SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
X Annual Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the fiscal year ended August 31, 1995
or
Transition Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the transition period from to
Commission File No. 033-19522-NY
GENISYS RESERVATION SYSTEMS, INC.
(Formerly Robotic Lasers, Inc.)
(Exact name of registrant as specified in its charter)
New Jersey 22-2 719541
(State or other jurisdiction of ( I.R.S. Employer
incorporation or organization) Identification No.)
2401 Morris Avenue, Union, NJ 07083
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including are. code: (908) 810-8767
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: NONE
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to
such filing requirements for the past 90 days.
Yes- X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [X]
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State the aggregate market value of the voting stock held by non-affiliates of
the registrant. The aggregate market value shall be computed by reference to the
price at which the stock was sold, or the average bid and asked prices of such
stock, as of a specified date within 60 days prior to the date of filing. NOT
AVAILABLE APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS: Indicate by check mark whether the registrant
has filed all documents and reports required to be filed by Section 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court. Yes No APPLICABLE ONLY TO
CORPORATE REGISTRANTS Indicate the number of shares outstanding of each of the
registrant's classes of common stock, as of latest practicable date. The number
of shares outstanding of the registrant's Common Stock as of November 30, 1995
was 5,609,732 shares, $.0001 par value per share. DOCUMENTS INCORPORATED BY
REFERENCE: List hereunder the following documents if incorporated by reference
and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the
document is incorporated: (1) any annual report to security-holders; (2) any
proxy or information statement; and (3) any prospectus filed pursuant to Rule
424(b) or (c) under the Securities Act of 1933. The listed documents should be
clearly des cribed for identification purposes. NONE
<PAGE>
PART I
Item 1. Business.
History
The Company was incorporated in New Jersey in April 1986 as a wholly-owned
subsidiary of JEC Lasers, Inc. ("JEC") to continue the research and development
of an ultra-compact, multi- kilowatt CO2 laser begun under an agreement with
Loughborough Consultants Ltd ("LCL"), which is affiliated with Loughborough
University of Technology, Loughborough, Leicestershire, England.
Due to the
uncertain financial condition of JEC and, in order to preserve the CO2 laser
technology which management felt may have had some value, on May 30, 1986, the
Board of Directors of JEC voted to spin-off Robotic Lasers into an independent,
publicly-owned corporation by issuing a stock dividend of one share of the
Company's Common Stock for every four shares of JEC common stock outstanding to
all shareholders of record as of July 8, 1986. On September 23, 1988, the shares
were registered under the Securities Act of 1933, as amended. On June 25, 1986,
the Company and JEC signed a Purchase Agreement whereby the Company acquired all
of the assets, rights and properties relating to JEC's CO2 laser research and
development agreement with LCL, subject to certain liabilities.
On March 3,
1995, the Company sold all of the assets, rights and properties relating to the
C02 laser research and development agreement with LCL, subject to certain
liabilities, to JEC for $345,593 which generated a profit of approximately
$246,000.
On August 9, 1995, the shareholders of the Company approved an
amendment to the Company's Certificate of Incorporation to effect a
fifty-five-for-one reverse stock split pursuant to which each fifty-five shares
of the Company's Common Stock outstanding as of its close of business on July
12, 1995 was replaced by one share of Common Stock. The reverse stock split
reduced the number of outstanding shares of Common Stock of the Company as of
July 12, 1995 from 30,853,352 to 560,970 (before July 16, 1996 two for one
reverse split) shares of Common Stock.
On August 11, 1995, Robotic Lasers
acquired Corporate Travel Link, Inc. (a development-stage enterprise) which was
incorporated on March 7, 1994, by issuing 5,048,730 (before July 16, 1996 two
for one reverse split) shares of restricted New Common Stock of the Company in
exchange for 300 shares of the Common Stock of Corporate Travel Link ("Travel
Link"), which represented all of the authorized, issued and outstanding shares
of common stock of Travel Link. As of August 11, 1995, the Company's business
and operations consist solely of the business and operations of Travel Link
which continues to operate as a wholly-owned subsidiary of the Company.
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SUBSEQUENT EVENT - On July 16, 1996, the Company's stockholders approved and
effectuated a two for one reverse stock split. Such split has been retroactively
reflected in the text of this document and in the accompanying consolidated
financial statements and t he accompanying notes. General The principal business
activity of the Company is developing a computerized limousine reservation and
payment system for the business traveler. The management of the Company
anticipates that the proprietary software that is being developed will enable
limousine reservations to be completely computerized -i.e., be entirely
automatic and operate without human intervention. At the present time, there are
four major airline reservations systems in operation in the United States --
"Sabre", "Worldspan", "Apollo" and "System One"(the "Reservation System"). Each
of these systems allows a travel agency or corporate travel department to make
an airline reservation and receive instantaneously a confirmation and a printed
airline ticket on any airline. It is also possible to make a hotel reservation
with one of the major hotel chains through any of the reservation systems and
receive an instantaneous confirmation of room availability. Additionally, a
travel agent or corporate travel manager may make an automobile reservation with
any one of the major car rental companies (Hertz, Avis and the like) through
these airline reservations systems, and receive an immediate confirmation of the
car rental reservation. When it comes to limousine reservations, however, there
is at present no method for making a reservation through one of the four major
airline reservation systems and receiving an immediate guaranteed confirmation.
The usual method of making a limousine reservation in a destination city is to
call a limousine company, if the travel agent knows of one. This use of the
telephone, with its attendant inconveniences such as "telephone tag" and missed
communications, can require up to a few hours to secure a confirmed limousine
reservation. It is also an expensive process for the travel agent or corporate
travel manager, due primarily to the personnel required to secure a binding
limousine reservation. There are also frequent billing errors and clerical
mistakes in scheduling. In today's cost-conscious business world, corporations
must explore every possible way to cut costs and save time. Under systems
presently in place, there is no quick, direct, and efficent way to reserve
limousine service. Today reservations are still being booked, changed, canceled
and reconfirmed by telephone, which is time-consuming, error-prone and
expensive. The Company seeks to solve the problems involved in making limousine
reservations for the business traveler by: 1. developing a limousine reservation
system that utilizes the airline computer reservation systems already in use; 2.
developing a way to identify and qualify the best limousine service providers in
the
<PAGE>
cities that are the business travelers most frequent destinations;
3. developing a way to disseminate reservation information to corporate clients
and to limousine service providers with no errors, with immediate confirmation
and without the need to utilize the telephone;
4. developing an automated
electronic payment system to process all fees charged by the Company to its
clients;
5. performing the above-described tasks with a high degree of quality
control; and
6. providing corporate clients with management and financial
information, to enable them to ascertain where costs are being incurred.
The
Company proposes to create its own computer system which will be linked with one
or more of the airline reservation systems. Any limousine reservations made
through the Reservation System will be relayed instantaneously to the Company's
computer and then to a service provider of the clients' choice -- all without
human intervention -- and an immediate limousine reservation will be confirmed.
