COACHMAN INCORPORATED
301 NW 63rd Street
Suite 500
Oklahoma City, Oklahoma 73116
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
To Be Held September 25, 1995
To the Stockholders of
COACHMAN INCORPORATED
NOTICE IS HEREBY GIVEN that Special Meeting of Stockholders of
Coachman Incorporated, a Delaware corporation (the "Corporation"), will
be held at 10:00 a.m., September 25, 1995 at 301 N.W. 63rd Street, Suite
500, Oklahoma City, Oklahoma, for the following purposes:
1. To authorize the increase of authorized Common Stock to
50,000,000 and to decrease the par value to $0.005 per
share.
2. To approve and authorize the Board of Directors to effect
a reverse stock split of the Corporation's Common Stock on
a 1 share for 6 shares basis and to increase or maintain
the Corporation's authorized Common Stock at 50,000,000
shares, par value $0.005, at such time as the Corporation's
Common Stock is accepted for listing on a national market;
3. To transact such other business as may properly come
before the meeting.
Only stockholders of record at the close of business on August 25,
1995 are entitled to notice of and to vote at this meeting and any
adjournment thereof. Such stockholders may vote in person or by proxy.
The stock transfer books of the Corporation will not be closed.
Stockholders are invited to attend the meeting in person. Whether
or not you plan on attending the meeting in person, it is important that
your shares be represented and voted at the meeting in accordance with
your instructions. Therefore, you are urged to fill in, sign, date and
return the accompanying proxy in the enclosed envelope. No postage is
required if mailed in the United States.
By Order of the Board of Directors
Dennis D. Bradford
Chairman of the Board
Oklahoma City, Oklahoma
September ___, 1995
COACHMAN INCORPORATED
301 NW 63rd Street
Suite 500
Oklahoma City, Oklahoma 73116
PROXY STATEMENT
FOR
SPECIAL MEETING OF STOCKHOLDERS
To Be Held September 25, 1995
This proxy statement is being furnished in connection with the
solicitation of proxies by and on behalf of the Board of Directors of
Coachman Incorporated, a Delaware corporation (the "Corporation"), to be
used at a Special Meeting of Shareholders and at any adjournment or
postponement thereof. This proxy statement and the accompanying form
of proxy were first mailed to the holders of the Corporation's common
stock on or about September __, 1995.
SOLICITATION OF PROXIES AND VOTING RIGHTS
The presence, in person or by proxy, of the holders of 1/3 of the
votes represented by the outstanding shares of the Corporation's common
stock is necessary to constitute a quorum at the Annual Meeting. Holders
of shares are entitled to one vote per share of common stock and are not
allowed to cumulate votes in the election of directors.
Subject to the rights of Shareholders to revoke their proxies, the
shares represented by each proxy executed in the accompanying form of
proxy will be voted at the meeting in accordance with the instructions
therein. Proxies on which no voting instructions are indicated will be
voted FOR Proposals 1 and 2 and in the best judgment of the proxy
holders on any other matter than may properly come before the Annual
Meeting. If a broker indicates on a proxy that it does not have
discretionary authority to vote shares on a certain matter, those shares
will not be considered present and entitled to vote with respect to that
matter. If a shareholder indicates on a proxy card that such shareholder
abstains from voting with respect to a proposal, the shares will be
considered as present and entitled to vote with respect to that matter,
and abstention will have the effect of a vote AGAINST the proposal.
Shareholders have the unconditional right to revoke their proxies
at any time prior to the voting of their proxies at the Special Meeting by
giving written notice to the Secretary of the Corporation or by attending
the Special Meeting and voting in person.
The expenses of the solicitation of the proxies for the meeting,
including the cost of preparing, assembling and mailing the notice, proxy,
proxy statement and return envelopes, the handling and tabulation of
proxies received, and charges of brokerage houses and other institutions,
nominees or fiduciaries for forwarding such documents to beneficial
owners, will be paid by the Corporation. The Corporation's Board of
Directors believe that it controls a sufficient number of votes to approve
the proposals without a solicitation of proxies. The Corporation does not
intend to solicit proxies other than the mailing of proxy materials. Both
Proposals require the affirmative vote of a majority of the issued and
outstanding shares of Common Stock.
