===============================================================================
SCHEDULE 14A
(Rule 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the
Commission Only (as permitted by
Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant to (S) 240.14a-11(c) or (S) 240.14a-12
OURPET'S COMPANY
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
===============================================================================
OURPET'S COMPANY
________________________________________________________________________________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
August 18, 2001
________________________________________________________________________________
To the Shareholders of OurPet's Company:
NOTICE IS HEREBY GIVEN that the Annual Meeting of the Shareholders of
OurPet's Company (the "Company") will be held on Saturday, August 18, 2001, at
10:00am EDT, at the Company offices located at 1300 East Street, Fairport
Harbor, Ohio 44077, for the purpose of considering and acting upon the following
matters:
(1) Election of three members (3) of the Company's Board of Directors to
serve until the Company's next annual meeting and until such
Directors' successors are elected and shall have qualified;
(2) Ratification of the appointment of S.R. Snodgrass, A.C. as the
Company's independent auditors for the fiscal year ending December 31,
2001;
(3) Transact such other business as may properly come before the Annual
Meeting or at any adjournment or postponement thereof.
A proxy statement describing the matters to be considered at the Annual
Meeting is attached to this notice. Only holders of Common Stock of record at
the close of business on June 29, 2001 are entitled to notice of, and to vote
at, the Annual Meeting and at any adjournment or postponement thereof.
Shareholders are cordially invited to attend the Annual Meeting. Whether
or not you plan to attend the Annual Meeting in person, you are urged to
complete, sign and date the accompanying proxy and return it promptly in the
enclosed postage paid envelope.
By Order of the BOARD OF DIRECTORS,
/s/ Konstantine S. Tsengas
--------------------------
Konstantine S. Tsengas
Secretary
Fairport Harbor, Ohio
July 13, 2001
1
OurPet's Company
1300 East Street
Fairport Harbor, Ohio 44077
Proxy Statement
________________________________________________________________________________
General
The Board of Directors of OurPet's Company ("the Company") hereby
solicits your proxy for use at the Annual Meeting of Shareholders to be held on
Saturday, August 18, 2001 ("the Annual Meeting"), or at any adjournment or
postponement of the Annual Meeting, for the purposes set forth in the foregoing
Notice of Annual Meeting of Shareholders. Copies of solicitation material will
be furnished to brokerage houses, fiduciaries and custodians to forward to
beneficial owners of Common Stock of the Company, no par value, held in their
name. The cost of solicitation of proxies, including expenses in connection with
preparing and mailing this Proxy Statement, will be borne by the Company. In
addition, we will reimburse brokerage firms and other persons representing
beneficial owners of Common Stock for their expenses in forwarding solicitation
material to such beneficial owners. Original solicitation of proxies by mail may
be supplemented by telephone, telegram, internet and personal solicitation by
directors, officers or other regular employees of the Company. No additional
compensation will be paid to directors, officers or other regular employees for
such services. This Proxy Statement and accompanying Proxy will be mailed on or
about July 13, 2001 to all shareholders entitled to vote at the Annual Meeting.
Voting Rights and Outstanding Shares
Shareholders of record at the close of business on June 29, 2001 (the
"Record Date") will be entitled to notice of and to vote at the Annual Meeting.
On the Record Date, the Company had outstanding 10,644,687 shares of Common
Stock, no par value. A quorum for the Annual Meeting consists the presence, in
person or by proxy, of the holders of a majority of the total number of shares
of Common Stock outstanding on the Record Date. Abstentions and broker "non-
votes" are counted as present and entitled to vote for purposes of determining a
quorum. Each holder of record of shares of Common Stock on the Record Date is
entitled to one vote per share on each matter to be considered at the Annual
Meeting. An affirmative vote of a majority of the shares present in person or
represented by proxy and entitled to vote is required for election of directors
and for approval of all other matters being submitted to shareholders for their
consideration. Abstentions and broker "non-votes" are not counted for purposes
of the election of directors and approval of all other matters being submitted
to shareholders. Cumulative voting is not allowed in the election of directors
of the Company.
When proxies are properly dated, executed and returned, the shares
they represent will be voted at the Annual Meeting in accordance with the
instructions of the shareholder. If no specific instructions are given, the
shares represented by proxies will be voted as follows:
. FOR the election of the nominees for the directors set forth herein;
. FOR the ratification of the appointment of auditors.
