AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 25, 2003
REGISTRATION NO. 333-103583
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO.1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
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OLYMPIC CASCADE FINANCIAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
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DELAWARE 875 NORTH MICHIGAN AVENUE, SUITE 36-4128138
1560, CHICAGO, IL 60611
(State or other jurisdiction of (Address, including zip code, and (IRS employer
incorporation or organization) telephone number, including area identification number)
code, or registrant's principal
executive offices)
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MARK GOLDWASSER
President and Chief Executive Officer
120 Broadway, 27th Floor
New York, New York 10271
(212) 417-8000
(Name, Address, Including Zip Code, And Telephone Number,
Including Area Code Of Agent For Service)
Please Send Copies Of All Communications To:
Mitchell C. Littman, Esq.
Steven D. Uslaner, Esq.
Littman Krooks LLP
655 Third Avenue
New York, New York 10017
(212) 490-2020
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this registration statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration number of the earlier effective registration
statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, please check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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Calculation Of Registration Fee
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Tile of Each Class of Amount to be Proposed Maximum Proposed Maximum Amount of
Securities to be Registered (1) Offering Price Per Aggregate Offering Registration
Registered Share (2) Price (1) Fee (2)(3)
--------------------------- ------------------------ --------------------- --------------------- ---------------------
Common Stock ($.02 par
value per share) 4,604,454 $0.33 $1,519,470 $122.93
--------------------------- ------------------------ --------------------- --------------------- ---------------------
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(1) Includes: (i) 1,093,109 shares of Common Stock held by the selling
shareholders named within; (ii) 1,854,998 shares of Common Stock issuable
upon conversion of 27,825 shares of our Series A Preferred Stock held by
the selling shareholders named within; and (iii) 1,656,347 shares of
Common Stock issuable upon exercise of warrants held by certain selling
shareholders. In addition to the shares set forth in the table, the amount
to be registered includes an indeterminate number of shares of Common
Stock issuable upon conversion of the 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 registration fee in
accordance with Rule 457(c) under the Securities Act of 1933, as amended,
based upon the average high and low trading price of the Common Stock
reported on The American Stock Exchange on February 28, 2003.
(3) This fee has been paid previously.
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 , 2003
PROSPECTUS
OLYMPIC CASCADE FINANCIAL CORPORATION
4,604,454 SHARES OF COMMON STOCK
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This prospectus relates the resale, from time to time, of up to
4,604,454 shares of Common Stock which are held by certain of our shareholders
named within. These shares include 1,093,109 shares of Common Stock held by
certain selling shareholders, 1,656,347 shares of Common Stock issuable upon
exercise of warrants held by certain selling shareholders and 1,854,998 shares
of Common Stock issuable upon conversion of 27,825 shares of Series A Preferred
Stock held by certain selling shareholders.
As of July 23, 2003, there were 3,367,558 shares of Common Stock issued
and outstanding. The 4,604,454 shares of Common Stock being registered in this
prospectus represent 66.9% of the currently outstanding shares of Common Stock,
calculated on a fully diluted basis.
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 $2,797,589 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), 34%; Triage
Partners LLC (of which Steven B. Sands and Martin S. Sands, our Co-Chairmen, are
the Co-Managers and Members), 65%; One Clark LLC (of which Mark Goldwasser, our
President and Chief Executive Officer is the Manager), 100%; Mark Goldwasser on
an individual basis, 6%; 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 and The
Chicago 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 5. On July 23, 2003, the last
reported sale price for our Common Stock on The American Stock Exchange was
$0.95 per share.
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INVESTING IN OUR SECURITIES INVOLVES CERTAIN RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 5 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 __, 2003.
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 conducts a national securities
brokerage business through its main offices in Seattle, Washington and New York
City, as well as 56 other branch offices located throughout the country.
National's business includes securities brokerage for individual and
institutional clients, market-making trading activities, asset management and
corporate finance services.
Our business plan includes the growth of our retail and institutional
brokerage business. In response to the slowdown in the financial markets, we
have scaled back certain business activities, including proprietary trading,
market-making trading, and online investing services. We believe that
consolidation within the industry is inevitable. Concerns attributable to the
weakened market and increased competition help explain the increasing number of
acquisition opportunities continuously introduced to us. We are focused on
maximizing the profitability of our existing operations, while we continue to
seek additional selective strategic acquisitions.
We are a Delaware corporation and were formed in 1996. Our executive
offices are located at 875 North Michigan Avenue, Suite 1560, Chicago, IL 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 and family, our former Chairman, Chief Executive Officer and principal
shareholder. In this Investment Transaction, the investors included Triage
Partners LLC (of which Steven B. Sands and Martin S. Sands, our Co-Chairmen, are
the Co-Managers and Members), 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 27,825 shares of
Preferred Stock, convertible into 1,854,998 shares of Common Stock, were issued
in the Investment Transaction and in a transaction with Steven A. Rothstein
described in Miscellaneous Transactions below. The number of shares is subject
3
to adjustments as the result of the payment of stock dividends (and other
distributions) and subdivisions, combinations, and reclassifications.