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table and notes thereto sets forth, as of June 30,
1995, certain information regarding ownership of common stock by (i)
each person known to the Corporation to beneficially own more than 5%
of its common stock, (ii) each director and nominee for director of the
Corporation and (iii) all present officers and directors of the Corporation
as a group.
Under the rules and regulations of the Securities and Exchange
Commission, a person is deemed to own beneficially all securities of which
that person owns or shares voting or investment power as well as all
securities which may be acquired through the exercise of currently
available conversion, warrant or option rights. Unless otherwise indicated,
each such person possesses sole voting and investment power with respect
to the shares owned by him.
Name and Address Amount and Nature of Percent of
of Beneficial Owner Beneficial Ownership Outstanding
Dennis D. Bradford 1,522,638 (a)(b) 18%
301 NW 63rd, Suite 500
Oklahoma City, OK 73116
Robert E. and Linda D. Swain 1,721,170 21%
1055 Bay Esplanade
Tampa, FL 34630
Craig Missler 507,646 (c) 6%
P. O. Box 1826
Venice CA 90294
Jay T. Edwards 6,150 (d) *
Alejandro G. Asmar 0 0
Catherine Myers 20 *
All officers and directors
as a group (4 persons) 3,249,978 (e) 45%
*Less than 1% of the common stock outstanding at June 30, 1995.
(a) Includes 13,100 shares of common stock that may be acquired
upon exercise of employee stock options previously granted under
the Corporation's 1987 Stock Option Plan.
(b) Includes 403,000 shares of common stock which may be acquired
upon exercise of nonqualified incentive stock options granted
December 14, 1993.
(c) Includes 129,143 shares available if a $30,000 note due Mr. Missler
by the Corporation is converted to stock.
(d) Includes 4,700 shares of common stock that may be acquired upon
exercise of employee stock options previously granted under the
Corporation's 1987 Stock Option Plan.
(e) Includes 417,800 shares of common stock that may be acquired by
such persons upon exercise of employee stock options previously
granted under the Corporation's 1987 Stock Option Plan and on
December 14, 1993.
AUTHORIZATION TO INCREASE COMMON STOCK
(Proposal One)
The Board of Directors has approved and recommends that the
stockholders of the Corporation approve an amendment to the
Corporation's Certificate of Incorporation for the purpose of increasing the
number of its authorized shares of Common Stock from 25,000,000 to
50,000,000 and to decrease the par value to $.005 per share.
The Board of Directors believes that the increase in the number of
authorized shares of Common Stock will increase the flexibility of the
Corporation for raising additional capital and future acquisitions. Except
for the intended acquisition of Olympic Mills and the sale of shares in the
private placement described below, the Corporation does not presently
have any plans to issue any Common Stock.
The affirmative vote of a majority of the outstanding Common
Stock entitled to vote on this proposal to amend the Corporation's
Certificate of Incorporation is required for approval of the proposal. The
Board of Directors recommends voting FOR this proposal to amend the
Certificate of Incorporation.
AUTHORIZATION OF REVERSE STOCK SPLIT
(Proposal Two)
The Board of Directors has approved and recommends that the
stockholders of the Corporation approve a one for six reverse stock split
of the Corporation's Common Stock and to increase or maintain the
authorized Common Stock at 50,000,000 shares, par value $0.005 per
share; provided, however, that the Corporation's Common Stock will be
accepted for listing on Nasdaq National Market or the American Stock
Exchange. Accordingly, shareholders are being asked to approve the
reverse stock split and to authorize the Board of Directors to take the
necessary action to achieve the stock split and change or maintain
authorized Common Stock only if the business purpose will be achieved.
It is possible that the reverse stock split will not occur if the Corporation
is unable to list the Common Stock on a national market for reasons
other than pricing. The Corporation knows of no reason why its Common
Stock would not be accepted for listing.
The proposed reverse stock split would be achieved by amendment
to the Certificate of Incorporation to reclassify and change (without any
further act) the currently authorized 25,000,000 shares of Common Stock
par value of $0.01 to 4,166,666 shares of Common Stock par value $0.06
or if the stock split is delayed, the 50,000,000 shares expected to be
authorized to 8,333,333 shares of Common Stock, par value $0.03. The
amendment to the Certificate of Incorporation would also provide for an
increase in the authorized Common Stock to 50,000,000 shares, par value
$0.005 per share.
