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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
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[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ________________ to ______________
Commission file number: 33-11059-A
VISITORS SERVICES INTERNATIONAL CORP.
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(Exact name of small business issuer as specified in it CHARTER)
FLORIDA 59-2773602
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(State or other jurisdiction of incorporation or organization) (IRS Employer Identification No.)
100 SECOND AVENUE SOUTH, SUITE 1000, ST. PETERSBURG, FLORIDA 33701
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(Address of principal executive offices)
(813) 895-4410
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(issuer's telephone number)
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(Former name, former address and former fiscal year, if changed since last report)
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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 FEBRUARY 13, 1997, OF
THE ISSUER'S COMMON STOCK, $.0001 PAR VALUE, THERE WERE 21,668,330 SHARES
OUTSTANDING.
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
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VISITORS SERVICES INTERNATIONAL CORP.
INDEX
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PART I. FINANCIAL INFORMATION Page
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Item 1. Financial Statements
Consolidated Balance Sheets
September 30, 1996 and
December 31, 1996 (Unaudited) 3
Unaudited Consolidated Statements of Operations
Three Months ended
December 31, 1996 and
December 31, 1995 4
Unaudited Consolidated Statements of Cash Flows
Three Months ended
December 31, 1996 and
December 31, 1995 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 9-13
SIGNATURE PAGE 13
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VISITORS SERVICES INTERNATIONAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
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Dec. 31, 1996 Sept. 30, 1996
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ASSETS
Current assets:
Cash $ 119,130 $ 51,546
Cash, restricted 150,000 150,000
Accounts receivable, net of allowance
for doubtful accounts 136,947 266,494
Other Current Assets 128,300 89,122
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Total current assets 534,377 557,162
Investment in related party 341,223 357,052
Equipment, net of accumulated depreciation 1,286,306 1,219,592
Goodwill 429,390 -
Other assets 15,403 27,155
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Total assets $ 2,606,699 $ 2,160,961
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LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current liabilities:
Accounts payable and accrued expenses 1,435,768 $ 1,154,272
Loans payable, stockholders 631,339 412,659
Accrued interest payable, stockholders 80,748 69,639
Accrued payroll and taxes 211,380 123,718
Capital leases payable, current portion 57,472 55,934
Notes payable, current portion 148,909 147,202
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Total current liabilities 2,565,616 1,963,424
Notes payable, net of current portion 283,848 324,730
Capital leases payable, net of current portion 53,504 56,886
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Total liabilities 2,902,968 2,345,040
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Stockholders' (deficit):
Preferred stock, $.001 par value
None issued and outstanding - -
Common stock, $.0001 par value 2,120 1,597
Additional paid-in capital 7,225,420 5,676,066
Accumulated (deficit) ( 7,523,809) ( 5,861,742)
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Total stockholders' (deficit) ( 296,269) ( 184,079)
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Total liabilities and stockholders' (deficit) $ 2,606,699 $ 2,160,961
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See accompanying notes
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VISITORS SERVICES INTERNATIONAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
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THREE MONTHS ENDED DECEMBER 31,
1996 1995
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Total Revenues $ 256,734 $84,685
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Operating Expenses:
Salaries 743,419 311,935
Payroll taxes 57,257 35,873
Contract services 169,638 39,342
Rent 65,363 36,485
Telephone 241,195 51,819
Travel and entertainment 309,618 60,327
Advertising and promotion 236,186 9,089
Depreciation 73,518 48,611
Other expenses 328,315 84,938
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Total operating expenses 2,224,509 678,419
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Net (loss) from operations (1,967,775) ( 593,734)
Other income (expenses):
Gain on sale of securities 74,171 -
Interest income 7,887 2,886
Interest (expense) ( 22,898) (20,567)
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Net (loss) $ (1,908,615) (611,415)
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Net (loss) per share: $ ( .10) $ (.04)
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Weighted Average Shares Outstanding 19,101,670 14,811,450
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See accompanying notes.