In connection with the 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 Mr. Rettman, Gary A. Rosenberg, Mr. Goldwasser,
Martin S. Sands, Steven B. Sands and Mr. 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 20.8% and 13.5% of our Common Stock,
respectively, calculated on a fully diluted basis.
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.
PRIVATE OFFERING
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 acted as the placement agent on a best efforts basis for the
Private Offering. In consideration of the services rendered by National, at each
closing, National 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 such number of Units equal to ten percent (10%) of the Units sold in
the Private Offering, at the same valuation received by investors in the Private
Offering. The offering period for the Private Offering expired on February 17,
2003.
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.
4
RISK FACTORS
INVESTING IN OUR SHARES INVOLVES A SIGNIFICANT DEGREE OF RISK.
PROSPECTIVE INVESTORS SHOULD CONSIDER CAREFULLY THE FOLLOWING RISK FACTORS AND
ALL THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS OR INCORPORATED BY
REFERENCE BEFORE INVESTING IN COMMON STOCK. EACH OF THESE RISK FACTORS COULD
ADVERSELY AFFECT OUR BUSINESS, OPERATING RESULTS AND FINANCIAL CONDITION, AS
WELL AS ADVERSELY AFFECT THE VALUE OF AN INVESTMENT IN COMMON STOCK. THESE
FACTORS ARE NOT INTENDED TO REPRESENT A COMPLETE LIST OF THE GENERAL OR SPECIFIC
FACTORS THAT MAY AFFECT US. OTHER FACTORS, INCLUDING GENERAL ECONOMIC FACTORS
AND BUSINESS STRATEGIES, MAY HAVE A SIGNIFICANT EFFECT ON OUR BUSINESS,
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
OPERATING RESULTS HAVE RESULTED IN REPORTING LOSSES; ADDITIONAL FINANCING MAY BE
REQUIRED.
We have reported losses of approximately $159,000 in the first quarter
of fiscal year 2003, losses of approximately $3.4 million in fiscal year 2002
and losses of approximately $7.9 million in fiscal year 2001. There is no
assurance that we will be profitable in the near term. Our losses are primarily
attributable to the recent market slow-down and volatility. We anticipate that
with increased revenues we will return to profitability; however, there can be
no assurance that revenues will increase and profitability will return.
In order for us to have the opportunity for future success and
profitability, we must successfully obtain additional financing, either through
borrowings, public offerings, private offerings, or some type of business
combination (e.g., merger, buyout, etc.). We have actively pursued a variety of
funding sources, and have consummated certain transactions, including the
Investment Transaction and Private Offering, 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
shareholders.
BECAUSE OUR STOCK MAY BE SUBJECT TO "LOW PRICE STOCK" RULES, THE MARKET FOR OUR
STOCK MAY BE LIMITED.
The Securities and Exchange Commission has adopted regulations which
generally define a "penny stock" to be any equity security that has a market
price less than $5.00. Our stock is presently covered by those rules, and may
continue to be so. The penny stock rules require broker-dealers to make a
special suitability determination before selling our stock to investors who are
not either regular customers or accredited investors. As a result, the potential
market for our stock may be limited.
OUR BUSINESS IS AFFECTED BY MARKET FLUCTUATIONS, LIQUIDITY AND VOLATILITY.
Our revenue and profitability may be adversely affected by market
fluctuations, market liquidity and declines in the volume of securities
transactions. National acts as a market maker in publicly traded common stocks.
In market making transactions, we undertake the risk of price changes or being
unable to resell the common stock we hold or being unable to purchase the common
stock we have sold. These risks are heightened by the illiquidity of many of the
common stocks we trades and/or make a market. Any losses from our trading
activities could have a material adverse effect on our business, financial
condition, results of operations or cash flows. In addition, we maintain trading
positions that can be adversely affected by the level of volatility in the
financial markets.
5
OUR BUSINESS COULD BE ADVERSELY AFFECTED BY A BREAKDOWN IN THE FINANCIAL
MARKETS.
As a securities broker-dealer, National's business 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.
OUR REVENUES MAY CONTINUE TO DECLINE IF ADVERSE MARKET OR ECONOMIC CONDITIONS
PERSIST.
Current unfavorable financial and economic conditions have reduced the
number and size of the transactions in which we provide underwriting and
placement agency services. Revenues from these activities are directly related
to the number and size of the transactions in which we participate and therefore
have been adversely affected by the sustained market downturn. Additionally, the
downturn in market conditions led to a decline in the volume of transactions
that we executed for our customers and, therefore, to a decline in the revenues
we received from commissions and spreads. If these adverse financial and
economic conditions persist, we will incur a further decline in transactions and
revenues that we receive from commissions and spreads.
