TREATS INTERNATIONAL ENTERPRISES INC.
INFORMATION STATEMENT
CONSENT NOTICE IN LIEU OF ANNUAL MEETING
Set forth below is a list of actions consented to, by the majority of
shareholders of the Company on January 28, 1997.
The consenting shareholders # of Shares
are as follows: Common Stocks Ownership
Registered %
Access Investment Group Ltd. 5,060,285 26.6
Paul Gibson In Trust 960,049 5.1
Royal Bank/Royal Bank Capital Corp. 7,207,760 37.9
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13,228,094 69.6%
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It has been resolved that:
1 - Paul Gibson, John Deknatel and Peter-Mark Bennett be appointed
directors for the year 1996/97 or until their successors are duly
elected.
2 - Orenstein and Partners be appointed auditors for the fiscal year
ending June 30, 1997.
3 - Approval of Filing of the Corporation's FORM 10-K for the year ended
June 30, 1996.
"WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE NOT REQUESTED TO SEND
US A PROXY."
This consent is being sent to shareholders of record as of January 28, 1997.
Jan. 28, 1997 By the Order of the Board of Directors.
by: /s/ CARMEN SAVARY
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Secretary
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The following sets forth the names of the Company's current Directors and
Officers. The Directors of the Company are elected annually by the shareholders
and the Officers are appointed annually by the Board of Directors. The Company
intends to expand the Board of Directors.
NAME AGE POSITION
Paul J. Gibson 41 President, C.E.O. and Director
John A. Deknatel 49 Chief Operating Officer and Director
Peter-Mark Bennett 39 Director
Erhard M. Sommer 58 Vice President, Operations
Francois Turcot 36 Director of Finance
PAUL J. GIBSON
Mr. Gibson is President, C.E.O. Chairman of the Board of the Company. Mr.
Gibson has served as President and C.E.O. of TCC since its formation in 1988 and
of Treats Inc. since July 1990. Mr. Gibson also serves in various capacities of
The Company's wholly owned subsidiaries. From its formation in 1986 until the
present, he has been President and C.E.O. of TMG, now a wholly owned subsidiary
of Treats Inc.
JOHN A. DEKNATEL
Mr. Deknatel is C.O.O. and Director of the Company. He also serves in
various capacities for The Company's wholly owned subsidiaries. Prior to
joining the Company in 1991, Mr. Deknatel served as Vice President and General
Manager of Manchu Wok U.S.A., a division of Scott's Hospitality, of Toronto,
Ontario. From 1985 to 1987, he was Director of Food Services for Canada's
Wonderland, a major theme park.
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT (CONT'D)
PETER-MARK BENNETT
Mr. Bennett was appointed Director December 16, 1994. Mr. Bennett has been
Director of Operations of Network Xcellence Ltd. in Ottawa from July 1994 to
present. From July 1990 to June 1992 he was Vice-President of Treats Inc.
Prior to July 1990 he was Managing Director of Widely Held Northern Investments
Ltd.
ERHARD M. SOMMER
Mr. Sommer is Vice President of Operations of the Company. He has been the
Vice President of Operations of Treats International Enterprises, Inc., since
its formation in 1990. He was the Director of Operations of U.S.A. Treats, the
former National Licensor for the (US) in Somerset, New Jersey from January 1990
to October 1990. from March 1985 to January 1990, he was self-employed as a
Consultant in the food and hospitality industries. From August 1979 to February
1985, he served as President of Fruzen Gladje Ice Cream, Ltd., in Lindenhurst,
New York.
FRANCOIS TURCOT
Mr. Turcot has been comptroller of the Company since May 1991. Prior to
joining the Company Mr. Turcot held the position of Comptroller with a Transport
Company in Paul's Transfer, in Hull, Quebec. From October 1986 to November
1989, Mr. Turcot was Comptroller at the Ramada Hotel in Hull, Quebec.
EXECUTIVE COMPENSATION
Set forth in the table below, is the cash compensation paid to all officers
of the Company:
U.S. $
CAPACITIES IN CASH
NAME OF INDIVIDUAL WHICH SERVED COMPENSATION
------------ ------------
Paul J. Gibson Chairman and Chief
Executive Officer $ 85,000
Executive officers as a group (4 people) $240,000
EMPLOYMENT AGREEMENT
By resolution of the Board of Directors, on May 15, 1995, compensation
agreements were approved for the Chairman and Chief Executive Officer, and the
Chief Operating Officer. Effective July 03, 1995, the resolution confirms the
above listed remuneration and sets compensation in the event of severance as
twenty four (24) months salary.
By resolution of the Board, on June 27, 1996 compensation agreements were
approved for the Chairman and Chief Executive Officer, and the Chief Operating
Officer. In addition to the gross annual base remuneration, in the event the
audited consolidated financial statements of the Company for the fiscal year
ending June 28, 1997 indicate Earnings before Interest, Taxes, Depreciation and
Amortization (EBITDA) equal to or exceeding C$1,510,000. each of the Officers of
the Company noted above will be entitled to either a Cash Bonus of 15% of gross
annual base remuneration or, at the option of the Officer, to Common Shares in
the Company equal to 30% of base annual remuneration into the average trading
price of the Company's Common Stock for the month of June 1997.
This resolution, with the exception of gross annual base remuneration, does not
supersede the Directors Resolution dated May 15, 1995.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following sets forth as of the date of filing, the number and
percentage owned of record and beneficially, by each Officer and Director of the
Company and by any other person owning 5% or more of the outstanding shares.
