Unassociated Document
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14C
(RULE
14c-101)
INFORMATION
STATEMENT PURSUANT TO SECTION 14(C)
OF
THE SECURITIES EXCHANGE ACT OF 1934
Check
the
appropriate box:
[X] Preliminary
Information Statement
[
] Confidential,
for Use of the
the
Commission Only (as permitted
by
Rule
14c-5(d)(2))
[
] Definitive
Information Statement
BROOKLYN
CHEESECAKE & DESSERTS COMPANY, INC.
(Name
of
Registrant as Specified In Charter)
Payment
of Filing Fee (Check the appropriate box):
[X] No
fee
required.
[
]
Fee
computed on table below per Exchange Act Rules 14c-5(g) 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 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:
BROOKLYN
CHEESECAKE & DESSERTS COMPANY, INC.
20
Passaic Avenue
Fairfield,
NJ 07004
May
[ ],
2006
To
Our
Stockholders,
You
are
cordially invited to attend the annual meeting of Stockholders of Brooklyn
Cheesecake & Desserts Company, Inc. (“BCAK” or the “Company”) to be held at
10:00 a.m. Eastern Daylight Time, on Monday, June 26, 2006, at the offices
of
the Company located at 20 Passaic Avenue, Fairfield New Jersey.
This
Information Statement is being furnished to the stockholders of BCAK., in
connection with the prior approval by our Board of Directors of, and receipt
of
approval by written consent of holders of a majority in voting power of shares
of the Company’s Common Stock, entitled to vote for, the proposals set forth
herein.
Specifically,
the following matters will be ratified and or approved at the annual
meeting:
· |
the
election of the slate of six incumbent directors to serve for the
ensuing
year or until their successors are elected and qualified;
|
· |
ratification
of Sherb & Co. LLP as the Company’s independent auditors for the
current fiscal year;
|
· |
ratification
of the debt exchange agreement dated March 28, 2006;
|
· |
amendment
to the amended certificate of incorporation to authorize a reverse
split
of the outstanding shares of common stock in any ratio between 1:2
and
1:25 at the discretion of the board of directors; and
|
· |
amendment
to the amended certificate of incorporation to authorize a name change
of
Company at the discretion of the Board of
Directors.
|
The
Board
of Directors believes that ratification of the election of the slate of
directors, appointment of auditors, the debt exchange agreement, the authority
to undertake a reverse split and the authority to rename the Company is in
the
best interests of the Company and its stockholders. Accordingly, on March
24, 2006, the Board unanimously approved the slate of directors, Sherb & Co,
LLP as the Company’s auditors, the Asset Exchange Agreement, as well as granting
the board the authority to undertake a reverse split of the Company’ common
stock and directed that these matters be submitted for stockholder
ratification.
This
document describes in detail the agenda items. WE URGE YOU TO READ AND CONSIDER
CAREFULLY THE INFORMATION PRESENTED. WE ARE NOT SEEKING YOUR PROXY
Because
the Board of Directors has unanimously approved the actions set forth in this
Information Statement and have received the written consent of holders of a
majority in voting power of shares of the Company’s Common Stock, we are not
asking you for your vote. Our Board of Directors has evaluated the proposed
transactions and has unanimously determined that the election of directors,
ratification of auditors, ratification of the debt exchange agreement and
authorizing the board to undertake a reverse split of common stock, and amending
the certificate of incorporation to change the name of the Company at the
board’s discretion is fair and in the best interests of the Company and its
shareholders.
This
Information Statement provides you with detailed information about the directors
standing for election, the Company’s auditors, the asset exchange agreement as
well as the proposed amendment to the certificate of incorporation authorizing
a
reverse split of common stock, and name change to be undertaken at the
discretion of the board of directors. You may also obtain information about
BCAK
from documents filed with the Securities and Exchange Commission. We encourage
you to read this entire document, including the appendices, completely and
carefully.
|
|
Sincerely yours, |
|
|
BROOKLYN CHEESECAKE & DESSERTS COMPANY,
INC. |
|
|
/s/ Anthony Merante |
|
|
Anthony Merante |
|
|
Chairman, Chief Executive Officer and
Corporate Secretary |
BROOKLYN
CHEESECAKE & DESSERTS COMPANY, INC.
20
Passaic Avenue
Fairfield,
NJ 07004
------------------------------------------------------------------------------------------------------------------------
NOTICE
OF
ANNUAL MEETING OF STOCKHOLDERS
TO
BE
HELD ON JUNE 26, 2006
------------------------------------------------------------------------------------------------------------------------
NOTICE
IS
HEREBY GIVEN that the Annual Meeting of Stockholders of Brooklyn Cheesecake
& Desserts Company, Inc. (“BCAK” or the “Company”), will be held on June 26,
2006 at 10:00 a.m. at the offices of the Company, 120 Passaic Avenue, Fairfield,
New Jersey, for the following purposes:
|
1.
|
To
elect six (6) directors, to serve until their respective successors
shall
be elected and shall qualify;
|
|
2.
|
To
ratify the selection of independent public accountants for the fiscal
year
ending December 31, 2006;
|
|
3. |
To
ratify the debt exchange agreement;
|
|
4. |
To
ratify an amendment to the amended articles of incorporation to permit
the
board of directors at its discretion to effectuate a reverse split
of the
Company’s issued and outstanding shares of common stock between a ratio of
1:2 to 1:25;
|
|
5. |
To
ratify an amendment to the amended articles of incorporation to permit
the
board of directors at its discretion to effectuate a change in the
Company’s name; and
|
|
6.
|
To
transact such other business as may properly come before the meeting
or
any adjournment or adjournments
thereof.
|
Pursuant
to the By-Laws, the Board of Directors has fixed the close of business on May
30, 2006, as the record date for the determination of Stockholders entitled
to
notice of and to vote at the Meeting. The transfer books of the Company will
not
be closed.
So
far as
Management is, at present, aware, no business will come before the Annual
Meeting other than the matters as set forth above.
WE
ARE NOT ASKING YOU FOR A PROXY
AND
YOU ARE REQUESTED NOT TO SEND A PROXY.
Dated: Fairfield,
New Jersey
June
[ ], 2006
By
Order
of the Board of Directors
/s/
Anthony Merante
______________________________
Anthony
Merante, Chairman,
Chief
Executive Officer and Corporate Secretary
PRELIMINARY
INFORMATION STATEMENT
BROOKLYN
CHEESECAKE & DESSERTS COMPANY, INC.
20
Passaic Avenue
Fairfield,
NJ 07004
FOR
THE
ANNUAL MEETING OF STOCKHOLDERS
TO
BE
HELD ON June 26, 2006
WE
ARE NOT ASKING YOU FOR A PROXY AND YOU ARE
NOT
REQUESTED TO SEND US A PROXY.
PLEASE
TAKE NOTICE that the Annual Meeting of Shareholders of the Corporation for
the
Fiscal Year ended December 31, 2005, will be held on Monday, June 26, 2006
at
10:00 a.m., at the offices of the Company, 20 Passaic Avenue, Fairfield, New
Jersey 07004.
Shareholders
of Record as of May 30, 2006 will be entitled to receive Notice and vote at
the
Meeting. It is anticipated that this Information Statement will be first mailed
to the Company’s stockholders, on or before
June
2,
2006 in conjunction with the Company’s Annual Report on Form 10-KSB. As of the
Record Date, there were a total of 684,445 shares of the Company’s Common Stock
outstanding with approximately 150 security holders of record. The Company’s
2005 Annual Report to its stockholders on Form 10-KSB is also enclosed and
should be read in conjunction with the materials set forth herein.
The
expenses incidental to the preparation and mailing of this Information Statement
are being paid by the Company.
Abstentions
and broker non-votes will be counted towards determining whether a quorum is
present.
The
holders of common stock are entitled to elect a majority of the Board of
Directors.
The
principal executive offices of the Company are located at 20 Passaic Avenue,
Fairfield, New Jersey 07004. The telephone number is (973) 808-8248
Summary
Term Sheet
WHO
IS ENTITLED TO NOTICE?
A:
Each
holder of an outstanding share of common stock of record on the close of
business on the Record Date, May 30, 2006, will be entitled to notice of each
matter to be voted upon pursuant to consents or authorizations. Shareholders
as
of the close of business on the Record Date that hold in excess of fifty percent
(50%) of the Company's 684,445 outstanding shares of common stock have indicated
that they will vote in favor of the Proposals. No action by the minority
shareholders in connection with the Proposals is required and we are NOT asking
you for your proxy and you are requested NOT to send a proxy in connection
with
the proposals set forth in this Information Statement.
