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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
OLYMPIC CASCADE FINANCIAL CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 36-4128138
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification Number)
875 NORTH MICHIGAN AVENUE, SUITE 1560, CHICAGO, IL 60611, (312) 751-8833
(Address, including zip code, and telephone number,
including area code, of Registrant's principal executive offices)
STEVEN A. ROTHSTEIN, CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER
ROBERT H. DASKAL, CHIEF FINANCIAL OFFICER, TREASURER AND SECRETARY
875 NORTH MICHIGAN AVENUE, SUITE 1560, CHICAGO, IL 60611, (312) 751-8833
(Name and address, including zip code, and telephone number, including area
code, of agent for service)
Please send copies of all communications to:
ALAN I. ANNEX, ESQ., CAMHY KARLINSKY & STEIN LLP, 1740 BROADWAY, SIXTEENTH
FLOOR, NEW YORK, NEW YORK 10019, (212) 977-6600
Approximate date of commencement of proposed sale to the public:
As soon as practicable 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 statement 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, check the following box and list the Securities Act
registration statement 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. [ ]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
TITLE OF EACH CLASS PROPOSED MAXIMUM PROPOSED MAXIMUM
OF SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED PER SHARE (1) PRICE (1) REGISTRATION FEE
-------------------- ------------ ---------------- ------------------ ----------------
<S> <C> <C> <C> <C>
Common stock, $0.02 75,000
par value(2) $3.083333 $447,083 $124.29
Common stock, $0.02 70,000
par value(3)
Total 145,000
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee pursuant
to Rule 457(c) based on the average of the high and low prices of the
Registrant's Common Stock as reported on the NASDAQ SmallCap Market on June
4, 1999.
(2) The shares of common stock are being registered for resale by the selling
stockholders named in the prospectus (the "Selling Stockholders").
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(3) To be issued upon exercise of warrants to acquire up to 70,000 shares of
common stock. Includes an indeterminate number of additional shares of
common stock as may from time to time become issuable upon the exercise of
the warrants by reason of stock splits, stock dividends and similar
transactions pursuant to Rule 416 of the Securities Act.
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 or until the Registration Statement shall become
effective on such date as the Commission acting pursuant to said Section 8(a)
may determine.
<PAGE>
SUBJECT TO COMPLETION, DATED JUNE 7, 1999
Prospectus
OLYMPIC CASCADE FINANCIAL CORPORATION.
145,000 SHARES OF COMMON STOCK
This prospectus relates to the offer and sale of up to 145,000 shares of Olympic
Cascade Financial Corporation common stock. The Selling stockholders are
offering to sell 75,000 shares of our common stock that they currently own. The
additional 70,000 shares of our common stock may be acquired by the selling
stockholders upon the exercise of warrants. We are registering the resale of
these common shares in the event the selling stockholders exercise the warrants.
We will not receive any of the proceeds from the sale of the shares by the
selling stockholders. We would receive proceeds from the exercise of the
warrants.
Our common stock is listed on The Nasdaq SmallCap Market under the symbol "NATS"
and The Chicago Stock Exchange under the symbol "OLY". On June 4, 1999 the
closing price of our common stock on The Nasdaq SmallCap Market was $ 3.00 per
share.
The selling stockholders may offer these shares through public or private
transactions, in or off the over-the-counter market in the United States at
prevailing market prices, or at privately negotiated prices. For details of how
the selling stockholders may offer their shares, please see the section of this
prospectus entitled "Plan of Distribution" on page 7.
INVESTING IN OUR COMMON STOCK INVOLVES RISK. SEE RISK FACTORS BEGINNING ON PAGE
TWO OF THIS PROSPECTUS.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed on the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is June 7, 1999.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
Risk Factors . . . . . . . . . . . . . 2 Selling Stockholders . . . . . . . . 7
Olympic Cascade Financial Corporation. 5 Plan of Distribution . . . . . . . . 7
Where You Can Find More Information. . 6 Legal Matters. . . . . . . . . . . . 8
Incorporation of Certain Documents By Experts. . . . . . . . . . . . . . . 8
Reference. . . . . . . . . . . . . . . 6
Use of Proceeds. . . . . . . . . . . . 7
</TABLE>
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RISK FACTORS
CHANGING ECONOMIC, POLITICAL AND MARKET CONDITIONS MAY RESULT IN DECREASED
REVENUES AND MAY INCREASE OUR COST OF DOING BUSINESS
The securities industry is subject to a variety of risks, including declines in
price level and volume of transactions, losses resulting from the trading or
underwriting of securities, volatility of the markets and the failure of third
parties to meet commitments. The securities industry is also affected by
economic, political and market conditions both domestic and international.