COMPETITION WITH LARGER FINANCIAL FIRMS MAY HAVE A NEGATIVE EFFECT OUR BUSINESS.
We compete directly with national and regional full-service
broker-dealers and a broad range of other financial service firms, including
banks and insurance companies. Competition has increased as smaller securities
firms have either ceased doing business or have been acquired by or merged into
other firms. Mergers and acquisitions have increased competition from these
firms, many of which have significantly greater financial, technical, marketing
and other resources than we have. Many of these firms offer their customers more
products and research than currently offered by us. These competitors may be
able to respond more quickly to new or changing opportunities, technologies and
client requirements. We also face competition from companies offering discount
and/or electronic brokerage services, including brokerage services provided over
the Internet, which we are currently not offering and doe not intend to offer in
the foreseeable future. These competitors may have lower costs or provide more
services, and may offer their customers more favorable commissions, fees or
other terms than those offered by us. To the extent that issuers and purchasers
of securities transact business without our assistance, our operating results
could be adversely affected.
THE FAILURE TO MEET THE LISTING CRITERIA OF THE AMERICAN STOCK EXCHANGE MAY
RESULT IN THE DELISTING OF OUR COMMON STOCK.
Our Common Stock is listed on the AMEX. The AMEX has certain guidelines
under which it considers removing securities from listing on the AMEX. On
February 5, 2003, we received a letter from AMEX indicating that we were not in
compliance with certain listing standards relating to (1) shareholders' equity
of less than $2.0 million and losses from continuing operations and/or net
losses in two out of our three most recent fiscal years, and (2) the requirement
to have and maintain an audit committee comprised of at least three independent
directors. We submitted a plan to AMEX indicating compliance with item (1) above
within a maximum of 18 months, and we are actively seeking another independent
director to satisfy item (2) above. On May 19, 2003 the AMEX 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, and an extension of time to July 28,
2003 to comply with the independent audit committee requirement. In the event
that we fail to comply with the listing standards or AMEX determines that our
6
compliance program is not satisfactory, our Common Stock may be removed from
AMEX and could trade on the OTC Bulletin Board or in the "pink sheets"
maintained by the National Quotation Bureau, Inc. Such alternatives are
generally considered to be less efficient markets, and our stock price, as well
as the liquidity of our Common Stock, may be adversely impacted as a result.
WE ARE CURRENTLY SUBJECT TO EXTENSIVE SECURITIES REGULATION AND THE FAILURE TO
COMPLY WITH THESE REGULATIONS COULD SUBJECT US TO PENALTIES OR SANCTIONS.
The securities industry and our business are subject to extensive
regulation by the Securities and Exchange Commission, state securities
regulators and other governmental regulatory authorities. We are also regulated
by industry self-regulatory organizations, including the NASD and the Municipal
Securities Rulemaking Board. We are a registered broker-dealer with the
Securities and Exchange Commission and member firms of the NASD.
Broker-dealers are subject to regulations which cover all aspects of
the securities business, including sales methods and supervision, trading
practices among broker-dealers, use and safekeeping of customers' funds and
securities, capital structure of securities firms, record keeping, and the
conduct of directors, officers and employees. The regulatory environment is also
subject to change.
Compliance with many of the regulations applicable to us involves a
number of risks, particularly in areas where applicable regulations may be
subject to varying interpretation. These regulations often serve to limit our
activities, including through net capital, customer protection and market
conduct requirements. If we are found to have violated an applicable regulation,
administrative or judicial proceedings may be initiated against us that may
result in a censure, fine, civil penalties, issuance of cease-and-desist orders,
the deregistration or suspension of our broker-dealer activities, the suspension
or disqualification of the our officers or employees, or other adverse
consequences. The imposition of any of these or other penalties could have a
material adverse effect on our operating results and financial condition.
WE RELY ON CLEARING BROKERS AND TERMINATION OF THE AGREEMENTS WITH THESE
CLEARING BROKERS COULD DISRUPT OUR BUSINESS.
We recently changed from a self-clearing system to using clearing
brokers to process our securities transactions and maintain customer accounts on
a fee basis for us. The clearing brokers also provide billing services, extend
credit and provide for control and receipt, custody and delivery of securities.
Our broker-dealers depend on the operational capacity and ability of the
clearing brokers for the orderly processing of transactions. In addition, by
engaging the processing services of a clearing firm, we are exempt from some
capital reserve requirements and other regulatory requirements imposed by
federal and state securities laws. If the clearing agreements are terminated for
any reason, we would be forced to find alternative clearing firms. We cannot
assure you that we would be able to find an alternative clearing firm on
acceptable terms to them or at all.
