<PAGE>
THE GREAT AMERICAN BACKRUB STORE, INC.
INFORMATION STATEMENT PURSUANT TO SECTION 14(F)
OF THE SECURITIES EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
---------------------
NO VOTE OR OTHER ACTION OF THE COMPANY'S SHAREHOLDERS
IS REQUIRED IN CONNECTION WITH THIS INFORMATION STATEMENT
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
---------------------
This Information Statement (the "Information Statement") is being mailed
on or about November 14, 1997 to the holders of record at the close of business
on November 12, 1997, of the common stock $0.001 par value per share (the
"Common Stock"), of The Great American BackRub Store, Inc., a New York
corporation (the "Company") in connection with the Company's acquisition of
Caribsun Corp. ("Caribsun") and appointment of certain persons to the Board of
Directors of the Company other than at a meeting of the stockholders of the
Company. You are urged to read this Information Statement carefully. However,
no action is required by the shareholders of the Company in connection with the
appointment of certain persons to the Board of Directors.
All members of the Board of Directors have executed written consents in
favor of the acquisition. The Board of Directors does not intend to solicit any
proxies or consents from any stockholders in connection with this acquisition.
This Information Statement is being distributed pursuant to the
requirements of Section 14(f) of the Securities Exchange Act of 1934, as
amended, and Rule 14f-1 thereunder.
<PAGE>
INFORMATION RELATING TO THE COMPANY'S COMMON STOCK
The shares of Common Stock are the only class of voting securities of the
Company outstanding. Each share of Common Stock is entitled to one vote per
share on all matters submitted to a vote of the shareholders. As of November 6,
1997 the Company had 13,700,716 shares of Common Stock outstanding.
CHANGE OF CONTROL OF THE COMPANY
On September 30, 1997 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 Acquisition closed
pursuant to the Securities Exchange Agreement 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
dated September 30, 1997 as an exhibit which was filed via EDGAR with the
Securities and Exchange Commission. Further information concerning the
acquisition of Caribsun from Ascot can be found in the Company's Form 8-K
Report dated October 16, 1997. The description in this Information Statement of
the Securities Exchange Agreement and its terms and conditions is qualified in
its entirety by reference to the Securities Exchange Agreement and the
respective exhibits and schedules thereto and is not, and does not purport to
be, complete.
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 following the mailing of this
Statement), and the following individuals (collectively referred to as "New
Management") were nominated to assume the positions set forth next to their
names:
<TABLE>
<CAPTION>
Name Age Position
- --------------------------- ----- -----------------------------------------------------------
<S> <C> <C>
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
</TABLE>
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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 4500 140th Avenue North,
Suite 221, 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
4500 140th Avenue North, Suite 221, 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. 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.
BOARD MEETINGS AND COMMITTEES
The Board of Directors of the Company held three meetings during the
fiscal year ended December 31, 1996 (the "1996 Fiscal Year"). During the 1996
Fiscal Year the Board of Directors had two committees, the Audit Committee
(which held one meeting) and the Compensation Committee (which held one
meeting). In addition, the Board of Directors took several actions by written
consent. During the 1996 Fiscal Year no member of Prior Management attended
fewer than 75% of the aggregate of the total number of meetings of the Board of
Directors and the committees on which he served. New Management anticipates
establishing audit, and compensation committees.
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SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of November 6, 1997 information
concerning ownership of the Company's securities by (i) each Director, (ii)
each executive officer, (iii) all Directors and executive officers as a group,
(iv) each member of Prior Management; and (v) each person known to the Company
to be the beneficial owner of more than five percent of each class:
<TABLE>
<CAPTION>
Name and Address(1) Amount and Nature Percent of
Title of Class of Beneficial Owner(2) of Beneficial Ownership Class(3)
- ------------------------------- --------------------------- ------------------------- ---------------
<S> <C> <C> <C>
Common Stock William Zanker 483,562(4) 3.4%
Terrance C. Murray 279,575(5) 2.0%
Stephen Seligman 27,500(6) <1%
Andrew L. Hyams 24,375(7) <1%
Donald R. Fleischer 38,125(8) <1%
Ascot International Corp. 11,000,000(9) 80.3%
David S. Coia 0(10) 0%
1123 Overcash Drive
Dunedin, FL 34698
David Coia 11,000,000(11) 80.3%
David L. West 11,000,000(12) 80.3%
Kevin P. Stone 0 0%
338 Soudan Avenue
Toronto, Ontario, Canada
Waylon E. McMullen 0 0%
P.O. Box 795517
Dallas, TX
Preferred Stock Terrance C. Murray 145,500(13) Not meaningful
All new executive officers and
Directors as a Group
(5 persons) 11,000,000(14) 80.3%
</TABLE>
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(1) Unless otherwise indicated, the address of each beneficial owner is c/o
The Great American BackRub Store, Inc., 4500 140th Avenue North, Suite
221, Clearwater, FL 33762.
