<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ________________ to ______________
Commission file number: 33-11059-A
TELESERVICES INTERNATIONAL GROUP INC.
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in it charter)
FLORIDA 59-2773602
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
100 SECOND AVENUE SOUTH, SUITE 1000, ST. PETERSBURG, FLORIDA 33701
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(813) 895-4410
--------------------------------------------------
(issuer's telephone number)
VISITORS SERVICES INTERNATIONAL CORP.
- --------------------------------------------------------------------------------
(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 Exchange Act during the past 12 months (or such shorter
period that the issuer 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 ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the issuer filed all documents and reports required to be filed
by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ ] 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: AS OF MAY 1, 1997, OF THE
ISSUER'S COMMON STOCK, $.0001 PAR VALUE, THERE WERE 24,350,134 SHARES
OUTSTANDING.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
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TELESERVICES INTERNATIONAL GROUP INC.
INDEX
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION Page
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets
September 30, 1996 and
March 31, 1997 (Unaudited) 3
Unaudited Consolidated Statements of Operations
Three Months and Six Months ended
March 31, 1997 and
March 31, 1996 and
Audited September 30, 1996 4
Unaudited Consolidated Statements of Cash Flows
Six Months ended
March 31, 1997 and
March 31, 1996 and
Audited September 30, 1996 5
Notes to Financial Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
PART II. OTHER INFORMATION 9-11
SIGNATURE PAGE 12
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TELESERVICES INTERNATIONAL GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
MAR. 31, 1997 SEPT. 30, 1996
------------ ------------
(Audited)
<S> <C> <C>
ASSETS
Current assets:
Cash $ 69,539 $ 51,546
Cash, restricted 150,000 150,000
Accounts receivable, net of allowance
for doubtful accounts 303,176 266,494
Other Current Assets 109,678 89,122
------------ ------------
Total current assets 632,393 557,162
Investment in related party 341,223 357,052
Equipment, net of accumulated depreciation 1,422,495 1,219,592
Goodwill 1,533,766 --
Other assets 10,920 27,155
------------ ------------
Total assets $ 3,940,797 $ 2,160,961
------------ ============
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses 2,200,890 $ 1,154,272
Loans payable, stockholders 2,042,611 412,659
Accrued interest payable, stockholders 131,432 69,639
Accrued payroll and taxes 368,615 123,718
Unearned revenue 13,321 --
Unearned franchise fee 225,000 --
Capital leases payable, current portion 59,053 55,934
Notes payable, current portion 223,909 147,202
------------ ------------
Total current liabilities 5,264,831 1,963,424
Notes payable, net of current portion 247,447 324,730
Capital leases payable, net of current portion 38,135 56,886
------------ ------------
Total liabilities 5,550,413 2,345,040
------------ ------------
Stockholders' (deficit):
Preferred stock, $.001 par value
None issued and outstanding -- --
Common stock, $.0001 par value 2,433 1,597
Additional paid-in capital 8,943,477 5,676,066
Accumulated (deficit) (10,555,526) (5,861,742)
------------ ------------
Total stockholders' (deficit) (1,609,616) (184,079)
------------ ------------
Total liabilities and stockholders' (deficit) $ 3,940,797 $ 2,160,961
============ ============
</TABLE>
See accompanying notes
3
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TELESERVICES INTERNATIONAL GROUP INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
three and six months ended March 31, 1997 and 1996
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, SIX MONTHS ENDED MARCH 31, TWELVE MONTHS ENDED
1997 1996 1997 1996 SEPT. 30, 1996
------------ ------------ ------------ ------------ (AUDITED)
-------------------
<S> <C> <C> <C> <C> <C>
Total Revenues $ 591,871 $ 172,023 $ 848,605 $ 256,708 $ 791,949
------------ ------------ ------------ ------------ ------------
Operating Expenses:
Salaries and payroll taxes 1,401,074 557,995 2,201,750 905,803 2,227,669
Contract services 476,009 12,944 645,647 52,286 435,111
Rent 137,890 43,539 203,253 80,024 145,040
Telephone 304,885 162,149 546,080 213,968 534,757
Travel and entertainment 304,341 79,655 613,959 139,982 330,752
Advertising and promotion 336,246 37,313 572,432 46,402 87,023
Depreciation 186,303 83,930 259,821 132,541 192,836
Amortization 47,719 -- 47,719 -- --
Other expenses $ 354,884 $ 123,779 $ 683,199 $ 208,716 $ 611,906
------------ ------------ ------------ ------------ ------------
Total operating expenses 3,549,351 1,101,304 $ 5,773,860 $ 1,779,722 $ 4,565,094
------------ ------------ ------------ ------------ ------------
Net (loss) from operations (2,957,480) (929,281) (4,925,255) (1,523,014) (3,773,145)
Other income (expenses):
Gain on sale of securities -- -- 74,171 -- --
Interest income 3,978 1,147 11,865 4,033 7,796
Interest (expense) (71,238) (24,000) (94,136) (44,567) (93,768)
------------ ------------ ------------ ------------ ------------
Net (loss) $ (3,024,740) $ (952,134) $ (4,933,355) $ (1,563,548) $ (3,859,117)
============ ============ ============ ============ ============
Net (loss) per share: $ (.13) $ (.06) $ (.25) $ (.10) $ (.22)
============ ============ ============ ============ ============
Weighted Average Shares
Outstanding 22,912,531 14,893,100 20,048,755 14,852,275 17,673,901
============ ============ ============ ============ ============
</TABLE>
See accompanying notes.
4
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TELESERVICES INTERNATIONAL GROUP INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
for the six months ended March 31, 1997 and 1996
<TABLE>
<CAPTION>
SIX MONTHS ENDED MARCH 31, TWELVE MONTHS ENDED
Cash flows from operating activities: 1997 1996 SEPTEMBER 30, 1996 (AUDITED)
----------- ----------- ----------------------------
<S> <C> <C> <C>
Net (loss) $(4,933,355) $(1,563,549) $(3,859,117)
Adjustments to reconcile net (loss) to
net cash (used in) operating activities:
Decrease in accounts receivable 44,168 (62,892) (179,392)
Depreciation expense 259,821 132,541 192,836
Amortization 47,719
Increase (decrease) in accounts payable
and accrued expenses 498,377 267,526 992,856
Increase in accrued payroll and taxes 244,897 122,285 93,685
Increase in accrued interest to stockholder 61,793 20,000 69,639
Stock issued for services 116,250 -- 78,000
Other (43,023) (4,308) (111,032)
----------- ----------- -----------
Net cash (used in) operating activities (3,658,645) (1,088,397) (2,722,525)
-----------
Cash flows from investing activities:
(Acquisition) of equipment (228,716) (291,139) (885,619)
(Acquisition) of new business (572,737) -- --
----------- ----------- -----------
Net cash (used in) investing activities (801,453) (291,139) (885,619)
----------- ----------- -----------
Cash flows from financing activities:
Cash proceeds from loans from stockholders 1,462,010 976,364 (48,915)
Issuance of common stock 3,151,997 122,475 3,277,373
Proceeds from (repayment of) leases payable (15,632) (23,396) (46,624)
Proceeds from notes payable -- -- 485,196
Repayment of notes payable (75,576) -- (13,264)
----------- ----------- -----------
Net cash provided by financing activities 4,522,799 1,075,443 3,653,766
----------- ----------- -----------
Increase (decrease) in cash 17,993 (304,093) 45,622
Cash, beginning of period 51,546 155,744 155,744
----------- ----------- -----------
Cash, end of period $ 69,539 $ (148,349) $ 201,366
=========== =========== ===========
Interest paid $ 71,238 $ 24,000 $ 21,066
=========== =========== ===========
Income taxes paid $ -- $ -- $ --
=========== =========== ===========
</TABLE>
See accompanying notes.