WHO
CAN VOTE?
A:
All
stockholders of record as of the close of business on May 30, 2006, although
the
Board of Directors prior to the preparation and mailing of this Information
Statement has a majority of voting power of the Company’s Common Stock that has
approved the proposals and transactions set forth in this Information
Statement.
WHAT
SHOULD I DO NOW?
A:
We
are
NOT asking you for your proxy and you are requested NOT to send a proxy in
connection with the proposals set forth in this Information Statement.
You
are
invited to attend the annual meeting. However, the Board of Directors has a
majority of the voting power of the Company’s Common Stock entitled to vote for
the proposals set forth in this Information Statement.
WHAT
CORPORATE MATTERS WILL THE PRINCIPAL SHAREHOLDERS VOTE FOR AND HOW WILL THEY
VOTE?
A:
Shareholders holding a majority of the outstanding stock have provided our
Board
of Directors the voting power to vote FOR the following matters:
o
FOR the
approval of the slate of directors as proposed. (see page ____).
o
FOR the
ratification of Sherb & Co. LLP as the Company’s independent auditors for
the current fiscal year. (see page ____).
o
FOR the
ratification of the debt exchange agreement. (see page ____).
o
FOR
ratification of the amendment to the certificate of incorporation permitting
the
board of directors at their discretion to proceed with a reverse split of the
Company’s common stock at a range from 1:2 to 1:25 with no further notice. (see
page _____).
o
FOR
ratification of the amendment to the certificate of incorporation permitting
the
board of directors at their discretion to change the name of the Company. (see
page _____).
WHY
DID WE ENTER INTO THE DEBT EXCHANGE AGREEMENT?
A:
The
unanimous board with a majority of issued and outstanding shares of Common
Stock
of the Company entered into the Debt Exchange Agreement whereby
the Company has exchanged certain assets for satisfaction of and assumption
of a
majority of the Company’s outstanding obligations and liabilities. The exchange
transaction was subject to a satisfactory fairness opinion as well as customary
closing conditions.
WHAT
WAS SPECIFICALLY EXCHANGED UNDER THE DEBT EXCHANGE AGREEMENT AND
WHY?
A:
Under
the Debt Exchange Agreement the Company has exchanged certain assets namely
machinery and equipment that had an appraised value of approximately $300,000
as
determined by an independent appraisal firm Daley-Hodkin, LLC. The Company
entered into the Debt Exchange Agreement as it has operated at a loss since
inception. Management had made attempts to increase revenues through a number
of
business initiatives and streamline operations by undertaking a number of cost
saving measures. However, despite the Company’s best efforts, it was never able
to operate at a profit. Brooklyn Cheesecake had sought funding for continued
operations through a number of sources including private placements of equity
(“PIPE”) and through loans. The Company has not been able to raise sufficient
funds through to maintain its operations and has had to rely primarily upon
a
series of arms length loans from its former Chairman and Chief Executive
Officer, Ronald Schutté. These loans were secured by a pledge of certain assets
of the Company’s operating subsidiary, namely Machinery and Equipment. In
addition to not having sufficient funds to maintain its business operations,
Brooklyn Cheesecake has been unable to raise funds to satisfy its outstanding
obligations including the loans made to it by Mr. Schutté that have been used to
maintain business operations. In turn, the Company entered into the Debt
Exchange Agreement with Mr. Schutté whereby it exchanged certain assets for
satisfaction of and assumption of a majority of the Company’s outstanding
obligations and liabilities. The transaction was subject to a satisfactory
fairness opinion.
HAS
THERE BEEN A CHANGE IN THE COMPANY’S BUSINESS AND OPERATIONS FOLLOWING THE DEBT
EXCHANGE?
A:
Yes,
the nature of the Company’s business operations have changed significantly
following the exchange of debt for assets with Mr. Schutté. The Company has
changed the focus of its business from manufacturing and selling baked goods
to
holding and licensing intellectual property.
WAS
THE DEBT EXCHANGE AN EXCHANGE OF ALL OR SUBSTANIALLY ALL THE ASSETS OF THE
COMPANY?
A:
No.
Prior to undertaking the Debt Exchange Agreement, our Board obtained a fairness
opinion from de-Pasquier & Co., Inc. regarding the exchange of debt for
certain assets. The transaction was determined to be fair and in the interest
of
the shareholders and the continued operation of the Company as failing to
proceed with the debt exchange, the Company would have been required to cease
operations. The Company exchanged machinery, equipment inventory of accounts
receivables website and goodwill, for the forgiveness and assumption of accounts
payable, lease obligations, and notes issued in favor of directors and/or former
directors Mr. Schutté. Following the exchange the Company has maintained certain
intellectual property, namely registered trademarks with the United States
Patent and Trademark office for the mark The Healthy BakeryÒ
(US Registration No. 1,644,559), Brooklyn Cheesecake Company Inc. (US
Registration No. 3,040,023) and Brooklyn Cheesecakes & Desserts Company,
Inc. (US Registration No. 3,017,300). The Company believes that the trademarks
are a significant asset and are valid and enforceable, however there can be
no
assurance as to the degree of protection its registered trademarks will afford
the Company. The Company has entered into a licensing agreement with respect
to
these trademarks whereby it anticipates that it will continue to generate
revenues from the licensing of same.
WHAT
IS THE PURPOSE OF THE REVERSE SPLIT OF THE COMPANY’S COMMON
STOCK?
A:
Authorizing a reverse split would permit
the Board of Directors, in its discretion, to amend the Company's Amended
Certificate of Incorporation and implement a reverse stock split (the "Reverse
Stock Split") of the Company's outstanding shares of Common Stock ("Common
Stock") in any ratio between 1:2 and 1:25 which would reduce the number of
outstanding shares of Common Stock (as well as affecting the amount and exercise
price of shares underlying preferred stock, warrants and certain options) on
a
pro-rata basis, would affect all stockholders proportionately and would,
therefore, increase the amount of Common Stock available for future
issuance.
WHAT
IS THE PURPOSE OF THE NAME CHANGE?
A:
The
name "Brooklyn Cheesecake & Desserts Company" does not truly reflect the
business and the business plan of the Company and as such, the board believes
that increased goodwill can be established through a change in the Company
name.
While no specific name has been chosen or recommended at the current time,
the
Board of Directors is actively studying proposed names and wishes to have the
flexibility of shareholder approval in advance of when a new corporate name
is
selected so as to proceed with the name change in an expedient fashion without
the time and expense associated with scheduling a special meeting of
shareholders for the approval of the name change.
WHAT
VOTE IS REQUIRED TO APPROVE THE PROPOSALS?
A:
On the
record date, our Board of Directors had the right to vote a total of 370,000
shares of Brooklyn
Cheesecake
common stock, or approximately 53% of the total shares outstanding. Our Board
has advised
that
it
will vote all of their shares in favor of the agenda items.
WHO
CAN HELP ANSWER ANY QUESTIONS I HAVE?
A:
If you
have any questions about the agenda for the meeting, please
contact:
Brooklyn
Cheesecake & Desserts Company, Inc.
Attn:
Anthony Merante, Chairman, CEO and Corporate Secretary
20
Passaic Avenue
Fairfield,
NJ 07004
973-808-8248
PROPOSAL
1: ELECTION
OF DIRECTORS
There
are
currently six members of the Company's Board of Directors that have been
nominated to serve as directors for the ensuing year or until their successors
have been elected and qualified.
Nominees
for Election as Directors
Certain
information relating to each director nominee is set forth below:
Name
|
Age
|
Principal
Occupation
|
Director
Since
|
|
|
|
|
Anthony
Merante
|
45
|
President,
Chief Executive Officer, and Chairman of the Board, Brooklyn Cheesecake
& Desserts Company, Inc.; Partner, Reda & Company CPA’s,
LLP
|
01/03
|
Vincent
Bocchimuzzo
|
53
|
Marketing
Manager with AFC Industries, Inc.
|
01/03
|
Liborio
Borsellino
|
50
|
Partner,
RBC and Associates
|
08/04
|
Carmelo
L. Foti
|
53
|
President
and Chief Operating Officer of the Bank of Southeastern
Connecticut
|
01/03
|
David
Rabe
|
45
|
President,
Interpro Systems, Inc.
|
08/04
|
Donald
O’Toole
|
54
|
Senior
Vice-president, Petry TV, Inc
|
08/05
|
Anthony
Merante was
appointed as director in January 2003 and was subsequently elected as a director
in August 2004. He was appointed Chief Financial Officer of the Company in
January 2005. Mr. Merante was subsequently appointed Chairman of the Board
of
Directors as well as Chief Executive Officer and President in March 2006. Mr.