In the event that the client has no relationship with a service provider or has
no preference, they will be able to access a national network service provider
through the Company's system. The Company is in the process of arranging access
to such national network services.
Employees
The Company presently employs 5
full-time employees, none of whom is covered by a collective bargaining
agreement. The Company also utilizes several software and marketing consultants
on a part-time basis. The Company believes its personnnel relations to be
satisfactory. Item 2. Properties The Company presently leases office space at
2401 Morris Avenue, Union, New Jersey. The five-year lease provides for a
monthly rental of $2,125.00 through November 2000 and contains approximately
1,500 square feet of office space. This property has been leased from
unaffiliated third parties and adaquately satisifies the present needs of the
Company. The Company anticipates that it will need approximately 3,500 square
feet in additional space in early 1997. Item 3. Legal Proceedings. The Company
is not a party to any litigation nor, to the knowledge of the Company, is any
litigation threatened.
<PAGE>
Item 4. Submission of Matters to a Vote of Security
Holders. A special meeting of the shareholders of the Company was held at the
offices of Paul A. Wurtzel, Esq., 300 Grand Avenue, Englewood, New Jersey 07631
on Wednesday, August 9, 1995 at 9:30 a.m. At the meeting, the shareholders of
the Company approved an amendment to the Company's Certificate of Incorporation
to effect a fifty-five-for-one reverse stock split pursuant to which each
fifty-five shares of the Company's Common Stock outstanding as of the end of
business on July 12, 1995 was replaced by one share of New Common Stock. The
Reverse Stock Split reduced the number of outstanding shares of Common Stock of
the Company as of July 12, 1995 from 30,853,352 to 560,970. The annual meeting
of shareholders of the Company was held at the offices of Corporate Travel Link,
Inc., 2401 Morris Avenue, 3rd Floor, Union, New Jersey, 07083, on Tuesday, July
16, 1996, at 9:30 A.M. At the meeting the shareholders of the Company approved
an amendment to the Company's Certificate of Incorporation to effect a
two-for-one reverse stock split pursuant to which each two shares of the
Company's new common stock outstanding as of the end of business of June 25,
1996, was replaced by one share of Common Stock of Genisys Reservation Systems,
Inc. The reverse stock split reduced the number of outstanding shares of common
stock of the Company as of June 25, 1996, from 5,669,731 to 2,834,866. Item 5.
Market for the Registrant's Common Equity and Related Stockholder Matters.
Market Information The Company's Common Stock is eligible to trade in the
over-the-counter market, however, the Company has been unable to locate any
market makers in its stock. The following table indicates the quarterly high and
low bid prices for the last two years for the Company's Common Stock, which
became publicly traded on September 23, 1988:Common Stock, which became publicly
traded on September 23, 1988:
Bid Price Bid Price
1995 1994
Quarter Ended High Low High Low
November 30 Not Available Not Available
February 28 Not Available Not Available
May 31 Not Available Not Available
August 31 Not Available Not Available
The foregoing prices were provided by the National Quotation Bureau.
Approximate Number of Equity Security Holders
Approximate Number of
Holders of Record as
Title of Class of August 31, 1995
Common Stock,
$.OOOI par value 1,100
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Included in the number of stockholders of record are shares held in "nominee" or
"street" name. Dividends The Company has never paid any cash dividends. The
Company presently intends to retain any future earnings for use in its
operations and, therefore, does not expect to pay cash dividends in the
foreseeable future. Item 6. Selected Financial Data. The following table sets
forth selected financial data with respect to the statements of operations and
balance sheets of the Company for the five years ended August 31, 1995. The
selected financial data is derived from the unaudited statements of operations
and balance sheets for years ended August 31, 1991 and August 31, 1992 and from
the audited statements of operations and balance sheets for the years ended
August 31, 1993, August 31, 1994 and August 31, 1995.
Selected Financial Data:
Years Ended August 31,
1995 1994 1993
(audited) (audited) (audited)
(consolidated)
Net sales $ $ $
Net income (loss) incurred
during the development
stage (269,080) 47,802 (45,102)
Net income (loss) per
common share ( .11) .0019 (.0018)
Working capital
(Deficit) (540,198) (584,620) (640,370)
Total assets 260,002 161,581 116,884
Total liabilities 555,079 640,570 643,675
Stockholders' equity
(Deficit) (295,077) ( 478,989) (526,791)
Years Ended August 31,
1992 1991
(unaudited) (unaudited)
Net sales $ $
Net income (loss) incurred
during the development
stage ( 46,885) ( 59,334)
Net income (loss) per
common share ( .0019) ( .0024)
Working capital
(Deficit) ( 603,892) (566,282)
Total assets 123,569 203,102
Total liabilities 605,258 637,906
Stockholders' equity
(Deficit) ( 481,689) (434,804)
<PAGE>
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations. Operations, Liquidity and Capital Resources The Company is in the
development stage and has not yet generated any revenues from operations. As
reflected in the accompanying financial statements, the Company has incurred
losses of $269,080 since inception and at August 31, 1995 had a working capital
deficit of $540,198.
At August 31, 1995, current assets were lower than current
liabilities by $540,198, while at August 31, 1994, current assets were lower
than current liabilities by $23,616. The current ratio was 0.027:1 at
August 31, 1995, compared to 0.0002:1 a year earlier.
Selling, general and administrative
expenses were $256,621 for the year ended August 31, 1995 as compared to $31,416
for fiscal 1994, an increase of $225,205 or 717%.
The Company's funds have been
provided from Loeb Holding Corp., as agent, ( See Note 4), advances from
stockholders and LTI Ventures Leasing Corporation (See Note 5).
On February 8,
1995, the Company and Loeb Holding Corp., as agent ("Loeb") signed an interim
loan agreement whereby Loeb loaned the Company the sum of $60,000, due in 60
days together with interest of 9%, to be used as working capital. Additionally,
on March 23, 1995, May 3, 1995, May 8, 1995, June 16, 1995 and July 3, 1995, the
Company and Loeb signed additional interim loan agreements whereby Loeb loaned
the Company the sums of $25,000, $185,000, $40,000, $50,000 and $75,000,
respectively. Each of these additional interim loans were due in 60 days from
the date of the agreement and accrued interest at 9%.
On September 5, 1995, the
Company and Loeb Holding Corp. signed an agreement whereby Loeb purchased
841,455 shares of New Common Stock of the Company. In consideration for the sale
of the stock, Loeb agreed to loan the Company up to a maximum of $500,000 as
evidenced by two Promissory Notes dated September 5, 1995, one in the principal
amount of $475,000 and the other in the principal amount of $25,000.
(a) The promissory note for $475,000 supersedes the above Interim
Loan Agreements and
repayments of the advances is governed by these promissory notes and not by the
provisions of any of the interim loan agreements.
