GENISYS RESERVATION SYSTEMS, INC.
2401 MORRIS AVENUE
UNION, NEW JERSEY 07083
Notice of Annual Meeting of Stockholders
To our Stockholders:
The Annual Meeting of Stockholders of Genisys Reservation
Systems, Inc., a New Jersey corporation, will be held on Wednesday,
December 17,1997, at 10:30 a.m. local time, at the offices of the
Company at 2401 Morris Avenue, 3rd Floor, Union, New Jersey, 07083,
to consider and act upon the following matters. A proxy card for
your use in voting on these matters is also enclosed.
1. Electing six (6) directors for a term expiring in 1998 as
recommended by the Board of Directors.
2. Approval of the Company's 1997 Stock Incentive Plan
dated May 12,1997.
3. Ratifying the appointment of independent auditors to
examine and report on the financial statements of the
Corporation for fiscal 1997, as recommended by the Board
of Directors.
4. Transacting any other business that may properly come
before the meeting or any adjournment thereof.
Only Common stockholders of record at the close of business on
November 12,1997, are entitled to notice of and to vote at
the meeting.
Dated: November 12, 1997
By Order of the Board of Directors
John H. Wasko
Secretary
______________________________________________________________
Your Proxy is important no matter how many shares you own. Please
mark your vote, fill in the date, sign and mail it today in the
accompanying self-addressed envelope which requires no postage if
mailed in the United States.
<PAGE>
ANNUAL MEETING OF STOCKHOLDERS
OF
GENISYS RESERVATION SYSTEMS, INC.
December 17, 1997
_________________
PROXY STATEMENT
_________________
GENERAL INFORMATION
Proxy Solicitation
This Proxy Statement is furnished to the holders of Common Stock, $.0001 par
value per share ("Common Stock"), of Genisys Reservation Systems, Inc. and
Subsidiaries ("Company") in connection with the solicitation of proxies on
behalf of the Board of Directors of the Company for use at the Annual Meeting of
Stockholders ("Annual Meeting") to be held on December 17, 1997, or at any
continuation or adjournment thereof, pursuant to the accompanying Notice of
Annual Meeting of Stockholders. The purpose of the meeting and the matters to be
acted upon are set forth in the accompanying Notice of Annual Meeting of
Stockholders. The Board of Directors knows of no other business which will come
before the meeting. Proxies for use at the meeting will be mailed to
stockholders on or about November 12 , 1997 and will be solicited chiefly by
mail, but additional solicitation may be made by telephone, telegram or other
means of telecommunications by directors, officers, consultants or regular
employees of the Company. The Company may enlist the assistance of brokerage
houses, fiduciaries, custodians and other like parties in soliciting proxies.
All solicitation expenses, including costs of preparing, assembling and mailing
the proxy material, will be borne by the Company. Revocability and Voting of
Proxy A form of proxy for use at the meeting and a return envelope for the proxy
are enclosed. Stockholders may revoke the authority granted by their execution
of proxies at any time before their effective exercise by filing with the
Secretary of the Company a written revocation or duly executed proxy bearing a
later date or by voting in person at the meeting. Shares represented by executed
and unrevoked proxies will be voted in accordance with the choice or
instructions specified thereon. If no specifications are given, the proxies
intend to vote "FOR" each of the nominees for director as described in Proposal
No. 1, "FOR" the ratification of the stock option plan as described in Proposal
No. 2 and "FOR" the appointment of Auditors as described in Proposal No. 3.
Proxies marked as abstaining will be treated as present for purposes of
determining a quorum for
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the Annual Meeting, but will not be counted as voting in respect of any matter
as to which abstinence is indicated. If any other matters properly come before
the meeting or any continuation or adjournment thereof, the proxies intend to
vote in accordance with their best judgment.
Record Date and Voting Rights
Only stockholders of record at the close of business on November 12, 1997 are
entitled to notice of and to vote at the Annual Meeting or any continuation or
adjournment thereof. On that date there were 4,355,594 shares of the Company's
Common Stock outstanding. Each share of Common Stock is entitled to one vote per
share. Any share of Common Stock held of record on November 12, 1997 shall be
assumed, by the Board of Directors, to be owned beneficially by the record
holder thereof for the period shown on the Company's stockholder records. The
affirmative vote of a majority of the stockholders present in person or by proxy
at the meeting is required for the election of the directors to be elected and
to approve the 1997 Stock Incentive Plan. Directors and officers of the Company
holding approximately 46.6 % of the outstanding Common Stock of the Company
intend to vote "FOR" the slate of directors, "FOR" the adoption of the 1997
Stock Incentive Plan and "FOR" the appointment of Auditors.
PROPOSAL NO. 1
ELECTION OF DIRECTORS
The By-Laws of the Company provide for a Board of Directors of not less than
three (3) members. The Board of Directors currently consists of seven (7)
members. The Board of Directors has fixed the number of directors at six (6) in
accordance with the provisions of the Company's By-laws. At the meeting, six (6)
directors will be elected to serve until the 1998 Annual Meeting of Stockholders
and until their successors have been elected and qualified. Any vacancy or
vacancies which occur during the year may be filled by the Board of Directors,
and any directors so appointed must stand for reelection at the next annual
meeting of stockholders. .
All nominees have consented to be named and have indicated their intent to serve
if elected. The Company has no reason to believe that any of these nominees are
unavailable for election. However, if any of the nominees become unavailable for
any reason, the persons named as proxies may vote for the election of such
person or persons for such office as the Board of Directors of the Company may
recommend in the place of such nominee or nominees. It is intended that proxies,
unless marked to the contrary, will be voted in favor of the election of the
nominees. .
The Board of Directors recommends that the stockholders vote "FOR" the election
of the following six nominees (Item No. 1 on the proxy card).
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<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
NOMINEES FOR ELECTION
Name Age Position
Lawrence Burk 56 President, Chief Executive Officer and Director
John H. Wasko 59 Chief Financial Officer,
Secretary, Treasurer
and Director
Mark A. Kenny 44 Director
David W. Sass 61 Director
S. Charles Tabak 65 Director
Warren D. Bagatelle 59 Chairman
</TABLE>
The Company's Audit and Compensation Committees consist of Messrs. Warren D.
Bagatelle, S. Charles Tabak and David W. Sass. All officers of the Company
devote their full time to the Company's business.
Lawrence E. Burk joined the Company on June 23, 1997, as President, Chief
Executive Officer, and Director following a 27 year career with Alexander &
Alexander Services. From 1993 to early 1996, Mr. Burk served as Chairman and CEO
of Alexander & Alexander, Inc., the U.S. Retail Subsidiary of A & A Services,
and from early 1996 until the company's acquisition by AON Corporation in late
1996, Mr. Burk served as President and Chief Operating Officer of A & A
International, the company's global retail operation. Mr. Burk served on the
company's Global Retail Board from 1985; on A & A Services Operations Board from
1989; and on A & A Inc.s' Executive Committee and Operations Board from 1989. A
& A was a NYSE listed Financial Services firm with revenues of over $1.3
billion. Mr. Burk has a B.A. degree in Economics from Southern Illinois
University and is a member of the schools' Advisory Board.
John H. Wasko has served the Company as a Director since April, 1986, as
Secretary since September 1995, and as Treasurer and Chief Financial Officer
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., presently an inactive company, 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.
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Mark A. Kenny, currently an employee of the Company, served as the Company's
Executive Vice President from August 1995 to October 1996 and as a Director
since August 1995. He has also served as Executive Vice President of Corporate
Travel Link, Inc. the Company's wholly owned subsidiary ("Travel Link") from
inception, March 1994 to November 1996 and as a Director since inception. 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.
David W. Sass has been a Director since
April, 1997 and has been a practicing attorney in New York City for the past 37
years and is currently a senior partner in the law firm of McLaughlin & Stern,
LLP, securities counsel to the Company. Mr. Sass is also an officer of Ionic
Fuel Technology, Inc., a company engaged in the sale and distribution of
emission control systems, a director of The Harmat Organization, Inc., a New
York based construction company and a member and Vice Chairman of the Board of
Trustees of Ithaca College. Mr. Sass earned a B.A. from Ithaca College, a J.D.
from Temple University School of Law and an L.L.M. (in taxation) from New York
University School of Law.
S. Charles Tabak has been a Director since April,
1997. Since 1991 he has been the Chief Executive Officer of Arc Medical &
Professional, Inc., an employment agency specializing in placement of
scientific, medical and office personnel. From 1969 to 1990, he was the
Executive Vice President and General Counsel for Channel Home Centers Inc. From
1967 to 1969, he was the Director of Finance of J.J. Newbury Co. Mr. Tabak is a
past member of the Board of Directors of Channel Home Centers, Inc. and Charge A
Plate Group of Greater New York. He is a graduate of both NYU School of Business
and School of Law, and is admitted to practice law in New York state and before
the U.S. Supreme Court.
Warren D. Bagatelle has been a Director and Chairman of
the Board of the Company since August, 1995. He served as Chief Executive
Officer of the Company from December 1996 through June, 1997. Since 1988, he has
been a Managing Director at Loeb Partners Corporation, a New York City
investment banking firm. 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. Mr. Bagatelle has a B.A. in economics from Union
College and an M.B.A. from Rutgers University. During 1997 the Board of
Directors held 10 meetings and acted one time on unanimous written consent. No
directors received compensation for serving as directors during the fiscal year
ended December 31, 1996. It is anticipated that outside directors will receive
$1,000 for each board meeting attended in person and $250 for each committee
meeting attended in person, as compensation for serving in such capacities
during the fiscal year ending December 31, 1997.
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PROPOSAL NO. 2
ADOPTION OF THE STOCK OPTION PLAN
The Board of Directors propose the approval and ratification of the Company's
1997 Stock Incentive Plan ("Plan"). The purpose of the Plan is to further the
long-term stability, continuing growth and financial success of the Company by
attracting and retaining key employees, directors and selected advisors of the
Company through the use of stock incentives, while stimulating the efforts of
these individuals upon whose judgment and interest the Company is and will be
largely dependent for the successful conduct of its business. It is believed
that it will strengthen their desire to remain with the Company and will further
the identification of those persons' interests with those of the Company's
stockholders.