The purpose of the reverse stock split is to establish an
appropriate price in the public market for the Corporation's Common
Stock in order to meet certain listing requirements for the Common Stock
being traded in a meaningful market, such as the Nasdaq National Market
or the American Stock Exchange. On August 8, 1995, shares of the
Corporation's Common Stock were trading at 50 cents per share, asked, as
quoted by the NASDAQ Electronic OTC Board.
If the reverse stock split is approved by the stockholders, the
Corporation will file an appropriate amendment to the Certificate of
Incorporation effecting such reverse stock split and establishing the
required number of shares of authorized Common Stock only upon a the
listing of the Common Stock and a decision by the Board of Directors to
do so. The stockholders of the Corporation will be given notice to
surrender their certificates of shares to American Stock Transfer, as
transfer agent for the Corporation, in order that new certificates (giving
effect to the reverse stock split) can be issued.
Any fractional shares to be issued will be rounded up the nearest
whole share by the stock transfer agent upon the reissuance of shares
surrendered.
IMPACT OF CERTAIN TRANSACTIONS ON SHARES OUTSTANDING
Currently, there are 8,278,142 shares of Common Stock issued and
outstanding and ______________ shares reserved for issuance under
certain incentive option plans and outstanding warrants. In June 1995,
the Corporation signed a definitive acquisition agreement with the owners
of Olympic Mills Corporation to acquire that business for cash and the
issuance of 6,000,000 shares of Common Stock. The Corporation intends
to raise an additional $4,500,000 to $8,000,000 through the sale of a
minimum of 11,250,000 shares and a maximum of 20,000,000 shares of
Common Stock in a private placement to fund the acquisition and provide
working capital for the Corporation. The shares required to complete the
acquisition of Olympic Mills are currently authorized. The shares required
to raise the minimum offering are also currently authorized.
If the shareholders vote for the proposals to effect a reverse stock
split of 1 share for each 6 shares and to increase the number of
authorized shares, each of which is recommended by the Board of
Directors, the number of shares of Common Stock authorized would be
50,000,000 par value $.005 per share. The number of shares outstanding
after the reverse split would be 1,379,691 with ____________ shares
reserved for issuance under the various stock option plans and
outstanding warrants. The number of shares to be issued in the
acquisition of Olympic Mills would be 1,000,000 shares and the minimum
number of shares to be sold in the private placement would be a
minimum of 1,875,000 shares and a maximum of 3,333,334 shares.
Assuming the closing of the Olympic Mills transaction, current
shareholders would own approximately 32% of the issued and outstanding
shares upon the issuance of the minimum shares offered in the private
placement and 24% upon the issuance of the maximum shares offered in
the private placement.
ACQUISITION OF OLYMPIC MILLS
The Corporation entered into an agreement dated June 27, 1995
(the "Agreement") with Corporacion Inmobiliaria Textil ("Cintex"), a Puerto
Rico corporation; Fideicomiso Hispamer ("Hispamer"), a Puerto Rico trust;
OM Acquisition Corp. ("OM"), a Delaware corporation; and Olympic Holding
Corp. ("Holding"). The Agreement provides that the Corporation will
acquire (i) all issued and outstanding Class A Preferred Stock of Olympic
Mills, Cintex and Hispamer, as well as $3,570,400 in indebtedness owed by
Olympic Mills to Cintex and Hispamer; (ii) all the issued and outstanding
common stock of Olympic Mills from Olympic Mills; (iii) all of the issued
and outstanding common stock of Lutania Mills, Inc. ("Lutania") from
Holding. Unless the context otherwise requires, references to Olympic
Mills include Lutania. Upon execution of the Agreement, the Corporation
deposited into escrow the sum of $100,000, which will be applied to the
purchase price at closing, which was to have occurred on August 31, 1995,
but was extended under the terms of the Agreement to September 30,
1995, upon the deposit by the Corporation of an additional $100,000 in
earnest money.
The purchase price is (i) $12,500,000 in cash, less adjustments; (ii)
6,000,000 shares of Common Stock of the Corporation; (1,000,000 after the
reverse stock split); (iii) a note for $1,000,000 if Olympic Mills has a
signed contract with the U.S. Department of Defense for a minimum of
$11,000,000 in purchases the first year ("Defense Contract Amount"); plus,
(iv) a note in an amount equal to the grants made to Olympic Mills after
May 23, 1995 (other than grants under a wage incentive program) by
December 31, 1995 but not more than $1,000,000 ("Grant Amount").