The principal amount of the
$475,000 note is to be repaid in 12 equal quarterly payments commencing two (2)
years from the date of said note. Prepayments may be made at any time without
penalty. Interest is accrued at the rate of nine percent (9%) per annum and
interest, payments are to be made quarterly at the end of each calendar quarter,
or at such earlier date that this Note becomes due and payable as a result of
acceleration, prepayment or as otherwise provided herein. Interest shall begin
to run from the date that the monies are or were advanced to the Maker. On March
31, 1996, all interest that has accrued through that date shall be calculated
and shall be paid in four equal installments on March 31, 1996, June 30, 1996,
<PAGE>
September 30, 1996 and December 31, 1996. In addition, the first quarterly
interest payment shall be made on March 31, 1996, for interest due for the first
quarter of 1996, and quarterly interest payments shall be made thereafter on
March 31st, June 30th, September 30th and December 31st of each year.
(b) The
Promissory Note for $25,000 accrues interest at the rate of nine percent (9%)
per annum payable quarterly and is convertible at the sole option of the holder
into a maximum of an additional 30% of common shares of the Company determined
by a
sliding scale based on the audited pretax profits of the Company during the
second and third years of operations of the Company on a sliding scale based
upon the Company achieving between 50% and 80% of the projections provided to
Loeb. (Example: if the Company achieves 80% or better of projection, no
conversion; if the Company achieves 50% or less of projection, conversion into
30% of the Company; if the Company achieves between 50% and 80% of projection,
the note is convertible into the pro-rate portion of 30% of the Company, i.e.,
70% achievement equals one-third of the 30% of the Company.) Unless previously
converted, the principal amount of the note shall be repaid by the Company in
twelve (12) equal quarterly installments, the first principal payment to be made
on April 1, 1998. On December 1, 1995, the Company and Loeb signed an interim
loan agreement whereby Loeb loaned the Company the sum of $50,000 due in 60 days
together with interest of 9% to be used as working capital. Additionally on
December 4, 1995, January 16, 1996, February 23, 1996 and March 12, 1996, the
Company and Loeb signed additional interim loan agreements whereby Loeb loaned
the Company the sums of $100,000, $50,000, $25,000 and $25,000 respectively.
Each of these additional interim loans were due in 60 days from the date of each
agreement and accrued interest at 9% per annum. Loeb has the option to convert
the five interim loan agreements into two term Promissory Notes, one in the
principal amount of $237,500 and the other in the principal amount of $12,500.
The two promissory notes would supersede the above interim Loan Agreements and
repayment of the advances would be governed by these promissory notes and not by
the provisions of any of the interim loan agreements. In consideration for the
conversion of the interim loan agreements into the two term Promissory Notes,
Loeb will receive 420,728 shares of Common Stock of the Company. The principal
amount of the $237,500 note is to be repaid in 12 equal quarterly payments
commencing two (2) years from the date of said note. Prepayments may be made at
any time without penalty. Interest is accrued at a rate of 9% per annum and
interest payments are to be made quarterly at the end of each calendar quarter,
or at such earlier date that the Note becomes due and payable as a result of
acceleration, prepayment or as otherwise provided therein. Interest shall begin
to run from the date that the monies are or were advanced to the Company. The
Promissory Note for $12,500 will accrue interest at the rate of 9% per annum
payable quarterly and is convertible at the sole option of the holder into a
maximum of an additional 15% of the common shares of the Company determined by a
sliding scale based on the audited pretax
<PAGE>
profits of the Company during the
second and third years of operations of the Company on a sliding scale based
upon the Company achieving between 50% and 80% of the projections provided to
Loeb. (Example: If the Company achieves 80% or better of projection, no
conversion; if the Company achieves 50% or less of projection, conversion into
15% of the Company; if the Company achieves between 50% and 80% of projection,
the note is convertible into the pro-rata portion of 15% of the Company, i.e.,
70% achievement equals one-third of the 15% of the Company). Unless previously
converted, this $12,500 principal amount, together with any accrued but unpaid
interest, shall become a demand note after the third year of operation of the
Company. On September 30, 1995, the Company entered into a sale and lease-back
arrangement with LTI Ventures Leasing Corp. (LTI) whereby the Company sold the
bulk of its computer hardware and commercially purchased software to LTI. In
consideration for the sale, the Company received a total of $169,599 and agreed
to lease back the hardware and software for varying terms at a monthly rental
totaling $7,039. During the quarter ended March 31, 1996, the Company sold 5,000
shares of the Company's restricted Common Stock to a former officer and director
of the Company for $10,000. During the same period, the Company also sold 25,000
shares of the Company's restricted Common Stock to an unrelated party for
$50,000. Pursuant to a private offering, the Company issued 11.5 units to
various unrelated third parties in May and June 1996. Each $50,000 unit consists
of a $49,000 promissory note and a Class A redeemable Common Stock purchase
Warrant valued at $1,000 per unit. Each warrant entitles the holder to purchase
25,000 shares of the Company's common stock at $5.75 per share. Total proceeds
received from this offering was $575,000 and warrants to purchase 287,500 shares
of the Company's common stock were issued. In April and June 1996, the Company
borrowed a total of $30,000 from two unrelated third parties. The maturity date
is the earlier of January 1, 1998, or the consummation of a public offering of
the Company`s common stock. These notes bear interest at a rate of 7% per annum,
payable on the last day of each calendar quarter of each year, commencing March
31, 1997, to the maturity date. If the maturity date of these notes shall occur
prior to January 1, 1998, in lieu of the $30,000 payment of the principal amount
due, the principal amount due shall be converted into 15,000 fully paid and
non-assessable shares of common stock of the Company. At August 31, 1995, the
Company had cash and cash equivalents of $11,147 and a working capital deficit
of $540,198. At June 30, 1996, the Company had cash of $396,928 and a working
capital deficit of $805,151. Management of the Company estimates that it will
require additional funding of approximately $750,000 to provide for its planned
operations for the next six months. The Company is exploring a number of options
to raise the required funds.
<PAGE>
Inflation is not expected to have any material
effect on the Company. Item 8. Financial Statements and Supplementary Data. See
Pages Fl through Fll. PART III Item 10. Directors and Executive Officers of the
Registrant. The following table sets forth certain information with respect to
each of the Company's directors and executive officers.
The following table sets forth certain information with respect to each of the
Company's directors and executive officers.
NAME AGE POSITION
Joseph Cutrona 58 President and Director
John Wasko 58 Secretary/Treasurer and Director
Mark A. Kenny 43 Director
Warren D. Bagatelle 58 Director
The Company's Executive Committee is empowered to exercise full authority of the
Board of Directors in circumstances when convening the full Board is not
practicable. Mr. Warren D. Bagatelle, Mr. John H. Wasko, and Mr. Joseph Cutrona
currently serve as members. Joseph Cutrona has served the Company as President
and Chairman of the Board since August 1995, and has served as President of
Travel Link since inception, March 11, 1994. He has been employed full time by
Travel Link since March 1995. From 1992 to 1995, Mr. Cutrona was engaged as a
marketing consultant of Country Club Transportation Services, Newark, New
Jersey, a company providing limousine services. From 1990 to 1992, he served as
Marketing Director of Gem Limousine, Edison, New Jersey, a provider of limousine
services. From 1978 to 1990, Mr. Cutrona provided limousine consulting services
to large corporations in the tri-state area. Mr. Cutrona graduated from
Fairleigh Dickinson University and The University of Maryland and Sophia
University, Osaka Japan. John H. Wasko has served the Company as Secretary since
September 1995, as Secretary and Treasurer since April 1996, and as a Director
since its inception in April 1986. Mr. Wasko has also served the Company as
President and Chairman of the Board since its inception to August 1995, and as
Treasurer from April 1986 to September 1987 and from May 1988 to August 1995.
