AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 14, 2004
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 36-4128138
AVENUE, SUITE 1560,
CHICAGO, IL 60611
(State or other (Address, including zip (IRS employer
jurisdiction of code, and telephone identification number)
incorporation or number, including area
organization) 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.
Adrian I. Kuzycz, 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
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Tile of Each Amount to be Proposed Proposed Amount of
Class of Registered (1) Maximum Maximum Registration
Securities to be Offering Aggregate Fee (2)
Registered Price Per Offering
Share (2) Price (1)
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Common stock
($.02 par value
per share) 4,369,137 $1.53 $6,684,780 $846.96
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(1) Includes: (i) 576,173 shares of common stock held by the selling
shareholders named within; (ii) 2,078,465 shares of common stock issuable
upon conversion of 31,177 shares of our Series A Preferred Stock held by
the selling shareholders named within; and (iii) 1,714,499 shares of
common stock issuable upon exercise of warrants held by certain selling
shareholders names within. 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 Series A 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 the 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 our common stock
reported on The American Stock Exchange on July 13, 2004.
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 JULY , 2004
PROSPECTUS
OLYMPIC CASCADE FINANCIAL CORPORATION
4,369,137 SHARES OF COMMON STOCK
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This prospectus relates to the resale, from time to time, of up to
4,369,137 shares of common stock which are held by certain of our shareholders
named within. These shares include 576,173 shares of common stock held by
certain selling shareholders, 1,714,499 shares of common stock issuable upon
exercise of warrants held by certain selling shareholders and 2,078,465 shares
of common stock issuable upon conversion of 31,177 shares of Series A Preferred
Stock held by certain selling shareholders.
As of July 14, 2004, there were 3,557,409 shares of common stock issued
and outstanding. The 4,369,137 shares of common stock being registered in this
prospectus represent 59.4% of the outstanding shares of common stock, assuming
sale of all shares included in this prospectus.
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 being sold in this prospectus. We will receive, however, proceeds from
the exercise of warrants of approximately $2,270,527 if all the warrants held by
the selling shareholders named in this prospectus are exercised.
Several of the selling shareholders named in this prospectus are
beneficial owners of more than five (5%) percent of our common stock. The
selling shareholders and their respective percentage of shares, calculated on a
fully diluted basis, being registered for sale in this prospectus are: Steven A.
Rothstein IRA (the beneficiary of which is the wife of Steven A. Rothstein, our
former Chairman, Chief Executive Officer and principal shareholder), 36%; Triage
Partners LLC (of which Steven B. Sands, our Chairman, is the manager and a
member), 67%; One Clark LLC (of which Mark Goldwasser, our President and Chief
Executive Officer, is the manager), 100%; Mark Goldwasser on an individual
basis, 64%; Gregory P. Kusnick and Karen Jo Gustafson, as Joint Tenants with
Right of Survivorship, 100%; and Gregory C. Lowney and Maryanne K. Snyder, as
Joint Tenants with Right of Survivorship, 100%.
Our common stock is traded on The American Stock Exchange under the symbol
OLY. We currently do not meet certain listing standards of The American Stock
Exchange and may be delisted as a result. See "Risk Factors" beginning on page
6. On July 13, 2004, the last reported sale price for our common stock on The
American Stock Exchange was $1.52 per share.
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1
Investing in our securities involves certain risks. See "Risk Factors"
beginning on page 6 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. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is July , 2004.
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 by reference in this prospectus. Reference to
selling shareholders refers to those shareholders listed under Selling
Shareholders, who may sell shares, from time to time, as described in this
prospectus.
OLYMPIC CASCADE FINANCIAL CORPORATION
OVERVIEW
We are a financial services organization operating through our
wholly-owned subsidiary, National Securities Corporation, a Washington
corporation, organized in 1947. National Securities Corporation conducts a
national securities brokerage business through its main offices in Seattle,
Washington and New York, New York, as well as 53 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.
We are a Delaware corporation formed in 1996. Our executive offices are
located at 875 North Michigan Avenue, Suite 1560, Chicago, IL 60611 and our
telephone number is (312) 751-8833.
SIGNIFICANT DEVELOPMENTS
INVESTMENT TRANSACTION
In fiscal year 2002, we completed a series of transactions in which
certain new investors obtained a significant ownership in us through a
$1,572,500 investment and by purchasing a majority of shares held by Steven A.
Rothstein, our former Chairman, Chief Executive Officer and principal
shareholder, and affiliates. In this investment transaction, the investors
included Triage Partners LLC (of which Steven B. Sands, our Chairman, is the
manager and a member), and One Clark LLC (of which Mark Goldwasser, our
President and Chief Executive Officer, is the manager). The investors purchased
an aggregate of $1,572,500 of Series A Preferred Stock at $100 per share.
Each holder of the Series A Preferred Stock is entitled at any time, and
from time to time, to convert any or all of the outstanding shares of its Series
A Preferred Stock into shares of common stock. Each share of the Series A
Preferred Stock is convertible into common stock based upon a conversion ratio
equal to the conversion price in effect at the time of conversion divided by
$1.50 per share. Accordingly, each share of Series A Preferred Stock is
convertible into 66.6666 shares of common stock. A total of 31,177 shares of
Series A Preferred Stock, convertible into 2,078,465 shares of common stock,
were issued in the investment transaction, in a transaction with Steven A.
Rothstein described in Miscellaneous Transactions below and pursuant to an
in-kind dividend paid as described in Stock Dividend below. The number of shares
is subject to adjustments as the result of the payment of stock dividends (and
other distributions) and subdivisions, combinations, and reclassifications.