Other items affecting the securities industry, include increased consolidation,
increased use of technology, increased use of discount and online electronic
brokerage services and increased regulation. These items could result in our
facing increased competition from larger broker-dealers, a need for increased
investment in technology, or potential loss of customers or reduction in
commission income. There can be no assurance that these trends or future changes
will not have a material adverse effect on our business, financial condition,
results of operations or cash flows.
MARKET FLUCTUATIONS MAY REDUCE OUR REVENUES AND PROFITABILITY
Our revenue and profitability may be adversely affected by declines in the
volume of securities transactions and in market liquidity. Additionally, our
profitability may be adversely affected by losses from the trading or
underwriting of securities or failure of third parties to meet commitments.
National acts as a market-maker in publicly traded common stocks. In market
making transactions, we undertake the risk of price changes or being unable to
resell the common stock we 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 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 in which we may incur losses in
our principal trading and market-making activities.
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 resources than us. Many of these
firms offer their customers more products and research than currently offered by
us. 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. 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. Commissions charged to customers
of discount and electronic brokerage services have steadily decreased over the
past several years and we expect such decreases to continue. To the extent that
issuers and purchasers of securities transact business without the assistance of
us, our operating results could be adversely affected. We use direct
solicitation of potential customers as a means of increasing business and
furnish investment research publications in an effort to attract existing and
potential clients. Many of our competitors also engage in advertising programs,
which we do not use to any significant degree. We believe that our ability to
compete for retail customers depends largely upon the skill, reputation and
experience of our retail brokers. However, there can be no assurance that these
factors will continue to enable us to remain competitive.
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WE DEPEND ON OUR ABILITY TO RETAIN AND RECRUIT KEY PERSONNEL AND IF WE LOSE ANY
OF OUR KEY PERSONNEL IT COULD BE DIFFICULT TO RECRUIT EFFECTIVE REPLACEMENTS
Our business depends on the highly skilled, and often highly specialized,
independent contractors and employees. Retention sales, trading, management,
investment banking and administrative professionals are particularly important
to us. At National, the investment executives are primarily independent
contractors and pay their overhead expenses in exchange for a higher payout
percentage. Typically, National's investment executives receive a net payout
percentage of approximately 70%. We feel that this compensation package along
with the flexibility of being independent is very competitive within the
industry. However, there can be no assurance that this compensation offered by
us will continue to be effective in recruiting and retaining personnel.
GROWTH AND EXPANSION MAY DIVERT MANAGEMENT'S FOCUS FROM OUR EXISTING BUSINESS
We plan to expand through internal growth and, when the opportunity arises, may
expand through acquisitions of related businesses. Additionally, we are
examining the possibility of providing brokerage services over the Internet.
Any expansion will require capital resources and divert management's attention
from our existing businesses. There can be no assurance that we will be able to
attract the personnel or expertise necessary for any expansion, or that any
expansion will be successful. The failure of any expansion could have a material
adverse effect on our business, financial condition, results of operations or
cash flows.
We have experienced increased growth of our current operations over the past
three years. Continued growth will require the addition of retail brokers. There
can be no assurance that management will be able to manage our growth
effectively, and any such failure could have an adverse effect on our business,
financial condition, results of operations or cash flows.
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 and WestAmerica
may be liable for the unauthorized acts of its retail brokers if they fail 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. We carry "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.
THIRD PARTY TRADE PROCESSING AND THE YEAR 2000 PROBLEM MAY DISRUPT OUR BUSINESS
The majority of National's and WestAmerica's trade processing information is
handled through third party vendors. National is in the process of implementing
a new trade processing system through BETA System, Inc., which is scheduled to
be fully operational by the third quarter of our 1999 fiscal year. We
anticipate that the implementation of this system will improve operations
including execution of orders, trade processing and trade reporting. However,
there can be no assurance that the new system will perform as expected and any
difficulty or significant delay in the implementation or operation of the new
system, or time spent training personnel, could adversely affect us.
3
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BETA Systems, Inc. has represented to us that they will be Year 2000 compliant
and our agreement calls for recourse against BETA Systems, Inc. should we incur
losses from the system not being Year 2000 compliant. Additionally, we have
initiated formal communications with all other significant data processing and
telecommunications vendors to determine the extent to which we are vulnerable to
those third parties failure to remediate their own Year 2000 Issue. These
vendors have represented to us that they will be compliant with the requirements
of the Year 2000. However, if BETA Systems, Inc. is not Year 2000 compliant and
we incur losses there can be no assurance that BETA Systems, Inc. will have the
financial resources to reimburse us for our losses.
We have determined that material costs and resources will not be required to
modify or replace portions of our internal hardware and software so that
computer systems will properly utilize dates beyond December 31, 1999.
However, even if our systems and our significant vendors are compliant, the
potential impact of the Year 2000 problem on the securities industry as a whole
could be material, as virtually every aspect of the sales of securities and
processing of transactions will be affected. Due to the size of the problem
facing the securities industry and the interdependent nature of the business, we
may be materially adversely affected by this issue.