5
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TELESERVICES INTERNATIONAL GROUP INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
March 31, 1997
(Unaudited)
NOTE A
The accompanying consolidated financial statements include the
accounts of TeleServices International Group Inc. ("TSIG") and its
subsidiaries, Visitors Services International Corp. (wholly owned since
September 26, 1996), American International Travel Agency, Inc. (wholly owned
since December 6, 1996), and GuaranTee Time, Inc. (wholly owned since February
24, 1997). The consolidated group of companies are collectively referred to
herein as "TSIG." All significant inter-company accounts and transactions have
been eliminated.
TSIG was incorporated in Florida on October 1, 1986, for the purpose
of seeking potential business opportunities through the acquisition of an
existing business. Prior to the acquisition, TSIG was a shell company with no
material assets, liabilities or operations.
Visitors Services International Corp. ("VSI") was incorporated in
November, 1992 under the laws of the State of Florida and commenced operations
in June 1993 to provide automated reservations and information services
specifically designed to support the special needs of convention and visitors
bureaus and other organizations.
American International Travel Agency, Inc. ("AIT") was incorporated in
1977 in the State of Florida to provide retail leisure travel services, but has
expanded its customer base to include commercial travel services. On December
6, 1996, TSIG consummated the acquisition of all the capital stock of AIT in
exchange for 31,579 shares of common stock in Phoenix. The acquisition was
accounted for under the purchase method. Results of operations were immaterial
for the period December 6, 1996 through December 31, 1996.
GuaranTee Time, Inc. ("GTT") was incorporated in 1995 in the State of
Wisconsin to provide automated tee-time scheduling for daily-fee golf courses
and their customers and commenced operations in March 1996 with their first
local network of nine participating golf courses in Milwaukee, Wisconsin.
NOTE B
The accompanying financial statements have been prepared by the
Registrant without audit and are the responsibility of TSIG's management. The
financial information reflects all normal recurring adjustments which, in the
opinion of management, are deemed necessary for a fair presentation of the
results for the interim periods. The results for the interim periods are not
necessarily indicative of the results to be expected for the year.
The accompanying financial statements have been prepared on the basis
of accounting principles applicable to a going concern. Accordingly, these
financial statements do not include adjustments, if any, which might be
necessary should TSIG be unable to continue as a going concern.
NOTE C
The attached summarized financial information does not include all
disclosures required to be included in a complete set of financial statements
prepared in conformity with generally accepted
6
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accounting principles. Reference is made to the Form 10-KSB, for the fiscal
year ended September 30, 1996 and consolidated financial statements of TSIG at
September 30, 1996, included in its annual report on Form 10-KSB for such
disclosures. Such Form 10-KSB, including without limitation financial
statements, should be read in conjunction with the data herein.
NOTE D
Loss per common share is computed by dividing the net loss by the
weighted average number of common shares outstanding during the year.
NOTE E
During December, 1996, TSIG, through VSI, acquired certain assets,
assumed certain liabilities and acquired the operating business of Global
Reservation Systems, Inc. ("GRS"), a Colorado corporation. GRS was in a
business similar to VSI. As a part of the GRS business combination, TSIG agreed
to issue up to 135,000 shares of TSIG common stock over a three year period
contingent upon the acquired business achieving certain predetermined net
income amounts and also achieving certain percentages of net income as a
percent of revenue. The accompanying financial statements do not include the
effect of the issuance of these shares due to these contingencies, the outcome
of which cannot presently be determined.
During January, 1997, TSIG, through VSI, acquired and took possession
of all the assets of International Reservation Services, Limited ("IRSL") and
intends to utilize all such assets to operate the former business of IRSL as
the business of VSI. VSI acquired these assets from IRSL as a result of a
bankruptcy proceeding of IRSL. IRSL filed a voluntary petition for relief under
Chapter 11 of Title 11, USC, in the United States Bankruptcy Court District of
Connecticut, case number 96-51396, on August 21, 1996. VSI was granted first
priority lien on IRSL's assets, by replacing U.S. Transportation Systems, Inc.
("USTS") as senior lender to IRSL, when VSI paid to USTS the amount of
$388,737.25, on January 20, 1997. Pursuant to Section 9-505 of the Uniform
Commercial Code, VSI took possession and title to all of IRSL's assets, free
and clear of liens, claims and encumbrances on January 21, 1997 in accordance
with the Court's Order dated January 17, 1997, which Order permitted VSI to act
as a "Replacement Lender" in the bankruptcy proceeding by paying the debts owed
by IRSL to USTS and thereby succeeding to all right, title, and interest of
USTS in and to any and all claims against IRSL and any and all collateral
securing such claims and succeeding to all the rights of USTS, including the
right to take immediate possession of all assets. VSI also paid $184,000 to the
Connecticut Department of Development ("DED") on January 20, 1997, to remove
the DED's secured claim lien on IRSL assets.
7
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
In December 1996, the Registrant acquired American International
Travel Agency, Inc. (AIT). In February 1997, the Registrant acquired GuaranTEE
Time, Inc. (GTT). In December 1996, Visitors Services International Corp.
(VSI), a subsidiary of the Registrant, acquired the assets of Global
Reservation Systems, Inc. (GRS). In January 1997, VSI acquired all the assets
of International Reservation Services, Limited (IRSL). The financial statements
have been prepared on an historical cost, consolidated basis to reflect these
acquisitions; the statements include all adjustments which in the opinion of
management are necessary in order to make the financial statements not
misleading.
For the six months ended March 31, 1997, the Registrant had revenues
of $848,605, compared to revenues of $256,708 for the six months ended March
31, 1996. This increase in revenues was due to increases in the number of calls
received by the Registrant, which is primarily the result of the acquisition of
AIT, GRS, and IRSL, as well as some increases from existing and new customers
of VSI.
Operating expenses for the six months ended March 31, 1997 were
$5,773,860, compared to operating expenses of $1,779,722 during the six months
ended March 31, 1996. These increases are the result of absorbing the operating
spending of the acquisitions noted, as well as increased spending as a result
of increased direct costs associated with the increased volumes noted above;
expansion of the Registrant's call center operations in St. Petersburg; MIS
(primarily related to the development and implementation of a new reservation
system); Sales and Marketing (primarily sponsorship fees and increases in
personnel); and General and Administrative (primarily increases in personnel).
This spending is in support of the Registrant's growth plans, and is expected
to continue at this level for the foreseeable future.