The Plan provides that five-year options to purchase up to 500,000 shares of
Common Stock may be issued to the Company's employees and outside directors. All
present and future employees shall be eligible to receive Incentive Awards under
the Plan, and all present and future non-employee Directors shall be eligible to
receive Non-Statutory Options under the Plan. An eligible employee or
non-employee Director shall be notified in writing stating the number of shares
for which Options are granted, the Option price per share, and conditions
surrounding the grant and exercise of the Options.
The exercise price of shares of Company Stock covered by an Incentive Stock
Option shall be not less than 100% of the Fair Market Value of such shares on
the Date of Grant; provided that if an Incentive Stock Option is granted to an
Employee who, at the time of the grant, is a 10% Shareholder, then the exercise
price of the shares covered by the Incentive Stock Option shall be not less than
110 % of the Fair Market Value of such shares on the Date of Grant. The exercise
price of shares covered a Non-statutory Stock Option shall be not less than 85 %
of the Fair Market Value of such shares on the Date of Grant.
The Plan shall be administered by a Committee, which shall be appointed by the
Board, and which shall consist of a minimum of two Board members.
Subject to stockholder approval of the Plan, options have been granted under the
Plan to each of David W. Sass and S. Charles Tabak (10,000 shares at an exercise
price of $6.00 per share); Lawrence E. Burk (200,000 shares at an exercise price
of $6.00 per share), and other employees of the Company at prices ranging from
$6.00 to $8.625 per share.
The Board of Directors recommends that the stockholders vote "FOR" adoption of
the Plan (Item No. 2 on the proxy card).
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PROPOSAL NO. 3
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has appointed Wiss & Company, LLP as
independent auditors to examine and report on the consolidated
financial statements of the Company for the year ending December
31, 1997, subject to stockholder approval.
During the year ending December 31, 1997, Wiss & Company, LLP
provided the Company with audit services, including examinations of
and reporting on the Company's consolidated financial statements,
as well as those of its subsidiaries. Audit services also included
a review of filings with the Securities and Exchange Commission and
the Company's annual report on Form 10-KSB.
Ratification of the appointment of Wiss & Company, LLP as
independent auditors requires the affirmative vote of a majority of
the votes cast at the meeting by holders of the Corporation's
Common Stock.
A representative of Wiss & Company, LLP will be present at
the Annual Meeting.
The Board of Directors recommends that the stockholders vote
"FOR" ratification of this appointment (Item No. 3 on the proxy
card).
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following tabulation shows the security ownership as of November 12, 1997 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 Steven E. Pollan who
is the record owner of 293,216 shares. The Company contends it has the right to
cancel such shares, because of certain disputes it has with Mr. Pollan. See
"Certain Transactions," below ), (ii) each Director and Officer of the Company
and (iii) all Directors and Officers as a group.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
NUMBER OF PERCENT
NAME & ADDRESS SHARES OWNED OF CLASS
Loeb Holding Corporation
As Escrow Agent (1)
61 Broadway
New York, NY 10006 1,053,679 22.16%
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Warren D. Bagatelle (1)
Loeb Partners Corporation
61 Broadway
New York, NY 10006 1,053,679 22.16%
Joseph Cutrona
82 Kendall Drive
Parlin, New Jersey, 08859 377,350 8.66%
Mark A. Kenny
Genisys Reservation Systems
2401 Morris Avenue
Union, NJ 07083 574,175 13.18%
John H. Wasko (2)
Genisys Reservation Systems
2401 Morris Avenue
Union, NJ 07083 102,046 2.32%
Lawrence E. Burk (3)
Genisys Reservation Systems
2401 Morris Avenue
Union, NJ 07083 205,000 4.50%
S. Charles Tabak (4)
ARC Medical Professional Personnel
36 Route 10W, Suite D
East Hanover, NJ 07936 10,000 *
David W. Sass (4)
McLaughlin & Stern, LLP
260 Madison Ave. 18th Fl.
New York, NY 10016 15,000 *
All Officers and Directors
as a group (7 persons) 2,337,250 46.60%
- ---------------------
* less than 1%
</TABLE>
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(1) Includes 653,679 shares of Common Stock purchased by Loeb Holding
Corporation, as escrow agent for Warren D. Bagatelle, Managing Director of Loeb
Partners Corp., HSB Capital (of which Warren Bagatelle is a partner), trusts for
the benefit of families of two principals of Loeb Holding Corporation and three
unaffiliated persons and 400,000 shares of Common Stock issuable upon conversion
of two Convertible Notes aggregating $37,500. Loeb Holding Corporation disclaims
any beneficial interest in these shares.
(2) Includes 14,362 shares of Common Stock 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 and a five (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 shares of
Common Stock issuable upon conversion of Mr. Wasko's prorata share of a
Convertible Note in the principal amount of $12,500.
(3) Includes a five (5) year option to purchase an aggregate of 200,000 shares
of Common Stock at a price of $6.00 per share issued on September 23, 1997.
(4) Includes a five (5) year option to purchase 10,000 shares of Common Stock at
a price of $6.00 per share issued on September 23, 1997.
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.
EXECUTIVE COMPENSATION
No executive officer received aggregate compensation exceeding
$100,000 in the fiscal year 1996.
CERTAIN TRANSACTIONS
In August 1994 Joseph Cutrona and Mark A. 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 an Officer and 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
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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 Term Promissory 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 Term Promissory 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 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 commencing September 1997 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 Lasers, Inc. ("JEC") signed a purchase
agreement whereby JEC acquired all of the assets, rights and properties relating
to the Company's CO2 laser research and development agreement with LCL, subject
to certain liabilities, in full consideration for the forgiveness of the
indebtedness of the Company to JEC in the amount of $345,593 owed as of February
28, 1995.
On August 11, 1995, Robotic Lasers, Inc. 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 five (5) year option to purchase
25,000 shares of Common Stock at a price of $0.60 per share, which option has
been exercised. In November, 1996 the Company granted Mr. Wasko a five (5) year
option to purchase 35,000 shares of Common Stock at a price of $2.00 per share.
On September 5, 1995 the Company entered into a 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.
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<PAGE>
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 Common Stock in this transaction.
The principal amount of the $237,500 Term Promissory Note is to be repaid in
twelve equal quarterly payments commencing two (2) years from the date thereof.
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 Term Promissory 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 canceling the
333,216 shares of Common Stock which had been issued to him in August of 1995.
It is the Company's position that the Common Stock should be canceled because,
among other reasons, Mr. Pollan failed to provide the services to the Company
which were to be the consideration for the issuance of the shares. Mr. Pollan
has commenced an action against the Company and others in the New Jersey Federal
Court which contests the Company's effort to cancel the shares issued to him,
and which seeks monetary damages and other relief. The action is in its
preliminary stages, and no assurance can be given as to its ultimate outcome.
During the quarters ended September 30, 1996 and December 31, 1996, in order to
raise additional working capital for the Company, Joseph Cutrona, former
President of the Company, sold a total of 37,600 shares of restricted Common
Stock of the Company owned by him to nineteen unaffiliated third parties at
prices ranging from $2.00 to $2.50 per share for total proceeds of $76,500 which
Mr. Cutrona remitted to the Company in the form of a capital contribution. In
February 1997 Mr. Cutrona sold an additional 9,850 shares of restricted Common
Stock to five unaffiliated third parties at a price of $2.00 per share for total
proceeds of $19,700, which Mr. Cutrona remitted to the Company in the form of an
additional capital contribution. Mr. Mark A. Kenny has issued 23,725 of his own
shares of restricted Common Stock to Mr. Cutrona as reimbursement for one-half
of the number of shares sold by Mr. Cutrona.
On October 10, 1996, the Company, Joseph Cutrona, 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 Genisys Payment System. Prosoft agreed to accept the 29,066
shares at a negotiated price of $3.75 per share in satisfaction of $108,997.50
which would be owed to Prosoft, Inc. by the Company upon completion of the
Genisys Payment System. This transfer has been completed. The Company has agreed
to issue an equal number of new shares of restricted Common Stock to Messrs.
Cutrona and Kenny in six equal installments if the Company meets certain
performance criteria on six specified dates.
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During November and December 1996, the Company and Loeb Holding Corporation
signed four eighteen (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
unaffiliated 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 hereof, 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. 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.
OTHER BUSINESS TO BE TRANSACTED
As of the date of this Proxy Statement, the Board of Directors knows of no other
business to be presented for action at the Annual Meeting of Stockholders. As
for any business that may properly come before the Annual Meeting or any
continuation or adjournment thereof, the Proxies confer discretionary authority
to the person named therein. These persons will vote or act in accordance with
their best judgment with respect thereto.
ANNUAL REPORT TO STOCKHOLDERS
The Annual Report on Form 10-KSB for the year ended December 31, 1996, is being
mailed to Stockholders with this Proxy Statement.
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STOCKHOLDER PROPOSAL - 1998 ANNUAL MEETING
Any stockholder proposals to be considered by the Company for inclusion in the
proxy material for the 1998 Annual Meeting of Stockholders must be received by
the Company at its principal executive offices by April 30, 1998.
The prompt return of your proxy is appreciated and will be helpful in obtaining
the necessary vote. Therefore, whether or not you expect to attend the meeting,
please sign the proxy and return it in the enclosed envelope.
