As filed with the Securities and Exchange Commission on February 7, 1997
Registration No. 333-15011
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2 to
FORM SB-2
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
GENISYS RESERVATION SYSTEMS, INC.
(Name of small business issuer in charter)
New Jersey 7872 22-2719541
(State or other (Primary Standard (IRS Employer
jurisdiction of Industrial Classification I.D. Number)
incorporation Code Number)
or organization)
(Address and telephone number, of registrant's
principal executive offices)
2401 Morris Avenue, 3rd Floor
Union, NJ 07083
(908) 810-8767
(Address of principal place of business or
intended principal place of business)
(Name, address and telephone number, of agent for service)
JOHN H. WASKO
c/o Genisys Reservation Systems, Inc.
2401 Morris Avenue, 3rd Floor
Union, NJ 07083
(908) 810-8767
Please send a copy of all communications to:
DAVID W. SASS, ESQ. William J. Davis
McLaughlin & Stern, LLP Scheichet & Davis, P.C.
260 Madison Avenue 505 Park Avenue, 20th Floor
New York, New York 10016 New York, New York 10022
(212) 448-1100 (212) 688-3200
Fax(212) 448-0066 Fax(212) 371-7634
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective.
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. []_____
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration statement number of the earlier effective registration
statement for the same offering.
[]---
If any of the securities being registered on this form are to be
offered on a delayed or continuous basis pursuant to Rule 415 of the Securities
Act of 1933, check the following box [x]
If delivery of the prospectus is expected to be made pursuant
to Rule 434, please check the following box. []
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CALCULATION OF REGISTRATION FEE
Title of Each Amount Proposed Maximum Proposed Maximum Amount of
Class of Security Being Offering Price Aggregate Offering
Registration
Being Registered Registered Per Unit/Share (1) Price Fee
- --------------------------------------------------------------------------------------------------
Shares of Common Stock 1,035,000 $5.00 $5,175,000 $1,568.18
$.0001 par value(2)(3) Shares
Class A Common Stock 1,725,000 $0.20 $ 345,000 $ 104.55
Warrants(2)(3) Warrants
Shares of Common Stock 1,725,000 $5.75 $9,918,750 $3,005.68
underlying the Class A Shares
Warrants(2)(3)(4)
Class B Common Stock 1,035,000 $0.10 $ 103,500 $ 31.36
Warrants(2)(3) Warrants
Shares of Common Stock 1,035,000 $6.75 $6,986,250 $2,117.05
underlying the Class B Shares
Warrants(2)(3)(4)
Class A Common Stock
Warrants(5) 287,500 $ .01 $ 2,875 $ .87
Shares of Common Stock 287,500 $5.75 $1,653,125 $ 500.95
underlying Class A
Warrants issued in a
private placement(5)
Underwriter's Warrant 90,000 $ .0001 $ 9 $ .01
to purchase Common Shares
Stock(2)
Class A Warrants(2) 150,000 $ .0001 $ 15 $ .01
Warrants
Class B Warrants(2) 90,000 $ .0001 $ 9 $ .01
Warrants
Underwriter's Shares 90,000 $6.00 $ 540,000 $ 163.64
of Common Stock(2) Shares
Shares of Common Stock 150,000 $6.90 $ 1,035,000 $ 313.64
Underlying Under- Shares
writer's Warrant to
Purchase Class A
Warrants(2)(3)
Shares of Common Stock 90,000 $8.10 $ 729,000 $ 220.91
Underlying Under- Shares
writer's Warrant to
Purchase Class B
Warrants(2)(3)
TOTAL $8,026.86
---------
Paid on Account 8,026.86
---------
Balance Due $ -0-
3
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(1) Estimated solely for the purpose of calculating the registration fee.
(2) Securities being registered for sale by the Company.
(3) Includes an additional 135,000 shares of Common Stock, 225,000 Class A
Warrants, 225,000 shares of Common Stock underlying the Class A
Warrants, 135,000 Class B Warrants and 135,000 shares of Common Stock
underlying the Class B Warrants as part of the Underwriter's
overallotment option.
(4) Pursuant to Rule 416 there are also being registered such additional
shares as may be issued as a result of the anti-dilution provisions of
the Common Stock Purchase Warrants and the Representative's Warrant.
(5) Securities being registered for resale only.
------------------------------
The registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states
that this Registration Statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the
Registration Statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
-----------------------------
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EXPLANATORY NOTE
This registration statement covers the primary offering of Common Stock
and Class A and Class B Redeemable Warrants by Genisys Reservation Systems, Inc.
("Company") and the offering of securities by certain selling stockholders
("Selling Stockholders"). The Company is registering under the primary
prospectus ("Primary Prospectus") 900,000 Shares of Common Stock, 1,500,000
Class A Redeemable Warrants, and 900,000 Class B Redeemable Warrants for sale by
the Underwriter. The Selling Stockholders are registering, under an alternate
prospectus ("Alternate Prospectus") 287,500 Class A Warrants and 287,500
shares of Common Stock underlying outstanding Class A Warrants. The Alternate
Prospectus pages, which follow the Primary Prospectus, contain certain sections
which are to be combined with all of the sections contained in the Primary
Prospectus, with the exceptions of the front and back cover pages and the
section entitled "The Offering." Furthermore, all references contained in the
Alternate Prospectus to the "Offering" shall refer to the Company's offering
under the Primary Prospectus.
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GENISYS RESERVATION SYSTEMS, INC.
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Cross Reference Sheet
Item Caption Location
1. Forepart of Registration Statement Outside Front Cover
Page and Outside Front
Cover Page of
Prospectus
2. Inside Front and Outside Back Cover Inside Front and Back
Outside Pages of Prospectus Cover Pages
3. Summary Information and Risk Factors Prospectus Summary;
Risk Factors
4. Use of Proceeds Use of Proceeds
5. Determination of Offering Price Underwriting; Risk
Factors
6. Dilution Dilution
7. Selling Security Holders Not Applicable
8. Plan of Distribution Underwriting
9. Legal Proceedings Not Applicable
10. Directors, Executive Officers, Management
Promoters and Control Persons
11. Security Ownership of Certain Principal Stockholders
Beneficial Owners and Management
12. Description of Securities Description of
Securities
13. Interest of Named Experts and Counsel Legal Matters; Experts
14. Disclosure of Commission Position on Underwriting-
Indemnification for Securities Act Indemnification
15. Organization Within Last Five Years Not Applicable
16. Description of Business Business; Risk
Factors; Financial
Statements; Selected
Financial Data;
Prospectus Summary;
Use of Proceeds
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17. Management's Discussion and Analysis Management's
or Plan of Operation Discussion and
Analysis of Financial
Condition and Results
of Operation
18. Description of Property Business-Properties
19. Certain Relationships and Related Certain Transactions
Transactions
20. Market for Common Equity and Related Market Information;
Stockholder Matters Prospectus Summary
21. Executive Compensation Management-Executive
Compensation
22. Financial Statements Financial Statements
23. Changes In and Disagreements With Not Applicable
Accountants on Accounting and
Financial Disclosure
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Subject to Completion dated February 7, 1997
PROSPECTUS
GENISYS RESERVATION SYSTEMS, INC.
900,000 Shares of Common Stock
1,500,000 Class A Redeemable Warrants
900,000 Class B Redeemable Warrants
Genisys Reservation Systems, Inc., a New Jersey corporation
("Company"), hereby offers through R.D. White & Co., Inc.
("Underwriter") 900,000 shares ("Shares") of Common Stock, par
value $.0001 per share, ("Common Stock") and 2,400,000 redeemable
warrants ("Redeemable Warrants"), 1,500,000 of which will be "Class
A Redeemable Warrants" and 900,000 of which will be "Class B
Redeemable Warrants," at an anticipated public offering price of
$5.00 per share of Common Stock, $.20 per Class A Redeemable
Warrant, and $.10 per Class B Redeemable Warrant (the Common Stock
and Redeemable Warrants collectively referred to as the
"Securities"). The Common Stock, Class A Warrants and Class B
Warrants will be offered seperately. See "Underwriting."
Each Redeemable Warrant shall be exercisable for a period of 48 months,
commencing six (6) months from the date on which the registration statement
("Registration Statement") of which this prospectus ("Prospectus") forms a part
is declared effective ("Effective Date") by the Securities and Exchange
Commission ("Commission"). Each Class A Redeemable Warrant shall entitle the
holder to acquire one share of Common Stock at a price equal to $5.75 per share.
Commencing 12 months after the Effective Date, the Company will have the right
at any time to redeem all, but not less than all, of the Class A Redeemable
Warrants at a price equal to twenty cents ($.20) per Redeemable Warrant,
provided that the closing bid price of the Common Stock equals or exceeds $6.25
per share for any twenty (20) trading days within a period of thirty (30)
consecutive trading days ending on the fifth trading day prior to the date of
the notice of redemption. Each Class B Redeemable Warrant shall entitle the
holder to acquire one share of the Common Stock at a price equal to $6.75 per
share. Commencing 12 months after the Effective Date, the Company will have the
right at any time to redeem all, but not less than all, of the Class B
Redeemable Warrants at a price equal to ten cents ($.10) per Redeemable Warrant,
provided that the closing bid price of the Common Stock equals or exceeds $7.25
per share for any twenty (20) trading days within a period of thirty (30)
consecutive trading days ending on the fifth trading day prior to the date of
the notice of redemption. See "Descriptions of Securities."
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The Underwriting Agreement prohibits the Company from issuing any
capital stock or other securities without the Underwriter's prior consent for a
period of eighteen (18) months following the date of this Prospectus. This
provision may limit the Company's ability to raise additional equity capital.
AN INVESTMENT IN THE SECURITIES DESCRIBED HEREIN INVOLVES A HIGH
DEGREE OF RISK AND IMMEDIATE SUBSTANTIAL DILUTION. SEE "RISK
FACTORS" AND "DILUTION."
SUCH SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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Price to Public Underwriting Discounts Proceeds to
and Commissions (1) Company(2)
Per Share offered by $5.00 $.50 $4.50
Company............
Per Class A Redeemable $.20 $.02 $.18
Warrant offered by
Company..........
Per Class B Redeemable $.10 $.01 $.09
Warrant offered by
Company..........
Total(3)..... $4,890,000 $489,000 $4,401,000
- --------------------------- --------------------------- -------------------------- --------------------------
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R.D. White & Co., Inc.
-----------------
The Date of this Prospectus is _________, 1997
- ---------------
(1) Does not include additional underwriting compensation to be
paid by the Company to the Underwriter in the form of a non-
accountable expense allowance of $146,700 ("Non-Accountable
Expense Allowance") equal to 3% of the aggregate public
offering price of the Securities or $168,705 assuming exercise
in full of the Over-Allotment Option, (as defined below),
$50,000 of which has been advanced to the Underwriter.
(2) Exclusive of exercise of the Over-Allotment Option (as defined
below) and before deducting expenses payable by the Company
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estimated at $381,700 (including the Underwriter's Non-Accountable
Expense Allowance of $146,700 payable by the Company). After deducting
such expenses and applicable underwriting discounts, the net proceeds
to the Company, exclusive of the exercise of the Over-Allotment Option
(as defined below), will be approximately $4,019,300.
(3) The Company has granted an option to the Underwriter to
purchase all or part of an additional 15% of the shares of
Common Stock and Redeemable Warrants from the Company to cover
over-allotments for a period of forty five (45) days from the
effective date of the Registration Statement upon the same
terms and conditions ("Over-Allotment Option"). If the Over-
Allotment Option is exercised in full, the total Price to
Public, Underwriting Discounts and Commissions, and Proceeds
to the Company will be $5,623,500, $562,350 and $5,061,150,
respectively (exclusive of other expenses payable by the
Company of $235,000 and the Non-Accountable Expense Allowance
of $168,705). Assuming exercise of the Over-Allotment Option
and after deducting expenses and applicable underwriting
discounts, the net proceeds to the Company will be
approximately $4,657,445. See "Underwriting."
Prior to the Company's public offering as described herein, there has
been no active public market for the Common Stock or the Redeemable Warrants,
and no assurance may be given that a public market will develop following the
completion of the offering or that, if any such market does develop, it will be
sustained. The Company has applied to have the Securities listed for quotation
on The NASDAQ SmallCap MarketSM ("NASDAQ") under the symbols: "GENS," "GENSW,"
and GENSZ," respectively. There can be no assurance given that the Company will
be able to satisfy on a continuing basis the requirements for quotation of such
securities on NASDAQ. See "Risk Factors - No Assurances of Public Market or
Continued NASDAQ Listing," "Risk Factors-Penny Stock Regulations" and "Market
for the Company's Securities and Other Related Stockholder Matters."
The Securities being offered for sale by the Company are being offered
on a firm commitment basis, subject to prior sale, when, as and if delivered to
and accepted by the Underwriter pursuant to the terms of the underwriting
agreement relating to the offering. See "Underwriting." It is expected that
delivery of certificates representing the securities being offered by the
Company will be made against payment therefor at the offices of the Underwriter
on or about ______, 1997. See "Available Information."
The Registration Statement of which this Prospectus forms a part but
with a different Prospectus cover page ("Alternate Prospectus") also relates to
the offer and sale of 287,500 Class A Warrants and 287,500 shares of Common
Stock issuable upon exercise of 287,500 outstanding Class A Redeemable Warrants
which were previously issued by the Company to the holders thereof and are to
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be offered and sold by such stockholders ("Selling Stockholders"). The Class A
Redeemable Warrants are exercisable at $5.75 per share. Such securities are
subject to an 18 month lock-up by the Underwriter. The shares are being offered
by the Selling Stockholders and are being registered for resale purposes only
pursuant to the Alternate Prospectus. Sales of the securities to be offered by
the Selling Stockholders (or even the potential of such sales) would likely have
an adverse effect on the market prices of the securities being offered by the
Company. The Company will not receive the proceeds of any sale of such
securities by the Selling Stockholders but may receive proceeds from the
exercise of the Redeemable Warrants covered by such shares, if such Redeemable
Warrants are exercised, as to which there can be no assurance. The Selling
Stockholders will receive the proceeds from the sale, if any, of the securities
to be offered by Selling Stockholders. Except as otherwise set forth herein, the
costs incurred in connection with the registration of such securities are to be
borne by the Company. See "Selling Stockholders".
For a period of time, the Company was not in compliance with the filing
requirements of the Securities Exchange Act of 1934 ("Exchange Act") and may be
subject to legal liability as a result thereof. See "Risk Factors-Non-Compliance
with Exchange Act Reporting Requirements".
As of February 5, 1997 there were 771 shareholders of record of the
Company.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
COMPANY'S SECURITIES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE
OPEN MARKET. SUCH TRANSACTIONS MAY BE EFFECTED IN THE OVER-THE-COUNTER MARKET OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
ALTHOUGH IT HAS NO LEGAL OBLIGATION TO DO SO, THE UNDERWRITER MAY FROM
TIME TO TIME ACT AS A MARKET-MAKER AND OTHERWISE EFFECT TRANSACTIONS IN THE
COMPANY'S SECURITIES. THE UNDERWRITER WILL NOT ACT AS A MARKET-MAKER UNTIL SUCH
TIME AS ITS PARTICIPATION IN THIS OFFERING IS COMPLETE. THE UNDERWRITER, IF IT
PARTICIPATES IN THE MARKET, MAY BE A DOMINATING INFLUENCE IN ANY MARKET THAT
MIGHT DEVELOP FOR ANY OF THE COMPANY'S SECURITIES. SUCH ACTIVITIES, IF
COMMENCED, MAY BE DISCONTINUED AT ANY TIME OR FROM TIME TO TIME. THEREFORE,
THERE IS NO ASSURANCE THAT THE UNDERWRITER WILL OR WILL NOT BE A DOMINATING
INFLUENCE. THE PRICES AND LIQUIDITY OF THE SECURITIES OFFERED HEREUNDER MAY BE
AFFECTED BY THE DEGREE, IF ANY, OF THE UNDERWRITER'S PARTICIPATION IN THE
MARKET. SEE "RISK FACTORS" AND "UNDERWRITING."
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AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and in
accordance therewith presently files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information may be inspected and copies at the Commission's public reference
room located in Room 1024 at 450 Fifth Street, N.W., Washington, D.C. 20549 and
at the Commission's Regional Offices located at Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661 and at 7 World Trade
Center, 13th Floor, New York, New York 10048. Copies of such materials may also
be obtained at prescribed rates from the Public Reference Section of the
Commission located in Room 1024 at 450 Fifth Street, N.W., Washington, D.C.
20549.
The Company has filed a Registration Statement relating to the
securities offered hereby with the Commission pursuant to the provisions of the
Securities Act of 1933, as amended (the "Securities Act"). Although this
Prospectus forms a part of the Registration Statement, it does not contain all
of the information set forth in the Registration Statement, the exhibits or the
schedules thereto. For further information with respect to the Company and the
securities offered hereby, reference is made to the Registration Statement, the
exhibits and the schedules thereto. All material elements of documents
referenced in the Registration Statement are set forth in the prospectus
disclosure herein. Reference is also made to the copy of such document which has
been filed as an exhibit to the Registration Statement.
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by reference to and
should be read in conjunction with the more detailed information and financial
data (including any financial statements and the notes thereto) appearing
elsewhere in this Prospectus. Unless otherwise indicated, all share and per
share amounts set forth hereinafter have been adjusted to reflect the reverse
split on a one-for-two basis effectuated in July 1996. Each prospective
investor is urged to read this Prospectus in its entirety.
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The Company
The principal business activity of Genisys Reservation Systems, Inc.
("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. Genisys Reservation Systems, Inc. is a
development stage company and has no commericially available products at the
present time.
At the present time, there are four major airline computer
reservation systems
in operation in the United States -- "Sabre", "Worldspan", "Apollo" and "System
One" (each reservation system referred to hereinafter as a "CRS").
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 CRS 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 any CRS
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 a CRS 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 make securing a confirmed
limousine reservation inconvenient.
The Company seeks to solve this problem by:
1. developing a limousine reservation system that utilizes
the CRS' already in use;
2. developing a way to identify and qualify the best
limousine service providers in the 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
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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 precise management and
financial information, to enable them to ascertain where their
money is being spent.
The Company was organized on April 25, 1986 under the name of
JEC02 Lasers, Inc. and changed its name to Robotic Lasers, Inc. on
December 22, 1987. It changed its name to Genisys Reservation
Systems, Inc. on July 16, 1996. The Company's executive offices
are at 2401 Morris Avenue, Union, NJ 07083, and its telephone
number is 908-810-8767.
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The Offering
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Securities Offered 900,000 shares of Common Stock, par
value $.0001, per share ("Common
Stock") and 2,400,000 redeemable
warrants ("Redeemable Warrants"),
1,500,000 of which will be "Class A
Redeemable Warrants" and 900,000 of
which will be "Class B Redeemable
Warrants."
Offering Price $5.00 per Share of Common Stock
$0.20 per Class A Redeemable Warrant
$0.10 per Class B Redeemable Warrant
The Redeemable Warrants Each Redeemable Warrant shall be
exercisable for a period of 48
months, commencing six (6) months
from the date on which the
registration statement
("Registration Statement") of which
this prospectus ("Prospectus") forms
a part is declared effective
("Effective Date") by the Securities
and Exchange Commission
("Commission"). Each Class A
Redeemable Warrant shall entitle the
holder to acquire one share of
Common Stock at a price equal to
$5.75 per share. Commencing 12
months after the Effective Date, the
Company will have the right at any
time to redeem all, but not less
than all, of the Class A Redeemable
Warrants at a price equal to ten
cents ($.10) per Redeemable Warrant,
provided that the closing bid price
of the Common Stock equals or
exceeds $6.25 per share for any
twenty (20) trading days within a
period of thirty (30) consecutive
trading days ending on the fifth
trading day prior to the date of the
notice of redemption. Each Class B
Redeemable Warrant shall entitle the
holder to acquire one share of the
Common Stock at a price equal to
$6.75 per share. Commencing 12
months after the Effective Date, the
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Company will have the right
at any time to redeem all,
but not less than all, of
the Class B Redeemable
Warrants at a price equal
to ten cents ($.10) per
Redeemable Warrant,
provided that the closing
bid price of the Common
Stock equals or exceeds
$7.25 per share for any
twenty (20) trading days
within a period of thirty
(30) consecutive trading
days ending on the fifth
trading day prior to the
date of the notice of
redemption.
