AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON
REGISTRATION NO. 333-______
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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OLYMPIC CASCADE FINANCIAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
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DELAWARE 875 NORTH MICHIGAN AVENUE, SUITE 36-4128138
1560, CHICAGO, IL 60611
(State or other jurisdiction of (Address, including zip code, and (IRS employer
incorporation or organization) telephone number, including area identification number)
code, or registrant's principal
executive offices)
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MARK GOLDWASSER
President and Chief Executive Officer
120 Broadway, 27th Floor
New York, New York 10271
(212) 417-8000
(Name, Address, Including Zip Code, And Telephone Number,
Including Area Code Of Agent For Service)
Please Send Copies Of All Communications To:
Mitchell C. Littman, Esq.
Steven D. Uslaner, Esq.
Littman Krooks LLP
655 Third Avenue
New York, New York 10017
(212) 490-2020
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box.[ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box.[X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration number of the earlier effective registration
statement for the same offering.[ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, please check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering.[ ]
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box.[ ]
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Calculation Of Registration Fee
--------------------------- ------------------------ --------------------- --------------------- ---------------------
Tile of Each Class of Amount to be Proposed Maximum Proposed Maximum Amount of
Securities to be Registered (1) Offering Price Per Aggregate Offering Registration
Registered Share (2) Price (1) Fee (2)
--------------------------- ------------------------ --------------------- --------------------- ---------------------
Common Stock ($.02 par
value per share) 4,604,454 $0.33 $1,519,470 $122.93
--------------------------- ------------------------ --------------------- --------------------- ---------------------
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(1) Includes: (i) 1,093,109 shares of Common Stock held by the selling
shareholders named within; (ii) 1,854,998 shares of Common Stock issuable
upon conversion of 27,825 shares of our Series A Convertible Preferred
Stock (the "Preferred Stock") held by the selling shareholders named
within; and (iii) 1,656,347 shares of Common Stock issuable upon exercise
of warrants held by certain selling shareholders. In addition to the
shares set forth in the table, the amount to be registered includes an
indeterminate number of shares of Common Stock issuable upon conversion of
the Preferred Stock and upon exercise of the warrants, as such number may
be adjusted as a result of stock splits, stock dividends and antidilution
provisions in accordance with Rule 416.
(2) Estimated solely for purposes of calculating registration fee in
accordance with Rule 457(c) under the Securities Act of 1933, as amended,
based upon the average high and low trading price of the Common Stock
reported on The American Stock Exchange on February 28, 2003.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the registration statement
shall become effective on such date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
-ii-
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING SHAREHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES, AND WE ARE NOT SOLICITING
OFFERS TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER FOR SALE IS NOT
PERMITTED.
SUBJECT TO COMPLETION, DATED MARCH 4, 2002
PROSPECTUS
OLYMPIC CASCADE FINANCIAL CORPORATION
4,604,454 SHARES OF COMMON STOCK
------------------------
This prospectus relates the resale, from time to time, of up to
4,604,454 shares of Common Stock which are held by certain of our shareholders
named within. These shares include 1,093,109 shares of Common Stock held by
certain selling shareholders, 1,656,347 shares of Common Stock issuable upon
exercise of warrants held by certain selling shareholders and 1,854,998 shares
of Common Stock issuable upon conversion of 27,825 shares of Preferred Stock
held by certain selling shareholders.
The prices at which such shareholders may sell the shares will be
determined by the prevailing market price for the shares or in negotiated
transactions. We will not receive any of the proceeds from the sale of the
shares sold pursuant to this prospectus. We will receive, however, proceeds from
the exercise of warrants of approximately $2,797,589 if all the warrants held by
the selling shareholders named herein are exercised.
Our common stock is traded on The American Stock Exchange and the
Chicago Stock Exchange under the symbol "OLY." On February 28, 2003, the last
reported sale price for our Common Stock on The American Stock Exchange was
$0.31 per share.
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INVESTING IN OUR SECURITIES INVOVLES CERTAIN RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 4 OF THIS PROSPECTUS.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED WHETHER
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. NOR HAVE THEY MADE. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
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The date of this prospectus is March__ , 2003.
1
SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS
This prospectus contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act"), and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Forward-looking statements deal with our current
plans, intentions, beliefs and expectations and statements of future economic
performance. Statements containing terms such as "believes," "does not believe,"
"plans," "expects," "intends," "estimates," "anticipates" and other phrases of
similar meaning are considered to contain uncertainty and are forward-looking
statements.
Forward-looking statements involve known and unknown risks and
uncertainties that may cause our actual results in future periods to differ
materially from what is currently anticipated. We make cautionary statements in
certain sections of this prospectus, including under "Risk Factors." You should
read these cautionary statements as being applicable to all related
forward-looking statements wherever they appear in this prospectus, in the
materials referred to in this prospectus, in the materials incorporated by
reference into this prospectus, or in our press releases.
No forward-looking statement is a guarantee of future performance, and
you should not place undue reliance on any forward-looking statement.
INCORPORATION OF CERTAIN INFORMATION BY REFERENCE
The following documents, which have been filed by us with the
Securities and Exchange Commission (the "Commission") pursuant to the Exchange
Act or the Securities Act, are incorporated by reference in this prospectus:
- Our Annual Report on Form 10-K for the fiscal year ended
September 30, 2002;
- Our Quarterly Report on Form 10-Q for the quarter ended
December 31, 2002; and
- Definitive Proxy Statement relating to our 2003 Annual Meeting
filed with the Commission on January 28, 2003.
In addition, all documents filed by us pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this prospectus
and prior to the termination of the offering of the Common Stock offered hereby
shall be deemed to be incorporated herein by reference and to be a part hereof
from the date of filing of such documents.
We hereby undertake to provide without charge to each person, including
any beneficial owner, to whom a copy of this prospectus is delivered, upon the
written or oral request of any such person, a copy of any and all of the above
documents. Such requests should be addressed to the Acting Chief Financial
Officer, Olympic Cascade Financial Corporation, 875 North Michigan Avenue, Suite
1560, Chicago, IL 60611.
2
PROSPECTUS SUMMARY
The following summary highlights information contained elsewhere in
this prospectus. You should read this summary together with the more detailed
information regarding our company and our Common Stock appearing elsewhere in
this prospectus or incorporated herein by reference. References in this
prospectus to "our company," "we," "our," and "us" refer to Olympic Cascade
Financial Corporation. Reference to "selling shareholders" refers to those
shareholders listed herein under Selling Shareholders, who may sell shares, from
time to time, as described in this prospectus. These factors are not intended to
represent a complete list of the general or specific factors that may affect us.