2
In addition, if other matters come before the annual meeting, the persons
named in the accompanying form of proxy will vote in accordance with his best
judgment with respect to such matters. A shareholder giving a proxy has the
power to revoke it at any time prior to its exercise by voting in person at the
Annual Meeting, by giving written notice to the Secretary of the Company prior
to the Annual Meeting or by giving a later dated proxy.
Security Ownership of Certain Beneficial Owners and Management.
The following table sets forth, as of June 29, 2001, certain information as
to the stock ownership and voting power of all persons (or group of persons)
known by the Company to be the beneficial owner of more than five percent (5%)
of the Common Stock, each director of the Company, each of the executive
officers and all directors and executive officers as a group.
Number of Shares Percentage of Voting
Name of Beneficial Owner (1) Beneficially Owned (2) Power (3)
---------------------------- ---------------------- ---------
Joseph T. Aveni, Director (4) 441,668 3.7
Greg W. Johnson, Director (5) 117,000 1.0
Dr. James W. McCourt, Director (6) 1,314,245 11.1
Dr. Steven and Evangelia S. Tsengas, 4,440,553 36.3
Director, Chairman, President,
Chief Executive Officer, and his
wife (7)
Glenn R. Godley, Executive Vice - *
President of Marketing/Sales (8)
John G. Murchie, Treasurer and - *
Controller (9)
Konstantine S. Tsengas, Vice 1,081,812 9.2
President of Operations and
Secretary (10)
All directors and officers as a
Group (7 persons) (11) 7,395,278 58.1
Nicholas S. Tsengas (12) 1,104,221 9.4
* Less than one percent
(1) Unless otherwise indicated and subject to applicable community property
laws, each stockholder has sole voting and investment power with respect to
all shares of Common Stock beneficially owned by such stockholder.
(2) The number of shares beneficially owned by each person named in the table
includes shares held by each individual of (i) the Company's Common Stock;
(ii) the Company's Preferred Stock, as if converted into Common Stock; and
(iii) Common Stock subject to warrants that are presently exercisable or
exercisable within 60 days of June 29, 2001. No shares that are subject to
the 1999 Stock Option Plan are included since none are exercisable or
exercisable within 60 days of June 29, 2001.
(3) Applicable percentage of voting power is based on the 11,644,687 shares of
Common Stock outstanding as of June 29, 2001. That number is comprised of
10,644,687 outstanding shares of Common Stock and 1,000,000 shares of
Common Stock issuable upon conversion of 100,000 outstanding shares of
Preferred Stock. Shares of Common Stock subject to warrants and options
that are presently exercisable or
3
exercisable within 60 days are deemed to be beneficially owned by the
person holding such warrants and options for the purpose of computing the
percentage of ownership of such person but are not treated as outstanding
for the purpose of computing the percentage of any other person.
(4) Includes 233,334 shares of Common Stock held and currently exercisable
warrants to purchase 208,334 shares of Common Stock.
(5) Includes 7,000 shares of Common Stock held, 70,000 shares of Common Stock
issuable upon conversion of 7,000 outstanding shares of Preferred Stock and
currently exercisable warrants to purchase 40,000 shares of Common Stock.
(6) Includes securities issued to Dr. McCourt, and to Beachcraft Limited
Partnership, in which Dr. McCourt serves as Trustee for its general
partner, and to DKKS, LP in which Dr. McCourt is the general partner.
Securities issued directly to Dr. McCourt include 448,180 shares of Common
Stock; Beachcraft Limited partnership holds 152,303 shares of Common Stock,
180,000 shares of Common Stock issuable upon conversion of 18,000
outstanding shares of Preferred Stock and currently exercisable warrants to
purchase 75, 606 shares of Common Stock; and DKKS, LP holds 139,078 shares
of Common Stock, 200,000 shares of Common Stock issuable upon conversion of
20,000 outstanding shares of Preferred Stock and currently exercisable
warrants to purchase 119,078 shares of Common Stock. Excludes 9,212 shares
of Common Stock held and currently exercisable warrants to purchase 2,424
shares of Common Stock issued to Dr. McCourt's daughters and son; Dr.
