PRELIMINARY COPY
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 (the "Corporation" or "Company"), will be held on
________,June ______, 1999, at 11:00 a.m. local time, at the offices of the
Corporation 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 seven (7) directors as recommended by the Board
of Directors.
2. Ratification of the acquisition of a technology license
and certain related assets from United Internet
Technologies, Inc.(formerly known as United Leisure
Interactive, Inc.,) and the approval of the issuance of
1,100,000 shares of Common Stock and two Warrants, each
in the amount of 800,000 shares, to United Internet
Technologies, Inc., as recommended by the Board of
Directors.
3. Ratification of the sale of the Limousine Reservation System
business to Gen O2, Inc., a newly organized corporation formed
by Mark A. Kenny, a former Director and founder of the
Company, as recommended by the Board of Directors.
4. Approval of an amendment to the Corporation's Certificate of
Incorporation to change the name of the Corporation to
netcruise.com, inc., as recommended by the Board of Directors.
5. Approval of an amendment to the Corporation's Certificate of
Incorporation to restate the provisions of the Corporation's
authorized Preferred Stock to correct certain inconsistencies,
as recommended by the Board of
Directors.
6. Ratifying the appointment of independent auditors to examine
and report on the financial statements of the Corporation for
fiscal 1998 and fiscal 1999, as recommended by the Board of
Directors.
7. Transacting any other business that may properly come before
the meeting or any adjournment thereof.
<PAGE>
All stockholders of record at the close of business on__________ 1999, are
entitled to notice of and to vote at the meeting.
Dated: ____________, 1999
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>
PRELIMINARY COPY
ANNUAL MEETING OF STOCKHOLDERS
OF
GENISYS RESERVATION SYSTEMS, INC.
June __, 1999
-----------------
PROXY STATEMENT
-----------------
GENERAL INFORMATION
Proxy Solicitation
This Proxy Statement is furnished to the holders of common
stock, $.0001 par value per share ("Common Stock") and Series A Preferred Stock
("Series A Preferred 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
tockholders ("Annual Meeting") to be held on June __, 1999, 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 ay ___, 1999 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 the Annual Meeting 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. Such consents or revocations
can be submitted by facsimile to 1-908-810-8769. 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 acquisition of a technology license and
certain related assets from United Internet Technologies, Inc. formally known as
United Leisure Interactive, Inc. ("UIT") and the approval of the issuance of
1,100,000 shares of Common Stock and two Warrants, each to purchase 800,000
shares of Common Stock of the Company, to UIT as described in Proposal No. 2,
"FOR" the ratification of the sale of the Limousine Reservation System
<PAGE>
business to GEN O2, Inc., a newly organized company formed by Mark A. Kenny, a
former director and founder of the Company, as described in Proposal No. 3,
"FOR" the approval of an amendment to the Company's Certificate of Incorporation
to change the name of the Company to netcruise.com, inc. as described in
Proposal No. 4, "FOR" the approval of an amendment to the Company's Certificate
of Incorporation to amend and restate the provisions of the Company's authorized
Common and Preferred Stock to correct certain inconsistencies as described in
Proposal No. 5 and "FOR" the ratification of the appointment of Auditors as
described in Proposal No. 6. Proxies marked as abstaining will be treated as
present for purposes of determining a quorum for 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 May
__, 1999 are entitled to notice of and to vote at the Annual Meeting or any
continuation or adjournment thereof. On that date there were 6,749,068 shares of
the Company's Common Stock and 381,177 shares of the Company's Series A
Preferred Stock outstanding. Each share of Common and Series A Preferred Stock
is entitled to one vote per share. Any share of Common or Series A Preferred
Stock held of record on May ___, 1999 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 votes cast by the stockholders present in person or by proxy at the
meeting and entitled to vote thereon is required for the election of the
directors, to ratify the acquisition of a technology license and certain related
assets from UIT and approve the issuance of 1,100,000 shares of Common Stock and
two Warrants, each to purchase 800,000 shares of the Company's Common Stock, to
UIT and to ratify the sale of the Limousine Reservation System business to GEN
O2, Inc., a newly organized company formed by Mark A. Kenny, a former director
and founder of the Company, to approve an amendment to the Company's Certificate
of Incorporation to change the name of the Company to netcruise.com, inc., to
approve an amendment to the Company's Certificate of Incorporation to restate
the provisions of the Company's authorized Common and Preferred Stock to correct
certain inconsistencies and to ratify the appointment of auditors.
In the event that a stockholder does not designate his or her broker to
vote in their place, brokers may be precluded from exercising their voting
discretion with respect to certain matters to be acted upon and thus, in the
absence of specific instructions from the beneficial owner of the shares, will
not be empowered to vote the shares on such matters and therefore will not be
counted in determining the number of shares necessary for approval. Shares
represented by such broker non- votes will, however, be counted for the purpose
of determining whether there is a quorum. The brokers will only be allowed to
vote for the election of Directors and the ratification of the appointment of
independent auditors. Since broker non-votes are not counted, it could be more
difficult to obtain the required approval to ratify the acquisition of a
technology license and certain related assets from UIT and to approve the
issuance of 1,100,000 shares of Common Stock and two Warrants, each to purchase
800,000 shares of the Company's Common Stock, to UIT and to ratify the sale of
the Limousine Reservation System business to GEN O2, Inc., a newly organized
company formed by Mark A. Kenny, a former director and founder of the Company,
to approve an amendment to the Company's Certificate of Incorporation to change
the name of the Company to netcruise.com, inc., and to approve an amendment to
the Company's Certificate of Incorporation to
<PAGE>
restate the provisions of the Company's authorized Common and Preferred Stock to
correct certain inconsistencies.
Directors and officers of the Company and certain other Shareholders
holding approximately 36.5% of the outstanding Common Stock (including UIT) and
all of the Series A Preferred Stock of the Company intend to vote "FOR" the
slate of directors, "FOR" the ratification of the sale of the Limousine
Reservation System business to GEN O2, Inc., a newly organized company formed by
Mark A. Kenny, a former director and founder of the Company, "FOR" the approval
of an amendment to the Company's Certificate of Incorporation to change the name
of the Company to netcruise.com, inc., "FOR" the approval of an amendment to the
Company's Certificate of Incorporation to restate the provisions of the
Company's authorized Common and Preferred Stock to correct certain
inconsistencies and "FOR" the ratification of the appointment of auditors.
Certain Directors and Officers of the Company and certain other shareholders
holding approximately 23.2% of the outstanding Common Stock (excluding UIT) and
all of the Series A Preferred Stock of the Company intend to vote "FOR"the
ratification of the acquisition of a technology license and certain related
assets from UIT and the approval of the issuance of 1,100,000 shares of Common
Stock and two warrants, each to purchase 800,000 shares of the Company's Common
Stock, to UIT.
Forward Looking Statements
When used in this Proxy Statement, the words "may," "will,"
"expect," "anticipate," "continue," "estimate," "project," "intend" and similar
expressions are intended to identify forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E
of the Securities Exchange Act of 1934, as amended regarding events, conditions
and financial trends that may affect the company's future plans of operations,
business strategy, operating results and financial position. Shareholders are
cautioned that any forward-looking statements are not guarantees of future
performance and are subject to risks and uncertainties and that actual results
may differ materially from those included within the forward-looking statements
as a result of various factors.
Advantages and Disadvantages of Approval of Proposals
Proposal No. 2: Ratification of the acquisition of a technology license and
certain related assets from United Internet Technologies, Inc. and approval of
the issuance of 1,100,000 shares of Common Stock and two stock purchase warrants
to United Internet Technologies, Inc.
The Company believes that the ratification of the acquisition of a
technology license and certain related assets from UIT and approval of the
issuance of 1,100,000 shares of Common Stock and the two warrants to UIT is in
the best interest of the Company, as the expected growth rate of the internet
travel business is anticipated to be faster than that for the limousine
reservations systems business. Management is of the opinion that the costs to
develop the new line of business is less than the costs required to maintain the
limousine reservation business until such time as revenues will be able to cover
the costs of operation. Further, it is management's opinion that the internet
travel business will provide, on a long term basis, a greater return to
shareholders.
Disadvantages to Proposal No. 2 include a lack of operating history with
respect to the software relating to the internet travel business. Although
management expects web-site development to continue through mid-1999, the
internet web-site is
<PAGE>
currently operational and independent travel consultants can view videos and
book car, air and hotel reservations directly through the web-site as well as
research vacation packages and cruise itineraries. The Company's independent
travel consultants are currently not able to book vacation and cruise packages
in an automated fashion through the web-site. In order to make these types of
reservations, the independent travel consultant is instructed to contact the
Company's service center, (operated through Sammy's Travel World, a wholly owned
subsidiary of the Company) via toll-free telephone, fax or e-mail, whereby a
live NetCruise travel agent will then make the vacation or cruise reservation.
The Company intends to continually enhance its technology to automate the
booking process for cruise and vacation reservations through its web-site. There
can be no assurance, though, that the Company will be able to achieve the
technological advancements necessary to automate the booking of cruise and
vacation reservations.
At the present time the Company only has a limited number of
individuals who have subscribed to be independent travel consultants . It is
important to note that the Company's customers consists of the independent
travel consultants as well as the clients of the independent travel consultants
for whom travel is booked. The Company initially acquired 280 independent travel
consultants as a result of the Company's acquisition of the assets of Sterling .
The Company is honoring the agreements the independent travel consultants made
with Sterling which were in place at the time the Company purchased Sterling's
assets. The subscription fees charged by the Company are significantly less than
those which had been charged by Sterling, although the renewal fees are the
same. This is true even though NetCruise will be providing additional services
not offered by Sterling, such as automated web-site booking capability and video
technology. As the independent travel consultants subscription agreements come
up for renewal, there is no guarantee that the independent travel consultants
will renew their agreements with the Company. Additionally, although the Company
believes that its national marketing campaign will be successful in the
recruitment of new independent travel consultants, there can be no assurance of
the effectiveness of the campaign.
The budgeted cost of the internet travel business becoming operational
is expected to be approximately $1,342,000. Of such amount, approximately
$198,000 was allocated to complete the development of the web site. The
remainder will be used to produce a television video infomercial and purchase
media time. The Company believes it will be able to finance such development
substantially from proceeds of a recent private placement in the amount of
$1,500,000, but there can be no assurance that such funds will be sufficient. In
the event the Company decides to purchase significant amounts of media time for
the television infomercial, it will need to raise additional funds. No assurance
can be made that the Company will be able to raise such funds.
