receivable
associated with segment activities; all other assets are
included as corporate assets. The Company does not track
expenditures for long-lived assets on a segment basis.
The table below presents information on the revenues and
operating contribution for each segment for the three and six
months ended March 31, 2001 and 2000, and items that reconcile
segment operating contribution to the Company's reported
pre-tax income (loss) from continuing operations (in
thousands).
Three Months Ended Six Months Ended
March 31, March 31,
2001 2000 2001 2000
---- ---- ---- ----
Net sales of services:
Travel 1,699 2,113 4,078 3,681
Technology 1,350 187 1,350 326
Other 385 503 385 876
--------------- ------------- ------------- ---------------
3,434 2,803 5,813 4,883
--------------- ------------- ------------- ---------------
--------------- ------------- ------------- ---------------
Operating contribution:
Travel (7,081) (3,564) (21,358) (6,570)
Technology (1,026) (23) (1,763) (43)
Other (1,865) 327 (1,761) 592
--------------- ------------- ------------- ---------------
--------------- ------------- ------------- ---------------
(9,972) (3,260) (24,882) (6,021)
--------------- ------------- ------------- ---------------
--------------- ------------- ------------- ---------------
Consolidated expenses:
Interest expense 1,314 804 2,224 1,456
Investment Reduction 4,203
--------------- ------------- ------------- ---------------
Pretax loss from continuing operations (11,286) (4,064) (31,309) (7,477)
=============== ============= ============= ===============
14
10. Stock options and warrants
The Company has a Stock Option Plan that provides for the
granting of options to purchase common shares to directors,
officers, employees and consultants of the Company. The number
of common shares reserved for issuance under the Stock Option
Plan shall not exceed 10,000,000 common shares or a greater
number as approved by the shareholders of the Company. Terms
of the options shall not be for a period less than one year or
longer than ten years. The option price shall be fixed by the
directors of the Company subject to price restrictions imposed
by the regulators. All options were granted at or above market
value at the date of grant. Accordingly, no current or
deferred compensation expense has been recorded in the periods
presented.
Stock option transactions
The following table summarizes information about the Company's
stock option activity:
Options
exercisable Number of Exercise price
at Options $
end of period
-------------- ------------- ------------------
Balance September 30, 2000 7,448,800 0.12 - 4.50
Options granted during the period 547,000 0.90 - 4.28
Options exercised during the period -0- -0-
Options expired during the period (406,500) 1.15 - 4.28
Options exercisable at end of period 3,483,967 0.12 - 4.50
------------ --------------
Balance December 31, 2000 7,589,300 0.12 - 4.50
Options expired during the period (50,000) 3.75
Adjust for reverse split (2,787,174) (6,031,440)
Options issued to Aviation Group 27,000 8.44 - 9.28
Options exercisable at end of period 700,633 0.40 - 14.93
------------ --------------
Balance March 31, 2001 1,534,860 0.40 - 14.93
============ ==============
Warrant transactions
Warrants granted in Travelbyus.com are convertible for
exchangeable shares of the Company at the ratio before the
reverse split effected in January 2001. The following table
summarizes information about the warrant activity in the
travelbyus.com warrant pool:
Number of Exercise price
underlying $
shares
---------------- --------------
Balance September 30, 2000 11,077,520 0.45 - 2.38
Issued on exercise of special warrants (note 6(a)) 3,496,500 1.67
Issued on debt financings (note 5 (b) and (c) 550,000 1.00 - 2.00
Special warrants exercised (6,993,000) 1.67
Debenture warrants exercised (200,000) 0.45
----------------- ----------------
Balance December 31, 2000 7,931,020 0.45 - 2.33
Issued on debt financings (note 5 (b) and (c) 300,000 1.00
Debenture warrants expired (6,778,250) 2.50 - 3.50
----------------- ----------------
Balance December 31, 2000 1,452,770 0.45 - 3.50
================= ================
15
The following table summarizes information about the warrant
activity in the Aviation Group warrant pool:
` Number of Exercise price
` underlying $
` shares
---------------- ---------------
Beginning balance at acquisition date 1,825,882 5.00 - 47.44
Issued on debt financings 10,410,000 0.50 - 7.00
Issued to management 2,100,000 0.50 - 0.75
----------------- ----------------
Balance March 31, 2001 14,335,882 0.50 - 47.44
================= ================
11. Series A Preferred Stock
In conjunction with the purchase of Global Leisure Travel,
Inc. on May 10, 2000, the Company issued 1,650 shares of its
9% cumulative convertible Series A preferred stock for $10,000
per share ($16.5 million in the aggregate) to the Series A
shares are convertible into common shares at the Company's
option. As additional consideration, warrants to purchase
750,000 shares of common stock at an exercise price of $5.00
per share were issued to the former owners of Global. The
Series A shares were converted to common shares in January,
2001.
12. Subsequent events
(a) On March 27, 2001, the Company entered into a letter of
understanding with American Leisure, Inc., a Florida
corporation controlled by Malcolm Wright (ALI), under which
the Company agreed to commit up to $1.5 million for a 50%
ownership interest in a joint venture with ALI. Through this
joint venture, the Company and Mr. Wright sought to acquire
certain assets of Med Resorts International, Inc. (MRI),
which was placed in receivership in August, 2000 in an
action filed against it by the Federal Trade Commission and
the Commonwealth of Virginia in the United States District
Court for the Northern District of Illinois. Subsequently,
the parties determined to seek to acquire and hold the MRI
assets through American Vacation Resorts, Inc., a Florida
corporation in which the Company and Mr. Wright would each
hold a 50% interest (AVR). On April 13, 2001, the court
entered an order granting the receiver's motion to approve
the sale of certain assets to ALI. Pursuant to the
provisions of the asset purchase agreement entered into
between ALI and the receiver in accordance with the court's
order, ALI subsequently assigned its rights under the
agreement to AVR, which acquired the MRI assets on April 17,
2001.