The Registrant sustained a net loss of $4,933,355 for the six months
ended March 31, 1997, compared to a net loss of $1,563,548 for the six months
ended March 31, 1996. This increased loss was the result of increased spending
noted above, partially offset by the increases in revenue. The Registrant
expects these losses to continue for the foreseeable future.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1997, the Registrant had stockholders equity (deficit)
of $(1,609,616), compared with stockholders equity (deficit) of $(1,121,409) at
March 31, 1996. Working Capital decreased from $(2,095,034) at March 31, 1996
to $(4,632,438) as of March 31, 1997. These decreases are the result of the
operating losses noted above, which are expected to continue for the
foreseeable future. The Registrant does not expect that the cash flow necessary
to meet its near term liquidity needs will be available from operations, and
the Registrant will require additional financing to continue operations. There
is no assurance that this financing will be available in the amount required or
available on terms which are satisfactory to the Registrant.
8
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PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings: None
ITEM 2. Changes in Securities:
On April 18, 1997, the Registrant filed Articles of Amendment with the
Secretary of State of Florida, pursuant to Article IV of the Corporation's
Articles of Incorporation, to designate 2,500,000 of the 10,000,000 authorized
shares of $.001 par value Preferred Stock as Series A Convertible Preferred
Stock, in accordance with the "Designation of Rights and Preferences of Series
A Convertible Preferred Stock of TeleServices International Group Inc. dated
March 31, 1997." This designation dated March 31, 1997 was subsequently deleted
from the Articles of Incorporation and replaced with a designation dated April
28, 1997, as described below.
On approximately May 5, 1997, the Registrant deleted the designation
dated March 31, 1997 (described above) from its Articles of Incorporation by a
subsequent amendment to its Articles of Incorporation with the Secretary of
State of Florida, pursuant to Article IV of the Corporation's Articles of
Incorporation, this time designating 3,000,000 of the 10,000,000 authorized
shares of $.001 par value Preferred Stock as Series A Convertible Preferred
Stock, in accordance with a revised designation entitled the "Designation of
Rights and Preferences of Series A Convertible Preferred Stock of TeleServices
International Group Inc. dated April 28, 1997." The designation dated April 28,
1997 supersedes and replaces in its entirety the previous designation dated
March 31, 1997.
As of the date of filing of this Form 10-QSB, no shares of Series A
Convertible Preferred Stock have been issued. The Articles of Amendment to the
Articles of Incorporation that were filed on approximately May 5, 1997 and
included the designation dated March 31, 1997, have no substantive effect; so
to avoid confusion, that amendment has not been included in the Articles of
Incorporation, as amended and as currently in effect, which are being filed in
as an exhibit hereto.
ITEM 3. Defaults Upon Senior Securities: None
ITEM 4. Submissions of Matters to a Vote of Security Holders:
On March 4, 1997, the Registrant, formerly known as Visitors Services
International Corp., filed Articles of Amendment to its Articles of
Incorporation with the Secretary of State of Florida to change its name to
TeleServices International Group Inc. The name change was adopted on March 3,
1997, by resolution of the Board of Directors of the Registrant and the written
consent of the stockholders, in accordance with Section 607.0704, Florida
Statutes, representing a sufficient number of votes necessary to approve the
amendment to the Articles of Incorporation. Under Florida law, stockholders
representing a sufficient number of votes necessary to approve any given matter
requiring stockholder approval may act by written consent without a meeting of
stockholders and without requiring that the matter be submitted to a vote of all
security holders.
ITEM 5. Other Information:
The following information relates to matters that occurred during the
fiscal quarter covered by this Form 10-QSB for the quarter ended March 31,
1997:
Acquisitions of Assets of International Reservation Systems, Limited
The Registrant, through a subsidiary corporation, Visitors Services
International Corp. (formerly Visitors Services, Inc.) ("VSI"), acquired and
took possession of all the assets of International Reservation Services,
Limited ("IRSL") on January 21, 1997, and is utilizing all such assets to
operate the former business of IRSL as the business of VSI. VSI acquired these
assets from IRSL as a result of a bankruptcy proceeding of IRSL.
IRSL filed a voluntary petition for relief under Chapter 11 of Title
11, USC, in the United States Bankruptcy Court - District of Connecticut, case
number 96-51396, on August 21, 1996. VSI was granted first priority lien on
IRSL's assets, by replacing U.S. Transportation Systems, Inc. ("USTS") as
senior lender to IRSL,
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when VSI paid to USTS the amount of $388,737.25, on January 20, 1997. Pursuant
to Section 9-505 of the Uniform Commercial Code, VSI took possession and title
to all of IRSL's assets, free and clear of liens, claims and encumbrances on
January 21, 1997 in accordance with the Court's Order dated January 17, 1997,
which Order permitted VSI to act as a "Replacement Lender" in the bankruptcy
proceeding by paying the debts owed by IRSL to USTS and thereby succeeding to
all right, title, and interest of USTS in and to any and all claims against
IRSL and any and all collateral securing such claims and succeeding to all the
rights of USTS, including the right to take immediate possession of all assets.
VSI also paid $184,000 to the Connecticut Department of Development ("DED") on
January 20, 1997, to remove the DED's secured claim lien on IRSL assets.
The funds paid by the Registrant in this acquisition were loaned to
the Registrant by Robert P. Gordon, who is the Chairman and majority
shareholder of the Registrant.
The assets of IRSL consist primarily of equipment, accounts receivable,
customer contracts and the rights to approximately one hundred "800" telephone
numbers. The Registrant intends to utilize all such assets to operate the former
business of IRSL as the business of VSI. The business, which began in 1992 as a
destination database marketing service company, specializing in the provision of
a centralized nationwide lodging reservation service and other travel related
services. The business acts as a "transparent" service provider appearing to
customers calling on dedicated 800 telephone numbers as the regional tourism
agency, hospitality association, or commercial tourism organization that it has
contracted with to provide the central reservation service for. The business
provides the booking service seven days a week, twenty-four hours a day, and all
reservation requests are responded to with live agents. Revenues from the
business are derived from a 10% booking fee paid by the lodging properties for
completed stays. The business also books airline tickets for travelers making
lodging reservations, as well as auto rentals. The business is currently
providing services for the Connecticut Department of Tourism, the Connecticut
Lodging & Attractions Association, the Florida Division of Tourism, the Florida
Hotel & Motel Association, the Massachusetts Lodging Associations, the New
Hampshire Lodging & Restaurant Association, the State of New Hampshire - Office
of tourism Development, the New Jersey Hotel & Motel Association, the New York
State Division of Tourism, the New York State Hospitality & Tourism Association,
the New York Thruway Authority, the Rhode Island Hospitality Association, the
Vermont Lodging & Restaurant Association, the Tennessee Hotel & Motel
Association, the Wisconsin Innkeepers Association, the Philadelphia Convention &
Visitors Bureau, Westchester Convention & Visitors Bureau, Greater Woodstock
Area Chamber of Commerce, Country Living Magazine, Getaways Magazine, National
Golf Course Owners Association, Airways/Allstar Automobile Rentals, Random
House/Fodor's and Mobil Travel Guides, Poconos Mountains Vacation Bureau, Mystic
Coast & Country, US AMATEUR Sports Association, WORLDTEK, WORLDSPAN and Global
Travel Services.