BY ORDER OF
THE BOARD OF DIRECTORS
JOHN H. WASKO, Secretary
New York, New York
November 12, 1997
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EXHIBIT A
GENISYS RESERVATION SYSTEMS, INC,
1997 STOCK INCENTIVE PLAN
Effective as of May 12, 1997
14
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Table of Contents
Page
Purpose...............................................................3
Definitions...........................................................3
General...............................................................5
Stock.................................................................5
Eligibility...........................................................5
Stock Options for Employees. . . . . . . . . . . . . . . .. . . . . . 5
Method of Exercise of Options. . . . . . . . . . . . . . . . . . . . .7
Nontransferability of Incentive Awards............................... 8
Effective Date of the Plan............................................8
Termination, Modification, Change.....................................8
Change in Capital Structure...........................................8
Administration of the Plan............................................9
Notice...............................................................10
Interpretation.......................................................11
15
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GENISYS RESERVATION SYSTEMS, INC,
1997 STOCK INCENTIVE PLAN
1. Purpose. The purpose of the Genisys Reservation Systems, Inc. 1997 Stock
Incentive Plan (the "Plan") is to further the long-term stability, continuing
growth and financial success of Genisys Reservation Systems, Inc. (the
"Company") by attracting and retaining key employees, directors and selected
advisors of the Company through the use of stock incentives. It is believed that
ownership of Company Stock will. stimulate the efforts of those employees,
directors and selected advisors upon whose judgment and interest the Company is
and will be largely dependent for the successful conduct of its business. It is
also believed that Incentive Awards granted to eligible persons under this Plan
will strengthen their desire to remain with the Company and will further the
identification of those persons' interests with those of the Company's
shareholders.
2. Definitions. As used in the Plan, the following terms have the meanings
indicated:
(a) "Act" means the Securities Exchange Act of 1934, as amended.
(b) "Applicable Withholding Taxes" means the aggregate amounts of federal, state
and local income and payroll taxes that the Company is required to withhold .
(c) "Board" means the Board of Directors of the Company.
(d) "Code" means the Internal Revenue Code of 1986, as amended.
(e) "Committee" means the committee appointed by the Board as described under
Section 15.
(f) "Company" means Genisys Reservation Systems, Inc., a New Jersey
corporation.
(g) "Company Stock" means shares of voting common stock of the
Company subject to adjustment as provided in Section 14.
(h) "Date of Grant" means the date on which an Incentive Award is granted by the
Committee.
(i) "Disability" or "Disabled" means, as to an Incentive Stock Option, a
Disability within the meaning of Code section 22(e)(3). As to all other forms of
16
<PAGE>
Incentive Awards, the Committee shall determine whether a Disability exists and
such determination shall be conclusive.
(j) "Employee" means an employee of the Company, or of any Parent or Subsidiary
of the Company.
(k) "Fair Market Value" means, as of a relevant date, (i) if the Company Stock
is traded on an exchange, the closing price of the Company Stock on such day on
the exchange on which it generally has the greatest trading volume, (ii) if the
Company Stock is traded on the over-the-counter market, the average between the
closing bid and asked prices on such day as reported by NASDAQ, or (iii) if
sales prices or bid and asked prices are not available for such day, the fair
market value shall be determined by the Committee using any reasonable method in
good faith.
(l) "Incentive Award" means the award of an Option under the Plan.
(m) "Incentive Stock Option" means an Option intended to meet the requirements
of, and qualify for favorable federal income tax treatment under, Code section
422.
(n) "Insider" means a person subject to section 16 of the Act.
(o) "Non-Employee Director" means a member of the Board who is not an Employee.
(p) "Nonstatatory Stock Option" means an Option that does not meet the
requirements of Code section 422 or, evan if meeting the requirements of Code
section 422, is not intended to be an Incentive Stock Option and is so
designated.
(q) "Option" means a right to purchase Company Stock granted under the Plan, at
a price determined in accordance with the Plan.
(r) "Parent" means, with respect to any corporation, a parent of that
corporation within the meaning of Code section 424(e).
(s) "Participant" means any Employee or Non-Employee Director who receives an
Incentive Award under the Plan.
(t) "Rule 16b-3" means Rule 16b-3 adopted pursuant to section 16(b) of the Act.
A reference in the Plan to Rule 16b-3 shall include a reference to any
corresponding rule (or number redesignation) of any amendments to Rule 16b-3
adopted after the effective date of the Plan's adoption.
17
<PAGE>
(u) "Subsidiary" means, with respect to any corporation, a subsidiary of that
corporation within the meaning of Code section 424(f).
(v) "10% Shareholder" means a person who owns, directly or indirectly, stock
possessing more than 10 % of the total combined voting power of all classes of
stock of the Company or any Parent or Subsidiary of the Company. Indirect
ownership of stock shall be determined in accordance with Code section 424(d).
3. General. Incentive Awards may be granted under the Plan in the form of
Options. The provisions of the Plan referring to Insiders or Rule 16b-3 shall
apply only to Participants who are subject to section 16 of the Act.
4. Stock. Subject to Section 14 of the Plan, there shall be reserved for
Issuance under the Plan an aggregate of 500,000 shares of Company Stock, which
shall be authorized but unissued shares. Shares that have not been issued under
this Plan and that are allocable to Incentive Awards or portions thereof that
expire or otherwise terminate unexercised may again be subjected to an Incentive
Award under this Plan.
5. Eligibility.
(a) All present and future Employees shall be eligible to receive Incentive
Awards under the Plan. The Committee shall have the power and complete
discretion, as provided in Section 12, to select which Employees shall receive
Incentive Awards and to determine for each such Participant the terms,
conditions and nature of the award, and the number of shares to be allocated to
each Participant as part of each Incentive Award.
(b) All present and future Non-Employee Directors shall be eligible to receive
Non-Statutory Options under the Plan. Non-Employee Directors shall not be
entitled to receive any other form of Incentive Award under the Plan.
(c) The grant of an Incentive Award shall not obligate the Company or any Parent
or Subsidiary of the Company to pay a Participant any particular amount of
remuneration, to continue the employment or other service relationship of the
Participant after the grant, or to make further grants to the Participant at any
time thereafter.
6. Stock Options for Employees .
(a) Whenever the Committee deems it appropriate to grant Options, notice shall
be given to the eligible Employee or Non Employee Director stating the number of
shares for which Options are granted, the Option price per share, whether the
Options are Incentive Stock Options or Nonstatutory Stock Options and the
conditions to which the grant and exercise of the Options are subject. This
notice, when duly accepted in writing by the Participant, shall become a stock
option agreement between the Company and the Participant.
18
<PAGE>
(b) Incentive Stock Options may only be awarded to Employees of the Company. The
exercise price of shares of Company Stock covered by an Incentive Stock Option
shall be not less than 100% of the Fair Market Value of such shares on the Date
of Grant; provided that if an Incentive Stock Option is granted to an Employee
who, at the time of the grant, is a 10% Shareholder, then the exercise price of
the shares covered by the Incentive Stock Option shall be not less than 110 % of
the Fair Market Value of such shares on the Date of Grant.
c) The exercise price of shares of Company Stock covered by a Nonstatutory Stock
Option shall be not less than 85 % of the Fair Market Value of such shares on
the Date of Grant. Notwithstanding the foregoing, Nonstatutory Stock Options
shall not be less than 100% of the Fair Market Value of such shares on the Date
of Grant if the Committee intends for such Options to qualify under Code section
162(m).
(d) Options may be exercised in whole or in part at such times as may be
specified by the Committee in the Participant's stock option agreement; provided
that the exercise provisions for Incentive Stock Options shall in all events not
be more liberal than the following provisions:
(i) No Incentive Stock Option may be exercised after the first to occur of:
(x) Five years from the Date of Grant,
(y) Three months following the date of the Participant's termination of
employment with the Company and any Parent or Subsidiary of the Company for
reasons other than death or Disability; or
(z) One year following the date of the Participant's termination of employment
by reason of death or Disability.
(ii) Except as otherwise provided in this paragraph, no Incentive Stock Option
may be exercised unless the Participant is employed by the Company or a Parent
or Subsidiary of the Company at the time of the exercise and has been so
employed at all times since the Date of Grant. If a Participant's employment is
terminated other than by reason of death or Disability at a time when the
Participant holds an Incentive Stock Option that is exercisable (in whole or in
part), the Participant may exercise any or all of the exercisable portion of the
Incentive Stock Option (to the extent exercisable on the date of such
termination) within three months after the Participant's termination of
employment. If a Participant's employment is terminated by reason of his
Disability at a time when the Participant holds an Incentive Stock Option that
is exercisable (in whole or in part), the Participant may exercise any or all of
the exercisable portion of the Incentive Stock Option (to the extent exercisable
on the date of Disability) within one year after the Participant's termination
of employment. If a Participant's employment is terminated by reason of his
death at a time when the Participant holds an Incentive Stock Option that is
Exercisable (in whole or in part), the Incentive Stock Option may be exercised
(to the extent exercisable on the date of death) within one year after the
Participant's death by the person to whom the Participant's rights under the
Incentive Stock Option shall have passed by will or by the laws of descent and
distribution.
19
<PAGE>
(iii) An Incentive Stock Option, by its terms, shall be exercisable in any
calendar year only to the extent that the aggregate Fair Market Value
(determined at the Date of Grant) of the Company Stock with respect to which
Incentive Stock Options are exercisable by the Participant for the first time
during the calendar year does not exceed $100,000 (the "Limitation Amount"). The
foregoing Limitation Amount shall be adjusted to the extent required by any
amendment to or modification of Code section 422. Incentive Stock Options
granted after December 31, 1986 under the Plan and all other plans of the
Company and any Parent or Subsidiary of the Company shall be aggregated for
purposes of determining whether the Limitation Amount has been exceeded. The
Committee may impose such conditions as it deems appropriate on an Incentive
Stock Option to ensure that the foregoing requirement is met. If Incentive Stock
Options exercisable by the Participant for the first time during any calendar
year exceed the Limitation Amount, the excess Options will be treated as
Nonstatutory Stock Options to the extent permitted by law.
(e) The Committee may, in its discretion, provide that an Option granted to an
Insider will not be exercisable by the Insider within the first six months after
it is granted.
(f) The Committee may, in its discretion, grant Options that by their terms
become fully exercisable upon a Change of Control notwithstanding other
conditions or, exercisability in the stock option agreement, and, in such event,
paragraph (e) shall not apply.
7. Method of Exercise of Options .
(a) Options may be exercised by the Participant giving written notice of the
exercise to the Company stating the number of shares the Participant has elected
to purchase under the Option . ln the case of a purchase of shares under an
Option, such notice shall be effective only if accompanied by the exercise price
in full paid in cash; provided that, if the terms of an Option so permit, the
Participant may (i) deliver shares of Company Stock (valued at their Fair Market
Value on the date of exercise) in satisfaction of all or any part of the
exercise price, (ii) deliver a properly executed exercise notice together with
irrevocable instructions to a broker to deliver promptly to the Company, from
the sale proceeds with respect to the sale of Company Stock , the amount
necessary to pay the exercise price and, if required by the Committee,
Applicable Withholding, Taxes.