Other factors, including general economic factors and business strategies, may
have a significant effect on our business, financial condition and results of
operations.
OLYMPIC CASCADE FINANCIAL CORPORATION
We are a financial services organization operating through our
wholly-owned subsidiary, National Securities Corporation, a Washington
corporation, organized in 1947 ("National"). National conducts a national
securities brokerage business through its main offices in Seattle, Washington
and New York City, as well as 56 other branch offices located throughout the
country. National's business includes securities brokerage for individual and
institutional clients, market-making trading activities, asset management and
corporate finance services.
Our business plan includes the growth of our retail and institutional
brokerage business. In response to the slowdown in the financial markets, we
have scaled back certain business activities, including: proprietary trading,
market-making trading, and online investing services. We believe that
consolidation within the industry is inevitable. Concerns attributable to the
weakened market and increased competition help explain the increasing number of
acquisition opportunities continuously introduced to us. We are focused on
maximizing the profitability of our existing operations, while we continue to
seek additional selective strategic acquisitions.
We are a Delaware corporation and were formed in 1996. Our executive
offices are located at 875 North Michigan Avenue, Suite 1560, Chicago, IL
60611and our telephone number is (312) 751-8833.
3
RISK FACTORS
INVESTING IN OUR SHARES INVOLVES A SIGNIFICANT DEGREE OF RISK.
PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE FOLLOWING RISK FACTORS AND
ALL THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS OR INCORPORATED BY
REFERENCE BEFORE INVESTING IN COMMON STOCK. EACH OF THESE RISK FACTORS COULD
ADVERSELY AFFECT OUR BUSINESS, OPERATING RESULTS AND FINANCIAL CONDITION, AS
WELL AS ADVERSELY AFFECT THE VALUE OF AN INVESTMENT IN COMMON STOCK.
OPERATING RESULTS HAVE RESULTED IN REPORTING LOSSES; ADDITIONAL FINANCING MAY BE
REQUIRED.
We have reported losses of approximately $159,000 in the first quarter
of fiscal year 2003, losses of approximately $3.4 million in fiscal year 2002
and losses of approximately $7.9 million in fiscal year 2001. There is no
assurance that we will be profitable in the near term. Our losses are primarily
attributable to the recent market slow-down and volatility. We anticipate that
with increased revenues we will return to profitability; however, there can be
no assurance that revenues will increase and profitability will return.
In order for us to have the opportunity for future success and
profitability, we must successfully obtain additional financing, either through
borrowings, public offerings, private offerings, or some type of business
combination (e.g., merger, buyout, etc.). We have actively pursued a variety of
funding sources, and have consummated certain transactions, including the
Investment Transaction and Private Offering, which are described in documents
incorporated by reference in this prospectus, in order to address our capital
requirements. If we continue to experience operating losses, additional
financing will be necessary, and there can be no assurance that we will be
successful in such pursuits. The issuance of new securities to raise capital
will cause the dilution of shares held by current shareholders.
CHANGING ECONOMIC, POLITICAL AND MARKET CONDITIONS MAY RESULT IN DECREASED
REVENUES AND MAY INCREASE OUR COST OF DOING BUSINESS.
The securities industry is subject to a variety of uncertainties,
including: declines in price level and volume of transactions; losses resulting
from the trading or underwriting of securities; volatility of domestic and
international financial, bond and stock markets, as demonstrated by recent
disruptions in the financial markets; extensive government regulation;
litigation; intense competition; and the failure of third parties to meet
commitments. Other items affecting the securities industry include increased
consolidation, increased use of technology, increased use of discount and online
electronic brokerage services, and increased regulation. These items in
particular could result in us facing increased competition from larger
broker-dealers, a need for increased investment in technology, or potential loss
of customers or reduction in commission income. There can be no assurance that
these trends or future changes will not have a material adverse effect on our
business, financial condition, results of operations or cash flows.
MARKET FLUCTUATIONS MAY REDUCE OUR REVENUES AND PROFITABILITY.
Our revenue and profitability may be adversely affected by declines in
the volume of securities transactions and in market liquidity. Additionally, our
profitability may be adversely affected by losses from the trading or
underwriting of securities or failure of third parties to meet commitments.
National acts as a market maker in publicly traded common stocks. In market
making transactions, we undertake the risk of price changes or being unable to
resell the common stock we holds or being unable to purchase the common stock we
have sold. These risks are heightened by the illiquidity of many of the common
stocks we trades and/or make a market. Any losses from our trading activities,
including as a result of unauthorized trading by our employees, could have a
4
material adverse effect on our business, financial condition, results of
operations or cash flows.
Lower securities price levels may also result in a reduced volume of
transactions, as well as losses from declines in the market value of common
stocks held for trading purposes. During periods of declining volume and
revenue, our profitability would be adversely affected. Declines in market
values of common stocks and the failure of issuers and third parties to perform
their obligations can result in illiquid markets in which we may incur losses in
its principal trading and market-making activities.
COMPETITION WITH LARGER FINANCIAL FIRMS MAY HAVE A NEGATIVE EFFECT OUR BUSINESS.
We compete directly with national and regional full-service
broker-dealers and a broad range of other financial service firms, including
banks and insurance companies. Competition has increased as smaller securities
firms have either ceased doing business or have been acquired by or merged into
other firms. Mergers and acquisitions have increased competition from these
firms, many of which have significantly greater financial, technical, marketing
and other resources than we have. Many of these firms offer their customers more
products and research than currently offered by us. These competitors may be
able to respond more quickly to new or changing opportunities, technologies and
client requirements. We also face competition from companies offering discount
and/or electronic brokerage services, including brokerage services provided over
the Internet, which we are currently not offering and doe not intend to offer in
the foreseeable future. These competitors may have lower costs or provide more
services, and may offer their customers more favorable commissions, fees or
other terms than those offered by us. To the extent that issuers and purchasers
of securities transact business without our assistance, our operating results
could be adversely affected.
THE FAILURE TO MEET THE LISTING CRITERIA OF THE AMERICAN STOCK EXCHANGE MAY
RESULT IN THE DELISTING OF OUR COMMON STOCK.