The cash portion of the purchase price will be reduced by the
amount in escrow ($200,000) and the amount by which Olympic Mills'
indebtedness to Congress Credit as of the closing date exceeds $5,000,000.
The notes evidencing the Defense Contract Amount and the Grant Amount
will be due 5 years from the closing date, will bear interest at an annual
rate of 7%, payable quarterly and will be secured by a subordinated lien
on all the furniture and equipment of Olympic Mills.
The amount by which Olympic Mills' indebtedness to Congress
Credit exceeds $5,000,000, will be evidenced by a promissory note from
Olympic to Cintex, will be due 90 days from the date of issue and will bear
interest at the rate of 0.11% per day.
In addition to the purchase price described above, the Corporation
will also be obligated, as a contingent purchase price, to issue additional
shares of Common Stock of the Corporation to the sellers if (i) none of
the sellers sells or disposes of any of the Corporation's Common Stock for
3 years after the closing date, and (ii) the average price of the
Corporation's Common Stock owned by them as quoted on a national
exchange for every 30 day period preceding the third anniversary date of
the closing is less than $15,000,000. If these contingencies are not met,
the Corporation is required to issue an additional number of shares
sufficient for sellers to own Common Stock of the Corporation having an
average price of $15,000,000 for the 30 day period preceding the third
anniversary date of the closing.
If the sellers voluntarily sell any of the Common Stock to a third
party, the Corporation has a 10 day right of first refusal to acquire the
shares at the same price offered by the sellers.
The acquisition will be treated as a sale for both Puerto Rico and
United States federal income tax purposes.
BUSINESS OF OLYMPIC MILLS CORPORATION
Olympic Mills is a privately held, vertically integrated textile and
apparel manufacturer in Puerto Rico. It is Puerto Rico's leading
manufacturer of underwear, T-shirts, school uniforms and polo shirts.
Olympic Mills is classified as a "936 Company" under the Code which
generally provides that qualified income earned in Puerto Rico is not
subject to U.S. taxation. Olympic Mills' products are sold primarily in
Puerto Rico or to the U.S. Military. Sales for 1994 were $31,228,916 with
net income of $2,044,670. The company operates two vertical mills and
a cut and sew operation in Puerto Rico.
Upon completion of the Acquisition, Olympic Mills Corporation will
operate as a subsidiary of the Company and Yabucoa Industries, Inc. and
Lutania Mills, Inc. will operate as subsidiaries of Olympic Mills Corporation.
Products. Olympic Mills has four basic product lines. All cotton
knitted men's underwear, cotton and cotton blend knitted T-shirts, cotton
and cotton blend polo shirts and non-knitted sewn products such as
pajamas and shorts. Trade names used by Olympic Mills include Grana
underwear, America Project underwear and sportswear and Olympic Mills.
Olympic Mills knits, bleaches and dies most of the knitted fabric used by
it and purchases the non-knitted fabric from outside sources.
In 1994, the product mix of the companies business was underwear
30%, T-shirts 50%, polo shirts 15% and other products 5%. This product
mix is expected to change during 1995 as a result of the increased
military purchasing of underwear. Currently, Olympic Mills produces 3,000
dozen T-shirts and 2,000 dozen briefs, polo shirts and other products
daily. Olympic Mills operates vertical mills in Guaynabo and Humacao,
Puerto Rico and a cutting and sewing operation in Yabucoa, Puerto Rico.
These facilities are sufficient to supply the current sales and future
expansion.
Customers. With the exception of underwear sold to the U.S.
Department of Defense and a private label "big and tall" program, all of
Olympic Mills' products are now sold in Puerto Rico. Grana underwear
is sold to the general public through leading department stores, retailers
and discounters such as WalMart and K-Mart. The T-shirts are sold to
screen printers who distribute printed shirts to retailers like Caribbean
Outfitters. The polo shirts are used primarily as school uniform shirts
and are sold through retailers and the school themselves.
The three largest customers are E. Mendoza & Co. (25%),
Estampados Deportivos (9%) and the U.S. Department of Defense (6%).