Securities Outstanding Prior to the
Company's Offering
Common Stock 3,280,594 Shares
Class A Warrants 287,500
Securities Outstanding After the
Company's Offering:
Common Stock (1)(3) 4,195,594 Shares
Class A Warrants(2) 1,787,500 Warrants
Class B Warrants(2) 900,000 Warrants
Proposed NASDAQ SmallCap MarketSM
Symbols(4)
Common Stock GENS
Class A Warrants GENSW
Class B Warrants GENSZ
</TABLE>
- ---------------
(1) Does not include: (a) 2,400,000 shares of Common Stock
issuable upon exercise of the Class A and Class B Warrants;
(b) 135,000 shares of Common Stock issuable upon exercise of
the Over-Allotment Option and 360,000 shares of Common Stock
issuable upon the exercise of the Redeemable Warrants
contained therein; or (c) 287,500 shares issuable upon
exercise of outstanding warrants issued in a private placement
in May, 1996. See "Description of Securities," and
"Underwriting."
(2) Does not include the issuance of 360,000 Redeemable Warrants
issuable upon exercise of the Over-Allotment Option, but does
include 287,500 Class A warrants issued in a private placement
in May 1996, which Warrants are identical to the Class A
Redeemable Warrants offered hereby. See "Underwriting" and
"Description of Securities."
(3) Includes 15,000 shares of Common Stock issuable upon the
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conversion of two promissory notes at the completion of this Offering
in the principal amounts of $20,000 and $10,000, respectively
("Convertible Notes").
(4) The Shares of Common Stock and the Class A Redeemable Warrants
and Class B Redeemable Warrants are expected to be listed for
quotation on NASDAQ under the symbols: "GENS", "GENSW" and
"GENSZ", respectively. There can be no assurance given that
the Company will be able to satisfy on a continuing basis the
requirements for quotation of such securities on NASDAQ. See
"Risk Factors" and "Market for the Company's Securities and
Other Related Stockholder Matters."
Risk Factors
An investment in any of the securities being offered hereby is highly
speculative and involves substantial risks including a qualified independent
auditors report - financial losses, limited operations, early development stage
of the Company, technological changes, market acceptance, dependence on existing
computer reservation systems, working capital - use of proceeds: broad
discretion in application of proceeds, dependence upon a key individual,
possible need for additional financing, dependence on certain suppliers,
economic downturn, technological change and new product development, product
protection and infringement, and competition. See "Risk Factors."
Use of Proceeds
The Company will receive the net proceeds of its offer and sale of the
Common Stock and Warrants of approximately $4,019,300 and intends to use the net
proceeds for the following: (i) approximately $850,000 for systems and
procedures development and additional equipment; (ii) approximately $563,500 for
repayment of outstanding indebtedness; and (iii) approximately $2,605,800 for
general working capital purposes. See "Risk Factors" and "Use of Proceeds".
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Summary Financial Information
The following summary of selected financial information concerning the
Company, other than the "As Adjusted" information reflecting the Company's
receipt and use of the net proceeds of its public offering (see "Use of
Proceeds"), have been derived from the financial statements (including the
related notes thereto) of the Company included elsewhere in this Prospectus (the
"Financial Statements").
The unaudited financial information of the Company as of September 30,
1996 and for the six months then ended have been prepared on the same basis as
the audited financial statements of the Company and, in the opinion of
management, include all adjustments necessary to present fairly the financial
position and the results of operations of the Company.
SUMMARY STATEMENT OF OPERATIONS DATA:
Period from
Four Months Ended Year Ended March 7, 1994
December 31, 1995 August 31, 1995 to August 31, 1994
----------------- --------------- -------------------
Costs and Expenses $ 293,210 $ 269,080 $ 31,510
Net Loss $(293,210) $ (269,080) $(31,510)
Net Loss Per Share $ (.11) $ (.16) $ (.02)
Nine Months Ended September 30
1996 1995
(Unaudited) (Unaudited)
Costs and Expenses $ 734,549 $ 252,793
Net Loss $(734,549) $(252,793)
Net Loss per Share $ (.26) $ (.15)
SUMMARY BALANCE SHEET DATA:
September 30, 1996 September 30, 1996
December 31, As
1995 Proforma Adjusted(1)(2)
Working Capital $(814,504) $(1,171,895) $2,333,905
(Deficit)
Total Assets $ 352,685 $ 733,991 4,239,791
Long-term Debt $ 89,746 $ 660,101 66,601
Total Liabilities $ 927,566 $ 1,924,668 1,331,168
Stockholders' Equity $(574,881) $(1,190,677) 2,908,623
(Deficiency)
(1) Includes the net proceeds (after underwriting commission,
nonaccountable expense allowance and estimated expenses) of the
offering contemplated herein and the repayment of outstanding
indebtedness of $563,500. See "Use of Proceeds".
(2) Includes the November, 1996 sale of 25,000 shares of Common Stock to an
unaffiliated party for $50,000 and the conversion of $30,000 of
convertible notes payable into 15,000 shares of Common Stock of the
Company, which occurs upon consummation of the offering contemplated
hereby.
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RISK FACTORS
THE SECURITIES OFFERED HEREBY ARE SPECULATIVE IN NATURE AND INVOLVE A
HIGH DEGREE OF RISK. SUCH SECURITIES SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN
AFFORD TO LOSE THEIR ENTIRE INVESTMENT. THEREFORE, EACH PROSPECTIVE INVESTOR
SHOULD, PRIOR TO PURCHASE, CONSIDER VERY CAREFULLY THE FOLLOWING RISK FACTORS,
AS WELL AS ALL OF THE OTHER INFORMATION SET FORTH ELSEWHERE IN THIS PROSPECTUS
AND THE INFORMATION CONTAINED IN THE FINANCIAL STATEMENTS, THE NOTES THERETO AND
THE DOCUMENTS REFERENCED HEREIN.
When used in this Prospectus, the words "may", "will", "expect", "anticipate",
"continue", "estimate", "project", "intend" and similar expressions are intended
to identify forward-looking statements within the meaning of Section 27A of the
Securites Act of 1933 and Section 21E of the Securities Exchange Act of 1934
regarding events, conditions and financial trends that may affect the Company's
future plans of operations, business strategy, operating results and financial
position. Prospective investors are cautioned that any forward-looking
statements are not guarantees of future performance and are subject to risks and
uncertainties and that actual results may differ materially from those included
within the forward-looking statements as a result of various factors. Such
factors are described under the headings "Management's Discussion and Analysis
of Financial Condition and Results of Operations," "The Company," "Business" and
in the risk factors set forth below.
Qualified Independent Auditor's Report - Financial Losses and Going
Concern.
The financial statements have been prepared assuming that the Company
will continue as a going concern. There can be no assurance that the Company's
business strategy will prove successful, or that the Company will operate
profitably. Since the Company has incurred operating losses from inception and
has capital and working capital deficiencies, there is substantial doubt as to
the Company's ability to continue as a going concern. See "Business", "Financial
Statements" and "Management's Discussion and Analysis".
Limited Operations - No Revenues to Date
To date, the operations of the Company have been limited to market
research and development of a software and hardware system for computerizing the
limousine reservation and payment process. The Company has not yet generated any
revenues and will require further technical development within a period of the
next twelve months, as well as an additional investment of the proceeds from
this Offering before a determination of the system's commercial feasibility can
be made. No assurance can be given that the Company's reservation and payment
system will achieve commercial feasibility. See "Business".
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Development Stage of the Company
The Company is not sufficiently established to fully evaluate
or forecast its prospects. The Company is thus subject to all the
risks associated with the creation of a new business and there is
no assurance that it will be able to continue to function as a
viable entity. See "Business"
Rapid Technological Changes - Cost and Competition
The computer hardware and software industry is relatively new and has
undergone, and is expected to continue to undergo, significant and rapid
technological changes. Market penetration and customer acceptance of the
Company's system will depend upon the Company's ability to develop and maintain
a technically competent marketing force as well as its ability to adapt to rapid
technological changes in its industry. The Company also expects that new
competitors may introduce systems or services that are directly or indirectly
competitive with those of the Company. Such competitors may succeed in
developing systems and services that have greater functionality or are less
costly than the Company's systems and services and may be more successful in
marketing such systems and services. The Company is still developing its
products and none are currently available. See "Business."
No Assurance of Market Acceptance
The Company believes that its computerized limousine reservation and
payment system will gain acceptance among corporate travel departments, however,
there can be no assurance that a sufficient number of corporate travel
departments will be willing to utilize the Company's system to enable the
Company to achieve profitable operations. See "Business".
Dependence on Existing Computer Reservation Systems
The Company is dependant on access to existing computer reservation
systems. If such systems were to experience technical difficulties or be unable
to operate for a period of time, the Company's business would be adversely
affected. In addition, the Company has agreements with three of the four CRS'.
There can be no assurance that such agreements will
be renewed or renewed on favorable terms after their expiration. Moreover, if
such agreements were to terminate and the Company were to lose access to such
systems, its business would be materially and adversly affected. See "Business".
Broad Discretion by Management in Application of Proceeds; Funding
of Day to Day Operations
A portion (approximately $2,605,800 or 64.9%) of the net
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<PAGE>
proceeds derived from the sale of the Securities offered hereby will be added to
the Company's general working capital. Management will have complete discretion
as to the application of such funds, including payment of executive salaries and
fees relating to the day to day operations. No assurance can be given as to the
amounts that will be raised by this offering and if such amounts will be
sufficient to meet the Company's needs. See "Use of Proceeds."
The management of the Company also has broad discretion as to the
application and allocation of up to $16,353,125 of gross proceeds that may be
received upon exercise of the Redeemable Warrants. As a result of the foregoing,
the success of the Company will be substantially dependent upon the discretion
and judgment of the management of the Company with respect to the application
and allocation of the net proceeds hereof. Pending use of such proceeds, the net
proceeds of this offering will be invested by the Company in temporary,
short-term investment grade interest-bearing obligations. See "Use of Proceeds,"
"Business" and "Management."
Dependence Upon Key Individual
The Company has only a few employees and the Company's success is
dependent upon the activities of Joseph Cutrona, its President. The loss of Mr.
Cutrona's services through death, disability or resignation will have a material
and adverse effect on the business of the Company. See "Management".
Possible Need for Additional Financing
The Company intends to fund its operations and other capital needs for
the next twelve (12) months from the date of this offering substantially from
revenues generated by the Company's planned operations and the proceeds of this
offering, but there can be no assurance that such funds will be sufficient for
these purposes. There can be no assurance that such financing will be available,
or that it will be available on acceptable terms. See "Use of Proceeds."
Dependence on Certain Suppliers
The Company is dependent on certain of its suppliers who are involved
with the development of the Company's system. Should the Company lose any such
suppliers, it would cause a delay in the Company's bringing its system to
market. The Company is dependent on two key suppliers who provide software
development services to the Company. Travel Automation Management provides the
"script" software programs which enable the Company's program to interact with
each of the airline computer reservation systems. Prosoft, Inc. has written all
the proprietary custom software for the Company's reservation system and is
presently completing the Company's payment system. Travel Automation
Management's services are provided on a purchase order/contract basis with
progress
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<PAGE>
payment terms. Prosoft's services are provided under various formal written
consulting agreements. No assurance can be given that the Company will be able
to adequately replace these two suppliers in the event of a termination of
services by the suppliers to the Company. See "Business".
Adverse Effect of Economic Downturn
The Company's system, when operable, will be dependant on the travel
habits of its customers. In the event there is an economic downturn or change in
travel patterns, the Company's business could be adversely affected. See
"Business".
Continuing Voting Control by Current Officers and Directors
As of the date hereof, the management of the Company owns 2,253,227
shares of Common Stock. Consequently, immediately upon completion of the
Company's public offering of the Securities, the officers and directors of the
Company will own or control the voting of 53.70% of the Company's issued and
outstanding Common Stock, assuming no exercise of the Over-Allotment Option and
no exercise of the Redeemable Warrants. There are no cumulative voting rights
and directors must be elected by a plurality of the outstanding voting
securities entitled to vote. Therefore management of the Company will be in a
position to control the actions of the Company. See "Principal Stockholders" and
"Certain Transactions."
Limitations on Product Protection and Possibility of Infringement
The Company does not have any patents on any of its technology and
relies largely on copyright, its license agreements with customers and its own
security systems, confidentiality procedures and employee nondisclosure
agreements to maintain the trade secrecy of its proprietary information. There
can be no assurance that the legal protections and precautions taken by the
Company, or available remedies, will be adequate to prevent misappropriation of
the Company's proprietary information. In addition, these protections do not
prevent independent third-party development of functionally equivalent or
superior systems, products or methodologies. Moreover, there can be no assurance
that third parties will not assert infringement claims against the Company.
See "Business".
Likely Competition
Although, to the best of the knowledge of the management of the
Company, there are as yet no competitors, it must be assumed that if the
Company's efforts are successful, other companies will begin to offer competing
systems. These future competitors may well be companies which have substantially
greater research, development, marketing and financial resources than the
Company.
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<PAGE>
Moreover, customers seeking limousine service will be able to reserve such
service through existing telephone based systems or alternative methods which
may indirectly compete with the Company.
See "Business".
Non-Compliance with Exchange Act Reporting Requirements
The Company was not in compliance with the filing requirements of the
Exchange Act in that it had filed unaudited financial statements rather than the
audited financial statements required by the Exchange Act due to its inability
at the time to pay for audited financial statements. The Company may be subject
to legal liability as a result thereof. The Company intends to use portions of
the proceeds from this offering allocated to working capital to fund such
compliance. See "Use of Proceeds".
Need for Highly Qualified Personnel
The success of the Company's business will depend upon its ability to
attract and retain personnel with a wide range of technical capabilities.
Competition for such personnel is intense, and is expected to increase in the
future. No assurance can be given that the Company will be able to attract and
retain such personnel. See "Business".
Arbitrary Determination of Offering Price of Securities
The public offering price of the Securities and the exercise price of
the Redeemable Warrants were determined by negotiation between the Company and
the Underwriter and do not necessarily bear any relationship to the Company's
assets, book value, net worth or any other established criteria of value. Among
the factors considered in determining such prices were the Company's historical
performance and growth, management's assessment of the Company's business
potential and earning prospects, the prospects for growth in the industry in
which the Company operates, market prices and prevailing market conditions
generally. Neither the offering price of the Securities nor the exercise price
of the Redeemable Warrants should be regarded as indicative of the actual value
of any of the securities being offered by the Company. The trading price of the
securities and/or exercise price of the Redeemable Warrants could also be
subject to significant fluctuations in response to variations in quarterly
results of operations, announcements of new contracts or services by the Company
or its competitors, government regulatory action, general trends in the industry
and other actions, including extreme price and volume fluctuations which have
been experienced by the securities markets from time to time in recent years.
See "Underwriting".
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<PAGE>
Immediate and Substantial Dilution
This Offering involves an immediate and substantial dilution of $4.39
(87.8%) per share between the net tangible book value per share of Common Stock
upon consummation of this Offering and the public offering price. To the extent
that any future financing involves the sale of the Company's equity securities,
the interests of the Company's then existing stockholders, including investors
in this Offering, could be substantially diluted. See "Dilution" and "Future
Sales of Stock by Stockholders."
Absence of Dividends on Common Stock
The Company has not paid any dividends on its Common Stock since its
incorporation and anticipates that, for the foreseeable future, working capital
and earnings, if any, will be retained for use in the Company's business
operations and in the expansion of its business. The Company has no present
intention to pay cash dividends on its Common Stock. See "Dividend Policy" and
"Description of Securities".
Possible Adverse Effect of Future Sales of Stock by Stockholders
Of the Company's 3,280,594 outstanding shares of Common Stock prior to
the Offering contemplated hereby, 3,000,109 shares are "restricted securities"
as that term is defined under the Securities Act and in the future may only be
sold in compliance with Rule 144 promulgated under the Securities Act or
pursuant to an effective registration statement. Rule 144 provides, in essence,
that a person (including a group of persons whose shares are aggregated) who has
satisfied a two-year holding period for such restricted securities may sell
within any three-month period, under certain circumstances, an amount of
restricted securities which does not exceed the greater of 1% of that class of
the Company's outstanding securities or the average weekly trading volume of
that class of securities during the four calendar weeks prior to such sale. In
addition, pursuant to Rule 144, persons who are not affiliated with the Company
and who have held their restricted securities for at least three years are not
subject to the quantity limitations or the manner of sale restriction of the
rules. As of the date hereof, no shares of Common Stock are available for resale
pursuant to Rule 144. Pursuant to an agreement with the Underwriter, the
officers, directors and holders of 5% or more of the Company's equity
securities, other then Steven Pollan and other than 200,000 shares of common
stock held by Loeb are restricted from selling their respective securities for a
period of 18 months from the Effective Date, absent waiver of such restriction
by the Underwriter. See "Certain Transactions" and "Underwriting."
In the event that shares of Common Stock which are not currently
salable become salable by means of registration, eligibility for sale under Rule
144 or otherwise and the holders of
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<PAGE>
such shares of Common Stock elect to sell such shares of Common Stock in the
public market, there is likely to be a negative effect on the market price of
the Company's securities and on the ability of the Company to obtain additional
equity financing. In addition, to the extent that such shares of Common Stock
enter the market, the value of the Common Stock in the over-the-counter market
may be reduced. No predictions can be made as to the effect, if any, that sales
or availability for sale of the Securities will have on the market price of any
such securities, which may prevail from time to time. Nevertheless, the
foregoing could adversely affect such prevailing market prices. See "Principal
Stockholders," "Certain Transactions" and "Description of Securities."
Possible Adverse Effects of Authorization of Preferred Stock; Anti-
Takeover Effects.
The Company's Certificate of Incorporation authorizes the issuance of a
maximum of 25,000,000 shares of preferred stock, $.0001 par value ("Preferred
Stock"), on terms which may be fixed by the Company's Board of Directors without
further stockholder action. None of such Preferred Stock has been designated or
issued. The terms of any series of Preferred Stock, which may include priority
claims to assets and dividends, and special voting rights, could adversely
affect the rights of holders of the Common Stock. The issuance of Preferred
Stock could make the possible takeover of the Company or the removal of
management of the Company more difficult, discourage hostile bids for control of
the Company in which stockholders may receive premiums for their shares of
Common Stock, or otherwise dilute the rights of holders of Common Stock and the
market price of the Common Stock. See "Description of Securities - Preferred
Stock".
Capital-Raising Restrictions
The Underwriting Agreement prohibits the Company from issuing any
capital stock or other securities without the Underwriter's prior consent for a
period of eighteen (18) months following the date of this Prospectus. This
provision may limit the Company's ability to raise additional equity capital.
Financial Risk to Investors in Public Offering
Upon completion of the Company's public offering, the Company's current
stockholders will have paid $618,600 for 3,295,594 shares of Common Stock, or
78.5% of the Company's then outstanding shares of Common Stock, and purchasers
of the Securities in the Company's public offering will have paid $4,500,000 for
900,000 shares of Common Stock, or 21.5% (exclusive of related warrants) of the
Company's then outstanding shares of Common Stock, assuming no exercise of the
Over-Allotment Option and no exercise of the Redeemable Warrants being offered
by the Company pursuant thereto. Therefore, investors purchasing Securities in
the Company's public offering will bear a substantially greater
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<PAGE>
financial risk than the Company's current stockholders. See
"Dilution."
No Assurance of Public Market or Continued NASDAQ Listing
Prior to the Company's public offering, there has been no public market
for any of the Company's securities, and there can be no assurance given that a
regular trading market for the Securities will develop after the completion of
the Company's public offering. If a trading market does in fact develop for any
of the foregoing securities, there can be no assurance given that it will be
sustained. The Company became a public company in 1988 in a transaction in which
JEC Lasers, Inc. distributed all of its holdings of the Company's common stock
to its stockholders. The Company has had no active business until its
acquisition of Corporate Travel Link. In connection with the Company's public
offering, the Company applied for and is expected to be granted inclusion of the
Common Stock and the Redeemable Warrants for quotation on NASDAQ under the
symbols: GENS, GENSW, and GENSZ, respectively. While such securities are
currently listed for quotation on NASDAQ, there can be no assurance given that
the Company will be able to satisfy the requirements for continued quotation on
NASDAQ or that such quotation will otherwise continue. If, for any reason, any
of such securities become ineligible for continued listing and quotation or a
public trading market does not develop, purchasers of such securities may have
difficulty selling their securities should they desire to do so.
Under the current rules of the National Association of Securities
Dealers, Inc. ("NASD"), in order to qualify for initial listing on NASDAQ, a
company must have, among other things, at least $4,000,000 in total assets,
$2,000,000 in total capital and surplus, $1,000,000 in market value of public
float and a minimum bid price of $3.00 per share. For continued listing, a
company must have, among other things, $2,000,000 in total assets, $1,000,000 in
total capital and surplus, $1,000,000 in market value of public float and a
minimum bid price of $1.00 per share. Although the Company is able initially to
satisfy the requirements for quotation on NASDAQ, it may be unable to satisfy
the requirements for continued quotation thereon, and trading, if any, in the
securities being offered hereby would be conducted in the over-the-counter
market in what are commonly referred to as the "pink sheets" of the National
Quotation Bureau, Inc. or on the NASD OTC Electronic Bulletin Board. As a
result, an investor may find it more difficult to dispose of or to obtain
accurate quotations as to the price of such securities. See "Underwriting".