Our Common Stock is listed on the AMEX. The AMEX has certain guidelines
under which it considers removing securities from listing on the AMEX. On
February 5, 2003, we received a letter from AMEX indicating that we were not in
compliance with certain listing standards relating to (1) shareholders' equity
of less than $2.0 million and losses from continuing operations and/or net
losses in two out of our three most recent fiscal years, and (2) the requirement
to have and maintain an audit committee comprised of at least three independent
directors. We intend to submit to AMEX a plan that indicates compliance with
item (1) above within a maximum of 18 months, and we are actively seeking
another independent director to satisfy item (2) above. In the event that we
fail to comply with the listing standards or AMEX determines that our compliance
program is not satisfactory, our Common Stock may be removed from AMEX and could
trade on the OTC Bulletin Board or in the "pink sheets" maintained by the
National Quotation Bureau, Inc. Such alternatives are generally considered to be
less efficient markets, and our stock price, as well as the liquidity of our
Common Stock, may be adversely impacted as a result.
WE ARE CURRENTLY SUBJECT TO EXTENSIVE SECURITIES REGULATION AND THE FAILURE TO
COMPLY WITH THESE REGULATIONS COULD SUBJECT US TO PENALTIES OR SANCTIONS.
The securities industry and our business are subject to extensive
regulation by the Commission, state securities regulators and other governmental
regulatory authorities. We are also regulated by industry self-regulatory
organizations, including the National Association of Securities Dealers, Inc.
("NASD") and the Municipal Securities Rulemaking board ("MSRB"). We are a
registered broker-dealer with the Commission and member firms of the NASD.
5
Broker-dealers are subject to regulations which cover all aspects of
the securities business, including: sales methods and supervision, trading
practices among broker-dealers, use and safekeeping of customers' funds and
securities, capital structure of securities firms, record keeping, and the
conduct of directors, officers and employees. The regulatory environment is also
subject to change.
Compliance with many of the regulations applicable to us involves a
number of risks, particularly in areas where applicable regulations may be
subject to varying interpretation. These regulations often serve to limit our
activities, including through net capital, customer protection and market
conduct requirements. If we are found to have violated an applicable regulation,
administrative or judicial proceedings may be initiated against us that may
result in a censure, fine, civil penalties, issuance of cease-and-desist orders,
the deregistration or suspension of our broker-dealer activities, the suspension
or disqualification of the our officers or employees, or other adverse
consequences. The imposition of any of these or other penalties could have a
material adverse effect on our operating results and financial condition.
WE RELY ON CLEARING BROKERS AND TERMINATION OF THE AGREEMENTS WITH THESE
CLEARING BROKERS COULD DISRUPT OUR BUSINESS.
We recently changed from a self-clearing system to using clearing
brokers to process our securities transactions and maintain customer accounts on
a fee basis for us. The clearing brokers also provide billing services, extend
credit and provide for control and receipt, custody and delivery of securities.
Our broker-dealers depend on the operational capacity and ability of the
clearing brokers for the orderly processing of transactions. In addition, by
engaging the processing services of a clearing firm, we are exempt from some
capital reserve requirements and other regulatory requirements imposed by
federal and state securities laws. If the clearing agreements are terminated for
any reason, we would be forced to find alternative clearing firms. We cannot
assure you that we would be able to find an alternative clearing firm on
acceptable terms to them or at all.
We permit our clients to purchase securities on a margin basis or sell
securities short, which means that the clearing firm extends credit to the
client secured by cash and securities in the client's account. During periods of
volatile markets, the value of the collateral held by the clearing brokers could
fall below the amount borrowed by the client. If margin requirements are not
sufficient to cover losses, the clearing brokers sell or buy securities at
prevailing market prices, and may incur losses to satisfy client obligations. We
have agreed to indemnify the clearing brokers for losses they incur while
extending credit to our clients.
CREDIT RISK EXPOSES US TO LOSSES CAUSED BY FINANCIAL OR OTHER PROBLEMS
EXPERIENCED BY THIRD PARTIES.
We are exposed to the risk that third parties that owe us money,
securities or other assets will not perform their obligations. These parties
include: trading counterparts, customers, clearing agents, exchanges, clearing
houses, and other financial intermediaries as well as issuers whose securities
we hold. These parties may default on their obligations owed to us due to
bankruptcy, lack of liquidity, operational failure or other reasons. This risk
may arise, for example, from holding securities of third parties, executing
securities trades that fail to settle at the required time due to non-delivery
by the counterparty or systems failure by clearing agents, exchanges, clearing
houses or other financial intermediaries, and extending credit to clients
through bridge or margin loans or other arrangements. Significant failures by
third parties to perform their obligations owed to us could adversely affect our
revenues and perhaps our ability to borrow in the credit markets.
ADVERSE RESULTS OF CURRENT LITIGATION AND POTENTIAL SECURITIES LAW LIABILITY
WOULD RESULT IN FINANCIAL LOSSES AND DIVERT MANAGEMENT'S ATTENTION TO BUSINESS.
6
Many aspects of our business involve substantial risks of liability.
There has been an increase in litigation and arbitration within the securities
industry in recent years, including class action suits seeking substantial
damages. We are subject to potential claims by dissatisfied customers, including
claims alleging they were damaged by improper sales practices such as
unauthorized trading, sale of unsuitable securities, use of false or misleading
statements in the sale of securities, mismanagement and breach of fiduciary
duty. National may be liable for the unauthorized acts of its retail brokers if
it fails to adequately supervise their conduct. As an underwriter, we may be
subject to substantial potential liability under federal and state law and court
decisions, including liability for material misstatements and omissions in
securities offerings. We may be required to contribute to a settlement, defense
costs or a final judgment in legal proceedings or arbitrations involving a past
underwriting and in actions that may arise in the future. National carries
"Errors and Omissions" insurance to protect against arbitrations; however, the
policy is limited in items and amounts covered and there can be no assurance
that it will cover a complaint. The adverse resolution of any legal proceedings
involving us could have a material adverse effect on our business, financial
condition, results of operations or cash flows.
WE DEPEND ON KEY PERSONNEL.
We depend on the continued services of our management team, as well as
our ability to hire additional members of management, and to retain and motivate
our other officers and key employees. Our future success also depends on our
continuing ability to attract and retain highly qualified personnel.
THE PRICE OF OUR COMMON STOCK IS VOLATILE.