Initially, revenues from the web-site will be derived from
subscriptions from the independent travel consultants along with commissions
from bookings shared with the independent travel consultants. As the Company
develops it believes that the majority of the it's revenue will be derived from
commissions earned from the sale of travel through the independent travel
consultants. The Company's business model is built around the sharing of
commissions with the independent travel consultants generated from travel
industry
<PAGE>
vendors such as airlines, hotels, car rental companies, resort properties, tour
operators and cruise lines. The Company believes that commission sharing with
the independent travel consultant, which ranges from 50% to 60% of the
commissions received by NetCruise is a key enticement for individuals to
subscribe to become independent travel consultants. The subscription and annual
renewal fee for all independent travel consultants, including the former
Sterling Travel Consultants, is currently $95.00. While the Company believes it
will benefit from its portion of the commission revenues generated, it also
believes that significant revenues will be derived from other key areas such as
annual subscription fees from its independent travel consultants, advertising
through its web-site and incentive arrangements with travel vendors and travel
related product vendors (in addition to its share of the standard travel
commissions). However, a significant change in the prevailing commission
structure in the travel industry could have a detrimental effect on the
Company's ability to attract and retain independent travel consultants and to
benefit from the other revenue sources listed above, which are substantially
created through this core distribution system.
In the event shareholders do not ratify the acquisition of a technology
license and certain related assets from UIT and approve the issuance of
1,100,000 shares of the Company's Common Stock to UIT and two warrants, each to
purchase 800,000 shares of the Company's Common Stock, the Company intends to
continue its entry into the internet travel business either by negotiating a
licensing agreement with UIT for the use of its technology license and certain
related assets or by utilizing alternative technologies. In the event that
Proposal No. 2 is not approved by the Shareholders and Proposal No. 3 is
approved by the Shareholders, the Company will not own the limousine reservation
business but will continue to expand into the internet travel business.
Proposal No. 3: Ratification of the sale of the limousine reservation
system business to GEN O2, Inc., a newly organized corporation formed by Mark A.
Kenny, a former director and founder of the Company.
Management of the Company set revenue objectives for the limousine
reservation business and made the decision to review the operation at the end of
the third quarter 1998 to determine the best approach to maximize utilization of
the Company's resources. The limousine reservation business did not meet its
revenue objectives and in early September 1998, the Company decided to seek a
buyer or joint venture partner for its limousine reservation business.
In addition, although the Company had begun to generate revenues, the
Company found that many limousine providers were resisting the payment of
commissions or fees in connection with bookings on the Company's system until
such time as the potential benefits of the Company's system could be better
quantified. This resulted in a much slower development of revenues for the
Company than was originally anticipated. Management estimated the cost of
operations for a more extended period of time and determined that the Company's
available funds would be better spent in other areas of the travel business.
Management has determined that the funds needed to develop the internet travel
business would be less than those required to bring the limousine business to
full operation. It therefore determined to expand into the internet travel
business. As a result, if the shareholders approve the acquisition of the
technology license and certain related assets from UIT and the sale of the
limousine reservation business, the effect to shareholders is a fundamental
change
<PAGE>
in the nature of the business of the Company from the limousine reservation
business to an internet travel business.
Disadvantages to ratification of Proposal No. 3 include the fact that
as part of the sale, the Company will be retaining a 32.66% interest in GEN 02,
Inc. and will be loaning to GEN 02, Inc. a $135,000 installment loan and a
$40,000 bridge loan. The TranspoNet Companies, Inc. ("TranspoNet") another
32.66% shareholder of GEN 02, Inc., is providing, commencing December 10, 1998,
$20,000 per month to GEN 02, Inc., for an aggregate of $240,000. TranspoNet is
not affiliated with the Company or any of its shareholders. The primary
capitalization of GEN 02, Inc., is being provided by the loans from the Company
and TranspoNet. In addition, the sole asset of GEN 02, Inc. is the limousine
reservation business. As a result, the Company will absorb all losses to the
extent of the assets transferred ($744,122). Although there are no minimum
contingent payments, the Company has begun to receive minimal contingent
payments from GEN 02, Inc., consisting of two payments totaling $3,656.20.
However, it is possible that the Company will not receive significant contingent
payments from GEN 02, Inc. over the 5 year period. Shareholders should note that
they are being asked to ratify the sale of the limousine business to GEN 02,
Inc., a company newly organized by Mark A. Kenny, who is a former director of
the Company. The sale of the limousine reservation business was negotiated with
GEN 02, Inc. while Mr. Kenny was still a director of the Company, although he
did not participate in the directors analysis and decision to sell the business
to GEN 02, Inc.
In the event that shareholders do not approve Proposal No. 3, the
Company will be required to either find another purchaser of the limousine
reservation business or raise additional capital to bring the limousine
reservation business to full operation. No assurance can be given that the
Company will be able to raise such funds.
Proposal No. 4: To amend Article First of the Company's Certificate of
Incorporation.
Since the Company proposes to fundamentally change its business from
that of the limousine reservation business to an internet travel business, the
Company determined that it would be appropriate to change the name of the
Company to more properly reflect this. Management does not believe that there
are any significant disadvantages to changing the name to netcruise.com, inc.
The advantages to approving the amendment to the Company's Certificate of
Incorporation to change the name of the Company to netcruise.com, inc. is that
the Company's name will be more identified with that of its operating business.
Proposal No. 5: To amend Article Fourth of the Company's Certificate of
Incorporation.
The advantages of amending the Company's Certificate of Incorporation
to restate the provisions of the Company's authorized Common and Preferred Stock
as described in Proposal No. 5 is that the Certificate of Incorporation will
become clearer because certain inconsistencies existing in the previous revision
will be corrected.
<PAGE>
If shareholders do not approve the change in the amended Certificate of
Incorporation, it may be difficult for the Company to utilize the authorized
preferred shares for acquisitions, financing, and other proper corporate
purposes.
If shareholders do not approve the name change or the amendment to the
Company's Certificate of Incorporations restating the provisions of the common
and preferred stock, managements present intention is to leave the name of the
Company and the Certificate of Incorporation as they now are.
<PAGE>
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<S> <C> <C> <C> <C> <C> <C>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARIES
(Development Stage Companies)
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, 1999
(Unaudited)
The following statements are based upon the historical balance sheet of the
Company appearing elsewhere herein to show the effect on the Company's balance
sheet if the shareholders approve or do not approve (1) the issuance of
1,100,000 shares of Series B Convertible Preferred Stock which automatically
converts into 1,100,000 shares of Common Stock and the related ratification of
the Acquisition of software, a technology license and related assets from United
Internet Technologies, Inc. ("UIT Transaction") and (2) the ratification of the
exchange of the Company's limousine reservation business for a noncontrolling
interest in Gen 02, Inc. ("Gen 02 Transaction"). Reference should be made to
Note 3 to the Company's financial statements appearing in the Company's Form
10-KSB for the year ended December 31, 1998 for additional information. These
statements should be read in conjunction with the Company's financial statements
and notes thereto appearing elsewhere herein.
Assumin
g
Assumin Shareholde
g rs
Sharehold Approve Assuming
ers
Approve Gen 02 Sharehold
UIT ers
Assuming Transact Transacti Do Not
ion on
Shareholders But Not the But Not the Approve
Approve Both Gen 02 UIT Either
ASSETS Transactions Transaction Transaction Transaction
(Note A) (Note B) (Note C) (Note D)
Current assets $ $ $ $
166,597 238,355 166,597
======= ======= =======
238,355
Investment in, and advances to, Gen 02, Inc. - 547,184 -
547,184
Property and equipment 294,326 112,429 294,326
112,429
Computer software and related assets 2,769,230 203,014 644,230
2,328,014
<PAGE>
Other assets 116,278 77,303 116,278
----- ----- ---- ------
--------- -- -- -
77,303
$3,231,527 $3,418,189 $1,106,527 $1,293,189
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities $ $ $ $
603,295 749,957 653,295 799,957
======= ======= ======= =======
Long-term debt 121,250 81,250 121,250
81,250
Stockholders' equity 2,546,9 371,98 371,98
82 2 2
2,546,982
$3,231,52 $3,418,18 $1,106,527 $1,293,18
7 9 9
Note A - Represents the historical balance sheet at March 31, 1999, as both
transactions were recorded as completed transactions
.
Note B - Reflects the consolidation of Gen 02, Inc.'s balance sheet appearing in
Note 6 to the March 31, 1999 Form 10-Q and the elimination of intercompany
balances.
Note C - Reflects the elimination of the $2,125,000 book value of the assets
acquired from UIT at March 31, 1999, the related $2,500,000 value ascribed to
the common stock issued and accumulated depreciation and amortization of
$375,000. In addition, the estimated costs of $50,000 to unwind the UIT
transaction have
<PAGE>
been accrued
.
Note D - Reflects both the consolidation and elimination entries described in
Notes B and C.
<PAGE>
GENISYS RESERVATION SYSTEMS, INC. AND SUBSIDIARIES
(Development Stage Companies)
PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 1999
(Unaudited)
The following statements are based upon the historical consolidated statement of
operations of the Company appearing elsewhere herein to show the effect on the
Company's statement of operations if the shareholders approve or do not approve
(1) the issuance of 1,100,000 shares of Series B Convertible Preferred Stock
which automatically converts into 1,100,000 shares of Common Stock and the
related ratification of the acquisition of software, a technology license and
related assets from United Internet Technologies, Inc. ("UIT Transaction") and
(2) the ratification of the exchange of the Company's limousine reservation
business for a noncontrolling interest in Gen 02, Inc. ("Gen 02 Transaction").
Reference should be made to Note 3 to the Company's financial statements
appearing in the Company's Form 10-KSB for the year ended December 31, 1998 for
additional information. These statements should be read in conjunction with the
Company's financial statements and notes thereto appearing elsewhere herein.
Assuming
Assuming Shareholder
s
Sharehold Approve Assuming
ers
Approve Gen 02 Shareholde
UIT rs
Assuming Transacti Transacti Do Not
on on
Shareholders But Not the But Not the Approve
Approve Both Gen 02 UIT Either
Transactions Transaction Transaction Transaction
(Note A) (Note B) (Note C) (Note D)
SERVICE REVENUES $ $ $ $
------------ -----------
80,533 153,439 80,533 153,439
====== ======= ====== =======
EXPENSES:
Cost of services 53,859 31,299 53,859
31,299
General and administrative 726,008 584,204 726,008
584,204
Depreciation and amortization 324,510 96,658 199,510
221,658
<PAGE>
Interest expense (income), net (81 (81 (818
----
8) 8) )
----
(
818)
836,34 1,103,55 711,34 978,559
------ -------
3 9 3
-
LOSS BEFORE EQUITY IN GEN 02, INC. (950,120) (630,810) (825,120)
(755,810)
EQUITY IN LOSS OF GEN 02, INC. - (194,31 -
-------- ------ ------- -
0)
----- -
(194,310)
NET LOSS INCURRED DURING THE
DEVELOPMENT STAGE $ $ (950,120 $ (825,12 $ (825,120)
===========
) 0)
==
(950,120
)
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 7,282,80 5,282,80 5,282,802
===========
2 2
=========
7,282,802
BASIC AND DILUTED LOSS
PER $ $(.13) $(.16) $(.16)
==== ==============
COMMON SHARE
====== =========
(.13)
Note A - Represents the historical statement of operations for the three months
ended March 31, 1999 appearing in Form 10-QSB , as both transactions were
recorded as completed transactions.