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VISITORS SERVICES INTERNATIONAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
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THREE MONTHS ENDED DECEMBER 31,
1996 1995
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Cash flows from operating activities:
Net (loss) $ (1,908,615) $ (611,415)
Adjustments to reconcile net (loss) to
net cash (used in) operating activities:
Decrease in accounts receivable 129,547 25,097
Depreciation expense 73,518 48,611
Increase (decrease) in accounts payable
and accrued expenses ( 143,504) 115,379
Increase in accrued payroll and taxes 87,662 7,733
Increase in accrued interest to stockholder 10,809 20,000
Other 95,589 ( 1,335)
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Net cash (used in) operating activities (1,654,994) ( 395,930)
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Cash flows from investing activities:
(Acquisition) of equipment ( 6,804) ( 138,249)
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Net cash (used in) investing activities ( 6,804) ( 138,249)
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Cash flows from financing activities:
Cash proceeds from loans from stockholders 218,680 516,918
Issuance of common stock 1,549,877 -
Repayment of notes payable ( 39,175) -
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Net cash provided by financing activities 1,729,382 516,918
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Increase (decrease) in cash 67,584 ( 17,261)
Cash, beginning of period 51,546 155,744
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Cash, end of period $ 119,130 $138,483
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Interest paid $ 22,898 $ 20,567
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Income taxes paid $ - $ -
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Note: During the three month period ended December 31, 1996, VSIC
assumed approximately $425,000 of liabilities in connection with the
business combination with Global Reservation Systems, Inc.
See accompanying notes.
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VISITORS SERVICES INTERNATIONAL CORP. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
December 31, 1996
(Unaudited)
NOTE A
The accompanying consolidated financial statements include the
accounts of Visitors Services International Corp. ("VSIC") and its
subsidiaries, Visitors Services, Inc. (wholly owned since September 26, 1996),
and American International Travel Agency, Inc. (wholly owned since December 6,
1996). The consolidated group of companies are collectively referred to herein
as "VSIC." All significant inter-company accounts and transactions have been
eliminated.
VSIC 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, VSIC was a shell company with no
material assets, liabilities or operations.
Visitors Services, Inc. ("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. ("American") 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, VSIC consummated the acquisition of all the
capital stock of American 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.
NOTE B
The accompanying financial statements have been prepared by the
Registrant without audit and are the responsibility of VSIC'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 VSIC 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 accounting principles.
Reference is made to the Form 10-KSB, for the fiscal year ended September 30,
1996 and consolidated financial statements of VSIC 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.
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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, VSIC, 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, VSIC
agreed to issue up to 135,000 shares of VSIC 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.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
As of September 30, 1996, planned principal operations of the
Registrant have commenced, although limited revenues have been received.
Visitors Services, Inc. ("VSI") was acquired in September of 1996 and American
International Travel Agency, Inc. ("AIT") was acquired in December of 1996. In
December of 1996, VSI also acquired the assets of Global Reservation Systems,
Inc. ("GRS"). The financial statements of the Registrant have been prepared on
a pro-forma, consolidated basis to reflect the acquisition of VSI and AIT, and
VSI's acquisition of the assets of GRS. The financial statements include all
adjustments which in the opinion of management are necessary in order to make
the financial statements not misleading.
During the three months ended December 31, 1996, the Registrant had
revenues of $256,734, compared to revenues of $84,685 for the three months
ended December 31, 1995, an increase of $172,049. During the three months
ended December 31, 1996, the Registrant had operating expenses of $2,224,509,
compared to operating expenses of $678,419 for the three months ended December
31, 1995, an increase of $1,546,090. The increase in operating expenses
relative to revenues is primarily due to increases in most expense categories
since the end of the fiscal year, September 30, 1996, in particular salaries
and payroll taxes, contract services and telephone expenses, driven primarily
by additional personnel and associated overhead costs necessary to support the
overall growth of the Registrant's operations.
For the three months ended December 31, 1996, the Registrant sustained
a net loss of approximately $1,908,615, compared to a net loss of $611,415 for
the three months ended December 31, 1995, an increase of $1,297,200. The
increase in net loss is primarily attributable to the large increase in
operating expenses since the end of the fiscal year, September 30, 1996,
although offset by the increase in revenues for the quarter. These losses are
expected to continue for a presently undetermined time.