The price of our Common Stock has fluctuated substantially. The
market price of our Common Stock may be highly volatile as a result of factors
specific to us and the securities markets in general. Factors affecting
volatility may include variations in our annual or quarterly financial results
or those of our competitors; the continued listing of our Common Stock on AMEX;
conditions in the economy in general; and changes in applicable laws or
regulations, or their judicial or administrative interpretations affecting us or
our subsidiary or the securities industry. In addition, volatility of the market
price of our Common Stock is further affected by our thinly traded nature.
7
USE OF PROCEEDS
The proceeds from the sale of the Common Stock offered pursuant to this
prospectus are solely for the account of the selling shareholders. Accordingly,
we will not receive any proceeds from the sale of the shares by the selling
shareholders. We will receive, however, proceeds from the exercise of warrants
of approximately $2,797,589 if all the warrants held by certain selling
shareholders named herein are exercised. There can be no assurance that such
warrants will be exercised. In the event that any or all of the warrants are
exercised, the proceeds will be used for general corporate purposes.
SELLING SHAREHOLDERS
BACKGROUND
We issued shares of Common Stock, Preferred Stock convertible into
shares of Common Stock and warrants exercisable into shares of Common Stock to
certain selling shareholders in the following private transactions:
o On January 21, 2003, we issued 76,923 shares of the Common
Stock and a three-year warrant to purchase 76,923 shares of
Common Stock at a per share price of $1.25 to D'Ancona &
Pflaum LLC, in consideration for, and payment of, $50,000 of
legal fees. We agreed to include the shares of Common Stock
and the shares of Common Stock issuable upon exercise of the
warrants in the registration statement which this prospectus
is a part.
o On December 23, 2002, we issued 130,770 Units in the Private
Offering for $85,000 to certain investors. Each Unit sold for
$0.65 and consisted of one share of Common Stock and one
three-year warrant to purchase one share of Common Stock at a
per share price of $1.25. Pursuant to a registration rights
agreement, we agreed to prepare and file a registration
statement for the resale of the shares of Common Stock and the
shares of Common Stock issuable upon exercise of the warrants.
o On December 23, 2002, we issued to National, the placement
agent in the Private Offering, agent's warrants to purchase
13,077 shares of Common Stock exercisable at $0.65 per share
and warrants to purchase 13,077 shares of Common Stock
exercisable at $1.25 per share. These warrants were realloted
by National among the various registered representatives whose
clients purchased Units pursuant to the Private Offering.
Pursuant to a registration rights agreement, we agreed to
prepare and file a registration statement for the resale of
the shares of Common Stock issuable upon exercise of the
warrants.
o On November 27, 2002, we issued 885,416 Units in the Private
Offering for $575,520. Each Unit sold for $0.65 and consisted
of one share of Common Stock and one three-year Warrant to
purchase one share of Common Stock at a per share price of
8
$1.25. Pursuant to a registration rights agreement, we agreed
to prepare and file a registration statement for the resale of
the shares of Common Stock and the shares of Common Stock
issuable upon exercise of the warrants.
o On November 27, 2002, we issued to National, the placement
agent in the Private Offering, agent's warrants to purchase
88,542 shares of Common Stock exercisable at $0.65 per share
and warrants to purchase 88,542 shares of Common Stock
exercisable at $1.25 per share. These warrants were realloted
by National among the various registered representatives whose
clients purchased Units pursuant to the Private Offering.
Pursuant to a registration rights agreement, we agreed to
prepare and file a registration statement for the resale of
the shares of Common Stock issuable upon exercise of the
warrants.
o On August 13, 2002, we issued 600 shares of Preferred Stock
for $60,000 to the individual retirement account of Steven A.
Rothstein, on the same terms and conditions as the equity sold
to investors in the Investment Transaction. We agreed to
include the shares issuable upon conversion of the Preferred
Stock in the registration statement which this prospectus is a
part.
o On July 31, 2002, we issued 1,500 shares of Preferred Stock
for $150,000 to the individual retirement account of Steven A.
Rothstein, on the same terms and conditions as the equity sold
to investors in the Investment Transaction. We agreed to
include the shares issuable upon conversion of the Preferred
Stock in the registration statement which this prospectus is a
part.
o On December 14, 2001, we completed the Investment Transaction
under which we issued 12,863 shares of Preferred Stock to
certain investors for an aggregate of $1,572,500. The
Preferred Stock is convertible into Common Stock at a price of
$1.50 per share. We agreed to include the shares issuable upon
conversion of the Preferred Stock in the registration
statement which this prospectus is a part.
o Concurrent with the Investment Transaction, two unrelated
individual noteholders holding $2.0 million of our debt
converted one-half of their debt into the same class of
Preferred Stock that was sold in the Investment Transaction.
In exchange for the certificates evidencing $1.0 million of
the $2.0 million of the promissory notes and previously issued
warrants to purchase 100,000 shares of Common Stock with an
exercise price of $5.00 per share, each noteholder was issued
5,000 shares of Preferred Stock, a warrant to purchase 50,000
shares of Common Stock with an exercise price of $1.75 per
share and a warrant to purchase 50,000 shares of Common Stock
with an exercise price of $5.00 per share. We agreed to
include the shares issuable upon conversion of the Preferred
Stock and the shares issuable upon exercise of the warrants in
the registration statement which this prospectus is a part.
o On January 25, 2001, we issued a warrant to purchase 75,000
shares of Common Stock at a per share price of $5.00 to Peter
Rettman in connection with an aggregate of $2,000,000 of
demand notes issued by us in favor of Gregory P. Kusnick and
Karen Jo Gustafson, as Joint Tenants with Right of
Survivorship and Gregory C. Lowney and Maryanne K. Snyder, as
Joint Tenants with Right of Survivorship. Additionally, on
February 1, 2001, we issued a warrant to purchase 75,000
shares of Common Stock at a per share price of $5.00 to Peter
Rettman in connection with a demand note for $1,000,000 issued
by us in favor of Mr. Rettman. Concurrent with the Investment
Transaction, we re-priced the warrant to purchase 75,000
shares of Common Stock from a price of $5.00 per share to a
price of $1.75 per share. We agreed to include the shares of
Common Stock issuable upon exercise of the warrants in the
registration statement which this prospectus is a part.