Note B - Reflects the consolidation of Gen 02, Inc.'s statement of operations
appearing in Note 6 to Form 10-QSB for the three months ended March 31, 1999
with the Company's
statement of operations.
<PAGE>
Note C - Reflects the elimination of the $125,000 of amortization on the assets
acquired from UIT during the three months ended March 31, 1999 and the number of
shares of common stock issued to UIT.
Note D - Reflects both the consolidation and elimination entries described in
Note B and C.
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<PAGE>
Interested Parties
As more fully described in Proposal No. 2, the Company
recently acquired a technology license and certain related
assets from UIT. In connection with this acquisition the Company
is seeking Shareholder approval for ratification of that
acquisition and payment therefor, in the form of the issuance of
1,100,000 shares of Common Stock and two Warrants, each to
purchase 800,000 shares of the Company's Common Stock, to UIT.
Messrs. Brian Shuster and Harry Shuster are currently directors
of UIT and were also elected as Directors of the Company
pursuant to an Asset Purchase Agreement, dated as of June 30,
1998, between the Company and UIT (the "Asset Purchase
Agreement"). In connection with this transaction, Mr. Brian
Shuster received two warrants, each entitling him to purchase
200,000 shares of Common Stock of the Company if certain
performance goals are met. UIT will not vote the 900,000 shares
of Common Stock of the Company currently held by UIT, nor will
these votes be counted for the purpose of obtaining a quorum for
Proposal No. 2. The 900,000 shares of Common Stock of the
Company currently held by UIT will be counted for quorum
purposes and will be eligible to vote on all other matters at
the 1999 Annual Meeting.
Mr. Mark A. Kenny, a former director and officer of the Company, and
currently a shareholder, is a principal of GEN O2, Inc., the purchaser of the
assets sold by the Company, as more fully described in Proposal No. 3. Mr. Kenny
will not vote the shares of Common Stock held by him in connection with Proposal
No. 3.
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 seven (7) in
accordance with the provisions of the Company's By-laws. At the
1998 Annual Meeting, seven (7) directors will be elected to
serve until the next 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
election 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.
<PAGE>
Election of the directors requires the affirmative vote of a
majority of the votes cast at the meeting by holders of the
Company's Common and Series A Preferred Stock.
The Board of Directors recommends that the stockholders vote
"FOR" the election of the following seven nominees (Item No. 1
on the proxy card).
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
NOMINEES FOR ELECTION
Name Age Position
Lawrence E. 57 President, Chief Executive Officer
==
Burk and Director
60 Chief Financial Officer, Secretary,
John H. Wasko Treasurer and Director
63 Director
David W. Sass
66 Director
S. Charles Tabak
40 Chairman
Warren D. Bagatelle
63 Director
Harry Shuster
40 Director
Brian Shuster
</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.
<PAGE>
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.
David W. Sass has been a Director since April, 1997 and has
been a practicing attorney in New York City for the past 38
years and is currently a senior partner in the law firm of
McLaughlin & Stern, LLP, securities counsel to the Company. Mr.
Sass is also a director of Pallet Management Systems, Inc., a
company engaged in the manufacture and repair of wooden pallets
and other packaging services and 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
and a director of Evercell, Inc., a company engaged in the development and
commercialization of batteries. Mr. Bagatelle has a B.A. in economics from Union
College and an M.B.A. from Rutgers University.
Harry Shuster has been Chairman of the Board of NetCruise Interactive,
Inc., a wholly owned subsidiary of the Company and a Director of the Company
since July, 1998. Mr. Shuster has served as Chairman of the Board, President and
Chief Executive Officer of United Leisure Corporation ("ULC"), a public company
engaged in children's recreational activities and interactive technology
development, since April, 1975. Mr. Shuster is also the
<PAGE>
Chairman of the Board, President and Chief Executive Officer of
Grand Havana Enterprises, Inc., a public company primarily
engaged in the business of ownership and operation of private
membership restaurants and cigar clubs. Mr. Shuster is also the
Chairman of the Board of United Film Distributors, Inc., a
privately held independent motion picture production corporation
and the General Partner of HEP II, Inc., a limited partnership
engaged in the motion picture production business. Mr. Shuster
is the father of Mr. Brian Shuster.
Brian Shuster has been President of NetCruise Interactive, Inc. and a
Director of the Company since July, 1998. He has served as Chief Executive
Officer, President and a director of United Film Distributors, Inc. since its
inception in May, 1995. Since he has been with United Film Distributors, Inc. he
has served as the producer of seven films. Prior to joining United Film
Distributors, Inc., he served as President of Beverly Hills Producers Group, a
private production company, where he produced one motion picture, served as
executive producer of another motion picture, and oversaw production of three
other films. From 1990 until 1993 Mr. Shuster served as Vice President of
Worldwide Entertainment Group, where he also produced three motion pictures. He
is also currently a director of ULC and President of UIT. Mr. Shuster is the son
of Mr. Harry Shuster.
Messrs. Harry Shuster and Brian Shuster are currently
directors of UIT. The Company recently acquired a technology
license and certain related assets from UIT, which is a wholly
owned subsidiary of ULC, as more fully described in Proposal No.
2. Messrs. Harry Shuster and Brian Shuster were elected as
directors of the Company following this transaction pursuant to
the acquisition agreement and will so serve for three (3) years,
if so elected. In connection with this transaction, Mr. Brian
Shuster received two warrants, each entitling him to purchase
200,000 shares of the Common Stock of the Company. One warrant
is exercisable for 200,000 shares at $2.50 per share and may be
exercised between April 1, 2002 and June 30, 2002, but only if
NetCruise Interactive, Inc. ("NetCruise") achieves profits equal
to or exceeding $5,000,000 for the years 1999, 2000 and 2001.
The other Warrant is exercisable for 200,000 shares at $6.00 per
share and may be exercised between April 1, 2002 and June 30,
2002, but only if NetCruise achieves profits equal to or
exceeding $10,000,000 for the years 1999, 2000 and 2001.
Executive Compensation
The following tabulation shows the total compensation paid by
the Company for services in all capacities in fiscal years 1996,
1997 and 1998 to the officers of the Company.
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Name and Principal Year Salary Bonus Other Annual
Position Compensation
Lawrence E. Burk 1998 $147,500 $0 $0
President & Chief 1997 $75,000 $0 $0
Executive Officer 1996 (1) $0 $0
$0
Joseph Cutrona (2) 1998 $0 $0 $0
1997 $41,639 $0 $6,667
1996 $73,500 $0 $5,000
Mark A. Kenny(3) 1998 $88,462 $0 $0
1997 $64,231 $0 $28,967
1996 $42,000 $0 $16,250
John H. Wasko 1998 $80,000 $0 $0
Chief Financial 1997 $81,247 $0 $20,000
Officer, Secretary & 1996 $10,000 $0 $49,500
Treasurer
</TABLE>
(1) Salary paid to Mr. Burk for the period June 23, 1997 thru December 31,
1997. Mr. Burk's Annual salary is $150,000.
(2) As of May 12, 1997, Mr. Cutrona was no longer an employee, Officer or
Director of the Company.
(3) Mr. Kenny formerly was the Company's Executive Vice President. He
resigned as an employee and a Director of the Company as of November 6 , 1998.
The Company and Mr. Lawrence E. Burk entered into an Employment Agreement on
June 23, 1997 whereby the Company agreed to pay Mr. Burk a salary of $150,000
per year. The Employment Agreement is of continuous duration and may be
terminated by either party. Mr. Burk is also entitled to an incentive bonus to
be determined in the sole discretion by the Board of Directors of the Company.
The Company and Mr. John H. Wasko entered into an Employment Agreement on
October 16, 1996 whereby the Company agreed to pay Mr. Wasko a salary of $80,000
per year. The Employment Agreement is of continuous duration and may be
terminated by either party. Mr. Wasko is also entitled to an incentive bonus to
be determined in the sole discretion by the Board of Directors of the Company.
The Company and Loeb Partners Corporation entered into a three year consulting
and investment banking agreement dated September 5, 1995 whereby the Company
agreed to pay Loeb Partners Corporation a consulting fee of $3,000 per month,
which contract has been extended for an additional three (3) years. Loeb
Partners Corporation also receives 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. The Company and Mr. Mark A.
Kenny entered into an Employment Agreement on May 1, 1997 whereby the Company
agreed to pay Mr. Kenny a salary of $100,000 per year. This contract was
terminated in November, 1998 by the resignation of Mr. Kenny. See Proposal No.
3.
Pursuant to the Asset Purchase Agreement the Company agreed that Messrs.
Harry Shuster and Brian Shuster would serve as directors of the Company for
three years and that Mr. Harry Shuster would serve as Chairman and Mr. Brian
Shuster would serve as President of NetCruise Interactive, Inc. In addition, the
Company agreed to pay Mr. Brian Shuster $5,000 per month for his services as a
consultant to the Company. Mr. Brian Shuster also received two warrants, each
entitling him to purchase 200,000 shares of the Common Stock
<PAGE>
of the Company. One warrant is exercisable for 200,000 shares at
$2.50 per share and may be exercised between April 1, 2002 and
June 30, 2002, but only if NetCruise Interactive, Inc. achieves
profits equal to or exceeding $5,000,000 for the years 1999,
2000 and 2001. The other Warrant is exercisable for 200,000
shares at $6.00 per share and may be exercised between April 1,
2002 and June 30, 2002, but only if NetCruise achieves profits
equal to or exceeding $10,000,000 for the years 1999, 2000 and
2001.
On May 12, 1997 the Company adopted the Genisys Reservation
Systems, Inc. 1997 Omnibus Stock Incentive Plan (the "Plan").
The Plan provides for the granting of stock options to
directors, officers and employees of the Company or any
subsidiary of the Company to purchase, or to exercise certain
rights with respect to shares of Common Stock of the Company.
The following table sets forth the options granted by the
Company to the officers and directors of the Company:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
Name No. of Securities Percent of total Exercise or Expiration Date
Underlying Options options base price
granted to per share
employees in
the fiscal year
John H. Wasko 35,000 $2.00 November 2001
25,000 $4.75 March 2004
Lawrence E. Burk 200,000 $4.75 March 2004
S. Charles Tabak 15,000 $4.75 March 2004
David W. Sass 15,000 $4.75 March 2004
During 1998 the Board of Directors held four meetings and
acted one time by unanimous written consent.
Outside directors 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, 1998.
</TABLE>
CERTAIN TRANSACTIONS
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 ("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.
<PAGE>
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, and in March 1999 the Company granted Mr. Wasko a five
(5) year option to purchase an aggregate of 25,000 shares of
Common Stock at a price of $4.75 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. This banking agreement has been
extended by the Company for three (3) years on the same terms.
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. 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.
In March 1998 the holder of two Term Convertible Promissory
Notes in the principal amounts of $475,000 and $237,500,
converted $400,000 of the principal amount of the former note
and $200,000 of the principal amount of the latter note into
188,235 shares and 94,118 shares respectively of the Series A
Preferred Stock of the Company at a price of $2.125 per share.