SALES AND REVENUES
The Registrant's sales and revenues are primarily derived from VSI.
VSI has derived revenues generally from (1) per call fee for visitor guide
requests and information calls, (2) booking fees paid by the hotel or lodging
properties for each booked and used reservation provided by VSI, (3)
transaction fees between $1.00 to $2.50 per ticket sold for the Arts,
Attractions, Events or Sport Teams for tickets sold by VSI, (4) subscription
fees charged to the properties and for information services to attractions and
events.
LIMITED WORKING CAPITAL; FINANCIAL INSTABILITY
For the three months ended December 31, 1996, compared to the end of
the fiscal year, September 30, 1996, stockholder's equity (deficit) was
$(296,269), a decrease of $112,190 from $(184,079); the accumulated earnings
(deficit) was $(7,523,809), an increase of $1,662,067 from $(5,861,742); and
working capital was $(2,031,239), a decrease of $624,977 from $(1,406,262). As
explained above, operating losses are expected to continue for a presently
undetermined time.
Various factors affecting the Registrant's operations raise doubt as
to the Registrant's ability to continue as a going concern. There can be no
assurance that the Registrant will be able to continue as a going concern or
achieve material revenues or profitable operations. The Registrant is
dependent upon sufficient cash flow from operations to meet its short-term and
long term liquidity needs. The Registrant may require additional financing.
In this event, no assurances can be given that such financing will be available
in the amount required or, if available, that it can be on terms satisfactory
to the Registrant.
CERTAIN FINANCING TRANSACTIONS
In October of 1996, the Registrant raised $843,750.75 through a
private placement of its common stock. The Registrant sold 1,124,999 shares of
common stock, par value $.0001 per share, at a cash purchase price of $0.75 per
share.
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PART II - OTHER INFORMATION
ITEM 1. Legal Proceedings: None
ITEM 2. Changes in Securities:
On September 26, 1996, Registrant executed an Agreement and Plan of
Reorganization ("Agreement") with Visitors Services, Inc. ("VSI"), and certain
Stockholders of VSI, pursuant to which a minimum of 80% of the issued and
outstanding shares of VSI were to be exchanged on a one share for one share
basis for shares of restricted stock of the Registrant. Pursuant to the
Agreement, the Registrant issued a total 15,220,295 shares of common stock of
the Registrant to the following persons in exchange for their controlling
interest (over 80%) in VSI: Robert P. Gordon, 11,585,472 shares; Elizabeth
Gordon (wife of Robert P. Gordon), 1,409,857 shares; Mr. and Mrs. Gordon,
jointly, 48,750 shares; Harvest International of America, Inc. (a corporation
controlled by Robert P. Gordon), 362,010 shares; and James F. Gordon (brother
of Robert P. Gordon). The "Exchange Offer" has been extended to the remaining
shareholders of VSI. The Registrant expects that an additional 4,226,352
shares of restricted common stock will be issued pursuant to the exchange
offer, for a total of 19,446,647 shares being issued pursuant to the
transaction. No underwriters were used and no commissions were paid. The
Registrant believes that this transaction is exempt from registration pursuant
to Section 4(2) and/or Rule 506 of Regulation D of the Securities Act of 1933
(the "Act"). The transaction was reported on Form 8-K dated September 30,
1996.
In October of 1996, the Registrant raised $843,750.75 in cash through
a private placement of its common stock. The Registrant sold 1,124,999 shares
of common stock, par value $.0001 per share, at a cash purchase price of $0.75
per share. Stephen G. McLean, an Officer of both the Registrant and VSI and a
Director of the Registrant, purchased 33,333 shares; Paul W. Henry, an Officer
and Director of the Registrant and a Director of VSI, purchased 50,000 shares,
which includes 15,000 shares in the name of his minor son; the R.P. Gordon
Children Family Trust, a trust benefiting the minor children of Robert P.