Acquisition of GuaranTEE Time, Inc.
The Registrant acquired all of the outstanding capital stock of
GuaranTEE Time, Inc. ("GTT") on February 24, 1997, in exchange for restricted
common stock of the Registrant. Initially 100,000 shares of the Registrant were
issued to the selling shareholders of GTT in exchange for their 100% interest
in GTT. Up to an additional 500,000 shares of restricted common stock of the
Registrant may be issued to the selling shareholders of GTT over the next three
years if GTT's net income exceeds certain projections over that period of time.
GTT is now a wholly owned subsidiary of the Registrant. The founders of GTT and
key management personnel agreed to stay on as management of GTT.
GTT was founded in 1995 with the idea of providing automated tee-time
scheduling for daily-fee golf courses and their customers. The strategy was to
provide the courses in a given area with a computerized tee-sheet and then
connect these courses via a local network that would allow golfers to schedule
a tee-time at any participating course by calling one centralized number. In
March 1996, GTT started their first local network with nine participating golf
courses in Milwaukee, Wisconsin. GTT's business plan called for setting up ten
of these local networks (regions) by 1998. In 1996 the company also began
development of a Point of Sale software module to compliment the tee-sheet
software. GTT's business strategy is to offer a nationwide tee-time scheduling
service through combined use of their proprietary tee scheduling software and a
centralized 800 number.
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ITEM 6. Exhibits and Reports on Form 8-K:
(a) Exhibits
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<S> <C>
2.1 Agreement and Plan of Reorganization between
Dynasty Capital Corporation and Visitors Services
International Corp., dated September 26, 1996. (2)
2.2 Asset Purchase Agreement between Visitors Services
International Corp. and Global Reservation Systems,
Inc., dated December 23, 1996. (3)
2.3 Stock Purchase Agreement between Visitors Services
International Corp. and GuaranTEE Time, Inc., dated
February 21, 1997. (4)
3.3 Bylaws as restated October 18, 1996 (5)
3.5 Articles of Incorporation, as amended and currently
in effect. (1)
27 Financial Data Schedule. (1)
</TABLE>
- --------------------------
(1) Filed herewith.
(2) Incorporated by reference to Exhibit 2.1 to the Registrant's Form 8-K
dated and filed on September 30, 1996.
(3) Incorporated by reference to Exhibit 2.2 to the registrant's Form 8-K
dated December 23, 1996, and filed on February 27, 1997.
(4) Incorporated by reference to Exhibit 2.3 to the registrant's Form 8-K
dated February 24, 1997, and filed on March 11, 1997.
(5) Incorporated by referenced to Exhibit 3.3 to the Registrant's Form 8-K
dated October 17, 1996, and filed on October 23, 1996.
(b) Reports on Form 8-K.
The following reports on Form 8-K were filed during the quarter ended
March 31, 1997:
The Registrant filed a Current Report on Form 8-K on February 5, 1997,
date of earliest event: January 21, 1997, reporting the Registrant's
acquisition of all the assets of International Reservation Services, Limited.
The Registrant filed a Current Report on Form 8-K on February 27,
1997, date of earliest event: December 23, 1996, reporting the Registrant's
acquisition of the assets of Global Reservation Systems, Inc.
The Registrant filed a Current Report on Form 8-K on March 11, 1997,
date of earliest event: February 24, 1997, reporting that the Registrant (i)
changed its name from Visitors Services International Corp. to TeleServices
International Group Inc., and (ii) acquired all of the outstanding capital
stock of GuaranTEE Time, Inc.
The Registrant filed a Current Report on Form 8-K/A-1 on April 7,
1997, date of earliest event: January 21, 1997, reporting the Registrant's
filing of an amendment to the Form 8-K providing the required financial
statements of the acquisition of all the assets of International Reservation
Services, Limited.
The Registrant filed a Current Report on Form 8-K/A-1 on May 12,
1997, date of earliest event: February 24, 1997, reporting the Registrant's
filing of an amendment to the Form 8-K providing the required financial
statements of the acquisition of all the outstanding capital stock of GuaranTEE
Time, Inc.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
TELESERVICES INTERNATIONAL GROUP INC.
Dated: May 15, 1997 /s/ Robert P. Gordon
-----------------------------------------
Robert P. Gordon, Chairman and Director
/s/ Raymond P. Wilson
-----------------------------------------
Raymond P. Wilson, Chief Financial Officer
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<S> <C>
2.1 Agreement and Plan of Reorganization between
Dynasty Capital Corporation and Visitors Services
International Corp., dated September 26, 1996. (2)
2.2 Asset Purchase Agreement between Visitors Services
International Corp. and Global Reservation Systems,
Inc., dated December 23, 1996. (3)
2.3 Stock Purchase Agreement between Visitors Services
International Corp. and GuaranTEE Time, Inc., dated
February 21, 1997. (4)
3.3 Bylaws as restated October 18, 1996 (5)
3.5 Articles of Incorporation, as amended and currently
in effect. (1)
27 Financial Data Schedule. (1)
</TABLE>
- --------------------------
(1) Filed herewith.
(2) Incorporated by reference to Exhibit 2.1 to the Registrant's Form 8-K
dated and filed on September 30, 1996.
(3) Incorporated by reference to Exhibit 2.2 to the registrant's Form 8-K
dated December 23, 1996, and filed on February 27, 1997.
(4) Incorporated by reference to Exhibit 2.3 to the registrant's Form 8-K
dated February 24, 1997, and filed on March 11, 1997.
(5) Incorporated by referenced to Exhibit 3.3 to the Registrant's Form 8-K
dated October 17, 1996, and filed on October 23, 1996.
<PAGE> 1
EXHIBIT 3.5
ARTICLES OF INCORPORATION
OF
DYNASTY CAPITAL CORPORATION
The undersigned, for the purpose of forming a corporation under the
Florida General Corporation Act hereby adopts the following Articles of
Incorporation.
ARTICLE I
The name of the corporation shall be DYNASTY CAPITAL CORPORATION.
ARTICLE II
The term of existence is perpetually.
ARTICLE III
The corporation may transact any and all lawful business for which
corporations may be incorporated under the Florida General Corporate Act.
ARTICLE IV
The aggregate number of shares which the corporation has authority to
issue is 100,000,000, all of which shall be common shares with a par value of
$.0001 each.
ARTICLE V
The street address of the initial registered office of the corporation
is 1645 Palm Beach Lakes Blvd., Suite 1200, West Palm Beach, Florida 33401, and
the name of the initial registered agent at such address is Robert C. Hackney.
ARTICLE VII
The name and post office address of the member of the first Board of
Directors is:
Robert C. Hackney 1645 Palm Beach Lakes Blvd., Suite 1200
West Palm Beach, Florida 33401
ARTICLE IX
The corporation shall be deemed to commence its existence upon the
date of filing of these Articles of Incorporation.