Olympic Mills recently completed a military contract to supply underwear
to all branches of the U.S. Military and, in June 1995, the U.S. Department
of Defense entered into a new two year contract which is expected to
result in a significant increase in sales to the U.S. Department of Defense.
No other single customer accounted for more than 5% of Olympic Mills' net
sales in fiscal 1994. The loss of the sales to any of the key customers
would have a material adverse effect on Olympic Mills' results of
operations. Olympic Mills has no long-term purchase contracts or
commitments with any customer other than the U.S. Department of
Defense.
Supplying products to retail stores outside of Puerto Rico could
represent a major growth area for Olympic Mills. Shirts imprinted at the
Humacao plant will be exported throughout the Caribbean Basin.
Customers would be retail stores, hotel shops, cruise ships and Caribbean
Outfitters stores. One of the fastest growing segments of the T-shirt
business is licensing. This area which could be pursued by Olympic Mills.
Coachman, through common stockholders and prior dealings, has
relationships with B.U.M. Equipment and Ocean Pacific as well as other
apparel licensing companies. The licensing market in the Caribbean and
South America represents a great opportunity.
In the past Olympic Mills operated a sales office in the United
States. The office was closed in 1987 due to a change in the ownership of
Olympic Mills and the owner's desire to concentrate on business in Puerto
Rico. Re-entering the U.S. market directly or through strategic alliances
present a significant opportunity for growth. Approximately 4 million
Puerto Ricans live in the United States, and they constitute approximately
20% of the Latin community in the United States which is the fastest
growing segment of the population. With the high name recognition of the
Grana name in the Puerto Rican community, both Grana underwear and
America Project T-shirt, offer potential opportunities for penetrating the
U.S. market.
Marketing. At the present time, Olympic Mills is marketing its
consumer products only in Puerto Rico through two channels of
distribution. One is through an in-house sales staff of 6 which handles
direct sales, and the other is through the distributors such as E. Mendoza
& Co.
In the past, Olympic Mills has used limited advertising in promoting
brand awareness. The existing core business is supplying quality
underwear and T-shirts to the Puerto Rican market. By expanding the
product line, increasing marketing and advertising and expanding the
customer base, management believes that future growth in this core
business is attainable.
The contract business with the U.S. military is relatively new to
Olympic Mills. Sales from the military contract are becoming a significant
portion of the Olympic Mills' gross revenues. During the last year, Olympic
Mills produced underwear for all branches of the military with quality and
service meeting or exceeding military standards. The U.S. military now
requires contractors to electronically receive purchase orders and
transmit invoices, and Olympic Mills has made the necessary changes to
meet this requirement.
Future Expansion. In the future, the Company expects to open a
sales and marketing operation in the United States. Such operation would
handle sales and distribution of all of Olympic Mills' products in the United
States. Both the Grana underwear and America Project T-shirts lines
could be very competitive in light of the large Puerto Rican and hispanic
population in the United States who are familiar with the Grana
trademark and products. The company will also pursue licensing and
private label manufacturing in the U.S.
Competition. There are several competitors for Olympic Mills
consumer products. The two largest are Fruit of the Loom and Hanes. In
Puerto Rico, Olympic Mills' is very competitive due to brand recognition
and loyalty and delivery time and service. However, as the Company
expands outside Puerto Rico, it will be at a disadvantage due to the size
and financial strength of its competition.
Raw Materials. The principal raw materials used by Olympic Mills
are 100% cotton yarn and a blend of pre-spun 50% cotton and 50%
synthetic yarn. Many factors including crop conditions, agricultural
policies, market conditions and demand can significantly affect the cost
and availability of these yarns, but to date, Olympic Mills has experienced
no difficulty obtaining adequate supplies. Olympic Mills currently
purchases yarn from three suppliers however, these are commodity
purchases and are available from a wide range of suppliers It currently
maintains a 60 day inventory of raw materials. All woven and some
knitted cloth is purchased from outside suppliers.
Inventory and Backlog. Olympic Mills' backlog consists of
confirmed purchase orders. At June 30, 1995, Olympic Mills had
approximately $3,000,000 of unfilled customer orders for goods compared
to $2,000,000 on June 30, 1994. Olympic Mills has not experienced any
difficulty in filling orders on a timely basis or material returns of its
products. Olympic Mills maintains a 60 day supply of raw materials and
also maintains an inventory of finished goods to level out the effects of
seasonality of sales.