McCourt disclaims beneficial ownership of such shares and warrants.
(7) Includes 3,129,721 shares of Common Stock held and currently exercisable
warrants to purchase 319,540 shares of Common Stock issued to Dr. Tsengas
and also currently exercisable warrants to purchase 104,000 shares of
Common Stock issued to Senk Properties in which Dr. Tsengas is a partner.
The number of warrants issued to Senk Properties attributed to Dr. Tsengas
is based upon his ownership percentage of 52%. Excludes option to purchase
200,000 shares of Common Stock, which is not exercisable within 60 days.
Includes 728,292 shares of Common stock held and currently exercisable
warrants to purchase 135,000 shares of Common Stock issued to Dr. Tsengas'
wife and also currently exercisable warrants to purchase 24,000 shares of
Common Stock issued to Senk Properties in which Dr. Tsengas' wife is a
partner. The number of warrants to Senk Properties attributed to Dr.
Tsengas' wife is based upon her ownership percentage of 12%. Excludes
2,084,033 shares of Common Stock held and currently exercisable warrants to
purchase 30,000 shares of Common Stock issued to Dr. Tsengas' sons and also
currently exercisable warrants to purchase 72,000 shares of Common Stock
issued to Senk Properties in which Dr. Tsengas' sons are partners. The
number of warrants to Senk Properties attributable to Dr. Tsengas' sons is
based upon their ownership percentage of 36%. Dr. Tsengas disclaims
beneficial ownership of such shares and warrants.
(8) Excludes options to purchase 150,000 shares of Common Stock, which are not
exercisable within 60 days.
(9) Excludes option to purchase 50,000 shares of Common stock, which is not
exercisable within 60 days.
4
(10) Includes 1,008,403 shares of Common Stock held and currently exercisable
warrants to purchase 5,000 shares of Common Stock issued to Mr. Tsengas and
also currently exercisable warrants to purchase 36,000 shares of Common
Stock issued to Senk Properties in which Mr. Tsengas is a partner. The
number of warrants issued to Senk Properties attributed to Mr. Tsengas is
based upon his ownership percentage of 18%. Excludes option to purchase
150,000 shares of Common Stock, which is not exercisable within 60 days.
Includes 22,409 shares of Common Stock held and currently exercisable
warrants to purchase 10,000 shares of Common Stock issued to Mr. Tsengas'
daughter and son. Mr. Tsengas is the son of Dr. Tsengas.
(11) Includes 5,868,720 shares of Common Stock held, 450,000 shares of Common
Stock issuable upon conversion of 45,000 outstanding shares of Preferred
Stock and currently exercisable warrants to purchase 1,076,558 shares of
Common Stock. Excludes options to purchase 550,000 shares of Common Stock,
which are not exercisable within 60 days.
(12) Includes 1,008,403 shares of Common Stock held and currently exercisable
warrants to purchase 5,000 shares of Common Stock issued to Mr. Tsengas and
also currently exercisable warrants to purchase 36,000 shares of Common
Stock issued to Senk Properties in which Mr. Tsengas is a partner. The
number of warrants issued to Senk Properties attributed to Mr. Tsengas is
based upon his ownership percentage of 18%. Includes 44, 818 shares of
Common Stock held and currently exercisable warrants to purchase 10,000
shares of Common Stock issued to Mr. Tsengas' daughters. Mr. Tsengas in
the son of Dr. Tsengas.
Proposal 1: Election of Directors
Unless marked otherwise, proxies received will be voted FOR the election of
each of the three nominees named below. Each of the current directors has been
nominated for election to the Board of Directors, except for Greg W. Johnson, a
director since 1999. Mr. Johnson is not standing for reelection and will be
retiring from the Board of Directors as of the Annual Meeting. This will result
in two vacancies on the Board of Directors. Under the terms of the Company's
Certificate of Incorporation, any vacancy on the Board of Directors may be
filled by a majority vote of the directors then in office. If any of the three
nominees is unable or unwilling to serve as a nominee for the office of director
at the time of the Annual Meeting, the proxies may be voted either (i) for a
substitute nominee who shall be designated by the proxy holder or by the present
Board of Directors to fill such vacancy or (ii) for the balance of the nominees,
leaving a vacancy. Alternatively, the size of the Board may be reduced
accordingly. The Board of Directors has no reason to believe that any of the
following nominees will be unwilling or unable to serve if elected as a
director. Such persons have been nominated to serve until the next Annual
Meeting of shareholders following the 2001 Annual Meeting or until their
successors, if any, are elected or appointed. The Board of Directors recommends
a vote "FOR" the election of each of the nominees listed below.