IN WITNESS WHEREOF, I have subscribed my name this 29th day of
September, 1986.
/s/ Robert C. Hackney
---------------------
Robert C. Hackney
<PAGE> 2
ARTICLES OF AMENDMENT
OF
DYNASTY CAPITAL CORPORATION
1. Article IV of the Articles of Incorporation of Dynasty Capital Corporation,
which was filed on October 1, 1986, is hereby amended to read as follows:
"Article IV - The Company is authorized to issue 100,000,000 shares of
Common Stock having a par value of .0001 each. Additionally, the
Company is authorized to issue 10,000,000 shares of Preferred Stock,
having a par value of .001 each. The Preferred Stock may be issue in a
series from time to time with such designation, rights, preferences
and limitations as the Board of Directors of the Company may determine
by resolution. The rights, preferences and limitations of a separate
series of Preferred Stock may differ with respect to such matters as
may be determined by the Board of Directors, including, without
limitation, the rate of dividends, method and amounts payable on
liquidation, sinking fund provisions (if any), conversion rights (if
any), and voting rights."
2. The foregoing amendment was adopted by the shareholders of this corporation
on the 3rd day of November.
IN WITNESS WHEREOF, the undersigned President and Secretary of this
corporation have executed these Articles of Amendment this 3rd day of November,
1986.
/s/Robert C. Hackney
--------------------
President and Secretary
<PAGE> 3
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
DYNASTY CAPITAL CORPORATION
Pursuant the provisions of Section 607.1006, Florida Statutes, this corporation
adopts the following Articles of Amendment to its Articles of Incorporation:
FIRST: The name of the Corporation is hereby changed by amending Article I of
the Articles of Incorporation to read as follows:
ARTICLE I
THE NAME OF THE CORPORATION SHALL BE VISITORS SERVICES INTERNATIONAL
CORP.
SECOND: The amendment was adopted on October 1, 1996, by resolution of the
board of directors and the written consent of the stockholders, in accordance
with Section 607.0704, Florida Statutes, representing a sufficient number of
votes necessary to approve this amendment.
Signed this 1st day of October, 1996.
By: /s/Steve McLean
--------------------------------------
Steve McLean, Executive Vice President
ATTEST:
/s/ Paul W. Henry
- --------------------------------
Paul W. Henry, Secretary
<PAGE> 4
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
VISITORS SERVICES INTERNATIONAL CORP.
Pursuant the provisions of Section 607.1006, Florida Statutes, this corporation
adopts the following Articles of Amendment to its Articles of Incorporation:
FIRST: The name of the Corporation is hereby changed by amending Article I of
the Articles of Incorporation to read as follows:
ARTICLE I
THE NAME OF THE CORPORATION SHALL BE TELESERVICES INTERNATIONAL GROUP INC.
SECOND: The amendment was adopted on March 3, 1997, by resolution of the board
of directors and the written consent of the stockholders, in accordance with
Section 607.0704, Florida Statutes, representing a sufficient number of votes
necessary to approve this amendment.
Signed this 3rd day of March, 1997.
By: /s/ Stephen G. McLean
---------------------------
Stephen G. McLean, CEO
ATTEST:
/s/ Paul W. Henry
- -----------------------------
Paul W. Henry, Secretary
<PAGE> 5
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
TELESERVICES INTERNATIONAL GROUP INC.
Pursuant the provisions of Section 607.0602, Florida Statutes, this corporation
adopts the following Articles of Amendment to its Articles of Incorporation:
FIRST: Pursuant to Article IV of the Corporation's Articles of Incorporation,
the Corporation does hereby designate 3,000,000 of the 10,000,000 authorized
shares of $.001 par value Preferred Stock as Series A Convertible Preferred
Stock, in accordance with the attached "Designation of Rights and Preferences
of Series A Convertible Preferred Stock of TeleServices International Group
Inc. dated April 28, 1997," which supersedes and replaces in its entirety the
previous "Designation of Rights and Preferences of Series A Convertible
Preferred Stock of TeleServices International Group Inc. dated March 31, 1997,"
which was attached to the Articles of Amendment to the Corporation's Articles
of Incorporation dated March 31, 1997, and filed with the Secretary of State on
April 18, 1997.
SECOND: This amendment was adopted on April 28, 1997, by resolution of the
board of directors without shareholder action and shareholder action was not
required.
Signed this 28th day of April, 1997.
By: /s/ Stephen G. McLean
----------------------------
Stephen G. McLean, CEO
ATTEST:
/s/ Paul W. Henry
- ----------------------------
Paul W. Henry, Secretary
<PAGE> 6
DESIGNATION OF RIGHTS AND PREFERENCES OF
SERIES A CONVERTIBLE PREFERRED STOCK OF
TELESERVICES INTERNATIONAL GROUP INC.
APRIL 28, 1997
TeleServices International Group Inc., a corporation organized and
existing under the laws of the State of Florida (the "Corporation"), DOES
HEREBY CERTIFY that pursuant to the authority contained in its Articles of
Incorporation, as amended, and in accordance with the Florida Business
Corporation Act, the Corporation's Board of Directors has duly adopted the
following resolution creating a series of the class of its authorized Preferred
Stock, designated as Series A Convertible Preferred Stock.
RESOLVED THAT:
Whereas, by virtue of the authority contained in its Articles of
Incorporation, as amended, the Corporation has the authority to issue Ten
Million (10,000,000) shares of $.001 par value Preferred Stock, the designation
and amount thereof and series, together with the preferences, rights, and
restrictions thereof, to be determined by the Corporation's Board of Directors
pursuant to the applicable laws of the State of Florida.
Now, therefore, the Corporation's Board of Directors hereby
establishes a series of the class of Preferred Stock authorized to be issued by
the Corporation as above stated, with the designations and amounts thereof,
together with the preferences, conversion and other rights, and relative
participating, optional and other special rights of each such series, and the
qualifications, limitations or restrictions thereof, to be as follows:
1. Designations and Amounts. Three Million (3,000,000) shares of the
Corporation's authorized Preferred Stock are designated as Series A Convertible
Preferred Stock.
2. Definitions.
For the purposes of this Resolution the following definitions shall
apply:
(a) "Board" shall mean the Board of Directors of the Corporation.
(b) "Corporation" shall mean TeleServices International Group
Inc., a Florida corporation.
(c) "Common Stock" shall refer to the Corporation's common stock,
par value $.0001 per share.
(f) "Subsidiary" shall mean any corporation, over 50% of whose
outstanding voting stock shall at the time be owned directly
or indirectly by the Corporation or by one or more
Subsidiaries.
3. Dividends. The holder of each issued and outstanding share of
Series A Convertible Preferred Stock shall be entitled to receive distributions
at the rate of ten percent (10%) simple interest per annum based on a $3.00 per
share stated value, payable in shares of restricted Common Stock. Such
dividend shall become due annually, in arrears, commencing December 31, 1997.
