<PAGE>1
THE APPLETREE COMPANIES, INC.
2255 Glades Road
Suite 200E
Boca Raton, Florida 33431
May 13, 1996
To Our Stockholders:
You are cordially invited to attend the Company's Special Meeting of
Stockholders which will be held on June 20, 1996 at 3:00 p.m., Eastern
Time, at the 2nd Floor Business Room-West, 2255 Glades Road, Boca Raton,
Florida.
The official Notice of Meeting, proxy statement and proxy are included with
this letter. The matters listed in the Notice of Meeting are more fully
described in the proxy statement.
It is important that your shares be represented and voted at the special
meeting, regardless of the size of your holdings. Accordingly, please mark,
sign and date the enclosed proxy and return it promptly in the enclosed
envelope to ensure that your shares will be represented. If you do attend
the special meeting, you may, of course, withdraw your proxy should you wish
to vote in person.
Sincerely,
Paul B. Kravitz
--------------------
Paul B. Kravitz
President
<PAGE>2
THE APPLETREE COMPANIES, INC.
2255 Glades Road
Suite 200E
Boca Raton, Florida 33431
May 13, 1996
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
The Special Meeting of Stockholders of The AppleTree Companies, Inc.
(herein referred to as "AppleTree" or the "Company") will be held on
June 20, 1996, at 3:00 p.m., Eastern Time, at the 2nd Floor Conference
Room-West, 2255 Glades Road, Boca Raton, Florida, to consider and take
action with respect to the following matters:
1. An amendment to the Company's Certificate of Incorporation increasing
its authorized capital stock to one hundred thirty million shares,
consisting of one hundred twenty million shares of common stock (the
"Common Stock") and ten million shares of preferred stock (the "Preferred
Stock").
Holders of record of the Company's Common Stock, par value $0.001 per share,
at the close of business on May 2, 1996, will be entitled to notice of and
to vote on all matters presented at the meeting and at any adjournments
or postponements thereof. A list of such holders will be open for the
examination of any stockholder, for any purpose germane to the meeting, at
the Company's headquarters in Boca Raton, Florida, for a period of ten days
prior to the meeting.
By order of the Board of Directors,
Paul B. Kravitz
----------------------
Paul B. Kravitz
President
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON AND REGARDLESS OF
THE NUMBER OF SHARES YOU OWN, PLEASE SIGN AND DATE THE ENCLOSED PROXY AND
MAIL IT PROMPTLY IN THE ENVELOPE PROVIDED TO ENSURE THAT YOUR SHARES WILL BE
REPRESENTED. YOU MAY NEVERTHELESS VOTE IN PERSON IF YOU ATTEND THE MEETING.
<PAGE>3
THE APPLETREE COMPANIES, INC.
2255 Glades Road
Suite 200E
Boca Raton, Florida 33431
____________________________
PROXY STATEMENT
____________________________
Special Meeting of Stockholders
June 20, 1996
This proxy is being furnished to the Common Stockholders of The AppleTree
Companies, Inc. (the "Company") in connection with the solicitation of
proxies on behalf of the board of Directors of the Company (the "Board of
Directors") for the Special Meeting of Stockholders to be held on June 20,
1996 at 3:00 p.m., Eastern Time, at the 2nd Floor Conference Room-West, 2255
Glades Road, Boca Raton, Florida, and at any adjournments and postponements
thereof. These proxy materials are being mailed on or about May 13, 1996,
to holders of record on May 2, 1996, of the Company's Common stock, par
value $0.001 per share (the "Common Stock").
When you sign and return the enclosed proxy prior to 5:00 p.m. Eastern Time
on June 19, 1996, unless the proxy indicates otherwise, the shares
represented thereby will be voted FOR the proposal set forth in Item 1 in
the Notice of Meeting.
Returning your completed proxy will not prevent you from voting in person at
the meeting should you be present and wish to do so. In addition, you may
revoke your proxy any time before it is voted by written notice to the
Secretary of the Company or by submission of a later-dated proxy, prior to
5:00 p.m. Eastern Time on June 19, 1996.
Each outstanding share of Common Stock entitles the holder thereof to one
vote. On May 2, 1996, there were 65,556,723 shares of Common Stock
outstanding. The presence in person or by proxy of a majority of such
shares shall constitute a quorum. Under Delaware law, abstentions are
treated as present and entitled to vote and therefore have the effect of
a vote against a matter. A broker non-vote on a matter is considered not
entitled to vote on the matter and thus is not counted in determining
whether a matter requiring approval of a majority of the shares present and
entitled to vote has been approved.
As disclosed in its Proxy Statement of July 19, 1995 (the "July Proxy") the
Company described a series of transactions with Strategica Capital
Corporation and an affiliate ("Strategica") under which the Company and
certain subsidiaries borrowed $2,650,000 and executed a note and a loan
agreement which loan comes due in November 1997 (the "Loan").