We permit our clients to purchase securities on a margin basis or sell
securities short, which means that the clearing firm extends credit to the
client secured by cash and securities in the client's account. During periods of
volatile markets, the value of the collateral held by the clearing brokers could
fall below the amount borrowed by the client. If margin requirements are not
sufficient to cover losses, the clearing brokers sell or buy securities at
prevailing market prices, and may incur losses to satisfy client obligations. We
have agreed to indemnify the clearing brokers for losses they incur while
extending credit to our clients.
7
CREDIT RISK EXPOSES US TO LOSSES CAUSED BY FINANCIAL OR OTHER PROBLEMS
EXPERIENCED BY THIRD PARTIES.
We are exposed to the risk that third parties that owe us money,
securities or other assets will not perform their obligations. These parties
include: trading counterparts, customers, clearing agents, exchanges, clearing
houses, and other financial intermediaries as well as issuers whose securities
we hold. These parties may default on their obligations owed to us due to
bankruptcy, lack of liquidity, operational failure or other reasons. This risk
may arise, for example, from holding securities of third parties, executing
securities trades that fail to settle at the required time due to non-delivery
by the counterparty or systems failure by clearing agents, exchanges, clearing
houses or other financial intermediaries, and extending credit to clients
through bridge or margin loans or other arrangements. Significant failures by
third parties to perform their obligations owed to us could adversely affect our
revenues and perhaps our ability to borrow in the credit markets.
ADVERSE RESULTS OF CURRENT LITIGATION AND POTENTIAL SECURITIES LAW LIABILITY
WOULD RESULT IN FINANCIAL LOSSES AND DIVERT MANAGEMENT'S ATTENTION TO BUSINESS.
Many aspects of our business involve substantial risks of liability.
There has been an increase in litigation and arbitration within the securities
industry in recent years, including class action suits seeking substantial
damages. We are subject to potential claims by dissatisfied customers, including
claims alleging they were damaged by improper sales practices such as
unauthorized trading, sale of unsuitable securities, use of false or misleading
statements in the sale of securities, mismanagement and breach of fiduciary
duty. National may be liable for the unauthorized acts of its retail brokers if
it fails to adequately supervise their conduct. As an underwriter, we may be
subject to substantial potential liability under federal and state law and court
decisions, including liability for material misstatements and omissions in
securities offerings. We may be required to contribute to a settlement, defense
costs or a final judgment in legal proceedings or arbitrations involving a past
underwriting and in actions that may arise in the future. National carries
Errors and Omissions insurance to protect against arbitrations; however, the
policy is limited in items and amounts covered and there can be no assurance
that it will cover a complaint. The adverse resolution of any legal proceedings
involving us could have a material adverse effect on our business, financial
condition, results of operations or cash flows.
WE DEPEND ON KEY PERSONNEL.
We depend on the continued services of our management team,
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 November 29, 2001, Mr.
Goldwasser voluntarily terminated his employment agreement with us in exchange
for a profit participation in National's branch office in New York City. 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; the continued listing of our Common Stock on AMEX;
conditions in the economy in general; and changes in applicable laws or
regulations, or their judicial or administrative interpretations affecting us or
our subsidiary or the securities industry. In addition, volatility of the market
price of our Common Stock is further affected by our thinly traded nature.
8
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 5. 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, 2002;
- Our Quarterly Report on Form 10-Q for the quarter ended
December 31, 2002;
- Definitive Proxy Statement relating to our 2003 Annual Meeting
filed with the Securities and Exchange Commission on January
28, 2003;
- Our Quarterly Report on Form 10-Q for the quarter ended March
31, 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.
9
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 $2,797,589 if all the warrants held by certain selling
shareholders named in this prospectus are exercised. The proceeds consist of
warrants to purchase 1,194,728 shares of Common Stock exercisable at $1.25 per
share, warrants to purchase 101,619 shares of Common Stock exercisable at $0.65
per share, warrants to purchase 180,000 shares of Common Stock exercisable at
$5.00 per share, warrants to purchase 175,000 shares of Common Stock exercisable
at $1.75 per share and warrants to purchase 5,000 shares of Common Stock
exercisable at $6.375 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 OFFERING. 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, in
consideration for National 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 to Greg
Traina, Scott Martinson, Sara Wheldon and Eric James,
registered representatives of National, 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
10
$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 November 27, 2002, we issued to National, in
consideration for National 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 to
Monteforte, Paul Sinno, Mike Bergin, Robert Setteducati,
Thomas Parigian, Mark Goldwasser, Frantz Pierre and Lenny
Billa, registered representative of National, 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 ($10.00 per share) and by purchasing 285,000 shares
of Common Stock from Steven A. Rothstein and family, our
former Chairman, Chief Executive Officer and principal
shareholder. The purchasers in the Investment Transaction were
Triage Partners LLC (of which Steven B. Sands and Martin S.