NET CAPITAL REQUIREMENTS MAY CONSTRAIN OUR BUSINESS ACTIVITIES
The Commission and various other securities exchanges and other regulatory
bodies in the United States have rules with respect to net capital requirements
that affect National and WestAmerica. These rules are designed to ensure that
National and WestAmerica maintain adequate regulatory capital for their business
activities. These rules require that a substantial portion of a broker-dealer's
assets be kept in cash or highly liquid investments. Failure to maintain the
required net capital may subject a firm to suspension or revocation of its
registration by the Commission and suspension or expulsion by the NASD and other
regulatory bodies, and ultimately may require its liquidation. Compliance by
with Net Capital Requirement Rules could limit certain operations that require
intensive use of capital, such as underwriting or trading activities. Advances,
dividend payments and other equity withdrawals from National or WestAmerica are
restricted by the regulations of the SEC, and other regulatory agencies. These
regulatory restrictions may limit the amounts that these subsidiaries may
dividend or advance to Olympic. In addition, a change in such Net Capital
Requirement Rules or the imposition of new rules affecting the scope, coverage,
calculation or amount of such net capital requirements, or a significant
operating loss or any large charge against net capital, could have similar
adverse effects.
OPERATING RESULTS REPORTED LOSSES FOR THREE OF THE LAST FOUR QUARTERS
We have reported losses three of the past four quarters resulting in an
accumulated deficit and there is no assurance that we will be profitable. Our
disappointing fourth quarter of the fiscal year 1998, was primarily attributed
to large operating losses from a former subsidiary, large losses related to the
sale of this subsidiary, the closure of two branch offices and the write-down
and write-off of receivables. In the first quarter of the fiscal year 1999, we
reduced overhead expenses and by the second quarter of the fiscal year 1999, we
had reported a profit. We anticipate that with increased revenues we will
continue to be profitable; however, there can be no assurance that revenue will
increase and profitability will continue. The tables show revenues, net income
(loss) for the last three fiscal years and the last four quarters. As a result
of the recent losses, we have an accumulated deficit of $2,468,000.
<TABLE>
<CAPTION>
Fiscal Year ended September 25, 26 and 27,
respectively (Dollars in thousands)
-----------------------------------
1998 1997 1996
---------------------------------------------
<S> <C> <C> <C>
Revenue $ 45,694 $ 39,994 $ 34,899
Net income
(loss) ($ 4,666) $ 101 $ 1,735
</TABLE>
<TABLE>
<CAPTION>
Previous Four Quarters
(Dollars in thousands) (unaudited)
----------------------------------
2nd Qtr 1st Qtr 4th Qtr 3rd Qtr
FYE 99 FYE 99 FYE 98 FYE 98
----------------------------------------------------------
<S> <C> <C> <C> <C>
Revenue $ 10,355 $ 8,161 $ 8,274 $ 11,846
Net income
(loss) $ 20 ($ 261) ($ 3,685) ($ 623)
</TABLE>
4
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OLYMPIC CASCADE FINANCIAL CORPORATION
Olympic Cascade Financial Corporation is a financial services organization,
which operates through its two subsidiaries, National Securities Corporation and
WestAmerica Investment Group. We are committed to establishing a significant
presence in the financial services industry by providing financing options for
emerging, small and middle capitalization companies through research, financial
advisory services, and sales and investment banking services for both public
offerings and private placements, and also providing retail brokerage and trade
clearance operations.
In June 1997, we acquired all of the outstanding stock of WestAmerica, a
Scottsdale, Arizona based broker-dealer specializing in retail brokerage
services. WestAmerica was acquired for $443,000 in cash and an agreement to
provide a bonus payment of $207,000 to several WestAmerica brokers.
During fiscal year 1998, we redirected our focus on retail operations by selling
our ownership in two of our subsidiaries, L.H. Friend, Weinress, Franksen &
Presson, Inc. and Travis Capital, Inc. In March 1997, we acquired L.H. Friend
for 250,000 shares of our common stock valued at that time at $1,375,000. In
July 1997, we acquired Travis Capital, for 20,000 shares of our common stock
valued at that time at $90,000. Additionally, we invested cash of $185,000 into
Travis Capital. Upon the sale of L.H. Friend we received cash of $500,000,
55,509 shares of our common stock and potential fees resulting from pending
corporate finance transactions in exchange for all of the common stock of L.H.
Friend. Upon the sale of Travis Capital we received a note receivable for
$281,000 in exchange for all of the common stock of Travis Capital.
National conducts a national securities brokerage business through its main
office in Seattle, Washington and in 38 other offices located in 18 states. Its
business includes securities brokerage for individual and institutional clients,
market-making trading activities, asset management and corporate finance
services. National concentrates upon retail brokerage with an emphasis on
personalized service. National's operations, and its largest sales office, is
located in Seattle, Washington. The majority of National's transactions involve
securities trades with individual customers.
