UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 31, 2006
Online Vacation Center Holdings Corp.
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(Exact name of registrant as specified in its charter)
Florida 0-32137 65-0701352
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
1801 N.W. 66th Avenue, Plantation, Florida 33313
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (954) 377-6400
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Not applicable
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(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
This report on Form 8-K/A amends the Company's previously filed Form 8-K on
September 5, 2006.
Item 1.01 Entry Into a Material Definitive Agreement
On August 31, 2006, Online Vacation Center Holdings Corp. consummated the
acquisition of Phoenix International Publishing, LLC, a publisher of consumer
magazines and guides about travel to the U.S. and Canada, pursuant to the terms
of an Acquisition Agreement, dated August 31, 2006, by and among Online Vacation
Center Holdings Corp., a Florida corporation, Phoenix International Publishing,
LLC, a Delaware limited liability company, and Simon Todd, an individual. Simon
Todd has been employed by Online Vacation Center as Vice President of Strategy
and Planning since May 1, 2006. Online Vacation Center is a wholly-owned
subsidiary of Online Vacation Center Holdings Corp.
Pursuant to the Acquisition Agreement, Online Vacation Center Holdings Corp.
purchased and acquired all of the issued and outstanding ownership interests of
Phoenix International Publishing, LLC for 1,450,000 restricted shares of Online
Vacation Center Holdings Corp. common stock.
The foregoing description of the Acquisition Agreement and the transactions
consummated thereby is qualified in its entirety by reference to the Acquisition
Agreement attached as Exhibit 2.1 hereto and the press release attached as
Exhibit 99.1 hereto, and incorporated herein by reference.
Item 2.01 Completion of Acquisition or Disposition of Assets
On August 31, 2006, Online Vacation Center Holdings Corp. consummated the
acquisition of Phoenix International Publishing, LLC, a publisher of consumer
magazines and guides about travel to the U.S. and Canada, pursuant to the terms
of an Acquisition Agreement, dated August 31, 2006, by and among Online Vacation
Center Holdings Corp., a Florida corporation, Phoenix International Publishing,
LLC, a Delaware limited liability company, and Simon Todd, an individual. The
information set forth in Item 1.01 above is incorporated into this Item 2.01 by
reference.
Item 9.01 Financial Statements and Exhibits.
(a) Financial Statements of Business Acquired. The financial statements required
under Item 9.01(a) of Phoenix International Publishing, LLC are attached to this
report.
(b) Proforma Financial Information. Proforma financial information at December
31, 2005 are attached to this report.
(d) Exhibits.
2.1 Acquisition Agreement, dated August 31, 2006, by and among Online
Vacation Center Holdings Corp., Phoenix International Publishing, LLC,
and Simon Todd.*
99.1 Press Release dated August 31, 2006*
*Previously filed on Form 8-K current report on September 5, 2006.
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
Date: November 6, 2006 ONLINE VACATION CENTER HOLDINGS CORP.
BY: /s/ EDWARD B. RUDNER
---------------------------
Edward B. Rudner
Chief Executive Officer
3
Phoenix International Publishing, LLC
TABLE OF CONTENTS
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PAGE
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM 1
FINANCIAL STATEMENTS
Balance Sheets 2
Statements of Income 3
Statement of Changes in Members' Deficit 4
Statements of Cash Flows 5
Notes to Financial Statements 6-9
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the board of directors and shareholders of
Phoenix International Publishing, LLC
We have audited the accompanying balance sheets of Phoenix International
Publishing, LLC as of December 31, 2005 and 2004 and the related statements of
operations, changes in members' deficit and cash flows for the years then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Phoenix International
Publishing, LLC for December 31, 2005 and 2004 and the results of its operations
and its cash flows for the years then ended in conformity with accounting
principles generally accepted in the United States of America.
/s/ Jewett, Schwartz & Associates
October 6th, 2006
Hollywood, Florida
1
PHOENIX INTERNATIONAL PUBLISHING, LLC
BALANCE SHEETS
DECEMBER 31,
2005 2004
--------- ---------
ASSETS
Current Assets:
Cash $ 95,077 $ 88,522
Accounts receivable, net 348,049 162,031
Other current assets 2,220 1,140
--------- ---------
Total current assets 445,346 251,693
--------- ---------
Property and equipment, net 9 674
--------- ---------
Other assets 4,197 4,197
--------- ---------
Total Assets $ 449,552 $ 256,564
========= =========
LIABILITIES AND MEMBERS' DEFICIT
Current Liabilities:
Accounts payable $ 241,199 $ 161,175
Related party loans 117,425 13,000
Advance payments 120,000 108,000
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Total current liabilities 478,624 282,175
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Total Liabilities 478,624 282,175
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Commitments and contingencies
Members' Deficit:
Member contributions 100 100
Accumulated deficit (29,172) (25,711)
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Total Members' Deficit (29,072) (25,611)
--------- ---------
Total Liabilities and Members' Deficit $ 449,552 $ 256,564
========= =========
See accompanying notes to the financial statements.