(2) Beneficial ownership has been determined in accordance with Rule 13d-3
under the Exchange Act and unless otherwise indicated, represents
securities for which the beneficial owner has sole voting and investment
power.
(3) Based upon 13,700,716 shares outstanding on November 6, 1997.
(4) Includes 420,000 shares issuable upon the exercise of outstanding options
and warrants. Does not include 250,000 shares issuable as a bonus to Mr.
Zanker in connection with the Acquisition which are subject to
registration under the Securities Act of 1933, as amended, or 60,000
shares which the Company agreed to issue to Mr. Zanker in lieu of 63,562
shares (included above) pledged to secure the Company's obligations under
certain Notes.
(5) Includes 120,000 shares issuable upon the exercise of options and 100,000
shares issuable upon the exercise of Warrants. Does not include 60,000
shares which the Company agreed to issue to Mr. Murray in lieu of 59,575
shares (included above) pledged to secure the Company's obligations under
certain Notes.
(6) Includes 22,500 shares issuable upon the exercise of options.
(7) Includes 22,500 shares issuable upon the exercise of options.
(8) Includes 22,500 shares issuable upon the exercise of options.
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(9) Does not include up to 6,097, 419 additional shares issuable to Ascot
under the terms of the Securities Exchange Agreement which is conditioned
upon an amendment to the Company's certificate of incorporation.
(10) David S. Coia is David Coia's son.
(11) Mr. Coia is an officer of Ascot and owns approximately 38% of the shares
of Ascot. He disclaims beneficial ownership of shares of the Company owned
by Ascot.
(12) Mr. West is an officer of Ascot and owns approximately 3% of the shares of
Ascot. He disclaims beneficial ownership of shares of the Company owned by
Ascot.
(13) Includes 145,500 shares issuable upon the exercise of Warrants.
(14) See Notes 10, 11 and 12 above.
No director or executive officer or any associate of any such person is a
party adverse to the Company or has a material interest adverse to the Company.
On December 7, 1995, the Company entered into an option agreement with
Laidlaw Equities, Inc. and Laidlaw Holdings, Inc. (collectively "Laidlaw")
pursuant to which Laidlaw granted the Company options (the "Options") to
purchase an aggregate of 475,000 shares (the "Option Shares"). Such Options
were exercisable at any time or from time to time prior to September 7, 1996 at
an exercise price of $4.00 per share.
On April 9, 1996, Laidlaw granted to Investors Associates, Inc. ("IAI"),
the underwriter for the proposed public offering of the Company's securities
(the "Offering") described in Item 1 (Description of Business - Recent and
Proposed Financing Transactions), an option to purchase 100,000 of the Option
Shares, exercisable at any time to and including May 9, 1996, for an exercise
price of $3.00 per share and the Company simultaneously released Laidlaw from
the Options with respect to such shares. IAI exercised such option.
On April 24, 1996, the Company granted certain individuals unaffiliated
with the Company (the "Grantees") the right (the "Right") to cause the Company
to assign the Options with respect to 375,000 of the Option Shares to them at
any time prior to June 7, 1996 (subsequently extended to September 7, 1996);
provided, however, that the exercise price with respect to such shares would be
$5.00 per share. IAI purchased 50,000 of such shares from Laidlaw and
simultaneously therewith the Company released Laidlaw from the Options as to
such 50,000 shares and the Grantees released the Company from the Right as to
such 50,000 shares.
Except as described above, the Options expired unexercised on September 7,
1996.
On February 1, 1996, the Company engaged Horatio Management Services
Corp., an affiliate of IAI, as the Company's management consultant for a period
of 24 months commencing February 1, 1996, at a fee of $5,000 per month
(exclusive of any accountable out-of-pocket expenses), $60,000 of which is
payable on the closing of the Offering and $60,000 of which is payable on the
first anniversary thereof.
In February 1996, the Company entered into a Financial Advisory and
Consulting Agreement (the "Financial Advisory Agreement") with IAI. The
Financial Advisory Agreement expired on January 31, 1997. As compensation for
the services to be performed by IAI for the Company pursuant to the Financial
Advisory Agreement, the Company paid to IAI a financial consulting fee of
$100,000, and issued warrants to purchase 100,000 shares of Common Stock at an
exercise price of $1.00 per share, exercisable to and including January 31,
1997, and warrants to purchase 200,000 shares of Common Stock at an exercise
price of $2.50 per share, exercisable to and including January 31, 1998. These
warrants have been exercised.