The assets consist principally of notes of MRI's vacation
club members, three hotels and certain condominium units and
time share intervals in hotel and resort properties. These
assets were subject to existing secured debt of
approximately $7.8 million. In accordance with the court's
order, the former MRI vacation club members have the right
to terminate their vacation club membership and be released
from any past or future liability on their MRI notes, or
affirm their obligations and continue as vacation club
members of AVR. AVR presently cannot estimate what amount of
member notes will be affirmed, but is optimistic that a
majority of members will continue their vacation club
membership with AVR. AVR intends to continue to operate and
seek to expand the former MRI vacation club business that it
acquired and offer enhanced travel benefit fulfillment to
vacation club members.
On April 30, 2001, the Company advised Mr. Wright that it
had elected to exercise its option to acquire the remaining
50% of the common stock of AVR. While the letter of
understanding suggests that the Company's ownership in the
entity holding the MRI assets would be effective as of the
option exercise date, the letter also contemplates that the
parties would negotiate and execute definitive agreements.
The parties expect to resolve the issue concerning the
effective date of the transfer, to clarify whether and the
manner in which the shares of ALI or its principal asset,
the Sungate Golf & Spa Development (a proposed golf and
resort property that has been received zoning approvals but
is presently undeveloped), will be transferred, and to
establish other terms and conditions of the transaction in
the definitive agreements.
Upon the closing of the transaction, the Company will own
all the capital stock of AVR, subject to the issuance or
reservation of shares representing 17.5% of the outstanding
common stock, which will be available for an equity
incentive program to management of AVR. This incentive
stock, if issued, is subject to repurchase by AVR in April
2005. Accordingly, on a diluted basis, the Company will hold
an 82.5% interest in AVR.
The total option consideration for the AVR shares and the
shares or assets of ALI consists of (i) the assumption of
$10.5 million of indebtedness to Mr. Wright maturing in
December 2002 that is secured by a mortgage on the Sungate
Golf & Spa Development, (ii) a repayment of $500,000
principal amount of such mortgage debt, and (iii) the
issuance of 1,000,000 shares of the common stock of the
Company, subject to adjustment. The adjustment is to be
determined based upon the value of the Company's stock on
August 31, 2001 and the amount of AVRs net assets after
determination of the number of vacation club memberships and
notes that are affirmed. The shares of the Company's common
stock issuable upon this adjustment can in no event exceed
19.9% of the Company's outstanding common stock, provided
that if the number of shares that would otherwise be
issuable absent this limitation would exceed this level, an
additional cash payment will made in lieu thereof.
A portion of the initial $500,000 cash consideration has
been paid from proceeds of loans to the Company from private
investors not affiliated with the Company and the balance of
the cash consideration is also expected to be provided by
debt financing. No assurance can be given that such
financing will be available to the Company. The terms of
this transaction were negotiated with Mr. Wright on an arm's
length basis. The Company had no relationship with ALI, AVR
or Mr. Wright prior to initiation of the discussions
relating to the Company's participation in the possible
acquisition of the MRI assets. Mr. Wright presently intends
to continue as the president of AVR.
(b) In May 2001, the Company received a commitment from a
Midwest based lending source for a credit facility providing
for borrowing availability of up to $23.0 million based on
eligible collateral. The commitment is subject to negotiation
of final documentation, completion of due diligence and other
customary conditions. The Company anticipates that, if these
conditions are satisfied, the loan agreements will be
finalized prior to June 30, 2001. No assurance can, however,
be given that these conditions will be satisfied or that the
facility will be funded. If the facility is funded, the
Company intends to use the proceeds to retire short-term debt
and to fund working capital and other obligations.
(c) Since March 31, 2001, the Company has continued to borrow
on a short term-basis to fund working capital and provide
funds for its purchase of AVR stock described above. During
April and May 2001, the Company issued a series of its
convertible secured bridge notes due December 31, 2001 under
which an aggregate principal amount of $8.3 million is
outstanding as of the date of this Report. Certain of the
funds evidenced by these notes were advanced during the
quarter ended March 31, 2001, as described under Note
6(b)(iii). The obligations evidenced by these notes are
secured by a pledge of the Company's capital stock in
Travelbyus Cruise Operations Inc. and Cheap Seats, Inc.
subsidiaries and by liens on substantially all of the assets
of these subsidiaries. The notes bear interest at the rate of
12% per annum, payable on August 2, 2001 and at maturity and
are convertible into the Company's common stock at any time
based upon a $2.00 per share price. The Company issued
warrants in connection with these notes. See Part II, Item 2
of this Report.
17
In April 2001, the Company borrowed $300,000 evidenced by a
note due July 3, 2001. This note is secured by a pledge of the
Company's common stock in AVR and liens on substantially all
of the assets of AVR. At the holder's option, all or a portion
of this note may be exchanged for a convertible secured bridge
note in a like principal amount under the terms described
above. This note bears interest at the rate of 12% per annum,
payable at maturity. The Company issued a warrant in
connection with this note. See Part II, Item 2 of this Report.
In April and May 2001, the Company borrowed $5.1 million in
the aggregate evidenced by a series of notes due 120 days
after issuance. These notes are secured by a pledge of the
Company's common stock in AVR and liens on substantially all
of the assets of AVR. These notes bear interest at the rate of
25% for the first 30-day period it is outstanding, increasing
by 25% for each 30-day period thereafter until maturity. The
Company intends to retire these notes with the proceeds from
the credit facility with Fit Management as soon as possible.
No assurance can be given that such facility will be funded.