WestAmerica, based in Scottsdale, Arizona is a registered securities
broker-dealer providing primarily retail brokerage operations. The majority
of WestAmerica's transactions involve securities trades with individual
customers.
Our business plan is to achieve growth of our retail brokerage business through
acquisitions of individual brokers, groups of brokers and other small brokerage
firms. We believe that consolidation within the industry is inevitable.
Concerns attributable to the strength of the 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 pursue acquisition opportunities.
Except for historical information contained in this prospectus, the matters
discussed in this prospectus contain or incorporate forward-looking
information. Statements containing terms such as "believes," "does not
believe," "no reason to believe," "expects," "plans," "intends," "estimates,"
"anticipates" are considered to contain uncertainty and are forward-looking
statements. Forward looking statements involve risks and uncertainties that
could cause results to differ materially, including changing market
conditions and other risks detailed in this prospectus and other documents
filed by us with the Securities and Exchange Commission from time to time.
You are cautioned that no forward-looking statement is a guarantee of future
performance and you should not place undue reliance on any forward-looking
statement.
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WHERE YOU CAN FIND MORE INFORMATION
We are required by the Securities Exchange Commission to file reports, proxy
statements and other information with the SEC. You can inspect and copy all of
this information at the Public Reference Room maintained by the SEC at 450 Fifth
Street, N.W., Washington, D.C. 20549. You may obtain information on the
operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. In
addition, the SEC maintains a web site that contains reports, proxy statements
and information statements and other information regarding issuers, such as us,
that file electronically with the SEC. The address of this web site is
http:\\www.sec.gov.
This prospectus, which constitutes a part of a registration statement on Form
S-3 filed by us with the SEC, omits information set forth in the
registration statement. Accordingly, you should reference the registration
statement and its exhibits for further information with respect to us and our
common stock. Copies of the registration statement and its exhibits are on
file at the offices of the SEC. Furthermore, statements contained in this
prospectus concerning any document filed as an exhibit are not necessarily
complete and, in each instance, we refer you to the copy of the document
filed as an exhibit to the registration statement. You should rely only on
the information or representations provided in this prospectus and the
registration statement. We have not authorized anyone to provide you with
different information.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to incorporate by reference the information we file with them,
which means that we can disclose important information to you by referring you
to those documents. The information incorporated by reference is considered to
be part of this prospectus, and information that we file later with the SEC will
automatically update and supersede the information in this prospectus.
Accordingly, we incorporate by reference the documents listed below and any
future filings we make with the SEC:
- - Annual Report on Form 10-K for the fiscal year ended September 25, 1998;
- - Quarterly Reports on Form 10-Q for the quarters ended March 26, 1999,
December 31 and June 26, 1998;
- - Definitive Proxy Statement dated February 18, 1999;
- - A description of our common stock contained in our Registration Statement
on Form 8-A, as filed with the SEC on July 31, 1998.
All reports and other documents we subsequently file after the date of this
prospectus and before the filing of a post-effective amendment which indicates
that all securities in this prospectus have been sold or which de-registers all
securities remaining unsold, shall be deemed to be part of this prospectus from
the date of the filing of such reports and documents.
You may request a copy of these filings, at no cost, by writing to us at the
following address: 875 North Michigan Avenue, Suite 1560, Chicago, Illinois
60611, Attention: Robert H. Daskal. The selling shareholders will not sell
these shares in any state in which they are not permitted. You should not
assume that the information in this Prospectus or any supplement is accurate as
of any date other than the date of those documents.
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USE OF PROCEEDS
We will not receive any proceeds from the sale of the 75,000 shares offered nor
will any proceeds be available for our use or benefit. We would receive
proceeds of $280,000 upon the exercise of the warrants to acquire an aggregate
of 70,000 shares of our common stock. These proceeds would be used by us for
reduction of debt and working capital.
SELLING STOCKHOLDERS
The following table sets forth the names of the selling stockholders, the total
number of shares of our common stock beneficially owned by the selling
stockholders as of the date of this prospectus and the number of shares, which
may be sold by the selling stockholders. This information is based upon
information provided by the selling stockholders.
<TABLE>
<CAPTION>
Number of shares Percentage of common
Number of beneficially owned stock beneficially owned
Shares prior to the after the offering is
Name being sold offering completed
- ------------------------- ---------- ------------------ ------------------------
<S> <C> <C> <C>
Maynard Mall Realty Trust 75,000 75,000 4.53%
ThermoEnergy Corporation 70,000 70,000 4.24%
</TABLE>
Maynard Mall Realty Trust received 25,000 shares of our common and a vested
warrant to purchase 50,000 shares our common stock. These shares and the
warrant were issued in May 1999 to settle a lawsuit brought against Olympic in
May 1997 by Maynard Mall Realty Trust.