<PAGE>4
Concurrently with the making of the Loan, the Borrowers entered into a four
year Consulting and Financial Services Advisory Agreement ("Consulting
Agreement") with Strategica Capital Corporation d/b/a Strategica Group
("Consultant") pursuant to which the Consultant is to provide the Borrowers
continuing consulting and financial services in connection with the Borrowers'
businesses and for raising additional capital. In addition, the Company
entered into Warrant Agreements with the Consultant by which Common Stock of
AppleTree and, under certain circumstances, certain subsidiaries may be
purchased ("Warrant Agreements").
In its July Proxy the Company set forth in detail the transactions with
Strategica Capital Corporation and described therein the Loan, the Consulting
Agreement and the Warrant Agreements. As an exhibit to that Proxy Statement
for the July Proxy, the Company attached the full text of those various
agreements. What follows is a summary of the transactions with Strategica
for the purpose of informing the stockholders as to the need to increase the
authorized capital stock of the Company with regard to matters involving
Strategica. The full text of the agreements with Strategica are available
for review by any stockholder at the offices of the Company.
Under the Consulting Agreement with Strategica, the Company executed the
Warrant Agreements. The Company has issued 3,126,389 shares pursuant to said
Warrant Agreement as well as warrants as to certain subsidiaries.
Subsequently, on November 22, 1995, the Company borrowed an additional
$603,000 (the "Additional Loan") from Strategica which resulted in, among
other things, the execution of a Second Warrant Agreement. Accordingly,
based upon the Consulting Agreement, the Warrant Agreement and the Second
Warrant Agreement, the Company has issued a warrant dated effective the 22nd
day of November, 1995 for 3,205,193 shares and will issue a new warrant for
8,201,073 shares which the Company believes will fulfill all of the
obligations as to the issuance of warrants to Strategica including those due
by reason of "Certain Transactions" described below which have occurred after
the closing of the Additional Loan on November 22, 1995.
Subsequently, the Company had been advised by NASDAQ that it must meet a
capital and surplus requirement in the amount of at least $5,500,000. The
Company, to meet that requirement, entered into certain transactions (the
"Certain Transactions") whereby the number of its shares of common stock were
converted and sold and thereby issued and outstanding at a time when the
market price was at or near its historic low. On February 29, 1996 the
Company filed a Form 8-K with the Securities and Exchange Commission and
with NASDAQ which described the Certain Transactions as to the issuance of
26,996,407 shares of Common Stock from the conversion of debentures and the
sale of Common Stock to meet the capital and surplus requirement. Because of
these Certain Transactions, the Company's shares issued and outstanding as of
February 29, 1996 totaled 64,022,238 shares. The Company is legally
obligated to have authorized an amount of stock to cover its obligations to
Strategica, which, based on the Certain Transactions and the shares
outstanding are 14,532,655 shares. In addition, the Form 8-K described the
issuance by the Company of 2,575 shares of its new 11% Convertible Preferred
Stock in exchange for the conversion of certain outstanding debt. The Company
is obligated to issue at least 15,736,111 shares of Common Stock when that
Preferred Stock is converted. Further the Company is obligated under other
agreements, including employee, director and executive options, to issue
shares of Common Stock. In some cases, the exercise price of these
agreements exceed the market price of Common Stock, however, the Company may
be obligated to reserve issuance of such shares.
<PAGE>5
Further, the Company intends to go forward with plans to obtain additional
capital in order to fulfill certain of its corporate purposes and
management's plans with regard to the Company. The Company is considering a
number of alternatives which could include the issuance of additional Common
Stock, or the issuance of debentures which would be convertible into Common
Stock, or the issuance of preferred stock which could be convertible into
Common Stock. There are no assurances that the Company will be able to
attract new capital and there are no agreements in place for such additional
capital.
Although the Company obtained shareholder approval on February 21, 1996 to
increase its authorized Common Stock to 90,000,000 shares, the closing of the
Certain Transactions, the Strategica warrant obligations and the Preferred
Stock conversion rights compel the Company to utilize all of the recently
increased Common Stock and require a new amount of authorized Common Stock.
Consequently, the Board of Directors requests the shareholders' consent to an
amendment to its Articles of Incorporation to increase the number of shares
of authorized Common Stock.
<PAGE>6
AMENDMENT OF CERTIFICATE OF INCORPORATION TO INCREASE AUTHORIZED CAPITAL STOCK
The Board of Directors adopted resolutions approving and recommending that
the shareholders adopt an amendment to Article Fourth of the Company's
Certificate of Incorporation to increase its authorized Common Stock, par
value $.001 per share, from 90,000,000 shares to 120,000,000 shares. The
rights and limitations of the Common Stock would remain unchanged under the
amendment. The Common Stock does not have preemptive rights.