The Company has issued warrants in connection with these
notes. See Part II, Item 2 of this Report.
(d) Effective April 20, 2001, the Company engaged Steven
Antebi as a consultant to advise it as to financial and
strategic planning matters. In accordance with the terms of
the consulting agreement entered into between the Company and
Mr. Antebi, the Company issued 2,200,000 shares of its common
stock to him on May 18, 2001, subject to increase by up to
2,000,000 additional shares in the event of specified dilutive
events. These shares were issued and registered under a
registration statement on Form S-8 in May 2001.
(e) As reported in the Company's current report on Form 8-K
filed April 23, 2001, PricewaterhouseCoopers LLP ("PWC")
resigned as the Company's independent accountants on April
17, 2001. PWC had served as the independent accountants for
travelbyus.com, which, under the terms of the Arrangement,
was the accounting acquirer of Aviation Group. Aviation
Group's independent accountants, Hein + Associates LLP
("Hein"), had ceased serving as Aviation Group's independent
accountants following the completion of the Arrangement.
Hein subsequently notified the Company that it had ceased
serving in this role. The Company is currently interviewing
accounting firms to replace PWC and expects to make a
decision in the near future. These consolidated financial
statements have not been reviewed by an independent
accounting firm.
(f) Effective April 10, 2001, the Company's publicly-traded
securities were delisted from The Nasdaq Stock Market due to
the inability of the Company to satisfy the initial listing
criteria, including maintenance of a $4.00 bid price for the
specified period. In the United States, the Company's
publicly-traded common stock and warrants continue to trade on
the OTC Bulletin Board under the trading symbols TRIP and
TRIPW, respectively.
(g) The Company has entered into an agreement to sell the
assets of its Aero Design, Inc. and Battery Shop, L.L.C.
subsidiaries for $3.0 million, subject to a purchase price
adjustment based upon financial performance prior to closing.
Closing is expected in June 2001. Net proceeds from the sale
are expected to be applied to retire indebtedness.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Overview
The Company and its subsidiaries are in the business of providing
travel-related products and services targeted primarily at the leisure customer,
including airline tickets and tour, cruise and group packages.
The companies held shareholder meetings on December 20, 2000 to vote on
the business combination, which was approved. On January 25, 2001, the Company
completed the statutory Arrangement in accordance with Ontario, Canada law
18
pursuant to which travelbyus.com was acquired by Travelbyus Canada Holdings
Ltd., formerly known as Aviation Group Canada Limited, a Canadian subsidiary of
Aviation Group. In connection with the consummation of the Arrangement, on
January 24, 2001, Aviation Group also changed its name to travelbyus, Inc.,
effected a one-for-five reverse split of its common stock and increased its
authorized number of shares of common stock from 10,000,000 to 250,000,000.
Aviation Group's pre-existing shareholders retained beneficial ownership of
approximately 5% of the combined entity. The accompanying financial statements
reflect the reverse split from the earliest period presented.
As part of the Arrangement, the outstanding common shares of
travelbyus.com were converted into exchangeable shares of travelbyus.com on a
one-for-one basis. Under the terms of the exchangeable shares and related
agreements, every five exchangeable shares are exchangeable, at the holder's
election, into one share of the Company's common stock. Any remaining
exchangeable shares not previously exchanged will automatically be exchanged
into the Company's common stock on January 1, 2003, or earlier upon the
occurrence of certain events. Each share of common stock of the Company that was
outstanding prior to the Arrangement remains outstanding and unchanged by the
Arrangement, except that every five shares now represents one share in
accordance with the reverse split.
The combined companies have accounted for the transaction under the
purchase method of accounting as if travelbyus.com had acquired Aviation Group
and had recapitalized under the capital structure of Aviation Group.
Accordingly, the combined company will record the assets and liabilities of the
Aviation Group as being acquired by travelbyus.com in the Arrangement.
Under the terms of the Arrangement, Aviation Group was the legal
acquirer of travelbyus.com and travelbyus.com was the accounting acquirer.
Consequently, the historical financial information set forth in this report is
that of the accounting acquirer, travelbyus.com. Current period financial
results presented for the three and six month periods ended March 31, 2001
include only the results of travelbyus.com through January 25, 2001, the date
the Arrangement was effectuated. For the balance of the three and six month
periods ended March 31, 2001, the results of both constituent companies to the
Arrangement are included. The Company's fiscal year end has been changed to
September 30.
Recent Events
Since March 31, 2001, the Company's independent accountants have
resigned, and the Company has entered into numerous financing transactions, has
acquired an interest in American Vacation Resorts, Inc., which operates a
vacation club business, has issued 2,200,000 shares of its common stock to a
consultant it has engaged and has been delisted from The Nasdaq Stock Market.
See note 12 to the notes to the consolidated financial statements.
Segments and Summary of Results
The following discussions and tables set forth a comparison of the
major categories, presented by division, of revenues and operating contribution
with each of the previous period's results (in thousands). These historical
results are not necessarily indicative of results to be expected for any future
period.
Three Months Ended Six Months Ended
March 31, March 31,
2001 2000 2001 2000
---- ---- ---- ----
Net sales of services:
Travel 1,699 2,113 4,078 3,681
Technology 1,350 187 1,350 326
Other 385 503 385 876
--------------- ------------- ------------- ---------------
3,434 2,803 5,813 4,883
--------------- ------------- ------------- ---------------
19
Operating contribution:
Travel (7,081) (3,564) (21,358) (6,570)
Technology (1,026) (23) (1,763) (43)
Other (1,865) 327 (1,761) 592
--------------- ------------- ------------- ---------------
(9,972) (3,260) (24,882) (6,021)
--------------- ------------- ------------- ---------------
Consolidated expenses:
Interest expense 1,314 804 2,224 1,456
Investment Reduction 4,203
--------------- ------------- ------------- ---------------
Pretax from continuing operations (11,286) (4,064) (31,309) (7,477)
=============== ============= ============= ===============
The Company intends to dispose of all remaining non-travel related
operations that were historically a part of Aviation Group. These non-travel
related assets, liabilities and operations are presented as held for sale or
discontinued in the accompanying financial statements at their estimated
liquidation value.
