<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K
Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report: October 16, 1997
-------------------------------------
(Date of earliest event reported)
THE GREAT AMERICAN BACKRUB STORE, INC.
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Exact name of registrant as specified in its charter
New York 0-25334 13-3729043
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State of other jurisdiction of Commission File No. I.R.S. Employer
incorporation or organization ID No.
4500 140th Avenue No., Suite 221, Clearwater, Florida 33762
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(Address of principal executive offices)
Registrant's telephone number, including area code: (813) 532-4818
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53 West 36th Street, Room 1202, New York, New York 10018
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(Former name or former address if changed since last report)
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Item 1. CHANGES IN CONTROL OF REGISTRANT
On September 30, 1997 The Great American BackRub Store, Inc. ("the
Company") entered into a Securities Exchange Agreement (the "Securities Exchange
Agreement"), to acquire (the "Acquisition") 100% of the issued and outstanding
common stock of Caribsun from Ascot International Corp. ("Ascot"). On October
16, 1997 the Securities and Exchange Agreement was amended and the Company
initially issued 11,000,000 shares of its Common Stock to Ascot in exchange for
all of the outstanding shares of Caribsun's Common Stock. Under the terms of the
Securities Exchange Agreement, the Company will issue up to a maximum of
17,097,419 shares in exchange for Caribsun. The final number of shares may be
reduced to the extent the audited net worth of Caribsun at October 15, 1997 is
less than $4.5 million, the audit of Caribsun balance sheet is not delivered by
Ascot prior to November 15, 1997, or if Ascot does not provide at least $150,000
of financing to the Company before November 15, 1997. The balance of the shares
due to Ascot will be issued following shareholder approval of a proposal to
amend the Company's certificate of incorporation to increase the Company's
authorized capital.
The Securities Exchange Agreement was attached to the Company's Form
8-K as an exhibit which was filed via EDGAR with the Securities and Exchange
Commission on or about October 16, 1997.
As a result of the Acquisition, Ascot owns approximately 80% of the
outstanding Common Stock and all of the management of the Company now consists
of officers and directors (or individuals nominated by such persons) of Ascot.
BOARD OF DIRECTORS
GENERAL
Management of the Company, prior to the Acquisition (collectively
referred to as "Prior Management") was as set forth below:
Name Position
---- --------
William Zanker President, Chairman of the Board
Terrance C. Murray Chief Executive Officer, Director
Stephen Seligman Director
Andrew L. Hyams Director
Donald R. Fleischer Director
Prior Management resigned effective as of October 16, 1997 (except Mr.
Seligman, whose resignation is effective ten days after the Company notifies
shareholders of these changes in accordance with Section 14f of the Exchange
Act), and the following individuals (collectively referred to as "New
Management") were nominated to assume the positions set forth next to their
names:
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Name Age Position
---- --- --------
David S. Coia 42 Chairman of the Board, Chief Executive Officer
David Coia 65 President, Chief Operating Officer
David L. West 39 Chief Financial Officer, Treasurer, Secretary and
Director
Kevin P. Stone 39 Director
Waylon E. McMullen 51 Director
David S. Coia is the son of David Coia and is the founder, principal
shareholder and chief executive officer of the Barclay Group. The Barclay Group
is a private real estate development firm which specializes in the development
of retail properties. It engages in all phases of the acquisition and
development of real estate properties and is currently developing projects
valued at $75 million, having experienced an annual growth rate of 20% during
the last 18 months. Representative clients include Walgreens, Home Depot and
Publix Supermarkets.
Mr. Coia's business address is 1123 Overcash Drive, Dunedin, Florida 34698.
David Coia has served as Director, President and Chief Executive
Officer of Ascot since March 1995. Mr. Coia has served as a consultant to the
Barclay Group since February 1988. Mr. Coia founded, and was the President of
Counsel Food Services, Inc., a Florida pizza franchise company in Clearwater,
Florida from 1988 to 1991. From 1975 to 1988 Mr. Coia served in various top
managerial positions, including Vice President of Development, and General
Manager of Operations for the Sheraton Hotels and Holiday Inn. In such capacity,
Mr. Coia was responsible for site selection, development and expansion of
various hotel sites and operations. Mr. Coia's business address is 4707 140th
Avenue N.E., Suite 312, Clearwater, Florida 33762.