On November 6, 1996, NASDAQ approved changes to its listing
requirements which will be submitted to the Securities and Exchange Commission
("Commission") for final approval. If the current proposal is approved without
modification, continued listing on NASDAQ would require that the Company meet
certain qualifications
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<PAGE>
with respect to either market value or net income as well as criteria regarding
the number of shares of Common Stock in the public float and the bid price per
share of Common Stock. The Company must also have a minimum of two independent
directors and meet other corporate governance criteria. The Company intends to
nominate two independent directors and believes that it will be able to meet the
remaining criteria for continued listing.
Risk of "Penny Stock" Regulations
The Commission has adopted regulations which define a "penny stock" to
be any equity security that has a market price (as defined) of less than $5.00
per share, subject to certain exceptions. The Company believes that, as of the
date of this Prospectus, the Common Stock and/or the Redeemable Warrants may be
deemed to be "penny stocks" as defined by the Exchange Act and the rules and
regulations promulgated thereunder. For any transaction involving a penny stock,
unless exempt, the rules require the delivery, prior to the transaction, of a
disclosure schedule prepared by the Commission relating to the penny stock
market. The broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative, current quotations for the
securities, information on the limited market in penny stocks and, if the
broker-dealer is the sole market-maker, the broker-dealer must disclose this
fact and the broker-dealer's presumed control over the market. In addition, the
broker-dealer must obtain a written acknowledgment from the customer that such
disclosure information was provided and must retain such acknowledgment from the
customer for at least three years.
Further, monthly statements must be sent to the customer disclosing
current price information for the penny stock held in the account. While many
NASDAQ-listed securities would otherwise be covered by the definition of penny
stock, transactions in a NASDAQ-listed security would be exempt from all but the
sole market-maker provision for: (i) issuers who have $2,000,000 in tangible
assets ($5,000,000 if the issuer has not been in continuous operation for three
years); (ii) transactions in which the customer is an institutional accredited
investor; and (iii) transactions that are not recommended by the broker-dealer.
In addition, transactions in a NASDAQ-listed security directly with a NASDAQ
market-maker for such securities would be subject only to the sole market-maker
disclosure, and the disclosure with respect to commissions to be paid to the
broker-dealer and the registered representative.
The above-described rules may materially adversely affect the liquidity
for the market of the Company's securities. Such rules may also affect the
ability of broker-dealers to sell the Company's securities and may impede the
ability of holders (including, specifically, purchasers in this offering) of the
Common Stock, the Class A Warrants, the Common Stock underlying the Class A
Warrants, the Class B Warrants and the Common Stock underlying the Class B
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<PAGE>
Warrants to sell such securities in the secondary market.
Underwriter's Influence on the Market
Although it has no legal obligation to do so, the Underwriter may from
time to time act as a market-maker and otherwise effect transactions in the
Company's securities. To the extent the Underwriter acts as a market-maker in
the Common Stock or Redeemable Warrants it may be a dominating influence in that
market. The price and liquidity of such securities may be affected by the
degree, if any, of the Underwriter's participation in the market inasmuch as a
significant amount of such securities may be sold to customers of the
Underwriter. Such customers subsequently may engage in transactions for the sale
or purchase of such securities through or with the Underwriter. In the event
that market-making activities are commenced, the Underwriter may discontinue
such activities at any time or from time to time. See "Underwriting."
Risk of Blue Sky Restrictions on Exercise of the Redeemable
Warrants
The Company has qualified the sale of the securities being offered
hereby in a limited number of states. Although certain exemptions in the Blue
Sky laws of certain states, other than those states in which such securities are
initially qualified, may permit such securities, including the Redeemable
Warrants, to be transferred to purchasers in such states, the Company will be
prevented from issuing Common Stock upon exercise of the Redeemable Warrants in
such states unless an exemption from registration or qualification is available
or unless the issuance of Common Stock upon the exercise of the Redeemable
Warrants is qualified and a current registration statement is in effect. The
Company may decide not to seek or may not be able to obtain qualification of the
issuance of such Common Stock in all of the states in which the ultimate
purchasers of the Redeemable Warrants reside. In such case, the Redeemable
Warrants of such purchasers will expire and have no value if such warrants
cannot be exercised. Accordingly, the market for the Redeemable Warrants may be
limited. See "Underwriting".
Current Prospectus Requirement to Exercise Warrants
During the exercise period of the Redeemable Warrants, the Company must
maintain and make available a current prospectus. This Prospectus will no longer
be current after _________, 1997 (or earlier upon the occurrence of a material
event or change which would render the information herein inaccurate or
otherwise misleading). There can be no assurance given that the Company will not
be prevented by financial or other considerations from maintaining a current
prospectus. In the event that a current prospectus is not available, the
Redeemable Warrants may not be
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<PAGE>
exercisable and the Company will be precluded from redeeming the
Redeemable Warrants. See "Underwriting".
Adverse Effects of Possible Redemption of the Redeemable Warrants
Each Class A Redeemable Warrant shall entitle the holder to acquire one
share of the Common Stock at a price equal to $5.75 per share. Commencing 12
months after the Effective Date, the Company will have the right at any time to
redeem all, but not less than all, of the Class A Redeemable Warrants at a price
equal to ten cents ($.10) per Redeemable Warrant, provided that the closing bid
price of the Common Stock equals or exceeds $6.25 per share for any twenty (20)
trading days within a period of thirty (30) consecutive trading days ending on
the fifth trading day prior to the date of the notice of redemption. Each Class
B Redeemable Warrant shall entitle the holder to acquire one share of the Common
Stock at a price equal to $6.75 per share. Commencing 12 months after the
Effective Date, the Company will have the right at any time to redeem all, but
not less than all, of the Class B Redeemable Warrants at a price equal to ten
cents ($.10) per Redeemable Warrant, provided that the closing bid price of the
Common Stock equals or exceeds $7.25 per share for any twenty (20) trading days
within a period of thirty (30) consecutive trading days ending on the fifth
trading day prior to the date of the notice of redemption. See "Descriptions of
Securities." Although holders of the Redeemable Warrants will have the right to
exercise their Redeemable Warrants through the date of redemption, they may be
unable to do so because they lack sufficient funds at the time of redemption, or
they may simply not wish to invest any more money in shares of the Common Stock
at that time. Should a holder of the Redeemable Warrants fail to exercise such
Redeemable Warrants or to sell such Redeemable Warrants on or prior to the
redemption date, such Redeemable Warrants will have no value beyond their
redemption value. The Company may not redeem the Redeemable Warrants unless the
Company has available a current prospectus with respect to the Redeemable
Warrants. See "Risk Factors-Current Prospectus Requirement" above and
"Description of Securities-Redeemable Warrants."
Possible Restrictions on Market-making Activities During Warrant
Solicitation
To the extent that the Underwriter solicits the exercise of the
Redeemable Warrants from the holders thereof, it may be prohibited pursuant to
the requirements of Rule 10b-6 under the Exchange Act from engaging in
market-making activities during such solicitation and for a period of up to nine
days preceding such solicitation. As a result, the Underwriter may be unable to
continue to provide a market for the Company's securities during certain periods
while the Redeemable Warrants are exercisable. The Underwriter is not obligated
to act as a market-maker. See "Underwriting."
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USE OF PROCEEDS
The net proceeds to the Company from the sale of the Securities being
offered by the Company, after deducting expenses and other costs of the
offering, are estimated to be approximately $4,019,300 (or $4,657,445 if the
Over-Allotment Option is exercised in full). The Company intends to use the net
proceeds of its offering substantially as follows:
Proposed Use of Proceeds Approximate Amount Percentage
System Procedures Development
and additional equipment(1) $850,000 21.1%
Repayment of Debt (2) 563,500 14.0%
Working Capital (3) 2,605,800 64.9%
--------- -----
Total $4,019,300 100%
---------
- ----------------------------
(1) To be utilized for (a) completion of software development and acquisition of
computer hardware needed to complete development of the Genisys payment system
($560,000) and (b) completion of software development and acquisition of
computer hardware necessary to complete integration of the Genisys reservation
system with the Apollo CRS ($290,000).
(2) The total of $563,500 bears interest at 10% per annum and is payable to 16
unaffiliated parties and matures upon the earlier to occur of May 29, 1997 or
thirty days after the closing date of the first underwritten public offering of
the Company's securities. See "Certain Transactions."
(3) General working capital contemplates, among other things, the use for
general corporate purposes, including funding day to day operations of the
Company such as executive salaries, compliance with reporting requirements and
the Company's future development.
The amounts set forth above are estimates developed by management of
the Company based upon the Company's current plans and prevailing economic and
industry conditions. Although the Company does not currently contemplate
material changes in the proposed use of proceeds set forth above, to the extent
that management of the Company finds that adjustment thereto is required, the
amounts shown may be adjusted among the uses indicated above. The Company's
proposed use of proceeds is subject to changes in general, economic and
competitive conditions, timing and management discretion, each of which may
change the amount of proceeds expended for the purposes intended. The proposed
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application of proceeds is also subject to changes in market conditions and the
Company's financial condition in general. Changes in general, economic,
competitive and market conditions and the Company's financial condition would
include, without limitation, the occurrence of an economic slowdown or recession
and changes in the competitive environment in which the Company operates. While
management of the Company is not currently aware of the existence or pending
threat of any of the foregoing events, there can be no assurance given that one
or more of such events will not occur. See "Risk Factors" generally, including
specifically, "Risk Factors-Working Capital-Use of Proceeds" and "Risk
Factors-Competition." Any additional proceeds received upon exercise of the
Over-Allotment Option or Redeemable Warrants will be added to working capital
and used as management, in its sole discretion, deems appropriate.
While no assurance can be given, the Company believes that the net
proceeds from its public offering and revenues generated by the Company's
planned operations will be adequate to satisfy the Company's working capital
needs for the next 12 months. The Company does not currently anticipate that it
will need the proceeds from the potential exercise of Redeemable Warrants to
fund its working capital needs or to maintain its operations over the next 12
months. However, the Company may require additional financing in the future in
order to expand its business. The Company is not able at this time to predict
the amount or potential source of such additional funds and has no current
commitments to obtain such funds, other than relating to the potential exercise
of outstanding Warrants. There can be no assurance that additional financing on
acceptable terms will be available to the Company when needed, if at all. See
"Business" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations." Pending use of the net proceeds from the Company's
public offering, the Company may make temporary investments in short-term,
investment grade, interest-bearing instruments.
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<PAGE>
CAPITALIZATION
The following table sets forth as of September 30, 1996 the Company's
capitalization on a proforma basis and as adjusted to give effect to this
Offering and its net proceeds, assuming the over-allotment is not exercised. The
information below should be read in conjunction with the Financial Statements
contained in this Prospectus, which should be read in their entirety.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Proforma As Adjusted(1)(2)(3)
Short-term debt:
Current portion of obligations
under Capital Leases $ 59,952 59,952
Notes payable-Stockholder 733,827 733,827
------- --------
Total Short-term debt 793,779 793,779
------- --------
Long-term debt:
10% Promissory notes payable 563,500 -
Convertible notes payable(3) 30,000 -
Long-term portion of obligations
under capital leases 66,601 66,601
------- --------
Total long-term debt 660,101 66,601
------- --------
Stockholders' equity (deficency):
Preferred stock, $.0001 par value;
25,000,000 shares authorized;
None outstanding - -
Common stock, $.0001 par value;
75,000,000 shares authorized;
3,255,594 shares issued and
outstanding (proforma) 326 -
4,195,594 shares outstanding,
as adjusted - 420
Paid in capital 137,346 4,236,552
Deficit accumulated during the
development stage (1,328,349) (1,328,349)
------------ -----------
Total stockholder's equity
(Deficiency) (1,190,677) 2,908,623
------------ ----------
Total Capitalization
Debt and stockholders' equity
$ 263,203 $3,769,003
---------- --------------
</TABLE>
- -------------
(1) Gives effect to the anticipated net proceeds of $4,019,300 public
offering and the repayment of debt of $563,500 with the proceeds.
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<PAGE>
(2) Does not include: (a) 287,500 shares of Common Stock issuable
upon exercise of the Class A Warrants issued in a private
placement; (b) 135,000 shares of Common Stock issuable upon
exercise of the Over-Allotment Option; (c) 360,000 shares of
Common Stock issuable upon exercise of the Redeemable Warrants
made part of the Over-Allotment Option; or (d) 90,000 shares
of Common Stock issuable upon exercise of the Underwriter's
Purchase Option. In the event all outstanding options
(excluding 360,000 options covering the over-allotment option
but including 90,000 shares covered by the Underwriters
Purchase Option) were exercised there would be 4,708,094
shares of Common Stock outstanding. See "Description of
Securities," "Certain Transactions," "Management" and
"Underwriting."
(3) Includes the conversion of $30,000 of convertible notes
payable into 15,000 shares of common stock upon consummation
of the public offering. Also includes the sale of 25,000
shares of common stock to an unaffiliated party for $50,000 in
November, 1996. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and
Capital Resources".
DILUTION
As of September 30, 1996, the Company had an aggregate of 2,834,866 shares of
Common Stock outstanding and a net tangible book value of $(1,557,871) or $(.55)
per share of Common Stock (3,255,594 shares, net tangible book value of
$(1,551,168) or $(.48) per share on a proforma basis. See September 30, 1996
financial statements). "Net Tangible Book Value Per Share" represents the total
amount of the Company's tangible assets, less the total amount of its
liabilities, divided by the total number of shares of Common Stock outstanding.
After giving effect to the sale of 900,000 shares of Common Stock by
the Company at the offering price of $5.00 per share of Common Stock, and the
proceeds from the sale of the Class A and Class B Warrants and the deduction of
offering expenses in the amount of $235,000 and underwriting discounts and
commissions estimated at $635,700 (which amounts include payment of the
Underwriter's Non-Accountable Expense Allowance but without taking into account
exercise of the Over-Allotment Option), the proforma net tangible book value of
the Company would be $.61 per share of Common Stock. This amount represents an
immediate dilution (the difference between the attributed price per share of
Common Stock to purchasers in the Company's offering and the proforma net
tangible book value per share of Common Stock as of September 30, 1996, of
approximately $4.39 per share of Common Stock, or
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<PAGE>
approximately 87.8% to new investors and an immediate increase (the difference
between the proforma net tangible book value per share of Common Stock as of
September 30, 1996 and the proforma net tangible book value per share of Common
Stock as of September 30, 1996 after giving effect to the issuance of 900,000
shares of Common Stock and related warrants) of $1.06 per share of Common Stock,
or approximately 21.2% to the Company's stockholders. Such increase to the
Company's current stockholders is solely attributable to the cash price paid by
purchasers of the Securities offered for sale by the Company.
The following table illustrates the per share dilution as of September 30, 1996:
Public offering price per share(1)................. $5.00
Net proforma tangible book value per share
before giving effect to the Company's
offering(3)..................................... $(.45)
Increase per share attributable to the net proceeds
of the sale of 900,000 shares of Common Stock
and related warrants offered by the Company..... 1.06
Proforma net tangible book value per share as of
September 30, 1996 reflecting the Company's
Offering(2)........................................ .61
Dilution per share to purchasers in the Company's
offering........................................... $4.39
- ------------------------
(1) Attributes $5.00 of the public offering price to the shares of
Common Stock and none to the Redeemable Warrants. Represents
the public offering price before deduction of estimated
expenses of the Company's offering, underwriting discounts and
commissions. If the Underwriter's over-allotment option is
exercised in full, the proforma as adjusted net tangible book
value per share of Common Stock after this Offering would be
approximately $.74 representing an immediate increase of $1.19
per share, or approximately 23.8% to current stockholders and
an immediate dilution of $4.26 per share, or approximately
85.2% to new investors.
(2) Assumes no exercise of: (a) the Underwriter's Purchase Option
(or exercise of the Redeemable Warrants included therein); (b)
the Over-Allotment Option (or exercise of the Redeemable
Warrants included therein). See "Capitalization,"
"Underwriting," "Certain Transactions" and "Description of
Securities."
(3) Includes the effect of the conversion of $250,000 of loans into term
debt and the related issuance of 420,738 shares of common stock, the
sale of 25,000 shares of common stock for $50,000 in November, 1996 and
the conversion of $30,000 of convertible notes payable into 15,000
shares of common stock.
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<PAGE>
The following table sets forth, as of November 30, 1996, a comparison
of the number of shares of Common Stock acquired by current stockholders from
the Company, the total consideration paid for such shares of Common Stock and
the average price per share paid by current stockholders of Common Stock and to
be paid by the prospective purchasers of the shares of Common Stock offered for
sale by the Company (based upon the anticipated public offering price of $5.00
per share of Common Stock, before deducting underwriting discounts and
commissions and estimated offering expenses).
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Common Stock Acquired Total Consideration Average Price
Number Percent Amount Percent Per Share
Current Stockholders..... 3,295,594 78.5% $ 618,600 12% $ .19
New Investors(1)(2)...... 900,000 21.5% $4,500,000 88% $5.00(3)
----------- ----- ----------- ----
Total(2)(3)(4)....... 4,195,594 100% $5,118,600 100%
</TABLE>
(1) Does not include 90,000 shares of Common Stock which may be
issued upon the exercise of an option granted to the
Underwriters to cover over-allotments. See "Underwriting".
(2) Assumes no exercise of: (a) the Underwriter's Purchase Option
(or exercise of the Redeemable Warrants included therein); or
(b) the Over-Allotment Option (or exercise of the Redeemable
Warrants included therein). See "Capitalization," "Management
Discussion and Analysis of Financial Conditions and Results of
Operations", "Underwriting," and "Description of Securities."
(3) Aggregate offering price before deduction of offering
expenses, underwriting discounts and commissions.
(4) Includes the 15,000 shares of Common Stock issuable upon the conversion
of the Convertible Notes and the 25,000 shares of Common Stock sold in
November 1996 for $50,000.
DIVIDEND POLICY
The Company has never paid and does not anticipate paying any
dividends on its Common Stock in the foreseeable future. The
Company currently intends to retain all working capital and
earnings, if any, for use in the Company's business operations and
in the expansion of its business. See "Description of Securities-
Common Stock."
35
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Overview
The principal business activity of the Company is developing a
computerized limousine reservation and payment system for the business traveler.
The Company anticipates that the proprietary software that is being developed
will enable limousine reservations to be completely computerized i.e., be
entirely automated and operate without human intervention except for initial
input of travel information.
The Company, a New Jersey corporation, was organized on April 25, 1986,
under the name of JECO2 Lasers, Inc. and changed its name to Robotic Lasers,
Inc. on December 22, 1987. On August 11, 1995, Robotic Lasers acquired Corporate
Travel Link, Inc. (a development-stage enterprise) which was incorporated in New
Jersey on March 7, 1994. For accounting purposes, the share exchange transaction
and combination of Corporate Travel Link with the Company has been treated as a
reverse acquisition. The previous historical financial statements of Corporate
Travel Link (since its information in March 1994) are now reported as the
historical consolidated financial statements of the Company and its subsidiary.
Since August 11, 1995, the Company's business and operations have consisted
solely of the business and operations of Corporate Travel Link, which continues
to operate as a wholly-owned subsidiary of the Company. The Company changed its
name from Robotic Lasers, Inc. to Genisys Reservation Systems, Inc. on July 16,
1996.
The Company changed its fiscal year end from the last day of August to
December 31, effective December 31, 1995.
Development of the Company's Systems
The development of the software program and the database for the Genisys
reservation system ("Genisys Reservation System") has been completed.
All the hardware elements of the Genisys
computer system have been purchased and integrated and the completed system is
up and operating. The Worldspan "script" computer software interface, which
allows the Genisys Reservation System to operate over the Worldspan CRS, has
been completed. The completed Genisys Reservation System
and data base operating through the Worldspan CRS has been "beta" tested with a
major entertainment company and its travel agency in Atlanta and with a
limousine service provider in Los Angeles. Actual reservations were booked,
confirmed and limousine services were provided. At that time, Worldspan could
have been brought on-line but the management of the Company decided
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<PAGE>
to wait until the payment system and the Sabre system could be brought on-line
at the same time.
The Sabre "script" computer software interface has also been completed and is
now undergoing preliminary or "alpha" testing, which the Company expects to be
completed shortly. The Company expects to begin "beta" testing the Sabre system
in February 1997.
The hardware and software development of the Genisys payment system
("Genisys Payment System") has been
completed and is currently undergoing "alpha" testing in conjunction with the
Sabre system. The payment system will be "beta" tested along with and integrated
into the Sabre system. Upon completion of the testing of the Sabre
reservation/payment system, the Worldspan system will be given a second "beta"
test with the Genisys Payment System integrated within its system as well.
Upon completion of the Worldspan reservation/payment system "beta" test,
both the Sabre and Worldspan systems will be brought on-line. Management
expects this to occur in early 1997.