PRINCIPAL SHAREHOLDERS & OFFICERS
# Shares of %
Common stock Ownership
REGISTERED
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Paul Gibson Intrust (1) 960,049 5.05%
418 Preston Street
Ottawa, Ontario (K1S 4N2)
John Deknatel 131,121 0.69%
418 Preston Street
Ottawa, Ontario (K1S 4N2)
Access Investment Group Ltd (2) 5,060,285 26.60%
Sassoon House
Nassau, Bahamas
Erhard Sommer 26,667 0.14%
418 Preston Street
Ottawa, Ontario (K1S 4N2)
Francois Turcot 36,458 0.19%
418 Preston Street
Ottawa, Ontario (K1S 4N2)
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Officers & Directors as a group 6,684,749 35.14%
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OWNERS IN EXCESS OF 5%
Royal Bank / RBCC (3) 7,207,760 37.89%
200 Bay Street, 13th Floor
Toronto, Ontario (M5J 2J5)
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS (CONT'D)
NOTES
1. Paul J. Gibson may be deemed to be a promoter as such terms are defined
under the Securities Act of 1933.
2. Access Investment Group Ltd. is a company controlled by Mr. P. Gibson and
his immediate family.
3. RBCC is a wholly owned subsidiary of the Royal Bank of Canada. The Royal
Bank of Canada is a widely held Canadian Chartered Bank. To the best of
the Company's knowledge, no one entity controls more than 10% of all
outstanding shares of the Royal Bank of Canada.
The Royal Bank holds all the issued Series A preferred shares which are
convertible, at their option, at a price equal to the lower of the weighted
average trading price for TIEI for the previous 30 trading days using the
average exchange rate for the period and US$0.30 per share. The undeclared
cumulative dividend may also be converted under the same terms.
SHARES
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Current Holdings RBCC/Royal Bank 7,207,760
POTENTIAL CONVERSION OF PREFERRED SHARES
AND DIVIDEND.
Preferred Shares $ 3,732,774 @ $.274 (*) 13,623,281
Dividend to June 30, 1996 $ 410,606 @ $.274 (*) 1,498,560
Dividend July 01, 1996 to
December 31, 1996 $ 102,651 @ $.274 (*) 374,640
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Ownership of RBCC/Royal Bank after conversion 22,704,241
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Total common shares issued after conversion 34,521,080
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Authorized common shares 33,333,333
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(*) The average trading price of $0.20US converted to $.274CDN.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
CAPITAL STOCK
RESERVED SHARES - JUNE 30, 1994
On June 30, 1994 Tricapital Management Limited exercised its outstanding
warrants and reserved shares to acquire 621,295 common shares for
consideration of $270,077 (U.S.$195,708).
STOCK ISSUE - DEBT RESTRUCTURING - JUNE 30, 1994
The Company concluded its negotiations under a private placement offering
to restructure its debt and capital, effective June 30, 1994, as follows:
Royal Bank of Canada, in consideration for retiring the outstanding
debenture of $4,732,779, issued a subordinated debenture of $1,000,000
adjusted for $150,000 accretion to $850,000 and was issued 5,409,825
non-voting series A preference shares for the balance. These shares are
redeemable at the option of the Company at a price of U.S. $1 per share at
any time. The shares carry a cumulative 5.5% cash dividend payable
quarterly in arrears. At the option of the holder the dividend may be paid
in the form of common shares of the Company. The shares are convertible at
the option of the holder at U.S. $.60 per share.
SPECIAL SHARES CONVERTED TO COMMON SHARES
As part of the restructuring, effective June 30, 1994, the 4,500,000 special
shares of Treats Inc. held by the Royal Bank of Canada were accreted back to
the $45 aggregate issue price. The Royal Bank of Canada converted its
special shares into 1,619,760 common shares of the Company.
ISSUANCE OF SHARES
The Company has issued 350,000 common shares pursuant to the debt
restructuring on June 30, 1994. The Royal Bank Capital Corporation
received an additional 350,000 common shares at nominal consideration as
the Company has been unsuccessful in raising U.S. $4 million in new equity
by June 30, 1995.
CANCELLATION OF COMMON SHARES - JANUARY 4, 1996
Pursuant to a resolution of the Board of Directors, the Transfer Agent of
record was instructed to cancel and return to treasury 2,067,344 common
shares held by Tricapital Management Limited. The shares were originally
issued pursuant to a debt restructuring with Tricapital Management Limited.
The restructuring did not proceed as outlined and accordingly these shares
were cancelled.
RELATED PARTY TRANSACTIONS
(a) The Royal Bank of Canada and its subsidiary, Royal Bank Capital Corporation,
are registered holders of 37.9% of the issued stock. The Royal Bank of
Canada holds a subordinated debenture.
(b) Accounts and notes receivable include nil (1995 - $45,374) due from a
franchisee related to the President of the Company.
(c) The Company leases its office premises at an annual cost of approximately
$100,000 from a company which is 100% owned by the family of the President.
The family owns approximately 32.6% of the common stock of the Company.
(d) Under a loan agreement executed July 05, 1994, the Company advanced $160,000
to certain officers to fund the purchase of company stock.
(e) During the year, the term debt owed to the Standard Chartered Bank was
acquired by 3193853 Canada Inc. the President of which, is a family member
of the Chief Executive Officer of the Company.