Joseph T. Aveni Mr. Aveni was elected to the Company's
69 years old Board of Directors in November 1998.
Director since 1998 Mr. Aveni has been the Chairman and
Chief Executive Officer of Realty One Chief Executive Officer of Realty One
since 1990 and serves on the Board of
Directors of the Cleveland Ballet and
the Greater Cleveland Growth
Association. He has served as
5
President of Property Management
Division of FIABCI and of National
Institute of Real Estate Management, as
a member of the Board of Directors of
the National Association of Realtors,
as Chairman of the Genesis Relocation
Services and as a member of the
Leadership Cleveland Class of '92. He
has received the Distinguished Service
Award and Realtor of the Year Award
from the Association of Realtors and
the Franklin Delano Roosevelt Award for
Excellence from the March of Dimes.
Dr. James W. McCourt Dr. McCourt was elected to the
60 years old Company's Board of Directors in
Director since 1999 December 1999. Dr.McCourt retired in
Retired 1998 from his dentistry practice in
Harlingen, Texas which he operated from
1995 to 1998 and has not participated
in any business activity since his
retirement. As an associate professor,
he has held positions at colleges and
universities and has also served as a
consultant and on the surgical staff of
many hospitals.
Dr. Steven Tsengas Dr. Tsengas has served on the Company's
64 years old Board of Directors since the merger
Director since 1985 with Manticus, Inc. in 1998 and also
Chairman of the Board, President and was a director of the predecessor
Chief Executive Officer of the Company company since it was incorporated in
1985. Dr. Tsengas has also been
Chairman, President and Chief Executive
Officer of the Company for the same
period of time. Dr. Tsengas received
his BS in Industrial Engineering from
the State of New York University at
Buffalo, his MS in Business from the
University of Rochester, W. Simon
Graduate School of Management, and his
Ph.D. degree in Natural Health from
Clayton College of Natural Health. He
holds numerous patents, has taught and
lectured at various colleges and was
elected to the National Inventors Hall
of Fame. He is active in numerous
professional, community and technical
associations, including the Ohio
Venture Association, American
Naturopathic Medical Association, the
Coalition for Natural Health, the Lake
County Development Council and the Lake
County Workforce
6
Development Council.
Board Committee
- ---------------
The Board of Directors has established a Compensation Committee, which
makes recommendations to the Board with respect to general compensation and
benefit levels for employees, determines the compensation and benefits for the
Company's executive officers and administers the Company's stock option plan.
The current members of this Committee are Joseph T. Aveni, Dr. James W. McCourt
and Dr. Steven Tsengas.
Compensation of Directors
- -------------------------
In 2000, directors who were full-time employees of the Company received no
cash compensation for services rendered as members of the Board of Directors or
a committee thereof. Directors who were not full-time employees of the Company
received reimbursement of out-of-pocket expenses for attendance at Board of
Director meetings. Non-Employee directors received no other compensation for
their services as directors. Director Greg Johnson was provided compensation in
the form of 40,000 warrants for the purchase of Common Stock at $1.00 per share,
which expire on December 31, 2001, for providing consulting services to the
Company regarding its Internet Website.
Board Meetings
- --------------
All directors were present for at least 75% of all meetings of the Board of
Directors and the meetings of the committee of which each was a member.
Employment Contracts and Termination of Employment and Change-in-Control
- ------------------------------------------------------------------------
Arrangements
- ------------
Other than the Company's standard form of non-competition and
confidentiality agreement, the Company does not presently have any employment
contracts in effect with the Executive Officers of the Company, including any
compensatory plans or arrangements resulting from the resignation, retirement or
other terminations of the Executive Officers.
Executive Compensation.
Summary Compensation Table
- --------------------------
The following summary compensation table sets forth the aggregate
compensation paid or accrued by the Company for the years ended December 31,
2000, 1999 and 1998 to its Executive Officers.