The "script" software program for Apollo is currently being developed and should
be ready for "alpha" testing in early 1997. Since by that time both the Genisys
Reservation and Payment Systems will be operating through the Sabre and
Worldspan CRSs, management expects that "beta" testing of the Apollo
system can be completed by mid 1997 and the Apollo system brought on-line in
late 1997.
Components of Revenue and Expenses
Revenue. The Company is a development-stage company and has generated
no revenues and has no commercial operations to date. The Company did not
generate any revenues from operations during the fiscal year ending December 31,
1996. The Company does expect to bring its Genisys Reservation
and Payment Systems on-line through two of the four CRS' in existence
(Sabre and Worldspan) in early 1997, at which
time the Company expects to generate revenue. The Company anticipates completing
development of and bringing a third CRS, Apollo,
on-line in late 1997, which it expects to increase revenues.
The Company anticipates that its Genisys Reservation and
Payment Systems will generate revenue from the following sources: (i) a booking
fee charged for use of the Genisys Reservation System and billed through the
Genisys Payment System, (ii) a processing fee generated by charges processed
through the Genisys Payment System, (iii) an annual software licensing fee
charged to limousine service providers who utilize the Genisys Reservation and
Payment Systems.
Expenses. Cost of service will include all costs directly
attributable to the Company's provision of services to its
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<PAGE>
corporate clients and the limousine service providers. The most significant
component of cost of service is the booking fee charged by the CRS
for reservations made by the Genisys systems
utilizing the CRS. Booking fees are a set amount charged by each CRS for
transactions posted through the system. Cost of service also includes the access
and file fees charged by a commercial bank acting as the Company's Automated
Clearing House in distributing payments made to limousine service providers
through the Genisys Payment System.
General and administration expenses include salaries, commissions and
benefits, travel costs, professional fees, rent, telephone and other operating
costs of the Company. The Company has not capitalized any internal expenditures
with respect to the costs of developing and implementing the Genisys Reservation
and Payment Systems.
Results of Operations
The Company is in the development stage and has not yet generated any
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 fiscal quarters. The Company does not expect to generate
any revenues from operations until 1997. As reflected in the accompanying
financial statements, the Company has incurred losses totaling $1,328,349 since
inception and at September 30, 1996, had a working capital deficit (proforma) of
$1,171,895.
Selling, general and administrative expenses were $561,808 for the nine
months ended September 30, 1996 as compared to $233,695 during the nine months
ended September 30, 1995. The primary reason for the difference between the two
periods is the commencement of operations during the earlier period when the
Company had only four part time employees for approximately half the period,
while during the latter period the Company was operational with 5 full-time
employees. Payroll and payroll-related costs increased approximately $155,000
during 1996. Other approximate cost increases during the 1996 period consist of
consulting fees ($46,000), travel costs ($19,000), marketing costs ($15,000) and
other administrative costs ($27,000) and professional fees ($66,000).
Professional fees for the nine months ended September 30, 1996 totaled $157,430.
Such amount consisted of attorney's fees of $45,797, accounting fees of $32,958,
accrued consulting fees of $27,000 payable to Loeb Partners, $47,500 payable to
John H. Wasko (accrued prior to his becoming an employee of the Company)and
miscellaneous fees of $4,175. Loeb Partners and Mr. Wasko are affiliates of the
Company.
Comparison of the results of operations during the 4 months ended
December 31, 1995, to the same period in 1994 is not deemed
38
<PAGE>
meaningful, as the Company only incurred nominal operating costs during the 1994
period.
Liquidity and Capital Resources.
The Company's funds have principally been provided from Loeb Holding
Corporation, as escrow agent ("Loeb"), for Warren D. Bagatelle,
HSB Capital,
trusts for the benefit of families of two principals of Loeb Holding
Corporation, and three
unaffiliated individuals,LTI Ventures Leasing Corporation and a private
offering, as described below.
In February, 1995, Loeb agreed to loan the Company up to a maximum of
$500,000 as evidenced by Convertible Notes. In addition, pursuant to five
interim loan agreements, Loeb loaned the Company an additional $250,000 from
December 1995 thru March 1996. In November and December 1996, Loeb Holding
Corporation loaned the Company $210,000 evidenced by a series of eighteen month
term Promissory Notes bearing interest at the annual rate of 10%. Total loan
proceeds from Loeb and Loeb Holding Corporation to date are $960,000.
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 unaffiliated party for $50,000.
Pursuant to a private offering, the Company issued 11.5 units to
sixteen unaffiliated third parties in May and June 1996. The Underwriter acted
as placement agent for the private placement. 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 by the Company.
In April and June 1996, the Company borrowed a total of $30,000 from
two unaffiliated third parties pursuant to two convertible notes. 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,
39
<PAGE>
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.
In November, 1996, the Company sold 25,000 shares of the Company's
restricted common stock to an unaffiliated party for $50,000.
At September 30, 1996, the Company had cash of $76,550 and a working
capital deficit (proforma) of $1,171,895. The Company intends to fund its
operations and other capital needs for the next twelve (12) months from the date
of this offering substantially from revenues generated by the Company's planned
operations and the proceeds of this offering, but there can be no assurance that
such funds will be sufficient for these purposes. There can be no assurance that
such financing will be available, or that it will be available on acceptable
terms. See "Use of Proceeds."
During the quarter ended September 30, 1996, Joseph Cutrona, President
of the Company made a capital contribution to the Company in the amount of
$41,700. In October, November and December 1996, Mr. Cutrona made additional
capital contributions totaling $35,000.
New Accounting Pronouncements
Statement of Financial Accounting Standards No. 121, "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of," requires that certain long-lived assets be reviewed for possible impairment
and written down to fair value, if appropriate. The Company adopted this new
pronouncement in 1996 and the impact of adoption is not expected to have a
material effect on the Company's financial statements.
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation," requires companies to measure employee stock
compensation plans based on the "fair value" method of accounting. However, the
statement allows the alternative of continued use of Accounting Principles Board
Opinion No. 25, "Accounting for Stock Issued to Employees," with proforma
disclosure of net income and earnings per share determined as if the "fair
value"-based method had been applied in measuring compensation cost. The Company
has not yet determined if it will adopt this new pronouncement in 1996 or
provide only proforma disclosure. The effects of this new pronouncement, if
adopted, have not been determined.
40
<PAGE>
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 for resale 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 11, 1995, Robotic Lasers acquired Corporate Travel Link, Inc.
(a development-stage enterprise) which was incorporated on March 7, 1994, by
issuing 1,682,924 shares of restricted New Common Stock of the Company (after
the July 16, 1996 one-for-two reverse split. See Notes 1 and 3 to December 31,
1995 financial statements) in exchange for 200 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.
Since August 11, 1995, the Company's business and operations have
consisted 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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<PAGE>
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 computer
reservation systems
in operation in the United States -- "Sabre", "Worldspan", "Apollo" and "System
One"(each such system referred to hereinafter as a "CRS").
Each CRS 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 CRS 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 each CRS
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 CRSs
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 make securing a confirmed
limousine reservation inconvenient.
In today's cost-conscious business world, corporations must explore
every possible way to cut costs and save time. Under the CRS' 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 largely
by telephone and telefax.
Computerized Limousine Reservation and Payment System
The Company proposes to work with travel agents and corporate travel
departments by providing a computerized system for securing limousine
reservations.
A typical reservation with the Company's proposed system may be
demonstrated as follows:
Assume that a corporate executive wishes to travel from Newark, New
Jersey to Phoenix, Arizona. The executive will contact his travel manager/agent
with his travel plans. The travel
42
<PAGE>
manager/agent will then determine which airline flies between Newark and Phoenix
on the date and at the time when the executive wishes to travel.
The travel manager/agent will then go to his airline reservation
computer to enter the information necessary to book the reservation. The
information originated by the travel manager/agent will be transmitted to one or
more CRS mainframe computers and, in turn, will be
relayed to the mainframe computer of the selected airline. The airline's
computer will ascertain seat availability and it will transmit a reservation
back to the Reservation System's mainframe computer. The CRS will
then retransmit the information to the travel manager/agent and a ticket will be
issued.
Further, if the corporate executive decides that he wishes to stay at a
particular hotel while in Phoenix, this reservation, too, may be made through
the CRS. The travel manager/agent inputs the data already in the
computer pertaining to the airline reservation, and he adds the data necessary
to secure a hotel reservation. The information is transmitted to the CRSs
mainframe computer, and it is then relayed to the hotel's mainframe.
The latter computer searches to ascertain room availability and relays a
confirmed reservation to the CRS. The CRS
transmits the information to the travel manager/agent and a confirmed
reservation slip is printed.
Finally, the corporate executive advises his travel manager/agent to
obtain four limousine reservations: (a) from his home to Newark Airport; (b)
from Phoenix Airport to his hotel; (c) from the hotel to the Phoenix Airport at
the end of his trip; and (d) from Newark Airport to his home. The travel
manager/agent, however, cannot presently effect these reservations through the
CRS or any of the other reservation systems and receive an
immediate, error-free confirmed limousine reservation.
Instead, the travel manager/agent must use the telephone or telefax.
While a corporate travel manager/agent based in Newark will undoubtedly know of
a limousine company in the Newark area to call, he may not know of any in the
Phoenix area. Confirmed reservations cannot be made quickly or efficiently.
The Company's system proposes to remedy this dilemma. The Company
proposes to create its own computerized system which will be linked with one or
more CRS'. Any limousine reservations made through
any CRS 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
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<PAGE>
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.
The Company's Computer System Defined
The Company's computer system would be made up of two main systems, the
Genisys Reservation System and the Genisys Payment System. The Genisys
Reservation System would be a fully automated computer system that allows travel
agents to make limousine bookings directly through any CRS
much like hotel or car bookings. The Genisys Payment
System is an automated electronic payment and reporting system which will
process and reconcile all purchases made through the Genisys Reservation System.
The Genysis Payment System is not yet operational. All hardware required for
development and commercial operation of the Company's Reservation and Payment
Systems are purchased, off-the-shelf components and are not manufactured by the
Company.
An Overview of the Genisys Reservation System
There are three main "components" that play a role in the delivery of a
limousine reservation; the CRS, the Genisys database, and the Genisys computer
terminals which must be purchased by the limousine service provider. The
Company's computer software will integrate these three components into a fully
functional, automated reservation delivery system.
CRS Interface Development
There are four main airline CRSs in existence today in the U.S, Sabre,
Worldspan, Apollo, and System One. These CRSs are the primary technology tool
utilized by travel managers/agents to make airline, hotel and car rental
reservations. The Company has contracts with Sabre, Worldspan and Apollo which
enabled the Company to develop an interface that will allow travel
managers/agents to make limousine reservations through the Genisys Reservation
System.
The Company has completed and tested the Genisys Reservation System
Worldspan interface, and will soon complete the Sabre interface. The Company
anticipates bringing Worldspan and Sabre on-line in early 1997. Apollo will be
the third CRS brought on-line, and the Company anticipates completing
development and bringing Apollo on-line in late 1997.
As stated herein, the Company has contracts in place with Sabre,
Apollo, and Worldspan. Each contract requires the Company to pay a fee for each
"booking" processed by the CRS. A "booking" is broadly defined as a reservation
that has not been canceled
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prior to its effective date - in essence, a reservation where service is
performed. The "booking" fee charged to the Company varies by CRS and is
activity driven (no booking, no charge). Additionally, there are minimum charges
in each of the CRS agreements: Sabre - $2,000 / mo..; Apollo - $1,000 / mo.;
Worldspan - $350 / mo. These minimum payments will only apply if actual booking
fees do not exceed monthly minimum.
Development of the Company's Systems
The development of the software program and the database for the
Genisys Reservation System has been completed. All the hardware elements of the
Genisys computer system have been purchased and integrated and the completed
system is up and operating. The Worldspan "script" computer software interface
which allows the Genisys Reservation System to operate over the Worldspan CRS
has been completed. The completed Genisys Reservation System
and data base, operating through the Worldspan CRS, has been "beta" tested
with a major entertainment company and its travel agency in Atlanta and with a
limousine service provider in Los Angeles. Actual reservations were booked,
confirmed and limousine services were provided. At that time, Worldspan could
have been brought on-line but the management of the Company decided to wait
until the payment system and the Sabre system could be brought on-line at the
same time.
The Sabre "script" computer software interface has also been completed
and is now undergoing preliminary or "alpha" testing, which the Company expects
to be completed shortly. The Company expects to begin "beta" testing the Sabre
system in February 1997.
The hardware and software development of the Genisys Payment System has
been completed and is currently undergoing "alpha" testing in conjunction with
the Sabre system. The Genisys Payment System will be "beta"
tested along with and
integrated into the Sabre system. Upon completion of the testing of the Sabre
reservation/payment system, the Worldspan system will be given a second "beta"
test with the payment system integrated within its system as well. Upon
completion of the Worldspan reservation/payment system "beta" test, both the
Sabre and Worldspan systems will be brought on-line. Management reasonably
expects this to occur in early 1997.
The Apollo "script" computer software interface program is currently
being developed and should be ready for "alpha" testing in early 1997. Since by
that time the Genisys Reservation and Payment Systems will be operating through
the Sabre and Worldspan CRS's,management expects that beta testing of the Apollo
system can be completed by mid 1997 and the Apollo system brought on-line in
late 1997.
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Genisys Database and Genisys Terminal Development
The Genisys Reservation System database was designed using relational
database technology which supports MPP (Massively Parallel Processing), a
technology that allows for much greater transaction processing throughput
through the use of additional low cost processors. The system, as currently
implemented, keeps a second server synchronized with the first to continue
operations in case of a server failure. The Company has developed custom
software applications to interact with the airline CRS's (Apollo, Sabre and
Worldspan), the remote Genisys Terminals which will be located at all limousine
service provider locations, and the Genisys Payment System.
The Genisys Terminal is a WindowsTM 3.1, 3.11 and Windows 95TM
compliant application, which has been built using technology purchased from a
leader in remote client/server communications. This technology is already in use
on more than 750,000 remote clients. Delivery of reservations and payment
information as well as the retrieval of completed trip information and their
associated costs are handled by clustered communications servers capable of
supporting over 5,000 Genisys Terminals in their current configuration. The
Genisys Terminals provide an easy to-use desktop with security for use by the
limousine service provider. Communications sessions with the limousine service
provider will always be initiated by the remote communications servers and
therefore will be transparent to the Service Provider. Communication sessions
will be supported via dedicated dial-up phone lines through the public switched
network to ensure availability. The limousine service provider will be
responsible for the cost of purchasing the Genisys Terminal, which the Company
estimates to be approximately $2,000. The Company's database and terminal
software will be provided in accordance with licensing agreements entered into
with the limousine service providers.
An Overview of Genisys Payment System
Currently under development, the Genisys Payment System will provide an
important addition to the Company's product package by performing two key
functions:
1. The Genisys Payment System will process all booking fees charged by
the Company for use of the Genisys Reservation System. This automated collection
of booking fees will eliminate billing and reduce accounts receivable for the
Company.
2. The Genisys Payment System will process payments for all ground
transportation purchases made through the Genisys Reservation System. This
functionality will allow the Company to become the Genisys "master merchant"
for all
limousine purchases made through its Reservation System. By becoming the "master
merchant", the Company expects to create additional interest revenue and
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processing fee revenue on the total dollar volume processed through the Genisys
Reservation and Payment Systems.
Revenue Sources
The Company anticipates generating revenue from the following sources:
1. Booking Fee
The Company will charge a booking fee for the use of the
Genisys Reservation System. Booking fees will be processed daily through the
Genisys Payment System and will either be charged to the Company's corporate
customer via a centrally billed credit card account or deducted from the amount
wired to the limousine service providers bank account in settlement of the
services provided.
2. Processing Fee
The Company will charge service providers a processing fee for
limousine service transactions processed through the Genisys Payment System.
This processing fee will take the place of the merchant fee currently charged to
service providers by the credit card companies with whom they do business. By
processing payments for all ground transportation services paid through the
system, the Company becomes the "master merchant". The Company has secured
discounted merchant fees rates from the credit card companies and will set its
processing fee at a rate that is comparable to what limousine service providers
are currently paying in merchant fees. The difference between the Company's cost
and the processing fee rate it charges is referred to as processing fee revenue.
Competition
Although, to the best of the knowledge of the management of the
Company, there are as yet no competitors, it must be assumed that if the
Company's efforts are successful, other companies will begin to offer competing
systems. These future competitors may be companies which have substantially
greater research, development, marketing and financial resources than the
Company. Moreover customers seeking limousine service will be able to reserve
such service through existing methods such as direct contact with service
providers which may compete with the Company.
Employees
The Company presently employs 5 full-time employees; 2 executive
officers, 2 marketing executives, and 1 office administrator. None of these
employees is covered by a collective bargaining agreement. The Company utilizes
several software and
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marketing consultants on a part-time basis and one full time ground
transportation industry consultant. The Company believes its personnel relations
to be satisfactory.
Properties
The Company presently leases office space at 2401 Morris Avenue, Union,
NJ 07083. 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.
A portion of the additional space (approximately 1,500 square feet)
will be used to house the computer hardware system which runs the Company's
reservation and payment system software programs. The balance of the space will
be used for additional corporate and sales offices. The Company requires no
manufacturing facilities since it has no present plans to manufacture any
hardware items. All hardware related to the Company's software product is
purchased commercially.
Government Regulation and licensing
There are no special regulations which impact upon the Company other
than the usual statutes and regulations which govern businesses in general.
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MANAGEMENT
Directors and 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 59 President and Director
John H. Wasko 58 Chief Financial Officer,
Secretary, Treasurer
and Director
Mark A. Kenny 44 Director
Warren D. Bagatelle 58 Chairman and Director
The Company's Executive Committee is empowered to exercise
the full authority of the Board of Directors in circumstances when
convening the full Board is not practicable. Messrs. Warren D.
Bagatelle, John H. Wasko, and Joseph Cutrona currently serve as
members. All officers of the Company other than Mr. Bagatelle
devote full time to the Company's business.
Upon the consummation of this offering, the Board of Directors of the
Company will establish a Compensation Committee and an Audit Committee which
will each be comprised of two directors who are not employees of the Company.
The Company's Compensation Committee will be responsible for establishing
executive salaries, bonuses and other compensation and administering any stock
option and other employee benefit plans of the Company. The Company's Audit
Committee will recommend the annual appointment of the Company's auditors, with
whom the Audit Committee will review the scope of audit and non-audit
assignments and related fees, accounting principles used by the Company in
financial reporting, internal auditing procedures and the adequacy of the
Company's internal auditing and control procedures.
Joseph Cutrona has served the Company as President since August
1995, and has served as President of Travel Link since its inception on March
11, 1994. 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
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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, The
University of Maryland and Sophia University, Osaka Japan.
John H. Wasko has served the Company as Secretary since
September 1995, and as Secretary and Treasurer since April 1996. 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 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 November,
1996 he was 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 a director of the Company since
August, 1995 and Chairman of the Board of Directors of the Company since
December, 1996. Since 1988 he has been 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. 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.
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Executive Compensation
The following tabulation shows the total compensation paid by the Company
for services in all capacities during the years ended December 31, 1996 and 1995
and August 31, 1995 to the Officers of the Company and total compensation for
all Officers as a group for such period:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Long-Term Compensation
Awards Payouts
Name and Other Annual Restricted All other
Principal Annual Compensation Compensation Stock Options LTIP Compen-
Position(1) Year Salary($) Bonus ($) Awards($) SARs Payouts(#) sation($)
Joseph Cutona 1996 $73,500.00 $0 $5,000 0 0 0
1995 $45,000.00 $0 $3,840 0 0 0
President 1995 $28,000.00 $0 $3,840 0 0 0
Mark A. Kenny 1996 $42,000.00 $0 $16,250 0 0 0
1995 $44,795.00 $0 $3,840 0 0 0
1995 $28,000.00 $0 $3,840 0 0 0
John H. Wasko 1996 $10,000.00 $0 $48,000 0 0 0
1995 $0 $0 $2,500 0 0 0
Secretary
Treasurer 1995 $0 $0 $2,500 0 0 0
</TABLE>
- -------
(1) See below "-Employment/Consulting Agreements," for a description of the
Company's employment agreements with Mr. Cutrona and Mr. Wasko.
Employment/Consulting Agreements.
The Company entered into an Employment Agreement with Joseph Cutrona
on September 5, 1995 which agreement was revised on October 17, 1996 for an
indefinite period of time, providing an annual salary of $75,000 for the period
from October 17, 1996 through December 31, 1996, and $100,000 thereafter until
modified by the Company. Mr. Cutrona is entitled to incentive bonuses in cash
and stock. Any incentive bonus paid to Mr. Cutrona shall be within the sole
discretion of the board of directors of the Company. The Company intends to
obtain key-man life insurance on the life of Mr.
Cutrona in the amount of $1,000,000.