Any dividends that the Corporation fails to declare and pay on the date due
shall accumulate and accrue until later paid or upon conversion of the Series A
Convertible Preferred Stock pursuant to the terms hereof. The number of shares
of Common Stock to be issued shall be determined by dividing the dollar amount
of the dividend as of the date declared or accrued by the market price per
share of Common Stock for the "Trading Period" (as defined in paragraph
5(C)(iv)) prior to the date the dividend was declared or accrued. The Board,
in its sole discretion, may elect to pay any dividend in cash rather than in
shares of restricted Common Stock out of the
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TELESERVICES INTERNATIONAL GROUP INC. (04/28/97) PAGE 1 OF 7
DESIGNATION OF RIGHTS AND PREFERENCES OF SERIES A CONVERTIBLE PREFERRED STOCK
<PAGE> 7
Corporation's profits legally available for such purpose and approved by the
Board for such purpose; and all dividends on the Series A Convertible Preferred
Stock shall be paid before any other distributions shall be declared, paid or
set aside upon the Common Stock or any other class of stock of the Corporation.
4. Liquidation or Dissolution. In the event of any voluntary or
involuntary liquidation, dissolution, or winding up of the affairs of the
Corporation, the holders of the issued and outstanding Series A Convertible
Preferred Stock shall be entitled to receive for each share of Series A
Convertible Preferred Stock, before any distribution of the assets of the
Corporation shall be made to the holders of any other capital stock, a dollar
amount equal to the stated value of $3.00 per share plus all accrued and unpaid
distributions declared thereon, without interest. After such payment shall
have been made in full to the holders of the issued and outstanding Series A
Convertible Preferred Stock, or funds necessary for such payment shall have
been set aside in trust for the account of the holders of the issued and
outstanding Series A Convertible Preferred Stock so as to be and continue to be
available therefor, then, before any further distribution of the assets of the
Corporation shall be made, a dollar amount equal to that already distributed to
the holders of the Series A Convertible Preferred Stock shall be distributed
pro-rata to the holders of the other issued and outstanding capital stock of
the Corporation, subject to the rights of any other class of capital stock set
forth in the Articles of Incorporation of the Corporation or Amendments to the
Articles of Incorporation filed by the Corporation. After such payment shall
have been made in full to the holders of such other issued and outstanding
capital stock, or funds necessary for such payment shall have been set aside in
trust for the account of the holders of such other issued and outstanding
capital stock so as to be and continue to be available therefor, the holders of
the issued and outstanding Series A Convertible Preferred Stock shall be
entitled to participate with the holders of all other classes of issued and
outstanding capital stock in the final distribution of the remaining assets of
the Corporation, and, subject to any rights of any other class of capital stock
set forth in the Articles of Incorporation of the Corporation or any Amendments
to the Articles of Incorporation filed by the Corporation, the remaining assets
of the Corporation shall be divided and distributed ratably among the holders
of both the Series A Convertible Preferred Stock and the other capital stock
then issued and outstanding according to the proportion by which their
respective record ownership of shares of the Series A Convertible Preferred
Stock and such capital stock bears to the total number of shares of the Series
A Convertible Preferred Stock and such capital stock then issued and
outstanding. If, upon such liquidation, dissolution, or winding up, the assets
of the Corporation distributable, as aforesaid, among the holders of the Series
A Convertible Preferred Stock shall be insufficient to permit the payment to
them of said amount, the entire assets shall be distributed ratably among the
holders of the Series A Convertible Preferred Stock. A consolidation or merger
of the Corporation, a share exchange, a sale, lease, exchange or transfer of
all or substantially all of its assets as an entirety, or any purchase or
redemption of stock of the Corporation of any class, shall not be regarded as a
"liquidation, dissolution, or winding up of the affairs of the Corporation"
within the meaning of this paragraph 4.
5. Conversion Privilege. Series A Convertible Preferred Stock shall
be convertible into restricted Common Stock as hereinafter provided and, when
so converted, shall be canceled and retired and shall not be reissued as such:
(A) Any holder of the Series A Convertible Preferred Stock may at any
time, in whole but not in part, convert such stock into the Common Stock of the
Corporation, on presentation and surrender to the Corporation of the
certificates of the Series A Convertible Preferred Stock to be so converted.
In order to convert Series A Convertible Preferred Stock into Common Stock, the
holder thereof shall on any business day surrender at the Corporations
principal office in St. Petersburg, Florida, the certificate or certificates
representing all such shares, duly endorsed to the Corporation or in blank.
Series A Convertible Preferred Stock shall be deemed to have been converted
immediately prior to the close of business on the day of such surrender for
conversion, and the person or persons entitled to receive the Common Stock
issuable upon such conversion shall be treated for all purposes as the record
holder or holders of such Common Stock at such time. As promptly as
practicable after the date of any conversion, the Corporation shall issue and
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TELESERVICES INTERNATIONAL GROUP INC. (04/28/97) PAGE 2 OF 7
DESIGNATION OF RIGHTS AND PREFERENCES OF SERIES A CONVERTIBLE PREFERRED STOCK
<PAGE> 8
deliver a certificate or certificates representing the number of shares of
Common Stock issuable upon such conversion, together with cash in lieu of any
fraction of a share, as provided in subparagraph (G) of paragraph 5, to the
person or persons entitled to receive same.
(B) Each holder of Series A Convertible Preferred Stock shall have
the right to convert such Series A Convertible Preferred Stock into Common
Stock at the conversion rate, determined as hereinafter provided, in effect at
the time of conversion. Unless such conversion rate shall be adjusted as
hereinafter provided, the conversion rate shall be as follows:
(i) If the holder requests conversion within one year after
the date the Series A Convertible Preferred Stock is issued to the holder, the
conversion rate shall be one (1) share of Common Stock for each share of Series
A Convertible Preferred Stock so converted.
(ii) If the holder requests conversion after one year but less
than two years after the date the Series A Convertible Preferred Stock is
issued to the holder, the conversion rate shall be one and one-tenth (1.1)
shares of Common Stock for each share of Series A Convertible Preferred Stock
so converted.
(iii) If the holder requests conversion after two years but
less than three years after the date the Series A Convertible Preferred Stock
is issued to the holder, the conversion rate shall be one and two-tenths (1.2)
shares of Common Stock for each share of Series A Convertible Preferred Stock
so converted.
(iv) If the holder requests conversion after three years but
less than four years after the date the Series A Convertible Preferred Stock is
issued to the holder, the conversion rate shall be one and three-tenths (1.3)
shares of Common Stock for each share of Series A Convertible Preferred Stock
so converted.
(v) If the holder requests conversion after four years but
less than five years after the date the Series A Convertible Preferred Stock is
issued to the holder, the conversion rate shall be one and four-tenths (1.4)
shares of Common Stock for each share of Series A Convertible Preferred Stock
so converted.
(vi) If the holder requests conversion after five years after
the date the Series A Convertible Preferred Stock is issued to the holder, the
conversion rate shall be one and five-tenths (1.5) shares of Common Stock for
each share of Series A Convertible Preferred Stock so converted.