The proposed increase in the authorized Common Stock has been recommended by
the Board of Directors to comply with the requirements of its agreements with
Strategica; to fulfill obligations under its Preferred Stock, various
employee stock option plans, director stock option plans, executive stock
option plans and existing agreements and warrants issued by the Company;
and, to assure that an adequate supply of authorized unissued shares is
available for general corporate and financing purposes. Additional shares
would be available for issuance without further action by the shareholders
on appropriate resolutions adopted by the Board of Directors, unless required
by the Company's Certificate of Incorporation or Bylaws or by applicable law
of the State of Delaware.
The issuance of additional shares of common stock may, among other things,
have a dilutive effect on earnings per share and on the equity and voting
power of existing holders of common stock.
The increase in authorized shares of Common Stock has not been proposed for
any anti-takeover related purpose and the Board of Directors and Management
have no knowledge of any current efforts to obtain such control of the
Company. The issuance of additional shares of Common Stock by the Company
could, however, potentially have an anti-takeover effect by making it more
difficult to obtain shareholder approval of various actions such as a merger
or removal of management. On the occurrence of such actions requiring
shareholder approval, all Common Stock would vote together as one class,
unless otherwise required by law.
The affirmative vote of the holders of a majority of the outstanding shares
of Common Stock will be required for the adoption of the proposed amendment.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE PROPOSED INCREASE IN THE
AUTHORIZED CAPITAL STOCK.
OTHER BUSINESS
No other business may properly be brought before the special meeting or any
adjournments or postponements thereof.
<PAGE>7
SECURITY OWNERSHIP OF DIRECTORS, OFFICERS AND OTHERS
<TABLE>
Security Ownership of Directors and Officers
- - --------------------------------------------
The following table sets forth information as of May 2, 1996 as to the record
and beneficial ownership of the Common Stock of the Company by each director
and director nominee of the Company, the Company's chief executive officer
and all executive officers and directors as a group.
<CAPTION>
<S> <C> <C>
Name and Address Percent
of Beneficial Owner Number of Shares<F1> Beneficially Owned<F2>
- - --------------------------------------------------------------------------------
Paul B. Kravitz, Chairman, 2,661,352 <F3> 3.9%
CEO and President
c/o The AppleTree Companies, Inc.
2255 Glades Road, Suite 200E
Boca Raton, FL 33431
Justin A. DiMacchia, CFO, Executive 1,157,125 <F4> 1.7%
Vice President of Finance,
Treasurer and Director
c/o The AppleTree Companies, Inc.
2255 Glades Road, Suite 200E
Boca Raton, FL 33431
John Donlevy, Director 58,500 <F5> *
c/o The AppleTree Companies, Inc.
2255 Glades Road, Suite 200E
Boca Raton, FL 33431
Allan C. Sorensen, Director 175,000 <F6> *
c/o The AppleTree Companies, Inc.
2255 Glades Road, Suite 200E
Boca Raton, FL 33431
George Kelly, Director 25,000 <F7> *
c/o The AppleTree Companies, Inc.
2255 Glades Road, Suite 200E
Boca Raton, FL 33431
All Executive Officers 4,076,977 <F8> 5.9%
and Directors as a
Group (5 persons)
_________________________
* Less than one percent.
<F1>
Except as discussed below, none of these shares are subject to rights to
acquire beneficial ownership, as specified in Rule 13d-3(d)(1) under the
Securities Exchange Act of 1934, as amended, and the beneficial owner has
sole voting power and investment power.
<PAGE>8
<F2>
Applicable percentage ownership is based on 65,556,723 shares of Common
Stock outstanding on May 2, 1996.
<F3>
Includes 202,412 shares owned directly and 2,458,940 shares subject to
options and warrants of which 1,550,000 shares are exercisable when the
Common Stock reaches a price ranging from $1.25 to $4.25 per share.
<F4>
Includes 21,255 shares owned directly and 1,135,870 shares subject to
options and warrants of which 650,000 shares are exercisable when the Common
Stock reaches a price ranging from $1.25 to $4.25 per share.
<F5>
Includes 6,000 shares owned directly and 52,500 shares subject to options
that are presently exercisable.
<F6>
Includes 150,000 shares owed directly and 25,000 shares subject to
options that are presently exercisable.
<F7>
Represents 25,000 shares subject to options that are presently exercisable.
<F8>
Includes 379,667 shares of Common Stock and 3,697,310 shares subject to
options and warrants of which 2,200,000 shares are exercisable when the
Common Stock reaches a price ranging from $1.25 to $4.25 per share.
</TABLE>
<PAGE>9
<TABLE>
Security Ownership of Certain Beneficial Owners
- - -----------------------------------------------
The following table sets forth information as of May 2, 1996 with respect to
any persons who are known to the Company to be beneficial owners of more than
5% of the Company's Common Stock.