9
o On June 30, 2000, we acquired Canterbury Securities
Corporation, our former subsidiary and a registered
broker-dealer. As part of the transaction, we issued five-year
warrants to acquire 5,000 shares of Common Stock at a price of
$6.375 per share. Pursuant to a registration rights agreement,
we agreed to include the shares of Common Stock issuable upon
exercise of the warrants in the registration statement which
this prospectus is a part.
o On November 28, 2001, we issued warrants to purchase 5,000
shares of Common Stock exercisable at $5.00 per share to the
individual retirement account of Steven A. Rothstein, pursuant
to the terms of a $50,000 loan made in August 2001. We agreed
to include the shares of Common Stock issuable upon exercise
of the warrants in the registration statement which this
prospectus is a part.
TABLE
The following table sets forth the number of shares of Common Stock
owned by each of the selling shareholders as of the date hereof, the number of
shares owned by them covered by this prospectus and the amount and percentage of
shares to be owned by each selling stockholder after the sale of all of the
shares offered by this prospectus. The table also sets forth the number of
shares of Common Stock certain selling shareholders will receive upon conversion
of the Preferred Stock and upon exercise of warrants. Except as indicated below,
none of the selling shareholders has had any position, office or other material
relationship with us within the past three years other than as a result of the
ownership of our shares or other securities. The information included below is
based on information provided by the selling shareholders. Because the selling
shareholders may offer some or all of their shares, no definitive estimate as to
the number of shares that will be held by the selling shareholders after such
offering can be provided and the following table has been prepared on the
assumption that all shares of Common Stock offered hereby will be sold.
The applicable percentages of ownership are based on an aggregate of
3,367,558 shares of Common Stock issues and outstanding on February 28, 2003.
This number does not include 1,854,998 shares of Common Stock issuable upon
conversion of 27,825 shares of Preferred Stock.
10
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
Shares which may Shares
be acquired upon Owned Percentage
exercise of After of Shares
Shares warrants Shares Offering (1) Owned
Name Owned -------- Offered ------ After
------ ------ ------- Offering
(1)
--------
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
Steven A. Rothstein IRA 140,000 (2) 5,000 (3) 145,000 (2) 281,363 (2) 8.0%
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
Triage Partners LLC 524,199 (4) - 524,199 (4) 285,000 (4) 7.3%
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
One Clark LLC 524,133 (5) - 524,133 (5) 0 0
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
Gregory P. Kusnick and Karen Jo Gustafson, as 333,333 (6) 100,000 (7) 433,333 (6)(7) 0 0
Joint Tenants with Right of Survivorship
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
Gregory C. Lowney and Maryanne K. Snyder, as 333,333 (6) 100,000 (7) 433,333 (6)(7) 0 0
Joint Tenants with Right of Survivorship
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
William Worrell, Jr. 153,848 153,848 307,696 (8) 0 0
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
Barbara Hulse 61,540 61,540 123,080 (9) 0 0
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
Seymour Lippman 76,924 76,924 153,848 (10) 0 0
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
Chris Dewey 76,924 76,924 153,848 (11) 0 0
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
David Coates 76,923 76,923 153,846 (12) 0 0
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
Judy Uman 38,462 38,462 76,924 (13) 0 0
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
Bruce W. Durkee & Kathy Durkee 61,600 61,600 123,200 (14) 0 0
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
I. Michael Goodman 76,923 76,923 153,846 (15) 0 0
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
Ralph Gitz 153,848 153,848 307,696 (16) 0 0
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
Martens Maarten 76,924 76,924 153,848 (17) 0 0
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
Ronald Kurt Ebert 31,500 31,500 63,000 (18) 0 0
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
Benjamin Haimowitz and Naomi Haimowitz 30,769 30,769 61,538 (19) 0 0
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
Kevin Deane 38,462 38,462 76,924 (20) 0 0
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
Mark Ginsburg 23,077 23,077 46,154 (21) 0 0
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
Michael Cushing 38,462 38,462 76,924 (22) 0 0
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
Roger Monteforte - 38,858 (23) 38,858 (23) 0 0
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
Paul Sinno - 28,010 (24) 28,010 (24) 0 0
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
Mike Bergin - 24,266 (25) 24,266 (25) 0 0
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
Mark Goldwasser - 15,386 (26) 15,386 (26) 46,300 1.4%
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
Frantz Pierre - 21,538 (27) 21,538 (27) 0 0
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
Lenny Billa - 25,950 (28) 25,950 (28) 0 0
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
Greg Traina - 15,930 (29) 15,930 (29) 0 0
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
Scott Martinson - 7,162 (30) 7,162 (30) 0 0
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
Sara Wheldon - 6,138 (31) 6,138 (31) 0 0
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
Eric James - 20,000 (32) 20,000 (32) 0 0
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
D'Ancona & Pflaum, LLC 76,923 76,923 153,846 (33) 0 0
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
Peter Rettman - 150,000 (34) 150,000 (34) 0 0
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
Gerald E. Morris - 2,250 (35) 2,250 (35) 0 0
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
Frank J. Cardello - 500 (36) 500 (36) 0 0
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
Gary A. Rosenberg Trust u/a/d 10/10/80 - 2,250 (37) 2,250 (37) 0 0
----------------------------------------------- ---------------- ------------------ ------------------ ---------------- -----------
11
----------
* Less than 1%
(1) Assumes sale of all shares offered by the selling shareholders. Does not
include shares of common stock issuable upon exercise of options held by
the selling shareholders.
(3) Includes shares of Common Stock issuable upon conversion of 2,100 shares
of Preferred Stock issued in connection with a private placement
transaction. Mr. Rothstein was our former Chairman, Chief Executive
Officer and principal shareholder. Shares owned after the offering include
a voting proxy over 274,660 shares of which Triage Partners LLC has been
granted a voting proxy.
(4) Includes 5,000 shares of Common Stock issuable upon the exercise (at a
price per share of $5.00) of a warrant issued in connection with a loan.
(5) Includes shares of Common Stock issuable upon conversion of 7,863 shares
of Preferred Stock issued in connection with a private placement
transaction. Steven B. Sands and Martin S. Sands, our Co-Chairmen, are the
Co-Managers and Members of Triage Partners LLC. Messer's Sands expressly
disclaim beneficial ownership with respect to any these shares. Shares
owned after the offering do not include a voting proxy over 274,660 shares
owned directly and indirectly by Mr. Rothstein.