Sands, our Co-Chairmen, are the Co-Managers and Members) 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. Pursuant to the terms of the Securities Purchase
Agreement, each of Triage Partners LLC and One Clark LLC
subsequently purchased an additional 2,500 shares of Series A
Preferred Stock for consideration of $250,000 ($10.00 per
share). 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. 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.
11
o MISCELLANEOUS TRANSACTIONS.
o On January 21, 2003, we issued 76,923 shares of the Common
Stock and a three-year warrant to purchase 76,923 shares of
Common Stock at a per share price of $1.25 to D'Ancona &
Pflaum LLC, in consideration for, and payment of, $50,000 of
legal fees. We agreed to include the shares of Common Stock
and the shares of Common Stock issuable upon exercise of the
warrants in the registration statement which this prospectus
is a part.
o On 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. Additionally,
on February 1, 2001, we issued a warrant to purchase 75,000
shares of Common Stock at a per share price of $5.00 to
Peter Rettman in connection with a demand note for
$1,000,000 issued by us in favor of Mr. Rettman. Concurrent
with the Investment Transaction, we re-priced the warrant to
purchase 75,000 shares of Common Stock from a price of $5.00
per share to a price of $1.75 per share. We agreed to
include the shares of Common Stock issuable upon exercise of
the warrants in the registration statement which this
prospectus is a part.
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, 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.
12
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
3,367,558 shares of Common Stock issues and outstanding on July 23, 2003. This
number does not include 1,854,998 shares of Common Stock issuable upon
conversion of 27,825 shares of Series A Preferred Stock and shares of Common
Stock issuable upon exercise of outstanding warrants and options held by the
selling shareholders.
13
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
Shares Which Percentage Percentage
May Be Acquired of Shares Shares of Shares
Upon Exercise Owned Before Owned Owned
Shares Of Warrants Offering (1) Shares After After
Name Owned -------- -------- Offered Offering (2) Offering (3)
------ ------ ------- ------ --------
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
Steven A. Rothstein IRA 426,363 (4)(5) 5,000 (6) 12.1% 145,000 (4)(6) 281,363 5.4%
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
Triage Partners LLC 809,199 (7)(8) - 20.8% 524,199 (7) 285,000 (8) 5.5%
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
One Clark LLC 524,133 (9) - 13.5% 524,133 (9) 0 *
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
Gregory P. Kusnick and Karen Jo 333,333 (10) 100,000 (11) 11.4% 433,333 (10)(11) 0 *
Gustafson, as Joint Tenants with
Rightof Survivorship
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
Gregory C. Lowney and Maryanne K. 333,333 (10) 100,000 (11) 11.4% 433,333 (10)(11) 0 *
Snyder, as Joint Tenants with Right
of Survivorship
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
William Worrell, Jr. 153,848 153,848 4.4% 307,696 (12) 0 *
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
Barbara Hulse 61,540 61,540 1.8% 123,080 (13) 0 *
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
Seymour Lippman 76,924 76,924 2.2% 153,848 (14) 0 *
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
Chris Dewey 76,924 76,924 2.2% 153,848 (15) 0 *
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
David Coates 76,923 76,923 2.2% 153,846 (16) 0 *
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
Judy Uman 38,462 38,462 1.1% 76,924 (17) 0 *
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
Bruce W. Durkee & Kathy Durkee 61,600 61,600 1.8% 123,200 (18) 0 *
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
I. Michael Goodman 76,923 76,923 2.2% 153,846 (19) 0 *
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
Ralph Gitz 153,848 153,848 4.4% 307,696 (20) 0 *
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
Martens Maarten 76,924 76,924 2.2% 153,848 (21) 0 *
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
Ronald Kurt Ebert 31,500 31,500 * 63,000 (22) 0 *
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
Benjamin Haimowitz and Naomi 30,769 30,769 * 61,538 (23) 0 *
Haimowitz
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
Kevin Deane 38,462 38,462 1.1% 76,924 (24) 0 *
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
Mark Ginsburg 23,077 23,077 * 46,154 (25) 0 *
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
Michael Cushing 38,462 38,462 1.1% 76,924 (26) 0 *
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
Roger Monteforte - 38,858 (27) 1.1% 38,858 (27) 0 *
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
Paul Sinno - 28,010 (28) * 28,010 (28) 0 *
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
Mike Bergin - 8,090 (29) * 8,090 (29) 0 *
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
Robert Setteducati - 8,088 (30) * 8,088 (30) 0 *
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
Thomas Parigian - 8,088 (31) * 8,088 (31) 0 *
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
Mark Goldwasser 792,819 (32) 15,386 (33) 19.3% 15,386 (33) 253,300 4.7%
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
Frantz Pierre - 21,538 (34) * 21,538 (34) 0 *
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
Lenny Billa - 25,950 (35) * 25,950 (35) 0 *
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
Greg Traina - 15,930 (36) * 15,930 (36) 0 *
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
Scott Martinson - 7,162 (37) * 7,162 (37) 0 *
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
Sara Wheldon - 6,138 (38) * 6,138 (38) 0 *
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
Eric James - 20,000 (39) * 20,000 (39) 0 *
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
D'Ancona & Pflaum, LLC 76,923 76,923 2.2% 153,846 (40) 0 *
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
Peter Rettman - 150,000 (41) 4.3% 150,000 (41) 0 *
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
Gerald E. Morris - 2,250 (42) * 2,250 (42) 0 *
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
Frank J. Cardello - 500 (43) * 500 (43) 0 *
-------------------------------------- ----------------- ---------------- ------------ ----------------- ------------- ------------
Gary A. Rosenberg Trust u/a/d 27,250 (44) 2,250 (45) * 2,250 (45) 25,000 (44) *
10/10/80
-------------------------------------- ------------------- -------------- ------------ ----------------- ------------- ------------
TOTAL 2,948,107 1,656,347 - 4,604,454 - -
-------------------------------------- ------------------- -------------- ------------ ----------------- ------------- ------------
14
----------
* 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.