In connection with this investment transaction, Triage Partners LLC also
purchased 285,000 shares of common stock from Mr. Rothstein and his affiliates
at a price of $1.50 per share. Additionally, Mr. Rothstein, James C. Holcomb,
Jr. and D.S. Patel each resigned from our Board of Directors, and Peter Rettman,
Mr. Goldwasser, Martin S. Sands, Steven B. Sands, Robert J. Rosan and Andrew
Zaro were each appointed to our Board of Directors. Our Board of Directors
currently consists of Peter Rettman, Gary A. Rosenberg, Mark Goldwasser, Norman
J. Kurlan, Steven B. Sands and Robert J. Rosan. As a result of these
transactions, as of the date of this prospectus, Triage Partners LLC and One
Clark LLC are beneficial owners of approximately 21.1% and 14.2% of our common
stock, respectively, calculated on a fully diluted basis.
3
Concurrent with the investment transaction, two unrelated individual
noteholders, 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, holding $2.0 million of our debt, converted
one-half of their debt into the same class of Series A Preferred Stock that was
sold in the investment transaction. The noteholders also had 100,000 of their
200,000 warrants to acquire shares of common stock repriced from an exercise
price of $5.00 per share to $1.75 per share. In January 2004, the two
noteholders extended the maturity dates on the notes from January 25, 2004 to
July 31, 2005. Also, effective February 1, 2004, the interest rate on each note
was increased to 12% from 9% per annum. Additionally, each of the noteholders'
warrants to purchase, in the aggregate, 100,000 shares of common stock at a
price of $5.00 per share expiring on February 1, 2004 was repriced to $1.25 per
share, and the expiration date of such warrants was extended to July 31, 2005.
The expiration date for the noteholders' warrants to purchase, in the aggregate,
an additional 100,000 shares of common stock at a price of $1.75 per share was
also extended from January 25, 2004 to July 31, 2005.
Private Offerings
In the second quarter of fiscal year 2004, we consummated a private
offering of our securities to a limited number of accredited investors pursuant
to Rule 506 of Regulation D under the Securities Act wherein we issued an
aggregate of $200,000 of three-year, 10% senior subordinated promissory notes to
five unaffiliated parties. The noteholders received three-year warrants to
purchase an aggregate of 50,000 shares of common stock at an exercise price of
$1.40 per share.
In the second quarter of fiscal year 2004, we consummated a private
offering of our securities to a limited number of accredited investors pursuant
to Rule 506 of Regulation D under the Securities Act wherein we issued an
aggregate of $850,000 of three-year, 10% senior subordinated promissory notes to
four unaffiliated parties. The noteholders received three-year warrants to
purchase an aggregate of 170,000 shares of common stock at an exercise price of
$1.50 per share. National Securities Corporation acted as the placement agent
for the private offering. The offering period for the private offering expired
on May 30, 2004.
In the first quarter of fiscal year 2003, we consummated a private
offering of our securities to a limited number of accredited investors pursuant
to Rule 506 of Regulation D under the Securities Act. Each unit in the private
offering sold for $0.65 and consisted of one share of our common stock and one
three-year warrant to purchase one share of our common stock at a per share
price of $1.25. Net proceeds of $554,500 closed in the first quarter of fiscal
year 2003, and we issued 1,016,186 shares of common stock and 1,016,186
warrants. National Securities Corporation acted as the placement agent on a best
efforts basis for the private offering. In consideration of the services
rendered by National Securities Corporation, at each closing, National
Securities Corporation was (i) paid a cash fee equal to ten percent (10%) of the
gross proceeds received by us at each closing, and (ii) issued warrants to
purchase 10% of the number of shares of common stock included in the units
exercisable at $0.65 per share and warrants to purchase 10% of the number of
shares of common stock issuable upon exercise of warrants included in the units
at an exercise price of $1.25 per share. The offering period for the private
offering expired on February 17, 2003.
4
Miscellaneous Transactions
In the fourth quarter of fiscal year 2002, we raised an aggregate of
$210,000 by the sale of Series A Preferred Stock (on the same terms and
conditions as the equity sold to investors in the investment transaction) to the
individual retirement account of Steven A. Rothstein.
In the second quarter of fiscal year 2003, we issued 76,923 shares of
common stock and a three-year warrant to purchase 76,923 shares of common stock
at $1.25 per share to D'Ancona & Pflaum LLC, as payment of approximately $51,000
of legal fees that were accrued as of September 30, 2002.
Stock Dividend
The holders of our Series A Convertible Preferred Stock are entitled to
receive dividends on a quarterly basis at a rate of 9% per annum, per share.
Such dividends are cumulative and accrue whether or not declared by our Board of
Directors, but are payable only when, as and if declared. In the second quarter
of fiscal year 2004, our Board of Directors declared an in-kind dividend in the
aggregate of 3,352 shares of Series A Preferred Stock. Such shares were issued
on March 31, 2004.
5
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 our 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 our common stock.
Operating results have resulted in reporting losses; additional financing may be
required.
Although we were profitable in both the first and second quarters of
fiscal year 2004, we reported losses of approximately $843,000, $3.4 million and
$7.9 million in fiscal years 2003, 2002 and 2001, respectively. There is no
assurance that we will be profitable in the near term. Our losses were primarily
attributable to the market slow-down and volatility. We anticipate that with the
improved market conditions and increased revenues, we may be again become
profitable for the fiscal year; however, there can be no assurance that current
levels of revenue will continue and that recent profitability will continue to
be realized.
In order for us to have the opportunity for future success and
profitability, we periodically may need to 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 offerings, described 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
stockholders.
Because our stock may be subject to "penny stock" rules, the market for our
stock may be limited.