(b) The Company may place on any certificate representing Company Stock issued
upon the exercise of an Option any legend deemed desirable by the Company's
counsel to comply with federal or state securities laws, and the Company may
require of the Participant a customary written indication of his investment
intent. Until the Participant has made any required payment, including any
Applicable Withholding Taxes, and has had issued to him a certificate for the
shares of Company Stock acquired, he shall possess no shareholder rights with
respect to the shares.
(c) As an alternative to making a cash payment to the Company to satisfy
Applicable Withholding Taxes, the Committee may establish procedures permitting
the Participant to elect to
20
<PAGE>
(a) deliver shares of already owned Company Stock or (b) have the Company retain
that number of shares of Company Stock that would satisfy all or a specified
portion of the Applicable Withholding Taxes of the Participant arising in the
year the Incentive Award becomes subject to tax. Any such election shall be made
only in accordance with procedures established by the Committee. The Committee
has the express authority to change any election procedure it establishes at any
time.
(d) Notwithstanding anything herein to the contrary, if the Company is subject
to section 16 of the Act, Options shall always be granted and exercised in such
a manner as necessary to conform to the provisions of Rule 16b-3.
8. Nontransferability of Incentive Awards. Incentive Awards shall not be
transferrable unless so provided in the award agreement or an amendment to the
award agreement.
9. Effective Date of the Plan. This Plan shall be effective as of May 12, 1997
and shall be submitted to the shareholders of the Company for approval. No
Option shall be exercisable and no Company Stock shall be issued under the Plan
until (i) the Plan has been approved by the Company's shareholders, (ii) shares
issuable under the Plan have been registered with the Securities and Exchange
Commission or an appropriate exemption from the registration requirement is
available, and (iii) the requirements of any applicable state securities laws
have been met.
10. Termination, Modification, Change. If not sooner terminated by the Board,
this Plan shall terminate at the close of business on May 11,2007. No Incentive
Awards shall be granted under the Plan after its termination. The Board may
terminate the Plan or may amend the Plan in such respects as it shall deem
advisable. The Board may unilaterally amend the Plan and Incentive Awards as it
deems appropriate to ensure compliance with Rule 16b-3 and to cause Incentive
Awards to meet the requirements of the Code, including Code section 422, and
regulations thereunder. Except as provided, in the preceding sentence, a
termination or amendment of the Plan shall not, without the consent of the
Participant, adversely affect a Participant's rights under an Incentive Award
previously granted to him.
11. Change in Capital Structure.
(a) The number of shares reserved for issuance under the Plan, the terms of
Incentive Awards, and all computations under the Plan shall be appropriately
adjusted by the Committee should the Company effect one or more stock dividends,
stock splits, subdivisions or consolidations of shares, or other similar changes
in capitalization, or if the par value of Company Stock is altered. If the
adjustment would produce fractional shares with respect to any unexercised
Option, the Committee may adjust appropriately the number of shares covered by
the Option so as to eliminate the fractional shares.
(b) If the Company is a party to a consolidation or merger in which the Company
is not the surviving corporation, a transaction that results in the acquisition
of substantially all of the Company's outstanding stock by a single person or
entity, or a sale or
21
<PAGE>
transfer of substantially all of the Company's assets, the Committee may take
such actions with respect to outstanding Incentive Awards as the Committee deems
appropriate.
(c) Any determination made or action taken under this Section 11 by the
Committee shall be final and conclusive and may be made or taken without the
consent of any Participant
.
12. Administration of the Plan. The Plan shall be administered by a Committee,
which shall be appointed by the Board, and which shall consist of not less than
two such members of the Board. Each member of the Committee shall qualify as a
"non-employee director" for purposes of Rule 16b-3 and as an "outside director"
for purposes of Code section 162(m) and the regulations thereunder. The
Committee shall have general authority to construe and interpret the terms of
the Plan and the respective award agreements under the Plan, to impose any
limitation or condition upon an Incentive Award that the Committee deems
appropriate to achieve the objectives of the Incentive Award and the Plan. The
determination of the Committee with respect to any matter under the Plan to be
acted upon by the Committee shall be conclusive and binding. Without limitation
and in addition to powers set forth elsewhere in the Plan, the Committee shall
have the following specific authority:
(a) The Committee shall have the power and complete discretion to determine (i)
which eligible Employees shall receive an Incentive Award and the nature of the
Incentive Award, (ii) the number of shares of Company Stock to be covered by
each Incentive Award, (iii) whether Options shall be Incentive Stock Options or
Nonstatutory Stock Options, (iv) the Fair Market Value of Company Stock, (v) the
time or times when an Incentive Award shall be granted, (vi) whether an
Incentive Award shall become vested over a period of time and when it shall be
fully vested, (vii) when Options may be exercised, (viii) whether a Disability
exists, (ix) the manner in which payment will be made upon the exercise of
Options , (x) conditions relating to the length of time before disposition of
Company Stock received upon the exercise of Options is permitted, (xi)
procedures for the withholding or delivery of Company Stock to satisfy
Applicable Withholding Taxes, (xii) notice provisions relating to the sale of
Company Stock acquired under the Plan, and (xiii) any additional requirements
relating to Incentive Awards that the Committee deems appropriate. The Committee
shall have the power to amend the terms of previously granted Incentive Awards
so long as the terms as amended are consistent with the terms of the Plan and
provided that the consent of the Participant is obtained with respect to any
amendment that would be detrimental to the Participant, except that such consent
will not be required if such amendment is for the purpose of complying with Rule
16b-3 or any requirement of the Code applicable to the Incentive Award.
(b) The Committee may adopt rules and regulations for carrying out the Plan. The
interpretation and construction of any rules or regulations adopted by the
Committee shall be final and conclusive. The Committee may consult with counsel,
who may be counsel to the Company, and shall not incur any liability for any
action taken in good faith in reliance upon the advice of counsel.
22
<PAGE>
(c) The Committee may delegate to the officers or employees of the Company and
deliver such instruments and documents, to do all such acts and things, and to
take all such other steps deemed necessary, advisable or convenient for the
effective administration of the Plan in accordance with its terms and purpose,
except that the Committee may not delegate any discretionary authority with
respect to substantive decisions or functions regarding the Plan, nor as to
Incentive Awards thereunder as those relate to Insiders, including but not
limited to decisions regarding the timing, eligibility, pricing, amount or other
material term of such Awards.
(d) A majority of the members of the Committee shall constitute a quorum, and
all actions of the Committee shall be taken by a majority of the members present
Any action may be taken by a written instrument signed by all of the members,
and any action so taken shall be fully effective as if it had been taken at a
meeting (e) The Board from time to time may appoint members previously appointed
and may fill vacancies, however caused, in the Committee.
Notwithstanding this Section 12 or any other provision of the Plan to the
contrary, any action required or permitted to be performed by the Committee may
be performed by the entire Board to the extent necessary or appropriate to
satisfy Rule 16b-3, as determined in the discretion of the Board.
13. Notice. All notices and other communications required or permitted to be
given under this Plan shall be in writing and shall be deemed to have been duly
given if delivered personally or mailed first class, postage prepaid, as
follows:
(a) if to the Company - at its principal business address to the attention of
the Secretary;
(b) if to any Participant - at the last address of the Participant known to the
sender at the time the notice or other communication is sent.
23
<PAGE>
14. Interpretation. The terms of this Plan are subject to all present and future
regulations and rulings of the Secretary of the Treasury or his delegate
relating to the qualification of Incentive Stock Options under the Code. If any
provision of the Plan conflicts with any such regulation or ruling, then that
provision of the Plan shall be void and of no effect. As to all Incentive Stock
Options and all Nonstatutory Stock Options with an exercise price of at least
100% of Fair Market Value of the Company Stock on the Date of Grant, this Plan
shall be interpreted for such Options to be excluded from applicable employee
remuneration for purposes of Code section 162(m).
IN WITNESS WHEREOF, the Company has caused the Plan to be executed this 12th day
of May, 1997.
GENISYS RESERVATION SYSTEMS, INC.
By:
24
<PAGE>
GENISYS RESERVATION SYSTEMS, INC.
ANNUAL REPORT
DECEMBER 31, 1996
27
<PAGE>
Dear Fellow Stockholder:
On behalf of Genisys Reservation Systems, I want to thank you for your continued
support of our Company.
I joined Genisys on June 23, 1997 after a long and successful career with a New
York Risk Management and Consulting firm. While the move from the financial
services field to the travel industry and software development arena is a
significant change, I have found that our customers are demanding cost
effieicnt products to improve
their productivity and expand their services, and the Genisvs automated
limousine reservation and payment system delivers. In the few weeks that our
product has been on the market delivering reservations through the Sabre
Computer Reservation Svstem (CRS) we have demonstrated that our system enhances
corporate travel in the following ways:
* Genisys dramatically reduces the time it takes to make a limousine
booking therebv reducing cost.
* Genisys minimizes mistakes and errors through automation.
* Genisys provides comprehensive data to better manage expenditure.
We continue to make progress in other areas as well. On June 20th. Genisys
completed an 80% purchase of Prosoft, Inc., the software development company who
designed and built the Genisys System, thereby assuring us of the technology
support necessary to maintain and enhance our system. Prosoft also provides us
with the abilltv to expand our product offerings in the automated travel sector
and other similar businesses. Genisys will continue to evaluate other potential
acquisition candidates to add to our product and revenue base.
We are currently installing our equipment in Service Provider locations,
providing them with the ability to accept reservations through our system. We
now have a strong base in New Jersev and have recently expanded our marketing
efforts to include the entire Northeast. We expect to be operational very soon
in Boston, a large corporate limousine market.
While revenue has been slow in developing, Genisvs is making progress in
positioning the company for future growth. We are negotiating cost reductions
from Sabre and Apollo to give us marketing flexibility. We also are developing
an interface with Apollo, another large CRS, and should be on-line by the
first quarter of 1998.