Mr. Wasko has also served as Chairman of the Board, President and Director of
JEC Lasers, Inc. ("JEC") since it was organized in September 1977. He was
awarded a bachelor of science degree in physics in 1963 and a master of science
degree in physics (summa cum laude) in 1965 from Fairleigh
<PAGE>
Dickinson
University. Mark A. Kenny, currently a consultant to the Company, served as the
Company`s Executive Vice President from August 1995 to October 1996 and Director
since August 1995 and has served as Executive Vice President of Travel Link
since inception, March 11, 1994 to October 1996. From 1974 to the present, Mr.
Kenny has been a partner of Country Club Transportation Services, a provider of
limousine services, which he co-founded in 1974. Mr. Kenny is one of the
original members of the New Jersey Business Travel Association and attended
Seton Hall Preparatory School and Seton Hall University. He is also a member of
the Association of Corporate Travel Executives and a charter member of the New
Jersey Limousine Association. Warren D. Bagatelle has been, since 1988, a
Managing Director at Loeb Partners Corporation, a New York City investment
banking firm and member of the New York and American Stock Exchanges. Mr.
Bagatelle is also a director of Energy Research Corporation, a company engaged
in the development and commercialization of electrical storage and power
generation equipment, principally fuel cells and rechargeable storage batteries,
Rotary Power International, Inc., a developer and manufacturer of rotary
engines, and Sports Media, Inc., a sports publishing and marketing company. From
1981 to 1987, he was head of Corporate Finance and Chairman of Josephthal, Lyon
& Ross Incorporated (formerly Rosenkrantz, Lyon & Ross, Inc.) an investment
banking firm. Mr. Bagatelle has a B.A. in economics from Union College and an
M.B.A from Rutgers University. Item 11 . Management Remuneration and
Transactions. The following tabulation shows the total compensation paid by the
Company for services in all capacities during the year ended August 31, 1995,
1994 and 1993 to the Officers of the Company and total compensation for all
Officers as a group for such period: Long-Term Compensation
Other Annual
Name and Annual Compensation Compensation
Principal Year Salary $ Bonus ($)
Position
Joseph Cutrona 1995 $28,000.00 $0 $3,840
President 1994 $0 $0 $4,000
1993 $0 $0 $0
Mark A. Kenny 1995 $28,000.00 $0 $3,840
1994 $0 $0 $4,000
1993 $0 $0 $0
John H. Wasko 1995 $0 $0 $2,500
Secretary 1994 $0 $0 $0
Treasurer 1993 $0 $0 $0
Long Term Compensation
Awards Payouts
Restricted All other
Name and Stock Options LTIP Compensa-
Principal Awards SARs Payouts(#) tion($)
Position
Joseph Cutrona 1995 0 0 0
President 1994 0 0 0
1993 0 0 0
Mark A. Kenny 1995 0 0 0
1994 0 0 0
1993 0 0 0
John H. Wasko 1995 0 0 0
Secretary 1994 0 0 0
Treasurer 1993 0 0 0
<PAGE>
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The following tabulation shows the security ownership as of June 25, 1996 of (i)
each person known to the Company to be the beneficial owner of more than 5% of
the Company's outstanding Common Stock,(not including 333,216 shares issued to
Steven Pollan which the Company has given notice of cancellation of as a result
of certain misrepresentations by Mr. Pollan to the Company) (ii) each Director
and Officer of the Company, and (iii) all Directors and Officers as a group.
NUMBER OF PERCENT
NAME & ADDRESS SHARES OWNED OF CLASS
Loeb Holding Corp.
As Agent (1)
61 Broadway
New York, NY 10006 841,455 29.68%
Warren D. Bagatelle
(1)(2)
Loeb Partners Corp.
61 Broadway
New York, NY 100061 848,194 29.92%
Joseph Cutrona
Genysis Reservation Systems
2401 Morris Avenue
Union, NJ 07083 666,433 23.51%
Mark A Kenny
10 Lisa Drive
Chatham, NJ 07928 666,433 23.51%
John H. Wasko
(3) (4)
Genysis Reservation Systems
2401 Morris Avenue
Union, NJ 07083 115,872 4.09%
All Officers and Directors
as a group (4 persons) 2,296,932 81.02%
(1) Does not include 420,728 Common Shares to be received by Loeb Holding Corp.,
as agent for non-affiliated persons, upon conversion of the interim loan
agreements into two Promissory Notes. (2) Includes 841,455 Common Shares
purchased by Loeb Holding Corp. as agent for Warren D. Bagatelle, Managing
Director of Loeb Partners Corp., HSB Capital of which Warren
<PAGE>
Bagatelle is
a partner and a number of other customers of and trusts managed by, Loeb
Partners Corp., and 6,739 Common Shares owned directly by Warren D. Bagatelle
and 2,233 Common Shares owned directly by HSB Capital. (3) Includes 29,383
Common Shares owned of record by Joan E. Wasko, John Wasko's wife, of which Mr.
Wasko disclaims beneficial ownership, but of which he may be deemed beneficial
owner. (4) Includes a 5-year option to purchase 25,000 shares of the Company's
Common Stock at a price of $0.60 per share granted to Mr. Wasko by the Company
on August 11, 1995. Messrs. Cutrona and Kenny may be deemed to be "parents" and
"promoters" of the Company, as those terms are defined in the rules and
regulations of the Securities Act of 1933, as amended. In August 1994 and
February 1995, Messrs. Cutrona and Kenny each received their Common Stock in the
Company for $7,840 of contributed services provided to the Company. In August
1994 and February 1995, Mr. Pollan received his common stock in the Company for
$3,920.
Item 13. Certain Relationships and Related Transactions.
During February 1995, the Company issued 45,765 shares of its Common Stock in
repayment of certain liabilities totaling $251,702. Those liabilities include
notes payable to Saddle Brook Investors of $149,633, note payable plus accrued
interest to a director of $34,273 and certain accounts payable of $67,796.
During March 1995, John H. Wasko, then President of the Company, upon exercise
of his own option, acquired 70,520 shares of the Common Stock of the Company at
an exercise price of $0.02145 per share. On March 3, 1995, the Company and JEC
signed a purchase agreement whereby JEC acquired all of the assets, rights and
properties relating to the Company's CO2 laser research and development
agreement with LCL, subject to certain liabilities, in full consideration for
the forgiveness of the indebtedness of the Company to JEC in the amount of
$345,593 owed as of February 28, 1995. On August 11, 1995, Robotic Lasers
acquired Travel Link, by issuing 5,048,730 shares (before reverse split) of
restricted New Common Stock of the Company in exchange for 300 shares of the
common stock of Travel Link owned by Joseph Cutrona, Mark A. Kenny and Steven E.