The Company entered into an Employment Agreement on October 17, 1996
with John Wasko for an indefinite period of time, providing an annual salary of
$50,000 for the period from October 17, 1996 through December 31, 1996, and
$80,000 thereafter until
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modified by the Company. Mr. Wasko is entitled to incentive
bonuses in cash and stock in each year that the Company has net
profits in amounts to be determined by the Company. Any incentive
bonus paid to Mr. Wasko shall be within the sole discretion of the
board of directors of the Company.
The Company entered into a Consulting Agreement on October 18, 1996
with Mark A. Kenny for an indefinite period of time, providing a monthly fee of
$6,500.00 during the period from October 18, 1996 through and including February
28, 1997, and a monthly fee of $8,400.00 thereafter, in each case payable in
arrears on the last day of each month during the term of the Consulting
Agreement. Mr. Kenny is entitled to incentive bonuses in cash and stock. Any
incentive bonuses paid to Mr. Kenny shall be within the sole discretion of the
board of directors of the Company.
All officers other than Mr. Warren D. Bagatelle are full time
employees of the Company.
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CERTAIN TRANSACTIONS
In August 1994 Joseph Cutrona and Mark Kenny each received a total
of 666,433 shares of the Company's common stock for services to be provided to
the Company.
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.
In February, 1995, Loeb Holding Corporation, as escrow agent
("Loeb"), for Warren D. Bagatelle, HSB Capital, trusts for the benefit of
families of two principals of Loeb Holding Corporation and three unaffiliated
individuals, agreed to loan the Company $500,000 evidenced by a series of
Convertible Promissory Notes. In September, 1995, Loeb converted the Convertible
Promissory Notes into 841,455 common shares of the Company and two Term
Promissory Notes, one in the principal amount of $475,000 and the other in the
principal amount of $25,000.
The principal amount of the $475,000 note is to be repaid in twelve
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 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 began to run from the date that the monies were advanced to
the Company.
The Promissory Note in the amount of $25,000 and an additional Note
in the amount of $12,500 issued in December 1995 and discussed below have been
modified. Such Notes provide for accrued interest at the rate of 9% per annum
payable quarterly and unless previously converted the principal amount of each
note is to be repaid in twelve equal quarterly installments, commencing April 1,
1998, or on such earlier date as such notes provide. The notes are convertible
at the sole option of the holder into an aggregate of 400,000 common shares of
the Company.
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
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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
1,682,924 shares of restricted new Common Stock of the Company in exchange for
the shares of the common stock of Travel Link owned by Joseph Cutrona, Mark A.
Kenny and Steven E. Pollan, which represented all the issued and outstanding
shares of common stock of Travel Link.
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 and in November, 1996 the Company granted Mr. Wasko a five year option to
purchase 35,000 shares of the Company's Common Stock at a price of $2.00 per
share.
On September 5, 1995 the Company entered into three year consulting
and investment banking agreement with Loeb Partners Corporation. Under the terms
of the agreement the Company pays Loeb Partners Corporation $3,000 per month.
Loeb Partners Corporation will also receive a fee for arranging private
financing and acquisitions. Mr. Warren D. Bagatelle, a Director and Chairman of
the Company, is a Managing Director of Loeb Partners Corporation.
During December 1995, Loeb agreed to loan the Company $250,000
evidenced by a series of Convertible Promissory Notes ("Convertible Promissory
Notes"). In November 1996, Loeb converted the Convertible Promissory Notes into
(i) two Term Promissory Notes, one in the principal amount of $237,500 and the
other in the principal amount of $12,500 issued in December, 1995 and discussed
below and (ii) 420,728 shares of Common Stock of the Company, of which 420,000
shares of common stock are owned by four unaffiliated parties. Loeb Holding
Corporation did not receive any shares of the Company's Common Stock in this
transaction.
The principal amount of the $237,500 note is to be repaid in twelve
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 began to run from the date that the monies were advanced to
the Company.
In August 1996, the Company gave notice to Mr. Pollan that it was
cancelling the 333,216 shares of its Common Stock which had been issued to him
for services to be provided to the Company. The reason for such cancellation
related to various claims made by the Company against Mr. Pollan that he failed
to provide services to the Company. Mr. Pollan has informed the Company that he
intends to legally contest any attempt by the Company to cancel his shares.
During the quarter ended September 30, 1996, in order to raise
additional working capital for the Company, Joseph Cutrona, President of the
Company, sold a total of 26,100 shares of restricted Common Stock of the Company
owned by him, to sixteen unaffiliated third parties at prices ranging from $2.00
to $2.50
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per share for total proceeds of $53,700. During the quarter ended September 30,
1996, Mr. Cutrona remitted $41,700 of these proceeds to the Company in the form
of a capital contribution. Subsequent to September 30, 1996, Mr. Cutrona
remitted $12,000 to the Company, which represents the balance of the proceeds
from the sale of his stock in the form of an additional capital contribution. In
October, November and December 1996, Mr. Cutrona sold an additional 11,500
shares of restricted Common Stock of the Company owned by him to 3 unaffiliated
third parties at a price of $2.00 per share for total proceeds of $23,000, which
Mr. Cutrona remitted to the Company in the form of an additional capital
contribution. Mr. Mark Kenny has agreed to use 18,800 of his own shares of
restricted Common Stock of the Company to reimburse Mr. Cutrona for one-half of
the number of shares recently sold by Mr. Cutrona.
On October 10, 1996, the Company, Joseph Cutrona, President of the
Company, Mark A. Kenny and Prosoft, Inc. signed an agreement whereby Mr. Cutrona
and Mr. Kenny each agreed to transfer 14,533 shares of restricted Common Stock
owned by them to Prosoft, Inc., or its designees, upon completion of the design
and satisfactory development of the Company's computerized vendor payment
system. Prosoft agreed to accept the 29,066 shares valued at $3.75 per share in
satisfaction of $108,997.50 which would be owed to Prosoft, Inc. by the Company
upon completion of the vendor payment system.
In October and November 1996, Joseph Cutrona, in recognition of
extensive valuable services rendered to the Company by two employees of the
Company, made a gift of 10,000 shares of restricted common stock of the Company
owned by him to the first employee and a gift of 5,000 shares of restricted
common stock of the Company owned by him to the second employee.
During November and December 1996, the Company and Loeb Holding
Corporation signed four 18 month Promissory Notes whereby Loeb Holding
Corporation loaned the Company the sums of $75,000, $30,000, $10,000 and $95,000
(totaling $210,00). The Promissory Notes which bear interest at 10%, mature on
May 11, 1998, May 25, 1998, June 2, 1998 and June 9, 1998.
The Company believes that each of these transactions was entered into
on terms at least as favorable to the Company as could have been obtained from
unaffilated third parties.
The transactions described above involve actual or potential
conflicts of interest between the Company and its officers or directors. In
order to reduce the potential for conflicts of interest between the Company and
its officers and directors, prior to entering into any transaction in which a
potential material conflict of interest might exist, the Company's policy has
been and will continue to be, that the Company does not enter into transactions
with officers, directors or other affiliates unless the terms of the transaction
are at least as favorable to the Company as those which would have been
obtainable from an unaffiliated source. As of the date of this Prospectus, the
Company has no plans to enter into any additional transactions which involve
actual or potential conflicts of interest between the Company and its officers
or directors.
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<PAGE>
Should the Company enter into any such transaction in the future, it will not
do so without first obtaining at least one fairness
opinion from, depending on the nature of the transaction, either its own
independent directors or from an independent investment banking firm.
- ----------------------------------------------------------------
PRINCIPAL STOCKHOLDERS
The following tabulation shows the security ownership as of November 30, 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 disputes between Mr. Pollan and the Company) (ii) each
Director and Officer of the Company, and (iii) all Directors and Officers as a
group.
NUMBER OF PERCENT PERCENT
NAME & ADDRESS SHARES OWNED OF CLASS AFTER OFFERING
Loeb Holding Corporation
As Escrow Agent (1)
61 Broadway
New York, NY 10006 1,242,183 37.86% 29.61%
Warren D. Bagatelle(2)
Loeb Partners Corp.
61 Broadway
New York, NY 100061 1,271,155 38.75% 30.30%
Joseph Cutrona(5)
Genysis Reservation Systems
2401 Morris Avenue
Union, NJ 07083 618,100 18.84% 14.7%
Mark A Kenny(5)
10 Lisa Drive
Chatham, NJ 07928 633,100 19.30% 15.50%
John H. Wasko(3)(4)
Genysis Reservation Systems
2401 Morris Avenue
Union, NJ 07083 156,205 4.76% 3.72%
All Officers and Directors
as a group (4 person) 2,678,560 81.65% 63.84%
(1) Includes 842,183 Common Shares purchased by Loeb Holding
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Corporation as escrow agent for Warren D. Bagatelle, Managing Director of Loeb
Partners Corp., HSB Capital of which Warren Bagatelle is a partner, and trusts
for the benefit of families of two principals of Loeb Holding Corporation and
three unaffiliated persons and 400,000 common shares issuable upon conversion of
two convertible Promissory Notes aggregating $37,500. Loeb Holding Corporation
disclaims any beneficial interest in these shares.
(2) Includes 842,183 Common Shares purchased by Loeb Holding
Corporation as escrow agent for Warren D. Bagatelle, Managing Director of Loeb
Partners Corp., HSB Capital of which Warren D. Bagatelle is a partner, and
trusts for the benefit of families of two principals of Loeb Holding Corporation
and three unaffiliated individuals, and 6,739 Common Shares owned directly by
Warren D. Bagatelle and 2,233 Common Shares owned directly by HSB Capital and
20,000 Common Shares pledged by Joseph Cutrona to Warren D. Bagatelle as
security and 400,000 common shares issuable upon conversion of two convertible
Promissory Notes aggregating $37,500.
(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, a 5-year option to purchase 35,000 shares of the
Company's Common Stock at a price of $2.00 per share granted to Mr. Wasko by the
Company on November 1, 1996 and 5,333 common shares issuable upon conversion of
two convertible Promissory Notes aggregating $37,500.
(5) Includes 14,533 Common Shares to be transferred to
ProSoft, Inc. upon successful completion of the Company's vendor
payment system.
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 Messrs. Cutrona and Kenny each received their Common
Stock in the Company for services to be provided to the Company.
For accounting purposes these shares were recorded at $7,840 for
each individual. In August, 1994 Mr. Pollan received his common
stock in the Company for services to be provided. See "Certain
Transactions".
SELLING STOCKHOLDERS
In addition to the Securities, the Registration Statement, of which
this Prospectus forms a part, also covers the registration of an aggregate of
287,500 Class A Redeemable Warrants and 287,500 shares of Common Stock issuable
upon the exercise of the Class A Redeemable Warrants, which were issued by the
Company in a private placement. The Company will not receive any proceeds from
the sale of these Class A Redeemable Warrants or shares but, may receive
proceeds if the warrants are subsequently exercised, as to which there can be no
assurance. The costs of qualifying these 287,500
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Class A Redeemable Warrants and 287,500 shares of Common Stock under federal and
state securities laws, together with legal and accounting fees, printing and
other costs in connection with this offering, will be paid by the Company.
Pursuant to an agreement with the Underwriter, the Class A Redeemable
Warrants and the 287,500 shares of Common Stock registered in the Registration
Statement, of which this Prospectus forms a part, may not be sold for eighteen
(18) months from the date of this Prospectus, subject, however, to earlier
release at the sole discretion of the Underwriter. Such shares are being
registered for resale purposes only and will be offered pursuant to an alternate
prospectus. See "Underwriting."
The terms and conditions of the Common Stock Purchase Warrants issued
by the Company in the private placement are identical to the terms and
conditions of the Class A Redeemable Warrants being offered pursuant to this
Prospectus. All of the securities issued in the private placement are being
registered in the Registration Statement, of which this Prospectus forms a part.
Pursuant to an agreement with the Underwriter, such Warrants and shares of
Common Stock may not be sold until eighteen months from the date of this
Prospectus, subject, however, to earlier release at the sole discretion of the
Underwriter. The certificates representing the 287,500 Class A Redeemable
Warrants and 287,500 shares of Common Stock issuable on exercise of the Class A
Redeemable Warrants will have legends affixed setting forth such restrictions.
The Underwriter may release these securities from this eighteen month
restriction at any time after all securities subject to this offering have been
sold. See "Underwriting." The resale of securities by the Selling Stockholders
are subject to prospectus delivery and other requirements of the Securities Act.
Sales of these securities, or even the potential for such sales at any time,
would likely have an adverse effect on the market prices of the Common Stock and
the Class A and Class B Redeemable Warrants. The Company will not receive any
proceeds from the sale of the securities by the Selling Stockholders. If all of
the Class A Redeemable Warrants issued in the private placement are exercised,
of which there is no assurance, the Company will receive the gross proceeds
therefrom aggregating up to an additional $1,653,125.
58
<PAGE>
Set forth below is a list of the Selling Stockholders and the number
of Warrants and shares of Common Stock issuable upon their exercise which are
being registered pursuant to the Registration Statement, of which this
Prospectus forms a part:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
No. of Shares No. of Shares No. Of Percentage
Owned Before issuable upon Warrants owned after
Name (1) Offering exercise of Offering(3)
- -------- -------- ----------- -----------
Class A Reedamble
-----------------
Warrants (2)
Steven C. Wright 0 12,500 12,500 0
Keith C. Kammer 0 12,500 12,500 0
Paul W. Leblanc 0 12,500 12,500 0
Mildred J. Greiss 0 12,500 12,500 0
Terry Nash 0 12,500 12,500 0
Joel B. Pipe 0 25,000 25,000 0
Theodore E. Hanson 0 25,000 25,000 0
Dennis Lafer 0 25,000 25,000 0
Vincent A. Ferranti 0 25,000 25,000 0
Jason J. Leinwand 0 12,500 12,500 0
James R. Welch 0 12,500 12,500 0
Daniel Churchill 0 25,000 25,000 0
Glen Cadrez, Jr. 0 12,500 12,500 0
John Albanese Numismatics 0 12,500 12,500 0
Giuseppe Pappalardo 0 25,000 25,000 0
Joseph Perri 0 25,000 25,000 0
- --------------------------
</TABLE>
(1) The persons named in the above table have sole voting and investment power
with respect to all of the Common Stock shown as beneficially owned by them,
except as otherwise indicated.
(2) Pursuant to an agreement with the Underwriter, the Class A Redeemable
Warrants and underlying shares may not be sold for eighteen (18) months from the
date of this prospectus, subject, however, to earlier release at the sole
discretion of the Underwriter.
(3) Assumes all Class A Redeemable Warrants and underlying
shares held by the Selling Stockholders are sold.
After making the investment in the private placement, the investors
did not own, nor did any of them have any right to acquire, any other securities
of the Company. None of the investors were affiliated with the Company at the
time of making their investment, at the time of this offering, or at any other
time.
Plan of Distribution
Subject to the eighteen (18) month restriction on the offer and sale
of the 287,500 Class A Redeemable Warrants and the 287,500 shares of Common
Stock issuable on their exercise the securities
59
<PAGE>
offered hereby may be sold from time to time directly by the Selling
Stockholders. Alternatively, the Selling Stockholders may, from time to time,
offer such securities through underwriters, dealers and/or agents. The
distribution of securities by the Selling Stockholders may be effected in one or
more transactions, privately-negotiated transactions or through sales to one or
more broker-dealers for resale of such securities as principals, at market
prices prevailing at the time of sale, at prices related to such prevailing
market prices or at negotiated prices. Usual and customary or specifically
negotiated brokerage fees or commissions may be paid by the Selling Stockholders
in connection with such sales. The Selling Stockholders, and intermediaries
through whom such securities are sold, may be deemed "underwriters" within the
meaning of the Securities Act with respect to the securities offered, and any
profits realized or commissions received may be deemed underwriting
compensation.
At the time a particular offer of securities is made by or on behalf
of the Selling Stockholders to the extent required, a prospectus will be
distributed which will set forth the number of securities being offered and the
terms of the offering, including the name or names of any underwriter, dealer or
agent, the purchase price paid by the underwriter for securities purchased from
the Selling Stockholders and any discounts, commissions or concessions allowed
or reallowed or paid to dealers and the proposed selling price to the public.
Under the Exchange Act and the regulations promulgated thereunder,
any person engaged in the distribution of the securities of the Company offered
by this Prospectus may not simultaneously engage in market-making activities
with respect to such securities of the Company during the applicable "cooling
off" period (which is nine days) prior to the commencement of such distribution.
In addition, and without limiting the foregoing, the Selling Stockholders will
be subject to applicable provisions of the Exchange Act, and the rules and
regulations promulgated thereunder, including without limitation, Rules 10b-6
and 10b-7 in connection with transactions in such securities, which provisions
may limit the timing of purchases and sales of such securities by the Selling
Stockholders.
Sales of securities by the Selling Stockholders or even the potential
of such sales, would likely have an adverse effect on the market prices of the
securities offered hereby. Following the closing of this offering, the freely
tradeable securities of the Company ("public float"), including this offering,
will be 1,159,101 shares of Common Stock, 1,500,000 Class A Redeemable Warrants
and 900,000 Class B Redeemable Warrants. This does not including an aggregate of
287,500 Class A Redeemable Warrants and the 287,500 shares of Common Stock
issuable upon exercise of the Class A Redeemable Warrants owned by the Selling
Stockholders,
60
<PAGE>
which are not transferable for eighteen (18) months commencing on the date of
this Prospectus or at such earlier date as may be permitted by the Underwriter,
which may release such securities at any time after all securities subject to
this offering have been sold and assuming no exercise of the Underwriter's
Purchase Option. See "Descriptions of Securities" and "Underwriting".
DESCRIPTION OF SECURITIES
Common Stock
The Company is currently authorized to issue 75,000,000 shares of
Common Stock, having a par value of $.0001 per share of which 3,280,594
(including 333,216 shares issued to Mr.Pollan) are outstanding prior to the
offering contemplated hereby. Each share of Common Stock entitles the holder
thereof to one vote on each matter submitted to the stockholders of the Company
for a vote thereon. The holders of Common Stock: (i) have equal ratable rights
to dividends from funds legally available therefor when, as and if declared by
the Board of Directors; (ii) are entitled to share ratably in all of the assets
of the Company available for distribution to holders of Common Stock upon
liquidation, dissolution or winding up of the affairs of the Company; (iii) do
not have preemptive, subscription or conversion rights, or redemption or sinking
fund provisions applicable thereto; and (iv) as noted above, are entitled to one
non-cumulative vote per share on all matters submitted to stockholders for a
vote at any meeting of stockholders. The Company has not paid any dividends on
its Common Stock to date. The Company anticipates that, for the foreseeable
future, it will retain earnings, if any, to finance the continuing operations of
its business. The payment of dividends will depend upon, among other things,
capital requirements and operating and financial conditions of the Company.
Redeemable Common Stock Purchase Warrants
The Company is offering 2,400,000 redeemable warrants, 1,500,000 of
which will be "Class A Redeemable Warrants" and 900,000 of which will be "Class
B Redeemable Warrants," at an anticipated public offering price of $.20 per
Class A Redeemable Warrant and $.10 per Class B Redeemable Warrant. Each
Redeemable Warrant shall be exercisable for a period of 48 months, commencing
six (6) months from the date on which the registration statement (the
"Registration Statement") of which this prospectus (the "Prospectus") forms a
part is declared effective ("Effective Date") by the Securities and Exchange
Commission ("Commission").
61
<PAGE>
Class A Redeemable Warrants
Each Class A Redeemable Warrant shall entitle the holder to acquire
one share of Common Stock at a price equal to $5.75 per share. Commencing twelve
months after the Effective Date, the Company will have the right at any time to
redeem all, but not less than all, of the Class A Redeemable Warrants at a price
equal to twenty cents ($.20) per Redeemable Warrant, provided that the closing
bid price of the Common Stock equals or exceeds $6.25 per share for any twenty
(20) trading days within a period of thirty (30) consecutive trading days ending
on the fifth trading day prior to the date of the notice of redemption.
Class B Redeemable Warrants
Each Class B Redeemable Warrant shall entitle the holder to acquire
one share of the Common Stock at a price equal to $6.75 per share. Commencing
twelve months after the Effective Date, the Company will have the right at any
time to redeem all, but not less than all, of the Class B Redeemable Warrants at
a price equal to ten cents ($.10) per Redeemable Warrant, provided that the
closing bid price of the Common Stock equals or exceeds $7.25 per share for any
twenty (20) trading days within a period of thirty (30) consecutive trading days
ending on the fifth trading day prior to the date of the notice of redemption.