The holder of the term promissory notes is Loeb Holding
Corporation, as escrow agent for Warren D. Bagatelle, Managing
Director of Loeb Partners Corp., HSB Capital (of which Mr.
Bagatelle is a partner), trusts for the benefit of families of
two principals of Loeb Holding Corporation and three
unaffiliated persons. Loeb Holding Corporation disclaims any
beneficial interest in these shares. Warren D. Bagatelle is
Chairman of the Company.
The Term Promissory Note in the amount of $25,000 and the Term
Promissory Note in the amount of $12,500 issued in December 1995
were converted in March 1998 into 400,000 shares of the Common
Stock of the Company at a price of $0.09375 per share.
<PAGE>
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 November and December 1996, the Company and Loeb
Holding Corporation signed four eighteen (18) month Convertible
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%, matured on May 11, 1998, May 25, 1998, June 2, 1998 and
June 9, 1998. In March 1998, Loeb, converted the total principal
amount of the four Convertible Promissory Notes ($210,000) into
98,824 shares of the Series A Preferred Stock of the Company at
a price of $2.125 per share.
In connection with the acquisition of the technology license
and the assets from UIT by NetCruise, Mr. Brian Shuster received
two warrants, each entitling him to purchase 200,000 shares of
the Common Stock of the Company. One warrant is exercisable for
200,000 shares at $2.50 per share and may be exercised between
April 1, 2002 and June 30, 2002, but only if NetCruise achieves
profits equal to or exceeding $5,000,000 for the years 1999,
2000 and 2001. The other Warrant is exercisable for 200,000
shares at $6.00 per share and may be exercised between April 1,
2002 and June 30, 2002, but only if NetCruise achieves profits
equal to or exceeding $10,000,000 for the years 1999, 2000 and
2001.
In November 1998 the Company entered into an Acquisition Agreement with a
company newly formed by a management group led by Mark A. Kenny, a Company
founder and former director. This new company was organized for the purpose of
this acquisition. Mr. Kenny is still a shareholder of the Company. The terms of
this sale are more fully discussed in Proposal No. 3.
For the year ended December 31, 1997 the Company paid to the
firm of McLaughlin & Stern, LLP the sum of $145,762 for legal
services. Mr. Sass, a director of the Company, is a member of
said firm.
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
<PAGE>
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.
PROPOSAL NO. 2
RATIFICATION OF THE ACQUISITION OF A TECHNOLOGY LICENSE AND
CERTAIN RELATED ASSETS FROM UNITED INTERNET TECHNOLOGIES,
INC. AND APPROVAL OF THE ISSUANCE OF 1,100,000 SHARES OF
COMMON STOCK AND TWO STOCK PURCHASE WARRANTS TO UNITED
INTERNET TECHNOLOGIES, INC.
Pursuant to the Asset Purchase Agreement, NetCruise (a wholly
owned subsidiary of the Company formed on July 21, 1998 for the
purpose of operating an internet travel business) acquired a
technology license and certain related assets from UIT in
consideration of 2,000,000 shares of the Company's Common Stock
and two warrants ("Warrants"), each entitling the holder to
purchase 800,000 shares of the Common Stock of the Company (the
"UIT Transaction"). One warrant is exercisable for 800,000
shares at $2.50 per share and may be exercised between April 1,
2002 and June 30, 2002, but only if NetCruise achieves profits
equal to or exceeding $5,000,000 for the years 1999, 2000 and
2001. The other Warrant is exercisable for 800,000 shares at
$6.00 per share and may be exercised between April 1, 2002 and
June 30, 2002, but only if NetCruise achieves profits equal to
or exceeding $10,000,000 for the years 1999, 2000 and 2001. No
value has been placed on the warrants since the warrants are
each contingent upon future earnings. For a more detailed
description of the Company's Common Stock please see Proposal
No. 5.
The Company has since been advised that the issuance of such
securities has caused the Company to inadvertently be in
violation of a Nasdaq MarketPlace Rule because the issuance of
the 2,000,000 shares and Warrants amounted to more than 20% of
the issued and outstanding shares of the Company and were not
approved by Shareholders as required by such Rule. Nasdaq
advised the Company that the Company's Common Stock would be
delisted as a result of such violation. The Company requested a
hearing on the delisting which was held on November 20, 1998.
Nasdaq issued its written determination on January 12, 1999 to
continue listing the Company's securities on The Nasdaq SmallCap
Market pursuant to the following conditions: (i) the UIT
Transaction must be unwound in the event shareholders do not
ratify the acquisition of the technology license and certain
related assets from UIT and approve the issuance of 1,100,000
shares of Common Stock and two Stock Purchase Warrants to UIT;
(ii) the Company must file a Definitive Proxy Statement with the
Securities and Exchange Commission and Nasdaq on or before
February 15, 1999; and (iii) the Company must submit
documentation to Nasdaq on or before March 15, 1999 evidencing
either the receipt of shareholder approval of the issuance of
additional shares to UIT or the unwinding of the issuance of
additional shares to UIT and purchase of a technology license
and certain related assets from UIT. The Company has requested
an extension from Nasdaq with respect to the deadlines to July
31, 1999.
The Company and UIT have restructured the transaction so that UIT will
return to the Company 1,100,000 shares of the Company's Common Stock (retaining
900,000 shares that are not in violation of the Nasdaq MarketPlace Rule) and the
Warrants. The Company will
<PAGE>
issue to UIT 1,100,000 shares of Convertible Series B Preferred
Stock (the "Series B Preferred Stock"), which Series B Preferred
Stock is automatically converted into 1,100,000 shares of the
Company's Common Stock upon Shareholder approval of the issuance
of the 1,100,000 shares of Common Stock and the Warrants. The
Series B Preferred Stock is non-voting stock and carries a
mandatory dividend of $275,000, payable on September 30, 1999
and a mandatory quarterly dividend at the rate of $68,750
commencing with the quarter ended December 31, 1999. No dividend
will be payable if the Shareholders approve the issuance of the
1,100,000 shares Common Stock and Warrants prior to the time
that the dividend is payable. Therefore, the total purchase
price in the UIT Transaction is 900,000 shares of the Company's
Common Stock and 1,100,000 shares of the Company's Series B
Convertible Preferred Stock. If shareholders ratify the
acquisition, the Series B Preferred Stock will automatically be
converted into 1,100,000 shares of the Company's Common Stock
and the Company will issue two warrants, each to purchase
800,000 shares of Common Stock, as outlined above.
In the event shareholders do not ratify the acquisition of the
assets and approve the issuance of 1,100,000 shares of Common
Stock and two stock purchase warrants, the UIT Transaction will
be unwound. In such event the Company estimates that the cost to
undo the transaction will not exceed $50,000. This estimate
includes accounting fees, legal fees, recording fees and
employee termination fees. In the event that the UIT Transaction
must be unwound, the following shall occur: (i) the Company
shall reassign the technology license and return the related
assets to UIT; (ii) UIT will return to the Company all stock
certificates received pursuant to the UIT Transaction and (iii)
Mr. Brian Shuster will return the warrants issued to him by the
Company; and (iv) Messrs. Brian and Harry Shuster will resign
from any officer or director position held by them. In addition,
Mr. Brian Shuster's consulting fee shall be pro-rated to the
date of his resignation and shall cease as of such date.
Reference should be made to Pro Forma Condensed Consolidated
Financial Statements as of December 31, 1998 for the effect of
undoing the UIT Transaction.
The Company determined to expand into the internet travel
business for several reasons. Although the Company had begun to
generate revenues, the Company found that many limousine
providers were resisting the payment of commissions or fees in
connection with bookings on the Company's system resulting in a
much slower development of revenues for the Company than was
originally anticipated. Management evaluated the cost of
operations for a more extended period of time and determined
that the Company's available funds would be better spent in
other areas of the travel business. It therefore determined to
expand into the internet travel business. As a result, if the
shareholders approve the acquisition of the technology license
and certain related assets and the sale of the limousine
reservation business, the effect to shareholders is a
fundamental change in the nature of the business of the Company
from the limousine reservation business to an internet travel
business.
<PAGE>
Disadvantages to Proposal No. 2 include a lack of operating
history with respect to the software relating to the internet
travel business. Although management expects web-site
development to continue through mid-1999, the internet web-site
is currently operational and independent travel consultants can
view videos and book car, air and hotel reservations directly
through the web-site, as well as research vacation packages and
cruise itineraries. The Company's independent travel consultants
are currently unable to book vacation and cruise packages in an
automated fashion through the web-site. In order to make these
types of reservations, the independent travel consultants are
instructed to contact the Company's service center, (operated
through Sammy's Travel World, a wholly owned subsidiary of the
Company) via toll-free telephone, fax or e-mail, whereby a live
NetCruise travel agent will then make the vacation or cruise
reservation. The Company intends to continually enhance its
technology to automate the booking process for cruise and
vacation reservations through its web-site. There can be no
assurance, though, that the Company will be able to achieve the
technological advancements necessary to automate the booking of
cruise and vacation reservations.
In addition, at the present time the Company only has a
limited number of individuals who have subscribed to be
independent travel consultants. It is important to note that the
Company's customers consist of the independent travel
consultants as well as the clients of the independent travel
consultants for whom travel is booked. The Company initially
acquired 280 independent travel consultants as a result of the
Company's acquisition of the assets of Sterling. The Company is
honoring the agreements the independent travel consultants made
with Sterling which were in place at the time the Company
purchased Sterling's assets. The subscription fees charged by
the Company are significantly less than those which had been
charged by Sterling, although the renewal fees are the same.
This is true even though NetCruise will be providing additional
services not offered by Sterling, such as automated web-site
booking capability and video technology. As the independent
travel consultants subscription agreements come up for renewal,
there is no guarantee that the independent travel consultants
will renew their agreements with the Company. Additionally,
although the Company believes that its national marketing
campaign will be successful in the recruitment of new
independent travel consultants, there can be no assurance of the
effectiveness of the campaign.
The budgeted cost of the internet travel business becoming
operational is expected to be approximately $1,342,000. Of such
<PAGE>
amount, approximately $198,000 was allocated to complete the
development of the web site. The remainder will be used to
produce a television video infomercial and purchase media time.
The Company believes it will be able to finance such development
substantially from proceeds of a recent private placement in the
amount of $1,500,000, but there can be no assurance that such
funds will be sufficient. In the event the Company decides to
purchase significant amounts of media time for the television
infomercial, it will need to raise additional funds. No
assurance can be made that the Company will be able to raise
such funds.