With these immediate objectives now well in hand, we are intensifying our focus
on growing revenues while continuing to control expenses. We will continue
taking aggressive creative approaches to winning market share designed to
capitalize on market need.
Sincerely,
Larrv Burk
President &
Chief Executive Officer
29
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Form 10-KSB
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
X Annual Report Pursuant to Section 13 or
15(d) of The Securities Exchange Act of
1934
For the fiscal year ended December 31, 1996
or
Transitional Report Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
For the transition period from to
Commission File Number 033-19522-NY
GENISYS RESERVATION SYSTEMS, INC.
(formerly Robotic Lasers, Inc.)
(Exact Name of registrant as specified in its charter)
New Jersey 22-2719541
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2401 Morris Avenue, Union, New Jersey 07083
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (908) 810-8767 Securities
registered pursuant to Section 12(b) of the Act: NONE Securities registered
pursuant to Section 12(g) of the Act:
Common Stock, par value $.0001 per share
Class A Redeemable Warrants
Class B Redeemable Warrants
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes - X No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendments to
this Form 10-K. [X]
State the aggregate market value of the voting stock held by non-affiliates
of the registrant. The aggregate market value shall be computed by
reference to the price at which the stock was sold, or the average bid
and asked prices of such stock, as of a specified date within 60 days
prior to the date of filing.
$12,275,802 as of the close of business on March 24, 1997
<PAGE>
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Indicate by check mark whether the registrant filed all documents and
reports required to be filed by Section 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes No
APPLICABLE ONLY TO CORPORATE REGISTRANTS
Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date. The number of shares
outstanding of the registrant's Common Stock as of March 25, 1997 was 4,330,594
shares.
DOCUMENTS INCORPORATED BY REFERENCE
List hereunder the following documents if incorporated by reference and
the part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document
is incorporated: (1) any annual report to security-holders; (2) any proxy or
information statement; and (3) any prospectus filed pursuant to Rule 424(b) or
(C) under the Securities Act of 1933. The listed documents should be clearly
described for identification purposes.
1. Rule 424(b) Prospectus dated March 20, 1997 is incorporated herein by
reference into Parts I, II and III
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
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 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.
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.
1
<PAGE>
10.13 Copy of Interim Loan Agreement between the Registrant and Loeb
Holding Corporation and certain executives of the Registrant.
10.14 Prosoft Consulting Agreement
21 List of Subsidiaries
All of the above-referenced documents, with the exception of the Rule 424(b)
Prospectus, are incorporated herein by reference to the Exhibit bearing the same
number in the Registrant's Registration Statement on Form SB-2, File No.
333-15011.
1
<PAGE>
Part I
Item 1. Business
History
The Company was incorporated in New Jersey in April 1986 as a
wholly-owned subsidiary of JEC Lasers, Inc. ("JEC") to continue the research and
development of an ultra-compact, multi-kilowatt CO2 laser begun under an
agreement with Loughborough Consultants Ltd. ("LCL"), which is affiliated with
Loughborough University of Technology, Loughborough, Leicestershire, England.
Due to the uncertain financial condition of JEC and, in order to
preserve the CO2 laser technology which management felt may have had some value,
on May 30, 1986, the Board of Directors of JEC voted to spin-off Robotic Lasers
into an independent, publicly-owned corporation by issuing a stock dividend of
one share of the Company's Common Stock for every four shares of JEC common
stock outstanding to all shareholders of record as of July 8, 1986. On September
23, 1988, the shares were registered under the Securities Act of 1933, as
amended. On June 25, 1986, the Company and JEC signed a Purchase Agreement
whereby the Company acquired all 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 CO2 laser research and development agreement with
LCL, subject to certain liabilities, to JEC for $345,593 which generated a
profit of approximately $246,000.
On August 9, 1995, the shareholders of the Company approved an
amendment to the Company's Certificate of Incorporation to effect a
one-for-fifty-five reverse stock split pursuant to which each fifty-five shares
of the Company's Common Stock outstanding as of its close of business on July
12, 1995 was replaced by one share of Common Stock. The reverse stock split
reduced the number of outstanding shares of Common Stock of the Company as of
July 12, 1995 from 30,853,352 to 560,970 (before July 16, 1996 one-for-two
reverse split) shares of Common Stock.
On August 11, 1995, the Company 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,
1996 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.
On July 16, 1996, the Company's stockholders approved and effectuated a
one-for-two reverse stock split. Such split has been retroactively reflected in
the text of this document and in the accompanying consolidated financial
statements and notes.
General
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 except for the initial inputing of travel
information. Genisys Reservation Systems, Inc. is a development stage company
and has no commercially 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
2
<PAGE>
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 any 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 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 corporate travel
department or 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 the 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
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 is developing its own computer system which will link with
one or more of the CRS's. The Company's computer system will be made up of two
systems, the Genisys Reservation System and the Genisys Payment System. The
Genisys Reservation System will be a fully automated computer system that allows
travel agents to make limousine bookings directly through any CRS, much like
hotel and 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 Genisys Payment System is not yet
operational. All hardware required for development and commercial operation of
the Company's Reservation and Payment Systems has been purchased, and are
off-the-shelf components not manufactured by 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 marketing consultants on a part-time basis and one
full-time ground transportation industry consultant. The company believes its
personnel relations to be satisfactory.
3
<PAGE>
Item 2. Properties
The Company presently leases approximately 1,500 square feet of office
space at 2401 Morris Avenue, Union, New Jersey, 07083. The five-year lese
expires in November 2000 and provides for a monthly rental of $2,125.00. This
property has been leased from unaffiliated third parties and adequately
satisfies the present needs of the Company. The Company anticipates that it will
need approximately 3,500 square feet in additional space in mid 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 Systems 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.
Item 3. Legal Proceedings
On February 20, 1997, two individuals filed an action against the
Company and Travel Link in the Superior Court of New Jersey seeking, among other
things, damages in the amount of 8% of any financing secured by Travel Link
resulting from plaintiffs efforts and as well as 5% of the Company's Common
Stock allegedly due for services rendered in connection with the Company's
acquisition of Travel Link in 1995. The claim for money damages is based upon an
alleged written agreement between Travel Link and plaintiffs, while the claim
for the shares of Common Stock is based upon alleged oral representations and
promises made by an officer of Travel Link. The Company believes that the
plaintiffs claims are without merit and intends to vigorously defend the action.
In August 1996, the Company gave notice to one of its former officers,
Mr. Steven E. Pollan, that it was canceling 333,216 shares of Common Stock
issued to him for services he was to have provided at the inception of Corporate
Travel Link, Inc. The Company believes that Mr. Pollan never provided such
services; Mr. Pollan has informed the Company, however, that he will contest any
attempt to cancel his shares.
Item 4. Submission of Matters to a Vote of Security Holders
A special meeting of the shareholders of the Company was held at the
offices of Paul A. Wurtzel, Esq., 300 Grand Avenue, Englewood, New Jersey,
07631, on Wednesday, August 9, 1995 at 9:30 a.m. At the meeting, the
shareholders of the Company approved an amendment to the Company's Certificate
of Incorporation to effect a one-for-fifty-five reverse stock split pursuant to
which each fifty-five shares of the Company's Common Stock outstanding as of the
end of business on July 1, 1995 was replaced by one share of New Common Stock.
The Reverse Stock Split reduced the number of outstanding shares of Common Stock
of the Company as of July 12, 1995 from 30,853,352 to 560,970.
The annual meeting of shareholders of the Company was held at the
offices of Corporate Travel Link, Inc., 2401 Morris Avenue, 3rd Floor, Union,
New Jersey, 07083, on Tuesday, July 16, 1996, at 9:30 a.m. At the meeting the
shareholders of the Company approved an amendment to the Company's Certificate
of Incorporation to effect a one-for-two reverse stock split pursuant to which
each two shares of the Company's new common stock outstanding as of the end of
business of June 25, 1996, was replaced by one share of Common Stock of Genisys
Reservation Systems, Inc. The reverse stock split reduced the number of
outstanding shares of common stock of the Company as of June 25, 1996, from
5,669,731 to 2,834,866.
4
<PAGE>
Part II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters.
Market Information
Prior to 1997, the Company's Common Stock was eligible to trade in the
over-the counter market, however, the Company was unable to locate any market
markers in its stock. The Following table indicates the quarterly high and low
bid prices for the last two years for the Company's Common Stock, which became
publicly traded on September 23, 1988:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Bid Price Bid Price
1996 1995
Quarter Ended High Low High Low
March 31 Not Available Not Available
June 30 Not Available Not Available
September 30 Not Available Not Available
December 31 Not Available Not Available
</TABLE>
The foregoing prices were provided by National Quotation Bureau.
As of March 20, 1997, the Effective Date of the Company's Registration
Statement, it's Common Stock, Class A Redeemable Warrants and Class B Redeemable
Warrants are quoted on the Nasdaq Small Cap Market.
Approximate Number of Equity Security Holders
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Approximate Number of
Holders of Record as
Title of Class of March 5, 1997
-------------- ----------------------
Common Stock,
$.0001 par value 769
</TABLE>
Included in the number of stockholders of record are shares held in
"nominee" or "street" name.
Dividends
The Company has never paid any cash dividends. The Company presently
intends to retain any future earnings for use in its operations and, therefore,
does not expect to pay cash dividends in the foreseeable future.
Item 6. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Components of Revenues and Expenses Revenues.
The Company is a development-stage company and has
generated no revenues and has no
5
<PAGE>
commercial operations to date. The Company did not generate any revenues from
operations during the fiscal year ended 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 mid 1997, at which time
the Company expects to generate revenues. 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 the
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 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 charges 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 administrative 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 mid 1997. As reflected in the accompanying
financial statements, the Company has incurred losses totaling $1,645,003 since
inception and at December 31, 1996, had a working capital deficit of $600,043.