ThermoEnergy Corporation received 50,000 shares of our common and a vested
warrant to purchase 20,000 shares our common stock. These shares and the
warrant were issued in May 1999 to settle a lawsuit brought against National in
October 1998 by ThermoEnergy Corporation.
It is unknown if, when or in what amounts the selling stockholders in this
prospectus may sell these shares. Because the selling stockholders may sell all
or some of their shares, no estimate can be given as to the amount of shares
that they will continue to hold after their sale.
PLAN OF DISTRIBUTION
The distribution of the shares by the selling stockholders may be effected
from time to time in one or more transactions (which may involve block
transactions), in specific offerings, exchange distributions and/or secondary
distributions, negotiated transactions, in settlement of short sales of
common stock or a combination of such methods of sale, at market prices
prevailing at the time of sale, at prices related to the prevailing market
prices or at negotiated prices by the selling stockholders, their pledges,
donees, transferees or distributees, or respective successors in interest.
These transactions may occur on the over-the-counter market or privately.
The selling stockholders may sell the shares to or through broker-dealers,
and the broker-dealers may receive compensation in the form of underwriting
discounts, concessions or commissions from the selling stockholders for whom
they may act as an agent. Without limiting the generality of the foregoing,
such brokers may act as dealers by purchasing any and all of the shares
covered by this prospectus either as agents for other or as principals for
their own accounts and reselling such securities pursuant to this prospectus.
The selling stockholders and any broker-dealers that act in connection with
the sale of the shares might be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act, and any commissions received
or profits realized by them on the resale of the shares may be deemed to be
underwriting discounts and commissions under the Securities Act. If the
selling
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stockholders qualify as "underwriters," they will be subject to the
prospectus delivery requirements of Section 5(b)(2) of the 1933 Act. As of
the date of this prospectus, we are not aware of any agreement, arrangement
or understanding between any broker or dealer and the selling stockholders
with respect to the offer or sale of the shares in this prospectus.
Under applicable rules and regulations of the Securities and Exchange
Commission, any person engaged in the distribution of the shares may not bid for
or purchase shares of our common stock during a period which commences one
business day prior to such person's participation in the distribution, subject
to certain exceptions, including passive market making activities.
At the time a sale of shares is made, to the extent required by the Securities
Act, a prospectus supplement will be distributed, setting forth the terms of the
sale, including the aggregate number of shares being sold, the names of any
underwriters, dealers or agents, any discounts, commissions and other items
constituting compensation from the selling stockholders and any discounts,
commissions or concessions allowed or re-allowed or paid to dealers.
The Selling stockholders may also sell their shares pursuant to Rule 144
promulgated under the Securities Act. The selling stockholders may from time to
time pledge the shares owned to secure margin or other loans made to the selling
stockholders. Thus, the person or entity receiving the pledge of any of the
shares may sell them, in a foreclosure sale, or otherwise, in the same manner as
described above for the selling stockholders. We will not receive any of the
proceeds from any sale of the shares by the selling stockholders. There can be
no assurance that the selling stockholders will sell all or any of the shares.
LEGAL MATTERS
The validity of our common stock and other legal matters have been passed upon
for the us by Camhy Karlinsky & Stein LLP, New York, New York.
EXPERTS
The financial statements incorporated in this prospectus by reference to our
Annual Report on Form 10-K for the fiscal year ended September 25, 1998 have
been audited by the following independent public accountants, as indicated in
their attached reports:
Feldman Sherb Ehrlich & Co., P.C., for the Company's fiscal year ended
September 25, 1998.
Moss Adams LLP, for the Company's fiscal years ended September 26, 1997 and
September 27, 1996.
These financial statements are included in this Prospectus and the Registration
Statement and we rely upon the authority of the above firms as experts in
accounting and auditing.
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NEITHER US, NOR ANY OF THE SELLING STOCKHOLDERS HAVE AUTHORIZED ANY DEALER,
SALESMAN OR ANY OTHER PERSON TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS. IF ANY
DEALER, SALESMAN OR OTHER PERSON GIVES INFORMATION OR MAKES REPRESENTATIONS
OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, YOU SHOULD NOT RELY ON THEM.
THIS PROSPECTUS IS NOT AN OFFER TO SELL SECURITIES AND NEITHER US NOR ANY OF
THE SELLING STOCKHOLDERS ARE SOLICITING OFFERS TO BUY THEM. THESE SECURITIES
WILL NOT BE SOLD IN ANY STATE WHERE THEIR OFFER OR SALE, OR SOLICITATIONS OF
OFFERS TO BUY THEM, WOULD BE UNLAWFUL PRIOR TO THEIR REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF SUCH STATE. INFORMATION IN THIS
PROSPECTUS IS CURRENT AS OF THE DATE OF THIS PROSPECTUS. EVEN IF YOU RECEIVE
A COPY OF THIS PROSPECTUS, NEITHER US NOR ANY OF THE SELLING STOCKHOLDERS ARE
MAKING ANY REPRESENTATION ABOUT WHETHER THE INFORMATION IN THIS PROSPECTUS IS
CORRECT AT ANY TIME AFTER THE DATE OF THIS PROSPECTUS.