Initially revenues from the web-site will be derived from
subscriptions fees of the independent travel consultants along
with commissions received from bookings shared with the
independent travel consultants. As the Company develops
management believes that the majority of the Company's revenue
will be derived from commissions earned from the sale of travel
through the independent travel consultants. The Company's
business model is built around the sharing of commissions with
the independent travel consultants generated from travel
industry vendors such as airlines, hotels, car rental companies,
resort properties, tour operators and cruise lines. The Company
believes that commission sharing with the independent travel
consultant, which ranges from 50% to 60% of the commissions
received by NetCruise is a key enticement for individuals to
subscribe to become independent travel consultants. The
subscription and annual renewal fee for all independent travel
consultants, including the former Sterling Travel Consultants,
is currently $95.00. While the Company believes it will benefit
from its portion of the commission revenues generated, it also
believes that significant revenues will be derived from other
key areas such as annual subscription fees from its independent
travel consultants, advertising through its web- site and
incentive arrangements with travel vendors and travel related
product vendors (in addition to its share of the standard travel
commissions). However, a significant change in the prevailing
commission structure in the travel industry could have a
detrimental effect on the Company's ability to attract and
retain independent travel consultants and to benefit from the
other revenue sources listed above, which are substantially
created through this core distribution system.
As a result of the transaction, the Company acquired the internet travel
web site called " NetCruise" and a perpetual, world-wide technology license for
"Parallel Addressing Video Technology" for all travel related applications,
along with all of the custom software, computer systems and intellectual
properties. No royalty payments are required under the licensing agreement for
the "Parallel Addressing Video Technology" and the license is exclusive as it
relates to the technology as applied to the travel industry. UIT has retained
the right to the technology for all other uses outside of the travel industry.
The intellectual property acquired consists of a license for the "Parallel
Addressing Video Technology" which includes the NetCruise name, logo,
trade-marks and service marks. The company did not acquire the patent to the
"Parallel Addressing Video Technology." Also included as part of the
intellectual property was an agreement between
<PAGE>
UIT and Internet Travel Network of Palo Alto, CA which UIT
transferred to the Company. This agreement provides for a
"private label" site on the Internet Travel Network "booking
engine". The agreement expires in April, 1999 and automatically
renews for successive one year periods unless either party gives
notice, no later than 30 days prior to the end of the period, of
its intent not to renew. The Company has renewed this agreement
under the terms and conditions of the original agreement. There
is no cost associated with renewing the agreement. The ITN
"booking engine" is essentially a world wide web based graphical
user interface to the airline owned Apollo computerized
reservation system. This technology allows a layperson with
access to the internet to access the databases and pricing
systems used by travel agents to research and procure air, car
rental and hotel reservations. By "private labeling" this
functionality, the Company is able to offer its travel
consultants access to a leading travel system, while not having
to expend the Company's capital resources which would be
required to create its own access. The custom software acquired
by the Company consists of a video player program (called a ULI
player) that permits the end user to view video files, a cruise
database, a CD-ROM video disc database containing video images
of travel-related information and miscellaneous commercially
purchased software. The technological feasibility of the custom
software was established at the time of the acquisition, as a
working model of the custom software had been completed at that
time. The Company formed NetCruise as a wholly owned subsidiary
for the purpose of operating an internet travel business
featuring the technology obtained through this acquisition.
Although the Company only has a limited number of individuals
who have subscribed to be independent travel consultants, and
therefore a limited number of customers, the Company intends to
launch, through television advertising, an aggressive marketing
campaign inviting the general public, along with existing travel
agents, to become NetCruise travel consultants. The goal of the
Company's marketing campaign is to encourage individuals to
enroll as independent travel consultants by paying an annual fee
to the Company. The independent travel consultants will then be
able to make reservations either through the password protected
section of the NetCruise web site or via telephone , fax or
e-mail bookings with travel agents who work directly for
NetCruise. Non-members who visit the non-password protected
section of the NetCruise web-site (the "Visitor's Section")
shall have access to a portion of the site which contains
general information about the Company, describes the independent
travel consultant program and allows the public to request
information or enroll as an independent travel consultant. To
date, the Visitor's Section of the web-site is being used for
demonstration to potential travel consultants. The password
protected section allows independent travel consultants to see
vacation and cruise destinations in full motion video and stereo
audio and to make hotel, air, car reservations, as well as
research vacation packages and cruise itineraries. The Company's
independent travel consultants are currently unable to book
vacation and cruise packages in an automated fashion through
<PAGE>
the web-site. In order to make these types of reservations, the
independent travel consultant must contact the Company's service
center, (operated through Sammy's Travel World, a wholly owned
subsidiary of the Company) via toll-free telephone, fax or
e-mail, whereby a live NetCruise travel agent will then make the
cruise reservation. The password protected section is only
accessible by company personnel and independent travel
consultants using a password.
The Company believes it will be successful in encouraging
people to pay the subscription fee and sign up as independent
travel consultants because as an independent travel consultant
individuals will have an opportunity to earn a commission on all
reservations made by them. Airlines, hotels, car rental
companies, cruise lines, tour operators and other travel vendors
will pay the Company commissions for all sales generated by the
Company. Such commissions will be shared with the independent
travel consultants. The Company hopes to enroll both the general
public and existing travel agents. The Company believes that
there is an emerging trend in the travel industry, whereby
individuals who are presently travel agents are leaving their
salaried positions and moving into positions similar to that of
an independent travel consultant with their own home based
travel business. The Company believes that existing travel
agents will be drawn to the opportunity to earn commissions,
create their own flexible hours, maintain their client base and
utilize their existing skills. Other advantages of a home based
travel business are no commuting to an office, low overhead, no
need to rent expensive airline owned computer reservation system
equipment and personal travel benefits. However, there can be no
assurance that the Company's marketing strategy directed to
existing travel agents will be successful. The Company , through
a combination of direct response TV, print, radio, and web-
based advertising, plans to offer individuals an opportunity to
join NetCruise as independent travel consultants. Each new
independent travel consultant will receive a start-up kit
consisting of a CD ROM library of video destinations; a
marketing kit which includes a guide to marketing an at-home
business, a training manual describing the travel industry, a
welcome letter containing a password for the web site and an
outline of NetCruise policies and procedures and full-service
support from the Company's live travel agents.
"Parallel Addressing Video Technology" allows the independent
travel consultants to see a destination in full motion video and
stereo audio never before available on the internet, without
waiting for a lengthy file download. Utilizing this proprietary
technology the NetCruise web site will interact with the
individual's PC, find the requested video clip on its CD ROM,
and play it locally in a clear, full screen mode. Included in
the assets acquired by NetCruise is an extensive library of
video clips complete with music and narratives in stereo, which
will bring views of cruise ships, hotels, and destinations from
around the world to the user in seconds. When the travel
consultant is ready, he or she will be able to make airline,
hotel and car rental reservations quickly and
<PAGE>
easily via NetCruise's reservation web site , as well as
research vacation packages and cruise itineraries. The Company's
independent travel consultants are currently unable to book
vacation and cruise packages in an automated fashion through the
web-site. In order to make these types of reservations, the
independent travel consultant is instructed to contact the
Company's service center, (operated through Sammy's Travel
World, a wholly owned subsidiary of the Company) via toll-free
telephone, fax or e-mail, whereby a live NetCruise travel agent
will then make the cruise reservation.
"Parallel Addressing Video Technology" provides zero-wait
time, full motion video and stereo audio to the independent
travel consultants interacting with the Company's internet
web-site . Unlike various forms of streaming video, live media
and internet video broadcasts, this technology does not rely on
bandwidth as the medium for delivery of video. UIT and its
parent, ULC, developed this technology and filed for patents in
July 1997. Although the General public will be able to access
much of the site to obtain information and enroll as an
independent travel consultant, the Company intends that only
participating travel consultants who have paid a fee to the
Company and received a password will be able to access the
reservation area of the site.
If at any point the individual requires additional expertise,
a personal NetCruise travel agent will be available by phone to
guide them through the process. On February 1, 1999 the Company
acquired Sammy's Travel World, Inc., a full-service travel
agency specializing in leisure and corporate travel and serving
the New York City and northern New Jersey area ("Sammy's"), with
annual gross bookings of approximately $1,800,000. "Bookings"
consists of the total dollar amount of airline tickets sold,
cruises sold, and hotel and car reservations made. Sammy's will
provide, when necessary, full service support via telephone to
the Company's independent travel consultants. Sammy's is now a
wholly owned subsidiary of the Company and has five (5)
employees. The purchase price for the acquisition was 36,600
shares of the Company's common stock which, for accounting
purposes is being valued at $1.50 per share or an aggregate of
$54,900. The Company acquired the following assets from Sammy's:
telephones, desks, chairs, fax and copy machines, filing
cabinets, safe, shelves, typewriters and computers.
Mr. Harry Shuster has been appointed Chairman and Brian Shuster the
President of NetCruise Interactive, Inc. Pursuant to the Asset Purchase
Agreement, Mr. Brian Shuster will receive $5,000 per month for his services as a
consultant to the Company. In addition, Messrs. Harry Shuster and Brian Shuster
have been serving as directors of the Company
<PAGE>
since the transaction closed and both have been nominated for
election as directors of the Company.
Management of the Company had been exploring a number of ways
to more fully and quickly develop its internet travel business,
while still maintaining an interest in the limousine reservation
business, through its ownership interest in GEN O2, Inc., but
with a significant reduction in the resources the Company had to
commit to the reservation operation. Management of the Company
believes that the NetCruise internet travel business, which is
not compatible with the limousine reservation business, provides
the Company's shareholders with a potential for a greater
return.
On November 5 , 1998, in order to augment the Company's entry
into the internet travel business, the Company entered into an
Asset Purchase Agreement with Sterling AKG Corp. d/b/a Sterling
Travel ("Sterling"), in which the Company purchased all the
assets relating to Sterling's network of independent travel
consultants ("Sterling Travel Consultants") for a total purchase
price of 25,000 shares of the Company's Common Stock which, for
accounting purposes, is being valued at $1.50 per share for an
aggregate of $37,500. An additional 17,500 shares ("Escrow
Shares") will be held in escrow by counsel to the Company. If
the Company does not achieve $3,000,000 of gross sales from the
sale of travel services, including renewal fees from the
Sterling Travel Consultants, over the initial twelve month
period beginning on November 1, 1998 and ending on October 31,
1999, the Escrow Shares shall immediately be returned to the
Company. If the Company achieves $3,000,000 of gross sales from
Sterling Travel Consultants over the initial twelve month period
as described herein, the Escrow Shares will be released by the
Company.
Included in the assets purchased by the Company was a list of
Sterling Travel Consultants (both active and inactive) that had
done or were doing business with Sterling. Also included in the
assets purchased were contacts, files, correspondence, earning
records, a data base of former and current customers of Sterling
estimated at approximately 20,000 entries, property and
equipment, including desks, chairs, fax and copy machines,
filing cabinets, computers and miscellaneous office supplies.
The data base of former and current
<PAGE>
customers also included the Sterling Travel Consultants, as they
were considered customers, not employees of Sterling and the
names of travel agents who had done business with Sterling as
Sterling Travel Consultants. In addition, included were
agreements with such Sterling Travel Consultants setting forth
the commissions they could earn and operational matters relating
to their position as an independent travel consultant.
The Company's current independent travel consultants are
all former Sterling Travel Consultants whose contracts were
assigned to the Company from Sterling as part of the acquisition
and who paid their subscription fee to Sterling. In the event
the independent travel consultants (formerly the Sterling Travel
Consultants) desire to renew their contracts, a renewal
subscription fee will be paid to the Company.