If our common stock becomes subject to the Securities and Exchange
Commission's penny stock rules, broker-dealers may experience difficulty in
completing customer transactions and trading activity in our securities may be
adversely affected. If at any time we have net tangible assets of $5,000,000 or
less and our common stock has a market price per share of less than $5.00,
transactions in our common stock may be subject to the "penny stock" rules
promulgated under the Securities Exchange Act of 1934, as amended. Under these
rules, broker-dealers who recommend such securities to persons other than
institutional accredited investors:
o must make a special written suitability determination for the
purchaser;
o receive the purchaser's written agreement to a transaction prior to
sale;
o provide the purchaser with risk disclosure documents which identify
certain risks associated with investing in "penny stocks" and which
describe the market for these "penny stocks" as well as a
purchaser's legal remedies; and
o obtain a signed and dated acknowledgment from the purchaser
demonstrating that the purchaser has actually received the required
risk disclosure document before a transaction in a "penny stock" can
be completed.
If our common stock becomes subject to these rules, broker-dealers may
find it difficult to effectuate customer transactions and trading activity in
our securities may be adversely affected. As a result, the market price of our
securities may be depressed, and you may find it more difficult to sell our
securities.
6
Our business could be adversely affected by a breakdown in the financial
markets.
As a securities broker-dealer, the business of National Securities
Corporation is materially affected by conditions in the financial markets and
economic conditions generally, both in the United States and elsewhere around
the world. Many factors or events could lead to a breakdown in the financial
markets including war, terrorism, natural catastrophes and other types of
disasters. These types of events could cause people to begin to lose confidence
in the financial markets and their ability to function effectively. If the
financial markets are unable to effectively prepare for these types of events
and ease public concern over their ability to function, our revenues are likely
to decline and our operations will be adversely affected.
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 Securities Corporation 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 trade and/or make a market. Any losses from our trading
activities, including as a result of unauthorized trading by our employees,
could have a 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
Competition with larger financial firms may have a negative effect on 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 does 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 American Stock Exchange. The American
Stock Exchange has certain guidelines under which it considers removing
securities from listing on The American Stock Exchange. On February 5, 2003, we
7
received a letter from The American Stock Exchange 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 submitted a plan to The American Stock Exchange
indicating compliance with item (1) above within a maximum of 18 months, and we
were actively seeking another independent director to satisfy item (2) above. On
May 19, 2003 The American Stock Exchange notified us that it accepted our plan
of compliance and granted us an extension of time to August 5, 2004 to satisfy
the financial standards requirement, and an extension of time to July 28, 2003
to comply with the independent audit committee requirement. We satisfied the
requirement to have and maintain an audit committee comprised of at least three
independent directors in July 2003. We will be subject to periodic review by the
staff of The American Stock Exchange during the extension period. In the event
that we fail to comply with the listing standards, or The American Stock
Exchange determines that our compliance program is not satisfactory, our common
stock may be removed from The American Stock Exchange 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 Securities and Exchange 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. and the Municipal Securities Rulemaking Board. We are a
registered broker-dealer with the Securities and Exchange Commission and member
firms of the National Association of Securities Dealers, Inc.
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 unilateral termination of the agreements with
these clearing brokers could disrupt our business.
We changed from a self-clearing brokerage firm to an introducing brokerage
firm, using third party 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
8
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 unilaterally terminated for any reason, we would be forced to
find alternative clearing firms without adequate time to negotiate the terms of
a new clearing agreement and without adequate time to plan for such change.
There can be no assurance that if there were a unilateral termination of its
clearing agreement that we would be able to find an alternative clearing firm on
acceptable terms to them or at all.
In December 2003, National Securities Corporation and its clearing firm,
First Clearing Corporation, mutually agreed to terminate their clearing
relationship by June 30, 2004. On June 22, 2004, National Securities Corporation
entered into an agreement with Fiserv Securities, Inc. to act as clearing agent
for its brokerage business. The conversion from First Clearing Corporation to
Fiserv Securities, Inc. is expected to be completed in the first week of October
2004.
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.
We may become subject to a penalty levied by the National Association of
Securities Dealers, Inc. with respect to an industry-wide investigation of
mutual fund trading activities.
The National Association of Securities Dealers, Inc. has recently
commenced an industry-wide investigation of mutual fund trading activities.
National Securities Corporation is one of the numerous broker-dealers that have
been contacted by the National Association of Securities Dealers, Inc. with
respect to this investigation. The National Association of Securities Dealers,
Inc. has identified certain customer mutual fund transactions ordered through
National Securities Corporation during the time period from October 2000 to
February 2003 that it believes may have constituted mutual fund timing and/or
excessive trading activity. National Securities Corporation has been engaged in
ongoing discussions and negotiations with the National Association of Securities
Dealers, Inc. to informally resolve these matters. Such resolution would likely
result in a settlement, whereby National Securities Corporation, without
admitting or denying any violations, would make both restitution and pay a fine
to the National Association of Securities Dealers, Inc., that in the aggregate
would approximate $600,000. Despite our on-going discussions and negotiations
with the National Association of Securities Dealers, Inc., no assurances can be
given that informal resolution will be achieved, that a formal proceeding will
not be commenced, or that the possible resulting penalties and fines would not
be in a materially greater amount. If required to litigate this matter, National
Securities Corporation believes it has meritorious defenses, and if necessary,
intends to vigorously defend this matter, although the ultimate outcome cannot
be determined at this time.
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
9
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.
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 Securities Corporation 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 Securities Corporation 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, particularly
Mark Goldwasser, our President and Chief Executive Officer, as well as our
ability to hire additional members of management, and to retain and motivate our
other officers and key employees. In July 2003, we entered into an employment
agreement with Mr. Goldwasser to serve as our President and Chief Executive
Officer for a base annual salary of $300,000. Mr. Goldwasser has been salaried
at that rate since July 2003. A definitive agreement memorializing such terms is
currently being completed. Our future success 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; 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.