Merante is a Certified Public Accountant and has been a partner with the firm
of
Reda & Company, LLP CPA’s in White Plains, NY since October 2001. Mr.
Merante graduated from St. John’s University in 1982 with a Bachelor’s of
Science
Vincent
Bocchimuzzo was
appointed as director in January 2003 and subsequently elected as a director
in
August 2004. Mr. Bocchimuzzo is Marketing Manager with AFC Industries, Inc.
Prior to this, Mr. Bocchimuzzo was an Executive for CINN Worldwide Westchester
Venture Group. Mr. Bocchimuzzo has worked for Univest Partners from 1982-1995.
Mr. Bocchimuzzo received his Bachelor’s of Arts degree at Fordham University in
1974.
Liborio
Borsellino
was
elected as a director in August 2004. Mr. Borsellino works for RBC and
Associates. Mr. Borsellino has been employed there since 1994. Mr. Borsellino
is
a manufacturer representative for Gear Sports Apparel, Johnson & Johnson
Sports Medicine, and Gatorade Athletic. Mr. Borsellino received his Bachelor’s
degree from Manhattan College in 1977.
Carmelo
L. Foti was
appointed as director in January 2003 and elected as a director in August 2004.
Mr. Foti is President and Chief Operating Officer at the Bank of Southeastern
Connecticut. Previously he served as Vice President, Manager Credit and
Marketing of the National Bank of Egypt, NY Branch. Mr. Foti has been employed
there since 1995. Mr. Foti earned his Masters in Arts from Johns Hopkin
University in 1976. Mr. Foti received his Bachelor’s of Arts degree from Fordham
University in 1974.
David
Rabe
was
elected as a director in August 2004. Mr. Rabe is the President of Interpro
Systems, Inc. Mr. Rabe has been with the company since January 1998. Mr. Rabe
received his Bachelor’s of Science degree in 1984 from New York
University.
Donald
O’Toole is
a
Senior Vice-president at Petry TV, Inc. Prior to this position, he served as
National Sales Manager for WGN TV in Chicago, IL. Mr. O’Toole holds a BA degree
from Southern New Hampshire University and an MBA from Iona
College.
Appointment/Resignation
of Officers and Directors
In
March
of 2006 prior to entering into the Debt Exchange Agreement with the Company,
Ronald Schutté our former Chairman, Chief Executive Officer and President
resigned both as a director and executive officer of the Company.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
Notes
from former Chairman and Chief Executive Officer Ronald Schutté
On
January 31, 2006 a note in the amount of $995,818 was issued to Mr. Ronald
Schutté the Company’s former Chairman, Chief Executive Officer and President
consolidating six prior notes previously issued to Mr. Schutté. The note was
secured by the Company’s assets.
Exchange
of Assets
The
Company lacked sufficient funds to satisfy the loans made to it by Mr. Schutté,
and in turn entered into a Debt Exchange Agreement with Mr. Schutté whereby it
exchanged certain assets for satisfaction of and assumption of a majority of
the
Company’s outstanding obligations and liabilities (see Agenda Item 3 herein for
additional information related to this transaction). The Company obtained a
satisfactory fairness opinion (see Exhibit 2 annexed hereto) prior to entering
into the debt exchange transaction.
Notes
from Current Chairman and Chief Executive Officer Anthony
Merante
On
January 31, 2006 the Company issued a new promissory note to Anthony Merante
its
current Chairman, Chief Executive Officer, President, and Chief Financial
Officer which consolidated into one note, inclusive of accrued interest all
previously issued notes totaling $187,086.
SECTION
16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934 (the "Exchange Act") requires
the
Company's directors and executive officers, and persons who own more than ten
percent of any class of its equity securities registered pursuant to Section
12
of the Exchange Act, to file reports of ownership and changes in ownership
with
the Securities and Exchange Commission (the "Commission"). Officers, directors
and greater than ten percent stockholders are required by the Commission to
furnish the Company with copies of all Section 16(a) forms they file.
The
Company believes, based solely on its review of the copies of such forms
received by it, or written representations from certain reporting persons that
for fiscal year 2005, no reports on Form 5 were required for those persons,
that
all filing requirements applicable to its officers, directors and greater than
ten percent stockholders were complied with during the year 2005, except that
Mr. O’Toole failed to timely file a Form 3s when he joined the Board of
Directors and Messrs, Schutté,
Merante, Bocchimuzzo, Borsellino, Foti, Rabe, and O’Toole failed to timely
file
Form
4s.
MEETINGS
AND COMMITTEES OF THE BOARD OF DIRECTORS
During
the fiscal year ended December 31, 2005, the Board of Directors met [four]
times, with incumbent director attending at least 75% of all Board
meetings.
Audit
Committee
The
role
of the Audit Committee (the “Committee”) is to assist the Board in its oversight
of the Company’s financial reporting process. At the current time the Board of
Directors serves as the Audit Committee.
Management
of the Company is responsible for the preparation, presentation and integrity
of
the Company’s financial statements, the Company’s accounting and financial
reporting principles and internal controls and procedures designed to assure
compliance with accounting standards and applicable laws and regulations. The
independent auditors are responsible for auditing the Company’s financial
statements and expressing an opinion as to their conformity with generally
accepted accounting principles.
In
the
performance of its oversight function, the Committee reviewed the Company’s
quarterly financial reports and regulatory issues facing the Company. Members
of
the Board of Directors as presently constituted and executive officers met
and
held discussions with Zeller, Weiss & Kahn LLP ("Zeller"), the Company’s
former independent auditors as well as with Sherb & Co., LLP (“Sherb”), the
Company’s present independent auditors. Management represented to the Board that
the Company's consolidated financial statements were prepared in accordance
with
accounting principles generally accepted in the United States, and the Board
reviewed and discussed the consolidated financial statements with management
and
with Sherb. The Board also discussed with Sherb the matters required to be
discussed by Statement on Auditing Standards No. 61 (Codification of
Statements on Auditing Standards, AU 380), as amended.
In
addition, the Board discussed with Sherb their independence from the Company
and
its management, and Sherb provided the Company the written disclosures and
letter required from the independent auditors by the Independence Standards
Board Standard No. 1 (Independence Discussions with Audit Committees).
The
Board
discussed with Sherb the overall scope and plans for their audit. The Board
met
with Sherb, with and without management present, to discuss the results of
their
examination, their evaluations of the Company's internal controls, and the
overall quality of the Company's financial reporting.
Members
of the independent Board are not professionally engaged in the practice of
auditing or accounting and are not experts in the fields of accounting or
auditing, including in respect of auditor independence. Members of the
independent Board rely without independent verification on the information
provided to them and on the representations made by management and the
independent auditors. Accordingly, the Audit Committee’s/Board’s oversight does
not provide an independent basis to determine that management has maintained
appropriate accounting and financial reporting principles or appropriate
internal control and procedures designed to assure compliance with accounting
standards and applicable laws and regulations. Furthermore, the Audit
Committee’s/Board’s reviews and discussions referred to above do not assure that
the audit of the Company’s financial statements has been carried out in
accordance with generally accepted auditing standards, that the financial
statements are presented in accordance with generally accepted accounting
principles or that the Company’s auditors are in fact
“independent.”
Change
of Auditors
On
January 13, 2005, the Company’s Board of Directors engaged Sherb & Co., LLP
("Sherb") to audit the consolidated financial statements of the Company. During
the Company's two most recent fiscal years and through January 13, 2005, the
Company has not consulted with Sherb regarding either (i) the application of
accounting principles to a specified transaction, either completed or proposed;
or the type of audit opinion that might be rendered on the Company's financial
statements, and neither a written report nor oral advice was provided that
was
an important factor considered by the Company in reaching a decision as to
the
accounting, auditing or financial reporting issue; or (ii) any matter that
was
either the subject of a disagreement, as that term is defined in Item
304(a)(1)(iv) of Regulation S-B and the related instructions to Item 304 of
Regulation S-B.