Since on-line transactions can be faster, less expensive and
more convenient than transactions conducted via traditional
means, a growing number of consumers are transacting business
over the World Wide Web. Examples of such transactions include
buying consumer goods, trading securities, purchasing airline
tickets and paying bills. Based upon its research and
discussions with individuals knowledgeable in electronic
commerce on the World Wide Web, management believes that 27% of
adult World Wide Web users made on-line purchases in 1997 and
that 50% of adult World Wide Web users will make on-line
purchases in 2000. Management believes that as electronic
commerce expands, advertisers and direct marketers will
increasingly seek to use the World Wide Web to locate customers,
advertise their products and services and facilitate
transactions.
The Company also believes that lodging and airline travel will
be a major leader in this market with total on-line travel
revenues possibly reaching over $50 billion by 2001. With travel
taking such a large portion of on-line sales, management of the
Company expects that the enhanced travel services offered by
NetCruise will attract a wide range of internet using consumers
enabling NetCruise to become a significant participant in
internet travel. In the event shareholders do not approve this
Proposal No. 2 the Company intends to continue its entry into
the internet travel business either by negotiating a licensing
agreement with UIT for the use of its technology license and
certain related assets or by utilizing alternative technologies.
In the event that Proposal No. 2 is not approved by the
Shareholders and Proposal No. 3 is approved, the Company will
not own the limousine reservation business but will continue to
expand into the internet travel business.
Management of the Company is confident that there were no
conflicts of interest in negotiating the acquisition of the
internet travel business and that all negotiations with UIT were
at "arms length".
Based upon the presently outstanding number of shares of
Common Stock of the Company (6,749,068), UIT would hold
3,600,000 shares (9,934,694 shares outstanding) or approximately
36.2% of the stock of the Company, assuming issuance of the full
2,000,000 shares of Common Stock (consisting of 900,000 shares
of Common Stock currently held by
<PAGE>
UIT and an additional 1,100,000 shares of Common Stock to be
issued to UIT upon conversion of the Series B Preferred stock in
the event the Shareholders approve Proposal No. 2) and exercise
of the Warrants. One warrant is exercisable for 800,000 shares
at $2.50 per share and may be exercised between April 1, 2002
and June 30, 2002, but only if NetCruise achieves profits equal
to or exceeding $5,000,000 for the years 1999, 2000 and 2001.
The other Warrant is exercisable for 800,000 shares at $6.00 per
share and may be exercised between April 1, 2002 and June 30,
2002, but only if NetCruise achieves profits equal to or
exceeding $10,000,000 for the years 1999, 2000 and 2001.
The acquisition of the technology license and certain related
assets as described in this Proposal No. 2 will have no
immediate tax effect on the Company.
Ratification of the acquisition of the technology license and
certain related assets from UIT and the approval of the issuance
of 1,100,000 shares of Common Stock of the Company and two
Warrants to UIT requires the affirmative vote of a majority of
the votes cast at the meeting by holders of the Company's Common
and Series A Preferred Stock entitled to vote thereon. Pursuant
to an Amendment Agreement made in connection with the Asset
Purchase Agreement, directors, officers and certain principal
shareholders of the Company, who in the aggregate hold
approximately 23.2% of the Company's outstanding Common Stock
and all of the Company's Preferred Stock, have agreed to vote
"FOR" Proposal No. 2. UIT will not vote on Proposal No. 2.
The Board of Directors recommends that the stockholders vote
"FOR" the ratification of the acquisition of a technology
license and certain related assets from UIT and for the approval
of the issuance of Common Stock and Warrants to UIT and. (Item
No. 2 on the proxy card).
<PAGE>
PROPOSAL NO. 3
RATIFICATION OF THE SALE OF THE LIMOUSINE RESERVATION
SYSTEM BUSINESS TO GEN O2, INC., A NEWLY ORGANIZED
CORPORATION FORMED BY MARK A. KENNY, A FORMER DIRECTOR
AND FOUNDER OF THE COMPANY.
On November 6, 1998 the Company sold the limousine reservation
system business by entering into an Acquisition Agreement (the
"Sales Agreement") by and between the Company and Corporate
Travel Link, Inc. ("Travel Link"), a wholly owned subsidiary of
the Company (the sellers in the transaction) and TranspoNet (a
non-affiliated company), Mark A. Kenny, Paul Murray and GEN 02,
Inc. (the purchaser in the transaction), a newly organized
corporation formed by Mark A. Kenny, a former director and
founder of the Company. This sale will allow the Company to
concentrate its resources and efforts on the continued build-up
of its internet travel business.
Prior to the current sale, the principal business of the
Company had been the development of a computerized reservation
and payment system known as "Genisys Reservation System". This
System accepts and processes reservations and payments for
ground transportation services made by its customers through
computerized reservations systems owned and operated by others,
using the trade name "Genisys Reservation System".
Management of the Company set revenue objectives for the
limousine reservation business and made the decision to review
the operation at the end of the third quarter to determine the
best approach to maximize utilization of the Company's
resources. The limousine reservation business did not meet its
revenue objectives and in early September 1998, the Company
decided to seek a buyer or joint venture partner for its
limousine reservation business.
In addition, although the Company has begun to generate
revenues, the Company found that many limousine providers were
resisting the payment of commissions or fees in connection with
bookings on the Company's system until such time as the
potential benefits of the Company's system could be better
qualified. This resulted in a much slower development of
revenues for the Company than was originally anticipated.
Management estimated the cost of operations for a more extended
period of time and determined that the Company's available funds
would be better spent in other areas of the travel business. It
therefore determined to expand into the internet travel
business. As a result of the shareholders approval, the
acquisition of the technology license and certain related assets
and the sale of the limousine reservation business the effect to
shareholders is a fundamental change in the nature of the
business of the Company from the limousine reservation business
to an internet travel business.
<PAGE>
The Company does not believe that it will, through GEN O2,
Inc., be exposed to losses from continued resistance of payment
of fees or commissions to GEN O2, Inc. The Company believes that
GEN O2, Inc. has a reasonable chance of success in the future.
This is because GEN O2, Inc., in response to market forces, has
recently altered its marketing approach by offering a tiered
pricing model. This pricing strategy provides a lower net cost
for high volume limousine companies. This approach has been met
with a favorable response from the market to date. GEN O2, Inc.
has also reduced costs by reducing payroll, lowering operating
and development costs and lowering rent expenses. Additionally,
GEN O2, Inc.'s partnership with the computer reservation systems
of the major airlines ("CRSs," consisting of SABRE, APOLLO and
WORLDSPAN) made recent price concessions to GEN O2, Inc. in an
effort to capture market share through lowered transaction
pricing. This reduction in fees from the CRSs should support GEN
O2 Inc.'s efforts to increase the number of transactions flowing
through the system by reducing limousine transaction costs to
the car and limousine service providers. The Company cannot
predict with certainty however, if the new marketing approach
will be effective or if the CRSs will continue to support the
GEN O2, Inc. pricing model.
Disadvantages to ratification of Proposal No. 3 include the
fact that as part of the sale, the Company will be retaining a
32.66% interest in GEN 02, Inc. and will be loaning to GEN 02,
Inc. a $135,000 installment loan and a $40,000 bridge loan. The
TranspoNet Companies, Inc. ("TranspoNet") another 32.66%
shareholder of GEN 02, Inc., is providing, commencing December
10, 1998, $20,000 per month to GEN 02, Inc., for an aggregate of
$240,000. TranspoNet is not affiliated with the Company or any
of its shareholders. The primary capitalization of GEN 02, Inc.,
is being provided by the loans from the Company and TranspoNet.
In addition, the sole asset of GEN 02, Inc. is the limousine
reservation business. As a result, the Company will absorb all
losses to the extent of the assets transferred ($744,122).
Although there are no minimum contingent payments, the Company
has begun to receive minimal contingent payments from GEN 02,
Inc., consisting of two payments totaling $3,656.20. However, it
is possible that the Company will not receive significant
contingent payments from GEN 02, Inc. over the 5 year period.
Shareholders should note that they are being asked to ratify the
sale of the limousine business to GEN 02, Inc., a company
organized by Mark A. Kenny, who is a former director of the
Company. The sale of the limousine reservation business was
negotiated with GEN 02, Inc. while Mr. Kenny was still a
director of the Company, although he did not participate in the
directors analysis and decision to sell the business to GEN 02,
Inc.
In the event that Shareholders do not approve Proposal No. 3,
the Company will be required to raise additional capital to
bring the limousine reservation business to full operation. No
assurance can be given that the Company will be able to raise
such funds. In the event shareholders do not ratify the
acquisition of a technology license and certain related assets
from UIT and approve the issuance of 1,100,000 shares of the
Company's Common Stock to UIT, as described in Proposal No. 2,
the Company intends to continue to expand into
<PAGE>
the internet travel business either by negotiating a licensing
agreement with UIT for the use of its technology license and
certain related assets or by utilizing alternative technologies.
In the event that Proposal No. 2 is not approved by the
Shareholders and this Proposal No. 3 is approved, the Company
will not own the limousine reservation business or the internet
travel business but will continue to expand into the internet
travel business.
Management is of the opinion that the costs in developing the
new line of business is less than the costs required to maintain
the limousine reservation business until such time as revenues
will be able to cover the costs of operation. Further, it is
management's opinion that the internet travel business can be
brought to market sooner and will provide, on a long term basis,
a greater return to shareholders.
Under the terms of the Sale Agreement, the sellers will sell
and transfer certain contractual rights and obligations of the
Company, all of the assets of Travel Link which are utilized in
connection with the ownership, operation and marketing of the
Genisys Reservation System and its entire ownership interest in
ProSoft to the purchaser in the transaction, constituting
approximately 20% of the total assets of the Company. ProSoft is
an 80% owned subsidiary of the Company which was acquired by the
Company in June, 1997. ProSoft is a software development company
which developed the software for the Company's computerized
limousine reservation and payment system. Paul Murray, a former
employee of the Company and President and Shareholder of
ProSoft, is also a shareholder of GEN O2, Inc.
The Company sold these assets, which had a book value of
$744,122 at November 6, 1998, net of $83,000 of indebtedness
assumed by GEN O2, Inc. for (i) 2,450 shares of Series A
Convertible Preferred Stock of GEN O2, Inc., constituting a
32.66% interest in GEN O2, Inc., which the Company carries on
its balance sheet as of December 31, 1998 at an asset value of
$624,204 and (ii) certain contingent payments over a period of 5
years, totaling $1,080,000 if all payments to the Company are
realized, however, since there are no minimum contingent
payments, it is possible that the Company will receive no
significant contingent payments from GEN 02, Inc. The terms are
as follows:
a. For each completed limousine transaction through the
current system from corporate users, a payment of
$0.20 per transaction with a $100,000 maximum payment
per year for five years.
b. For each completed limousine transaction through the
Almost Real Time System which was (the "ART System")
under development by the sellers prior to the
execution of the sales agreement and is to be
completed by GEN 02, Inc., that will be directed
toward leisure customers, a payment of $0.20 per
transaction with a $100,000 maximum payment in the
first year and a $0.30 payment per transaction with a
$120,000 maximum payment per year thereafter.