David L. West has been the Chief Financial Officer of Ascot since
January 1995. From July 1993 through December 1994 Mr. West was a Manager in the
accounting firm of Lewis, Birch & Ricardo, P.A. Mr. West served as Controller
and Chief Financial Officer of Bently Pharmaceuticals, Inc. from October 1991
through June 1993. From March 1984 through September 1991 Mr. West served in the
audit practice of KPMG Peat Marwick, LLP. Mr. West's business address is 4707
140th Avenue N.E., Suite 312, Clearwater, Florida 33762.
Kevin P. Stone has been the President of Underwriting at Commonwealth
International Group, Ltd. since February 1996. Mr. Stone was the General
Manager/Special Risks Manager for Metropole Insurance Brokers, Toronto, from
1993 through 1996. Mr. Stone was the International Manager of South Western
Insurance Group from 1991 through 1993. Mr. Stone's business address is 338
Soudan Avenue, Toronto, Ontario, Canada.
Waylon E. McMullen is a licensed and practicing attorney in Dallas,
Texas and has been since 1971. In 1991 Mr. McMullen founded Waylon E. McMullen,
P.C., a law firm, and currently serves as its President. From 1975 to 1991 Mr.
McMullen served as President of Akin & McMullen, P.C., a law firm in Dallas,
Texas. Mr. McMullen served as a Director for Pizza Inn, a publicly traded
corporation traded on the American Stock Exchange from 1975 to 1987.
<PAGE>
Mr. McMullen is presently serving as a Director for the Furia Organization and
Golden Interstate Medical Management, Inc. Mr. McMullen's business address is
P.O. Box 795517, Dallas, Texas.
Each member of New Management has been nominated to serve in such
position until the next annual meeting of shareholders and until their
successors have been duly elected and shall have qualified.
Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
Reference is made to Item 1 concerning the acquisition of Caribsun by
the Company. Caribsun through a wholly owned subsidiary, Coconut Hall Resort
Limited, owns approximately 86 acres of undeveloped land in Antigua for which it
has obtained certain government licenses and approvals to construct a hotel,
condominium and casino project. The Company plans to continue Caribsun's plans
to finance the development of the property as well as continue the operations
and franchising of The Great American BackRub Store, Inc.
Item 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
The financial information and pro forma information described below
which is required by Item 7 of Form 8-K is not yet available. The Registrant
anticipates that it will file the required financial information as soon as
possible, but no later than 60 days from the date this report must be filed.
(a) Financial Statements
Independent Auditors' Report
Consolidated Balance Sheet as of December 31, 1996
Consolidated Statement of Operations for the years ended
December 31, 1996 and 1995
Consolidated Statement of Changes in Common Stockholder's
Equity for the years ended December 31, 1996 and 1995
Consolidated Statement of Cash Flows for the years ended December 31,
1996 and 1995
Summary of Accounting Policies
Notes to Consolidated Financial Statements
(b) Pro Forma Financial Information
Pro Forma Balance Sheet at July 31, 1997 (filed herewith).
Pro-Forma Condensed Financial Statements
Condensed Balance Sheet as of June 30, 1997
Condensed Statement of Operations for the six months ended
June 30, 1997
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Condensed Balance sheet as of December 31, 1996
Condensed Statement of Operations for the year ended December 31, 1996
(c) Exhibits
The following Exhibits are filed with this Form 8-K
*2.1 Securities Exchange Agreement dated as of September 30, 1997
between The Great American BackRub Store, Inc. and Ascot
International corp., the sole Stockholder of Caribsun Corp.
2.2 Amendment to Securities Exchange Agreement dated October 16,
1997.
*99.1 The Great American BackRub Store, Inc. Press Release dated
October 1, 1997.
*Incorporated by reference to the Company's Form 8-K Report dated
September 30, 1997.
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE GREAT AMERICAN BACKRUB
STORE, INC.
By: /s/ David Coia
---------------------------------
David Coia, President
Dated: October 31, 1997
<PAGE>
THE GREAT AMERICAN BACKRUB STORE, INC.