On
November 22, 2004, the Registrant (the "Company") filed a current report on
Form
8-K advising that its former certified accountants, Zeller, Weiss & Kahn LLP
("Zeller") had informed the Company on November 17, 2004 that they had
resigned.
There
were no disagreement(s) with Zeller on any matter of accounting principles
or
practices, financial statement disclosure or auditing scope or procedure, which
disagreement(s), if not resolved to the satisfaction of Zeller, would have
caused Zeller to make reference to the subject matter of such
disagreement(s)
in connection with its audit reports.
Compensation
Committee
The
Board
of Directors current serves as the Compensation Committee and reviews the
Company's compensation policies and practices, develops recommendations with
respect to compensation for the Company's senior executives.
Nominating
Committee
The
Board
of Directors currently serves as the Nominating Committee. The committee is
intended to assist
in
the oversight of the Company's corporate governance matters, including the
determination of the independent status of current and prospective Board
members, periodic evaluation of the Board of Directors, its committees and
individual directors, and the identification and selection of director nominees.
The
Nominating Committee will consider stockholder suggestions for nominees for
director other than self-nominating suggestions. Suggestions may be submitted
to
the Secretary of the Company at the Company’s administrative offices.
REMUNERATION
OF NON-MANAGEMENT DIRECTORS
In
January of 2005 our Board approved [add in compensation terms for outside
directors and shares issued etc.]
COMPENSATION
OF DIRECTORS AND EXECUTIVE OFFICERS
Executive
Compensation
The
following Summary Compensation Table shows, for the years ended December 31,
2003, December 31, 2002 and December 31, 2001, the compensation awarded to,
earned by or paid to the Company's current and former Chief Executive Officers,
the only individuals for whom such information is required:
Executive
Compensation
The
following table sets forth compensation paid to the Chief Executive Officer
and
to executive officers of the Company and other executive officers of the Company
deemed essential to the operation of the Company.
Name
and Principal Position
|
Year
|
Salary
($)
|
Bonus
($)
|
Other
Annual Compensation
|
|
|
|
|
|
Ron
Schutté, CEO(1)
|
2005
|
$200,000
(2)
|
$0.00
|
$0.00
|
|
2004
|
$200,000
(2)
|
$0.00
|
$0.00
|
|
2003
|
$100,000
|
$0.00
|
$0.00
|
|
|
|
|
|
Anthony
Merante, CFO(2)
|
2005
|
$96,000
(3)
|
$0.00
|
$0.00
|
__________
(1)
Mr.
Schutté resigned as a director and executive offer of the Company effective
March 28, 2006. See “Certain Relationships and Related Transactions”
herein.
(2)
Mr.
Schutté received
$100,000 in cash and $100,000 in restricted common stock.
(3)
Mr.
Merante received $48,000 in restricted stock and the company accrued the
remaining salary obligation of $48,000.
(2)
Mr.
Merante was appointed Chief Financial Officer of the Company in January 2005.
He
subsequently was appointed Chairman, Chief Executive Officer and President
upon
the resignation of Mr. Schutté on March 28, 2006
Employment
Contracts and Termination of Employment and Change-In-Control
Agreements
Currently
our only executive officer is Mr. Anthony Merante who is serving as our Chief
Executive Officer, President, Chief Financial Officer and Corporate Secretary.
Mr. Merante serves in said positions without a formal agreement with the
Company.
STOCK
OPTIONS
The
following table contains information concerning the grant of stock options
during 2005 to each of the Company's executives listed in the Summary
Compensation Table above receiving stock options during such period.
No
matter
what theoretical value is placed on a stock option on the date of grant, its
ultimate value will depend on the market value of the Company's common stock
at
a future date. If the price of the Company's common stock increases, all
stockholders will benefit commensurably with the optionees. The stock options
will have no value to the executives named above or other optionees if the
price
of the Company's common stock does not increase above the exercise price of
the
option.
Option
Grants in Last Fiscal Year
|
|
|
Number
of
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Securities
|
|
|
%
of Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Underlying
|
|
|
Options
Granted
|
|
|
Exercise
or
|
|
|
|
|
|
|
|
Options
|
|
|
to
Employees
|
|
|
Base
Price
|
|
|
Expiration
|
|
Name
(#) |
|
|
Granted
|
|
|
in
Fiscal Year
|
|
|
($/Sh)
|
|
|
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ronald
Schutté
|
|
|
29,000
|
|
|
48.8
|
|
$2.00-$2.63
|
01/13/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Anthony
Merante
|
|
|
17000 |
|
|
28.6
|
|
$2.00-$2.63
|
01/13/10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
On
February 17, 2006 all outstanding option granted to Messrs Schutté
and Merante as well as all other Officers and Directors, have converted to
restricted shares of stock on a one for one basis.
OPTION
EXERCISES AND HOLDINGS
The
following table sets forth information with respect to the Company's executives
listed in the Summary Compensation Table above concerning the number of
unexercised options and the value of unexercised options held by such executives
as of the end of 2005. No options were exercised by such executives during
2005.
Aggregated
Option/SAR Exercises in Last Fiscal Year and FY-End Option/SAR Values
|
|
Number
of Securities
|
|
Value
of In-the-Money
|
|
|
Underlying
Unexercised
|
|
Unexercised
Options
|
|
|
Options
at
FY-End
|
|
at
FY-End($)
|
Name
|
|
Exercisable
|
|
Unexercisable
|
|
Exercisable
|
|
Unexercisable
|
|
|
|
|
|
|
|
|
|
Ronald
Schutte
|
|
29,000
|
|
0
|
|
0
|
|
0
|
|
|
|
|
|
|
|
|
|
Anthony
Merante
|
|
17,000
|
|
0
|
|
0
|
|
0
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information regarding ownership of the
Company's common stock as of May 18, 2006 by (i) each person who is known to
us
to be the beneficial owner of more than 5% of the common stock of the Company,
(ii) each of our directors, (iii) each of our executive officers, and (iv)
all
directors and executive officers of the Company as a group. The following
information is based in part upon data furnished by the persons indicated
below.
Unless
otherwise noted, the address of the beneficial owner is in care of the
Company.
Name
of Beneficial Owner and Address (1)
|
|
No.
of Shares Beneficially Owned (2)
|
|
Percent
|
|
|
|
|
|
Ronald
L. Schutté (3)
|
|
125,368
|
|
18.3%
|
Anthony
J. Merante (director and officer) (4)
|
|
59,852
|
|
8.7%
|
Vincent
Bocchimuzzo (director)
|
|
12,738
|
|
1.9%
|
Liborio
Borsellino (director)
|
|
11,024
|
|
1.6%
|
Carmelo
L. Foti (director)
|
|
12,738
|
|
1.9%
|
David
Rabe (director)
|
|
11,024
|
|
1.6%
|
David
O’Toole (director)
|
|
9,381
|
|
1.4%
|
ICM
Asset Managment
|
|
35,280
|
|
5.2%
|
Current
Directors and Nominal Executives as a Group (6 persons)
|
|
116,757
|
|
17.1%
|
(1)
Unless otherwise indicated, the business address for each of such beneficial
owners is c/o Brooklyn Cheesecake & Desserts Company, Inc., 20 Passaic
Street, Fairfield NJ 07004
(2)
Directly and indirectly. The inclusion of securities owned by others as
beneficially owned by the respective individuals does not constitute an
admission that such individuals are the beneficial owners of such securities.
(3)
Mr.
Schutté is a former officer and director of the Company. Mr. Schutté resigned
all positions with the Company as of March 28, 2006.
(4)
Mr.
Merante was appointed Chief Financial Officer of the Company as of January
13,
2005 and subsequently was appointed Chairman, Chief Executive Officer and
President as of March 28, 2006.
PROPOSAL
2: INDEPENDENT
ACCOUNTANTS
The
Board
of Directors has selected Sherb & Co., LLP as the Company’s independent
auditors for the Fiscal Year ending December 31, 2006. Representative of Sherb
& Co., LLP are not expected to be present at the Annual
Meeting.
RELATIONSHIP
WITH INDEPENDENT ACCOUNTANTS
Sherb
& Co. is the independent accounting firm that audited the Company’s
financial statements for the year ended December 31, 2005. As indicated in
the
Report of Audit Committee, Sherb & Co. were first engaged in January 2005.