On November 15, 1996, the Company entered into a franchise agreement with
Roosevelt Field Partners. Certain executive officers and directors of the
Company own, collectively, an approximately 40% equity interest in Roosevelt
Field Partners.
Certain executive officers of the Company participated in a bridge
financing by the Company which was consummated on December 27, 1996. The bridge
financing (the net proceeds of which were approximately $175,000), consisting
of five and one-third investment units, each such unit comprising a promissory
note in the principal amount of $49,250 and 750,000 warrants (the Bridge
"Warrants"). Each such note bears interest at the
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rate of 10% per annum and is payable one year from the date of issue or upon an
earlier public offering o equity securities of the Company. Each Bridge Warrant
entitles the holder thereof to purchase one share of the Company's Series A
Convertible Preferred Stock (the "Series A Preferred Stock") for a price of
$5.00, subject to adjustment in certain circumstances, at any time during the
three-year period commencing on the first anniversary of the date of issuance
of the Bridge Warrants. Each share of Series A Preferred Stock pays a
cumulative dividend of $.35 per annum, has a liquidation preference of $5.00
and is convertible on or after December 27, 1997 into the greater of (i) two
shares of Common Stock of the Company or (ii) a number of shares of Common
Stock equal to $8.00 divided by the average of the closing prices of the Common
Stock for the ten trading days ending on the third trading day preceding the
date of conversion (the "Closing Price") subject to further adjustment under
certain circumstances. In the bridge financing, William Zanker, President of
the Company, Terrance C. Murray, Chief Executive Officer of the Company, and
Keith R. Dee, Chief Financial Officer of the Company, purchased an aggregate of
one and one-third of the investment units. On January 27, 1997, Mr. Zanker and
the Company entered into an agreement whereby Mr. Zanker rescinded his
investment in the Bridge Financing, consisting of .73387 investment units, and
an equal number of units were sold by the Company to another investor.
On February 5,1997, the Company filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form SB-2 (the
"Registration Statement") for the sale in an underwritten offering of 270,000
shares of Series B Convertible Preferred Stock of the Company (the "Series B
Preferred Stock") at an anticipated public offering price of $10.00 per share.
Under the terms of the Bridge Warrants, upon the effectiveness of the
Registration Statement describe above, each Warrant shall be automatically
converted into one-half of a warrant (a "Series B Warrant") each of which will
entitle the holder thereof to purchase one share of Series B Convertible
Preferred Stock for an initial price of $8.00 per share, subject to adjustment
in certain circumstances, at any time during the three-year period commencing
on the first anniversary of the effective date of such Registration Statement,
and the holders of the Series B Warrants are entitled to have such Warrants and
the Preferred Stock and Common Stock underlying such Warrants registered for
public sale. On February 7, 1997, the Company filed a second registration
statement with the Commission with respect tot he sale by the holders thereof
of the Series B Warrants and the preferred Stock and Common Stock underlying
such Warrants. The Registration Statement is not yet effective and plans for
the Preferred Stock Offering have been suspended.
All future and ongoing transactions and loans with officers, directors and
principal shareholders of the Company will be on terms no less favorable than
could be obtained from independent third parties and will be approved by a
majority of the disinterested directors of the Company.
SECTION 16 BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's executive officers and directors, and persons who are beneficial
owners of more than ten percent of the Company's Common Stock, to file reports
of ownership and changes in ownership with the Securities and Exchange
Commission (the "Commission"). Such persons are required by the Commission's
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
Based solely on review of copies of such forms furnished to the Company,
or written representations that no Form 5's were required, the Company believes
that during the fiscal year ended December 31, 1996, except as described below,
all Section 16(a) filing requirements applicable to its officers, directors and
greater than ten-percent beneficial owners were complied with.
DEFINED BENEFIT PLANS
During the 1996 Fiscal Year the Company did not have any defined benefit
plan.
EMPLOYMENT AGREEMENTS
Pursuant to the Securities Exchange Agreement, the Company and Mr. Zanker
mutually agreed to terminate the employment agreement with Mr. Zanker dated
November 1, 1994 and enter into a consulting agreement (the "Consulting
Agreement") with Mr. Zanker dated October 16, 1997.