<CAPTION>
<S> <C> <C>
Name and Address of
Beneficial Owner Number of Shares<F1> Percent Beneficially Owned<F2>
- - --------------------------------------------------------------------------------
Strategica Capital Corp. 14,532,655 <F3> 18.4%
d/b/a Strategica Group
("Strategica")
1221 Brickell Avenue
Miami, Florida 33133
Europe American Capital 14,624,815 <F4> 18.8%
P.O. Box 47
Roadtown Tortola
British Virgin Island
TACC 3,296,233 <F5> 4.8%
P.O. Box 47
Roadtown Tortola
British Virgin Islands
Seabeach & Co. 7,045,454 10.7%
c/o Kennedy Capital Management
425 N. New Ballas Road, Ste 181
St. Louis, Missouri 63141
Lancer Partners 5,188,101 7.9%
c/o Citco Fund Services, Curaco
Kaya Flamboyan 9-P.O. Box 812
Curaco, Netherlands Antilles
Siata Holding Corp. 3,477,333 5.3%
133 Richmond Street West
Suite 402
Toronto, Ontario
M5H 2L3
Dale Enterprises 3,200,000 4.9%
P.O. Box 795
Gibraltar
<F1>
Except as discussed below, none of these shares are subject to rights to
acquire beneficial ownership, as specified in Rule 13d-3(d)(1) under the
Securities Exchange Act of 1934, as amended, and the beneficial owner has
sole voting power and investment power.
<PAGE>10
<F2>
Applicable percentage ownership is based on 65,556,723 shares of Common
Stock outstanding on May 2, 1996.
<F3>
Represents shares of Common Stock which are issuable upon the exercise of
warrants in which Strategica is entitled to according to the Loan and Warrant
Agreements.
<F4>
Represents 12,439,878 shares of Common Stock which are issuable upon the
exercise of 2,036 shares of the Company's Class B Convertible Preferred Stock
and 2,184,937 shares of Common Stock which are owned directly.
<F5>
Represents shares of Common Stock which are issuable upon the exercise of
539 shares of the Company's Class B Convertible Preferred Stock.
</TABLE>
SUBMISSION OF STOCKHOLDER PROPOSALS FOR THE 1997 ANNUAL MEETING
Proposals of stockholders intended to be presented at the annual meeting in
1997 must be received by the Secretary of The AppleTree Companies, Inc.,
2255 Glades Road, Suite 200E, Boca Raton, Florida 33431, not later than the
31st day of August, 1996 to be considered for inclusion in the Company's 1997
proxy materials.
ADDITIONAL INFORMATION
This solicitation is being made by the Company. All expenses of the Company
in connection with this solicitation will be borne by the Company. The
Company will request brokerage firms, nominees, custodians and fiduciaries to
forward proxy materials to the beneficial owners of shares held of record by
such persons and will reimburse such persons and the Company's transfer agent
for their reasonable out-of-pocket expenses in forwarding such materials.
Please complete the enclosed proxy and mail it in the enclosed postage-paid
envelope as soon as possible.
By order of the Board of Directors,
Paul B. Kravitz
--------------------
Paul B. Kravitz
President
The AppleTree Companies, Inc.
2255 Glades Road
Suite 200E
Boca Raton, Florida 33431
May 6, 1996
<PAGE>11
The AppleTree Companies, Inc.
2255 Glades Road, Suite 200E
Boca Raton, Florida 33431
Shareholder's Proxy--------------------Special Meeting June 20, 1996
The undersigned, having received the Notice of Annual Meeting and Proxy
Statement dated, May 13, 1996, hereby appoints Paul B. Kravitz and Justin A.
DiMacchia, and each of them, proxies with power of substitution to vote for
the undersigned at the special meeting of shareholders of The AppleTree
Companies, Inc. on June 20, 1996, at any adjournments thereof, as follows:
The Board of Directors recommends a vote FOR Item 1. If no direction is
made, this proxy will be voted FOR Item 1.
(1) Approval for increase in the authorized capital stock
FOR ____ AGAINST ____ ABSTAIN ____
In the absence of an expressed direction, Mr. Kravitz or Mr. DiMacchia will
vote in favor of the listed proposal and, in addition, on other business
which may properly come before the meeting or any adjournment as they deem
proper.
(to be signed on the other side)
<PAGE>12
PROXY NO. (Continued from reverse side) NO. OF SHARES
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS. WHEN
PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR ITEM 1.
Please sign exactly as names appear on this Proxy. Joint owners should each
sign. Trustees, executors, etc. should indicate capacity in which they are
signing.
Dated:________________________, 1996
Signature: __________________________
Signature: __________________________
PLEASE SIGN, DATE AND RETURN THIS CARD PROMPTLY USING THE ENCLOSED ENVELOPE.