The Company operates within three operating segments: Travel,
Technology and Other. The Travel segment provides a broad range of travel
products, targeted primarily at the leisure customer, including airfare, hotel
rooms, cruise packages, and ground packages. Products and services are offered
through the traditional travel agency base, 1-800 call centers and the internet.
Included in the Travel segment are the operations of the following subsidiaries:
Mr. Cheaps Travel, International Tours Inc., GalaxSea Cruises and Tours, Inc.,
Express Vacations, Cheap Seats, Bell Travel, Global Leisure and Travelbyus
Cruise Operations.
The Technology segment designs and manufactures electronic data storage
systems, develops internet accessible travel reservations systems, custom
programming services, and a distributed website marketing system. Included in
this segment are the operations of Legacy, Epoch, Prosoft and SiteRabbit.com.
Included in the Other segment are advertising and associate marketing
operations of International Tours Inc., GalaxSea Cruises and Tours, Inc. and
Travelbyus Cruise Operations, and the operations of Aviation Group.
Seasonality and Variability of Results
The Company's travel operations experience seasonal variability in
revenues, primarily relating to the heavy summer and year-end leisure travel
seasons. Management believes, however, that the integration of its various
travel and technology companies can allow it to increase revenues above
historical levels in future periods, and that when combined with other company
products, can generate higher gross margins as well.
Forward Looking Statements
Various statements made in this Report concerning the manner in which
the Company intends to conduct its future operations, management's expectations
or beliefs as to various proposed transactions and potential trends that may
impact future results of operations are forward looking statements. The Company
may be unable to realize its plans and objectives due to various important
factors, including, but not limited to the following factors: The travel
industry in which the Company competes is highly competitive. Two of the
Company's principal competitors in the online travel agency sector,
Travelocity.com and Expedia.com, have substantially greater resources and more
favorable operating results than the Company. Some economists have advised that
the United States has entered or is expected to enter a recessionary period.
Unfavorable general economic conditions significantly affect discretionary
travel and leisure activities on which the Company's business is substantially
dependent and make capital raising activities more difficult and costly. The
Company continues to incur substantial losses in its operations, principally in
its Travel segment, and management does not presently know if the Company's
recently launched internet accessible travel reservations system will find wide
public acceptance. As a result of its significant operating losses, the Company
has found it necessary to regularly seek additional debt financing. The Company
has recently incurred significant short-term debt, often at high interest rates.
No assurance can be given that such short-term financing will continue to be
20
available to the Company on any terms or that the Company will be able to obtain
long-term financing to retire its existing short-term and other debt when due.
In addition, the significant number of shares of common stock issuable upon
exercise of the Company's outstanding options and warrants and upon the
conversion of the Company's outstanding preferred stock and convertible notes,
in many instances at low exercise or conversion prices, the Company's present
inability to become listed on a national securities exchange or Nasdaq, and the
low trading volume for the Company's shares on the over-the-counter markets in
which the shares trade, may impair the Company's ability to raise needed capital
by depressing the price at which the Company can sell its common stock.
Results of Operations
Since January 2000, the Company has acquired the operations of 20
businesses, including, effective as of January 25, 2001, Aviation Group.
Accordingly, a comparison of the results of operations for the three and six
month periods ended March 31, 2001 with the same periods in 2000 is not, in the
opinion of management, meaningful.
Comparison of the Three Month Periods Ended March 31, 2001 and 2000
The Company experienced a pre-tax operating loss from continuing
operations of $11.3 million for the three months ended March 31, 2001 compared
to a pre-tax operating loss from continuing operations of $4.1 million for the
three month period ended March 31, 2000. This $7.2 million increase in operating
losses was the result of the following cash and non-cash expenses and
adjustments (in thousands):
Improvement in Travel segment gross profit margins $ 818
Increase in non-cash goodwill amortization (2,654)
Increase in administrative costs from new acquisitions
Travel $ (934)
Technology (1,130)
Corporate (including one-time merger expenses) (2,008) (4,072)
------
Interest Expense (634)
Other (680)
-----
$( 7,222)
During the three months ended March 31, 2001, management continued to
integrate its existing and new travel and technology acquisitions into a
combined fully operational business model, while reducing duplicative and
excessive costs relating to its subsidiaries' operating as historically
independent entities. Annualized reductions in such overhead costs of
approximately $4.1 million were eliminated, as evidenced by the improvement in
operating loss levels for the three month period ended March 31, 2001 compared
to the three month period ended December 31, 2000. Additional reductions and
expense consolidation activities are expected to continue during the remainder
of the 2001 fiscal year.
Comparison of the Six Month Periods Ended March 31, 2001 and 2000
The Company experienced a pre-tax operating loss from continuing
operations of $31.3 million for the six months ended March 31, 2001 compared to
a pre-tax operating loss from continuing operations of $7.5 million for the six
month period ended March 31, 2000. This $23.8 million increase in operating
losses was the result of the following cash and non-cash expenses and
adjustments (in thousands):
Improvement in Travel segment gross profit margins $1,591
One-time non-cash write-down of investment in subsidiaries
Travel $(4,302)
Technology (7,810) (12,112)
---------
Increase in non-cash goodwill amortization (4,444)
Increase in administrative costs from new acquisitions
Travel $(1,866)
Technology (2,016)
21
Corporate (including one-time merger expenses) (3,579) (7,461)
------
Interest Expense (877)
Other (529)
-----
$(23,832)
During the six months ended March 31, 2001, management continued to
integrate its existing and new travel and technology acquisitions into a
combined fully operational business model, while reducing duplicative and
excessive costs relating to its subsidiaries' operating as historically
independent entities. Annualized reductions in such overhead costs of
approximately $4.1 million were eliminated, as evidenced by the improvement in
operating loss levels for the three month period ended March 31, 2001 compared
to the three month period ended December 31, 2000. Additional reductions and
expense consolidation activities are expected to continue during the remainder
of the 2001 fiscal year.