(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 1,854,998 shares of Common
Stock issuable upon conversion of 27,825 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 140,000 shares of Common Stock issuable upon conversion of 2,100
shares of Series A Preferred Stock issued to Steven A. Rothstein IRA in
connection with a private placement transaction. 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 524,199 shares of Common Stock issuable upon conversion of 7,863
shares of Series A Preferred Stock issued in connection with a private
placement transaction. Steven B. Sands and Martin S. Sands, our
Co-Chairmen, and the Co-Managers and Members of Triage Partners LLC,
share 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 524,133 shares of Common Stock issuable upon conversion of 7,862
shares of Series A Preferred Stock issued in connection with a private
placement transaction. Mark Goldwasser, our President, Chief Executive
Officer and Director, and the Manager of One Clark LLC, has voting
control over the shares. See footnote 27 for beneficial ownership and
ownership percentages of Mr. Goldwasser.
(10) Includes shares of Common Stock issuable upon conversion of 5,000 shares
of Series A Preferred Stock issued in connection with a private placement
transaction.
(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 $5.00) of a warrant
issued in connection with a private placement transaction.
(12) Includes 153,848 shares of Common Stock and 153,848 shares of Common
Stock issuable upon the exercise (at a price per share of $1.25) of a
warrant issued in connection with a private placement transaction.
(13) Includes 61,540 shares of Common Stock and 61,540 shares of Common Stock
issuable upon the exercise (at a price per share of $1.25) of a warrant
issued in connection with a private placement transaction.
(14) 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.
15
(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 76,923 shares of Common Stock and 76,923 shares of Common Stock
issuable upon the exercise (at a price per share of $1.25) of a warrant
issued in connection with a private placement transaction.
(17) Includes 38,462 shares of Common Stock and 38,462 shares of Common Stock
issuable upon the exercise (at a price per share of $1.25) of a warrant
issued in connection with a private placement transaction.
(18) Includes 61,600 shares of Common Stock and 61,600 shares of Common Stock
issuable upon the exercise (at a price per share of $1.25) of a warrant
issued in connection with a private placement transaction.
(19) Includes 76,923 shares of Common Stock and 76,923 shares of Common Stock
issuable upon the exercise (at a price per share of $1.25) of a warrant
issued in connection with a private placement transaction.
(20) Includes 153,848 shares of Common Stock and 153,848 shares of Common
Stock issuable upon the exercise (at a price per share of $1.25) of a
warrant issued in connection with a private placement transaction.
(21) 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.
(22) Includes 31,500 shares of Common Stock and 31,500 shares of Common Stock
issuable upon the exercise (at a price per share of $1.25) of a warrant
issued in connection with a private placement transaction.
(23) Includes 30,769 shares of Common Stock and 30,769 shares of Common Stock
issuable upon the exercise (at a price per share of $1.25) of a warrant
issued in connection with a private placement transaction.
(24) Includes 38,462 shares of Common Stock and 38,462 shares of Common Stock
issuable upon the exercise (at a price per share of $1.25) of a warrant
issued in connection with a private placement transaction.
(25) Includes 23,077 shares of Common Stock and 23,077 shares of Common Stock
issuable upon the exercise (at a price per share of $1.25) of a warrant
issued in connection with a private placement transaction.
(26) Includes 38,462 shares of Common Stock and 38,462 shares of Common Stock
issuable upon the exercise (at a price per share of $1.25) of a warrant
issued in connection with a private placement transaction.
(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
16
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.
Includes shares beneficially owned by One Clark LLC, of which Mr.
Goldwasser is the Manager, including 524,133 shares of Common Stock
issuable upon conversion of 7,862 shares of Series A Preferred Stock
issued in connection with a private placement transaction. See footnote
6.