Annual Compensation Long Term Compensation
------------------- ----------------------
Awards Payouts
------ -------
Securities All
Other Annual Underlying LTIP Other
Name and Principal Position Salary Bonus Compensation Options/ Payouts Compensation
Year ($) ($) ($) SARS (#) ($) ($)
---- --- --- --- --------- --- ---
Dr. Steven Tsengas 2000 80,000 - - - - -
Chairman, President 1999 74,375 - - 200,000 (3) - -
& Chief Executive Officer 1998 75,000 - - - - -
7
Konstantine S. Tsengas 2000 62,000 - - - - -
Vice President of 1999 59,500 - - 150,000 (3) - -
Operations & Secretary 1998 60,000 - - - - -
Glenn R. Godley (1) 2000 62,000 - - 50,000 (3) - -
Exec. Vice President of 1999 32,506 - - 100,000 (3) - -
Marketing/Sales 1998 - - - - - -
John G. Murchie (2) 2000 54,059 - - 50,000 (3) - -
Treasurer and 1999 - - - - - -
Controller 1998 - - - - - -
(1) Mr. Godley became an executive officer of the Company in May of 1999.
(2) Mr. Murchie became an executive officer of the Company in January of 2000.
(3) Represents options granted in December 1999, January 2000 and December 2000
pursuant to the Company's 1999 Stock Option Plan which vest one-third on
each of the second, third and fourth anniversaries of the date of grant,
expire on the fifth anniversary of the date of grant and have an exercise
price of $0.825 per share for Dr. Tsengas, $0.75 per share for Mr. Tsengas,
$0.75 per share for the 1999 award and $1.25 per share for the 2000 award
for Mr. Godley and $1.00 per share for Mr. Murchie.
Option Plan
- -----------
The Company maintains the 1999 Stock Option Plan (the "Plan") for its
officers and key employees under which options may be granted at the discretion
of the Board of Directors. The Company has reserved 850,000 shares of its
Common Stock for issuance upon the exercise of options granted under the Plan.
Under the Plan, options to purchase an aggregate of 568,000 shares are
outstanding as of June 29, 2001. These options vest one-third on each of the
second, third and fourth anniversaries of the date of grant and expire on the
fifth anniversary of the date of grant. The Company grants options for the Plan
at exercise prices equal to or greater than the fair market value of the Common
Stock on the date of grant.
The following table sets forth the number of individual stock option grants
made to each Executive Officer during 1999 and 2000.
Number of
Securities Percent of Total
Underlying Options/SARs Granted
Options/SARs to Employees in Exercise or Base Expiration
Name Granted (#) Year (1) Price ($/sh) Date
---- ----------- -------- ------------ ----
Dr. Steven Tsengas (1999) 200,000 33.3% $0.825 12/04/04
Konstantine S Tsengas(1999) 150,000 25.0% $ 0.75 12/04/04
Glenn R. Godley (1999) 100,000 16.7% $ 0.75 12/04/04
Glenn R. Godley (2000) 50,000 42.6% $ 1.25 12/20/05
John G. Murchie (2000) 50,000 42.6% $ 1.00 01/26/05
8
(1) The Company granted options to purchase an aggregate of 600,000 shares of
Common Stock during 1999, all of which were granted on December 4, 1999 and
an aggregate of 117,500 shares of Common Stock during 2000.
The following table sets forth information (on an aggregate basis)
concerning exercises of stock options during 1999 and 2000 by each of the
Executive Officers and the final December 31, 2000 value of unexercised options.
Number of Securities Underlying Value of Unexercised "In-the-
unexercised Options/SARs at Money" Options/SARs at
12/31/00 (#) 12/31/00 ($) (1)
------------ ----------------
Shares
Acquired
or Value
Exercise Realized
Name (#) ($) Exercisable Unexerciseable Exercisable Unexerciseable
---- --- --- ---------------- -------------------- ---------------- --------------------
Dr. Steven Tsengas - - - 200,000 - $85,000
Konstantine S. Tsengas - - - 150,000 - $75,000
Glenn R. Godley - - - 150,000 - $50,000
John G. Murchie - - - 50,000 - $12,500
(1) Calculated based upon the difference between the exercise price and the
estimated fair market value of $1.25 a share on December 31, 2000.