<PAGE>
c. If the system and the ART System are merged at any
time in the future, the sellers shall receive a
payment of $0.25 per completed transaction with a
$200,000 maximum payment in the first year and a
$220,000 maximum payment per year thereafter.
d. If the payments are not reached in a particular year,
the payments defined in letters a-c above will have a
carry-over to the following year.
e. In no event shall any payments defined in letters a-c
above be due to the sellers for transactions
completed after December 10, 2003.
f. For the transfer of the assets by the sellers and the assumption of
certain liabilities of the sellers by the purchaser as described above along
with the agreement by the sellers to provide the purchaser with a series of
loans, the purchaser granted an equity interest to the sellers in GEN O2, Inc.
equal === to 32.66% of the equity of GEN O2, Inc. The loans provided by the ===
sellers will include a ninety day secured bridge loan in the amount of $40,000
secured by 22,857 shares of Common Stock of the Company owned by Mr. Kenny, a
secured loan of $135,000 payable commencing in the second year and secured by
77,143 shares of Common Stock of the Company owned by Mr. Kenny. Mr. Kenny has
also pledged 23,428 shares of the Company's Common Stock owned by him to secure
the return of a security deposit to the Company and 68,000 shares of the
Company's Common Stock to secure minimum payments which are required to be made
by the Company under certain contracts which were transferred to the purchaser
in connection with the sale.
g. A second 32.66% shareholder of GEN O2, Inc.,
TranspoNet, has committed to provide funding for the
purchaser of up to $240,000 in the form of a series
of loans. TranspoNet has a right to convert the
unpaid principal of the loans at any time into a
maximum number of shares of common stock of the
purchaser not to exceed an additional 6% equity
interest in the purchaser.
The Series A Preferred Stock issued to the Company and
TranspoNet in accordance with the transaction are part of a
class of preferred stock of GEN O2, Inc. designated as "Series A
Preferred Convertible Stock" and the number of shares of
preferred stock constituting such class is 4,900. The shares of
Series A Preferred Stock issued to the Company together with the
shares of Series A Preferred Stock issued to TranspoNet
constitute all of the authorized shares of the Series A
Preferred Stock of GEN O2, Inc. So long as any share of Series A
Preferred Stock remains outstanding, GEN O2, Inc. shall not
authorize the issuance or issue any additional shares of Series
A Preferred Stock or any shares of any series or class of stock
ranking senior to, or on a parity with, the Series A Preferred
Stock as to rights upon liquidation, dissolution or winding up
of GEN O2, Inc. without the prior written consent of at least a
majority of the holders of the Series A Preferred Stock.
<PAGE>
The par value of the Series A Preferred Stock is $0.0001 per
share and no dividends shall be declared or paid on the Series A
Preferred Stock. In the event of a voluntary or involuntary
liquidation, dissolution or winding up of GEN O2, Inc., the
holders of the Series A Preferred Stock shall be entitled to
receive out of the assets of GEN O2, Inc. available for
distribution to stockholders, before any distribution of assets
is made to the holders of any other series or class of stock of
GEN O2, Inc., a liquidating preferential distribution in an
amount equal to $400.00 per share of Series A Preferred Stock.
The holders of the Series A Preferred Stock shall be entitled to
vote on all matters submitted to a vote of the shareholders of
GEN O2, Inc. and shall be entitled to one vote for each share of
Series A Preferred Stock. The holders of the Series A Preferred
Stock shall not have cumulative voting rights. At any time and
from time to time, upon notice to GEN O2, Inc., the holders of
the Series A Preferred Stock shall be entitled to convert each
share of Series A Preferred Stock into one fully paid and
non-assessable share of common stock of GEN O2, Inc. subject to
adjustments for any stock splits, stock dividends, reverse stock
splits or recapitalization.
Upon conversion of the Series A Preferred Stock into common
stock of GEN O2, , Inc. the Company and TranspoNet will each own
2,450 shares or 32.66%, respectively, of the issued and
outstanding common stock of GEN O2, Inc. It is anticipated that
the Purchaser will issue an additional 2,500 shares of common
stock in the near future, thereby diluting the ownership
interest of the Company and TranspoNet in GEN O2, Inc. to 24.5%.
The Company's influence in GEN O2, Inc. is limited to the right
to elect one member of a five (5) member Board of Directors.
In the event shareholders do not approve the sale of the
limousine reservation business as described in this Proposal No.
3 the Company intends to either find another purchaser of the
limousine reservation business or raise additional capital to
bring the limousine reservation business to full operation while
continuing its entry into the internet travel business. No
assurance can be given that the Company will be able to raise
such funds.
Shareholders are being asked to ratify the sale of the
Limousine Reservation System business since it represented the
primary focus of the Company. Since the Limousine Reservation
business did not meet its revenue objectives and would require
additional capital infusion, management decided it would be in
the best interest of the shareholders if the Company were to
concentrate its efforts on the NetCruise internet travel
business. Reference should be made to the Pro Forma Balance
Sheet as of September 30, 1998 and notes thereto contained in
the Company's Form 10-QSB, as amended, (which gives effect to
this transaction as of this date) and to the last paragraph of
Note 6 thereto.
Management of the Company believes that the sale of the limousine
reservation business to GEN O2, Inc. as described in this Proposal No. 3 will
have no material tax effect on the Company.
<PAGE>
Ratification of the sale of the Limousine Reservation System
business requires the affirmative vote of a majority of the
votes cast at the meeting by the holders of the Company's Common
and Series A Preferred Stock entitled to vote thereon.
The Board of Directors recommends that the Shareholders vote
"FOR" the ratification of the sale of the Limousine Reservation
System business. (Item no. 3 on the Proxy Card).
PROPOSAL NO. 4
TO AMEND ARTICLE FIRST OF THE COMPANY'S CERTIFICATE OF
INCORPORATION
The Board of Directors of the Company has unanimously adopted,
subject to stockholder approval, a resolution to amend Article
FIRST of the Company's Certificate of Incorporation to change
the name of the Company from Genisys Reservation Systems, Inc.
to netcruise.com,
inc.
Reasons for the Proposal
With the acquisition of certain assets and the technology
license from UIT, the Company expanded its travel business such
that the current name is no longer descriptive of the Company's
business. Management is of the opinion that the proposed new
name is more descriptive. Through NetCruise the Company plans to
become a provider of Internet travel services and the Board of
Directors has determined that it is in the Company's best
interest to change its name to be more identified with that of
the Company's business, and has adopted a resolution amending
Article FIRST of the Certificate of Incorporation to reflect
this change. Management does not believe that there are any
significant disadvantages to changing the name to netcruise.com,
inc.
The resolution approved by the Board of Directors amending
Article FIRST is as follows:
"FIRST: The name of the Corporation is netcruise.com, inc."
Approval of the amendment to Article FIRST of the Company's
Certificate of Incorporation requires the affirmative vote of a
majority of the votes cast at the meeting by holders of the
Company's Common and Series A Preferred Stock entitled to vote
thereon.
<PAGE>
The Board of Directors recommends that the stockholders vote "FOR" approval
of this Proposal No. 4.
PROPOSAL NO. 5
TO AMEND ARTICLE FOURTH OF THE COMPANY'S CERTIFICATE OF
INCORPORATION
The Board of Directors of the Company has unanimously adopted,
subject to stockholder approval, a resolution to amend Article
FOURTH of the Company's Certificate of Incorporation to amend
and restate the provisions of the Company's authorized Common
and Preferred Stock to correct certain inconsistencies.
Reasons for the Proposal
The Board of Directors of the Company has unanimously adopted,
subject to stockholder approval, a resolution amending and
restating the first paragraph and paragraphs (a) and (b) of
Article FOURTH of the Company's Certificate of Incorporation to
amend and restate the provisions of the Company's authorized
Preferred Stock to correct certain inconsistencies in such
provisions as they now exist. The prior version of the
Certificate of Incorporation does not describe the rights of the
holders of Common Stock. The restated version sets forth clearly
the voting, dividend, dissolution and liquidation of the Common
Stock consistent with the laws of the State of New Jersey. The
description of the Preferred Stock has also been amended to
correct certain inconsistencies found in the current version.
These included conflicting descriptions of the dividends.
Currently description of the dividend rights is contradictory,
as dividends are described as being both cumulative and
non-cumulative. The new provision eliminates both descriptions
and simply provides that the Board of Directors has the right to
determine if dividends will be cumulative or non-cumulative.
Also, in the prior revision the Board of Directors has the right
to determine liquidation preferences in an amount equal to the
par value. This provision is eliminated in the amended version,
with the Board of Directors having the right to determine the
liquidation preference. These corrections are needed for the
Series B Preferred Stock to be issued to UIT as described in
Proposal No. 2. The amended version also differs from the
current Article of Incorporation in that it gives the Board of
Directors the power to determine and fix voting power, declare
dividend rights without limitation and to determine the rank of
any series of Preferred Stock issued. A disadvantage to amending
the Certificate of Incorporation to restate the provisions of
the Preferred and Common Stock of the Company is that it may be
difficult for the Company to utilize the authorized preferred
shares for acquisitions, financing and other proper corporate
purposes.
The resolution approved by the Board of Directors amending and
restating Article FOURTH is as follows:
<PAGE>
"FOURTH: The total number of shares of stock which the
Corporation shall be authorized to issue shall be 100,000,000
shares consisting of 75,000,000 shares of Common Stock with a
par value per share of $.000l ("Common Stock"), and 25,000,000
shares of Preferred Stock with a par value per share of $.0001
("Preferred Stock"). The following is a statement of the
designations and the powers, privileges, rights,
qualifications, limitations or restrictions in respect of each
class of capital stock of the Corporation:
(a) The voting, dividend, liquidation and other rights and
privileges of the holders of the Common Stock are subject to and
qualified by any and all rights and privileges of the holders of
Preferred Stock of any series as may be designated by the Board
of Directors upon any issuance of the Preferred Stock of any
series. The holders of Common Stock are entitled to one vote for
each share of Common Stock held at all meetings of stockholders
(and written actions in lieu of meetings). There shall be no
cumulative voting of shares of the Common Stock. Dividends shall
be declared and paid on the Common Stock from funds legally
available therefor when, as and if declared by the Board of
Directors of the Corporation. Upon the dissolution or
liquidation of the Corporation, all assets of the Company
available for distribution to the holders of Common Stock shall
be distributed ratably among the holders of the Preferred Stock,
if any, and the holders of the Common Stock, subject to any
preferential rights of any then outstanding Preferred Stock.
(b) Preferred Stock may be issued at any time from time to
time in one or more series, each of such series to have such
powers, designations, preferences, rights, qualifications,
limitations or restrictions as provided in this Certificate of
Incorporation or by law or in the resolution or resolutions
providing for the issuance of such series adopted by the Board
of Directors of the Corporation as hereinafter provided.