Gordon (Mr. Gordon has no control over and disclaims any interest in the trust,
beneficial of otherwise) purchased 333,333 shares; Robert J Conrads, a Director
of VSI at the time, purchased 400,000 shares; Michael Gordon, brother of Robert
P. Gordon, purchased 33,333 shares; Samuel Jacobs, an Officer of VSI, purchased
33,333 shares; Russell R. Uhlmann, Jr., an Officer of VSI, purchased 33,333
shares. 1,814,206 shares; and the balance of 208,334 shares were purchased by
four other persons. No underwriters were used and no commissions were paid.
All purchasers are accredited investors, and the Registrant believes that this
private placement is exempt from registration pursuant to Sections 4(2) and/or
4(6) of the Securities Act of 1933 (the "Act"). All shares are restricted
securities under the Act.
On October 16, 1996, the Registrant filed a Registration Statement on
Form S-8 covering registration under the Securities Act of 1933, as amended, of
3,600,000 shares of the Registrant's common stock, $.0001 par value per share,
pursuant to the Registrant's Employee Benefit and Consulting Services
Compensation Plan dated October 3, 1996 (the "VSIC Plan"). Furthermore, on
November 18, 1996, the Registrant adopted and assumed VSI's 1995 Non-Qualified
Stock Option Plan ("VSI Plan"), whereby all options issued and issuable under
the VSI Plan will be convertible into shares of common stock of VSIC rather
than into shares of VSI common stock. The VSI Plan was amended to increase the
number of shares authorized to be issued under the VSI Plan from 3,250,000
shares to 5,000,000 shares; and to facilitate the Registrant's ability to adopt
and assume the VSI Plan, the VSI Plan was restated and retitled as "Visitors
Services, Inc. Employee Benefit and Consulting Services Compensation Plan,"
which is a "mirror-image" of the plan that has been established by the
Registrant. Under both the VSIC Plan and the VSI Plan, the Registrant may
issue Common Stock and/or options to purchase Common Stock to certain
consultants, service providers, officers, directors and employees. The purpose
of the VSIC Plan is to promote the best interests of the Registrant and its
stockholders by providing a means of non-cash remuneration to eligible
participants who contribute to operating progress and earning power of the
Registrant. Both the VSIC Plan and the VSI Plan are administered by the
Registrant's Board of Directors or a committee thereof which has the discretion
to determine from time to time the eligible participants to receive an award;
the number of shares of stock issuable directly or to be granted pursuant to
option; the price at which the option may be exercised or the price per share
in cash or cancellation of fees or other payment which the Registrant or VSI is
liable if a direct issue of stock and all other terms on which each option
shall be granted. In October 1996, options to acquire all shares covered by
the VSIC Plan and the Form S-8 Registration Statement were granted, at an
exercise price of $.75 per share, including grants to the following Officers
and Directors of VSIC and/or VSI to acquire the number of shares indicated:
Robert P. Gordon, 2,220,000 options; Stephen G. McLean, 225,000 options; Paul
W. Henry, 45,000 options; Robert
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J. Conrads (former director), 325,000 options; Samuel C. Jacobs, 25,000
options; and Russell R. Uhlmann, Jr., 25,000 options. As of December 31, 1996,
a total of 655,000 shares of common stock of the Registrant were issued under
the VSIC Plan to persons other than the Officer and Directors identified above,
including 530,000 shares for consulting services and 125,000 shares for legal
services.
ITEM 3. Defaults Upon Senior Securities: None
ITEM 4. Submissions of Matters to a Vote of Security Holders:
On October 2, 1996, the Registrant, formerly known as Dynasty Capital
Corporation, filed Articles of Amendment with the Secretary of State of Florida
to change its name to Visitors Services International Corp. The name change
was adopted on October 1, 1996, 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:
A. The following information relates to matters that occurred during the
quarter ended December 31, 1996, and were also reported in the Form 10-KSB for
the year ended September 30, 1996, which was filed on January 14, 1997:
Acquisition of American International Travel Agency, Inc.
On December 6, 1996, the Registrant's subsidiary, Visitors Services,
Inc. ("VSI"), entered into a Stock Purchase Agreement (the "SPA") with Phoenix
Information Systems Corp. ("Phoenix") to acquire all the capital stock of
American International Travel Agency, Inc. ("American") from Phoenix in
exchange for 31,579 shares of Common Stock of Phoenix owned by VSI. This
transaction was closed on December 6, 1996, subject to certain rescission
rights described below. The consideration paid was based upon arms-length
negotiations between VSI and Phoenix and a fair market evaluation. Management
believes entering into this SPA will provide the following benefits to VSI:
(i) access to the major travel agency computerized reservation systems
world-wide, and (ii) the ability to issue airline tickets.