Certain Relationships and Related Transactions
In September 1996, a predecessor of the Company entered into a sales
commission agreement with Anthony O'Rourke, owner of Macke International Trade,
Inc., a former member of the Board of Directors. The agreement provides for the
payment of a 4% commission on net sales to a certain customer for which
commission of $29,200 was earned in 1999 and $58,493 was earned in 2000. Mr.
O'Rourke, through Macke International Trade, Inc. also provided sales consulting
services for which $1,000 was expensed in 1999. The Company issued 67,224
shares of Common Stock to Mr. O'Rourke in 1999 as payment for sales consulting
services. Such shares were valued at $50,418.
The Company leases production, warehouse and office facilities from a
related entity, Senk Properties, a general partnership comprised of Dr. Steven
Tsengas, Konstantine S. Tsengas, Evangelia S. Tsengas and Nicholas S. Tsengas.
At December 31, 2000, the current monthly rental was $11,247 plus real estate
taxes with annual increases each May in the base rental of approximately 3%.
The initial lease term was for five years ending on May 31, 1998. It has been
extended for an additional five-year term, with the possibility of four
additional extensions of five years each. Lease expense before the cancellation
of accrued rent described in the Paid-In Capital Note to Consolidated Financial
Statements was $138,795 for 1999 and $83,901 for 2000, net of amounts received
from a sublease for six months.
In March 2000, DKKS, LP, a firm for which Dr. James W. McCourt (a member of
the Board of Directors) is the general partner, exercised 150,000 warrants,
which had been issued in 1998, for the cash purchase of 150,000 shares of Common
Stock at $0.75 a share, which it transferred into the name of Beachcraft, L.P.,
another entity controlled by Dr. McCourt.
On February 1, 1999 and September 1, 1999, the Company borrowed $100,000
and $200,000 for working capital purposes from Mr. Aveni. The initial loan for
$100,000 was
9
exchanged for 100,000 shares of Common Stock in March 2000. The second loan is
due on August 31, 2001 and has an annual interest rate of 10%. In addition, Mr.
Aveni received 50,000 warrants for the purchase of Common Stock at $0.75 per
share which expire on July 31, 2001 and 100,000 warrants for the purchase of
Common Stock at $1.00 per share which expire on August 31, 2001. The 100,000
warrants were exercised in March 2000 upon the conversion of the initial loan
described above.
On March 1, 1999, the Company borrowed $60,000 from three of its
stockholders, James Palmer, Bruce Matilo, and Joseph and Rose Ulrich, for
working capital at an annual interest rate of 10%. The loan and accrued
interest were paid on September 1, 1999 with $25,000 in principal being paid in
cash to Palmer and $35,000 in principal being exchanged for Convertible
Preferred Stock to Matilo ($10,000) and the Ulrich's ($25,000) as part of the
Company's 1999 Private Placement. Also, in connection with the Company's 1999
Private Placement of Convertible Preferred Stock, DKKS, LP purchased 20,000
shares for $200,000 in cash and Greg W. Johnson purchased 7,000 shares of
$70,000 in cash.
In December 1999, the Company issued an aggregate total of 500,000 warrants
for the purchase of Common Stock at $1.00 per share which expire on December 14,
2004 to Senk Properties and to Dr. Steven Tsengas, Konstantine S. Tsengas,
Evangelia S. Tsengas, Nicholas S. Tsengas and the grandchildren of Dr. Tsengas.
Senk Properties, a partnership comprised of Dr. Steven Tsengas and his wife,
Evangelia Tsengas, and his two sons, Konstantine Tsengas and Nicholas Tsengas,
canceled $158,060 owed to the partnership by the Company for accrued rent due
under their lease agreement with the Company and received 200,000 of the 500,000
warrants, from the Company as consideration. Also in December 1999, Dr. Tsengas
and his wife forgave $232,607 owed to them by the Company and in consideration
received 300,000 of the 500,000 warrants which they distributed between
themselves, and their children and grandchildren as designees. These
transactions resulted in additional Paid-In Capital to the company of $390,667.