(C) The conversion rate as hereinabove provided shall be subject to
adjustment as follows:
(i) In case the Corporation shall (a) make a distribution in
shares of its capital stock, (b) subdivide its outstanding shares of Common
Stock into a greater number of shares, or (c) combine its outstanding shares of
Common Stock into a smaller number of shares, the conversion rate in effect
immediately prior thereto shall be adjusted so that the holder of a share of
Series A Convertible Preferred Stock surrendered for conversion after the
record date fixing stockholders to be affected by such event shall be entitled
to receive, upon conversion, the number of shares of Common Stock which such
holder would have owned or have been entitled to receive after the happening of
such event had such share of Series A Convertible Preferred Stock been
converted immediately prior to the record date in the case of such dividend or
the effective date in the case of any such subdivision, combination or
reclassification. An adjustment made pursuant to this subparagraph 5(C)(i)
shall be made whenever any of such events shall happen, but shall become
effective retroactively after such record date or such effective date, as the
case may be, as to shares of Series A Convertible Preferred Stock converted
between such record date or effective date and the date of happening of any
such event.
(ii) In case the Corporation shall issue rights or warrants to
all holders of its
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TELESERVICES INTERNATIONAL GROUP INC. (04/28/97) PAGE 3 OF 7
DESIGNATION OF RIGHTS AND PREFERENCES OF SERIES A CONVERTIBLE PREFERRED STOCK
<PAGE> 9
Common Stock entitling them to subscribe for or purchase shares of Common Stock
at a price per share, which, when added to the amount of consideration received
or receivable by the Corporation for such right or warrant, is less than the
current market price (as hereinafter defined) per share of Common Stock at the
record date mentioned below, the conversion rate shall be adjusted so that
thereafter, until further adjusted, each share of Series A Convertible
Preferred Stock shall be convertible into that number of shares of Common Stock
determined by multiplying the number of shares of Common Stock into which such
share of Series A Convertible Preferred Stock was theretofore convertible by a
fraction, the numerator of which shall be the number of shares of Common Stock
outstanding on the date of issuance of such rights or warrants plus the number
of additional shares of Common Stock issuable upon the exercise of such rights
or warrants, and the denominator of which shall be the number of shares of
Common Stock outstanding on the date of issuance of such rights or warrants
plus the number of shares which an amount equal to the sum of (a) the aggregate
exercise price of the total number of shares of Common Stock issuable upon the
exercise of such rights or warrants, plus (b) the aggregate amount of
consideration, if any, received, or receivable by the Corporation for any such
rights or warrants, would purchase at such current market price. Such
adjustment shall be made whenever such rights or warrants are issued, but shall
also be effective retroactively as to shares of Series A Convertible Preferred
Stock converted between the record date for the determination of stockholders
entitled to receive such rights or warrants and the date such rights or
warrants are exercised.
(iii) In case the Corporation shall distribute to all holders
of its Common Stock any one or more of the following: (a) evidence of its
indebtedness, (b) assets (excluding cash distributions, distributions made out
of current or retained earnings and distributions of the stock of any
subsidiary), or (c) rights or warrants to subscribe for or purchase securities
issued by, or property of, the Corporation (excluding those referred to in
subparagraph 5(C)(ii) above), then in each such case the conversion rate shall
be adjusted as provided below so that thereafter, until further adjusted, the
number of shares of Common Stock into which each share of Series A Convertible
Preferred Stock shall be convertible shall be determined by multiplying the
number of shares of Common Stock into which such share of Series A Convertible
Preferred Stock was theretofore convertible by a fraction, the numerator of
which shall be the current market price per share of Common Stock on the date
of such distribution, and the denominator of which shall be such current market
price per share of the Common Stock, less the then fair market value (as
determined by the Board of the Corporation, whose determination shall be
conclusive) of the portion of the assets or evidence of indebtedness so
distributed or of such rights or warrants applicable to one share of the Common
Stock. Such adjustment shall be made whenever any such distribution is made,
but shall also be effective retroactively as to shares of Series A Convertible
Preferred Stock converted between the record date for the determination of
stockholders entitled to receive such distribution and the date such
distribution is made.
(iv) For the purpose of any computation under subparagraphs
5(C)(ii) and (iii) above, the current market price per share of Common Stock at
any date shall be (a) if the Common Stock is listed on any national securities
exchange, the average of the daily closing prices for the 15 consecutive
business days commencing 20 business days before the day in question (the
"Trading Period"); (b) if the Common Stock is not listed on any national
securities exchange but is quoted on the National Association of Securities
Dealers, Inc. Automated Quotation System ("NASDAQ") or the Electronic Bulletin
Board, the average of the high and low bids as reported thereon for the Trading
Period; and (c) if the Common Stock is neither listed on any national
securities exchange nor quoted on NASDAQ or the Electronic Bulletin Board, the
price shall be determined in any reasonable manner approved by the Board of
Directors of the Company.
(v) No adjustment in the conversion rate shall be required
unless such adjustment would require an increase or decrease of at least 5% in
such rate; provided, however, that any adjustments which by reason of this
subparagraph 5(C)(v) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment.
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TELESERVICES INTERNATIONAL GROUP INC. (04/28/97) PAGE 4 OF 7
DESIGNATION OF RIGHTS AND PREFERENCES OF SERIES A CONVERTIBLE PREFERRED STOCK
<PAGE> 10
(D) No adjustment of the conversion rate shall be made in any of the
following cases:
(i) upon the grant or exercise of stock options or warrants
outstanding on the date hereof or hereafter granted, or under any employee
stock option plan now or hereafter authorized.
(ii) shares of Common Stock issued upon the conversion of
Series A Convertible Preferred Stock;
(iii) shares issued in connection with the acquisition by the
Corporation or by any subsidiary of the Corporation of 80% or more of the
assets of another corporation, and shares issued in connection with the
acquisition by the Corporation or by any subsidiary of the Corporation of 80%
or more of the voting shares of another corporation (including shares issued in
connection with such acquisition of voting shares of such other corporation
subsequent to the acquisition of an aggregate of 80% of such voting shares),
shares issued in a merger of the Corporation or a subsidiary of the Corporation
with another corporation in which the Corporation or the Corporation's
subsidiary is the surviving corporation, and shares issued upon the conversion
of other securities issued in connection with any such acquisition or in any
such merger;
(iv) shares issued by way of dividend or other distribution on
Common Stock excluded from the calculation of the adjustment under this
subparagraph 5(D) or on Common Stock resulting from any subdivision or
combination of Common Stock so excluded; or
(E) Whenever the conversion rate is adjusted as herein provided, the
Corporation shall prepare a certificate signed by the Treasurer of the
Corporation setting forth the adjusted conversion rate and showing in
reasonable detail the facts upon which such adjustment is based. As promptly as
practicable, the Corporation shall cause a copy of the certificate referred to
in this subparagraph 5(E) to be mailed to each holder of record of issued and
outstanding Series A Convertible Preferred Stock at the address of such holder
appearing on the Corporation's books.
(F) The Corporation shall pay all taxes that may be payable in respect
of the issue or delivery of Common Stock on conversion of Series A Convertible
Preferred Stock pursuant hereto, but shall not pay any tax which may be payable
with respect to income or gains of the holder of any Series A Convertible
Preferred Stock or Common Stock or any tax which may be payable in respect of
any transfer involved in the issue and delivery of the Common Stock in a name
other than that in which the Series A Convertible Preferred Stock so converted
was registered, and no such issue or delivery shall be made unless and until
the person requesting such issue has paid to the Corporation the amount of any
such tax, or has established, to the satisfaction of the Corporation, that such
tax has been paid.