Preferred Stock
The Certificate of Incorporation of the Company authorizes the
issuance of up to 25,000,000 shares of Preferred Stock, $.0001 par value per
share. None of such Preferred Stock has been designated or issued. The Board of
Directors is authorized to issue shares of Preferred Stock from time to time in
one or more Class and, subject to the limitations contained in the Certificate
of Incorporation and any limitations prescribed by law, to establish and
designate any such limitations prescribed by law, to establish and designate any
such Class and to fix the number of shares and the relative conversion rights,
voting rights and terms of redemption (including sinking fund provisions) and
liquidation preferences. If shares of Preferred Stock with voting rights are
issued, such issuance could affect the voting rights of the holders of the
Common Stock by increasing the number of outstanding shares having voting
rights, and by the creation of class or series voting rights. If the Board of
Directors authorizes the issuance of shares of Preferred Stock with conversion
rights, the number of shares of Common Stock outstanding could potentially be
increased by up to the authorized amount. Issuance of shares of Preferred Stock
could, under certain circumstances, have the effect of delaying or preventing a
change in control of the Company and may adversely affect the rights of holders
of Common Stock. Also, the Preferred Stock could have preferences over the
Common Stock (and
62
<PAGE>
other series of preferred stock) with respect to dividends and
liquidation rights.
Private Placement
The terms and conditions of the Common Stock Purchase Warrants issued
by the Company in the private placement are identical to the terms and
conditions of the Class A Redeemable Warrants. All of the securities issued in
the private placement are being registered in the Registration Statement, of
which this Prospectus forms a part. Pursuant to an agreement with the
Underwriter, such warrants and shares of Common Stock may not be sold until
eighteen months from the date of this Prospectus, subject, however, to earlier
release at the sole discretion of the Underwriter. The certificates representing
the 287,500 Class A Warrants and the 287,500 shares of Common Stock issuable on
exercise of the Class A Redeemable Warrants will have legends affixed setting
forth such restrictions. The Underwriter may release these securities from this
eighteen month restriction at any time after all securities subject to this
offering have been sold. See "Underwriting."
Transfer and Warrant Agent
Continental Stock Transfer & Trust Company is the Registrar
and Transfer Agent for the Common Stock and the Registrar and
Warrant Agent for the Redeemable Warrants.
UNDERWRITING
General
Subject to the terms and conditions set forth in the Underwriting
Agreement by and between the Company and the Underwriter ("Underwriting
Agreement"), the Underwriter has agreed to purchase on a "firm commitment"
basis, an aggregate of 900,000 shares of Common Stock and 2,400,000 Redeemable
Warrants (exclusive of the 135,000 shares of Common Stock and 360,000 Warrants
subject to the Over-Allotment Option).
The Underwriter has advised the Company that it proposes to offer the
Common Stock and Redeemable Warrants to the public at the public offering price
set forth on the cover page of this Prospectus. The Securities are offered by
the Underwriter subject to: (i) approval of certain legal matters by counsel to
the Underwriter; and (ii) certain other conditions typical of such agreements
specified in the Underwriting Agreement.
The Company has agreed to sell the Securities to the
63
<PAGE>
Underwriter at a discount of 10% of the public offering price thereof. The
Company has also agreed to pay the Underwriter the Non-Accountable Expense
Allowance (as previously defined) equal to 3% of the aggregate offering price of
the Securities ($50,000 of which was advanced to the Underwriter). Pursuant to
the provisions of the Underwriting Agreement, in the event that the Company's
public offering is terminated for any reason, the Underwriter shall be
reimbursed for all its accountable expenses. Any amounts previously paid shall
be credited against any amounts due.
The Underwriter has informed the Company that it does not intend to
confirm sales to any accounts over which it exercises discretionary authority.
Prior to the Company's public offering, there has been no public
trading market for the Securities. The offering price of the Common Stock and
the exercise price of the Redeemable Warrants were determined by negotiation
between the Company and the Underwriter. The factors considered by the Company
and the Underwriter in determining the public offering price of the Common Stock
and the exercise price of the Redeemable Warrants, in addition to prevailing
market conditions, were management's assessment of the Company's business
potential and earning prospects, the prospects for growth in the industry in
which the Company operates. The public offering price may not bear any
relationship to the Company's assets, book value, net worth or other criteria of
value applicable to the Company.
The Underwriter has required that all officers and directors and
holders of 5% or more of the issued and outstanding shares of Common Stock and
securities exercisable, convertible or exchangeable for shares of Common Stock,
other then Mr. Pollan and 200,000 of the shares held by Loeb, agree to a lock-up
of their securities for a period of not less than eighteen (18) months in order
for the Underwriter to engage in the Offering as well as in order to maintain a
more orderly trading market. Such shares will have a legend placed on the
certificates to express the lock-up.
The Underwriting Agreement prohibits the Company from issuing any
capital stock or other securities without the Underwriter`s prior consent for a
period of eighteen (18) months following the Effective Date of the Registration
Statement. The Underwriter has no present intention of waiving such restriction.
This provision may limit the Company's ability to raise additional equity
capital.
The Over-Allotment Option
The Company has granted to the Underwriter the Over-Allotment Option
which is exercisable for a period of 45 days from the date hereof to purchase up
to an additional 135,000 shares of Common
64
<PAGE>
Stock and 360,000 Redeemable Warrants (equal to an aggregate of up to 15% of the
number of shares of Common Stock and Redeemable Warrants offered by the Company
to the public) for the purpose of covering over-allotments. The Over-Allotment
Option is exercisable upon the same terms and conditions as are applicable to
the sale of the Securities.
The Underwriter's Purchase Option
As part of the consideration to the Underwriter for its services in
connection with the public offering described herein, the Company has agreed to
issue and sell to the Underwriter, at the closing, for nominal consideration,
five (5) year warrants to purchase such number of shares of Common Stock and
Redeemable Warrants as shall equal 10% of the number of shares of Common Stock
and Redeemable Warrants (excluding the over-allotment option) being underwritten
for the account of the Company at a price of $.0001 per warrant (the
"Warrants"). The Warrants shall be exercisable at any time during a period of
four(4) years commencing at the beginning of the second year after their
issuance and sale at a price equaling 120% of the public offering price of the
shares of Common Stock and Redeemable Warrants.
During the period in which the Underwriter's Purchase Option is
exercisable, the holders thereof are given the opportunity to profit from a rise
in the market price of the Securities which may result in a dilution of the
interest of the stockholders. The Company may find it more difficult to raise
additional equity capital if it should be needed for the business of the Company
while the Underwriter's Purchase Option is outstanding. At any time when the
holders thereof might be expected to exercise such Warrants, the Company would
probably be able to obtain additional equity capital on terms more favorable
than those provided by the Underwriter's Purchase Option. Any profit realized on
the sale of securities issuable upon the exercise of the Underwriter's Purchase
Option may be deemed additional underwriter compensation.
Registration Rights
In connection with the underwriting of the Company's public offering,
the Company has granted to the Underwriter certain "piggy back" and "demand"
registration rights. Pursuant to the terms of the Underwriting Agreement, the
Company agrees that, for a period of seven (7) years from the effective date of
the public offering of the shares of Common Stock and Redeemable Warrants, if
the Company intends to file a Registration Statement or Statements for the
public sale of securities for cash (other than a Form S-8, Form S-4 or
comparable Registration Statement), it will notify all of the holders of the
Warrants and/or underlying securities and if so requested it will include
therein material to permit a public offering of the securities underlying said
Warrants at the expense
65
<PAGE>
of the Company (excluding fees and expenses of the holder's counsel and any
underwriting or selling commissions). In addition, for a period of five (5)
years from such effective date, upon the written demand of holder(s)
representing a majority of the Warrants, the Company agrees, on one occasion, to
promptly register the underlying Securities at the expense of the Company
(excluding fees and expenses of the holder's counsel and any underwriting or
selling commissions).
Finder's Fees
No finder has been associated with the Company's public offering as
described herein; nor does the Company have any obligation to pay a finder's fee
to anyone in connection with any pending transaction involving the Company.
Warrant Solicitation Fee
Pursuant to the Underwriting Agreement, the Company has agreed to
grant to the Underwriter a right of first refusal for a period of three (3)
years after the Effective Date of the Registration Statement for any publicly
offered sale of securities to be made by the Company or any of its present or
future subsidiaries. The Underwriting Agreement also provides that the
Underwriter shall act as the Company's exclusive agent with respect to the
solicitation of the Redeemable Warrants, and receive from the Company a
commission equal to 4% of the exercise price of the Redeemable Warrants
("Warrant Solicitation Fee") commencing twelve (12) months after the effective
date of the Registration Statement, payable upon exercise, if; (i) the market
price of the Common Stock on the date that any such Redeemable Warrant is
exercised is greater than the exercise price of the Redeemable Warrant; (ii) the
exercise of such Redeemable Warrant was solicited by a member of the National
Association of Securities Dealers, Inc.; (iii) the Redeemable Warrant is not
held in a discretionary account; (iv) disclosure of this compensation
arrangement is made both at the time of the public offering and at the time of
the exercise of such Redeemable Warrant; and (v) solicitation of the exercise is
not in violation of Rule 10b-6 of the Exchange Act. No commission will be paid
to the Underwriter on Redeemable Warrants voluntarily exercised within one (1)
year of the Effective Date or on Redeemable Warrants voluntarily exercised at
any time without solicitation by the Underwriter.
In addition, unless granted an exemption by the Commission from Rule
10b-6 under the Exchange Act, the Underwriter will be prohibited from engaging
in any market making activities or solicited brokerage activities with respect
to the Company's securities for the period from nine business days prior to any
solicitation of the exercise of any Redeemable Warrant or nine (9) business days
prior to the exercise of any Redeemable Warrant based
66
<PAGE>
on a prior solicitation until the later of the termination of such solicitation
activity or the termination (by waiver or otherwise) of any right the
Underwriter may have to receive such a fee for the exercise of the Redeemable
Warrants following such solicitation. As a result, the Underwriter may be unable
to continue to provide a market for the Company's securities during certain
periods while the Redeemable Warrants are exercisable.
Other Terms of the Underwriting
The Company has agreed not to issue, sell, offer to sell, grant any
option relating to the sale of or otherwise dispose of (directly or indirectly)
any of the Company's equity securities (including securities convertible into,
exercisable for or exchangeable into equity securities) without the
Underwriter's prior written consent, except for issuances pursuant to: (i) the
exercise of the Underwriter's Purchase Option; (ii) the Company's public
offering of securities as described herein; (iii) a declaration of dividends,
recapitalization, reorganization or similar transaction; or (iv) a currently
existing stock incentive or option plan, for 18 months from the Effective Date.
In addition, each officer, director and stockholder who owns 5% or more of the
Company's equity securities, other then Mr. Pollan and other than 200,000 of the
shares held by Loeb has agreed not to sell, transfer, convey, pledge,
hypothecate or otherwise dispose of any of the respective securities of the
Company owned by them for a period of 18 months from the Effective Date without
the Underwriter's prior approval.
In connection with and as consideration for the Underwriter's
participation in the Company's public offering, the Company has given the
Underwriter the right, upon completion of such public offering, to designate a
person to attend all meetings of the Company's Board of Directors for a period
of five (5) years. Such person need not be a director but shall be entitled to
attend all such meetings and to receive all notices and other correspondence and
communications sent by the Company to members of its Board of Directors. As of
the date hereof, the Underwriter has not identified a designee nor has it
expressed to the Company the desire to exercise its right to select such a
designee.
The Company has agreed to retain the Underwriter as its financial
consultant for a period of 24 months commencing upon consummation of the
proposed public offering at a monthly retainer of $2,000, all of which is
payable in advance upon such consummation.
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<PAGE>
Indemnification
The Company has agreed to indemnify the Underwriter and others
against certain liabilities, including liabilities under the Securities Act.
Insofar as indemnification for liabilities arising under the Securities Act may
be provided to officers, directors or persons controlling the Company, the
Company has been informed that, in the opinion of the Commission, such
indemnification is against public policy and is therefore unenforceable. The
Underwriter has agreed to indemnify the Company, its directors, and each person
who controls it within the meaning of Section 15 of the Securities Act with
respect to any statement in or omission from the Registration Statement, the
Prospectus or any amendment or supplement thereto if such statement or omission
was made in reliance upon information furnished in writing to the Company by the
Underwriter specifically for or in connection with the preparation of the
Registration Statement, the Prospectus, or any such amendment or supplement
thereto.
The foregoing summaries of certain terms and conditions of the
Underwriting Agreement and the Underwriter's Purchase Option state all the
material elements of such documents. Copies of the foregoing documents have been
filed with the Commission as exhibits to the Registration Statement of which
this Prospectus forms a part and are also on file at the offices of the
Underwriter and the Company. Reference is hereby made to each such exhibit for a
detailed description of the provisions thereof which have been summarized above.
See "Available Information."
LEGAL MATTERS
Certain legal matters in connection with the issuance of the
securities being offered by the Company will be passed upon for the Company by
McLaughlin & Stern, LLP, New York, New York. A member of the firm of McLaughlin
& Stern, LLP owns 5,000 shares of the Company's Common Stock. Legal matters for
the Underwriter will be passed upon by Scheichet & Davis, P.C., New York, New
York.
EXPERTS
The Financial Statements of the Company included in this Prospectus
to the extent and for the periods indicated in their report have been reported
on by Wiss & Company, LLP, independent certified public accountants, as stated
in their report appearing herein in reliance upon such report given on the
authority of that firm as experts in accounting and auditing.
68
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Independent Auditors' Report F-2
Consolidated Financial Statements:
Consolidated Balance Sheet at December 31, 1995 F-3
Consolidated Statements of Operations for the Four Months
Ended December 31, 1995, the Year Ended August 31, 1995,
and the Periods From March 7, 1994 (commencement of
development stage activities) to August 31, 1994 Months
December 31, 1995 F-4
Consolidated Statements of Changes in Stockholders'
Equity (Deficiency) for the Four Months Ended
December 31, 1995, the Year Ended August 31, 1995,
and the Period From March 7, 1994 (commencement of
development stage activities) to August 31, 1994 F-5
Consolidated Statements of Cash Flows for the
Four Months Ended December 31, 1995, the Year Ended
August 31, 1995, and the Periods From March 7, 1994
(commencement of development stage activities) to
August 31, 1994 and to December 31, 1995 F-6
Notes to Consolidated Financial Statements F-7 to F-15
Consolidated Financial Statements (Unaudited):
Consolidated Balance Sheets - September 30, 1996
(proforma), September 30, 1996 and December 31, 1995 F-16
Consolidated Statements of Operations - Nine and
Three Months Ended September 30, 1996 and Period From
March 7, 1994 (commencement of development stage
activities) Through September 30, 1996 F-17
Consolidated Statement of Stockholders' Equity
(Deficiency) - Nine Months Ended September 30, 1996 F-18
Consolidated Statements of Cash Flows - Nine Months
Ended September 30, 1996 and 1995 and Period
From March 7, 1994 (commencement of development
stage activities) Through September 30, 1996 F-19
Notes to Consolidated Financial Statements F-20 to F-23
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 sheet of Genisys
Reservation Systems, Inc. and Subsidiary (formerly Robotic Lasers, Inc. and a
Development Stage Company) as of December 31, 1995 and the related consolidated
statements of operations, changes in stockholders' equity and cash flows for the
four months ended December 31, 1995, the year ended August 31, 1995, and for the
periods from March 7, 1994 (commencement of development stage activities) to
August 31, 1994 and December 31, 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) at December 31, 1995 and the results of their operations and
their cash flows for the four months ended December 31, 1995, the year ended
August 31, 1995 and for the periods from March 7, 1994 (commencement of
development stage activities) to August 31, 1994 and December 31, 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 Company is a development stage company and has
suffered recurring losses from operations that raise substantial doubt about its
ability to continue as a going concern. Management's plans in regard to these
matters are also described in Note 2. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
WISS & COMPANY, LLP
Woodbridge, New Jersey
July 8, 1996
F-2
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(Formerly Robotic Lasers, Inc.)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEET
DECEMBER 31, 1995
ASSETS
CURRENT ASSETS:
Cash $ 22,613
Prepaid expenses 703
Total Current Assets $ 23,316
PROPERTY AND EQUIPMENT, LESS ACCUMULATED
DEPRECIATION OF $17,393 145,384
OTHER ASSETS:
Computer software costs 156,997
Deposits and other 26,988
183,985
$ 352,685
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Notes payable - stockholder, less unamortized
debt discount of $12,426 $ 637,574
Accounts payable and accrued expenses 98,012
Current portion of obligations under capital leases 45,012
Loans and advances - related parties 19,126
Accrued interest payable - stockholder 28,096
Payroll taxes payable 10,000
Total Current Liabilities $837,820
LONG-TERM PORTION OF OBLIGATIONS UNDER CAPITAL LEASES
89,746
927,566
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
Additional paid-in capital 280
Additional paid-in capital 18,639
Deficit accumulated during development stage (593,800)
Total Stockholders' Equity (Deficiency) (574,881)
$352,685
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
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Period From March 7, 1994
Four Months Year (Commencement of
Ended Ended Development Stage Activities)
December 31, August 31, August 31, December 31,
1995 1995 1994 1995
REVENUES AND EXPENSES DURING THE DEVELOPMENT STAGE:
Revenues $ - $ - $ - $ -
Expenses:
General and administrative 250,454 256,621 31,416 538,491
Depreciation and amortization 18,453 240 94 18,787
Interest expense 24,303 12,219 - 36,522
293,210 269,080 31,510 593,800
NET LOSS INCURRED DURING THE
DEVELOPMENT STAGE $(293,210) $(269,080) $(31,510) $(593,800)
NET LOSS PER COMMON SHARE $(.11) $(.16) $(.02) $(.32)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING
2,594,503 1,694,611 1,682,924 1,859,495
</TABLE>
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)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
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
endered, valued at approximately $.006 per share $10,000 1,682,924 $ - $10,000 $ -
Net loss (31,510) - - - (31,510)
BALANCE, AUGUST 31, 1994 (21,510) 1,682,924 - 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 - - 168 (168) -
Net loss (269,080) - - - (269,080)
PERIOD ENDED DECEMBER 31, 1995:
Conversion of related party debt into
common stock 13,406 841,455 84 13,322 -
Net loss (293,210) - - - (293,210)
BALANCE, DECEMBER 31, 1995 $(574,881) 2,804,866 $280 $18,639 $(593,800)
</TABLE>
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
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Period From
Four Months Year March 7, 1994
Ended Ended (Commencement of Develoment
Stage Activities), to
December 31, August 31, August 31, December 31,
1995 1995 1994 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(293,210) $(269,080) $ (31,510) $(593,800)
Adjustment to reconcile net loss to
net cash flows from operating activities:
Depreciation and amortization 18,453 240 94 18,787
Contribution of services rendered
to capital - 9,600 10,000 19,600
Changes in operating assets and liabilities:
Prepaid expenses 3,031 (3,734) - (703)
Other assets 218,053 (243,255) (2,200) (27,402)
Accounts payable and accrued expenses 10,770 73,155 - 83,925
Payrol1 1,027 8,973 - 10,000
Accrued interest payable 15,852 12,244 - 28,096
Net cash flows from operating activities (26,024) (411,857) (23,616) (461,497)
CASH FLOWS FROM INVESTING ACTIVITIES -
Acquisition of equipment and software (319,774) - - (319,774)
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances from (repayments to) stockholder (6,820) (4,001) 10,821 -
Loans and advances from related parties 14,326 (8,000) 12,800 19,126
Proceeds from issuance of notes payable 215,000 435,000 - 650,000
Payments under computer equipment leases (9,724) - - (9,724)
Proceeds from sale and lease-back 144,482 - - 144,482
Net cash flows from financing activities 357,264 422,999 23,621 803,884
NET CHANGE IN CASH 11,466 11,142 5 22,613
CASH, BEGINNING OF PERIOD 11,147 5 - -
CASH, END OF PERIOD $22,613 $11,147 $ 5 $22,613
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 8,426 $ - $ - $ 8,426
Net liabilities assumed in
reverse acquisition $ - $ 14,087 $ - $14,087
Conversion of related party debt
into common stock $ 13,406 $ - $ - $13,406
</TABLE>
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 1,682,924 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 by, and a recapitalization of, Travel
Link. The net assets of the Company of $(14,000) consisted primarily of accounts
payable of $14,000. 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 and payment 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 quarters. The Company does not
expect to generate any revenues from operations during the fiscal year ending
December 31, 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>
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 December 31, 1995,
there were no uninsured balances.
Property and Equipment - Property and equipment is stated at cost and
depreciated using the straight-line method over an estimated useful life of 5
years.
Computer Software Costs Relating to Reservation and Payment Systems - The
Company capitalizes the external direct costs of materials and services and
interest consumed in the development of the Genisys Reservation and Payment
Systems (no internal direct costs are anticipated). Such costs will be amortized
on a straight-line basis over three years, subject to periodic evaluation for
impairment.
Debt Discount and Debt Issue Costs - Costs related to the issuance of debt are
capitalized. Such costs and any related debt discount are amortized over the
term of the related debt.
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.
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.