(6) Includes shares of Common Stock issuable upon conversion of 7,862 shares
of Preferred Stock issued in connection with a private placement
transaction. Mark Goldwasser, our President, Chief Executive Officer and
Director, is the Manager of One Clark LLC. Mr. Goldwasser expressly
disclaims beneficial ownership with respect to any these shares.
(7) Includes shares of Common Stock issuable upon conversion of 5,000 shares
of Preferred Stock issued in connection with a private placement
transaction.
(8) Includes (i) 50,000 shares of Common Stock issuable upon the exercise (at
a price per share of $1.75) of a warrant issued in connection with a
private placement transaction and (ii) 50,000 shares of Common Stock
issuable upon the exercise (at a price per share of $5.00) of a warrant
issued in connection with a private placement transaction.
(9) Includes 153,848 shares of Common Stock and 153,848 shares of Common Stock
issuable upon the exercise (at a price per share of $1.25) of a warrant
issued in connection with a private placement transaction.
(10) Includes 61,540 shares of Common Stock and 61,540 shares of Common Stock
issuable upon the exercise (at a price per share of $1.25) of a warrant
issued in connection with a private placement transaction.
(11) Includes 76,924 shares of Common Stock and 76,924 shares of Common Stock
issuable upon the exercise (at a price per share of $1.25) of a warrant
issued in connection with a private placement transaction.
(12) Includes 76,924 shares of Common Stock and 76,924 shares of Common Stock
issuable upon the exercise (at a price per share of $1.25) of a warrant
issued in connection with a private placement transaction.
(13) Includes 76,923 shares of Common Stock and 76,923 shares of Common Stock
issuable upon the exercise (at a price per share of $1.25) of a warrant
issued in connection with a private placement transaction.
(14) Includes 38,462 shares of Common Stock and 38,462 shares of Common Stock
issuable upon the exercise (at a price per share of $1.25) of a warrant
issued in connection with a private placement transaction.
(15) Includes 61,600 shares of Common Stock and 61,600 shares of Common Stock
issuable upon the exercise (at a price per share of $1.25) of a warrant
issued in connection with a private placement transaction.
(16) Includes 76,923 shares of Common Stock and 76,923 shares of Common Stock
issuable upon the exercise (at a price per share of $1.25) of a warrant
issued in connection with a private placement transaction.
12
(17) Includes 153,848 shares of Common Stock and 153,848 shares of Common Stock
issuable upon the exercise (at a price per share of $1.25) of a warrant
issued in connection with a private placement transaction.
(18) Includes 76,924 shares of Common Stock and 76,924 shares of Common Stock
issuable upon the exercise (at a price per share of $1.25) of a warrant
issued in connection with a private placement transaction.
(19) Includes 31,500 shares of Common Stock and 31,500 shares of Common Stock
issuable upon the exercise (at a price per share of $1.25) of a warrant
issued in connection with a private placement transaction.
(20) Includes 30,769 shares of Common Stock and 30,769 shares of Common Stock
issuable upon the exercise (at a price per share of $1.25) of a warrant
issued in connection with a private placement transaction.
(21) Includes 38,462 shares of Common Stock and 38,462 shares of Common Stock
issuable upon the exercise (at a price per share of $1.25) of a warrant
issued in connection with a private placement transaction.
(22) Includes 23,077 shares of Common Stock and 23,077 shares of Common Stock
issuable upon the exercise (at a price per share of $1.25) of a warrant
issued in connection with a private placement transaction.
(23) Includes 38,462 shares of Common Stock and 38,462 shares of Common Stock
issuable upon the exercise (at a price per share of $1.25) of a warrant
issued in connection with a private placement transaction.
(24) Includes 19,429 shares of Common Stock issuable upon the exercise (at a
price per share of $0.65) of a warrant issued in connection with a private
placement transaction and 19,429 shares of Common Stock issuable upon the
exercise (at a price per share of $1.25) of a warrant issued in connection
with a private placement transaction.
(25) Includes 14,005 shares of Common Stock issuable upon the exercise (at a
price per share of $0.65) of a warrant issued in connection with a private
placement transaction and 14,005 shares of Common Stock issuable upon the
exercise (at a price per share of $1.25) of a warrant issued in connection
with a private placement transaction.
(26) Includes 12,133 shares of Common Stock issuable upon the exercise (at a
price per share of $0.65) of a warrant issued in connection with a private
placement transaction and 12,133 shares of Common Stock issuable upon the
exercise (at a price per share of $1.25) of a warrant issued in connection
with a private placement transaction.
(27) Includes 7,693 shares of Common Stock issuable upon the exercise (at a
price per share of $0.65) of a warrant issued in connection with a private
placement transaction and 7,693 shares of Common Stock issuable upon the
exercise (at a price per share of $1.25) of a warrant issued in connection
with a private placement transaction. Mr. Goldwasser is our President,
Chief Executive Officer and Director.
(28) Includes 10,769 shares of Common Stock issuable upon the exercise (at a
price per share of $0.65) of a warrant issued in connection with a private
placement transaction and 10,769 shares of Common Stock issuable upon the
exercise (at a price per share of $1.25) of a warrant issued in connection
with a private placement transaction.
(29) Includes 12,975 shares of Common Stock issuable upon the exercise (at a
price per share of $0.65) of a warrant issued in connection with a private
placement transaction and 12,975 shares of Common Stock issuable upon the
exercise (at a price per share of $1.25) of a warrant issued in connection
with a private placement transaction.
(30) Includes 7,965 shares of Common Stock issuable upon the exercise (at a
price per share of $0.65) of a warrant issued in connection with a private
placement transaction and 7,965 shares of Common Stock issuable upon the
exercise (at a price per share of $1.25) of a warrant issued in connection
with a private placement transaction.
13
(31) Includes 3,581 shares of Common Stock issuable upon the exercise (at a
price per share of $0.65) of a warrant issued in connection with a private
placement transaction and 3,581 shares of Common Stock issuable upon the
exercise (at a price per share of $1.25) of a warrant issued in connection
with a private placement transaction.
(32) Includes 3,069 shares of Common Stock issuable upon the exercise (at a
price per share of $0.65) of a warrant issued in connection with a private
placement transaction and 3,069 shares of Common Stock issuable upon the
exercise (at a price per share of $1.25) of a warrant issued in connection
with a private placement transaction.