6
<PAGE>
The Consulting Agreement is effective until September 30, 1999 and
pursuant thereto Mr. Zanker is to, during normal business hours, provide advice
to the Company relating to financial affairs, marketing, personnel and similar
matters so as to assist New Management in operating the Company during the term
thereof. Mr. Zanker is to receive (i) $120,000 in equal monthly installments of
$10,000 commencing November 1, 1997 for the first twelve months of the
Consulting Agreement; (ii) $80,000 in equal monthly installments of $6,666.66
commencing November 1, 1998 for the second twelve months of the Consulting
Agreement; and (iii) five year warrants to acquire shares of the Company's
common stock as follows: 100,000 shares at $0.50 per share; 100,000 shares at
$0.75 per share and 100,000 shares at $1.00 per share. The Consulting Agreement
contains a non-compete/non-interference provision during the term of the
Agreement.
DIRECTOR COMPENSATION
Set forth below is the compensation of the Prior Management of the Company
during the last fiscal year. The compensation for directors subsequent to the
Acquisition has not yet been determined.
<TABLE>
<CAPTION>
SECURITY GRANTS
NUMBER OF
ANNUAL SECURITIES
RETAINER MEETING CONSULTING/ NUMBER UNDERLYING
NAME FEES($) FEES($) OTHER FEES($) OF SHARES OPTIONS/SAR'S
- -------------- ---------- --------- --------------- ----------- --------------
<S> <C> <C> <C> <C> <C>
W. Zanker -0- -0- -0- -0- 120,000
T. Murray -0- -0- -0- -0- 120,000
S. Seligman -0- $1,000 -0- -0- 10,000
A. Hyams -0- $1,000 -0- -0- 10,000
D. Fleischer -0- $1,000 -0- -0- 10,000
</TABLE>
Employees of the Company receive no additional compensation for service as
a directors. All directors are reimbursed for their reasonable out of pocket
expenses incurred in connection with their duties to the Company.
EXECUTIVE COMPENSATION
The following table sets forth, for the fiscal years indicated, all
compensation awarded to, earned by, or paid to the chief executive officer of
the Company and the Chairman of the Board of the Company. There is no other
executive officer of the Company whose salary and bonus exceeded $100,000 with
respect to the fiscal years ended December 31, 1996, December 31, 1995 and
December 31, 1994.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1)
- ----------------------------------
NAME AND SALARY BONUS OTHER ANNUAL
PRINCIPAL POSITION YEAR ($) ($) COMPENSATION
- ------------------------- ------ --------- ------------ -------------
<S> <C> <C> <C> <C>
William Zanker
Chairman of the Board 1994 * * *
1995 108,308 -0- -0-
1996 120,000 57,000 -0-
Terrance C. Murray
Chief Executive Officer 1994 * * *
1995 108,308 -0- -0-
1996 120,000 30,000 -0-
Keith Dee
Chief Financial Officer 1994 * * *
1995 6,000 -0- -0-
1996 100,000 16,539 -0-
</TABLE>
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(1) Annual Compensation for executive officers subsequent to the Acquisition
has not yet been determined.
* Mr. Zanker, Mr. Murray and Mr. Dee did not receive any compensation in
fiscal 1994.
There were no stock option grants made to each of the executive officers
named in the Summary Compensation Table during the year ended December 31,
1996.
7
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The following table provides certain information regarding option
exercises and unexercised stock options held by each of the executive officers
named in the Summary Compensation Table as of December 31, 1996.
<TABLE>
<CAPTION>
Number of
Securities Value of
Underlying Unexercised
Number of Unexercised In-the-Money
Shares Acquired Options and Options and
on Exercise of SARs at SARS at
Options/ Value Fiscal Year End Fiscal Year End
Redemption of Realized Exercisable/ Exercisable/
Name SAR's Options/SAR's Unexercisable Unexercisable
- ----------------------- ----------------- --------------- ----------------- ----------------
<S> <C> <C> <C> <C>
William Zanker ...... 100,000 / 0(1) $50,000 / 0 120,000 / 0 $390,000 / 0
Terry Murray ......... 100,000 / 0(1) $50,000 / 0 120,000 / 0 $390,000 / 0
Keith Dee ............ 0 / 0 $0 / 0 10,000 / 0 $40,625 / 0
</TABLE>
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(1) Stock Option exercise.
In connection with the Acquisition, Mr. Zanker was issued five year warrants
(pursuant to the Consulting Agreement) to acquire shares of the Company's
common stock as follows: 100,000 shares at a price of $0.50 per share, 100,000
shares at a price of $0.75 per shares, and 100,000 shares at a price of $1.00
per share.
In connection with the Acquisition, Mr. Murray and the Company entered into a
termination and settlement agreement in settlement of claims for past due wages
owed to Mr. Murray, whereby Mr. Murray was issued five year warrants to acquire
shares of the Company's common stock as follows: 33,333 shares at a price of
$0.50 per share, 33,333 shares at a price of $0.75 per share, and 33,334 shares
at a price of $1.00 per share.
8