2
PHOENIX INTERNATIONAL PUBLISHING, LLC
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31,
2005 2004
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Revenues, net $ 1,938,550 $ 1,276,864
Cost of sales (1,440,644) (858,478)
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Gross profit 497,906 418,386
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General and administrative expenses 501,367 421,964
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Net loss $ (3,461) $ (3,578)
=========== ===========
See accompanying notes to the financial statements.
3
PHOENIX INTERNATIONAL PUBLISHING, LLC
STATEMENT OF CHANGES IN MEMBERS' DEFICIT
FOR THE YEARS ENDED DECEMBER 31,
Total
Members' Accumulated Members'
Contribution Deficit Deficit
------------- ------------ ---------
Balance, January 1, 2004 $ 100 $(22,133) $(22,033)
Net Loss -- (3,578) (3,578)
-------- -------- --------
Balance, December 31, 2004 $ 100 $(25,711) $(25,611)
Net Loss -- (3,461) (3,461)
-------- -------- --------
Balance, December 31, 2005 $ 100 $(29,172) $(29,072)
======== ======== ========
See accompanying notes to the financial statements.
4
PHOENIX INTERNATIONAL PUBLISHING, LLC
STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
2005 2004
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Cash Flows from Operating Activities:
Net loss $ (3,461) $ (3,578)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation 4,621 568
Amortization 423 442
Changes in Operating Assets and Liabilities:
Accounts receivable (186,018) (71,225)
Prepaid expenses and other current assets (1,080) --
Accounts payable and accrued expenses 80,024 62,243
Advance payment 12,000 108,000
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Net cash provided by (used in) operating activities (93,491) 96,450
--------- ---------
Cash Flows from Investing Activities:
Purchase of property and equipment (4,379) --
--------- ---------
Net cash used in investing activities (4,379) --
--------- ---------
Cash Flows from Financing Activities:
Proceeds from loan payable 104,425 (21,377)
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Net cash provided by (used in) financing activities 104,425 (21,377)
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Net Increase in Cash 6,555 75,073
Cash, Beginning of Year 88,522 13,449
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Cash, End of Year $ 95,077 $ 88,522
========= =========
Supplemental Disclosures:
Cash paid for interest $ -- $ 226
========= =========
See accompanying notes to the financial statements.
5
PHOENIX INTERNATIONAL PUBLISHING, LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business
Phoenix International Publishing is the UK's leading publisher of
consumer travel magazines and guides about travel to the USA and
Canada. In addition, the company distributes travel guides in multiple
languages in many countries, including Germany, France, Belgium,
Holland, Mexico, Brazil, Argentina and Japan. The company has offices
in Dallas, Texas, London and Horsham, England. The primary client base
of regional tourism offices, state and province tourism offices,
convention and visitor bureaus and travel suppliers is spread
throughout the USA and Canada.
Use of Estimates
The preparation of financial statements in accordance with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure at the date of the
financial statements and during the reporting period. The most
significant of the estimates relates to third-party payer contractual
allowances and the allowance for doubtful accounts. It is reasonably
possible that these estimates will change in the near term due to one
or more future confirming events. Accordingly, actual results could
differ from those estimates.
Revenue recognition
The Company recognizes revenue in accordance with provision of Staff
Accounting Bulletin (SAB) No. 104 "Revenue Recognition in Financial
Statements", which states that revenue is realized or realizable and
earned when all of the following criteria are met: persuasive evidence
of an arrangement exists, services have been rendered, the seller's
price to the buyer is fixed or determinable, and collectibility is
reasonably assured. Revenue is recognized upon production of the
magazine or travel guide.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents. At December
31, 2005 and 2004 cash and cash equivalents include cash on hand and
cash in the bank.
6
PHOENIX INTERNATIONAL PUBLISHING, LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Accounts Receivable
Accounts receivables principally consist of amounts due from customers
and are recorded net of doubtful accounts for financial statement
reporting purposes. As of December 31, 2005 and 2004, there were no
amounts recorded as doubtful accounts as all balances were fully
collectible.
Property and Equipment
Property and equipment are recorded at cost and depreciation is
provided using the straight-line method over the estimated useful lives
of the assets.
Major replacements and betterments are capitalized and depreciated over
the remaining useful lives of the assets.
Advances
Amounts recorded as advance payments represent amounts received on
publishing to be done in future years.