10
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, and Section
21E of the Securities Exchange Act of 1934, as amended. 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" beginning on
page 6. 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 pursuant to the Exchange Act (Commission File No.
001-12629) are incorporated by reference in this prospectus:
- Our Annual Report on Form 10-K for the fiscal year ended September
30, 2003;
- Our Quarterly Report on Form 10-Q for the quarter ended December 31,
2004;
- Definitive Proxy Statement relating to our 2004 Annual Meeting filed
with the Securities and Exchange Commission on January 27, 2004;
- Our Quarterly Report on Form 10-Q for the quarter ended March 31,
2004;
- Our Current Report on Form 8-K filed on June 24, 2004;
- Our Current Report on Form 8-K filed on February 27, 2004;
- Our Current Report on Form 8-K filed on December 22, 2003; and
- Our Current Report on Form 8-K filed on October 9, 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 by reference in this prospectus and to be a
part of this prospectus 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.
11
USE OF PROCEEDS
The proceeds from the sale of the common stock offered in 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.
However, we will receive proceeds from the exercise of warrants of approximately
$2,270,527 if all the warrants held by selling shareholders named in this
prospectus are exercised. The proceeds consist of warrants to purchase 1,215,880
shares of common stock exercisable at $1.25 per share, warrants to purchase
91,619 shares of common stock exercisable at $0.65 per share, warrants to
purchase 175,000 shares of common stock exercisable at $1.75 per share, warrants
to purchase 5,000 shares of common stock exercisable at $6.375 per share,
warrants to purchase 172,000 shares of common stock exercisable at $1.50 per
share, warrants to purchase 50,000 shares of common stock exercisable at $1.40
per share and warrants to purchase 5,000 shares of common stock at $5.00 per
share. 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, Series A 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 Private Offerings
o In the second quarter of fiscal year 2004, we consummated a
private offering of our securities to a limited number of
accredited investors pursuant to Rule 506 of Regulation D
under the Securities Act. Each unit in the private offering
consisting of a 10% $50,000 principal amount senior
subordinated promissory note and a warrant to purchase 10,000
shares of common stock at $1.50 per share.
o On February 25, 2004, we issued a $50,000 three-year,
10% senior subordinated promissory note to Jeffrey C.
Fernyhough. Mr. Fernyhough received a three-year warrant
to purchase 10,000 shares of common stock at an exercise
price of $1.50 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.
o On February 18, 2004, we issued an aggregate of $550,000
three-year, 10% senior subordinated promissory notes to
Barcombe Investments Limited and Shampan Lamport
Financial Holdings LLC. Barcombe Investments Limited
received a three-year warrant to purchase 50,000 shares
of common stock at an exercise price of $1.50 per share
and Shampan Lamport Financial Holdings LLC received a
three-year warrant to purchase 60,000 shares of common
stock at an exercise price of $1.50 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
o On February 13, 2004, we issued a $250,000 three-year,
10% senior subordinated promissory note to Branscombe
Investments Limited. Branscombe Investments Limited
received a three-year warrant to purchase 50,000 shares
12
of common stock at an exercise price of $1.50 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.
o On January 13, 2004, we consummated a private offering of our
securities to a limited number of accredited investors
pursuant to Rule 506 of Regulation D under the Securities Act.
We issued an aggregate of $200,000 of three-year, 10% senior
subordinated promissory notes to Arthur H. Dunkin, Richard S.
Portnoy, Richard N. Stewart and Micheline Stewart, Joint
Tenants, Kevin Lemack and Laurie Lemack, Joint Tenants, and
Benjamin H. Spiller and Beatrice M. Spiller, Joint Tenants.
Such noteholders received three-year warrants to purchase an
aggregate of 50,000 shares of common stock at an exercise
price of $1.40 per share. We agreed to include the shares of
common stock issuable upon exercise of the warrant in the
registration statement which this prospectus is a part.
o In the first quarter of fiscal year 2003, we consummated a
private offering of our securities to a limited number of
accredited investors pursuant to Rule 506 of Regulation D
under the Securities Act. Each unit in the private offering
sold for $0.65 and consisted of one share of our common stock
and one three-year warrant to purchase one share of our common
stock at a per share price of $1.25. Net proceeds of $554,500
closed in the first quarter of fiscal year 2003, and we issued
1,016,186 shares of common stock and 1,016,186 warrants.
o On December 23, 2002, we issued an aggregate of 130,770
units in the private offering for $85,000 to investors
consisting of Benjamin Haimowitz and Naomi Haimowitz,
Kevin Deane, Mark Ginsburg and Michael Cushing. 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. 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 Securities
Corporation, in consideration for National Securities
Corporation acting as the placement agent for the
private offering, 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 Securities Corporation to, among others, Scott
Martinson, Sara Wheldon and Eric James, registered
representatives of National Securities Corporation, as
indicated in the selling shareholder table below. 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 an aggregate of 885,416
units in the private offering for $575,520 to investors
consisting of William Worrell, Jr., Barbara Hulse,
Seymour Lippman, Chris Dewey, David Coates, Judy Uman,
Bruce W. Durkee & Kathy Durkee, I. Michael Goodman,
Ralph Gitz, Martens Maarten and Ronald Kurt Ebert. 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. 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.