(G) No fractional shares or scrip representing fractional shares shall
be issued upon the conversion of any shares of Series A Convertible Preferred
Stock. If the conversion shares of Series A Convertible Preferred Stock
results in a fraction, the fraction shall be rounded up to the nearest whole
share.
(H) The Corporation shall at all times reserve and keep available,
free from preemptive rights, out of its authorized Common Stock, for the
purpose of effecting the conversion of the issued and outstanding Series A
Convertible Preferred Stock, the full number of shares of Common Stock then
deliverable in the event and upon the conversion of all of the Series A
Convertible Preferred Stock then issued and outstanding.
(I) All shares of Common Stock issued or issuable upon conversion of
the Series A Convertible Preferred Stock shall be restricted and bear a
restrictive legend. Holders of the Series A Convertible Preferred Stock shall
have no right to demand that the Series A Convertible Preferred Stock or the
shares of Common Stock issuable upon conversion of the Series A Convertible
Preferred Stock be registered under federal or state securities laws.
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TELESERVICES INTERNATIONAL GROUP INC. (04/28/97) PAGE 5 OF 7
DESIGNATION OF RIGHTS AND PREFERENCES OF SERIES A CONVERTIBLE PREFERRED STOCK
<PAGE> 11
6. Voting Rights. The shares of the Series A Convertible Preferred
Stock shall be non-voting, except as to matters which they are entitled to
vote, as a class, under the laws of the State of Florida, or as provided below.
7. Redemption by the Corporation. The Corporation, at the option of
the Board, may redeem, in whole or in part, the Series A Convertible Preferred
Stock at any time outstanding after: 1) five (5) years after the date the
Series A Convertible Preferred Stock was issued; or 2) the date on which the
average of the daily closing price for any Trading Period (as defined in
paragraph 5(C)(iv) above) is greater than $6.00 per share. If the Corporation
elects to exercise this redemption right, the Corporation shall give at least
30 days' prior written notice to the holders of record of the Series A
Convertible Preferred Stock to be redeemed and by issuing to each holder of
Series A Convertible Preferred Stock the number of shares of restricted Common
Stock to which he or she would be entitled to receive upon conversion pursuant
to paragraph 5, plus all accrued and unpaid distributions declared or accrued,
at the date fixed for redemption, without interest, in additional shares of
restricted Common Stock, or in cash, as determined by the Corporation pursuant
to paragraph 3, for the shares of Series A Convertible Preferred Stock so
redeemed. The Board shall have full power and authority, subject to the
limitations and provisions herein contained, to prescribe the manner in which
and the terms and conditions upon which the Series A Convertible Preferred
Stock shall be redeemed. In addition, on such date the holders of Series A
Convertible Preferred Stock shall no longer be entitled to any distributions
and shall not have any rights or interests as holders of said shares, except to
receive the payment herein designated, without interest thereon, upon
presentation and surrender of their certificates therefor.
8. Anti-Dilution. In the event of any change in the outstanding
capital stock of the Corporation by reason of any reorganization,
recapitalization, stock split, stock dividend, combination or exchange of
shares, merger, consolidation, the shares of Series A Convertible Preferred
Stock shall be appropriately adjusted if the stated value is affected. Any
shares of Series A Convertible Preferred Stock or other securities received by
the holders of the Series A Convertible Preferred Stock as a result of any such
adjustment shall be subject to all of the terms and conditions of the
Designation of Rights and Preferences of Series A Convertible Preferred Stock.
9. No Preemptive Rights. No holder of the Series A Convertible
Preferred Stock shall be entitled, as of right, to purchase or subscribe for
any part of the unissued capital stock of the Corporation or of any capital
stock of the Corporation to be issued by reason of any increase of the
authorized capital stock of the Corporation, or to purchase or subscribe for
any bonds, certificates of indebtedness, debentures or other securities
convertible into or carrying options or warrants to purchase stock or other
securities of the Corporation or to purchase or subscribe for any stock of the
Corporation purchased by the Corporation or by its nominee or nominees, or to
have any other preemptive rights now or hereafter defined by the laws of the
State of Florida.
10. Changes In Terms of Series A Convertible Preferred Stock. The
terms of the Series A Convertible Preferred Stock may not be amended, altered
or repealed, and no class of capital stock or securities convertible into
capital stock shall be authorized which has superior rights to the Series A
Convertible Preferred Stock as to distributions or liquidation, without the
consent of the holders of at least 51% of the outstanding shares of Series A
Convertible Preferred Stock, voting as a separate series.
11. No Implied Limitations. Except as otherwise provided by express
provisions of this Designation of Rights and Preferences of Series A
Convertible Preferred Stock, nothing herein shall limit, by inference or
otherwise, the discretionary right of the Board to classify and reclassify and
issue any shares of Preferred Stock and to fix or alter all terms thereof to
the full extent provided in the Articles of Incorporation of the Corporation.
12. General Provisions. In addition to the above provisions with
respect to the Series A Convertible Preferred Stock, such Series A Convertible
Preferred Stock shall be subject to, and
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TELESERVICES INTERNATIONAL GROUP INC. (04/28/97) PAGE 6 OF 7
DESIGNATION OF RIGHTS AND PREFERENCES OF SERIES A CONVERTIBLE PREFERRED STOCK
<PAGE> 12
entitled to the benefits of, the provisions set forth in the Corporation's
Articles of Incorporation with respect to Series A Convertible Preferred Stock
generally.
13. Notices. All notices required or permitted to be given by the
Corporation with respect to the Series A Convertible Preferred Stock shall be
in writing, and if delivered by first class United States mail, postage
prepaid, to the holders of the Series A Convertible Preferred Stock at their
last addresses as they shall appear upon the books of the Corporation, shall be
conclusively presumed to have been duly given, whether or not the stockholder
actually receives such notice; provided, however, that failure to duly give
such notice by mail, or any defect in such notice, to the holders of any stock
designated for redemption, shall not affect the validity of the proceedings for
the redemption of any other shares of Series A Convertible Preferred Stock.
IN WITNESS WHEREOF, TeleServices International Group Inc. has caused
this Designation of Rights and Preferences of Series A Convertible Preferred
Stock to be duly executed by its Chief Executive Officer and attested by its
Secretary this 28th day of April, 1997.
TELESERVICES INTERNATIONAL GROUP INC.
/s/ Stephen G. McLean
----------------------------------------
Stephen G. McLean, Chief Executive
Officer
Attest
/s/ Paul W. Henry
- -------------------------------------------
Paul W. Henry, Secretary
- --------------------------------------------------------------------------------
TELESERVICES INTERNATIONAL GROUP INC. (04/28/97) PAGE 7 OF 7
DESIGNATION OF RIGHTS AND PREFERENCES OF SERIES A CONVERTIBLE PREFERRED STOCK
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THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
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QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-QSB.
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