145,000 SHARES
OLYMPIC CASCADE
FINANCIAL CORPORATION
COMMON STOCK
PROSPECTUS
JUNE 7, 1999
9
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses payable by the Company and
the selling stockholders in connection with the sale of the Common Stock being
registered. Except for the legal fees and expenses to be paid by the selling
stockholders, all the fees and expenses set forth below will be paid by the
Company. All the amounts shown are estimates except the registration fee.
<TABLE>
<S> <C>
SEC Registration Fee . . . . . . . . . . . . . . . . . . . $ 124.29
Accounting fees and expenses . . . . . . . . . . . . . . . 2,000.00
Legal fees and expenses to be paid by the Company. . . . . 2,000.00
---------
Total. . . . . . . . . . . . . . . . . . . . . . . $4,124.29
---------
---------
</TABLE>
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our bylaws provide that we shall indemnify and advance the expenses of
individual directors, officers, employees and agents against costs, judgments
and other financial liability resulting from any action alleged to have been
taken or omitted by such individual. The bylaws permit such indemnification if,
among other things, the proposed indemnity acted in good faith with reasonable
belief that the conduct was in, or at least not opposed to, the best interests
of the Company, and in the case of a criminal proceeding, with a reasonable
belief that the conduct was not unlawful. We have obtained insurance on behalf
of any person who is or was a director, officer or employee or agent of the
Company or is or was serving at the request of the Company as an officer,
employee, or agent of another corporation, partnership, joint venture, trust
other enterprise or employee benefit plan, against any liability arising out of
that person's status as such, whether or not we would have the power to
indemnify that person against such liability.
ITEM 15. SALES OF UNREGISTERED SECURITIES
In July 1997 we issued 20,000 unregistered shares of our common stock in
exchange for all of the outstanding stock of Travis Capital, Inc. Our common
stock was valued at $90,000 as consideration for this transaction. The issuance
of these securities were exempt from registration under the Securities Act
pursuant to Section 4(2) thereof on the basis that the transaction did not
involve a public offering.
In May 1997 we issued a five-year warrant to purchase 30,000 unregistered
shares of our common stock to FAI General Insurance Company Limited in
connection with a financing. As a result of subsequent stock dividends, the
holder of this warrant can now purchase 33,075 unregistered shares of our common
stock. In November 1997 we issued a five-year warrant to purchase 45,000
unregistered shares of our common stock to FAI in connection with a second
financing. As a result of subsequent stock dividends, the holder of this warrant
can now purchase 47,250 unregistered shares of our common stock. The warrants
were issued as consideration for loans made to us. The issuance of these
securities were exempt from registration under the Securities Act pursuant to
Section 4(2) thereof on the basis that the transactions did not involve a public
offering. The shares that will be issued upon the exercise of the warrants were
registered in connection with a registration statement filed May 7, 1999
(Registration No. 333-74243).
In July 1997 we issued a five-year warrant to purchase 15,000 unregistered
shares of our common stock to Geller & Friend Capital Partners. As a result of
subsequent stock dividends, the holder of this warrant can now purchase 16,538
unregistered shares of our common stock. The warrant was issued as
consideration for a commitment to provide financing. The issuance of these
securities were exempt from registration under the Securities Act pursuant to
Section 4(2) thereof on the basis that the transaction did not involve a public
offering.
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The shares that will be issued upon the exercise of the warrants were
registered in connection with a registration statement filed May 7, 1999
(Registration No. 333-74243).
In November 1997 we issued three five-year warrants to purchase 25,000,
25,000 and 25,000 unregistered shares of our common stock to Merryl H. Tisch as
custodian for Jessica S. Tisch, Benjamin J. Tisch and Samuel A. Tisch,
respectively, in connection with a financing. We received $25,000 for the
issuance of each warrant or $75,000 in total. As a result of subsequent stock
dividends, the holders of these warrants can now purchase 26,250, 26,250 and
26,250 unregistered shares of our common stock, respectively. The issuance of
these securities were exempt from registration under the Securities Act pursuant
to Section 4(2) thereof on the basis that the transactions did not involve a
public offering. The shares that will be issued upon the exercise of the
warrants were registered in connection with a registration statement filed May
7, 1999 (Registration No. 333-74243).
In January 1998 we issued a five-year warrant to purchase 157,500
unregistered shares of our common stock to LVE, LLC. The warrant was issued as
consideration for a loan made to us. The issuance of these securities were
exempt from registration under the Securities Act pursuant to Section 4(2)
thereof on the basis that the transaction did not involve a public offering. The
shares that will be issued upon the exercise of the warrants were registered in
connection with a registration statement filed May 7, 1999 (Registration No.