(33) Includes 10,000 shares of Common Stock issuable upon the exercise (at a
price per share of $0.65) of a warrant issued in connection with a private
placement transaction and 10,000 shares of Common Stock issuable upon the
exercise (at a price per share of $1.25) of a warrant issued in connection
with a private placement transaction.
(34) Includes 76,923 shares of the Common Stock and 76,923 shares of Common
Stock issuable upon the exercise (at a price per share of $1.25) of a
warrant issued in consideration for, and payment of, $50,000 of legal
fees.
(35) Includes 75,000 shares of Common Stock issuable upon the exercise (at a
price per share of $5.00) of a warrant issued in connection with a loan
and 75,000 shares of Common Stock issuable upon the exercise (at a price
per share of $1.75) of a warrant issued in connection with a loan. Mr.
Rettman is a member of our board of directors.
(36) Includes 2,250shares of Common Stock issuable upon the exercise (at a
price per share of $6.375) of a warrant issued in connection with the
acquisition of our former subsidiary, Canterbury Securities Corporation.
(37) Includes 500 shares of Common Stock issuable upon the exercise (at a price
per share of $6.375) of a warrant issued in connection with the
acquisition of our former subsidiary, Canterbury Securities Corporation.
(38) Includes 2,250 shares of Common Stock issuable upon the exercise (at a
price per share of $6.375) of a warrant issued in connection with the
acquisition of our former subsidiary, Canterbury Securities Corporation.
14
PLAN OF DISTRIBUTION
We are registering for resale 4,604,454 shares of Common Stock with
this prospectus on behalf of the selling shareholders named in this prospectus.
These shares include (i) an aggregate of 1,854,998 shares of Common Stock
certain selling shareholders will receive conversion of 27,825 shares of
Preferred Stock and (ii) an aggregate of 1,656,347 shares of Common Stock
issuable upon exercise of warrants. The selling shareholders will act
independently of us in making decisions with respect to the timing, manner and
size of each sale. We have agreed to bear certain expenses in connection with
the registration of the shares of Common Stock offered and being sold by the
selling shareholders. The selling shareholders will bear all brokerage
commissions and similar selling expenses, if any, attributable to sales of the
shares. Sales of shares may be affected by the selling stockholders from time to
time in one or more types of transactions (which may include block transactions)
on The American Stock Exchange, in the over-the-counter market, in negotiated
transactions, or a combination of such methods of sale, at market prices
prevailing at the time of sale, or at negotiated prices. These transactions may
or may not involve brokers or dealers.
The selling stockholders may affect sales of shares:
- In ordinary brokerage transactions in which the broker
solicits purchasers or executes unsolicited orders, or
transactions in which the broker may acquire the share as
principal and resell the shares into the public market in any
manner permitted by the selling shareholders under this
prospectus;
- In connection with the pledge of shares registered hereunder
to a broker/dealer or other pledgee to secure debts or other
obligations, and the sale of the shares so pledged upon a
default;
- Through the writing or settlement of non-traded and
exchange-traded put or call option contracts, and by means of
the establishment or settlement of other hedging transactions
including forward sale transactions. In addition, the selling
shareholders may loan their shares to broker/dealers who are
counterparties to hedging transactions and such broker/dealers
may sell the shares so borrowed into the public market;
- In private transactions and transactions otherwise than on The
American Stock Exchange, on any other national securities
exchange or in over-the-counter market on which shares of
Common Stock maybe listed or quoted at the time of any sale;
- In block trades, in which a broker-dealer will attempt to sell
the shares as agent for the selling shareholders, but may take
a position and resell a portion of the block as principal to
facilitate the transaction;
- Through a combination of any of the above transactions.
Broker-dealers may receive compensation in the form of discounts,
concessions, or commissions from the selling stockholder and/or the purchasers
of shares for whom such broker-dealers may act as agents or to whom they sell as
principal or both (this compensation to a particular broker-dealer might be in
excess of customary commissions).
The selling shareholders and any broker-dealers that act in connection
with the sale of shares might be deemed to be "underwriters" within the meaning
of Section 2(a)(11) of the Securities Act. In this case, any commissions
15
received by broker dealers and any profit on the resale of the shares sold by
them while acting as principals might be deemed to be underwriting discounts or
commissions under the Securities Act. We have agreed to indemnify the selling
shareholders named in this prospectus against certain liabilities, including
liabilities arising under the Securities Act. The selling shareholders may agree
to indemnify any agent, dealer or broker-dealer that participates in
transactions involving sales of the shares against certain liabilities,
including liabilities arising under the Securities Act.
Because the selling shareholders may be deemed to be "underwriters"
within the meaning of Section 2(a)(11) of the Securities Act, the selling
shareholders will be subject to the prospectus delivery requirements of the
Securities Act.
The selling shareholders also may resell all or a portion of their shares
in open market transactions in reliance upon Rule 144 under the Securities Act,
if they meet the criteria and conform to the requirements of Rule 144.
LEGAL MATTERS
The validity of the issuance of the common stock offered hereby has
been passed upon for us by Littman Krooks LLP, 655 Third Avenue, New York, New
York 10017.
EXPERTS
Our consolidated financial statements appearing in our Annual Report on
Form 10-K for the year ended September 28, 2002 have been audited by Grassi &
Co., CPAs, P.C., independent public accountants, as set forth in their report
included therein and incorporated in this prospectus by reference. The
consolidated financial statements are incorporated in this prospectus in
reliance upon such report given upon the authority of that firm as experts in
accounting and auditing.
AVAILABLE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Commission. Those reports, proxy statements and other
information may be obtained:
- At the Public Reference Room of the Commission, Room
1024-Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549;
- At the public reference facilities at the Commission's
regional offices located at Seven World Trade Center, 13th
Floor, New York, New York 10048 or Northwestern Atrium Center,
500 West Madison Street, Suite 1400, Chicago, Illinois 60661;
- By writing to the Commission, Public Reference Section,
Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549;
- From the Internet site maintained by the Commission at
http://www.sec.gov, which contains reports, proxy and
information statements and other information regarding issuers
that file electronically with the Commission.
Some locations may charge prescribed or modest fees for copies.