The assets of American both before and after the signed SPA will
continue to be used as a retail travel agency located in Clearwater, Florida.
American was incorporated in 1977 in the State of Florida to provide
retail leisure and commercial travel services. American represents all
airlines, tour operators and cruise and rail lines on a commission basis.
During the three fiscal years ending June 30, 1994, March 31, 1995 and
March 31, 1996, American had total revenues of $314,573, $142,753 and $405,662,
respectively and net loss of $7,886 in 1994, net loss of $71,972 in 1995, and
net income of $31,076 in 1996.
The SPA states that the transaction is conditioned upon the subsequent
consent of the Airlines Reporting Corporation ("ARC"). VSI and Phoenix have
agreed that if the ARC does not consent to the change in ownership contemplated
in the SPA, the SPA will unwind and terminate as if the transaction was never
entered into by either party.
Acquisitions of Assets of Global Reservation Systems, Inc.
On December 23, 1996, VSI entered into an Asset Purchase Agreement
(the "APA") with Global Reservation Systems, Inc. ("GRS"), a Colorado
corporation, to acquire all of GRS's interests in, to and under any asset, used
in connection with GRS's business of answering toll-free telephone numbers
advertised by contracted marketing organizations, providing information to
callers of such toll-free telephone numbers, making reservations
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with lodging properties and attractions and providing advertising effectiveness
statistics to such contracted marketing organizations of every kind, nature and
description. As partial consideration for the acquired assets, VSI will assume
trade payables up to a maximum amount equal to $200,000; liabilities associated
with various Trade License Agreements; rent payment obligations of $1,250 a
month for twelve months; and all obligations and liabilities arising out of
events occuring on or after December 23, 1996, related to VSI's ownership of
the acquired assets or its conduct of the GRS Operations. As additional
consideration for the acquired assets, VSI will cause its corporate parent,
VSIC, to grant each year to GRS 45,000 shares of VSIC common stock, par value
$.0001 per share, for fiscal years 1997, 1998 and 1999, if and only if, (i) the
Net Operating Income attributable to the acquired assets for fiscal years 1997,
1998 and 1999 equals or exceeds 60% of the projected Net Operating Income for
fiscal 1997, 1998 and 1999; and (ii) the Net Operating Income is not less than
10% of the Total Adjusted Gross Revenue as projected for fiscal years 1997,
1998 and 1999. Certain roll over provisions are in place if the required Net
Operating Income is not attained in the prior fiscal year. The consideration
paid was based upon arms-length negotiations between VSI and GRS and a fair
market evaluation.
GRS was incorporated in the State of Colorado to provide retail
leisure travel services. Included in the APA are all trade names, names under
which GRS operates, trademarks, service mark, patent or copyright and any
application for any of the foregoing used by GRS and which are material in the
conduct of its business, including: Global Reservation Systems, Inc., Colorado
Reservation Service, Illinois Reservation Service, Utah Reservation Service,
Michigan Reservation Service, Georgia Reservation Service and Chicago Plus
Reservation.
B. The following information relates to matters that occurred after the
quarter ended December 31, 1996:
Acquisitions of Assets of International Reservation Systems, Limited
The Registrant, through a subsidiary corporation, Visitors Services,
Inc. ("VSI"), acquired and took possession of all the assets of International
Reservation Services, Limited ("IRSL") on January 21, 1997, 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.
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, account
receivables, 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, is 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
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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.
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ITEM 6. Exhibits and Reports on Form 8-K:
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(a) Exhibits
Exhibit Number Description
-------------- -----------
2.1 Agreement and Plan of Reorganization between Dynasty Capital Corporation and Visitors
Services, Inc., dated September 26, 1996 (2)
3 Articles of Incorporation (3)
3.1 Amendment to Articles of Incorporation, filed November 12, 1986 (4)
3.2 Amendment to Articles of Incorporation, filed October 2, 1996 (5)
3.3 Bylaws as restated October 18, 1996 (6)
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 3 to the Registrant's Form 8-K
dated and filed on October 15, 1996.