Sherb & Co performed no services for the Company during calendar 2004. The
aggregate fees billed e during 2005 for each of the following categories of
services are set forth below:
|
|
|
|
|
Audit
fees
|
|
$
|
34,000
|
|
Audit-related
fees
|
|
$
|
0
|
|
Tax
fees
|
|
$
|
0
|
|
All
other fees
|
|
$
|
0
|
|
“Audit
fees” include fees for the audits of the Company’s annual financial statements
for 2005 and the quarterly review of the statements for the quarter ended
September 30, 2005, as well as fees for consultation regarding accounting issues
and their impact on or presentation in the Company’s financial statements.
“Audit-related services” consists primarily of the review of registration
statements and the issuance of related consents. “Tax fees” include tax planning
and the preparation of the Company’s tax returns.
The
following table summarizes fees billed for services for 2004 by Sherb & Co.
and Zeller,
Weiss & Kahn LLP. Zeller, Weiss & Kahn the Company’s former auditors,
provided service for 2003.
|
|
2004
|
|
2003
|
|
Audit
fees
|
|
$
|
34,919
|
|
$
|
27,000
|
|
Audit-related
fees
|
|
$
|
0
|
|
$
|
[
0
|
]
|
Tax
fees
|
|
$
|
0
|
|
$
|
[
0
|
]
|
All
other fees
|
|
$
|
0
|
|
$
|
[
0
|
]
|
|
|
|
|
|
|
|
|
PROPOSAL
3: RATIFICATION AND ADOPTION AND CONFIRMATION OF THE DEBT EXCHANGE AGREEMENT
BETWEEN
THE COMPANY, AND RONALD SCHUTTÉ, THE COMPANY’S FORMER PRESIDENT, CHAIRMAN AND
CHIEF EXECUTIVE OFFICER BY THE EXCHANGE OF CERTAIN ASSETS, AND THE ASSUMPTION
OF
LIABILITIES OF JM SPECIALTIES, INC. FOR A PORTION OF THE SECURED DEBT DUE TO
MR.
SCHUTTÉ.
Reasons
For The Board’s Determination to Obtain Stockholders Ratification of the Debt
Exchange Agreement
The
Debt
Exchange Agreement is more fully described in this information statement, and
a
copy of the Debt Exchange Agreement is annexed as an Exhibit
1,
all of
the terms of the agreement are incorporated by reference.
The
Company is a New York Corporation governed by both New York law and the rules
and regulations of the Securities and Exchange Commission with respect to the
Debt Exchange Agreement. The Company exchanged certain assets of its operating
business subsidiary, JM Specialties, Inc. (JM) to satisfy a part of the Secured
Debt due to Ronald Schutté, the Company’s former Chairman and Chief Executive
Officer (See “Certain Relationships and Related Transactions” herein). New York
law provides that the sale or disposition of substantially all of the Company’s
assets requires stockholders approval, however, the Board determined that a
material portion of JM assets would not be exchanged for debt in that ownership
of the JM intellectual property would be maintained and licensed to Mr. Schutté,
so that the Company would continue to receive revenues for said intellectual
property and continue as an operating entity. The Board of Directors prior
to
entering into the Debt Exchange Agreement obtained a fairness opinion from
Pasquieri & Co., Inc. regarding the terms of the proposed exchange of
certain assets of the Company for satisfaction and or assumption of a
substantial portion of the Company’s debt as well as that the assets that the
Company was exchanging were not all or substantially all of the Company’s assets
but rather that the Company by maintaining its intellectual property would
be
maintaining a substantial portion of its assets (See a copy of the Fairness
Opinion issued to the Company’s Board of Directors annexed hereto as
Exhibit
2).
The
stock of J.M. Specialties, Inc was also sold to Mr. Schutte.
In
order
to assure that there would be no issues with respect to the Debt Exchange
Agreement, the Board determined that it would obtain stockholder ratification,
adoption and confirmation of the Board’s unanimous resolution to enter into the
Debt Exchange Agreement, so as to assure compliance with all applicable laws
and
regulations, as the Board further determined that unless immediate action was
taken with respect to the cessation of business operations of JM, that JM would
have closed its doors with a total loss of shareholder value, as neither JM
nor
the Company was able to continue to fund the continuing losses from
operations.
The
Company and its wholly owned subsidiary, (“JM”) entered into a exchange
agreement on March 28, 2006 with Ronald Schutté, the Company’s former Chief
Executive Officer and Chairman wherein the Company and JM in payment of a
portion of the secured debt in the sum of $1,177,030 debt due to Mr. Schutté by
the Company agreed to exchange certain assets of JM in satisfaction of a portion
of the debt in the sum of $377,030. Additionally, Mr. Schutté personally assumed
all of the general creditor obligations of JM which aggregate the sum of
$768,285 as well as further assumed the obligations of plant and equipment
lessee obligations aggregating the sum of $654,185. The Board of Directors
determined that the JM secured debt obligation due to Mr. Schutté could not be
paid from the assets or business of JM or the Company, and that the continuation
of the JM business operating losses at the rate of approximately $90,000 per
month could not be sustained by JM or the Company, and to continue the business
operations of JM would have resulted in further losses which would have caused
the Company to file for bankruptcy, or go out of business. The debt exchange
agreement excluded certain intellectual property assets of JM which are valued
at approximately $300,000 and which will remain as assets of Brooklyn Cheesecake
Company. In further support of the Board’s determination to enter into the debt
exchange transaction, the Company obtained a Fairness Opinion from an
independent appraisal firm, (du Pasquier & Co., Inc.) which confirmed that
the assets exchanged for the $826,041 of secured debt due Mr. Schutté was fair
and equitable, as JM could not continue its business with the steady stream
of
operating losses and would have faced creditors legal actions for non payment.
The
Company’s losses over the past three fiscal year period were as follows: fiscal
year 2003 ($146,614), fiscal year 2004 ($574,324), fiscal year 2005
($1,064,311). Resultantly, the Company’s net value decreased to a negative
($915,631) and its working capital was deficient to the sum of ($1,252,005)
as
of December 31, 2005
As
the
Company did not have the ability to borrow from banks or finance companies,
to
support is operations, it was completely dependent upon loans from officers
and
directors, or the sale of equity at a deep discount to maintain its business
operations. The sale of equity in the Company, where possible, caused a severe
dilution to stockholders based upon the price per share paid for stock in the
Company.
As
the
Company was unable to continue its business operations, it was faced with a
surrender of its assets to Mr. Schutté as a secured creditor, or the taking of
its assets by general creditors through court proceedings that would have
resulted in judgments against the Company.
As
a part
of the Debt Exchange Agreement, Mr. Schutté agreed that the balance of the
secured debt in the sum of $800,000 deferred at the option of the Company until
the Company was able to complete a merger and/or reverse acquisition of another
company. At that time, Mr. Schutté as a secured creditor would have the option
of payment in the form of cash, or the issuance of new securities of the Company
at an agreed upon valuation. All vendors would be paid in full. The independent
valuation of the intellectual property (trademarks) were valued at between
$200,000 to $300,000 and would continue to be owned by the Company, and the
Company would continue to be paid royalty income monthly for use of the
trademarks which would be used by the Company to pay the balance of all its
creditors.
Use
of Proceeds
The
assets exchanged which are valued at $300,000 were used to reduce secured debt.
The royalty agreed to be paid by Mr. Schutté, 1% of sales, will be used to pay
expenses of the Company going forward.
Dissenter’s
Rights
Our
stockholders are not entitled to seek dissenter’s or appraisal rights under New
York Law in connection with the Debt Exchange Agreement.
Regulatory
Approval
Except
for compliance with applicable regulations of the Securities and Exchange
Commission in connection with the information statement and New York Law in
connection with the Debt Exchange Agreement, we are not required to comply
with
any Federal or State regulatory requirements. No Federal or State regulatory
approvals for the Debt Exchange Agreement are required.
PROPOSAL
4: AMENDMENT TO THE AMENDED CERTIFICATE OF INCORPORATION TO AUTHORIZE A REVERSE
SPLIT OF THE OUTSTANDING SHARES OF COMMON STOCK IN ANY RATIO BETWEEN 1:2 AND
1:25 AT THE DISCRETION OF THE BOARD OF DIRECTORS
Ratification
of this proposal would permit the Board of Directors, in its discretion, to
amend the Company's Amended Certificate of Incorporation and implement a reverse
stock split (the "Reverse Stock Split") of the Company's outstanding shares
of
Common Stock ("Common Stock") in any ratio between 1:2 and 1:25 which would
reduce the number of outstanding shares of Common Stock (as well as affecting
the amount and exercise price of shares underlying preferred stock, warrants
and
certain options) on a pro-rata basis, would affect all stockholders
proportionately and would, therefore, increase the amount of Common Stock
available for future issuance. The shares of common stock outstanding after
a
Reverse Stock Split would have the same rights and privileges as the shares
of
Common Stock currently held.