Financial Condition and Liquidity
The Company incurred a net loss before write-off and amortization of
goodwill of approximately $18.1 million during the six months ended March 31,
2001, had an accumulated deficit of approximately $190.4 million and a working
capital deficiency of approximately $39.4 million at the end of the period.
During the six month period, the Company used cash of approximately $11.3
million to fund operations.
The Company has incurred significant losses associated with the
acquisition and integration of its various travel and technology acquisitions
into a single fully operational business model. The Company has also incurred
significant operating losses associated with its Travel segment, principally
related to the operations of its Global Leisure subsidiary. The Company has
taken steps to reduce the operating costs associated with these operations and
intends to take all other appropriate actions, including the potential
disposition of assets, to seek to eliminate these losses. During the six month
period, the Company also made significant investments in technology development
and infrastructure, principally in bringing online its SiteRabbit.com internet
accessible travel reservations system. This system was launched in February
2001.
Management estimates that its existing credit facilities are presently
insufficient to maintain operations and repay obligations due or coming due in
the coming year. Since January 1, 2001, the Company has negotiated extensions of
various short-term debt agreements and has incurred substantial short-term
indebtedness to assist the Company in meeting its ongoing cashflow requirements.
However, most of this indebtedness is due on or prior to December 31, 2001.
Substantially all of the Company's assets are provided as security for its
various debt financings. See notes 6 and 12 to the Company's consolidated
financial statements.
In May 2001, the Company received a commitment from a Midwest based
lending source for a credit facility providing for borrowing availability of up
to $23.0 million based on eligible collateral. The commitment is subject to
negotiation of final documentation, completion of due diligence and other
customary conditions. The Company anticipates that, if these conditions are
satisfied, the loan agreements will be finalized prior to June 30, 2001. No
assurance can, however, be given that these conditions will be satisfied or that
the facility will be funded. If the facility is funded, the Company intends to
use the proceeds to retire short-term debt and to fund working capital and other
obligations.
In addition to seeking to improve its operating performance and
attracting additional capital, the Company is additionally pursuing the sale of
its non-travel operating subsidiaries relating to the former Aviation Group
aviation service activities. These sales, if completed during the 2001 fiscal
year, are expected to generate reductions in negative working capital exceeding
$3.5 million. No assurance can be given that the Company will be successful in
completing such sales in a timely manner and on favorable terms.
22
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
Apollo Galileo USA Partnership has filed suit against the Company in
the United States District Court for the Northern District of Illinois alleging
breach of a contract between plaintiff and the Company's Global Leisure
subsidiary. Prior to commencement of the suit, the plaintiff made demand for
payment of sums in excess of $5.6 million. The Company disputes liability
because it was not a party to the contract. The Company intends to vigorously
defend against this suit.
Item 2. Changes in Securities and Use of Proceeds.
On January 25, 2001, the Company completed the statutory Arrangement in
accordance with Ontario, Canada law, pursuant to which travelbyus.com was
acquired by Travelbyus Canada Holdings Ltd., formerly known as Aviation Group
Canada Limited, a Canadian subsidiary of Aviation Group. In connection with the
consummation of the Arrangement, on January 24, 2001, Aviation Group also
changed its name to travelbyus, Inc., effected a one-for-five reverse split of
its common stock and increased its authorized number of shares of common stock
from 10,000,000 to 250,000,000. As a result, every five shares of common stock
that were outstanding were combined into one new share of common stock. No
change in the $.01 par value per share resulted from the reverse split. Aviation
Group's pre-existing shareholders retained beneficial ownership of approximately
5% of the combined entity.
As part of the Arrangement, the outstanding common shares of
travelbyus.com were converted into exchangeable shares of travelbyus.com on a
one-for-one basis. Under the terms of the exchangeable shares and related
agreements, every five exchangeable shares are exchangeable, at the holder's
election, into one share of the Company's common stock. Any remaining
exchangeable shares not previously exchanged will automatically be exchanged
into the Company's common stock on January 1, 2003, or earlier upon the
occurrence of certain events. Each share of common stock of the Company that was
outstanding prior to the Arrangement remains outstanding and unchanged by the
Arrangement, except that every five shares now represents one share in
accordance with the reverse split.
Pursuant to the Company's agreements with travelbyus.com and Montreal
Trust Company of Canada, as trustee for the exchangeable shareholders, holders
of exchangeable shares are entitled to receive, subject to applicable law,
dividends equivalent to all dividends paid on the Company's common stock and are
also entitled to participate in any liquidation of the Company through an
automatic exchange right. The Company has issued a special voting share to the
trustee for the exchangeable shareholders. The special voting share has a number
of votes equal to the number of outstanding exchangeable shares divided by five.
These votes may be cast at any meeting at which the Company's shareholders are
entitled to vote. An exchangeable shareholder may instruct the trustee how to
vote the special voting share with respect to the exchangeable shares held by
that holder.