Selling, general and administrative expenses were $819,205 for the year
ended December 31, 1996 as compared to $256,621 for the year ended August 31,
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 4
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 $250,000 during 1996. Other
approximate cost increases during the 1996 period consist of consulting fees
($54,000), travel costs ($23,000), marketing costs ($16,000), other
administrative costs ($83,000) and professional fees ($136,000). Professional
and consulting fees for the year ended December 31, 1996, totaled $237,000. Such
amount consisted of attorneys fees of $84,000, accounting fees of $42,000,
accrued consulting fees of $36,000 payable to Loeb partners, $48,000 payable to
John H. Wasko (accrued prior to his becoming an employee of the Company),
$16,000 in consulting fees payable to Mark A. Kenny and miscellaneous fees of
$11,000. Loeb partners, Mr. Kenny and Mr. Wasko are affiliates of the Company.
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,
6
<PAGE>
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 through 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.
In September 1995, January 1996 and December 1996, the Company entered
into sale and lease-back arrangements 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 sales, the Company received
a total of $295,000 and agreed to lease back the hardware and software for
varying terms at a monthly rental totaling $11,960.
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 also sold 25,000
shares of the Company's restricted Common Stock to an unrelated party for
$50,000.
Pursuant to a private offering, the Company issued 11.5 units to
sixteen unaffiliated third parties in May and June 1996. Each $50,000 unit
consists of a $49,000 promissory note and a Class A Redeemable Warrant valued at
$1,000 per unit. Each such warrant entitles the holder to purchase 25,000 shares
of the Company's Common Stock at $5.75 per share. The proceeds from this
offering totaled $575,000 and Class A Redeemable Warrants to purchase 287,500
shares of 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 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 December 31, 1996, the Company had cash of $91,548 and a working
capital deficit of ($600,043). The Company intends to fund its operations and
other capital needs for the next twelve (12) months substantially from revenues
generated by the Company's planned operations and the proceeds from its public
offering of stock.
During the quarters ended September 30, 1996, and December 31, 1996,
Joseph Cutrona, President of the Company, made capital contributions to the
Company in the amounts of $41,700 and $35,000 respectively. In February 1997,
Mr. Cutrona made additional capital contributions totaling $19,700.
In February and March 1997, the Company borrowed a total of $65,000
from three unaffiliated third parties pursuant to three eighteen (18) month
Promissory Notes bearing interest at 10% per annum payable at maturity. These
notes are secured by 16,250 shares of the Company's restricted Common Stock
owned by Joseph Cutrona and 16,250 shares owned by Mark A. Kenny.
On March 26, 1997, the Company consummated a public offering of its
securities consisting of 1,035,000 shares of Common Stock at $5.00 per share,
1,725,000 Class A Redeemable Warrants at $.20 per
7
<PAGE>
Class A Redeemable Warrant and 1,035,000 Class B Redeemable Warrants at $.10 per
Class B Redeemable Warrant. The Net proceeds of such offering totaled
$4,657,445.
Inflation is not expected to have any material effect on the Company.
Item 7. Financial Statements and Supplementary Data.
See Pages F-1 through F-16.
Item 8. Changes In and Disagreements with Accountants on Accounting and
Financial Disclosures
Not applicable
8
<PAGE>
PART III
Item 9. Directors and Executive Officers of the Registrant
The following table sets forth certain information with respect to each
of the Company's directors and executive officers.
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
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 Chief Executive Officer
</TABLE>
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 their full time to the Company's business.
Joseph Cutrona has served the Company as President and as a Director
since August 1995, and has served as President and as a Director 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 Gem Limousine, Edison, New Jersey, a provider
of limousine servies. 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 a Director since August 1995,
as Secretary since September 1995, and as Treasurer and Chief Financial Officer
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 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 as a
Director since August 1995. He has also served as Executive Vice President of
Travel Link from inception, March 1974 to November 1996 and as a Director since
inception. 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 and Chief Executive
Officer since December 1996. Since 1988, he has been a Managing Director at Loeb
Partners Corporation, a New York City investment banking firm and a member of
the New York and American Stock Exchanges. Mr. Bagatelle is also a director of
Energy Research
9
<PAGE>
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.
Item 10. 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>
Annual Compensation Long Term Compensation
Awards Payout
Other Restricted All
Annual StOptions LTIP Other
Name and Year Salary Bonus Compensation Awards /SAR's Payout Compensation
-------- ---- ------ ----- ------------ ------ ------ ------ ------------
Principal Position (Mgmt. Fee)
- ------------------
Joseph Cutrona 1996 $73,500 $0 $ 5,000 0 0 0 0
President
1995 $45,000 $0 $ 3,840 0 0 0 0
1995 $28,000 $0 $ 3,840 0 0 0 0
Mark A. Kenny 1996 $42,000 $0 $16,250 0 0 0 0
1995 $44,795 $0 $ 3,840 0 0 0 0
1995 $28,000 $0 $ 3,840 0 0 0 0
John H. Wasko 1996 $10,000 $0 $48,000 0 0 0 0
Chief Financial Officer,
Secretary& Treasurer 1995 $0 $0 $ 2,500 0 0 0 0
1995 $0 $0 $ 2,500 0 0 0 0
Warren D. Bagatelle 1996 $0 $0 $36,000(1) 0 0 0 0
Chief Executive Officer
1995 $0 $0 $0 0 0 0 0
1995 $0 $0 $0 0 0 0 0
</TABLE>
(1) Represents accrued but unpaid consulting fees to Loeb Partners Corporation
of which Warren D. Bagatelle is Managing Director.
Item 11. Security Ownership of Certain Beneficial Owners and Management
The following tabulation shows the security ownership as of December
31, 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 E. Pollan which the Company has given notice of
cancellation 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.
10
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
NUMBER OF PERCENT
NAME & ADDRESS SHARES OWNED OF CLASS
Loeb Holding Corporation
As Escrow Agent (1)
61 Broadway
New York, NY 10006 1,242,183 37.86%
Warren D. Bagatelle (2)
Loeb Partners Corporation
61 Broadway
New York, NY 10006 1,271,155 38.75%
Joseph Cutrona (5)
Genisys Reservation Systems
2401 Morris Avenue
Union, NJ 07083 611,133 18.63%
Mark A. Kenny (5)
10 Lisa Drive
Chatham, NJ 07928 646,133 19.70%
John H. Wasko (3) (4)
Genisys Reservation Systems
2401 Morris Avenue
Union, NJ 07083 176,206 5.37%
All Officers and Directors
as a group (4 persons) 2,704,627 82.44%
</TABLE>
(1) Includes 842,183 shares of Common Stock purchased by Loeb Holding
Corporation, as escrow agent for Warren D. Bagatelle, Managing Director of Loeb
Partners Corp., HSB Capital (of which Warren Bagatelle is a partner), trusts for
the benefit of families of two principals of Loeb Holding Corporation and three
unaffiliated persons and 400,00 shares of Common Stock issuable upon conversion
of two Convertible Notes aggregating $37,500. Loeb Holding Corporation disclaims
any beneficial interest in these shares.
(2) Includes 842,183 shares of Common Stock purchased by Loeb Holding
Corporation, as escrow agent for Warren D. Bagatelle, Managing Director of Loeb
Partners Corp., HSB Capital (of which Warren Bagatelle is a partner), trusts for
the benefit of families of two principals of Loeb Holding Corporation and three
unaffiliated individuals; 6,739 shares of Common Stock owned directly by Warren
D. Bagatelle; 2,233 shares of Common Stock owned directly by HSB Capital; 20,000
shares of Common Stock pledged by Joseph Cutrona to Warren Bagatelle as security
and 400,000 shares of Common Stock issuable upon conversion of two Convertible
Notes aggregating $37,500.
(3) Includes 29,383 shares of Common Stock 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 five (5) year option to purchase 25,000 shares of Common
Stock at a price of $0.60 per share granted to Mr. Wasko by the Company on
August 11, 1995, a five (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 shares of Common Stock issuable upon
conversion of two
11
<PAGE>
Convertible Notes aggregating $37,500.
(5) Does not give effect to 14,533 shares of Common Stock to be
transferred to Prosoft, Inc. Upon completion of the Genisys 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 and February 1995, Messrs.
Cutrona and Kenny each received their Common Stock in the Company for services
to be provided to the Company. For accounting purposes the value of these shares
was recorded at $7,840 for each individual. Mr. Pollan received his Common Stock
in August 1994 for services to have been provided to the Company. See "Certain
Transactions."
Item 12. Certain Relationships and Related Transactions
In August 1994, Joseph Cutrona and Mark A. 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 an officer and 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 Term Promissory Note is to be
repaid in twelve equal quarterly payments commencing September 1997. 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 of each
calendar quarter, or at such earlier date that the Term Promissory 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 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 commencing September 1997 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 option, acquired 70,520 shares of the Common Stock of the
Company at an exercise price of $0.02145 per share.
On March 3, 1995, the Company and JEC signed a purchase agreement
whereby JEC acquired all of the assets, rights and properties relating to the
Company's CO2 laser research and development agreement with LCL, subject to
certain liabilities, in full consideration for the forgiveness of the
indebtedness of the Company to JEC in the amount of $345,593 owed as of February
28, 1995.
On August 11, 1995, Robotic Lasers acquired Corporate Travel Link,
Inc. by issuing 1,682,924 shares
12
<PAGE>
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 authorized, issued and outstanding
shares of common stock of Corporate Travel Link.
In August 1995, the Company granted Mr. Wasko a five (5) year option to
purchase 25,000 shares of Common stock at a price of $0.60 per share and in
November 1996, granted Mr. Wasko a five (5) year option to purchase 35,000
shares of Common Stock at a price of $2.00 per share.
On September 5, 1995, the Company entered into a 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 Common Stock in this transaction.
The principal amount of the $237,500 Term Promissory Note is to be
repaid in twelve equal quarterly payments commencing December 1997. 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 Term Promissory 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
canceling the 333,216 shares of Common Stock which had been issued to him for
services to be provided by 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 quarters ended September 30, 1996, and December 31, 1996, in
order to raise additional working capital for the Company, Joseph Cutrona,
President of the Company, sold a total of 37,600 shares of restricted common
stock of the Company owned by him, to nineteen unaffiliated third parties at
prices ranging from $2.00 to $2.50 per share for total proceeds of $76,500 which
Mr. Cutrona remitted to the Company in the form of a capital contribution. In
February 1997, Mr. Cutrona sold an additional 9,850 shares of restricted Common
Stock to 7 unaffiliated third parties at a price of $2.00 per share for total
proceeds of $19,700, which Mr. Cutrona remitted to the Company in the form of an
additional capital contribution. Mr. Mark A. Kenny has agreed to use 23,725 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. The
Company has agreed to issue an equal number of new shares of restricted Common
Stock to Messrs. Cutrona and Kenny in six equal installments if the Company
meets certain performance criteria on six specified dates.