Seasonally. The products sold to the U.S. Department of Defense
are not seasonal. Commercial sales are seasonal in nature with
Christmas, back to school and Fathers Day being the peak seasons.
Financing. The Company has obtained a letter of intent from
Congress, to finance through Olympic Mills a portion of the purchase price
and provide an operating credit line. Terms are, in general, a $10,000,000
revolving credit line funding up to an amount equal to 50% of inventory
and 80% of receivables secured by inventory and receivables and a
$5,000,000 3 year term loan secured by machinery and equipment. The
rate will be 4% over Congress's "cost of 936 Funds," which is regulated by
a local Puerto Rican authority which rate is normally between 75% and
90% of the LIBOR rate.
Patents, Copyrights and Trademarks. Olympic Mills is the holder
of a number of copyrights and registered trademarks. Those actively used
now are Grana and America Project . Olympic Mills has used the trade
name "Olympic Mills" for 46 years in Puerto Rico and has used it in the
United States while operating a sales office in the United States; however,
it has not been registered.
Regulations. Olympic Mills' various operations will be regulated by
federal, state and foreign laws, rules and regulations. On the federal level,
the Olympic Mills is subject to minimum wage and other labor laws. It will
also be subject to foreign and state regulation regarding wages, hours,
working conditions and worker's compensation. Olympic Mills must
comply with local land use and zoning regulations. Olympic Mills is now
also subject to the terms of the Disabled American's Act and is making
every effort to comply.
Facilities. Olympic Mills leases and occupies a 170,000 square foot
manufacturing facility, which contains the executive offices, in Guaynabo,
Puerto Rico. It also leases and occupies a 140,000 square foot
manufacturing facility in Humacao and a 28,000 square foot cut and sew
facility in Yabucoa, Puerto Rico.
Employees. Olympic Mills employs 1,035 full and part-time
employees. None of Olympic Mills' employees is represented by a labor
union or subject to a collective bargaining agreement.
Olympic Mills does not have a collective bargaining agreement
covering any of its employees, nor has it ever experienced any material
labor disruption, and is not aware of any efforts or plans to organize its
employees. The Company contributes part of the cost of medical and life
insurance coverage for eligible employees. Olympic Mills considers
relations with its employees to be excellent. Olympic Mills does not have
a retirement or pension program.
Legal Proceedings. There are no material legal proceedings
pending against Olympic Mills at this time.
FINANCIAL INFORMATION
Financial information required on Coachman Incorporated has or
will be provided to stockholders in the form of the Corporation's Form
10-K for 1994 and Form 10-Q for the Second Quarter of 1995.
THE COMPANY
Common Stock
The Company has paid no dividends on its Common Stock
as of the date of this Memorandum nor does it intend to pay dividends on
its Common Stock in the foreseeable future. See "DESCRIPTION OF CAPITAL
STOCK." The Company currently intends to retain future earnings to fund
development and growth of its businesses. In the future, any payment of
dividends on Common Stock will be dependent upon the financial
condition, capital requirements and earnings of the Company, restrictions
in any lending arrangements the Company may have, including the facility
with Congress, and any other factors the Board of Directors may deem
relevant.
The Corporation's Common Stock is listed for trading on the
NASDAQ OTC Bulletin Board under the trading symbol "CINC". The following
table reflects the range of high and low bid prices, as reported by the
National Quotation Bureau, for each quarterly period during 1994 and
through the date of the Memorandum. The prices represent inter-dealer
prices, without mark-up, mark-down or commission and may not rep-
resent actual transactions. Trading in the Corporation's Common Stock
is very limited and may not be an indication of the value of the Common
Stock.
High Low High Low
Quarterly Period Ended Bid Bid Ask Ask
- ---------------------------------------------------------------------------
March 31, 1994 .50 .25
June 30, 1994 .3125 .1875 .4375 .3750
September 30, 1994 .3125 .25 .50 .34375
December 31, 1994 .3125 .1875 .46875 .34375
March 31, 1995 .21875 .125 .40625 .20
June 30, 1995 .50 .125 .6875 .1875
Current 8-25-95 .25 .25 .4375 .4375
On August 25, 1995, the average of the bid and asked price for the
Common Stock, as reported on the NASDAQ OTC Bulletin Board, was
$.34375 per share. As of August 25, 1995, the Corporation had
approximately 665 holders of its Common Stock.