Pollan which represented all the authorized, issued and outstanding shares of
common stock of Travel Link. As of August 11, 1995, the Company's business and
operations consist solely of the business and operations of Travel Link which
continues to operate as a wholly-owned subsidiary of the Company. Travel Link (a
development-stage enterprise) was incorporated on March 7, 1994. The principal
business activity of Travel Link is developing a computerized limousine
reservation and payment systems for the business traveler. On September 30,
1995, 841,455 Common Shares of the Company were purchased by Loeb
<PAGE>
for Warren
D. Bagatelle, HSB Capital and a number of other customers of, and trusts managed
by Loeb. Loeb recieved such shares as well as $750,000 in Promissory Notes in
consideration for $750,000 loaned to the Company in cash. On December 1, 1995,
the Company and Loeb signed an interim loan agreement whereby Loeb loaned the
Company the sum of $50,000 due in 60 days together with interest of 9% to be
used as working capital. Additionally on December 4, 1995, January 16, 1996,
February 23, 1996 and March 12, 1996, the Company and Loeb signed additional
interim loan agreements whereby Loeb loaned the Company the sums of $100,000,
$50,000, $25,000 and $25,000 respectively. Each of these additional interim
loans were due in 60 days from the date of each agreement and accrued interest
at 9% per annum. Loeb has the option to convert the five interim loan agreements
into two term Promissory Notes, one in the principal amount of $237,500 and the
other in the principal amount of $12,500. The two promissory notes would
supersede the above interim Loan Agreements and repayment of the advances would
be governed by these promissory notes and not by the provisions of any of the
interim loan agreements. In consideration for the conversion of the interim loan
agreements into the two term Promissory Notes, Loeb will receive 420,728 shares
of Common Stock of the Company. The principal amount of the $237,500 note is to
be repaid in 12 equal quarterly payments commencing two (2) years from the date
of said note. Prepayments may be made at any time without penalty. Interest is
accrued at a rate of 9% per annum and interest payments are to be made quarterly
at the end of each calendar quarter, or at such earlier date that the Note
becomes due and payable as a result of acceleration, prepayment or as otherwise
provided therein. Interest shall begin to run from the date that the monies are
or were advanced to the Company. The Promissory Note for $12,500 will accrue
interest at the rate of 9% per annum payable quarterly and is convertible at the
sole option of the holder into a maximum of an additional 15% of the common
shares of the Company determined by a sliding scale based on the audited pretax
profits of the Company during the second and third years of operations of the
Company on a sliding scale based upon the Company achieving between 50% and 80%
of the projections provided to Loeb. (Example: If the Company achieves 80% or
better of projection, no conversion; if the Company achieves 50% or less of
projection, conversion into 15% of the Company; if the Company achieves between
50% and 80% of projection, the note is convertible into the pro-rata portion of
15% of the Company, i.e., 70% achievement equals one-third of the 15% of the
Company). Unless previously converted, this $12,500 principal amount, together
with any accrued but unpaid interest, shall become a demand note after the third
year of operation of the Company. In August 1994 and February 1995 Joseph
Cutrona and Mark Kenny each received common stock in the Company for $7,840 of
contributed services provided to the Company. In August 1995 the Company granted
Mr. Wasko a 5 year option to purchase 25,000 shares of the Company`s common
stock at a price of $0.60 per share. In August 1996, the Company gave notice to
Mr. Pollan that it was cancelling the 333,216
<PAGE>
shares of its Common Stock which
had been issued to him in connection with the acquisition of Travel Link. The
reason for such cancellation related to various claims made by the Company
against Mr. Pollan as a result of material misrepresentation made to the Company
and failure to provide services to the Company. Mr. Pollan has informed the
Company that he will legally contest any attempt by the Company to cancel his
shares.services to the Company. Mr. Pollan has informed the Company that he
will legally contest any ttempt by the Company to cancel his shares.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) (1) Financial Statements
Included in Part II of this report:
Balance Sheets - August 31, 1995 and 1994.
Statements of Operations During the Development Stage - For thePeriod from
Inception through August 31, 1995 and for the Years Ended August 31, 1995, 1994
and 1993.
Statements of Cash Flows - For the Period from Inception through August 31,
1995, and for the Years Ended August 31, 1995, 1994 and 1993.
Statement of Changes in Stockholders' Equity - For the Years Ended August 31,
1995, 1994 and 1993.
Notes to Financial Statements.
(2) Financial Statements Schedules
There are no schedules which are applicable or required to be filed for the
three years ended August 31, 1995, 1994 and 1993.
(3) Exhibits
None.
(b) Reports on Form 8-K
The following report relating to the fiscal year ended August 31, 1995 was
filed:
Form 8-K dated August 11, 1995.
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Independent Auditors' Report F-2
Consolidated Financial Statements:
Consolidated Balance Sheets at August 31, 1995 and 1994 F-3
Consolidated Statements of Operations for the Year
Ended August 31, 1995, and the Periods From March 7,
1994 (date of inception) to August 31, 1994 and to
August 31, 1995 F-4
Consolidated Statements of Changes in Stockholders'
Equity (Deficiency) for the Year Ended August 31,
1995, and the Period From March 7, 1994 (date of
inception) to August 31, 1994 F-5
Consolidated Statements of Cash Flows for the Year Ended
August 31, 1995, and the Periods From March 7, 1994 (date
of inception) to August 31, 1994 and to August 31, 1995 F-6
Notes to Consolidated Financial Statements F-7 to F-14
F-1
<PAGE>
INDEPENDENT AUDITORS'REPORT
To the Board of Directors and Stockholders of
Genisys Reservation Systems, Inc.
(A Development Stage Company)
We have audited the accompanying consolidated balance sheets of Genisys
Reservation Systems, Inc. and Subsidiary (formerly Robotic Lasers, Inc. and a
Development Stage Company) as of August 31, 1995 and 1994 and the related
consolidated statements of operations, changes in stockholders'equity and cash
flows for the year ended August 31, 1995 and for the periods from March 7, 1994
(date of inception) to August 31, 1994 and 1995. These financial statements are
the responsibility of the Company's management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We conducted our
audits in accordance with generally accepted auditing standards. Those standards
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the
consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Genisys Reservation Systems, Inc.
and Subsidiary (formerly Robotic Lasers, Inc. and a Development Stage Company)
their operations and their cash flows for the year ended August 31, 1995 and for
the periods from March 7, 1994 (date of inception) to August 31, 1994 and 1995,
in conformity with generally accepted accounting principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Copany is a development stage company and has
suffered recurring losses from operations that raise substantial doubt about
its ability to continue as a going convern. Management's plans in regard to
these matters are also described in Note 2. The financial statements do not
include any adjustements that might result from the outcome of this
uncertainty.