13
o On November 27, 2002, we issued to National Securities
Corporation, in consideration for National Securities
Corporation acting as the placement agent for the
private offering, 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 Securities Corporation to Roger Monteforte,
Paul Sinno, Mike Bergin, Robert Setteducati, Thomas
Parigian, Mark Goldwasser, Frantz Pierre and Lenny Bila,
registered representatives of National Securities
Corporation, as indicated in the selling shareholder
table below. 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 Investment Transaction. On December 28, 2001, we completed a
series of transactions under which certain new investors
obtained a significant ownership in us through purchasing
15,725 shares of Series A Preferred Stock for consideration of
$1,572,500 ($100 per share) and by purchasing 285,000 shares
of common stock from Steven A. Rothstein, our former Chairman,
Chief Executive Officer and principal shareholder, and
affiliates. The purchasers in the investment transaction were
Triage Partners LLC (of which Steven B. Sands, our Chairman,
is the manager and a member) and One Clark LLC (of which Mark
Goldwasser, our President and Chief Executive Officer, is the
manager) who participated on a equal pro-rata basis with
respect to the preferred stock purchase. The Series A
Preferred Stock is convertible into common stock at a price of
$1.50 per share. As part of the investment transaction, Triage
Partners LLC purchased 285,000 shares of common stock from Mr.
Rothstein and his affiliates at a price of $1.50 per share.
The shares sold by Mr. Rothstein represented a majority of
common stock beneficially owned by Mr. Rothstein. We agreed to
include the shares issuable upon conversion of the Series A
Preferred Stock in the registration statement which this
prospectus is a part.
o Concurrent with the investment transaction, two unrelated
individual noteholders, 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, holding $2.0 million of our debt
converted one-half of the principal amount of such debt into
the same class of Series A Preferred Stock that was sold in
the investment transaction. In exchange for the instruments
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 Series A
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. In January 2004, the two noteholders
extended the maturity dates on the notes from January 25, 2004
to July 31, 2005. As a result, each of the noteholders'
warrants to purchase, in the aggregate, 100,000 shares of
common stock at a price of $5.00 per share expiring on
February 1, 2004 was repriced to $1.25 per share, and the
expiration date of such warrants was extended to July 31,
2005. We agreed to include the shares issuable upon conversion
of the Series A Preferred Stock and the shares issuable upon
exercise of the warrants in the registration statement which
this prospectus is a part.
14
o Miscellaneous Transactions.
o In December 2003, certain selling stockholders including
William Worrell, Jr., Barbara Hulse, Seymour Lippman, David
Coates, Bruce W. Durkee & Kathy Durkee, Ralph Gitz, Martens
Maarten, Ronald Kurt Ebert, Judy Uman and D'Ancona & Pflaum,
LLC, sold an aggregate 622,081 shares of common stock to
certain other selling stockholders including Arthur Dunkin,
Victor M. Dandridge, Selwyn Capital Management, Adelman
Limited Family Trust, Miles J. Newman, Dennis Gardner, William
C. Burnham IRA and Samuel A. Ruth, at a cash purchase price of
$1.10 per share, for an aggregate purchase price of
$684,289.10. We agreed to prepare and file a registration
statement for the resale of the shares of common stock.
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 approximately
$51,000 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. The shares were sold as part of the
December 2003 transaction.
o On August 13, 2002, we issued 600 shares of Series A 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
Series A Preferred Stock in the registration statement which
this prospectus is a part.
o On July 31, 2002, we issued 1,500 shares of Series A 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
Series A Preferred Stock in the registration statement which
this prospectus is a part.
o On November 28, 2001, we issued a warrant 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 warrant 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. 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. In February 2004, the term of the $1.0 million secured
demand note was extended to March 1, 2005. Upon completion of
the note renewal, the warrant to purchase 75,000 shares of
15
common stock at a price of $5.00 per share, that was to expire
on February 1, 2004, was repriced to $1.25 per share, and the
expiration date of such warrants was extended to July 31,
2005. The expiration date for the noteholder's warrant to
purchase an additional 75,000 shares of common stock at a
price of $1.75 per share was also extended from January 25,
2004 to July 31, 2005. 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 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 an aggregate of 5,000 shares of common
stock at a price of $6.375 per share to Gerald E. Morris,
Frank J. Cardello and the Gary A. Rosenberg Trust u/a/d
10/10/80 (an affiliate of our director, Gary A. Rosenberg). 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 Stock Dividend. The holders of our Series A Convertible Preferred
Stock, Steven A. Rothstein IRA, Triage Partners LLC, One Clark, LLC,
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, are entitled to receive
dividends on a quarterly basis at a rate of 9% per annum, per share.
Such dividends are cumulative and accrue whether or not declared by
our Board of Directors, but are payable only when, as and if
declared. In March 2004, our Board of Directors declared an in-kind
dividend in the aggregate of 3,352 shares of Series A Preferred
Stock to the holders of our Series A Convertible Preferred Stock.
Such shares were issued on March 31, 2004.
TABLE
The following table sets forth the number of shares of common stock owned
by each of the selling shareholders as of the date of this prospectus, 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 Series A 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
3,557,409 shares of common stock issued and outstanding on July 14, 2004. This
number does not include 2,078,465 shares of common stock issuable upon
conversion of 31,177 shares of Series A Preferred Stock and shares of common
stock issuable upon exercise of outstanding warrants and options held by the
selling shareholders.