On December 4, 1999, the Board of Directors approved the 1999 Stock Option
Plan (the "Plan") subject to shareholder approval, which approval was obtained
on August 5, 2000. This Plan replaced the prior plan and provided that the
options previously granted to officers and key employees would be exchanged for
options under the Plan in an equal amount and identical exercise price. Dr.
Tsengas, Mr. Tsengas and Mr. Godley were granted options to purchase 200,000,
150,000 and 100,000 shares, respectively, of Common Stock at an exercise price
of $0.825 for Dr. Tsengas and $0.75 for Messrs. Tsengas and Godley. Pursuant to
the terms of the Company's stock option plan, the exercise price for Dr. Tsengas
is 10% higher than the other's due to his stock ownership exceeding 10% of the
outstanding shares. On January 26, 2000, Mr. Murchie was granted an option to
purchase 50,000 shares of Common Stock at an exercise price of $1.00. On
December 20, 2000, Mr. Godley was granted an additional option to purchase
50,000 shares of Common Stock at an exercise price of $1.25. One-third of such
options vest on each of the second, third and fourth anniversaries of the date
of grant and expire on the fifth anniversary of the date of grant.
In January 2000, the company issued 40,000 warrants for the purchase of
Common Stock at $1.00 per share, which expire on December 31, 2001 to Greg W.
Johnson, a director of the Company, for consulting services to be provided by
Mr. Johnson to the Company.
On July 21, 2000, the Company borrowed $50,000 from Dr. Steven Tsengas, on
August 1, 2000, it borrowed $25,000 from Joseph T. Aveni, and on August 2, 2000,
it borrowed $150,000 from Beachcraft Limited Partnership, a firm for which Dr.
James W.
10
McCourt serves as Trustee for its general partner for working capital purposes.
The notes have an annual interest rate of 10% and are due on July 31, 2002 for
Dr. Tsengas and Mr. Aveni, and on August 1, 2001 for Beachcraft, L.P. due to a
six-month extension obtained in February 2001. In connection with these loans,
the Company issued 50,000 warrants for the purchase of Common Stock at $1.25 a
share to Dr. Tsengas, warrants to purchase 25,000 shares at the same price to
Mr. Aveni and warrants to purchase 75,000 shares at the same price to Beachcraft
Limited Partnership. The 75,000 warrants issued to Beachcraft, L.P. includes
37,500 warrants issued in February 2001 for the six-month extension on repayment
of its loan. These warrants all expire on July 31, 2003.
On October 20, 2000, the Company borrowed an additional $40,000 from Dr.
Tsengas for working capital purposes. This note is due on demand and has an
annual interest rate of 10%. The Company repaid Dr. Tsengas $5,000 on this note
on October 25, 2000, $5,000 on November 17, 2000, $10,000 on December 21, 2000
and $10,000 on December 29, 2000.
The Company believes the terms it received from the loans described above
are at least as favorable as terms it could have obtained from unaffiliated
third parties.
Proposal 2: Ratification of Selection of Independent Auditors
The Board of Directors has selected S.R. Snodgrass, A.C. as the company's
independent auditors for the year ending December 31, 2001, and has further
directed that management submit the selection of independent auditors for
ratification by the shareholders at the Annual Meeting. S.R. Snodgrass, A.C.
has audited the Company's financial statements since 1998. Representatives of
S.R. Snodgrass, A.C. are expected to be present at the Annual Meeting, will have
an opportunity to make a statement if they desire to do so and will be available
to respond to appropriate questions.
Shareholder ratification of the selection of S.R. Snodgrass, A.C. as the
Company's independent auditors is not required by the Bylaws or otherwise. The
Board of Directors has elected to seek such ratification as a matter of good
corporate practice. Should the shareholders fail to ratify the selection of
S.R. Snodgrass, A.C. as independent auditors, the Board of Directors will
consider whether to retain that firm for the year ending December 31, 2001. The
affirmative vote of the holders of a majority of the Common Stock represented at
the Annual Meeting is required for approval of this proposal. The Board of
Directors recommends a vote "FOR" ratification of the appointment of S.R.
Snodgrass, A.C. as independent auditors for the Company for the current year.
The following table shows the fees paid or accrued by the Company for the
audit and other services provided by S.R. Snodgrass, A.C. for fiscal year 2000.