333-74243).
In February 1999 we issued 40,000 unregistered shares of our common stock
to Casull Arms Corporation under a settlement agreement. This agreement settled
a lawsuit brought against National in September 1997 by Casull alleging breach
of contract and other torts. The issuance of these securities were exempt from
registration under the Securities Act pursuant to Section 4(2) thereof on the
basis that the transaction did not involve a public offering. The shares were
registered in connection with a registration statement filed May 7, 1999
(Registration No. 333-74243).
In March 1999 we issued 20,000 unregistered shares of our common stock to
D'Ancona & Pflaum LLC in payment of balances owed for past services rendered.
These shares were issued in payment of balances owed for past services rendered
and were valued at $80,000. The issuance of these securities were exempt from
registration under the Securities Act pursuant to Section 4(2) thereof on the
basis that the transaction did not involve a public offering. The shares were
registered in connection with a registration statement filed May 7, 1999
(Registration No. 333-74243).
In March 1999 we issued 10,000 unregistered shares of our common stock to
Sugar Friedberg & Felsenthal in payment of balances owed for past services
rendered. These shares were issued in payment of balances owed for past
services rendered and were valued at $40,000. The issuance of these securities
were exempt from registration under the Securities Act pursuant to Section 4(2)
thereof on the basis that the transaction did not involve a public offering. The
shares were registered in connection with a registration statement filed May 7,
1999 (Registration No. 333-74243).
In May 1999 we issued 25,000 unregistered shares and we issued a
five-year warrant to purchase 50,000 shares of our common stock to Maynard
Mall Realty Trust under a settlement agreement. This agreement settled a
lawsuit brought against Olympic as the succesor to National in May 1997. The
issuance of these securities were exempt from registration under the
Securities Act pursuant to Section 4(2) thereof on the basis that the
transaction did not involve a public offering. The shares that may be issued
upon the exercise of the warrant are being registered in connection with this
registration statement.
In May 1999 we issued 50,000 unregistered shares and we issued a
five-year warrant to purchase 20,000 shares of our common stock to
ThermoEnergy Corporation under a settlement agreement. This agreement
settled a lawsuit brought against National in October 1998. The issuance of
these securities were exempt from registration under the Securities Act
pursuant to Section 4(2) thereof on the basis that the transaction did not
11
<PAGE>
involve a public offering. The shares that may be issued upon the exercise of
the warrant are being registered in connection with this registration
statement.
<TABLE>
<CAPTION>
ITEM 16. EXHIBITS
<S> <C>
5.1 Opinion of Camhy Karlinsky & Stein LLP
23.1 Consent of Feldman Sherb Erhlich & Co., P.C.
23.2 Consent of Moss Adams LLP
23.3 Consent of Camhy Karlinsky & Stein LLP (contained in Exhibit 5.1)
24.1 Powers of Attorney (contained on signature page)
</TABLE>
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;
(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 thereto) 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 the
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 end of the estimated
maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) (s230.424(b) of
this Chapter) if, in the aggregate changes in volume and price
represent no more than a 20% 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 (a)(1)(i) and (a)(1)(ii) do
not apply if the information required to be included in the post-effective
amendment by those paragraphs is contained in periodic reports filed with
or furnished to the Commission by the Registrant pursuant to Section 13 or
Section 15(d) of the Exchange Act that are incorporated by reference in the
registration statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be new
Registration Statement relating to the securities offered therein, and this
offering of such securities at that time shall be deemed to be the initial
bona fide offering itself.
(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.
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 provisions referenced in Item 6 of this
12
<PAGE>
Registration Statement, or otherwise, the Registration has been advised that
in the opinion of the Commission, such 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 the public policy
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes 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 (the "Exchange Act") that is incorporated by
reference in this 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.
To deliver or cause to be delivered with the prospectus, to each person to
whom the prospectus is sent or given, the latest annual report to security
holders that is incorporated by reference in the prospectus an furnished
pursuant to and meeting the requirements of Rule 14a-3 or Rule 14c-3 under the
Securities Exchange Act of 1934; and, where interim financial information
required to be presented by Article 3 of Regulation S-X are not set forth in the
prospectus, to deliver, or cause to be delivered to each person to whom the
prospectus is sent or given, the latest quarterly report that is specifically
incorporated by reference in the prospectus to provide such interim financial
information.
For purposes of determining any liability under the Securities Act of 1933,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective. For the purpose of
determining any liability under the Securities Act of 1933, each post-effective
amendment that contains a form of prospectus 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.
13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, 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 to be
signed on its behalf by the undersigned, thereunto duly authorized on this 7th
day of June, 1999.