16
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Shares Which Percentage
May Be Percentage of Shares
Acquired of Shares Shares Owned
Upon Owned Owned After
Shares Exercise Of Before Shares After Offering
Name Owned Warrants Offering (1) Offered Offering (2) (3)
------ ------ -------- -------- ------- ------ --------
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Steven A. Rothstein IRA 433,896 (4)(5) 5,000 (6) 11.81% 157,533 (4)(6) 281,363 4.99%
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Triage Partners LLC 872,799 (7)(8) 0 21.06% 587,799 (7) 285,000 (8) 5.06%
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
One Clark LLC 587,733 (9) 0 14.18% 587,733 (9) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Gregory P. Kusnick and
Karen Jo Gustafson, as 475,200
Joint Tenants with Right 375,200 (10) 100,000 (11) 11.78% (10)(11) 0 0
of Survivorship
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Gregory C. Lowney and
Maryanne K. Snyder, as 475,200
Joint Tenants with Right 375,200 (10) 100,000 (11) 11.78% (10)(11) 0 0
of Survivorship
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
William Worrell, Jr. 153,848 (12) 0 4.32% 153,848 (12) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Barbara Hulse 0 61,540 (13) 1.70% 61,540 (13) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Seymour Lippman 9,623 76,924 (14) 2.38% 86,547 (14) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Chris Dewey 76,924 76,924 (15) 4.23% 153,848 (15) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
David Coates 43,423 76,923 (16) 3.31% 120,346 (16) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Judy Uman 0 38,462 (17) 1.07% 38,462 (17) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Bruce W. Durkee & Kathy
Durkee 0 61,600 (18) 1.70% 61,600 (18) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
I. Michael Goodman 11,773 76,923 (19) 2.44% 88,696 (19) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Ralph Gitz 0 153,848 (20) 4.15% 153,848 (20) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Martens Maarten 43,424 76,924 (21) 3.31% 120,348 (21) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Ronald Kurt Ebert 0 31,500 (22) * 31,500 (22) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Benjamin Haimowitz and
Naomi Haimowitz 0 30,769 (23) * 30,769 (23) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Kevin Deane 0 38,462 (24) 1.07% 38,462 (24) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Mark Ginsburg 0 23,077 (25) * 23,077 (25) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Michael Cushing 0 38,462 (26) 1.07% 38,462 (26) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Roger Monteforte 0 38,858 (27) 1.08% 38,858 (27) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Paul Sinno 0 28,010 (28) * 28,010 (28) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Mike Bergin 0 8,090 (29) * 8,090 (29) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Robert Setteducati 0 8,088 (30) * 8,088 (30) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Thomas Parigian 0 8,088 (31) * 8,088 (31) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Mark Goldwasser 336,633 (32) 15,386 (33) 9.11% 15,386 (33) 336,633 (32) 5.68%
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Frantz Pierre 0 21,538 (34) * 21,538 (34) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Lenny Bila 0 25,950 (35) * 25,950 (35) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
New York/GT Asset 0 15,930 (36) * 15,930 (36) 0 0
Management Inc.
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Scott Martinson 0 7,162 (37) * 7,162 (37) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Sara Wheldon 0 6,138 (38) * 6,138 (38) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Eric James 10,000 (39) 10,000 (39) * 20,000 (39) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
D'Ancona & Pflaum, LLC 0 76,923 (40) 2.12% 76,923 (40) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
17
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Shares Which Percentage
May Be Percentage of Shares
Acquired of Shares Shares Owned
Upon Owned Owned After
Shares Exercise Of Before Shares After Offering
Name Owned Warrants Offering (1) Offered Offering (2) (3)
------ ------ -------- -------- ------- ------ --------
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Peter Rettman 0 150,000 (41) 4.05% 150,000 (41) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Gerald E. Morris 0 2,250 (42) * 2,250 (42) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Frank J. Cardello 0 500 (43) * 500 (43) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Gary A. Rosenberg Trust
u/a/d 10/10/80 0 (44) 2,250 (45) * 2,250 (45) 0 (44) 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Arthur H. Dunkin 40,000 (46) 12,500 (46) 1.47% 52,500 (46) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Richard S. Portnoy 0 12,500 (47) * 12,500 (47) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Richard N. Stewart and
Micheline Stewart, Joint
Tenants 0 12,500 (48) * 12,500 (48) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Kevin Lemack and Laurie
Lemack,
Joint Tenants 0 6,250 (49) * 6,250 (49) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Benjamin H. Spiller and
Beatrice M. Spiller,
Joint Tenants 0 6,250 (50) * 6,250 (50) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Barcombe Investments
Limited 0 50,000 (51) 1.39% 50,000 (51) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Branscombe Investments
Limited 0 50,000 (52) 1.39% 50,000 (52) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Shampan Lamport
Financial Holdings, Inc. - 60,000 (53) 1.66% 60,000 (53) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Jeffrey C. Fernyhough - 10,000 (54) * 10,000 (54) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Andrew Fishbone - 2,000 (55) * 2,000 (55) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Victor M. Dandridge 14,000 (56) - * 14,000 (56) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Selwyn Capital Management 33,500 (57) - * 33,500 (57) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Adelman Limited Family
Trust 33,500 (58) - * 33,500 (58) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Miles J. Newman 20,000 (59) - * 20,000 (59) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Dennis Gardner 33,500 (60) - * 33,500 (60) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
William C. Burnham IRA 20,000 (61) - * 20,000 (61) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
Samuel A. Ruth 32,658 (62) - * 32,658 (62) 0 0
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
TOTAL 3,557,634 1,714,499 - 4,369,137 902,996 -
-------------------------- ---------------- -------------- ------------- ---------------- ------------- ------------
----------
* Less than 1%
(1) Calculated based on Rule 13d-3(d)(i). In calculating this amount for each
selling shareholder, we treated as outstanding the number of shares of
common stock issuable upon exercise of that selling shareholder's warrants
and/or the number of shares of common stock issuable upon conversion of
that selling shareholder's Series A Preferred Stock, but we did not assume
exercise of any other selling shareholder's warrants or conversion of any
other selling shareholder's Series A Preferred Stock.
18
(2) Assumes sale of all shares offered by the selling shareholder.
(3) Calculated based on Rule 13d-3(d)(i). In calculating this amount for each
selling shareholder, we treated as outstanding 2,078,464 shares of common
stock issuable upon conversion of 31,177 shares of Series A Preferred Stock
and the shares of common stock issuable upon exercise of that selling
shareholder's warrants, but we did not assume exercise of any other selling
shareholder's warrants.