(4) Incorporated by reference to Exhibit 3.1 to the Registrant's Form 8-K
dated and filed on October 15, 1996.
(5) Incorporated by reference to Exhibit 3.2 to the Registrant's Form 8-K
dated and filed on October 15, 1996.
(6) 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
December 31, 1996:
The Registrant filed a Current Report on Form 8-K on September 30,
1996, date of earliest event: September 26, 1996, reporting (i) a 14.4 to 1
reverse split of the outstanding common stock of the Registrant; (ii) the
Registrant's acquisition of Visitors Services, Inc.; and (iii) changes in
control of the Registrant. Filed with the Report were financial statements of
VSI and pro forma financial information.
The Registrant filed a Current Report on Form 8-K on October 15, 1996,
reporting that the Registrant changed its name from Dynasty Capital Corporation
to Visitors Services International Corp.
The Registrant filed a Current Report on Form 8-K on October 22, 1996,
date of earliest event: October 17, 1996, reporting (i) changes in Company's
certifying accountant, (ii) the Registrant's restated Bylaws, (iii) a change
12
<PAGE> 13
in management structure, and (iv) a change in the Registrant's annual
accounting period from one ending on June 30 to a fiscal year ending on
September 30 of each year.
The following report on Form 8-K was filed subsequent to the end of
the quarter ended December 31, 1996:
The Registrant filed a Current Report on Form 8-K on February 5, 1997,
reporting the acquisition of assets of International Reservation Systems, as
further described above in Item 5.
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.
VISITORS SERVICES INTERNATIONAL CORP.
Dated: February 13, 1997 /s/ Robert P. Gordon
-------------------------------------
Robert P. Gordon, Chairman, Chief
Financial and Accounting Officer, and
Director
13
<PAGE> 14
Exhibits Index
--------------
<TABLE>
<S> <C>
Exhibit Number Description
-------------- -----------
2.1 Agreement and Plan of Reorganization between Dynasty Capital Corporation and Visitors
Services, Inc., dated September 26, 1996 (2)
3 Articles of Incorporation (3)
3.1 Amendment to Articles of Incorporation, filed November 12, 1986 (4)
3.2 Amendment to Articles of Incorporation, filed October 2, 1996 (5)
3.3 Bylaws as restated October 18, 1996 (6)
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 3 to the Registrant's Form 8-K
dated and filed on October 15, 1996.
(4) Incorporated by reference to Exhibit 3.1 to the Registrant's Form 8-K
dated and filed on October 15, 1996.
(5) Incorporated by reference to Exhibit 3.2 to the Registrant's Form 8-K
dated and filed on October 15, 1996.
(6) Incorporated by referenced to Exhibit 3.3 to the Registrant's Form 8-K
dated October 17, 1996, and filed on October 23, 1996.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S QUARTERLY REPORT ON FORM 10-QSB FOR THE PERIOD ENDED DECEMBER 31,
1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FORM 10-QSB.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 119,130
<SECURITIES> 0
<RECEIVABLES> 213,588
<ALLOWANCES> 76,641
<INVENTORY> 0
<CURRENT-ASSETS> 534,377
<PP&E> 1,662,893
<DEPRECIATION> 376,587
<TOTAL-ASSETS> 2,606,699
<CURRENT-LIABILITIES> 2,565,616
<BONDS> 0
0
0
<COMMON> 2,120
<OTHER-SE> (298,389)
<TOTAL-LIABILITY-AND-EQUITY> 2,606,699
<SALES> 256,734
<TOTAL-REVENUES> 256,734
<CGS> 0
<TOTAL-COSTS> 2,224,509
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 28,006
<INTEREST-EXPENSE> 22,898
<INCOME-PRETAX> (1,908,615)
<INCOME-TAX> 0
<INCOME-CONTINUING> (1,908,615)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,908,615)
<EPS-PRIMARY> (.10)
<EPS-DILUTED> (.10)
</TABLE>