Set forth below is a description of various unregistered securities
issued by the Company since January 1, 2001. In each instance, these securities
were issued by the Company in reliance upon the exemption afforded by Section
4(2) of the Securities Act of 1933 and/or the rules and regulations promulgated
thereunder. These securities were issued in privately negotiated transactions to
persons reasonably believed by the Company to be "accredited investors" (as such
term is defined under Rule 501(a) of Regulation D) and/or to be sophisticated
and knowledgeable investors possessing sufficient information about the Company.
In April 2000, the Company sold a total of 425,000 shares of its common
stock to an investor in a private placement at a per share price of $0.38. The
investor paid an aggregate purchase price of $161,500 for these shares.
In April and May 2001, the Company issued convertible notes due
December 31, 2001 in the original principal amount of $8.3 million. These
notes are convertible into common stock of the Company at a conversion price of
$2.00 per share.
From January 2001 to May 2001, the Company issued promissory notes to
various lenders. In certain instances, as additional consideration to the
lenders for agreeing to make or extend the maturity dates of loans to the
23
Company, the Company has issued warrants to purchase shares of its common stock
to such lenders for terms ranging from three to five years from the issuance or
registration of the underlying shares. These warrants are exercisable at per
share prices of $0.50 (2,225,000 shares); $0.625 (600,000 shares); $1.00
(450,000 shares); and $2.00 (340,000 shares). One lender exercised its warrants
to purchase 200,000 shares of the Company's common stock, at a price of $1.00
per share, in March 2001. The Company has also issued warrants to lenders to
purchase 2,170,090 shares of common stock at an exercise price of $1.00 per
share, which are exercisable only upon conversion of the Company's convertible
bridge notes under which these warrants were issued. These warrants are
exercisable for a term ending 60 days after the registration of the underlying
shares.
In exchange for various services, primarily marketing, investor
relations, investment banking, financial and e-commerce consulting services,
from January 2001 to May 2001, the Company issued warrants to vendors to
purchase a total of 3,220,000 shares of common stock at per share exercise
prices of $0.50 (2,450,000 shares); $0.625 (250,000 shares); $2.00 (20,000
shares); $4.00 (150,000 shares); $5.00 (125,000 shares); $6.00 (125,000 shares);
and $7.00 (100,000 shares). The term of these warrants ranges from two to three
years after their issuance.
In April 2001, the Company issued warrants to purchase 600,000 shares
of its common stock to former principals of Epoch Technology, Inc., as an
agreed-upon adjustment of the price paid by the Company in May 2000 for the
interests of the principals of Epoch Technology. These warrants are exercisable
at $0.75 per share and expire three years after their issuance.
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
Not applicable
Item 5. Other Information.
In May 2001, the Company received a commitment from a Midwest based
lending source for a credit facility providing for borrowing availability of up
to $23 million based on eligible collateral. The commitment is subject to
negotiation of final documentation, completion of due diligence and other
customary conditions. The Company anticipates that, if these conditions are
satisfied, the loan agreements will be finalized prior to June 30, 2001. No
assurance can, however, be given that these conditions will be satisfied or that
the facility will be funded. If the facility is funded, the Company intends to
use the proceeds to retire short-term debt and to fund working capital and other
obligations.
Effective April 20, 2001, the Company engaged Steven Antebi as a
consultant to advise it as to financial and strategic planning matters. In
accordance with the terms of the consulting agreement entered into between the
Company and Mr. Antebi, the Company issued 2,200,000 shares of its common stock
to him on May 18, 2001, subject to increase by up to 2,000,000 additional shares
in the event of specified dilutive events. These shares were issued and
registered under a registration statement on Form S-8 in May 2001.
As reported in the Company's current report on Form 8-K filed April 23,
2001, PricewaterhouseCoopers LLP ("PWC") resigned as the Company's independent
accountants on April 17, 2001. PWC had served as the independent accountants for
travelbyus.com, which, under the terms of the Arrangement, was the accounting
acquirer of Aviation Group. Aviation Group's independent accountants, Hein +
Associates LLP ("Hein"), had ceased serving as Aviation Group's independent
accountants following the completion of the Arrangement. Hein subsequently
notified the Company that it had ceased serving in this role. The Company is
currently interviewing accounting firms to replace PWC and expects to make a
decision in the near future. The consolidated financial statements in this
Report have not been reviewed by an independent accounting firm.
Effective April 10, 2001, the Company's publicly-traded securities were
delisted from The Nasdaq Stock Market due to the inability of the Company to
24
satisfy the initial listing criteria, including maintenance of a $4.00 bid price
for the specified period. In the United States, the Company's publicly-traded
common stock and warrants continue to trade on the OTC Bulletin Board under the
trading symbols TRIP and TRIPW, respectively.
See also note 12 of the Company's consolidated financial statements for
a description of certain other recent transactions.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
10.1 Consulting Agreement dated as of April 20, 2001 between the
Company and Steven Antebi.
(b) Reports on Form 8-K.
Since January 1, 2001, the Company has filed the following current
reports on Form 8-K:
On February 8, 2001, the Company filed a current report on Form 8-K
announcing the completion of the Arrangement, the change of the Company's name
to travelbyus, Inc., the effectiveness of a one-for-five reverse split of its
common stock, an increase in the authorized number of shares of common stock to
250,000,000 shares, a change in its fiscal year end from June 30 to September
30, the consummation of a number of financing transactions and warrant
issuances, a letter of intent regarding a financing transaction, and certain
improvements to the Company's website.
On April 13, 2001, the Company filed an amended current report on Form
8-K/A (which amended the February 8, 2001 current report) to include the
financial statements of travelbyus.com for years ended September 30, 2000 and
1999 and the three months ended December 31, 2000 and 1999, and the pro forma
financial statements of the combined company for the year ended September 30,
2000 and the three months ended December 31, 2000.
On April 23, 2001, the Company filed a current report on Form 8-K to
report that PricewaterhouseCoopers LLP had resigned as the Company's independent
accountants.