Wiss & Company, LLP
Woodbridge, New Jersey
July 8, 1992
F-2
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(Formerly Robotic Lasers, Inc.)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
August 31,
ASSETS 1995 1994
CURRENT ASSETS:
Cash $11,147 $ 5
Prepaid expenses 3,734 -
Total Current Assets 14,881 5
DEPOSITS AND OTHER ASSETS 245,121 2,106
AND OTHER
$260,002 $2,111
LIABILITIES AND STOCKHOLDERS' EQUITY
(DEFICIENCY)
CURRENT LIABILITIES:
Notes payable - private investor $435,000 $ -
Accounts payable and accrued expenses 87,242 -
Current portion of obligations
under computer equipment leases - -
Accounts payable - related party 4,800 12,800
Accrued interest payable - private
investor 12,244 -
Payroll taxes payable 8,973 -
Loans payable - stockholders,
non-interest bearing 6,820 10,821
Total Current Liabilities 555,079 23,621
COMMITMENTS
STOCKHOLDERS' EQUITY (DEFICIENCY):
Preferred stock, $.0001 par value:
25,000,000 shares authorized; none
outstanding - -
Common stock, $.0001 par value:
75,000,000 shares authorized;
2,804,866 shares issued and outstanding 280 -
Common stock, no par value: 2,524,379
shares authorized, issued and outstanding - 10,000
Additional paid-in capital 5,233 -
Deficit accumulated during development
stage (300,590) (31,510)
Total Stockholders' Equity (Deficiency) (295,077) (21,510)
$260,002 $ 2,111
See accompanying notes to consolidated financial statements.
F-3
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(Formerly Robotic Lasers, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
Period From
Year March 7, 1994
Ended (Date of Inception) to
August 31, August 31, August 31,
1995 1994 1995
REVENUES AND EXPENSES
DURING THE DEVELOPMENT
STAGE:
Revenues $ - $ - $ -
Expenses:
General and
administrative 256,621 31,416 288,037
Depreciation and
amortization 240 94 334
Interest expense 12,219 - 12,219
269,080 31,510 300,590
NET LOSS INCURRED
DURING THE
DEVELOPMENT STAGE $(269,080) $(31,510) $(300,590)
NET LOSS PER
COMMON SHARE $(.11) $(.01) $(.12)
WEIGHTED AVERAGE
NUMBER OF COMMON
SHARES OUTSTANDING
2,539,739 2,524,379 2,534,777
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(Formerly Robotic Lasers, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
Deficit
Accumulated
Additional During the
Common Stock Paid-in Development
Total Shares Par Value Capital Stage
PERIOD ENDED
AUGUST 31, 1994:
Issuance of
common stock at
March 7, 1994
(inception) for
services rendered,
valued at
approximately
$.004 per share $10,000 2,524,379 $10,000 $ - $ -
Net loss (31,510) - - - (31,510)
BALANCE,
AUGUST 31, 1994 (21,510) 2,524,379 10,000 - (31,510)
YEAR ENDED
AUGUST 31, 1995:
Contribution of
services rendered 9,600 - 9,600 - -
Net assets
received (liabilities
assumed) in
reverse acquisition
of Robotic
Lasers, Inc. (14,087) 280,487 28 (14,115) -
Change in par value - - (19,348) 19,348 -
Net loss (269,080) - - - (269,080)
BALANCE, AUGUST 31,
1995 $(295,077) 2,804,866 $280 $5,233 $(300,590)
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(Formerly Robotic Lasers, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Period From
Year March 7, 1994
Ended (Date of Inception), to
August 31, August 31, August 31,
1995 1994 1995
CASH FLOWS FROM
OPERATING ACTIVITIES:
Net loss $(269,080) $(31,510) $(300,590)
Adjustment to reconcile
net loss to net cash
flows from operating
activities:
Amortization 240 94 334
Contribution of services
rendered to capital 9,600 10,000 19,600
Changes in operating assets
and liabilities:
Prepaid expenses (3,734) - (3,734)
Other assets (243,255) (2,200) (245,455)
Accounts payable and
accrued expenses 73,155 - 73,155
Payroll taxes payable 8,973 - 8,973
Accrued interest payable 12,244 - 12,244
Net cash flows from
operating activities (411,857) (23,616) (435,473)
CASH FLOWS FROM INVESTING
ACTIVITIES - - -
CASH FLOWS FROM FINANCING
ACTIVITIES:
Advances from (repayments to)
stockholders (4,001) 10,821 6,820
Loans and advances from
related parties (8,000) 12,800 4,800
Proceeds from issuance
of notes payable 435,000 - 435,000
Net cash flows
from financing activities 422,999 23,621 446,620
NET CHANGE IN CASH 11,142 5 11,147
CASH, BEGINNING OF PERIOD 5 - -
CASH, END OF PERIOD $11,147 $ 5 $ 11,147
SUPPLEMENTAL CASH FLOW
INFORMATION:
Interest paid $ - $ - $ -
Net liabilities assumed
in reverse acquisition $14,087 $ - $14,087
See accompanying notes to consolidated financial statements.
F-6
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(Formerly Robotic Lasers, Inc.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - History of the Company, Nature of the Business and Summary of
Significant Accounting Policies: History of the Company and Nature of the
Business - Genisys Reservation Systems, Inc. (the "Company") was incorporated in
April 1986 as Robotic Lasers, Inc. In March 1995, the Company sold all of its
assets, rights and properties relating to a certain laser research and
development agreement (subject to certain liabilities). On August 11, 1995, the
Company acquired Corporate Travel Link, Inc. ("Travel Link") a development stage
company, by issuing 5,048,730 shares of its restricted common stock in exchange
for all of the authorized, issued and outstanding shares of common stock of
Travel Link. For accounting purposes, the share exchange transaction and
combination of Travel Link with the Company has been treated as a reverse
acquisition. The previous historical financial statements of the Company are no
longer reported and the financial statements of Travel Link (since its formation
in March 1994) are now reported as the historical consolidated financial
statements of the Company and its subsidiary. The Company is a development stage
company and is engaged in developing a computerized limousine reservation system
for the business traveler. The Company anticipates that the proprietary software
being developed will enable a system of limousine reservations to be completely
computerized and operate without human intervention. The Company has generated
no revenues and has no commercial operations to date. The Company has been
unprofitable since inception and expects to incur additional operating losses
over the next several years. The Company does not expect to generate any
revenues from operations during 1995 and 1996. Estimates and Uncertainties - The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results, as determined at a later date, could differ from those
estimates. Principles of Consolidation - As indicated above, the consolidated
financial statements include the accounts of the Company's wholly-owned
subsidiary, Travel Link and, since August 11, 1995, those of the Company.
Retroactive effect has been given to the exchange of shares for Travel Link to
March 7, 1994. All significant intercompany transactions and accounts have been
eliminated in consolidation.