A
Reverse
Stock Split would reduce the presently issued and outstanding shares of Common
Stock from
684,445
to approximately 342,223 in the ratio 1:2 and approximately 27,378 in the ratio
of 1:25 (as a result of rounding, the actual number may be slightly higher).
The
number of authorized shares of Common Stock shall remain the same. The Company
believes that the decrease in the number of shares of Common Stock outstanding
as a consequence of a proposed Reverse Stock Split may increase the per share
price of the Common Stock, which may encourage greater interest in the Common
Stock and possibly promote greater liquidity for the Company's stockholders.
However, the increase in the per share price of the Common Stock as a
consequence of a proposed Reverse Stock Split may be proportionately less than
the decrease in the number of shares outstanding. In addition, any increased
liquidity due to any increased per share price could be partially or entirely
off-set by the reduced number of share outstanding after a proposed Reverse
Stock Split in a per share price that adequately compensates for the adverse
impact of the market factors noted above. There can, however, be no assurance
that the favorable effects described above will occur, or that any increase
in
per share price of the Common Stock resulting from the proposed Reverse Stock
Split will be maintained for any period of time. In addition, there can be
no
assurance that a public market for the Company’s securities will continue.
The
Board
of Directors will determine at its discretion and in accordance with then
applicable state law whether fractional shares will be issued. All fractional
interests resulting from a Reverse Stock Split will be increased to the next
higher whole number of shares if permitted by law, or the Board of Directors
may
arrange for the disposition of fractional interests. The Company believes that
the approximate total number of beneficial holders of the Common Stock of the
Company is in excess of 300. After a Reverse Stock Split the Company estimates
that it will continue to have approximately the same number of
stockholders.
Except
for changes in the number of shares owned resulting from a Reverse Stock Split,
the rights and privileges of holders of shares of Common Stock will remain
the
same, both before and after a proposed Reverse Stock Split.
There
can
be no assurance that the market price of the Common Stock after a proposed
Reverse Stock Split will be proportionately greater than the market price before
a proposed Reverse Stock Split, or that such price will either exceed or remain
in excess of the current market price.
Upon
shareholder approval of the proposal, the Board of Directors reserves the right
in its sole discretion to proceed with, hold in abeyance or to abandon the
proposed Amendment and Reverse Stock Split without further action by the
stockholders at any time.
However,
in no event will the Board of Directors exercise its authority to effect a
Reverse Stock Split, if such action would result in the Common Stock no longer
being listed on an exchange or quotation system.
FEDERAL
INCOME TAX CONSEQUENCES
No
opinion of counsel has been obtained concerning the following information.
Stockholders are advised to consult with their own tax advisors for more
detailed information relating to their individual federal state and local tax
circumstances.
1.
The
proposed Reverse Stock Split will be a reorganization described in section
368(a)(1)(E) of the Internal Revenue Code of 1986, as amended.
2.
The
Company will recognize no gain or loss as a result of the proposed Reverse
Stock
Split.
3.
Stockholders will recognize no gain or loss to the extent that currently
outstanding shares of Common Stock are exchanged for new shares of Common Stock
pursuant to the proposed Reverse Stock Split.
4.
The
tax basis of the new Common Stock received in exchange for Common Stock pursuant
to the proposed Reverse Stock Split will be the same as the stockholders' basis
in the stock exchanged. Therefore, the new shares of Common Stock in the hands
of a stockholder will have an aggregate basis for computing gain or loss equal
to the aggregate basis of shares of Common Stock held by that immediately prior
to the proposed Reverse Stock Split.
Any
reverse split would be implemented solely in the discretion of the Board of
Directors, which reserves the right to implement the reverse split at the time
of its choosing and at any ratio from 1:2 to 1:25. If the application of the
ratio causes any stockholder to have a fractional share of stock,
such
share
may
be rounded up to the next highest whole share at the discretion of the Board
of
Directors and in accordance with then applicable New York law. In the event
fractional shares are not permitted to be rounded to the next higher whole
number of shares, the Board of Directors may arrange for the disposition of
fractional interests.
The
Company is currently listed on the Over-The-Counter Bulletin Board (OTCBB);
however, there is no assurance that the Company will continue to meet the
maintenance standards for continued listing on the OTCBB.
The
decrease in the number of shares of Common Stock outstanding resulting from
the
Reverse Stock Split and the anticipated corresponding increased price per share
may stimulate interest in the Company's Common Stock, promote greater liquidity
for the Company's stockholders and result in a higher price level for the
post-split Common Stock. However, there is no assurance that the Reverse Stock
Split will achieve these results. In addition, a Reverse Stock Split might
leave
some stockholders with one or more "odd-lots" of the Company's Common Stock
(stock in amounts of less than 100 shares). These shares may be more difficult
to sell, or require a greater commission per shares to sell, than shares in
even
multiples of 100.
While
approval of this proposal would NOT increase the authorized common stock of
the
Company, additional shares of common stock would be available to the Company
for
issuance due to the decrease of currently outstanding Common Stock caused by
a
Reverse Stock Split. Any additional shares of Common Stock made available by
this amendment could be issued at the direction of the Company's Board of
Directors from time to time for any proper corporate purpose, including, without
limitation, the acquisition of other businesses, the raising of additional
capital for use in its business, a split of, or dividend on, then outstanding
shares or in connection with any employee stock plan or program. Any future
issuances of authorized shares of Common Stock may be authorized by the Board
of
Directors without further action by the stockholders.
Although
the Company's Board of Directors will issue Common Stock only when required
or
when the Board considers such issuance to be in the best interests of the
Company, the issuance of additional Common Stock may, among other things, have
a
dilutive effect on earnings per share and on the equity and voting rights of
stockholders. Furthermore, since applicable state law requires the vote of
in
excess of a majority of shares of each class of stock in order to approve
certain mergers and reorganizations, the additional authorized but unissued
shares of Common Stock available as a result of the Reverse Stock Split could
permit the Board to issue shares to persons supportive of management's position.
Such persons might then be in a position to vote to prevent a proposed business
combination that is deemed unacceptable to the Board, although perceived to
be
desirable by some stockholders, including, potentially, a majority of
stockholders. This could provide management with a means to block any majority
vote that might be necessary to effect a business combination in accordance
with
applicable law. Additionally, the presence of such additional authorized but
unissued shares of Common Stock could discourage unsolicited business
combination transactions that might otherwise be desirable to stockholders.
The
Board of Directors is not currently aware of any contemplated hostile or
friendly takeover attempt or business combination proposal.
The
Board
believes that the benefits of providing it with the flexibility to issue shares
without delay for any proper business purpose, including as an alternative
to an
unsolicited business combination opposed by the Board, outweigh the possible
disadvantages of dilution and discouraging unsolicited business combination
proposals, and that it is prudent and in the best interests of stockholders
to
provide the advantage of greater flexibility which will result from this
amendment.
PROPOSAL
5: RATIFICATION OF AUTHORITY TO EFFECT A NAME CHANGE
The
Board
of Directors had recommended that shareholders approve the proposal to grant
authority to the Board of Directors at its discretion to amend the Certificate
of Incorporation of the Company to change the name of the Company.
The
Board
of Directors believes that the name "Brooklyn Cheesecake & Desserts Company”
may not truly reflect the business and the business plan of the Company and
as
such believes that increased goodwill can be established through a change in
the
Company name in the future. While no specific name has been chosen or
recommended at the current time, the Board of Directors is actively studying
proposed names and wishes to have the flexibility of shareholder approval in
advance of when a new corporate name is selected so as to proceed with the
name
change in an expedient fashion without the time and expense associated with
scheduling a special meeting of shareholders for the approval of the name
change.
The
Board
believes that the benefit of providing it with the flexibility to effectuate
a
corporate name change in the future outweighs any detriment in providing the
Board with this authority.