(4) Includes 152,533 shares of common stock issuable upon conversion of 2,288
shares of Series A Preferred Stock issued to Steven A. Rothstein IRA in
connection with a private placement transaction and subsequent in-kind
dividend on the Series A Preferred Stock. Mr. Rothstein is our former
Chairman, Chief Executive Officer and principal shareholder. Mr.
Rothstein's wife is the beneficiary of the Steven A. Rothstein IRA. Mr.
Rothstein has voting control over the IRA shares.
(5) Includes all shares beneficially owned by Mr. Rothstein including 274,660
shares of which Triage Partners LLC has been granted a voting proxy.
(6) Includes 5,000 shares of common stock issuable upon the exercise (at a
price per share of $5.00) of a warrant issued to Steven A. Rothstein IRA in
connection with a loan.
(7) Includes 587,799 shares of common stock issuable upon conversion of 8,817
shares of Series A Preferred Stock issued in connection with a private
placement transaction and subsequent in-kind dividend on the Series A
Preferred Stock. Steven B. Sands, our Chairman, and the manager and a
member of Triage Partners LLC, has voting control over the shares.
(8) Does not include a voting proxy over 274,660 shares beneficially owned by
Mr. Rothstein. See footnote 5.
(9) Includes 587,733 shares of common stock issuable upon conversion of 8,816
shares of Series A Preferred Stock issued in connection with a private
placement transaction and subsequent in-kind dividend on the Series A
Preferred Stock. Mark Goldwasser, our President, Chief Executive Officer
and Director, and the manager of One Clark LLC, has voting control over the
shares. See footnotes 32 and 33 for beneficial ownership and ownership
percentages of Mr. Goldwasser.
(10) Includes shares of common stock issuable upon conversion of 5,628 shares of
Series A Preferred Stock issued in connection with a private placement
transaction and subsequent in-kind dividend on the Series A Preferred
Stock.
(11) 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 $1.25) of a warrant issued in
connection with a private placement transaction.
(12) Includes 153,848 shares of common stock issued pursuant to the exercise (at
a price per share of $1.25) of a warrant issued in connection with a
private placement transaction.
(13) Includes 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.
(14) Includes 9,623 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.
(15) 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.
(16) Includes 43,423 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.
19
(17) Includes 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.
(18) Includes 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.
(19) Includes 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.
(20) Includes 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.
(21) Includes 43,424 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.
(22) Includes 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.
(23) Includes 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.
(24) Includes 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.
(25) Includes 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.
(26) Includes 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.
(27) 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.
(28) 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.
(29) Includes 4,045 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 4,045 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 4,044 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 4,044 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.
(31) Includes 4,044 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 4,044 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) Mr. Goldwasser is our President, Chief Executive Officer and Director.
Excludes shares of common stock beneficially owned by One Clark LLC, of
which Mr. Goldwasser is the Manager, including 587,733 shares of common
stock issuable upon conversion of 8,816 shares of Series A Preferred Stock
issued in connection with a private placement transaction and subsequent
in-kind dividend on the Series A Preferred Stock. See Footnote 9. Also
includes 290,333 shares of common stock issuable upon exercise of options.
(33) 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.
20
(34) 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.
(35) 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.
(36) 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.
(37) 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.
(38) 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.
(39) Includes 10,000 shares of common stock issued pursuant to 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.
(40) Includes 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 legal fees.
(41) Includes 75,000 shares of common stock issuable upon the exercise (at a
price per share of $1.25) of a warrant issued in connection with a 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.
(42) 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.
(43) 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.
(44) Excludes shares of common stock issuable upon the exercise of options
beneficially owned by Gary A. Rosenberg, a member of our Board of
Directors.
(45) 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.
Mr. Rosenberg is the trustee of the trust and has voting control over the
shares.
(46) Includes 40,000 shares of common stock and 12,500 shares of common stock
issuable upon the exercise (at a price per share of $1.40) of a warrant
issued in connection with private placement transactions.
(47) Includes 12,500 shares of common stock issuable upon the exercise (at a
price per share of $1.40) of a warrant issued in connection with a private
placement transaction.
(48) Includes 12,500 shares of common stock issuable upon the exercise (at a
price per share of $1.40) of a warrant issued in connection with a private
placement transaction.
(49) Includes 6,250 shares of common stock issuable upon the exercise (at a
price per share of $1.40) of a warrant issued in connection with private
placement transactions.
21
(50) Includes 6,250 shares of common stock issuable upon the exercise (at a
price per share of $1.40) of a warrant issued in connection with a private
placement transaction.
(51) Includes 50,000 shares of common stock issuable upon the exercise (at a
price per share of $1.50) of a warrant issued in connection with a private
placement transaction.
(52) Includes 50,000 shares of common stock issuable upon the exercise (at a
price per share of $1.50) of a warrant issued in connection with a private
placement transaction.
(53) Includes 60,000 shares of common stock issuable upon the exercise (at a
price per share of $1.50) of a warrant issued in connection with a private
placement transaction.
(54) Includes 10,000 shares of common stock issuable upon the exercise (at a
price per share of $1.50) of a warrant issued in connection with a private
placement transaction.
(55) Includes 2,000 shares of common stock issuable upon the exercise (at a
price per share of $1.50) of a warrant issued in connection with a private
placement transaction.
(56) Includes 14,000 shares of common stock issued in connection with a private
placement transaction.
(57) Includes 33,500 shares of common stock issued in connection with a private
placement transaction.
(58) Includes 33,500 shares of common stock issued in connection with a private
placement transaction.
(59) Includes 20,000 shares of common stock issued in connection with a private
placement transaction.
(60) Includes 33,500 shares of common stock issued in connection with a private
placement transaction.