F-7
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(Formerly Robotic Lasers, Inc.) (A Development Stage Company) NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS Financial Instruments - Financial instruments
include cash and equivalents, other assets, accounts payable, accrued expenses
and long-term debt. The amounts reported for financial instruments are
considered to be reasonable approximations of their fair values, based on market
information available to management. Cash and Equivalents - The Company
considers all highly liquid debt instruments purchased with a maturity of three
months or less to be cash equivalents. Concentration of Credit Risk - The
Company maintains its cash balances in several financial institutions. The
accounts at each institution are insured by the Federal Deposit insurance
Corporation up to $100,000. At August 31, 1995, there were no uninsured
balances. Income Taxes - Deferred tax assets and liabilities are computed
annually for temporary differences between the financial statement and tax bases
of assets and liabilities that will result in taxable or deductible amounts in
the future based on enacted tax laws and rates applicable to the periods in
which the temporary differences are expected to affect taxable income. Valuation
allowances are established when necessary to reduce deferred tax assets to the
amount expected to be realized. Net Income (Loss) Per Common Share - Net income
(loss) per common share is based upon the weighted average number of outstanding
common shares. The shares issuable upon the exercise of outstanding warrants and
options have been excluded since the assumed conversion would be antidilutive,
due to net losses for all periods presented.
Note 2 - Operating and Liquidity Difficulties and Management's Plans to
Overcome: The accompanying financial statements of the Company have been
presented on the basis that it is a going concern, which contemplates the
realization of assets and the satisfaction of liabilities in the normal course
of business. The Company has reported net losses since inception and expects to
incur additional operating losses over the next several years. The Company has
also experienced liquidity difficulties since inception, and in order to
continue the development of the Company's reservation system, needs significant
additional financing. The Company has financed its operations since inception
with the proceeds from the issuance of long-term debt. Since inception, the
operations of the Company have been limited to market research and developing a
software and hardware system for computerizing the limousine reservation system.
These efforts are at a preliminary stage and will
F-8
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY (Formerly Robotic Lasers, Inc.)
(A Development Stage Company) NOTES TO CONSOLIDATED FINANCIAL STATEMENTS require
further technical development and additional financing before a determination of
the system's commercial feasibility can be made. No assurance can be given that
the Company's reservation system will achieve commercial feasibility. The
Company's working capital and its capital requirements will depend upon numerous
factors, including, without limitation, the progress of the Company's system
development, competition, industry technological advances and the ability of the
Company to market its limousine reservation system. The Company will require
additional significant financing to complete the system development, cover
anticipated losses and sustain operations in 1995 and beyond and, in addition,
to satisfy the repayment of long-term debt. There can be no assurance that the
financing needed for attaining commercial viability of the Company's reservation
system will be obtained. If the Company is unable to raise sufficient capital,
it will delay and could prevent the completion of the development of the
reservation system. The Company intends to fund its operations and other capital
needs for the next twelve months principally from the proceeds from the issuance
of long-term debt and the net proceeds of a contemplated public offering, but
there can be no assurance that such proceeds, if obtained, will be sufficient
for these purposes. There is also no assurance that such financing will be
available, or that it will be available on acceptable terms. Reference should be
made to "Management's Discussion and Analysis of Financial Condition and Results
of Operations" included elsewhere herein for additional information.
Note 3 - Deposits and Other Assets:
At August 31, 1995, deposits and other assets consist
of the following:
Deposits on computer equipment and system $244,255
Organization costs, net of accumulated amortization of $334
866
$245,121
Note 4 - Notes Payable to Private Investor:
Through August 31, 1995, a private investor loaned the Company a
total of $435,000. In September 1995, the private investor loaned
the Company an additional $65,000 and signed an agreement whereby
the private investor
F-9
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(Formerly Robotic Lasers, Inc.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
converted its $500,000 loan to the Company into two (2) Promissory Notes, with
principal amounts of $475,000 and $25,000, respectively. The $475,000 note is to
be repaid in twelve equal quarterly installments commencing two years from the
date of such note. This note bears interest at nine percent (9%) per annum and
interest payments are to be made quarterly at the end of each calendar quarter
or at such earlier date that this note becomes due and payable as a result of
acceleration, pre-payment or as otherwise provided therein. Interest accrued
through March 31, 1996 was calculated and was to be paid in four (4) equal
installments on March 31, June 30, September 30 and December 31, 1996. The
$25,000 promissory note accrues interest at nine percent (9%) per annum (payable
quarterly) and is convertible at the sole option of the note holder into a
maximum of an additional 30% of shares of common stock of the Company based on
the Company achieving certain results of operations as compared to the projected
results of operations provided to the private investor. If the Company achieves
pre-tax profit of at least 80% of the projected results of operations, there is
no conversion option. Unless previously converted, the principal of this note
shall be repaid by the Company in 12 equal quarterly installments, commencing
April 1, 1998.
Note 5 - Commitments: Leases - In September 1995, the Company
entered into a sale and lease-back arrangement whereby the Company sold the bulk
of its computer hardware and commercially purchased software to a lessor for
approximately $170,000 and agreed to lease back such equipment for initial terms
ranging from 24 to 30 months. As of August 31, 1995, no borrowings were
outstanding under this lease obligation. The Company leases its administrative
facilities under a five-year lease expiring in November 2000. The lease provides
for annual rent of $25,500. The Company also has two automobile leases which
provide for future lease payments of $12,000 and $5,000 for the years ending
August 31, 1996 and 1997. Rent expense totalled $14,000 and $7,000 for the year
ended August 31, 1995 and the period from March 7, 1994 (date of inception) to
August 31, 1994, respectively.
Note 6 - Income Taxes: Deferred income taxes
reflect the net effects of temporary differences between the amounts of assets
and liabilities for financial reporting purposes and the amounts used for income
tax purposes. The principal temporary difference arises from the net operating
loss carryforwards and results in a deferred tax asset of approximately $120,000
and $12,000 at August 31, 1995 and 1994, respectively.
F-10
<PAGE>
GENISYS
RESERVATION SYSTEMS, INC. AND SUBSIDIARY (Formerly Robotic Lasers, Inc.) (A
Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
A valuation allowance is provided when it is more likely than not that some
portion of the deferred tax asset will not be realized. The Company has
determined, based on its recurring net losses, lack of a commercially viable
product or system and it being a development stage company, that a full
valuation allowance is appropriate at August 31, 1995 and 1994. A reconciliation
of the provision (benefit) for income taxes computed at the federal statutory
rate of 34% and the effective tax rate of income (loss) before income taxes is
as follows: Period From
Period From
Year Ended March 7, 1994
August 31, to August 31,
1995 1994
Computed tax on net loss at
federal statutory rate $(91,000) $(11,000)
State income taxes, net of
federal income tax benefits (16,000) (2,000)
Tax effect of net operating
losses not currently usable 107,000 13,000
Provision (benefit) for
income taxes $ - $ -
At August 31, 1995, the Company had net operating loss carryforwards of
approximately $300,000 expiring through 2010. Current tax law limits the
use of net operating loss carryforwards after there has been a substantial
change in ownership (as defined) during a three year period. Because of the
possible future changes in common stock, the use of the Company's net
operating loss carryforwards may be subject to an annual limitation. To the
extent amounts available under the annual limitation are not used, they may
be carried forward for the remainder of 15 years from the year the losses
were originally incurred.