Audit Fees (1) $43,615
Financial Information Systems Design and
Implementation Fees 0
All Other Fees (2) 11,860
------------------
Total $55,475
==================
(1) Audit services of S.R. Snodgrass, A.C. for 2000 consisted of the
examination of the consolidated financial statements of the Company at
September 30, 2000 and at December 31, 2000.
11
(2) "All Other Fees" includes $7,883 for services related to filings made with
the Securities and Exchange Commission and $3,977 for the other services,
including, among other items, tax services. The Board of Directors has
determined that the provision of these services is compatible with
maintaining the independence of S.R. Snodgrass, A.C.
Other Matters
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's directors, officers and persons who own more than 10% of the
Common Stock or the Convertible Preferred Stock, to file with the Securities and
Exchange Commission (the "SEC") an initial report of ownership of the Company's
stock on Form 3 and reports of changes in ownership on a Form 4 or a Form 5.
Persons subject to Section 16 are required by SEC regulations to furnish the
Company with copies of all Section 16(a) forms that they file. As a matter of
practice, the Company's administrative staff assists in preparing and filing
these reports. During the fiscal year ended December 31, 2000, the Company's
directors, officers and persons who own more than 10% of the Common Stock or the
Convertible Preferred Stock were not subject to Section 16 and therefor no
reports were filed.
The Board of Directors knows of no other business to be presented at the
Annual Meeting, but if other matters do properly come before the Annual Meeting,
it is intended that the person named on the Proxy will vote on such matters in
accordance with his best judgment.
Financial Statements
The condensed consolidated statements of operations for the years ended
December 31, 2000 and December 31, 1999 and for the quarters ended March 31,
2001 and March 31, 2000 and the condensed consolidated balance sheets as of
December 31, 2000, December 31, 1999 and March 31, 2001 are part of the
President's Letter included with this Proxy Statement. The Company will furnish,
without charge, a copy of its audited financial statements for its fiscal year
ended December 31, 2000 and/or a copy of its unaudited financial statements for
the quarter ended March 31, 2001 to its shareholders upon written request.
Requests should be sent to: OurPet's Company, 1300 East Street, Fairport Harbor,
Ohio 44077, Attn: Secretary. This information can also be obtained on the
Internet at www.sec.gov/cgi-bin/srch-edgar?OURPETS +CO.
By Order of the Board of Directors,
/s/ Konstantine S. Tsengas
--------------------------
Konstantine S. Tsengas
Secretary
Fairport Harbor, Ohio
July 13, 2001
12
PROXY
This Proxy is Solicited on Behalf of the Board of Directors
OURPET'S COMPANY
Konstantine S. Tsengas is hereby authorized to represent the undersigned at the
Annual Meeting of Shareholders of OurPet's Company to be held on Saturday,
August 18, 2001 at the OurPet's Company offices located at 1300 East Street,
Fairport Harbor, Ohio 44077 at 10:00 am EDT, and any adjournment or postponement
thereof, and to vote the number of shares which the undersigned would be
entitled to vote if personally present.
Number of Shares: _________ (X) Please mark votes as in this example.
Name and Address
of Shareholder:
This Proxy will be voted as you direct below. In the absence of such direction,
it will be voted FOR all of the Directors and FOR each of the Proposals below.
1. SELECTION OF DIRECTORS For Against Abstain
--- ------- -------
Nominees: Joseph T. Aveni ( ) ( ) ( )
Dr. James W. McCourt ( ) For all nominees except
Dr. Steven Tsengas as noted __________________
2. Proposal to ratify the Appointment of S.R. Snodgrass, A.C. as the
Independent Auditors for Fiscal Year 2001. ( ) ( ) ( )
3. In their discretion, upon such other matters as properly may come before
the meeting.
( ) ( ) ( )
( ) Mark here for address change and note above.
( ) Mark here if planing on attending the Annual Meeting in person.
Note: Please sign exactly as name appears. Joint owners should each sign.
Executor, Administrator, or Guardian, please sign full title as such. If signer
is a corporation, please sign with the full corporation name by duly authorized
officer or officers.
Signature: ________________________________________ Date: ____________________
Signature: ________________________________________ Date: ____________________
13