The Corporation intends to apply to have the Common Stock listed
on the American Stock Exchange or the Nasdaq National Market. To
achieve the price per share required for listing, the shareholders of the
Corporation must approve a reverse stock split of 1 share for each 6
shares and authorize the Board of Directors to file the necessary
amendments to its Articles of Incorporation if and when the listing is
accepted. The prices shown in the above table do not reflect the impact
of the reverse stock split. The Board of Directors of the Corporation has
approved a 1 for 6 reverse stock split and anticipates shareholder
approval prior to the close of this Offering.
Business
The Company, through its subsidiaries, currently: (i) operates four
Caribbean Outfitters retail stores in Aruba (2), Bonaire and St. Thomas and
a Back Bay Outfitters store in Tampa, Florida; (ii) manages a hotel in San
Antonio, Texas; and (iii) has an option to purchase the Hotel on the Cay
in St. Croix, U.S.V.I. During the past two years the Company has
consolidated its financial and management operations to increase
efficiency. During the next year, the Company intends to move the
supervision of its retail and resort operations to Puerto Rico, and with the
acquisition of Olympic Mills, establish a T-shirt distribution and printing
operation.
Market Segments. The Company is engaged in the following leisure
travel related business: Caribbean Outfitters stores are specialty retailers
of casual clothing, tropical gifts and native crafts; Back Bay Outfitters
sells eco-tourism clothes, gear and supplies; Resorts of Americas and
Innkeepers, Inc. sell time shares at a resort and manages a hotel. With
the acquisition of Olympic Mills, the Company will produce and distribute
a proprietary line of T-shirts and travel clothing.
Retail Customers. There are significant number of potential
customers both at current locations and potential future locations. The
Company will aggressively market its retail stores and clothing lines to
customers traveling by air, cruise and visiting overnight in Caribbean
locations. This will be done primarily through print media and placing
logos prominently on all merchandise sold.
Retail Expansion Strategy. As the population ages and people have
more free time, the leisure travel industry has grown rapidly. Statistics
show more people are traveling than ever before. The Caribbean is one
of the top destinations for leisure travel. The cruise business has grown
by over 8% annually, and there are now 40,000 cruise ship berths under
construction for delivery by 1997, a 28% increase. The Company is
positioned to take advantage of this growth and is planning to expand its
retail operations. Its retail and distribution operation sells resort clothing
and gifts in the Caribbean Basin as well as eco-tourism clothing, gear and
supplies. All of these segments are expected to grow with the leisure
travel industry.
Retail Competition. Competition in the retail business in the
Caribbean Basin is primarily from local shops, most with single locations.
Although there are Caribbean wide chains such as Little Switzerland and
Benneton, they do not directly compete with Caribbean Outfitters due to
the difference in product line. There are a wide range of competitors in
wholesale distribution from small one man shops to large suppliers of
clothing such as "Bye" .
Hotel and Time Share. The Coachman Inn concept was developed
and refined by the Company since it was founded in 1985. The concept
was to develop, construct and operate luxury/economy lodging properties
positioned towards the lower priced end of the lodging industry. The
hotels were designed to attract the value-conscious traveler desiring
quiet, clean, comfortable, "no-frills" lodging at reasonable prices. The
Company owned and managed 10 hotel properties but had to curtail
additional development due to a lack of expansion capital and financing.
Without the ability to expand the hotel business into a substantial chain,
the Company shifted its primary business emphasis from hotel operations
to retail operations. The Company then began liquidating a significant
portion of the hotel properties. The Company currently manages one
Coachman Inn Hotel in San Antonio, Texas.
In 1994, the Company acquired an option to purchase the Hotel on
the Cay in St. Croix, U.S.V.I. and a contract to sell time share units at
that hotel. The option on the Hotel expires in October, 1995 and the Company
has not decided whether to exercise or negotiate an extension of the
option. The Company does not manage that hotel and has not actively
sold time share units since the quality standards required by the Company
for the hotel have not been met. Competition in the time share sales
business varies from large multi-property chains like Disney and Marriott
to individual properties. Location and property value are the deciding
factor on most buying decisions.