(A Development Stage Company)
CONDENSED BALANCE SHEET
(Pro-Forma)
As of July 31, 1997
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ASSETS
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<TABLE>
<CAPTION>
Historical Adjustments Pro-forma
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<S> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 227,053 $ -- $ 227,053
Receivable 144,960 -- 144,960
Prepaid expenses 11,040 -- 11,040
Inventory 281,244 -- 281,244
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Total current assets 664,297 -- 664,297
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PROPERTY AND EQUIPMENT
Land -- (a) 5,305,129 5,305,129
Furniture and fixtures 463,560 -- 463,560
Leasehold improvements 931,446 -- 931,446
Purchased Lease 120,000 -- 120,000
Computer equipment 46,458 -- 46,458
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Total 1,561,464 (a) 5,305,129 6,866,593
Less, Accumulated depreciation (285,008) -- (285,008)
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Property and equipment - net 1,276,456 5,305,129 6,581,585
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OTHER ASSETS:
Note receivable 50,938 (a) 108,000 158,938
Lease and equipment deposits 290,616 -- 290,616
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Total Other Assets 341,554 -- 449,554
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TOTAL ASSETS $2,282,307 $ 5,413,129 $ 7,695,436
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</TABLE>
(a) Preliminary pro-forma consolidation of Caribsun, Corp into The Great
American BackRub Store, Inc.
<PAGE>
THE GREAT AMERICAN BACKRUB STORE, INC.
(A Development Stage Company)
CONDENSED BALANCE SHEET
(Pro-Forma)
As of July 31, 1997
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<TABLE>
<CAPTION>
Historical Adjustments Pro-forma
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<S> <C> <C> <C>
CURRENT LIABILITIES:
Accounts payable $ 626,501 $ -- $ 626,501
Accrued expenses 193,278 (a) 450,000 643,278
Accrued payroll and related 79,604 -- 79,604
Bridge notes 158,244 -- 158,244
Deferred revenue 72,425 -- 72,425
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Total Liabilities 1,130,052 450,000 1,580,052
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DEFERRED RENT 363,991 -- 363,991
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COMMITMENTS AND CONTINGENCIES -- -- --
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STOCKHOLDER'S EQUITY
Series B convertible preferred stock, $0.001 par value
15,000 shares authorized, none issued -- -- --
Preferred stock, $0.01 par value; 1,000,000 shares
authorized; 500,000 issued and outstanding -- (a) 5,000 5,000
Common stock, par value $0.001 per share
20,000 shares authorized, 2,416,85
shares issued and outstanding 2,417 (a) 1 2,418
Additional paid in capital 8,865,331 (a) 5,700,128 14,565,459
Deficit accumulated during the development stage (8,079,484) (a) (742,000) (8,821,484)
---------- ----------- -----------
788,264 4,963,129 5,751,393
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TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $ 2,282,307 $ 5,413,129 $ 7,695,436
========== =========== ===========
</TABLE>
<PAGE>
Exhibit 2.2
THE GREAT AMERICAN BACKRUB STORE, INC.
53 WEST 36TH STREET, ROOM 1202
NEW YORK, NEW YORK 10018
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Telephone (212) 750-7046
October 16, 1997
Ascot International Corp.
4707 140th Avenue N., Suite 312
Clearwater, FL 34622
Att: David Coia, President
Re: Securities Exchange Agreement
Ladies and Gentlemen:
Reference is hereby made to the Securities Exchange Agreement ("the
Agreement") dated as of September 30, 1997 by and between The Great American
BackRub Store, Inc., a New York corporation ("Purchaser"), and Ascot
International Corp., a Delaware corporation ("Ascot"), being the sole
Stockholder of Caribsun Corp., a Delaware corporation ("Caribsun"). Unless
defined herein, all capitalized terms used in this amendment shall have the
meanings defined in the Agreement.
Ascot International Corp. has informed the Purchaser that it is not
able to deliver the Closing Balance Sheet in the form required by paragraph
3.2(b) of the Agreement. The parties to the Agreement wish to extend the
Closing dated until October 16, 1997 and are willing to close the transactions
contemplated by the Agreement with the amendments set forth herein.