DEADLINE
FOR SUBMITTING STOCKHOLDER PROPOSALS
Rules
of
the Securities and Exchange Commission require that any proposal by a
stockholder must be received by the Company for consideration at the 2006 Annual
Meeting of Stockholders no later than January 3, 2007 if any such proposal
is to
be eligible for inclusion in the Company’s Proxy/Information Statement materials
for its 2006 Annual Meeting. Under such rules the Company is not required to
include stockholder proposals in its Proxy/Information Statement materials
unless certain other conditions specified in such rules are met.
VOTING
PROCEDURE
Under
New
York law, each holder of record is entitled to vote the number of shares owned
by the shareholder for any agenda item. There are no cumulative voting rights
for the shareholders of the Company.
OTHER
INFORMATION
The
Company does not know of any matters other than those referred to in the
accompanying Notice of Annual Meeting of Stockholders that may properly come
before the meeting or other matters incident to the conduct of the meeting.
There
are
no matters on the agenda that involve rights of appraisal of a stockholder.
The
Company incorporates by reference all items and matters contained in its Form
10-KSB for the Fiscal Year ended December 31, 2005 as filed with the Securities
and Exchange Commission in addition to its Form 10-QSBs and Form 8-K Reports
as
filed with the Commission.
|
|
|
|
By
order of the
Board of Directors, |
|
|
|
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By: |
/s/ Anthony
Merante |
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Anthony
Merante |
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Chairman,
Chief Executive Officer, President and Corporate Secretary
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Dated: Fairfield,
New Jersey |
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May
[ ], 2006
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Exhibit
1
EXCHANGE
AGREEMENT
Agreement
made this 28th
day of
March, 2006, by and between Brooklyn Cheesecake and Desserts Company, Inc.
(NY),
a New York corporation, its wholly-owned subsidiary J.M. Specialties, Inc.,
a
New Jersey Corporation, with the principal place of business located at 20
Passaic Avenue, Fairfield, N.J. 07004, (hereinafter referred to as the
“Company”), Ronald L. Schutté, (hereinafter referred to as the “Creditor”) and
Brooklyn Cheesecake & Desserts Company, Inc. (NJ), with its principal place
of business located at 360 Hollywood Ave., Tuckahoe, NY 10707, (hereinafter
referred to as “BCAK-NJ)”.
WHEREAS,
the
Company is engaged in the business of manufacturing, distributing and marketing
various bakery food products;
WHEREAS,
the
Creditor has made certain loans and advances to the Company;
WHEREAS,
the
Company acknowledges the indebtedness to Creditor;
WHEREAS,
Creditor
has formed BCAK-NJ for among other purposes effectuating the transaction
contemplated by this Agreement;
WHEREAS,
the
Company, Creditor and BCAK-NJ are desirous of entering into an agreement
to
satisfy the Company’s debt to Creditor, and
WHEREAS,
the
parties are desirous of defining their rights and responsibilities with respect
to said indebtedness.
NOW
THEREFORE,
for $10
and other good and valuable consideration, the parties agree to the
following:
1.
Company
Indebtedness to Creditor.
The
Company, as of the date hereof owes the sum of $1,177,030 with interest at
13%
per annum to Creditor’s assignee. Annexed hereto and marked Exhibit
I
is a
schedule of loans and advances made by Creditor to the Company. The aforesaid
amounts due are evidenced by promissory notes issued by the Company to Creditor,
and assigned to BCAK-NJ. Annexed hereto and marked Exhibit
II
is a
copy of said assignment. BCAK-NJ has demanded payment in full of the sum
of
$1,177,030 with interest which is due and owing by the Company to Creditor
and/or its assignee without any offset or set off on the aforesaid
amount.
2.
Exchange
of Indebtedness for Assets. In
satisfaction of $377,030 of said indebtedness inclusive of interest and
BCAK-NJ’s assumption of the Company’s outstanding accounts payable and accrued
expenses, the Company is agreeable to transfer certain assets to BCAK-NJ
“as
is”, “where is” and without recourse to the Company, other than the Company’s
warranty and representation, that it has title to said assets, and that the
assets will be exchanged and transferred to BCAK-NJ free and clear of any
liens
or encumbrances. Annexed hereto and marked Exhibit
III
is a
true copy of the assets that will be exchanged by the Company. Annexed hereto
and marked Exhibit
IV
is a
true copy of the liabilities assumed by BCAK-NJ. BCAK-NJ further agrees to
accept the assignment without recourse of all contracts of the Company as
set
forth in Exhibit
V annexed
hereto. In addition, the Company agrees, for value received, to separately
transfer 100% of the J.M. Specialties, Inc. a New Jersey Corporation’s common
stock to the creditor and/or its assignee.
3.
Exchange
of Assets “As Is”, “Where Is” and Without Recourse. BCAK-NJ
is accepting said assets and business without independent valuation of the
assets listed on Exhibit
III.
The
parties understand and agree that the title to the assets is being transferred
to BCAK-NJ “as is”, “where is” and without any of the warranties as made and
provided under the Uniform Commercial Code other than the warranty of title
as
provided for herein.
4. Assumption
of Work in Progress. BCAK-NJ
further agrees as a part of this exchange Agreement that it will assume all
of
the work in progress of the Company as scheduled herein as well as all existing
agreements to purchase products, materials and supplies, and further assume
the
Company’s obligations under all existing agreements inclusive of the Company’s
lease. BCAK-NJ agrees that it will provide written acknowledgment from all
current vendors and creditors that said agreements have been assigned to
Creditor or its designee BCAK-NJ as the case may be, and that the Company
is not
responsible for any liability or contingent liability to any of said creditors
or contract vendors.
5.
Limited
but Substantial Assets to Remain with the Company. The
parties agree that the Company, on closing, will be left with the trademark
Brooklyn Cheesecake Company, Inc. (US Registration No. 3,040,023) which will
be
licensed to the Creditor pursuant to an Exclusive Licensing Agreement entered
into by the parties on the same herein and cash on hand of a minimum of $20,000
to be used by the Company for its expenses associated with making the
appropriate disclosure and periodic filings with the Securities and Exchange
Commission (“SEC”) disclosing material events that are required to be publicly
disclosed for a period of one (1) year from closing. Such funds will be refunded
if the Company’s parent shell is sold within three months of this
closing.
6.
Remaining
Indebtedness Following the Exchange. Upon
closing of the transaction, the sum of $800,000.00 representing the balance
of
indebtedness due BCAK-NJ as assignee of Creditor will remain due and will
continue to accrue interest at a rate of 13% per annum and shall be secured
by a
properly perfected security agreement in the trademark assets retained by
the
Company. Payment of said sum will be deferred at the Company’s option until such
time as the Company received royalties from BCAK-NJ under the Exclusive
Licensing Agreement. In the event there is a change in control of the Company,
Licensee shall have the immediate right to exchange the remaining balance
of its
outstanding loans to the Company for sole and exclusive ownership of the
Company’s trade name asset that collateralizes such indebtedness. The
consummation of this exchange shall terminate any future liability that Creditor
and the Company shall have pursuant to this Agreement, the loan obligations
due
to Creditor and the Exclusive Licensing Agreement.
7.
Disclosure
of Transaction. Creditor
and BCAK-NJ acknowledge that the Company is required to make a public
announcement and public filings with the SEC of the material aspects of the
within transaction.
8.
Agreement
Subject to Approval. The
parties agree that the within agreement and the transaction contemplated
hereby
is not subject to the approval of stockholders of Company.
9.
Related
Party Transaction - Conflicts. The
parties acknowledge that Ronald Schutté, the Company’s President, Chief
Executive Officer and Chairman is the sole stockholder of BCAK-NJ. Ronald
Schutté represents that he has not participated or engaged in any discussions or
negotiations with the Board of Directors or stockholders of the Company
concerning the independent valuation of the assets and business, and further
that the parties acknowledge the potential of a conflict of interest exists
and
as such, Ronald Schutté will resign on closing as Chairman, Chief Executive
Officer and President of the Company, subject to full disclosure of the
transaction made to stockholders of the Company.
10.
Warranties
and Representations of BCAK-NJ.
(a) |
BCAK-NJ
warrants and represents that it will maintain product liability
insurance
as well as general liability insurance and list the Company as
an insured
party for the period of the statute of limitations to protect the
Company
from any claims that are asserted against the Company as a result
of the
operation of the Company’s business, prior to the closing.
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(b) |
BCAK-NJ
will defend and hold harmless the Company and its Officers and
Directors
from any claims, liabilities, legal actions or contingent liabilities
asserted against the Company or any of its Officers and Directors
as a
result of the within transaction upon receiving written notice
of any of
said claims, and that said indemnification will include all legal
fees and
expenses incurred with respect to any of said
claims.