16
We have filed with the Commission a registration statement under the
Securities Act of 1933, as amended, with respect to the common stock offered
hereby. This prospectus, which is a part of the registration statement, does not
contain all the information set forth in, or annexed as exhibits to, such
registration statement, certain portions of which have been omitted pursuant to
rules and regulations of the Commission. For further information with respect to
our company and the common stock, reference is made to such registration
statement, including the exhibits thereto, copies of which may be inspected and
copied at the aforementioned facilities of the Commission. Copies of such
registration statement, including the exhibits, may be obtained from the Public
Reference Section of the Commission at the aforementioned address upon payment
of the fee prescribed by the Commission.
17
TABLE OF CONTENTS
---------------------------------------------------------------------------------------------------- ------------
Section Page
---------------------------------------------------------------------------------------------------- ------------
Special Information Regarding Forward Looking Information................................. 2
---------------------------------------------------------------------------------------------------- ------------
Incorporation of Certain Documents By Reference........................................... 2
---------------------------------------------------------------------------------------------------- ------------
Prospectus Summary........................................................................ 3
---------------------------------------------------------------------------------------------------- ------------
Risk Factors.............................................................................. 4
---------------------------------------------------------------------------------------------------- ------------
Use of Proceeds........................................................................... 8
---------------------------------------------------------------------------------------------------- ------------
Selling Shareholders...................................................................... 8
---------------------------------------------------------------------------------------------------- ------------
Plan of Distribution...................................................................... 15
---------------------------------------------------------------------------------------------------- ------------
Legal Matters............................................................................. 16
---------------------------------------------------------------------------------------------------- ------------
Experts................................................................................... 16
---------------------------------------------------------------------------------------------------- ------------
Available Information..................................................................... 16
---------------------------------------------------------------------------------------------------- ------------
4,604,454 SHARES
COMMON STOCK
OLYMPIC CASCADE FINANCIAL CORPORATION
-------------
PROSPECTUS
-------------
March 4, 2003
18
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses in connection with this offering are as follows:
---------------------------------------------------------------------- ---------------------
Amount
---------------------------------------------------------------------- ---------------------
SEC Registration Fee............................................ $ 122.93
---------------------------------------------------------------------- ---------------------
Accounting Fees and Expenses.................................... $ 1,000
---------------------------------------------------------------------- ---------------------
Legal Fees and Expenses......................................... $ 25,000
---------------------------------------------------------------------- ---------------------
Miscellaneous................................................... $ 5,000
---------------------------------------------------------------------- ---------------------
Total........................................................... $ 31,122.93
---------------------------------------------------------------------- ---------------------
All the above expenses will be borne by the Registrant.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 125(a) of the DGCL provides in relevant part that "[a]
corporation shall have the power to indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that the person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with such action, suit or proceeding if the
person acted in good faith and in a manner the person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe the
person's conduct was unlawful." With respect to derivative actions, Section
145(b) of the DGCL provides in relevant part that "[a] corporation shall have
the power to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor . . . [by reason of
the person's service in one of the capacities specified in the preceding
sentence] against expenses (including attorneys' fees) actually and reasonably
incurred by the person in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interest of the corporation except
that no indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper."
Our Certificate of Incorporation includes a provision that
eliminates the personal liability of our directors for monetary damages for
breach of fiduciary duty to the full extent permitted by Delaware law.
Our Amended and Restated By-laws provide that:
19
- We must indemnify our directors and officers to the fullest
extent permitted by Delaware law, subject to certain very
limited exceptions;
- We may indemnify our other employees and agents to the same
extent that we indemnify our officers and directors, unless
otherwise required by law, our certificate of incorporation,
our bylaws or agreements; and
- We must advance expenses, as incurred, to our directors and
executive officers in connection with legal proceedings to the
fullest extent permitted by Delaware law, subject to certain
very limited exceptions.
We have obtained liability insurance for our officers and directors.
The above discussion of the our Certificate of Incorporation and
Amended and Restated By-laws and of Section 145 of the Delaware General
Corporation Law is not intended to be exhaustive and is respectively qualified
in its entirety by such restated Certificate of Incorporation, Amended and
Restated By-laws and statute.
ITEM 16. EXHIBITS
(a) Exhibits
Exhibit
Number Description
------- -----------
5 Opinion of Littman Krooks LLP as to the legality of the
securities being registered. *
23.1 Consent of Grassi & Co., CPAs, P.C. *
23.2 Consent of Littman Krooks LLP, included in the opinion filed
as Exhibit 5.
24 Power of Attorney, included in the signature page of this
Registration Statement.
* To be filed by amendment.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act; and
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high and of the estimated
maximum offering range may be reflected in the form of
20
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that paragraphs (i) and (ii) above do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the Registrant pursuant to
Section 13 and Section 15(d) of the Exchange Act that are incorporated by
reference in the registration statement.
(2) That, for purposes of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering as such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section 15(d) of
the Exchange Act) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(5) That, insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
21
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement on Form S-3 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of New York in the State of
New York on March 4, 2003
OLYMPIC CASCADE FINANCIAL CORPORATION
By /s/ Mark Goldwasser
------------------------------------------
Mark Goldwasser
President, Chief Executive Officer and Director
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Robert H. Daskal, our Acting Chief
Financial Officer, his or her attorney-in-fact, each with the power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this Registration Statement on
Form S-3 (including post-effective amendments or any abbreviated registration
statement and any amendments thereto filed pursuant to Rule 462(b) increasing
the number of securities for which registration is sought), and to file the
same, with all exhibits thereto and all documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that such attorneys-in-fact and
agents or any of them, or his or their substitute or substitutes, may lawfully
do or cause to be done by virtue hereof. Pursuant to the requirements of the
Securities Act of 1933, as amended, this Registration Statement has been signed
by the following persons in the capacities indicated below on the 4th day of
March 2003.
Signature Date
/s/ Mark Goldwasser March 4, 2003
--------------------------------
Mark Goldwasser
President, Chief Executive Officer and Director
/s/ Robert H. Daskal March 4, 2003
--------------------------------
Robert H. Daskal
Acting Chief Financial Officer
/s/ Steven B. Sands March 4, 2003
--------------------------------
Steven B. Sands
Co-Chairman of the Board
22
/s/ Martin S. Sands March 4, 2003
--------------------------------
Martin S. Sands
Co-Chairman of the Board
/s/ Robert J. Rosan March 4, 2003
--------------------------------
Robert J. Rosan
Director
/s/ Gary A. Rosenberg March 4, 2003
--------------------------------
Gary A. Rosenberg
Director
/s/ Peter Rettman March 4, 2003
--------------------------------
Peter Rettman
Director
23