Income Taxes
As of December 31, 2005 and 2004, the Company was organized as a
limited liability corporation, whereby the income of the corporation
was reported on the personal income tax returns of the members.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to
concentrations of credit risk consist principally of accounts
receivable.
Fair Value of Financial Instruments
The Company's financial instruments include cash, trade receivables.
The carrying amount of these financial instruments has been estimated
by management to approximate fair value.
Foreign Currency Translation
The Company does conduct operations in both the United States and the
United Kingdom, whose functional currency is the British pound. At the
transaction date, each asset, liability, revenue and expense are
recorded in British pounds by the use of
7
PHOENIX INTERNATIONAL PUBLISHING, LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
the exchange rate in effect at that date. At the year end, monetary
assets and liabilities are translated into US dollars by using the
exchange rate in effect at that date. The resulting foreign currency
transaction gains and losses are included in operating revenues and
expenses for the year. These gains or losses were insignificant in 2005
and 2004.
Recent Accounting Policies
Non-monetary Exchange
In December 2004, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) No. 153,
"Exchanges of Nonmonetary Assets, an amendment of APB Opinion No. 29."
The amendments made by SFAS No. 153 eliminate the exception for
nonmonetary exchanges of similar productive assets and replace it with
a general exception for exchanges of nonmonetary assets that do not
have commercial substance. A nonmonetary exchange has commercial
substance if the future cash flows of the entity are expected to change
significantly as a result of the exchange. The provisions of this
statement became effective for nonmonetary asset exchanges occurring in
the Company's fourth quarter of 2005. The adoption of SFAS No. 153 did
not have a material impact on The Company's financial statements.
Conditional Asset Retirement
In March 2005, the FASB issued FASB Interpretation (FIN) No. 47 -
"Accounting for Conditional Asset Retirement Obligations - an
Interpretation of SFAS 143 (FIN No. 47). FIN No. 47 clarifies the
timing of liability recognition for legal obligations associated with
the retirement of a tangible long-lived asset when the timing and/or
method of settlement are conditional on a future event. FIN No. 47 is
effective no later than December 31, 2005. FIN No. 47 did not impact
the Company for the year ended December 31, 2005.
Accounting Changes and Error Corrections
In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and
Error Corrections." This statement replaces APB Opinion No. 20,
"Accounting Changes", and SFAS No. 3, "Reporting Accounting Changes in
Interim Financial Statements," and changes the requirements for the
accounting for and reporting of a change in accounting principle. This
statement applies to all voluntary changes in accounting principles. It
also applies to changes required by an accounting pronouncement in the
8
PHOENIX INTERNATIONAL PUBLISHING, LLC
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2005
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
unusual instance that the pronouncement does not include specific
transition provisions. When a pronouncement includes specific
transition provisions, those provisions should be followed. SFAS No.
154 requires retrospective application to prior periods' financial
statements of voluntary changes in accounting principles. SFAS No. 154
is effective for accounting changes and corrections of errors made
during 2007, beginning on January 1, 2007. The Company does not believe
the adoption of SFAS No. 154 will have a material impact on its
financial statements.
NOTE 2. PROPERTY AND EQUIPMENT
Estimated
Useful Lives
Years
-----
--------------- ---------------
2005 2004
--------------- ---------------
Furniture, fixtures and equipment 5-10 $ 14,675 $ 10,296
Less accumulated depreciation 14,666 9,622
--------------- ---------------
$ 9 $ 674
=============== ===============
Depreciation expense for the years ended December 31, 2005 and 2004
totaled $4,621 and $568 respectively.
NOTE 3. LOANS PAYABLE RELATED PARTY
The Company entered into an unsecured promissory note agreement with a
member of the Company in 2004 in the amount of $13,000. Under the terms
of the agreement the loan is non-interest bearing and due on demand. At
December 31, 2005 the amount due was $8,491.
In 2005, the Company entered into an unsecured promissory note
agreement with another member of The Company. Under the terms of the
agreement the loan bears interest at (pound)12 per day and is due upon
demand. At December 31, 2005 the amount due was $108,000.
NOTE 4. SUBSEQUENT EVENT
On August 31, 2006, the Company was acquired by Online Vacation Center
Holdings Corp (OVCH). The Company will become a wholly owned subsidiary
of OVCH and continue its operations as such.
9
PRO FORMA UNAUDITED CONDENSED CONSOLIDATED FINANCIAL INFORMATION
Balance Sheet as of December 31, 2005
The following pro forma unaudited consolidated financial information gives
effect to the acquisition. This pro forma balance sheet assumes the transactions
occurred as of December 31, 2005. The pro forma unaudited consolidated financial
information is presented for illustrative purposes only. It is not necessarily
indicative of the operating results or financial position that would have
occurred if the acquisition had been consummated at the beginning of the period
indicated, nor is such information indicative of the future operating results or
financial position of Online Vacation Center Holdings Corp. after the
acquisition.