On May 2, 2001, the Company filed a current report on Form 8-K to
report the Company's acquisition of an interest in AVR, as more fully described
in note 12 to the consolidated financial statements.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
TRAVELBYUS, INC.
By: /s/ William Kerby
---------------------------
William Kerby
Chief Executive Officer
By: /s/ Gregory Miller
--------------------------
Gregory Miller
Chief Financial Officer
Date: May 21, 2001
25
Exhibit 10.1
CONSULTING AGREEMENT
This Consulting Agreement (the "Agreement"), effective as of April 20,
2001 between travelbyus, Inc. (the "Company"), a Texas corporation, and Steven
Antebi (the "Consultant").
In consideration of and for the mutual promises and covenants contained
herein, and for other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:
1. Purpose. The Company hereby engages Consultant as an independent consultant
(and not as an agent, employee, partner or joint venturer) during the term
specified hereinafter to render consulting advice to the Company upon the terms
and conditions as set forth herein.
2. Term. This Agreement commenced effective as of April 20, 2001 through a
period ending on July 19, 2001 (the "Term"), provided that the Company may
terminate this Agreement at any time for any reason upon 30 days' prior written
notice to the Consultant; provided further that the provisions of Sections 4 and
11-17 inclusive will survive termination of this Agreement.
3. Duties of Consultant.
(a) During the Term, Consultant will provide the Company with such
consulting advice as is reasonably requested by the Company with respect to
financial planning and the development of a business plan as is reasonably
requested by the Company. In performance of these duties, Consultant will
provide the Company with the benefits of its reasonable judgment and efforts.
Consultant's duties will include, but will not necessarily be limited to the
following:
(i) Advice concerning strategic issues, including alliance
partnerships and joint ventures;
(ii) Advice regarding the implementation of the Company's goals
and plans; and
(iii) Advice regarding the existing and possible alternative
financial structures for the
Company;
(iv) Advice concerning short and long range financial planning;
(v) Advice regarding the formulation of business and financing
goals and plans;
(vi) Use of Consultant's reasonable best endeavors to comply with
all reasonable requests of the Company in relation to the
performance of the duties of the Consultant hereunder.
(b) In connection with rendering its advice hereunder, Consultant and
its employees and agents will be given reasonable access to the
Company's officers, premises and records.
(c) The Company acknowledges that Consultant's advice pursuant hereto
does not and will not constitute any guarantee or other assurance as to
the ability of the Company to accomplish whether in whole or in part
any specific goals or plans of the Company.
(d) The Company acknowledges that Consultant retains the right to
provide consulting advice to other parties. Nothing herein contained
will be construed to limit or restrict Consultant in conducting such
business with respect to others, or in rendering advice to others or
conducting any other business. During the Term the Consultant will not,
however, provide consulting advice in favor of any other parties
engaged in the same business as the Company without prior written
consent of the Company, other than to affiliates of the Company.
4. Compensation. In consideration for Consultant agreeing to provide and
providing the consulting services to be rendered pursuant to this Agreement, the
Company agrees to pay Consultant $500,000 by tendering to
Consultant 2,200,000 shares of common stock of the Company, subject to
adjustment as hereinafter provided (the "Shares"). The Shares will be issued to
Consultant upon execution of this Agreement. The Shares will be promptly
registered for resale under the Securities Act of 1933, as amended on Form S-8,
but in no event later than two weeks following the date hereof. If, at any time
from the date hereof through and including October 20, 2001, the Company shall
issue any additional shares of its common stock by reason of any warrantholder's
exercise of any warrants or any preferred shareholder's conversion of any shares
of convertible preferred stock, whether such warrants or shares of convertible
preferred stock have previously been or are hereafter issued by the Company
("Dilutive Shares"), then the Consultant shall receive from the Company such
number of additional shares of common stock of the Company ("Additional Shares")
as would be required to maintain his existing ownership percentage in the
Company, determined in accordance with the following equation (except that in no
event shall more than 2,000,000 Additional Shares be issued to Consultant):
S = S + X
N N +D
Where:
S = the 2,200,000 Shares issuable to Consultant upon the
execution of this Agreement.
N = all of the issued and outstanding shares of common stock
of the Company as of the close of business on April 20, 2001
(including the 2,200,000 Shares issuable to Consultant upon
the execution of this Agreement).
X = the Additional Shares.
D = the Dilutive Shares.
5. Expenses. The Company will pay or promptly reimburse Consultant for the
out-of-pocket expenses, including expenses for travel, lodging, and meals, which
(a) are incurred by Consultant in connection with the performance of services
under this Agreement, (b) the Company either (i) authorizes in advance and
confirms in writing or (ii) subsequently determines, in its sole discretion, to
be reasonable under the circumstances, (c) are identified in an invoice
submitted to the Company, and (d) are supported by receipts for individual
expense items of Twenty-Five Dollars ($25) or more.
6. Proprietary Information. Consultant agrees that, except as appropriate to
carry out its duties under this Agreement or as required by law (in the opinion
of Consultant's counsel), it will not use or disclose, without the Company's
prior consent, any information furnished or disclosed (whether before or after
the date hereof) to Consultant by the Company or its employees, agents or
representatives, including without limitation any of the Company's trade secrets
or other proprietary information or information concerning the Company's current
and any future proposed operations, services or products; provided that
Consultant's obligations of nonuse and nondisclosure under this provision will
not be deemed to restrict the use and/or disclosure of information that (a) is
or becomes publicly known or within the public domain without a breach of this
agreement, (b) Consultant can establish was known to it prior to its receipt
thereof, or (c) has been or is subsequently disclosed to Consultant by a third
person who is not under an obligation of confidence to the Company or any of its
affiliates.