The parties hereby agree to amend the Agreement as follows:
(1) Section 3.2 of the Agreement is amended:
(a) to amend paragraphs 3.2(a), (b)and (c) to read as follows:
"(a) In full consideration for the acquisition of Caribsun
Shares, the Purchaser will issue to Ascot a sufficient
number of Purchaser Shares to equal 80% of the outstanding
shares of Purchaser Common Stock after giving effect to such
issuance and assuming that all currently existing options,
warrants and other securities presently convertible into
shares of the Purchaser Common Stock had been exercised and
converted on the Closing Date (the "Initial Number of
Purchaser Shares"). The calculation used to determine the
Initial Number of Shares is annexed to this Agreement as
Amended Schedule 3.2. The Purchaser will deliver 11,000,000
Purchaser Shares to Ascot at Closing (the "Downpayment
Shares").
<PAGE>
(b) The number of Purchaser Shares shall be subject to
adjustment as follows:
By November 15, 1997, Ascot will deliver a Balance Sheet of
Caribsun at October 15, 1997 audited by Elliot Weinberg &
Associates. The audited balance sheet of Caribsun as of
October 15, 1997 shall be referred to in this Agreement as
the "Closing Balance Sheet." In the event that the net worth
of Caribsun shown on the Closing Balance Sheet which will be
reflected as net worth of the Purchaser following
consolidation is less than $4,500,000, the number of
Purchaser Shares to be issued to Ascot in exchange for the
Caribsun Shares shall be reduced (but not increased) by the
number of shares determined by subtracting the difference
between $4,500,000 and the net worth of Caribsun set forth
on the Closing Balance Sheet, dividing by $4,500,000 and
multiplying the result by the Initial Number of Purchaser
Shares. The reduced number of Purchaser Shares thus obtained
shall be the final purchase price for the Caribsun Shares.
In the event the Closing Balance Sheet is not delivered to
the Purchaser by November 15, 1997, the number of Purchaser
Shares shall be reduced by 500,000 and thereafter to be
reduced 500,000 for each month or portion thereof that the
Closing Balance Sheet is late.
(c) In the event that there are not a sufficient number of
authorized, unissued and unreserved shares of Purchaser's
Common Stock, to issue the number of Purchaser Shares
equaling the final purchase price, the Purchaser will
promptly call a meeting of shareholders, or take appropriate
action by consent to authorize the additional number of
shares to fully pay the final purchase price. In the event
the outstanding shares of Purchasers Common Stock are
increased or reduced without the receipt of consideration as
a result of corporation action by the Purchaser, the number
of share so Purchasers Stock comprising the shortfall will
be proportionately reduced or increased."
(b) to add the following paragraph 3.2(d):
"(d) Certificates representing the "Downpayment Shares",
together with stock power duly endorsed in blank by Ascot
shall be held in escrow pursuant to an escrow agreement with
Sommer & Schneider LLP, in form and substance acceptable to
Ascot."
(2) Section 4.12 is deleted in its entirety.
(3) Article IV is amended to add the following Section 4.20:
"4.20 Issuance of Preferred Stock. The holder of a
$5,000,000 Note payable by Caribsun shall have agreed in
writing to exchange such for preferred stock which is not
callable at the option of the holder."
<PAGE>
(4) Article VI is amended to add the following Section 6.8:
"6.8 Financing. Ascot agrees to provide the Purchaser with
financing in an amount not less than $150,000 by November
15, 1997 to fund the operation of the BackRub Stores. In the
event such funding is not received by November 15, 1997, the
final purchase price for Caribsun shall be reduced by
500,000 Purchaser Shares."
Except as modified by this amendment, all other provisions of the
Agreement shall remain in full force and effect.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
Please sign and date this amendment in the spaces provided below to
confirm our mutual understandings and agreements as set forth in this Letter
and return a signed copy to the undersigned..
Very truly yours,
/s/ William Zanker
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William Zanker
President
Acknowledged and agreed to:
CARIBSUN CORP.
By: /s/ David Coia
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David Coia, President
Date: _________________________
ASCOT INTERNATIONAL CORP.
By: /s/ David Coia
----------------------------
David Coia, President
Date: ______________________________
COCONUT HALL RESORT LIMITED
By: /s/ David Coia
----------------------------
David Coia, President
Date:_______________________________