(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.
(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 issuable upon the exercise (at a
price per share of $0.65) of a warrant issued in connection with a
private placement transaction and 10,000 shares of Common Stock issuable
upon the exercise (at a price per share of $1.25) of a warrant issued in
connection with a private placement transaction.
(40) Includes 76,923 shares of the Common Stock and 76,923 shares of Common
Stock issuable upon the exercise (at a price per share of $1.25) of a
warrant issued in consideration for, and payment of, $50,000 of legal
fees.
(41) Includes 75,000 shares of Common Stock issuable upon the exercise (at a
price per share of $5.00) of a warrant issued in connection with a loan
and 75,000 shares of Common Stock issuable upon the exercise (at a price
per share of $1.75) of a warrant issued in connection with a loan. Mr.
Rettman is a member of our board of directors.
(42) Includes 2,250shares of Common Stock issuable upon the exercise (at a
price per share of $6.375) of a warrant issued in connection with the
acquisition of our former subsidiary, Canterbury Securities Corporation.
(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.
17
(44) Includes shares 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.
18
PLAN OF DISTRIBUTION
We are registering for resale 4,604,454 shares of Common Stock with
this prospectus on behalf of the selling shareholders named in this prospectus.
These shares include (i) an aggregate of 1,854,998 shares of Common Stock
certain selling shareholders will receive conversion of 27,825 shares of Series
A Preferred Stock and (ii) an aggregate of 1,656,347 shares of Common Stock
issuable upon exercise of warrants. The selling shareholders will act
independently of us in making decisions with respect to the timing, manner and
size of each sale. We have agreed to bear certain expenses in connection with
the registration of the shares of Common Stock offered and being sold by the
selling shareholders. The selling shareholders will bear all brokerage
commissions and similar selling expenses, if any, attributable to sales of the
shares. Sales of shares may be affected by the selling stockholders, from time
to time, in one or more types of transactions (which may include block
transactions) on The American Stock Exchange, in the over-the-counter market, in
negotiated transactions, or a combination of such methods of sale, at market
prices prevailing at the time of sale, or at negotiated prices. These
transactions may or may not involve brokers or dealers.
The selling stockholders may affect sales of shares:
- In ordinary brokerage transactions in which the broker
solicits purchasers or executes unsolicited orders, or
transactions in which the broker may acquire the share as
principal and resell the shares into the public market in any
manner permitted by the selling shareholders under this
prospectus;
- In connection with the pledge of shares registered 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. In this case, any commissions
received by broker dealers and any profit on the resale of the shares sold by
19
them while acting as principals might be deemed to be underwriting discounts or
commissions under the Securities Act. We have agreed to indemnify the selling
shareholders named in this prospectus against certain liabilities, including
liabilities arising under the Securities Act. The selling shareholders may agree
to indemnify any agent, dealer or broker-dealer that participates in
transactions involving sales of the shares against certain liabilities,
including liabilities arising under the Securities Act.
Because the selling shareholders may be deemed to be "underwriters"
within the meaning of Section 2(a)(11) of the Securities Act, the selling
shareholders will be subject to the prospectus delivery requirements of the
Securities Act.
The selling shareholders also may resell all or a portion of their
shares in open market transactions in reliance upon Rule 144 under the
Securities Act, if they meet the criteria and conform to the requirements of
Rule 144.
LEGAL MATTERS
The validity of the issuance of the Common Stock offered 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 appearing in our Annual Report on
Form 10-K for the year ended September 28, 2002 have been audited by Grassi &
Co., CPAs, P.C., independent public accountants, as set forth in their report
included in this prospectus and incorporated in this prospectus by reference.
The consolidated financial statements are incorporated in this prospectus in
reliance upon such report given upon the authority of that firm as experts in
accounting and auditing.
AVAILABLE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the 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;
- 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.
20
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.