Authority is hereby granted to the Board of Directors from time
to time to issue the Preferred Stock in one or more series, and
in connection with the creation of any such series, by
resolution or resolutions providing for the issuance of' the
shares thereof, to determine and fix such voting powers, full or
limited, or no voting powers, and such designations,
preferences, powers and relative participating, optional or
other special rights and qualifications, limitations or
restrictions thereof, including, without limitation, dividend
rights, conversion rights, redemption privileges and liquidation
preferences, as shall be stated and expressed in such resolution
or resolutions, all to the full extent now or hereafter
permitted by law. Without limiting the generality of the
foregoing, the resolutions providing for issuance of any series
of Preferred Stock may provide that such series shall be
superior or rank equally or be junior to the Preferred Stock of
any other series to the extent permitted by law. The resolutions
providing for issuance of any series of Preferred Stock may
provide that such resolutions may be amended by subsequent
resolutions adopted in the same manner as the preceding
resolutions. All shares of Preferred Stock of the same series
shall be identical with each other in all respects."
<PAGE>
The Company is currently authorized to issue 75,000,000 shares
of Common Stock, having a par value of $.0001 per share of which
6,749,068 are outstanding. Each share of Common Stock entitles
the holder thereof to one vote on each matter submitted to the
stockholders of the Company for a vote thereon. The holders of
Common Stock: (i) have equal ratable rights to dividends from
funds legally available therefor when, as and if declared by the
Board of Directors; (ii) are entitled to share ratably in all of
the assets of the Company available for distribution to holders
of Common Stock upon liquidation, dissolution or winding up of
the affairs of the Company; (iii) do not have preemptive,
subscription or conversion rights, or redemption or sinking fund
provisions applicable thereto; and (iv) as noted above, are
entitled to one non-cumulative vote per share on all matters
submitted to stockholders for a vote at any meeting of
stockholders. The Company has not paid any dividends on its
Common Stock to date. The Company anticipates that, for the
foreseeable future, it will retain earnings, if any, to finance
the continuing operations of its business. The payment of
dividends will depend upon, among other things, capital
requirements and operating and financial conditions of the
Company.
Approval of the amendment to Article FOURTH of the Company's
Certificate of Incorporation requires the affirmative vote of a
majority of the votes cast at the meeting by holders of the
Company's Common and Series A Preferred Stock entitled to vote
thereon.
The Board of Directors recommends that the stockholders vote "FOR" approval
of this Proposal No. 5.
PROPOSAL NO. 6
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, 1998 and 1999, subject to stockholder ratification.
During the year ending December 31, 1997 and 1998, 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 Company's
Common and Series A Preferred Stock entitled to vote thereon.
<PAGE>
A representative of Wiss & Company, LLP will be present at the
Annual Meeting, will have an opportunity to make a statement if
he or she so desires and is expected to be available to respond
to appropriate questions.
The Board of Directors recommends that the stockholders vote
"FOR" ratification of this appointment (Item No. 6 on the proxy
card).
<PAGE>
SECURITY OWNERSHIP OF PRINCIPAL STOCKHOLDERS AND
MANAGEMENT
The following tabulation shows the security ownership as of
April 26, 1999 of (i) each person known to the Company to be the
beneficial owner of more than 5% of the Company's outstanding
Common Stock, (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 OF CLASS
OWNED
Loeb Holding Corporation
As Escrow Agent (1)
61 Broadway
New York, NY 10006 16.1%
1,088,973
Loeb Holding Corporation (2)
61 Broadway
New York, NY 10006 1.46%
98,824
United Internet Technologies,
Inc. (3)(7)
18081 Magnolia Avenue 13.3%
Fountain Valley, CA 92708 900,000
Warren D. Bagatelle (1)(2)
Loeb Partners Corporation
61 Broadway 17.5%
New York, NY 10006 1,187,797
Mark A. Kenny
GEN O2, Inc.
15 Clyde Road, Suite 201 4.8%
Somerset, NJ 08873 324,175
John H. Wasko (4)
Genisys Reservation Systems
2401 Morris Avenue 2.0%
Union, NJ 07083
Lawrence E. Burk (5) 137,046
Genisys Reservation Systems
2401 Morris Avenue 3.03%
Union, NJ 07083
S. Charles Tabak (6) 205,000
ARC Medical Professional
Personnel *
36 Route 10W, Suite D
East Hanover, NJ 07936
22,000
<PAGE>
David W. Sass (6)
McLaughlin & Stern, LLP
260 Madison Ave. 18th Fl.
New York, NY 10016 20,000 *
Harry Shuster(3)(7)(8)
United Internet Technologies,
Inc.
18081 Magnolia Avenue 900,000 13.3%
Fountain Valley, CA 92708
Brian Shuster (7)
United Internet Technologies,
Inc. 0 *
18081 Magnolia Avenue
Fountain Valley, CA 92708
Yeshiva Beth Hillel of Krasner, 400,000 5.9%
Inc.
1371 42nd Street
Brooklyn, New York 11219
2,471,843(9) 36.5%
All Officers and Directors
as a group (7 persons)
---------------------
* less than 1%
</TABLE>
(1) Includes 753,679 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
Mr. Bagatelle is a partner), trusts for the benefit of families
of two principals of Loeb Holding Corporation and three
unaffiliated persons, 282,353 shares of Common Stock issuable
upon conversion of 282,353 shares of Series A Preferred Stock of
the Company and 52,941 shares of Common Stock issuable upon
conversion of two Convertible Notes aggregating $112,500. Loeb
Holding Corporation disclaims any beneficial interest in these
shares.
(2) Includes 98,824 shares of Common Stock issuable upon
conversion of 98,824 shares of Series A Preferred Stock of the
Company.
(3) UIT will also receive 1,100,000 shares of Series B
Preferred Stock, convertible into 1,100,000 shares of Common
Stock if Shareholders approve the issuance of 1,100,000 shares
of Common Stock and two Warrants, each entitling the holder to
purchase 800,000 shares of Common Stock. One warrant is
exercisable for 800,000 shares at $2.50 per share and may be
exercised between April 1, 2002 and June 30, 2002, but only if
NetCruise achieves profits equal to or exceeding $5,000,000 for
the years 1999, 2000 and 2001. The other Warrant is exercisable
for 800,000 shares at $6.00 per share and may be exercised
between April 1, 2002 and June 30, 2002, but only if NetCruise
achieves profits equal to or exceeding $10,000,000 for the years
1999, 2000 and 2001.
<PAGE>
(4) 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, 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, a five (5) year
option to purchase an aggregate of 25,000 shares of Common Stock
at a price of $4.75 per share granted on March 12, 1999 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.
(5) Includes a five (5) year option to purchase an aggregate
of 200,000 shares of Common Stock at a price of $4.75 per share
granted on March 12, 1999.
(6) Includes a five (5) year option to purchase 15,000 shares
of Common Stock at a price of $4.75 per share granted on March
12, 1999.
(7) Includes the 900,000 shares of the Company's Common Stock
owned by UIT. Mr. Harry Shuster is a significant shareholder, a
director and the Chairman of the Board of UIT and may be deemed
the beneficial owner of these shares.
(8) Does not include two warrants issued in connection with
the acquisition of assets from UIT, each entitling Mr. Shuster
to purchase 200,000 shares of the Company's Common Stock. One
warrant is exercisable for 200,000 shares at $2.50 per share and
may be exercised between April 1, 2002 and June 30, 2002, but
only if NetCruise achieves profits equal to or exceeding
$5,000,000 for the years 1999, 2000 and 2001. The other warrant
is exercisable for 200,000 shares at $6.00 per share an may be
exercised between April 1, 2002 and June 30, 2002, but only if
NetCruise achieves profits equal to or exceeding $10,000,000 for
the years 1999, 2000 and 2001.
(9) Includes all of the options granted to certain officers
and directors pursuant to the footnotes numbered (1) through (6)
above.
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.
<PAGE>
ANNUAL REPORT TO STOCKHOLDERS
The Annual Report on Form 10-KSB as amended for the year ended
December 31, 1998 is being mailed to Stockholders with this
Proxy Statement and are incorporated herein by reference.
STOCKHOLDER PROPOSAL - 1999 ANNUAL MEETING
Any stockholder proposals to be considered by the Company for
inclusion in the proxy material for the 1999 Annual Meeting of
Stockholders must be received by the Company at its principal
executive offices by June 30, 1999.
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
New York, New York JOHN H. WASKO, Secretary
May _____, 1999
<PAGE>
GENISYS RESERVATION SYSTEMS, INC.
P R O X Y
This Proxy is Solicited on Behalf of the Board of Directors
The undersigned hereby appoints Lawrence E. Burk and Warren D.
Bagatelle as Proxies, each with the power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated below, all the shares of
the common and preferred stock of Genisys Reservations Systems, Inc. held of
record by the undersigned on_____________, 1999, at the Annual Meeting of
Stockholders to be held on _______________, 1999, or any adjournment thereof.
1. ELECTION OF DIRECTORS
Lawrence E. Burk, John H. Wasko, David W. Sass, S. Charles Tabak, Warren D.
Bagatelle, Harry Shuster and Brian Shuster.
To withhold authority to vote for any nominee, a line must be drawn
through the nominee's name.
2. RATIFICATION OF THE ACQUISITION OF A TECHNOLOGY LICENSE AND CERTAIN
RELATED ASSETS FROM UNITED INTERNET TECHNOLOGIES, INC. ANDAPPROVAL OF
THE ISSUANCE OF 1,100,00 SHARES OF COMMON STOCK AND TWO WARRANTS EACH
IN THE AMOUNT OF 800,000 SHARES TO UNITED INTERNET TECHNOLOGIES, INC.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. RATIFICATION OF THE SALE OF THE LIMOUSINE RESERVATION BUSINESS SYSTEM
TO GEN O2, INC., A NEWLY ORGANIZED COMPANY FOUNDED BY MARK A. KENNY, A
FORMER DIRECTOR AND FOUNDER OF THE COMPANY.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. APPROVAL OF AN AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION
TO CHANGE THE NAME OF THE CORPORATION TO NETCRUSETRAVEL.COM, INC.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. APPROVAL OF AN AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION
TO RESTATE THE PROVISIONS RELATING TO THE CORPORATION'S AUTHORIZED
PREFERRED STOCK AS THEY RELATE TO DIVIDENDS AND LIQUIDATION
PREFERENCES.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
<PAGE>
6. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
FOR [ ] AGAINST [ ] ABSTAIN [ ]
7. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS
MADE, THIS PROXY WILL BE VOTED "FOR" PROPOSALS 1, 2, 3, 4, 5 AND 6.
Please sign name exactly as appears below. When shares are held by
joint tenants, both should sign. When signing as attorney, as executor,
administrator, trustee or guardian, please give full title as such. If a
corporation, please sign in full corporate name by President or other authorized
officer. If a partnership, please sign in partnership name by authorized person.
Dated: , 1999
Signature
Signature, if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY USING THE ENCLOSED
ENVELOPE
If you have had a change of address, please print or type your new address(s) on
the line below.