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 Genisys 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 owned to Prosoft, Inc. by the Company upon completion
of the Genisys Payment System.
13
<PAGE>
In October and November 1996, and February 1997, Joseph Cutrona, in
recognition of extensive valuable services rendered to the Company by three
employees of the Company, made gifts aggregating 35,000 shares of restricted
Common Stock owned by him to the three employees, including a gift of 20,000
shares of restricted Common Stock to John H. Wasko.
During November and December 1996, the Company and Loeb Holding
Corporation signed four eighteen (18) month Promissory Notes whereby Loeb
Holding Corporation loaned the Company the sums of $75,000, $30,000, $10,000 and
$95,000 (totaling $210,000). 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 a favorable to the Company as could have been obtained from
unaffiliated third parties.
Item 13. Exhibits, Financial Statement Schedules and Reports on Form 8-k
(a) (1) Financial Statements
Included in Part II of this report:
Balance Sheets - December 31, 1996 and 1995.
Statements of Operations During the Development Stage - For
the Period from Inception through December 31, 1996 and the
Years Ended December 31, 1996 and August 31, 1995, and for the
four months ended December 31, 1995.
Statements of Cash Flows - For the Period from Inception
through December 31, 1996 and for the Years Ended December 31,
1996 and August 31, 1995, and for the four months ended
December 31, 1995.
Statement of Changes in Stockholders' Equity - For the Years
Ended December 31, 1996 and August 31, 1995, and for the four
months ended December 31, 1995.
Notes to Financial Statements
(2) Financial Statements Schedules
There are no schedules which are applicable or required to be
filed for the three years ended December 31, 1996 and 1995 and
August 31, 1995 and for the four months ended December 31,
1995.
(3) Exhibits
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
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 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.
14
<PAGE>
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.
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 and certain executives of the Registrant.
10.14 Prosoft Consulting Agreement
21 List of Subsidiaries
All of the above-referenced documents, with the exception of the Rule 424(b)
Prospectus, are incorporated herein by reference to the Exhibit bearing the same
number in the Registrant's Registration Statement on Form SB-2, File No.
333-15011.
(b) (1) Reports on Form 8-K
The following report relating to the fiscal year ended
December 31, 1996 was filed:
None
14
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Page
Independent Auditors' Report...................................................................................... F-2
Consolidated Financial Statements:
Consolidated Balance Sheet at December 31, 1996................................................................ F-3
Consolidated Statements of Operations for the Year Ended December 31, F-4
1996, 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 December 31, 1996......................................................................
Consolidated Statements of Changes in Stockholders' Equity (Deficiency) F-5
for the Year Ended December 31, 1996, the Four Months Ended December 31,
1995, and Year Ended August 31, 1995........................................................................
Consolidated Statements of Cash Flows for the Year Ended December 31, F-6
1996, 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 December 31 ,1996......................................................................
Notes to Consolidated Financial Statements..................................................................... F-7 to
F-14
</TABLE>
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, 1996 and the related consolidated
statements of operations, changes in stockholders' equity and cash flows for the
year ended December 31, 1996, the four months ended December 31, 1995, the year
ended August 31, 1995, and for the period from March 7, 1994 (commencement of
development stage activities) to December 31, 1996. 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, 1996 and the results of their
operations and their cash flows for the year ended December 31, 1996, the four
months ended December 31, 1995, the year ended August 31, 1995 and for the
period from March 7, 1994 (commencement of development stage activities) to
December 31, 1996, 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
January 31, 1997 (except as to the waiver of default described in Note 3, for
which the date is February 21, 1997)
F-2
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARY
(Formerly Robotic Lasers, Inc.)
(A Development Stage Company) CONSOLIDATED BALANCE SHEET DECEMBER 31, 1996
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS:
Cash.......................................................................................... $91,548
Prepaid expenses.............................................................................. 1,081
Total Current Assets.................................................................. $92,629
PROPERTY AND EQUIPMENT, LESS ACCUMULATED DEPRECIATION OF
$65,102.................................................................................... 235,285
OTHER ASSETS:
Computer software costs, less accumulated amortization of
$35,215.................................................................................... 312,171
Deferred offering costs....................................................................... 153,210
Debt issue costs, less accumulated amortization of $10,957.................................... 45,393
Deposits and other............................................................................ 64,910
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Current maturities of long-term debt.......................................................... $161,282
Accounts payable and accrued expenses......................................................... 304,490
Due to related parties........................................................................ 29,652
Accrued interest payable - related parties.................................................... 95,748
Accrued consulting fees - related parties..................................................... 101,500
Total Current Liabilities............................................................. $692,672
LONG-TERM DEBT:
Long-term debt, less current maturities....................................................... 1,009,757
10% Promissory notes payable.................................................................. 563,500
Convertible notes payable..................................................................... 30,000
Total Liabilities..................................................................... 2,295,929
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;
3,280,594 shares issued and outstanding.................................................... 328
Additional paid-in capital.................................................................... 252,344
Deficit accumulated during development stage.................................................. (1,645,003)
Total Stockholders' Equity (Deficiency)............................................... (1,392,331)
</TABLE>
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
Year Four Months Year (Commencement of
Ended Ended Ended Development
December 31, December 31, August 31, Stage Activities) to
1996 1995 1995 December 31, 1996
REVENUES AND EXPENSES DURING
THE DEVELOPMENT STAGE:
Revenues.................................. $ - $ - $ - $ -
Expenses:
General and
administrative....................... 819,205 250,454 256,621 1,357,696
Depreciation and
amortization......................... 97,721 18,453 240 116,508
Interest expense....................... 134,277 24,303 12,219 170,799
NET LOSS INCURRED DURING THE
DEVELOPMENT STAGE......................... $(1,051,203) $(293,210) $(269,080 $(1,645,003)
NET LOSS PER COMMON SHARE.................... $(.36) $(.11) $(.16) $(.74)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING................. 2,904,482 2,594,503 1,694,611 2,230,821
</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
Paid-in Development
Total Shares Par Value Capital Stage
Common Stock
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)
BALANCE, AUGUST 31, 1995........................ (295,077) 1,963,411 196 5,317 (300,590)
PERIOD ENDED DECEMBER 31, 1995:
Conversion of related party
debt into term note and
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)
YEAR ENDED DECEMBER 31, 1996:
Issuance of common stock:
For cash.................................. 110,000 55,000 6 109,994 -
For conversion of
stockholder note into
term note and common
stock................................... 6,703 420,728 42 6,661 -
Contribution to capital by
stockholder/officer....................... 76,700 - 76,700 -
Issuance of warrants, less
related costs of $1,150................... 10,350 - 10,350 -
Common stock (15,000 shares)
transferred to certain
employees by a stockholder
in consideration of
services rendered......................... 30,000 - - 30,000 -
Net loss..................................... (1,051,203) - - (1,051,203)
BALANCES, DECEMBER 31, 1996..................... $(1,392,331) 3,280,594 $328 $252,344 $(1,645,003)
</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
March 7, 1994
Four Months Year (Commencement
Year Ended Ended Ended of Development
December 31, December 31, August 31, Stage Activities) to
1996 1995 1995 December 31, 1996
CASH FLOWS FROM OPERATING
ACTIVITIES:
$(1,051,203) $(293,210) $(269,080) $(1,645,003)
Net loss.....................................
loss to net cash flows from
operating activities:
Depreciation and
amortization............................ 97,721 18,453 240 116,508
Contribution of services
rendered to capital..................... 30,000 - 9,600 49,600
Changes in operating assets
and liabilities:
Prepaid expenses........................ (378) 3,031 (3,734) (1,081)
Other assets............................ (38,162) 218,053 (243,255) (65,564)
Accounts payable and
accrued expenses..................... 365,630 27,649 94,372 487,651
Net cash flows from
operating activities.............. (596,392) (26,024) (411,857) (1,057,889)
CASH FLOWS FROM INVESTING
ACTIVITIES:
Acquisition of equipment and
software.................................. (327,999) (319,774) - (647,773)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Loans and advances from
related parties........................... 10,526 7,506 (12,001) 29,652
Proceeds from issuance of
notes payable............................. 305,000 215,000 435,000 955,000
Payments under computer
equipment leases.......................... (53,352) (9,724) - (63,076)
Proceeds from sale and
lease-back................................ 150,162 144,482 - 294,644
Proceeds from issuance of
convertible notes......................... 30,000 - - 30,000
Proceeds from sale of common
stock..................................... 110,000 - - 110,000
Contribution to capital -
stockholder/officer....................... 76,700 - - 76,700
Proceeds from issuance of 10%
promissory notes and
related warrants.......................... 575,000 - - 575,000
Costs paid upon issuance of
promissory notes and
warrants.................................. (57,500) - - (57,500)
Deferred offering costs...................... (153,210) - - (153,210)
Net cash flows from
financing activities.............. 993,326 357,264 422,999 1,797,210
NET CHANGE IN CASH.............................. 68,935 11,466 11,142 91,548
CASH, BEGINNING OF PERIOD....................... 22,613 11,147 5 -
CASH, END OF PERIOD............................. $91,548 $22,613 $11,147 $91,548
SUPPLEMENTAL CASH FLOW
INFORMATION:
Interest paid................................ $37,250 $8,426 $ - $45,676
Net liabilities assumed in
reverse acquisition....................... $ - $ - $14,087 $14,087
Conversion of related party
debt into common stock.................... $6,703 $13,406 $ - $20,109
</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 originally incorporated in April 1986 as JECO2
Lasers, Inc., changed its name to Robotic Lasers, Inc. in December 1987 and
further changed to its current name in July 1996. 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 then 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 developing
computerized limousine reservation and payment systems 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 expects
to commence generating revenue from operations during the fiscal year ending
December 31, 1997.