21
TABLE OF CONTENTS
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Section Page
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Prospectus Summary...................................................... 3
------------------------------------------------------------------------ ------
Risk Factors............................................................ 5
------------------------------------------------------------------------ ------
Special Information Regarding Forward Looking Information............... 9
------------------------------------------------------------------------ ------
Incorporation of Certain Documents By Reference......................... 9
------------------------------------------------------------------------ ------
Use of Proceeds......................................................... 10
------------------------------------------------------------------------ ------
Selling Shareholders.................................................... 10
------------------------------------------------------------------------ ------
Plan of Distribution.................................................... 19
------------------------------------------------------------------------ ------
Legal Matters........................................................... 20
------------------------------------------------------------------------ ------
Experts................................................................. 20
------------------------------------------------------------------------ ------
Available Information................................................... 20
------------------------------------------------------------------------ ------
4,604,454 SHARES
COMMON STOCK
OLYMPIC CASCADE FINANCIAL CORPORATION
-------------
PROSPECTUS
-------------
July , 2003
22
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated expenses in connection with this offering are as follows:
----------------------------------------------- ---------------------
Amount
----------------------------------------------- ---------------------
SEC Registration Fee........................... $ 122.93
----------------------------------------------- ---------------------
Accounting Fees and Expenses................... $ 5,000
----------------------------------------------- ---------------------
Legal Fees and Expenses........................ $25,000
----------------------------------------------- ---------------------
Miscellaneous.................................. $ 5,000
----------------------------------------------- ---------------------
Total.......................................... .. $36,122.93
----------------------------------------------- ---------------------
All the above expenses will be borne by the Registrant.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 125(a) of the DGCL provides in relevant part that "[a]
corporation shall have the power to indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that the person is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by the person in connection with such action, suit or proceeding if the
person acted in good faith and in a manner the person reasonably believed to be
in or not opposed to the best interests of the corporation, and, with respect to
any criminal action or proceeding, had no reasonable cause to believe the
person's conduct was unlawful." With respect to derivative actions, Section
145(b) of the DGCL provides in relevant part that "[a] corporation shall have
the power to indemnify any person who was or is a party or is threatened to be
made a party to any threatened, pending or completed action or suit by or in the
right of the corporation to procure a judgment in its favor . . . [by reason of
the person's service in one of the capacities specified in the preceding
sentence] against expenses (including attorneys' fees) actually and reasonably
incurred by the person in connection with the defense or settlement of such
action or suit if he acted in good faith and in a manner the person reasonably
believed to be in or not opposed to the best interest of the corporation except
that no indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable to the corporation
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such expenses
which the Court of Chancery or such other court shall deem proper."
Our Certificate of Incorporation includes a provision that
eliminates the personal liability of our directors for monetary damages for
breach of fiduciary duty to the full extent permitted by Delaware law.
23
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 Certificate of Incorporation and
Amended and Restated By-laws and of Section 145 of the Delaware General
Corporation Law is not intended to be exhaustive and is respectively qualified
in its entirety by such restated Certificate of Incorporation, Amended and
Restated By-laws and statute.
ITEM 16. EXHIBITS
(a) Exhibits
Exhibit Number Description
------------------- -----------
5 Opinion of Littman Krooks LLP as to the legality of the securities being registered.*
23.1 Consent of Grassi & Co., CPAs, P.C. *
23.2 Consent of Littman Krooks LLP, included in the opinion filed as Exhibit 5.
24 Power of Attorney, included in the signature page of this Registration Statement.
* To be filed by amendment.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act; and
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or
in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume
of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any
deviation from the low or high and of the estimated maximum
offering range may be reflected in the form of prospectus filed
24
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 Exchange Act that are incorporated by
reference in the registration statement.
(2) That, for purposes of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering as such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) That, for purposes of determining any liability under the
Securities Act, each filing of the Registrant's annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable, each
filing of an employee benefit plan's annual report pursuant to Section 15(d) of
the Exchange Act) that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(5) That, insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling persons
of the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
25
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 25, 2003
OLYMPIC CASCADE FINANCIAL CORPORATION
By /s/ Mark Goldwasser
------------------------------------------
Mark Goldwasser
President, Chief Executive Officer and Director
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below constitutes and appoints Robert H. Daskal, our Acting Chief
Financial Officer, his or her attorney-in-fact, each with the power of
substitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this Registration Statement on
Form S-3 (including post-effective amendments or any abbreviated registration
statement and any amendments thereto filed pursuant to Rule 462(b) increasing
the number of securities for which registration is sought), and to file the
same, with all exhibits thereto and all documents in connection therewith, with
the Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that such attorneys-in-fact and
agents or any of them, or his or their substitute or substitutes, may lawfully
do or cause to be done by virtue hereof. Pursuant to the requirements of the
Securities Act of 1933, as amended, this Registration Statement has been signed
by the following persons in the capacities indicated below on the 25th day of
July 2003.
Signature Date
/s/ Mark Goldwasser July 25, 2003
--------------------------------
Mark Goldwasser
President, Chief Executive Officer and Director
/s/ Robert H. Daskal July 25, 2003
--------------------------------
Robert H. Daskal
Acting Chief Financial Officer
/s/ Steven B. Sands July 25, 2003
--------------------------------
Steven B. Sands
Co-Chairman of the Board
/s/ Martin S. Sands July 25, 2003
--------------------------------
Martin S. Sands
Co-Chairman of the Board
26
/s/ Robert J. Rosan July 25, 2003
--------------------------------
Robert J. Rosan
Director
/s/ Gary A. Rosenberg July 25, 2003
--------------------------------
Gary A. Rosenberg
Director
/s/ Peter Rettman July 25, 2003
--------------------------------
Peter Rettman
Director
27