OLYMPIC CASCADE FINANCIAL CORPORATION
Registrant
<TABLE>
<S> <C>
By: /s/ Steven A. Rothstein Date: June 7, 1999
Steven A. Rothstein
Chairman, Chief Executive
Officer and President
By: /s/ Robert H. Daskal Date: June 7, 1999
Robert H. Daskal
Senior Vice President,
Chief Financial Officer,
Treasurer and Secretary
By: /s/ David M. Williams Date: June 7, 1999
David M. Williams
Controller
</TABLE>
Pursuant to the requirements of the Securities Act, this Registration Statement
has been signed by the following persons in the capacities and on the dates
indicated:
<TABLE>
<CAPTION>
Signature Capacity Date
<S> <C> <C>
/s/ Steven A. Rothstein Chairman, Chief Executive June 7, 1999
Steven A. Rothstein Officer and President
/s/ Gary A. Rosenberg Director June 7, 1999
Gary A. Rosenberg
/s/ James C. Holcomb, Jr. Director June 7, 1999
James C. Holcomb, Jr.
/s/ D.S. Patel Director June 7, 1999
D.S. Patel
</TABLE>
14
<PAGE>
EXHIBIT 5.1
LEGAL OPINION
June 7, 1999
Olympic Cascade Financial Corporation
875 North Michigan Avenue
Suite 1560
Chicago, Illinois 60611
Re: REGISTRATION STATEMENT ON FORM S-3
Dear Sir/Madam:
We have reviewed the Registration Statement on Form S-3 (the
"Registration Statement") filed under the Securities Act of 1933 as amended (the
"Act"), by Olympic Cascade Financial Corporation, a Delaware corporation (the
"Company"), on May 24, 1999. The Registration Statement has been filed for the
purpose of registering for offer and sale under the Act, up to 75,000 shares
(the "Shares") of the Company's Common Stock, $.02 par value (the "Common
Stock") and 70,000 shares (the "Warrant Shares") of the Company's Common Stock
which are issuable upon exercise of certain warrants (the "Warrants").
We have examined your Certificate of Incorporation as amended, your
Bylaws and such documents, corporate records and questions of law as we have
deemed necessary solely for the purpose of enabling us to render this opinion.
In conducting our examination, we have assumed, without investigation, the
genuineness of all signatures, the correctness of all certificates, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as certified or photostatic
copies and the authenticity of the originals of such copies, and the accuracy
and completeness of all records made available to us by the Company, and public
officials. In addition, we have assumed, without investigation, the accuracy of
representations and statements as to factual matters made by officers and
employees of the Company.
In addition, the opinions hereinafter expressed are subject to the
following qualifications:
(a) Our opinion in Paragraph 1 below as to the good standing of the
Company and its subsidiaries is based solely upon certificates from public
officials and verbal confirmation from the State of Delaware.
(b) Our opinions below are limited to the matters expressly set
forth in this opinion letter, and no opinion is to be implied or may be inferred
beyond the matters expressly so stated.
(c) We disclaim any obligation to update this letter for events
occurring after the date of this opinion letter.
On the basis of such examination, we are of the opinion that:
1. The Company is a corporation duly organized and validly
existing and in good standing under the laws of the State of Delaware.
15
<PAGE>
2. The Company has an authorized capitalization of 6,100,000
shares of capital stock consisting of 6,000,000 shares of Common Stock, $.02 par
value, and 100,000 shares of Preferred Stock, $.01 par value.
3. The Shares are validly issued, fully paid and nonassessable.
4. The Warrant Shares, when issued pursuant to the terms and
conditions of the Warrants, as described in the Registration Statement, will
constitute legal and binding obligations of the Company in accordance with their
terms.
We hereby consent to the use of this opinion as an exhibit to the
Registration Statement.
Very truly yours,
CAMHY KARLINSKY & STEIN LLP
16
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the use in this Registration Statement on Form S-3, of our
report dated December 9, 1998 relating to the financial statements of Olympic
Cascade Financial Corporation as of September 25, 1998 and for the year then
ended.
/s/ Feldman Sherb Ehrlich & Co., P.C.
Feldman Sherb Ehrlich & Co., P.C.
Certified Public Accountants
June 1, 1999
New York, New York
17
<PAGE>
EXHIBIT 23.2
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference in this Registration Statement
of Olympic Cascade Financial Corporation on Form S-3 of our report dated
November 14, 1997, on the financial position of Olympic Cascade Financial
Corporation and subsidiaries as of September 26, 1997, and the results of their
operations and cash flows for each of the years in the two year period then
ended, appearing in the Annual Report on Form 10-K of Olympic Cascade Financial
Corporation for the year ended September 25, 1998. We also consent to the
reference to us under the heading "Experts" in the Prospectus, which is part of
this Registration Statement.
/s/ Moss Adams LLP
Moss Adams LLP
Seattle, Washington
May 25, 1999
18