7. Representations and Warranties of the Company. The Company represents and
warrants to Consultant as follows:
(a) The Company is a corporation duly incorporated, validly existing,
and in good standing under the laws of the State of Texas and has all
corporate power and authority, and all corporate authorizations,
necessary to enable it to enter into this Agreement and carry out the
transactions that are the subject of this Agreement.
(b) This Agreement is a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms.
(c) When issued and registered as provided in this Agreement, the
Shares will be duly and validly issued, fully paid and nonassessable,
free and clear of any liens or encumbrances, and will be free of
restrictions on transfer except for such restrictions, if any, as may
be imposed under applicable securities laws.
(d) When issued as provided in this Agreement, the Shares will have
been registered with the Securities and Exchange Commission and
qualified in the State of Texas under the Texas Corporate Securities
Laws of 1968, as amended, or exempt from such qualification.
8. Representations and Warranties of the Company. The Consultant represents and
warrants to the Company that this Agreement is a valid and binding agreement of
the Consultant, enforceable against the Consultant in accordance with its terms.
9. Assignment. This Agreement and the rights hereunder may not be assigned by
either party (except by operation of law) without prior written consent of the
other party, but, subject to the foregoing limitation, this Agreement will be
binding upon and inure to the benefit of the respective successors, assigns and
legal representatives of the parties.
10. Notices and Other Communications. Any notice or other communication required
or permitted to be given under this Agreement must be in writing and will be
deemed effective when delivered in person or transmitted by a facsimile process
(with a prompt written confirmation) or, if outside the hours of 9:00 a.m. to
5:00 p.m. on any business day in the jurisdiction of the addressee, will be
deemed to be given at 9:00 a.m. on the next business day, or on the third
business day after the day on which mailed from within the United States of
America, to the following addresses (or to any other address subsequently
specified by the person to whom the notice or other communication is sent):
If to the Consultant:
Steven Antebi
c/o Fontenelle LLC
345 North Maple Drive, Suite 358
Beverly Hills, Colorado 90210
Facsimile Number: (310) 476-1338
If to the Company:
travelbyus, Inc.
700 North Pearl Street
Suite 2170
Dallas, Texas 7250
Attention: William Kerby
Facsimile Number: (604) 541-2450
With a copy (not constituting notice) to:
David G. Edwards
Derpken Keevican & Weiss
USX Tower, 58th Floor
600 Grant Street
Pittsburg, PA 15219
Facsimile Number: (412) 355-2609
For the purposes of this Agreement, "business day" will refer to a day in which
trading banks are open for business.
11. Captions. The headings of the sections of this Agreement are intended solely
for convenience of reference and are not intended and will not be deemed for any
purpose whatever to modify or explain or place any construction upon any of the
provisions of this Agreement.
12. Attorneys' Fees. In the event any party hereto will institute an action to
enforce any rights hereunder, the prevailing party in such action will be
entitled, in addition to any other relief granted, to reasonable attorneys' fees
and costs.
13. Entire Agreement. This Agreement, constitutes the entire agreement between
the parties hereto pertaining to the consulting relationship of the parties and
supersede all prior and contemporaneous agreements and understandings of the
parties, and there are no representations, warranties or other agreements
between the parties in connection with the subject matter hereof except as
specifically set forth herein. No supplement, modification, amendment, waiver or
termination of this Agreement will be binding unless executed in writing by the
parties hereto. No waiver of any of the provisions of this Agreement will be
deemed or will constitute a waiver of any provision hereof (whether or not
similar), nor will waiver constitute a continuing waiver.
14. Indemnification by the Company and the Consultant.
(a) Consultant hereby agrees to indemnify and save the Company and hold
the Company harmless in respect of all causes of actions, liabilities,
costs, charges and expenses, loss and damage (including consequential
loss) suffered or incurred by the Company (including legal fees)
arising from any negligent act or omission of the Consultant or its
employees, servants and agents and /or arising from any material breach
by Consultant or any of its employees, servants and agents of any of
the terms and conditions imposed on the Consultant pursuant to this
Agreement.
(b) The Company hereby agrees to indemnify and save Consultant and hold
Consultant harmless in respect of all causes of actions, liabilities,
costs, charges and expenses, loss and damage (including consequential
loss) suffered or incurred by the Consultant (including legal fees)
arising from any willful or grossly negligent act or omission of the
Company or its employees, servants and agents and/or arising from
material breach by the Company or any of its employees, servants and
agents of any of the terms and conditions imposed on the Company
pursuant to this Agreement.
(c) No party will be liable to any other party hereunder for any claim
covered by insurance, except to the extent that the liability of such
party exceeds the amount of such insurance coverage. Nothing in this
clause (c) will be construed to reduce insurance coverage to which any
party may otherwise be entitled.
15. Severability. If any provision or portion of a provision of this Agreement
is held to be invalid, illegal or unenforceable under applicable law, that
provision or portion will be excluded from this Agreement, but only to the
extent of such prohibition or unenforceability, and the balance of the Agreement
will be interpreted as if that provision or portion were so excluded, and will
be enforceable in accordance with its terms.
16. Governing Law. This Agreement will be governed by, and construed under, the
laws of the State of California entered into and to be performed entirely within
California. Venue for any actions hall be in the appropriate state or federal
court within Los Angeles County.
17. Counterparts. This Agreement may be executed in counterparts. All of such
counterparts will constitute one and the same agreement. The Company and
Consultant agree that facsimile signatures of this Agreement will be deemed a
valid and binding execution of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
this day and year first above written.
Company: travelbyus, Inc.
a Texas corporation
By: /s/ William Kerby
------------------
Name: William Kerby
Title:
Consultant:
/s/ Steven Antebi
-------------------
Steven Antebi