Patents, Copyrights and Trademarks. The Company has registered
the trade name "Coachman Inn " with the United States Patent and
Trademark office which has issued a certificate of registration effective
March 1986. The Company has also registered the trade name "Caribbean
Outfitters " with the United States Patent and Trademark office which has
issued a certificate of registration effective in April, 1995. The Company
has filed a Federal Trademark Application with the United States Patent
and Trademark office for "Back Bay Outfitters ". The Company intends to
maintain the integrity of these symbols against unauthorized use and to
protect future use against claims of infringement and unfair competition
where circumstances warrant. Any licensee's use of the trade name,
service mark and logo must be in strict conformance with the license of
franchise agreement to be entered into with the Company.
Regulations The Company's various operations will be regulated by
federal, state and foreign laws, rules and regulations. On the federal level,
the Company is subject to minimum wage and other labor laws. It will also
be subject to foreign and state regulation regarding wages, hours, working
conditions and worker's compensation. The Company must comply with
local land use and zoning regulations. Operation of the Company's hotel
properties will require compliance with state and local health regulations
and other laws and regulations of state and local authorities. The
Company is now also subject to the terms of the Disabled American's Act
and is making every effort to comply.
Facilities. The Company currently leases approximately 5,700
square feet of office space at 301 N.W. 63rd Street, Suite 500, Oklahoma
City, Oklahoma, as its corporate headquarters, which lease expires March
31, 1997. Caribbean Outfitters leases approximately 1,000 square feet of
office space at 715 N. Sherrill, Tampa, Florida, as its operations
headquarters on a short term basis.
Caribbean Outfitters has leases with remaining terms ranging from
two to five years on the six current store locations. The store sizes range
from 734 square feet in Bonaire, Netherlands Antilles, to 2,900 square feet
in Aruba. The average store size is 2,000 square feet.
Employees. As of December 31, 1994, the Company employed 63
people, 10 of whom were in management positions. Non-management
employees were composed of approximately 30 full-time employees and
23 part-time employees. The number of part-time employees fluctuates
during peak selling periods. Full-time employees are defined as those
working over 30 hours per week. None of the Company's employees is
represented by a labor union or subject to a collective bargaining
agreement.
The Company does not have a collective bargaining agreement
covering any of its employees, nor has it ever experienced any material
labor disruption, and is not aware of any efforts or plans to organize its
employees. The Company contributes part of the cost of medical and life
insurance coverage for eligible employees. All employees also receive very
substantial discounts on Caribbean Outfitters merchandise. The Company
considers relations with its employees to be excellent. The Company does
not have a retirement or pension program.
Legal Proceedings. There are no material legal proceedings
pending against the Company at this time. The Company's Florida
subsidiary, Caribbean Outfitters, Inc. has accounts payable and lease
obligations of approximately $782,374, some of which are pending claims
and litigation filed against the subsidiary.
INDEPENDENT PUBLIC ACCOUNTANTS
Sartain Fischbein & Co., independent certified public accountants,
have served the Corporation as its principal accountants, for the past year
and were responsible for the audit of the Corporation's most recent
financial statements. Representatives of such firm will be present at the
Corporation's Special Meeting and will have the opportunity to respond to
appropriate questions and to make a statement if they so desire. KPMG
Peat Marwick have served Olympic Mills as its principal accountants for
the past year and were responsible for the audit of the financial
statements of Olympic Mills included herein and for the pro forma
financial statements included herein. No representatives of KPMG Peat
Marwick will be present at the Special Meeting. The Corporation has not
decided who will serve as its principal accountants for the current year
and does not expect to do so until after the completion of the transaction
with Olympic Mills.
OTHER BUSINESS
Management does not intend to bring any matters before the
meeting other than those set forth in the accompanying notice.
Management knows of no other matters to be brought before the meeting
by others. However, if any other matters are brought before the meeting,
the proxies named in the enclosed form of proxy will vote in accordance
with their judgment on such matters.
By Order of the Board of Directors
Dennis D. Bradford
Chairman of the Board
Oklahoma City, Oklahoma
September __, 1995
YOUR COOPERATION IN GIVING THIS MATTER YOUR IMMEDIATE
ATTENTION AND IN RETURNING YOUR PROXY PROMPTLY
WILL BE APPRECIATED
95-194