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 or upon
conversion of outstanding debt have been excluded since the effect would be
F-8
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(Formerly Robotic Lasers, Inc.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
antidilutive, due to net losses for all periods presented. Fully diluted
earnings per share will be reported in future years when certain contingencies
(see Note 5) are reasonably possible of occurrence and the effect results in a
material dilution of earnings per share.
New Accounting Pronouncements - Statement of Financial Accounting Standards No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of," requires that certain long-lived assets be reviewed
for possible impairment and written down to fair value, if appropriate. The
Company will adopt this new pronouncement in 1996 and the impact of adoption is
not expected to have a material effect on the Company's financial statements.
Statement of Financial Accounting Standards No. 123, "Accounting for stock Based
Compensation," requires companies to measure employee stock compensation plans
based on the fair value method of accounting. However, the statement allows the
alternative of continued use of Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," with proforma disclosure of net
income and earnings per share determined as if the fair value based method had
been applied in measuring compensation cost. The Company has not yet determined
if it will adopt this new pronouncement in 1996 or provide only proforma
disclosure. The effects of this new pronouncement, if adopted, have not been
determined.
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 quarters. The Company has also
experienced liquidity difficulties since inception, and in order to continue the
development of the Company's reservation and payment 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 and payment system. These efforts are at a preliminary
stage and will require further technical development within a period of the next
twelve months 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 and payment system will achieve commercial feasibility.
F-9
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(Formerly Robotic Lasers, Inc.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 1996 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 and payment 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 substantially from the net proceeds of additional borrowings and a
contemplated public offering, but there can be no assurance that the net
proceeds of such contemplated offering, if successful, 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 Notes Payable - Stockholder:
In February 1995, the Company signed an agreement with a related party pursuant
to which the Company borrowed $500,000 as evidenced by a series of Convertible
Promissory Notes. In September 1995, the Convertible Promissory Notes were
converted into 841,455 shares of the Company's common stock and two Promissory
Notes with principal amounts of $475,000 and $25,000, respectively. Such
Simultaneously, 841,455 shares outstanding had beenwere contributed back to the
Company by its original stockshareholders who acquired the shares in March 1994.
For accounting purposes, such transaction has been treated as a 2 for 3 reverse
stock split. The common stock issued upon conversion and the related debt
discount havehas been recorded based upon theirits estimated fair values and
that of the notes.
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 payable quarterly. 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
F-10
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(Formerly Robotic Lasers, Inc.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
results of operations provided to the stockholder. 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, this $25,000 note will be
repaid by the Company in twelve equal quarterly installments commencing on
April 1, 1998.
In December 1995, the Company and this stockholder signed an additional loan
agreement whereby the stockholder agreed to loan the Company up to an additional
$250,000. In December 1995, the stockholder loaned the Company $150,000 and,
during the first quarter of 1996, the stockholder 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 stockholder
has the option of converting these additional loans, totaling $250,000 into two
9% term notes ($237,500 and $12,500) and 420,728 shares of common stock of the
Company. Such common stock would be recorded based upon its estimated fair value
and that of the notes. 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 for the $25,000 note. Unless previously converted,
this $12,500 note will be repaid by the Company in twelve equal quarterly
installments commencing on April 1, 1998.
Total borrowings from the stockholder are $650,000 at December 31, 1995 and
$750,000 through June 1996. Accrued interest was $28,096 at December 31, 1995
and $60,253 at June 30, 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.
Note 4 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
F-11
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(Formerly Robotic Lasers, Inc.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
agreed to lease back such equipment for initial terms ranging from 24 to 30
months. The obligations under these leases at December 31, 1995 consist of the
following:
Imputed
Interest
Description Rate
Capital lease payable in monthly
installments of $3,945 through March
1998 and $2,367 through March 1999,
collateralized by the computer equipment 25.4% $146,754
Capital lease payable in monthly
installments of $2,105 through
September 1997 and $421 through
September 1998, collateralized by the
computer equipment 20.4% 55,572
202,326
Less: Amount representing interest 67,568
Present value of minimum lease payments 134,758
Less: Current maturities 45,012
$ 89,746
The obligations under these leases mature as follows:
Year Ending December 31,
1996 $45,012
1997 51,565
1998 31,370
1999 6,811
$134,758
The Company leases its administrative facilities under a five-year lease
expiring in November 2000. The lease provides for annual rent of $25,500.
Rent expense totalled $7,000, $14,000 and $7,000 for the four months ended
December 31, 1995, the year ended August 31, 1995 and the period from March 7,
1994 (date of commencement of development stage activities) to August 31, 1994,
respectively.
F-12
<PAGE>
Employment Agreement - The Company entered into an employment agreement with its
President in September 1995. The agreement provides for annual compensation of
$75,000 effective October 1996 and $100,000, effective January 1997.
Note 5 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 $236,000 at December 31, 1995.
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 December 31, 1995.
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 Ended Year Ended
December 31, August 31,
1995 1995
Computed tax benefit on net loss at
federal statutory rate $(99,000) $ (91,000)
State income tax benefit, net of
federal income tax effect (17,000) (16,000)
Tax effect of net operating losses
not currently usable 116,000 107,000
Provision (benefit) for income taxes $ - $ -
At December 31, 1995, the Company had net operating loss carryforwards of
approximately $600,000 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 ownership, 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.
F-13
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(Formerly Robotic Lasers, Inc.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 6 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.
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 per share.
Note 7 Subsequent Events:
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
unaffiliated private investor, 25,000 shares of its restricted common stock for
$50,000.
Reverse Stock Splits - In July 1996, the Company's stockholders approved and
effectuated a one for two reverse stock split. As indicated in Note 3, the
contribution of shares by the original stockholders has been treated at a 2 for
3 reverse stock split. Stock splits have been retroactively reflected in the
accompanying consolidated financial statements.
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 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. Gross proceeds of this private offering totalled
$575,000.
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 $5.75 per share. The rights represented by
this warrant are exercisable commencing 90 days after the effective date of a
F-14
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(Formerly Robotic Lasers, Inc.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 unaffiliated 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 will be converted
into 15,000 shares of the Company's common stock.
Note 8 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 services to be provided at the inception of
Travel Link. 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-15
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(formerly Robotic Lasers, Inc.)
A Development Stage Enterprise
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
September 30, 1996 December
Proforma Historical 31, 1995
(Unaudited) (Unaudited)
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 76,550 $ 76,550 $ 22,613
Prepaid Expenses 16,122 16,122 703
Total Current Assets 92,672 92,672 23,316
PROPERTY & EQUIPMENT, NET OF
ACCUMULATED DEPRECIATION OF
$58,424, $58,424 & $17,393 252,041 252,041 145,384
OTHER ASSETS
Computer software costs, less accumulated
amortization of $31,598, $31,598 & $0 310,402 310,402 156,997
Dept issue costs, less accumulated
amortization of $6,261, $6,261 & $0 50,089 50,089 --
Deposits and Other 28,787 28,787 26,988
389,278 389,278 183,985
$ 733,991 $ 733,991 $ 352,685
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
LIABILITIES:
Notes Payable - Stockholder, less
unamortized debt discount of $16,173,
$9,470 & $12,426 $733,827 $ 740,530 $ 637,574
Accounts Payable and accrued expenses 269,320 269,320 98,012
Current portion of obligation under computer
equipment lease 59,952 59,952 45,012
Accrued interest payable - stockholder 95,461 95,461 28,096
Accrued consulting fees - officer 49,500 49,500 ---
Loans and advances from related parties 56,507 56,507 19,126
Payroll taxes payable --- --- 10,000
Total current liabilities 1,264,567 1,271,270 837,820
Long-term portion of obligation under
computer equipment lease 66,601 66,601 89,746
10% Promissory Notes payable 563,500 563,500 ---
Convertible notes payable 30,000 30,000 ---
1,924,668 1,931,371 927,566
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;3,255,594 (proforma),
2,834,866 and 2,804,866 Shares
Issued and Outstanding 326 283 280
Additional paid in Capital 137,346 130,686 18,639
Deficit Accumulated During the Developmental Stage (1,328,349) (1,328,349) ( 593,800)
(1,190,677) (1,197,380) ( 574,881)
$ 733,991 $ 733,991 $ 352,685
</TABLE>
See Accompanying Notes to Financial Statements
F-16
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(formerly Robotic Lasers, Inc.)
( A development Stage Enterprise)
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
DURING THE DEVELOPMENT STAGE
(unaudited)
March 7, 1994
(Commencement
of Development
Nine Months Nine Months Three Months Three Months stage Activities)
Ended Ended Ended Ended Through
Sept 30, 1996 Sept 30, 1995 Sept 30, 1996 Sept 30, 1995 Sept 30, 1996
REVENUES AND EXPENSES DURING
THE DEVELOPMENT STAGE
Revenue $ -- $ -- $ -- $ -- $ --
Expenses -
General and Administrative 561,808 233,695 181,880 105,384 1,100,299
Depreciation and Amortization 82,026 4,876 36,817 4,495 100,813
Interest Expense, net 90,715 14,222 42,222 8,112 127,237
734,549 252,793 260,919 117,991 1,328,349
NET (LOSS) INCURRED DURING
THE DEVELOPMENT STAGE ($734,549) ($ 252,793) ($260,919) ($117,991) ($1,328,349)
NET (LOSS) INCURRED
PER COMMON SHARE ($ .26 ) ($ .15 ) ($ .09) ($ .06) ($ .62)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 2,828,625 1,737,377 2,834,866 1,844,509 2,142,588
</TABLE>
See Accompanying Notes to Financial Statements
F-17
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(formerly Robotic Lasers, Inc.)
(A Development Stage Enterprise)
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Deficit
Accumulated
Additional During The
Common Stock Paid-In Development
Total Shares Value Capital Stage
BALANCE - DECEMBER 31, 1995 ($574,881) 2,804,866 $280 $ 18,639 ($593,800)
PROCEEDS FROM ISSUANCE
OF COMMON STOCK 60,000 30,000 3 59,997
PROCEEDS FROM ISSUANCE
OF WARRANTS, LESS RELATED
COSTS OF $1,150 10,350 10,350
CONTRIBUTION OF CAPITAL
BY STOCKHOLDER/OFFICER 41,700 41,700
NET (LOSS) FOR THE
NINE MONTHS ENDED
SEPTEMBER 30, 1996 ( 734,549) -- -- -- ( 734,549)
BALANCE - SEPTEMBER 30, 1996 ($1,197,380) 2,834,866 $283 $130,686 ($1,328,349)
</TABLE>
See Accompanying Notes to Financial Statements
F-18
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(formerly Robotic Lasers, Inc.)
(A Development Stage Enterprise)
CONSOLIDATED STATEMENT OF CASH FLOWS
(unaudited
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
March 7, 1994
(Commencement
of Development
Stage Activities)
Nine Months Ended Nine Months Ended Through
September 30, September 30, September 30,
1996 1995 1996
CASH FLOWS FROM OPERATING ACTIVITIES
Net (Loss) ( $734,549) ( $252,793) ( $1,328,349)
Adjustment to Reconcile Net (Loss) to Cash
Flows from Operating Activities:
Depreciation and Amortization 82,026 4,876 100,813
Common Stock issued for services rendered -- 9,600 19,600
Changes in operating assets and liabilities:
Other Assets ( 1,979) ( 2,000) ( 29,381)
Accounts Payable and Accrued Expenses 210,808 ( 21,357) 304,733
Prepaid Expenses ( 15,419) ( 1,867) ( 16,122)
Accrued Interest Payable 67,365 15,938 95,461
NET CASH FLOWS FROM
OPERATING ACTIVITIES ( 391,748) ( 247,603) ( 853,245)
CASH FLOWS FROM INVESTING ACTIVITIES
Acquisition of Equipment ( 332,691) ( 241,255) ( 652,465)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Issuance of Notes Payable 100,000 500,000 750,000
Payments under Computer Equipment Lease ( 33,322) -- ( 43,046)
Proceeds from sale and lease-back 25,117 -- 169,599
Proceeds from Issuance of Common Stock 60,00 -- 60,000
Advances from related parties 37,381 -- 56,507
Contribution of capital - stockholder/officer 41,700 -- 41,700
Proceeds from issuance of 10% Promissory
Notes Payable and Related Warrants 575,000 -- 575,000
Costs paid upon issuance of Promissory
Notes and Warrants ( 57,500) -- ( 57,500)
Proceeds from issuance of
Convertible Notes Payable 30,000 -- 30,000
NET CASH FLOWS FROM
FINANCING ACTIVITIES 778,376 500,000 1,582,260
NET INCREASE IN CASH 53,937 11,142 76,550
CASH - BEGINNING OF PERIOD 22,613 5 --
CASH - END OF PERIOD $ 76,55 $ 11,147 $ 76,550
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid $ 24,170 -- $ 32,596
Net liabilities assumed
in reverse acquisition $ -- $ -- $ 14,087
</TABLE>
See Accompanying Notes to Financial Statements
F-19
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(formerly Robotic Lasers, Inc.)
(A Development Stage Enterprise)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1 Basis of Presentation
The consolidated balance sheet at December 31, 1995, has been derived from the
audited consolidated balance sheet and is presented for comparative purposes.
All other financial statements are unaudited. In the opinion of management, all
adjustments which include only normal recurring adjustments necessary to present
fairly the financial position, results of operations and cash flows of all
periods presented have been made. The results of operations for interim periods
are not necessarily indicative of the operating results for the full year.
Footnote disclosures normally included in financial statements prepared in
accordance with the generally accepted accounting principles have been omitted
in accordance with the published rules and regulations of the Securities and
Exchange Commission. These consolidated financial statements should be read in
conjunction with the audited financial statements and notes thereto for the most
recent fiscal year.
Note 2 Activities of the Company
The Company is in the development stage and has not yet generated any revenues
from operations. The Companys funds have been provided from Loeb Holding
Corporation, LTI Ventures Leasing Corporation, and from certain private
offerings.
As reflected in the accompanying consolidated financial statements, the Company
has incurred net losses of $1,328,349 since inception, and at September 30,
1996, had a working capital deficiency of $1,178,598 (proforma deficiency -
$1,171,895). These factors, among others, indicate that if the Company is unable
to secure additional financing, it may be unable to continue in existence. The
accompanying financial statements do not include any adjustments relating to the
recoverability and classification of recorded asset amounts or the amounts and
classification of liabilities that might be necessary should the Company be
unable to continue in existence.
Note 3 Notes Payable - Stockholder
In February 1995, the Company signed an agreement with Loeb Holding Corporation,
as escrow agent (Loeb), for Warren D. Bagatelle, HSB Capital, trusts for benefit
of families of two principals of Loeb Holding Corporation, and three
unaffiliated individuals, pursuant to which the Company borrowed $500,000 as
evidenced by a series of Convertible Promissory Notes. In September 1995, the
Convertible Promissory Notes were converted into 841,455 shares of the Companys
common stock and two Promissory Notes with principal amounts of $475,000 and
$25,000, respectively. Simultaneously, 841,455 shares outstanding were
contributed back to the Company by its original shareholders. For accounting
purposes, such transaction has been treated as a reverse stock split. The common
stock issued upon conversion has been recorded based upon its estimated fair
value and that of the notes.
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
therein. Interest shall begin to run from the date that the monies are or were
advanced to the Maker. On March 31, 1996, all interest accrued through that date
was calculated and was to be paid in four equal installments on March 31,
F-20
<PAGE>
1996, June 30, 1996, September 30, 1996 and December 31, 1996. In addition, the
first quarterly interest payment was to 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.
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 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 30% of the Company; if the Company achieves between 50% and 80% of
projection, the note is convertible into the pro-rata 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 this note shall be repaid
by the Company in twelve (12) equal quarterly installments, the first principal
payment to be made on April 1, 1998.
In December 1995, the Company and Loeb signed an additional loan agreement
whereby Loeb agreed to loan the Company up to an additional $250,000. On
December 1, 1995, 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, Loeb
loaned the Company the sums of $100,000, $50,000, $25,000 and $25,000
respectively. Each of these additional loans were due in 60 days from the date
of each agreement and accrued interest at 9% per annum.
In November 1996, Loeb converted the additional loans into two term Promissory
Notes, one in the principal amount of $237,500 and the other in the principal
amount of $12,500. In consideration for the conversion of the loans into the two
term Promissory Notes, Loeb received 420,728 shares of Common Stock of the
Company. The accompanying proforma balance sheet at September 30, 1996, reflects
the effect of this debt conversion, the related issuance of common stock and
corresponding charge ($6,703) to unamortized debt discount.
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 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 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 Maker.
The Promissory Note for $12,500 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 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, the principal amount of this note shall be repaid
by the Company in twelve (12) equal quarterly installments, the first principal
payment to be made on April 1, 1998.
There was no cash paid for interest for the nine months ended September 30,
1996. As of the date of this report, no cash has been paid to Loeb for interest
and the Company is technically in default on the Loeb Notes. Accordingly, such
notes payable are classified as current liabilities in the
F-21
<PAGE>
accompanying financial statements.
Note 4 Computer Equipment Lease
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 of the sale, the Company received a total of $169,599 and agreed
to lease back the hardware and software for initial terms ranging from 24 to 30
months at a monthly rental totaling $7,039. As a consideration for entering into
the aforementioned agreement with the Company, LTI was granted a 5-year warrant
to purchase a maximum of 12,721 shares of Common Stock of the Company for cash
at a price of $2.00 per share.
Note 5 10% Promissory Notes Payable
Pursuant to a private offering, the Company issued 11.5 units to various
unaffiliated third 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 a Class
A redeemable common stock purchase warrant valued at $1,000 per unit. Costs paid
in connection with the issuance of these units totaled $57,500.
The principal and interest on the promissory notes are to be repaid the earlier
of three years from issuance or thirty days after the closing date of the first
underwritten public offering of the Companys securities.
Each Class A common stock purchase warrant entitles the holder to purchase up to
25,000 shares of the Companys common stock at an exercise price of $5.75 per
share. The rights represented by this warrant are exercisable commencing 90 days
after the effective date of the 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 effectiveness of
the registration statement filed with the Securities and Exchange Commission. At
September 30, 1996, warrants to purchase 287,500 shares of the Companys common
stock are outstanding, pursuant to this offering.
Note 6 Convertible Notes Payable
In April and June 1996, the Company borrowed a total of $30,000 from two
unaffiliated third parties. The maturity date is the earlier of January 1, 1998,
or the consummation of a public offering of the Companys 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.
Note 7 Stockholders' Equity
Stock Split - At the annual meeting, stockholders approved an amendment to the
Companys Certificate of Incorporation effecting a 2 for 1 reverse stock split
of the outstanding shares of Common Stock of the Company as of the record date
(June 25, 1996) from 5,669,731 shares to 2,834,866 shares. The accompanying
financial statements give retroactive effect to the stock split.
Common Stock - In August 1996, the Company gave notice to Steven E. Pollan that
it was canceling the 333,216 shares of its Common Stock which had been issued to
him for services to be provided to the Company. The reason for such cancellation
related to various claims made by the Company against Mr. Pollan as a result of
the failure to provide services to the Company. Mr. Pollan has informed the
Company that he intends to legally contest any attempt by the Company to cancel
his
F-22
<PAGE>
shares. Pending return of the shares, they will be considered outstanding for
all periods presented.
Contribution to Capital - During the quarter ended September 30, 1996, in order
to raise additional working capital for the Company, Joseph Cutrona, President
of the Company, sold a total of 26,100 shares of restricted common stock of the
Company owned by him, to sixteen unaffiliated third parties at prices ranging
from $2.00 to $2.50 per share for total proceeds of $53,700. During the quarter
ended September 30, 1996, Mr. Cutrona remitted $41,700 of these proceeds in the
form of a capital contribution. Subsequent to September 30, 1996, Mr. Cutrona
remitted $12,000, which represents the balance of the proceeds from the sale of
this stock, to the Company in the form of an additional capital contribution. In
October, November and December 1996, Mr. Cutrona sold an additional 11,500
shares of restricted common stock of the Company owned by him to 3 unaffiliated
third parties at a price of $2.00 per share for total proceeds of $23,000 which
Mr. Cutrona remitted to the Company in the form of an additional capital
contribution. Mr. Mark Kenny formerly Executive Vice President of the Company,
has agreed to use his own shares of restricted common stock of the Company to
reimburse Mr. Cutrona for one-half of the number of shares sold by Mr. Cutrona.
Note 8 Subsequent Events
Long-Term Debt - During November and December 1996, the Company and Loeb Holding
Corporation signed four 18 month Promissory Notes whereby Loeb Holding
Corporation loaned the Company the sums of $75,000, $30,000, $10,000 and $95,000
(Total $210,000). The Promissory Notes which bear interest at 10%, mature on May
11, 1998, May 25, 1998, June 2, 1998 and June 9, 1998.
Sale of Common Stock - In November 1996, the Company sold 25,000 shares of the
Company's restricted common stock to an unaffiliated party for $50,000.