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.
Financial Instruments - Financial instruments include cash and
equivalents, other assets, accounts payable, accrued expenses and longterm 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.
F-7
<PAGE>
Note 1 - History of the Company, Nature of the Business and Summary of
Significant Accounting Policies: (Continued)
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,
1996, 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.
Deferred Offering Costs - Offering costs have been deferred, pending
the outcome of the offering contemplated herein. If the offering is successful,
these costs will be charged against additional paid-in capital, otherwise, they
will be charged to expense.
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.
Stock Options - The Company accounts for stock option grants using the
intrinsic value based method prescribed by APB Opinion No. 25. Since the
exercise price equalled or exceeded the estimated fair value of the underlying
shares at the date of grant, no compensation was recognized in 1996 and 1995.
Had compensation cost been based upon the fair value of the option on
the date of grant, as prescribed by Statement of Financial Accounting Standards
No. 123, the Company's proforma net loss and net loss per share would have been
approximately $(1,086,000) ($.37 per share) in 1996 and $(313,000) ($.12 per
share) for the period ended December 31, 1995, using the Black Sholes option
pricing model.
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
antidilutive, due to net losses for all periods presented.
Note 2 - Operating and Liquidity Difficulties and Management's Plans to
Overcome: The accompanying financial statements of the Company have been
presented on the basis that it is a going concern, which contemplates the
realization of assets and the satisfaction of liabilities in the normal course
F-8
<PAGE>
Note 2 - Operating and Liquidity Difficulties and Management's Plans to
Overcome: (continued)
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. The development of both the
reservation and payment systems have been
completed and are currently undergoing testing. No assurance can be given that
the Company's reservation and payment system will achieve commercial
feasibility.
The Company's working capital and its capital requirements will depend
upon numerous factors, including, without limitation, the progress of the
Company's system development and testing, 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 and testing, cover anticipated losses and sustain
operations in 1997 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 Company's ability to bring the reservation and
payment systems on-line.
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 - Long-term Debt: Notes Payable - Stockholder - In February
1995, the Company signed an agreement with a then unrelated 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 841,455
shares had been contributed back to the Company by its original stockholders 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 ($13,406) have been recorded based upon
their 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
F-9
<PAGE>
Note 3 - Long term Debt: (continued)
quarterly) and is convertible at the sole option of the note holder into 266,667
shares of common stock of the Company. 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. In November 1996, the stockholder converted
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. The common stock
issued upon conversion and the related debt discount ($6,703) have been recorded
based upon their estimated fair values and that of the notes. The $237,500 note
is to be repaid in 12 equal quarterly installments commencing two (2) years from
the date of such note. The $12,500 note is convertible into 133,333 shares of
common stock of the Company. 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 totalled $750,000 at December 31,
1996 and accrued interest was $94,003. The Company has not paid any interest
under these loan
agreements to date. In February 1997, the stockholder agreed that interest
payments on its notes, which are currently in default, would be deferred until
September 1997. The stockholder also waived any defaults on the notes through
February 1997.
Notes Payable - Related Party - During November and December 1996, the
Company and the investment banking firm described in Note 4 signed four 18 month
Promissory Notes whereby the investment banking firm loaned the Company a total
of $210,000, of which $205,000 was received by December 31, 1996. Such Notes
bear interest at 10% and mature in May and June 1998. Accrued interest totalled
$1,745 at December 31, 1996.
Capital Leases - In September 1995, January 1996 and December 1996, the
Company entered into sale and lease-back arrangements whereby the Company sold
the bulk of its computer hardware and commercially purchased software to a
lessor for amounts totalling $295,000 and agreed to lease back such equipment
for initial terms ranging from 24 to 30 months. The obligations under these
leases at December 31, 1996 are summarized as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Imputed
Interest
Description Rate
Capital leases payable in monthly installments
totalling $11,960 through various expiration dates,
collateralized by the computer equipment and 25.4% to
software.......................................................................26.6% $321,670
Less: Amount representing interest................................................ 90,102
------------
Present value of minimum lease payments........................................... 231,568
Less: Current maturities.......................................................... 88,515
F-10
<PAGE>
Note 3 - Long Term Debt: (Continued)
A summary of long-term debt follows:
Notes payable - stockholder, less unamortized debt discount
of $15,529............................................................................... $734,471
Notes payable - related party............................................................... 205,000
Capital leases.............................................................................. 231,568
1,171,039
Less: Current maturities.................................................................... 161,282
Long-term debt matures as follows:
Year Ending December 31,
1997........................................................................................ $161,282
1998........................................................................................ 465,557
1999........................................................................................ 296,259
2000........................................................................................ 186,045
2001........................................................................................ 61,896
---------------
</TABLE>
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 4 - Commitments: Leases - 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 $26,000, $7,000, $14,000 and $54,000 for the year
ended December 31, 1996, 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 December 31, 1996, respectively.
Employment Agreements - The Company entered into employment agreements
with its President in September 1995 (modified in October 1996), and with its
Secretary/Treasurer in October 1996. The agreements provide for aggregate annual
compensation of $125,000 effective October 1996 and $180,000 effective January
1997, until modified by the Company.
Consulting Agreements - 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 Company's common stock at a negotiated price of
F-11
<PAGE>
Note 4 - Commitments: (Continued)
$3.75/share. The shares are to be transferred by two stockholders and,
accordingly, will be considered a contribution to capital. The Company has
agreed to issue an equal number of new shares of restricted common stock to such
stockholders in six equal installments, if the Company meets certain performance
criteria on six specified dates.
The Company entered into a consulting agreement in October 1996 with a
director, who formerly served as the Company's Executive Vice- President. The
agreement provides for monthly consulting fees of $6,500 through February 1997
and $8,400 per month thereafter, until modified by the Company. Fees accrued
during 1996 pursuant to this agreement totalled $16,000.
In September 1995, the Company entered into a three year consulting
agreement with an investment banking firm whose managing director is a
stockholder and the Chairman of the Board of Directors of the Company. The
agreement provides for a consulting fee of $3,000 per month. During 1996, fees
totalled $36,000 and are included in accrued consulting fees at December 31,
1996. Also included in accrued consulting fees is $49,500 of fees for consulting
services provided to the Company in 1996 by its current Chief Financial Officer.
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 $600,000 at December 31,
1996.
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, 1996.
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:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Year Ended Period Ended Year Ended
December 31, December 31, August 31,
1996 1995 1995
Computed tax benefit on net loss at federal $(347,000) $(99,000) $(91,000)
statutory rate.............................................................
State income tax benefit, net of federal income tax (61,000) (17,000) (16,000)
effect.....................................................................
Tax effect of net operating losses not currently 408,000 116,000 107,000
usable.....................................................................
Provision (benefit) for income taxes.......................................... $- $- $-
</TABLE>
At December 31, 1996, the Company had net operating loss carryforwards
of approximately $1,600,000 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-12
<PAGE>
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.
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. In November 1996, the Company sold 25,000 shares of the Company's
restricted common stock to another unaffiliated party for $50,000.
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 as 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 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.
Cancellation of Shares - 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-13
<PAGE>
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 November 1996, the Company granted an option
to purchase 35,000 shares of its common stock to the same officer exercisable at
$2.00 per share through November 2001.
These warrants were immediately exercisable and fully vested.
In connection with the leases described in Note 3, the Company granted
to the lessor warrants to purchase a 22,098 shares of common stock at an
exercise price of $2 per share.
Contribution to Capital - During the year ended December 31, 1996, in
order to raise additional working capital, the Company's President sold 37,600
shares of restricted common stock of the Company owned by him to nineteen
unaffiliated third parties at prices ranging from $2.00 to $2.50 per share for
total proceeds of $76,700. Such proceeds were remitted to the Company in the
form of a capital contribution. The Company's former Executive Vice President,
has agreed to use his own shares of restricted common stock of the Company to
reimburse the Company's President for one-half of the number of shares he sold.
Note 7 - Subsequent Event (Unaudited): Contingency - On February 20,
1997, two individuals filed an action against the Company and Travel Link in the
Superior Court of New Jersey seeking, among other things, damages in the amount
of 8% of any financing secured by Travel Link resulting from the plaintiff's
efforts as well as 5% of the Company's Common Stock allegedly due for services
rendered in connection with the Company's acquisition of Travel Link in 1995.
The claim for monetary damages is based upon a written agreement between Travel
Link and plaintiffs while the claim for the shares of the Company's Common Stock
is based upon alleged oral representations and promises made by an officer of
Travel Link. Management believes that the plaintiffs have not introduced any
financings to the Company and intends to vigorously defend the action. No
assurances can be given that the Company will prevail in this matter.
F-14
<PAGE>
SIGNATURES
Pursuant to requirements of Section 13 or 15(d) of the
Securities Act of 1934, the Registrant has duly caused this Annual Report and
any subsequent amendments thereto to be singed on its behalf by the undersigned,
thereunto duly authorized.
March 31, 1997
GENISYS RESERVATION SYSTEMS, INC.
(formerly Robotic Lasers, Inc.)
/s/ Joseph Cutrona
President and Director
Pursuant to the requirements of the Securities Act of 1934, this Report
has been signed below by the following persons in their respective capacities
with the Registrant and on the dates indicated.
/s/ John H. Wasko
John H. Wasko
Secretary, Treasurer and
Principal Financial Officer
<PAGE>
SIGNATURES
Pursuant to requirements of Section 13 or 15(d) of the
Securities Act of 1934, the Registrant has duly caused this Annual Report and
any subsequent amendments thereto to be singed on its behalf by the undersigned,
thereunto duly authorized.
March 31, 1997
GENISYS RESERVATION SYSTEMS, INC.
(formerly Robotic Lasers, Inc.)
/s/ Joseph Cutrona
President and Chairman
Pursuant to the requirements of the Securities Act of 1934, this Report
has been signed below by the following persons in their respective capacities
with the Registrant and on the dates indicated.
/s/ John H. Wasko
John H. Wasko
Secretary, Treasurer and
Principal Financial Officer