Online Vacation Phoenix Effect of
Center Holdings International PIP Post
Corp. Publishing acquisition Acquisition
--------------- ----------------- ---------------- ----------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 2,213,182 $ 95,077 $ 2,308,259
Accounts receivable, net 581,896 348,049 929,945
Other current assets 220,720 2,220 222,940
-------------- --------------- ---------------- ---------------
Total Current Assets 3,015,798 445,346 - 3,461,144
Restricted cash 315,000 - 315,000
Property and equipment, net 111,100 9 111,109
Deferred income taxes 1,116,148 - 1,116,148
Goodwill - - 1,660,322 1,660,322
Intangible assets, net 44,314 4,197 48,511
-------------- --------------- ---------------- ---------------
Total Assets $ 4,602,360 $ 449,552 $ 1,660,322 $ 6,712,234
============== =============== ================ ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable and accrued liabilities $ 894,187 $ 241,199 1,135,386
Related party loans - 117,425 117,425
Deferred revenue 479,434 120,000 599,434
Customer deposits 1,575,475 - 1,575,475
-------------- --------------- ---------------- ---------------
Total Current Liabilities 2,949,096 478,624 - 3,427,720
Subordinate Debentures 3,000,000 - 3,000,000
-------------- --------------- ---------------- ---------------
Total Liabilities 5,949,096 478,624 - 6,427,720
-------------- --------------- ---------------- ---------------
Members' Deficit
Member contributions 100 (100) -
Accumulated deficit (29,172) 29,172 -
--------------- ----------------
Total Member's Deficit (29,072) 29,072 -
--------------- ----------------
ORIGINAL CAPITAL STRUCTURE
Common Stock, 20,000,000 shares authorized at
$.001 par value; 171,429 shares issued and outstanding 171 171
AMENDED CAPITAL STRUCTURE
Common stock, $0.0001 par value, 80,000,000
shares authorized, 18,256,777 shares issued and
outstanding 145 145
Additional paid-in capital 248,473 1,631,105 1,879,578
Accumulated deficit (1,595,380) (1,595,380)
--------------- ---------------- ---------------
Total Shareholders' Equity (Deficiency) (1,346,736) 1,631,250 284,514
--------------- ---------------- ---------------
Total Liabilities & Member's Deficit/
Shareholders' Equity $ 4,602,360 $ 449,552 $ 1,660,322 $ 6,712,234
=============== =============== ================ ===============
PRO FORMA UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the year ended December 31, 2005
The following pro forma unaudited consolidated financial information gives
effect to the sale of assets and the share exchange and assumes the transactions
occurred as of January 1, 2005. The pro forma unaudited consolidated financial
information is presented for illustrative purposes only. It is not necessarily
indicative of the operating results or financial position that would have
occurred if the acquisition had been consummated at the beginning of the period
indicated, nor is such information indicative of the future operating results or
financial position of Online Vacation Center after the asset sale and share
exchange.
Phoenix Online Effect of
International Vacation PIP Post
Publishing Center acquisition Acquisition
----------------- ------------------ ------------------ ------------------
NET REVENUES $ 1,938,550 $ 7,975,688 $ 9,914,238
Cost of goods sold 1,440,644 1,440,644
----------------- -----------------
GROSS PROFIT 497,906 8,473,594
OPERATING EXPENSES:
Sales and marketing 2,052,933 2,052,933
General and administrative 501,367 3,875,781 4,377,148
----------------- ------------------ -----------------
INCOME (LOSS) FROM OPERATIONS (3,461) 2,046,974 2,043,513
----------------- ------------------ -----------------
Other expenses:
Interest expense, net - (238,607) (238,607)
----------------- ------------------ ------------------ -----------------
Total other expenses, net - (238,607) - (238,607)
----------------- ------------------ ------------------ -----------------
Earnings from continuing operations
before provision for income taxes (3,461) 1,808,367 1,804,906
Provision (benefit) for income taxes (412,168) - (412,168)
----------------- ------------------ ------------------ -----------------
NET INCOME (LOSS) $ (3,461) $ 2,220,535 $ - $ 2,217,074
================= ================== ================== =================
EARNINGS PER SHARE - Basic $ 12.95 $ 1.367
================== =================
Weighted average shares outstanding - basic 171,429 1,450,000 1,621,429
================== ================== =================
EARNINGS PER SHARE - Fully Diluted $ 12.95 $ 1.367
================== =================
Weighted average shares outstanding -
fully diluted 171,429 1,450,000 1,621,429
================== ================== =================