Consulting Agreement - In October 1996, the Company executed a consulting
agreement to develop software to operate the Genisys Payment system for a total
price of $218,000 of which $109,000 would be paid in cash and $109,000 in shares
of the Companys common stock at an estimated fair value of $3.75/share. The
shares are to be transferred by two stockholders and, accordingly, will be
considered a contribution to capital. The stockholders may obtain one-sixth of
the shares contributed if certain events occur upon each of six specified dates.
Notes Payable - Stockholder - In January 1997, the Company and Loeb agreed to
change the conversion privilege under both the $25,000 and $12,500 Promissory
Notes. The Notes are now convertible at the sole option of the holder into
266,667 and 133,333 common shares of the Company, respectively.
F-23
<PAGE>
<PAGE>
No dealer, salesperson or other
person has been authorized to give any
information or to make any representations
in connection with this Offering
other than those contained in this GENISYS RESERVATION
Prospectus and, if given or made, such SYSTEMS, INC.
information or representations must not
be relied on as having been
authorized by the Company. This
Prospectus does not constitute an offer
to sell or a solicitation of an offer to
buy any security other than the
securities offered by this Prospectus,
or an offer or solicitation of an offer
to buy any securities by any person in
any jurisdiction in which such offer or
solicitation is not authorized or is
unlawful. The delivery of this
Prospectus shall not, under any circum
stances, create any implication that the
information herein is correct as of any
time subsequent to the date of this
Prospectus.
- ----------------------------
TABLE OF CONTENTS Page
Available Information
Prospectus Summary
Risk Factors 900,000 Shares Of Common Stock
Use of Proceeds 1,500,000 Class A Redeemable Warrants
Capitalization 900,000 Class B Redeemable Warrants
Dilution
Dividend Policy R.D. WHITE & CO., INC.
Management's Discussion
and Analysis of
Financial Condition
and Results of
Operations
Business
Management
Certain Transactions
Principal Stockholder
Selling Stockholders
Description of Securities
Underwriting
Concurrent Sales by
Selling Stockholders
Legal Matters
Experts
Financial Statements
Until _________, 1997 (25 days after the date of this Prospectus), all dealers
effecting transactions in the Debentures, whether or not participating in the
distribution, may be required to deliver a Prospectus. This is in addition to
the obligation of dealers to deliver a Prospectus when acting as underwriters
and with regard to their unsold allotments or subscription.
<PAGE>
Alternate Cover Page - The Offering
SUBJECT TO COMPLETION, DATED FEBRUARY 7, 1997
PROSPECTUS
287,500 Class A Redeemable Warrants and
287,500 Shares of Common Stock Underlying such Warrants
GENISYS RESERVATION SYSTEMS, INC.
This Prospectus relates to the offering of 287,500 Class A Redeemable
Warrants and 287,500 shares of common stock ("Common Stock"), par value $.0001
per share, of Genisys Reservation Systems, Inc. a New Jersey corporation
("Company") issuable upon exercise of Class A Redeemable Warrants issued in a
private placement. The securities offered hereby may not be transferred for
eighteen (18) months from the date hereof, subject to earlier release at the
sole discretion of R.D. White & Co., Inc. which is acting as the underwriter in
connection with a public offering of the Company's securities (the
"Underwriter"). The certificates evidencing such securities include a legend
with such restrictions. The Underwriter may release the securities held by the
Selling Stockholder at any time.
The Securities offered by this Prospectus may be sold from time to time
by the Selling Stockholders, or by their transferees. No underwriting
arrangements have been entered into by the Selling Stockholders. The
distribution of the securities by the Selling Stockholders may be effected in
one or more transactions that may take place on the over-the-counter market
including ordinary broker's transactions, privately-negotiated transactions or
through sales to one or more dealers for resale of such shares as principals at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. Usual and customary or
specifically negotiated brokerage fees or commissions may be paid by the Selling
Stockholders in connection with sales of such securities. Transfers of the
securities may also be made pursuant to applicable exemptions under the
Securities Act of 1933 (the "Securities Act") including but not limited to sales
under Rule 144 under the Securities Act.
The Selling Stockholders and intermediaries through whom such
securities may be sold may be deemed "underwriters" within the meaning of the
Securities Act with respect to the securities offered, and any profits realized
or commissions received may be deemed underwriting compensation. The Company has
agreed to indemnify the Selling Stockholders against certain liabilities,
including liabilities under the Securities Act.
On the date hereof, the Company commenced pursuant to the Registration
Statement of which this Prospectus is a part of a public offering of 900,000
shares of Common Stock, 1,500,000 Class A Redeemable Warrants, and 900,000 Class
B Redeemable Warrants. See "Concurrent Sales."
The Company will not receive any of the proceeds from the sale of the
securities by the Selling Stockholders, but will receive proceeds from the
options covered by such shares. All costs in incurred in the registration of the
securities of the Selling Stockholders are being borne by the Company. See
"Selling Stockholders."
The Company intends to furnish its security holders with annual reports
containing audited financial statements and the audit report of the independent
certified public accountants and such interim reports as it deems appropriate or
as may be required by law. The Company's fiscal year ends December 31.
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY INVOLVES A HIGH DEGREE
OF RISK AND IMMEDIATE SUBSTANTIAL DILUTION OF THE BOOK VALUE OF THE COMMON STOCK
AND SHOULD BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE
INVESTMENT. SEE "RISK FACTORS", WHICH BEGINS ON PAGE , AND "DILUTION" PAGE .
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS, ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
----------------------------
The date of this Prospectus ______ __ , 1997
69
<PAGE>
The Offering
Securities Offered by
Selling Stockholders............287,500 Class A Redeemable Warrants
and 287,500 Shares Issuable
upon exercise of outstanding
Class A Redeemable Warrants
Securities Outstanding
Prior to the Company`s
Offering:
Common Stock(3).............. 4,195,594 Shares
Series A Warrants............ 1,787,500 Warrants
Series B Warrants............ 900,000 Warrants
Securites Outstanding
After the Company`s
Offering:
Common Stock(1)(3)............ 4,483,094 Shares
Series A Warrants(2).......... 1,500,000 Warrants
Series B Warrants(2).......... 900,000 Warrants
Use of Net Proceeds........... See "Use of Proceeds"
Proposed Symbol(4)
Common Stock.................GENS
Class A Warrants..... .......GENSW
Class B Warrants.............GENSZ
- ------------------------------
(1) Does not include: (a) 2,400,000 shares of Common Stock issuable upon
exercise of the Class A and Class B Warrants; (b) 135,000 shares of
Common Stock issuable upon exercise of the Over-Allotment Option and
360,000 shares of Common Stock issuable upon the exercise of the
Redeemable Warrants contained therein. See "Description of Securities,"
"Principal Stockholders," and "Underwriting."
(2) Does not include the issuance of 360,000 Redeemable Warrants issuable
upon exercise of the Over-Allotment Option. See "Underwriting" and
"Description of Securities."
(3) Includes 15,000 shares of Common Stock issuable upon the conversion of
two promissory notes at the completion of this Offering in the
principal amounts of $20,000 and $10,000 respectively ("Convertible
Notes").
(4) The Shares of Common Stock and the Class A Redeemable Warrants and Class
B Redeemable Warrants are expected to be listed for quotation on NASDAQ
under the symbols: "GENS", "GENSW" and "GENSZ", respectively. There can
be no assurance given that the Company will be able to satisfy on a
continuing basis the requirements for quotation of such securities on
NASDAQ. See "Risk Factors" and "Market for the Company's Securities and
Other Related Stockholder Matters."
70
<PAGE>
No dealer, salesperson or other
person has been authorized to give any
information or to make any representations
in connection with this Offering
other than those contained in this
Prospectus and, if given or made, such
information or representations must
not be relied on as having been GENISYS RESERVATIONS
authorized by the Company. This SYSTEMS, INC.
Prospectus does not constitute an
offer to sell or a solicitation of
an offer to buy any security other
than the securities offered by this
Prospectus, or an offer or solicita
tion of an offer to buy any securities
by any person in any jurisdiction in
which such offer or solicitation is
not authorized or is unlawful. The
delivery of this Prospectus shall not,
under any circumstances, create any
implication that the information
herein is correct as of any time
subsequent to the date of this
Prospectus.
____________________________ 287,500 Class A Warrants
TABLE OF CONTENTS Page and
287,500 Shares Of
Available Information Common Stock Issuable
Prospectus Summary upon exercise of
Risk Factors outstanding Class A
Use of Proceeds Warrants
Capitalization
Dilution
Dividend Policy
Management's Discussion
and Analysis of
Financial Condition
and Results of
Operations
Business
Management
Certain Transactions
Principal Stockholder
Selling Stockholders
Description of Securities
Underwriting
Concurrent Sales by
Selling Stockholders
Legal Matters
Experts
Financial Statements
Until _________, 1997 (25 days after the date of this Prospectus), all
dealers effecting transactions in the Debentures, whether or not
participating in the distribution, may be required to deliver a Prospectus.
This is in addition to the obligation of dealers to deliver a Prospectus
when acting as underwriters and with regard to their unsold allotments or
subscription.
71
<PAGE>
PART II
Information Not Required in Prospectus
ITEM 24. Indemnification of Officers and Directors
The Company's Certificate of Incorporation provides in Article Fourth
that no Director of this Corporation shall be liable to the Corporation or
any of its shareholders for damages for breach of any duty owed to the
Corporation or its shareholders except for liability for any breach of duty
based upon an act or omission (i) in breach of such person's duty of loyalty
to the Corporation or its shareholders, (ii) not in good faith or involving
a knowing violation of law, or (iii) resulting in receipt by such person of
an improper personal benefit.
ITEM 25. Other Expenses of Issuance and Distribution
The expenses payable by Registrant in connection with the issuance and
distribution of the securities being registered (other than underwriting
discounts and commissions, non-accountable expenses of $132,600 ($152,484 if
the over-allotment option is exercised) are estimated as follows:
Securities and Exchange Commission Fees..............$ 8,026.86
NASDAQ Stock Market listing fee......................$ 10,000.00
Transfer/Warrant Agent's fee and expenses............$ 3,500.00
NASD filing fee......................................$ 934.00
Accounting fees and expenses.........................$ 35,000.00
Blue Sky fees and expenses...........................$ 30,000.00
Tombstone Advertisement..............................$ 10,000.00
Printing Expenses (including Securities).............$ 40,000.00
Legal fees...........................................$ 90,000.00
Miscellaneous........................................$ 7,539.14
Total........................................$ 235,000.00
ITEM 26. Recent Sales of Unregistered Securities
During February 1995, the Company issued 45,765 shares of its Common
Stock in repayment of certain liabilities totaling $251,702. Those
liabilities included notes payable to Saddle Brook Investors of $149,633, a
note payable plus accrued interest to a director of $34,273 and certain
accounts payable of $67,796.
II-1
<PAGE>
In February 1995, Loeb Holding Corporation, as escrow agent ("Loeb"),
for Warren D. Bagatelle, HSB Capital, trusts for the benefit of families of
two principals of Loeb and three unaffiliated individuals, agreed to loan
the Company $500,000 evidenced by a series of Convertible Promissory Notes.
In September 1995, Loeb converted the Convertible Promissory Notes into
841,455 common shares of the Company and two Term Promissory Notes, one in
the principal amount of $475,000 and the other in the principal amount of
$25,000.
The principal amount of the $475,000 note is to be repaid in twelve
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 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 began to run from the date that the
monies were advanced to the Company.
The Term Promissory Note in the amount of $25,000 and a Note issued in
December, 1995 in the amount of $12,500 have been modified. Such Notes
provide for accrued interest at the rate of 9% per annum payable quarterly
and unless previously converted the principal amount of each note is to be
repaid in twelve equal quarterly installments, commencing April 1, 1998, or
on such earlier date as such notes provide. Such notes are convertible at
the sole option of the holder into an aggregate of 400,000 common shares of
the Company.
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.
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 the
director of the Company for $10,000. During the same period, the Company
sold 25,000 shares of the Company's restricted Common Stock to an
unaffiliated party for $50,000.
II-2
<PAGE>
On August 11, 1995, Robotic Lasers acquired Corporate Travel Link,
Inc., by issuing 1,682,924 shares of restricted new Common Stock of the
Company in exchange for the shares of the common stock of Corporate Travel
Link owned by Joseph Cutrona, Mark A. Kenny and Steven E. Pollan, which
represented all the issued and outstanding shares of common stock of
Corporate Travel Link.
In August 1994 Joseph Cutrona and Mark Kenny each received 666,433
shares of common stock in the Company for contributed services to be
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 and a 5-year option to purchase 35,000 shares of the Company's common
stock at a price of $2.00 per share granted to Mr. Wasko by the Company on
November 1, 1996.
During December, 1995, Loeb agreed to loan the Company $250,000
evidenced by a series of Convertible Promissory Notes. In November, 1996,
Loeb converted the Convertible Promissory Notes into two Term Promissory
Notes, one in the principal amount of $237,500 and the other in the
principal amount of $12,500 plus 420,728 shares of Common Stock of the
Company, of which 420,000 shares are owned by four unaffiliated parties.
In May, 1996, Pursuant to a private offering, the Company issued 11.5
units to sixteen unaffiliated third parties in May and June, 1996. The
Underwriter acted as placement agent for the private placement. 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. The
Underwriter was paid a fee of $57,500 in connection with the private
placement.
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Neither the Company nor any person acting on its behalf offered or sold
the securities described above by means of any form of general solicitation
or general advertising. Each purchaser represented in writing that he
acquired the securities for his own account. A legend was placed on the
certificate stating that the restrictions on their transferability and sale.
Each purchaser signed a written agreement that the securities will not be
sold without registration under the Act or exemption therefrom. The
Registrant believes such issuances are exempt transactions not involving a
public offering under Section 4(2) of the Securities Act of 1933, as
amended.
During the quarter ended September 30, 1996, in order to raise
additional working capital for the Company, Joseph Cutrona, President of the
Company, sold a total of 26,100 shares of restricted common stock of the
Company owned by him, to sixteen unaffiliated third parties at prices
ranging from $2.00 to $2.50 per share for total proceeds of $53,700. During
the quarter ended September 30, 1996, Mr. Cutrona remitted $41,700 of these
proceeds to the Company in the form of a capital contribution. Subsequent to
September 30, 1996, Mr. Cutrona remitted $12,000, which represents the
balance of the proceeds from the sale of this stock, to Company in the form
of an additional capital contribution. In October, November and December
1996, Mr. Cutrona sold an additional 11,500 shares of restricted common
stock of the Company owned by him to 3 unaffiliated third parties at a price
of $2.00 per share for total proceeds of $23,000 which Mr. Cutrona remitted
to the Company in the form of an additional capital contribution. Mr. Mark
Kenny has agreed to use his own shares of restricted common stock of the
Company to reimburse Mr. Cutrona for one-half of the number of shares sold
by Mr. Cutrona.
In November, 1996, the Company sold 25,000 shares of the Company's
restricted common stock to an unaffiliated party for $50,000.
During November and December, 1996, the Company and Loeb Holding
Corporation signed four 18 month Promissory Notes whereby Loeb Holding
Corporation loaned the Company the sums of $75,000, $30,000, $10,000 and
$95,000 (total of $210,000). The Promissory Notes which bear interest at
10%, mature on May 11, 1998, May 25, 1998, June 2, 1998 and June 9, 1998.
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ITEM 27. Exhibits and Financial Statement Schedules
(a) Exhibits
1.1 Form of Underwriting Agreement
1.2 Selected Dealer Agreement
3.1 Registrant's Articles of Incorporation
3.2 Registrant's By-Laws
4.1 Form of Common Stock Certificate
4.2 Redeemable Warrant Agreement with Form of
Class A and Class B Warrant and Warrant
Agreement
4.3 Form of Representative's Unit Purchase
Option
5. Opinion of McLaughlin & Stern, LLP
10.1 Employment Agreement dated October 17, 1996
between Registrant and Joseph Cutrona.
10.2 Consulting Agreement dated October 18, 1996
between the Registrant and Mark A. Kenny.
10.3 Employment Agreeement dated October 17, 1996
between Registrant and John H. Wasko.
10.4 Copy of lease dated November 1, 1995 between
Unicom and Corporate Travel Link, Inc.
10.5 Copy of Agreement dated June 22, 1995
between American Airlines, Inc., and
Corporate Travel Link, Inc., relating to
Sabre Extension Program - Associate
Distribution and Services Agreement.
10.6 Copy of Agreement dated June 30, 1995
between American Airlines, Inc. and
Corporate Travel Link, Inc., relating to
Associate Sabre Equipment Lease Agreement.
10.7 Copy of Agreement dated June 30, 1995
between American Airlines, Inc., and
Corporate Travel Link, Inc. - non-standard
system amendment to Corporate Sabre
Equipment Lease Agreement.
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10.8 Copy of Script Consulting Agreement dated
June 21, 1995 between Worldspan, LP and
Corporate Travel Link, Inc.
10.9 Copy of Script Services agreement dated June
21, 1995 between Worldspan, LP and Corporate
Travel Link, Inc.
10.10 Copy of Galileo Services Display and
Reservation Agreement dated August 28, 1995
between Galileo International Partnership
and Corporate Travel Link, Inc.
10.11 Copy of Ancillary Services Agreement dated
August 28, 1995 between Galileo
International Partnership and Corporate
Travel Link, Inc.
10.12 Copy of Worldspan Car Rental Associate
Reservation Agreement between Worldspan, LP
and Corporate Travel Link, Inc.
10.13 Copy of Interim Loan Agreement between the
registrant and Loeb Holding Corporation,
as escrow agent, and certain executives of
the Registrant.
10.14 Prosoft Consulting Agreement
10.15 Copy of Consulting and Investment Banking
Agreement between the Company and Loeb
Partners Coproration.
10.16 Copy of Promissory Notes of the Company
dated November 6, 1996 in the principal
amounts of $12,500 and $237,500 payable to
Loeb Holding Corporation, as escrow agent.
21 List of Subsidiaries
24.1 Consent of Wiss & Company, LLP
24.2 Consent of McLaughlin & Stern, LLP
28.1 Executive Stock Issuance
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Schedules other than those listed above have been omitted since they are
either not required, are not applicable or the required information is shown
in the financial statements or related notes.
ITEM 28. Undertakings
The undersigned Registrant hereby undertakes to:
(a) (1) File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i) Include any prospectus required by section 10(a)
(3) of the Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information
in the registration statement. Notwithstanding the foregoing, any increase
or decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of a prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20 percent change in the maximum aggregate
offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement.
(iii) Include any additional or changed material
information on the plan of distribution;
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement for the securities
offered, and the offering of the securities at that time to be the initial
bona fide offering;
(3) File a post-effective amendment to remove from
registration any of the securities that remain unsold at the end
of the offering; and
(b) Provide to the underwriter at the closing specified in the
underwriting agreement certificates in such denominations and registered in
such names as required by the Underwriter to permit prompt delivery to each
purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors,
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officers and controlling persons of the small business issuer pursuant to
the foregoing provisions, or otherwise, the Registrant has been advised that
in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by the small business issuer of expenses incurred or
paid by a director, officer or controlling person of the small business
issuer in the successful defense of any action, suite or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, the Registrant will, unless in the opinion
of its counsel the matter has been settled by controlling precedent, submit
to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For the purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon Rule 430A and
contained in a form of prospectus filed by the Registrant pursuant to Rule
424(b) (1) or (4) or 497 (h) under the Securities Act shall be deemed to be
part of this registration as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
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CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use in the Prospectus constituting part of
this Registration Statement on Form SB-2 of our report dated July 8, 1996,
relating to the consolidated financial statements of Genisys Reservation
Systems, Inc., and Subsidiary which appears in such the Prospectus.
We also consent to the reference to us under "Experts" in the
Prospectus.
Wiss & Company, LLP
Woodbridge, New Jersey
February 5, 1997
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SIGNATURES
In accordance with the requirements of the Securities Act of
1933, the Registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements of filing on Form SB-2 and authorized
this registration statement to be signed on its behalf by the undersigned,
in the City of Union, State of New Jersey, on February 7, 1997.
GENISYS RESERVATION SYSTEMS, INC.
By: /s/ Joseph Cutrona
Joseph Cutrona
President
In accordance with the requirements of the Securities Act of
1933, this registration statement was signed by the following persons in the
capacities and on the dates stated.
/s/Joseph Cutrona President and Director February 7, 1997
Joseph Cutrona
/s/John H. Wasko Secretary, Treasurer
John H. Wasko and Director February 7, 1997
(Chief Financial Officer and
Chief Accounting Officer)
/s/Mark A. Kenny Director February 7, 1997
Mark A. Kenny
/s/Warren D. Bagatelle Chairman and Director February 7, 1997
Warren D. Bagatelle (Chief Executive Officer)
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