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(c) |
The
parties agree that the provisions of the Uniform Commercial Code
and Bulk
Sales law with respect to notification to all creditors and taxing
authorities, and all other applicable sections, will be waived
by the
parties, upon condition that BCAK-NJ warrants and represents to
the
Company that BCAK-NJ will be responsible for making full payment
to all
bona fide creditors of the Company, as well as providing substantiation
of
verification of value of the assets as may be required in that
the value
of the assets exchanged by the Company for the debt owed to BCAK-NJ
was
fair and reasonable to creditors and stockholders of the
Company.
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(d) |
BCAK-NJ
warrants and represents that it will maintain product liability
insurance
as well as general liability insurance and list the Company as
an insured
party for the period of the statute of limitations to protect the
Company
from any claims that are asserted against the Company as a result
of the
operation of the Company’s business, prior to the closing.
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(e) |
BCAK-NJ
will defend and hold harmless the Company and its Officers and
Directors
from any claims, liabilities, legal actions or contingent liabilities
asserted against the Company or any of its Officers and Directors
as a
result of the within transaction upon receiving written notice
of any of
said claims, and that said indemnification will include all legal
fees and
expenses incurred with respect to any of said
claims.
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The
parties agree that the provisions of the Uniform Commercial Code and Bulk
Sales
law with respect to notification to all creditors and taxing authorities,
and
all other applicable sections, will be waived by the parties, upon condition
that BCAK-NJ warrants and represents to the Company that BCAK-NJ will be
responsible for making full payment to all bona fide creditors of the Company,
as well as providing substantiation of verification of value of the assets
as
may be required in that the value of the assets exchanged by the Company
for the
debt owed to BCAK-NJ was fair and reasonable to creditors and stockholders
of
the Company
11.
Warranties
and Representations of the Company.
(a) |
Company
warrants and represents that it is a duly formed corporation in
good
standing and that it has the requisite legal authority to enter
into this
transaction with no further consents required and without violating
any
laws or legal agreement current enforceable against the Company.
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(b) |
Company
will defend and hold harmless Creditor, BCAK-NJ and its Officers
and
Directors from any claims, liabilities, legal actions or contingent
liabilities asserted against the Creditor and/or BACK-NJ or any
of its
Officers and Directors as a result of the within transaction upon
receiving written notice of any of said claims, and that said
indemnification will include all legal fees and expenses incurred
with
respect to any of said claims.
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12.
Conditions
of Closing. Creditor
and BCAK-NJ agree that the following are conditions of closing of the exchange
transaction:
(a) The
board
of directors of the Company must approve this Agreement and the exchange
transaction as contemplated hereunder.
(b) There
is
no legal proceeding threatened or pending that would delay or result in damages
to the Company or its Officers and Directors for finalizing the exchange
of
assets agreement.
(c) That
BCAK-NJ has obtained in writing a release of the Company’s obligations under its
premises lease and all existing agreements and contracts with customers and
others.
(d) Cancellation
of all issued and outstanding promissory notes due to Creditor or its assignee
BCAK-NJ by the Company except for $800,000.
(e) Written
confirmation from the Company’s accounting firm, that all sales or other taxes
that may be due as a part of the exchange are either exempt, waived or are
required to be paid on closing.
(f) |
Creditor,
BCAK-NJ and the Company agree to provide all reasonable documentation
required by the parties to complete the transaction, including
but not
limited to contract assignments, documents of title or any other
document
or certificate required to finalize the exchange of assets for
debt.
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(g) |
Company
and BCAK-NJ entering into the Exclusive Licensing
Agreement.
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(h) |
Company
issuing BCAK-NJ (as assignee of Creditor) a security agreement
and UCC-1
Forms evidencing BCAK-NJ security interest in the Company’s trademark
assets.
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(i) |
BCAK-NJ’s
written satisfaction of $377,030 of loans to the Company for the
exchange
assets.
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13.
Independent
Representation. Creditor/BCAK-NJ
and the Company acknowledge that each party has been represented by independent
counsel and as such no inference can be drawn as to the interpretation of
any
provision of this Agreement determined to be subjective.
14.
Notices. Any
notices requests, claims, demands, instructions and other communications
to be
given hereunder to any party shall be in writing and delivered in person,
sent
by certified mail, postage prepaid, return receipt requested, or by facsimile
transmission with a confirmed telephone transmission answer back, to the
following addresses (or at such other address or number as is given in writing
by one party to the others pursuant hereto)
If
to
Company: Baratta
& Goldstein
597
Fifth
Avenue
New
York,
New York 10017
Attention:
Joseph A Baratta, Esq.
Telecopy
No. (212) 750-8297
If
to
BCAK-NJ: Daniel
W.
Dowe, Esq.
42
Forest
Lane
Bronxville,
New York 10708
Telecopy
No. (914) 337-0846
15.
Amendments. This
Agreement may be amended only upon the mutual written consent of the parties
herein.
16.
Caption
Headings.
Caption
headings in this Agreement are provided merely for convenience and are of
no
force and effect.
17.
Duplicates,
Original Counterparts. This
Agreement may be executed in counterparts, each of which shall be deemed
to be
an original, but all of which together shall constitute one and the same
agreement.
18.
Entire
Agreement. This
Agreement, including the Schedules hereto, constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes
all
prior agreements and understandings between the parties. There are no
representations, warranties, undertakings or agreements between the parties
with
respect to the subject matter of this Agreement except as set forth
herein.
19.
Non-Assignability. The
parties hereto may not assign their rights, interests, obligations or
liabilities under this Agreement or delegate their duties without the prior
written consent of the other parties.
20.
Public
Announcements.
Company,
Creditor and BCAK-NJ shall consult with each other before issuing any press
release or otherwise making any public statement relating to the transactions
contemplated hereby, and shall not issue any such press release or make any
such
public statement without the consent of the other party (which consent shall
not
be unreasonably withheld or delayed) except as may be required by applicable
securities law.
21.
Governing
Law. This
Agreement shall be governed and construed in accordance with the laws of
the
State of New York. All parties to this Agreement hereby submit to the personal
and subject matter jurisdiction and venue of the state and federal courts
located in the County of New York, State of New York.
22.
Severability. In
the
event any term or provision of this Agreement shall be deemed to be illegal,
invalid or unenforceable for any reason, such illegality, invalidity or
unenforceability will not affect any other term or provision of this Agreement
and the parties shall endeavor to replace the invalid or null and void
provisions(s) with such which correspond best to the intention of the parties
hereto.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
heretofore stated.
WITNESS: BROOKLYN
CHEESCAKE AND DESSERTS
COMPANY,
INC. (NY)
____________________ By:
/s/
Anthony J. Merante _
Title:
President_________________
Date:
March
28,
2006
Address: 20
Passaic
Avenue
Fairfield
NJ,
07004
J.M.
SPECIALTIES, INC., A NEW JERSEY
CORPORATION
____________________ By:
/s/
Anthony J. Merante___________
____________________ Title:
President_________________
Date:
March
28,
2006
Address: 20
Passaic
Avenue
Fairfield
NJ,
07004
WITNESS:
BROOKLYN
CHEESECAKE & DESSERTS
COMPANY,
INC. (NJ),
____________________ By:/s/
Ronald L.Schutté ___________
____________________ Title:
President__________________
Date:
March
28,
2006
Address:
360 Hollywood Avenue
Tuckahoe
NY, 10707
WITNESS
_____________________ /s/
Ronald L. Schutté____________
_____________________ Ronald
L.
Schutté
Individually
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement on the date
heretofore stated.
WITNESS: BROOKLYN
CHEESCAKE AND DESSERTS
COMPANY,
INC. (NY)
____________________ By:______________________________
____________________ Title:_____________________________
Address:__________________________
___________________________
J.M.
SPECIALTIES, INC., A NEW JERSEY
CORPORATION
____________________ By:______________________________
____________________ Title:_____________________________
Address:__________________________
___________________________
WITNESS:
BROOKLYN
CHEESECAKE & DESSERTS
COMPANY,
INC. (NJ),
____________________ By:______________________________
____________________ Title:_____________________________
Address:__________________________
___________________________
WITNESS
_____________________ _________________________________
_____________________ Ronald
Schutté
Individually
Exhibit
2