Note 7 - Stockholders' Equity: Preferred Stock
The Company's Certificate of Incorporation authorizes the issuance of up
to 25,000,000 shares of Preferred Stock. None of such Preferred Stock has
been designated or issued to date. The Board of Directors is authorized to
issue shares of Preferred Stock from time to time in one or more series and
to establish and designate any such series and to fix the number of shares
and the relative conversion rights, voting rights, terms of redemption and
liquidation.
F-11
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(Formerly Robotic Lasers, Inc.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Warrants and Options - In August 1995, the Company granted an option to purchase
25,000 shares of its common stock to an officer, exercisable at $.60 per share
through August 2000. In connection with the lease described in Note 4, the
Company granted to the lessor a warrant to purchase a maximum of 12,721 shares
of common stock at an exercise price of $2.00 per share.
Note 8 - Subsequent Events:
Note Payable to Private Investor - In December 1995, the Company and the private
investor, described in Note 4 above, signed additional loan agreements whereby
the private investor loaned the Company an additional $150,000. During the first
quarter of 1996, the private investor loaned the Company an additional $100,000.
These additional loans are due 60 days from the date of such loans and accrue
interest at nine percent (9%) per annum. The private investor has the option of
converting these additional loans, totaling $250,000, into two 9% term notes
($237,500 and $12,500) and will receive 420,728 shares of common stock of the
Company in consideration for such conversion. The $237,500 note would be repaid
in 12 equal quarterly installments commencing two (2) years from the date of
such note. The $12,500 note would be convertible at the sole option of the
holder into a maximum of an additional 15% of the Company's shares of common
stock based on the Company's achievement of certain operating results as
compared to projected results, as more fully described above. Unless previously
converted, this $12,500 note, together with any accrued or accrued but unpaid
interest, shall become a demand note after the third year of operation of the
Company. Total borrowings from the private investor are $750,000 through March
1996. The Company has not paid any interest under these loan agreements through
June 30, 1996. Therefore, the Company is technically in default on such notes.
Accordingly, the notes have been classified as current liabilities in the
accompanying consolidated financial statements. Recent Sales of Common Stock -
During the quarter ended March 31, 1996, the Company sold 5,000 shares of its
restricted common stock to a former officer and director of the Company for
$10,000. In addition, the Company sold, to an unrelated private investor, 25,000
shares of its restricted common stock for $50,000. Reverse Stock Split - In July
1996, the Company's stockholders approved and effectuated a one for two reverse
stock split. Such split has been retroactively reflected in the accompanying
consolidated financial statements.
F-12
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(Formerly Robotic Lasers, Inc.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Fiscal Year - In December 1995, the Board of Directors voted to change the
Company's fiscal year to a calendar year, effective December 31, 1995. Private
Offering - Pursuant to a private offering, the Company issued 11.5 units to
various unrelated parties in May and June 1996. Each $50,000 unit consists of a
$49,000 three-year promissory note (bearing interest at 10% per annum) and
50,000 Class A redeemable common stock purchase warrants valued at $1,000 per
unit. Gross proceeds of this private offering totalled $575,000, of which
$563,500 was allocated to the notes and $11,500 to the respective warrants. The
principal and interest on the promissory notes are to be repaid at the earlier
of three years from issuance of such notes or 30 days after the closing date of
the Company's first underwritten public offering. Each Class A common stock
purchase warrant entitles the holder to purchase a share of the Company's common
stock at an exercise price of $2.875 per share. The rights represented by this
warrant are exercisable commencing 90 days after the effective date of a public
offering registration statement until four years thereafter. The terms and
conditions of these warrants are subject to adjustment to conform with the
warrants to be registered upon the effectiveness of the contemplated
registration statement to be filed with the Securities and Exchange Commission.
Warrants to purchase 287,500 shares of the Company's common stock are currently
outstanding pursuant to this private offering. Convertible Notes Payable - In
April and June 1996, the Company borrowed a total of $30,000 from two unrelated
parties. These notes bear interest at 7% per annum, payable on the last day of
each calendar quarter, commencing March 31, 1997. The maturity dates are the
earlier of January 1, 1998 or upon the consummation of a public offering of the
Company's common stock. If the maturity dates of these notes occur prior to
January 1, 1998, the notes may be converted into 15,000 shares of the Company's
common stock.
Note 9 - Restatement of August 31, 1995 Financial Statements:
The Company's accompanying financial statements have been restated to reflect
the acquisition of Travel Link as a reverse acquisition (See Note 1). The
transaction had previously been accounted for as a purchase. The effects of this
restatement are as follow:
August 31, 1995
As Originally
Reported As Restated
Total assets $641,026 $260,002
Stockholders' equity (deficiency) 85,947 (295,077)
Accumulated deficit (301,113) (300,590)
Net loss (269,603) (269,080)
F-13
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(Formerly Robotic Lasers, Inc.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 10 - Event Subsequent to Date of Auditors' Report (Unaudited): In August
1996, the Company gave notice to a former officer that it was cancelling the
333,216 shares of its common stock which had been issued to the former officer
in connection with the reverse acquisition described in Note 1. Such
cancellation relates to various claims made by the Company against the former
officer and failure to provide services to the Company. The former officer has
informed the Company that he will contest any attempt by the Company to cancel
his shares. Pending return of the shares, they are considered outstanding for
all periods presented herein.
F-14
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
GENISYS RESERVATION SYSTEMS, INC.
November 12, 1996 By: Joseph Cutrona, President
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
signed below by the following persons on behalf of the Registrant and in the
capacities and on the dates indicated.
Joseph Cutrona President, Chairman, November 12, 1996
and Director
Mark A. Kenny Director November 12, 1996
Warren D. Bagatelle Director November 12, 1996
John H. Wasko Secretary, Treasurer and November 12, 1996
Director
<PAGE>
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS
FILED PURSUANT TO SECTION 15(d) OF THE ACT BY
REGISTRANTS WHICH HAVE NOT REGISTERED
SECURITIES PURSUANT TO SECTION 12 OF THE ACT
The 1995 Annual Report to Shareholders and proxy material
relating to the annual meeting, which at this date has not been
scheduled, are under preparation and will be furnished to
shareholders after the filing of this Annual Report on Form 10-K.
Copies of such material shall be furnished to the Commission when
it is sent to shareholders.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Company's financial statements for the four months ended December 31,
1996, and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 4-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> SEP-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 23
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 23
<PP&E> 320
<DEPRECIATION> 18
<TOTAL-ASSETS> 353
<CURRENT-LIABILITIES> 200
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> (587)
<TOTAL-LIABILITY-AND-EQUITY> 353
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 268
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 24
<INCOME-PRETAX> (292)
<INCOME-TAX> 0
<INCOME-CONTINUING> (292)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (292)
<EPS-PRIMARY> (50)
<EPS-DILUTED> (50)
<PAGE>
</TABLE>