(61) Includes 20,000 shares of common stock issued in connection with a private
placement transaction.
(62) Includes 32,658 shares of common stock issued in connection with a private
placement transaction.
22
PLAN OF DISTRIBUTION
We are registering for resale 4,369,137 shares of common stock with this
prospectus on behalf of the selling shareholders named in this prospectus. These
shares include (i) an aggregate of 2,078,465 shares of common stock certain
selling shareholders will receive upon conversion of 31,177 shares of Series A
Preferred Stock and (ii) an aggregate of 1,714,499 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 in this
prospectus 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 of 1933, as amended. In this case, any
commissions received by broker dealers and any profit on the resale of the
23
shares sold by them while acting as principals might be deemed to be
underwriting discounts or commissions under the Securities Act of 1933, as
amended. We have agreed to indemnify the selling shareholders named in this
prospectus against certain liabilities, including liabilities arising under the
Securities Act of 1933, as amended. 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 of 1933, as amended.
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 of
1933, as amended.
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
of 1933, as amended, 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 in this
prospectus has been passed upon for us by Littman Krooks LLP, 655 Third Avenue,
New York, New York 10017.
EXPERTS
Our consolidated financial statements as of and for the year ended
September 30, 2003, incorporated into this prospectus by reference to our 2003
Annual Report on Form 10-K, have been so incorporated in reliance on the report
of Marcum & Kliegman LLP, a registered independent public accounting firm, given
upon the authority of such firm as experts in accounting and auditing. Our
consolidated financial statements as of and for the year ended September 30,
2002, incorporated into this prospectus by reference to our 2003 Annual Report
on Form 10-K, has been incorporated in reliance on the report of Grassi & Co.,
P.C., a registered independent public accounting firm, given upon the authority
of such firm as experts in accounting and auditing. Our consolidated financial
statements as of and for the year ended September 28, 2001, incorporated into
this prospectus by reference to our 2003 Annual Report on Form 10-K, has been
incorporated in reliance on the report of Feldman Sherb & Co., P.C., an
independent public accounting firm, given upon the authority of such firm as
experts in accounting and auditing.
AVAILABLE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. Those reports, proxy
statements and other information may be obtained:
- At the Public Reference Room of the Securities and Exchange
Commission, Room 1024-Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549;
- At the public reference facilities at the Securities and Exchange
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;
24
- By writing to the Securities and Exchange Commission, Public
Reference Section, Judiciary Plaza, 450 Fifth Street, N.W.,
Washington, D.C. 20549;
- From the Internet site maintained by the Securities and Exchange
Commission at http://www.sec.gov, which contains reports, proxy and
information statements and other information regarding issuers that
file electronically with the Securities and Exchange Commission.
Some locations may charge prescribed or modest fees for copies.
We have filed with the Securities and Exchange 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 Securities and
Exchange 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 Securities and Exchange Commission. Copies of
such registration statement, including the exhibits, may be obtained from the
Public Reference Section of the Securities and Exchange Commission at the
aforementioned address upon payment of the fee prescribed by the Securities and
Exchange Commission.
25
TABLE OF CONTENTS
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Section Page
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Prospectus Summary.................................................... 3
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Risk Factors.......................................................... 6
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Special Note Regarding Forward Looking Information.................... 11
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Incorporation of Certain Information By Reference..................... 11
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Use of Proceeds....................................................... 12
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Selling Shareholders.................................................. 12
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Plan of Distribution.................................................. 23
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Legal Matters......................................................... 24
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Experts............................................................... 24
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Available Information................................................. 24
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4,369,137 SHARES
COMMON STOCK
OLYMPIC CASCADE FINANCIAL CORPORATION
-------------
PROSPECTUS
-------------
July , 2004
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.............................. $847
---------------------------------------------------------------
Accounting Fees and Expenses...................... $5,000
---------------------------------------------------------------
Legal Fees and Expenses........................... $25,000
---------------------------------------------------------------
Miscellaneous..................................... $5,000
---------------------------------------------------------------
Total............................................. $35,847
---------------------------------------------------------------
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 Amended 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.
II-1
Our Amended and Restated By-laws provide that:
- 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 Amended 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 Amended 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 Marcum & Kliegman LLP
23.2 Consent of Grassi & Co., CPAs, P.C.
23.3 Consent of Feldman Sherb & Co., P.C.
23.4 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.
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 of 1933, as amended; 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
II-2
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
prospectus filed with the Securities and Exchange 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 Securities Exchange Act of 1934, as amended,
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 Securities Exchange Act of 1934, as amended (and, where
applicable, each filing of an employee benefit plan's annual report pursuant to
Section 15(d) of the Securities Exchange Act of 1934, as amended) 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 of 1933, as amended, 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
of 1933, as amended, 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 of 1933, as amended, and will be governed by the final adjudication of such
issue.
II-3
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 July 14, 2004.
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 14h day of
July, 2004.
Signature Date
/s/ Mark Goldwasser July 14, 2004
--------------------------------
Mark Goldwasser
President, Chief Executive Officer and Director
/s/ Robert H. Daskal July 14, 2004
--------------------------------
Robert H. Daskal
Acting Chief Financial Officer
/s/ Steven B. Sands July 14, 2004
--------------------------------
Steven B. Sands
Chairman of the Board
II-4
/s/ Norman J. Kurlan July 14, 2004
--------------------------------
Norman J. Kurlan
Director
/s/ Robert J. Rosan July 14, 2004
--------------------------------
Robert J. Rosan
Director
/s/ Gary A. Rosenberg July 14, 2004
--------------------------------
Gary A. Rosenberg
Director
/s/ Peter Rettman July 14, 2004
--------------------------------
Peter Rettman
Director
II-5