As filed with the Securities and Exchange Commission on August 21, 1996.
Registration No. 333-__________
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
WOODROAST SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
MINNESOTA 41-1563961
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization) Number)
10250 VALLEY VIEW ROAD, SUITE 145
EDEN PRAIRIE, MINNESOTA 55344
TELEPHONE: (612) 944-5113
(Address, including zip code, and telephone number,
including area code, of registrant's
principal executive offices)
SHELDON F. JACOBS
10250 VALLEY VIEW ROAD, SUITE 145
EDEN PRAIRIE, MINNESOTA 55344
TELEPHONE: (612) 944-5113
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies of communications to:
ERIC O. MADSON, ESQ.
WINTHROP & WEINSTINE, P.A.
3000 DAIN BOSWORTH PLAZA
60 SOUTH SIXTH STREET
MINNEAPOLIS, MINNESOTA 55402
TELEPHONE: (612) 347-0700
--------------------------
Approximate date of commencement of proposed sale to the public:
AS SOON AS PRACTICABLE AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
If the only securities being offered on this Form are to be offered pursuant to
dividend or interest reinvestment plans, 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. |_|
---------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================================================
Proposed Proposed
Maximum Maximum Amount of
Title of Each Class of Amount to Offering Price Aggregate Registration
Securities to Be Registered Be Registered Per Share (1) Offering Price (1) Fee
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.005 par value 625,000 shares $4.188 $2,617,500 $902.59
=========================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of determining the registration fee,
based on average of the bid and ask prices for the Common Stock as
reported on the Nasdaq SmallCap Market on August 19, 1996.
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 THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS DATED AUGUST 21, 1996
PROSPECTUS
625,000 SHARES
WOODROAST SYSTEMS, INC.
COMMON STOCK
This Prospectus relates to the sale of up to 625,000 shares (the
"Shares") of Common Stock of Woodroast Systems, Inc. (the "Company") by certain
selling shareholders (the "Selling Shareholders"). See "Selling Shareholders."
The Company will not receive any of the proceeds from the sale of Shares by the
Selling Shareholders. See "Use of Proceeds."
The Company's Common Stock is currently listed on the Nasdaq Smallcap
Market under the symbol "WRSI". On August 19, 1996, the last reported sale price
thereon was $4.125 per share of Common Stock.
SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
==============================================================================
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND SELLING
PUBLIC (1) COMMISSIONS SHAREHOLDERS (1)
- ------------------------------------------------------------------------------
Per Share....................... $ None $
- ------------------------------------------------------------------------------
Total (2)....................... $ None $
==============================================================================
(1) Based on the last sale price for the Common Stock as reported on the Nasdaq
SmallCap Market on August ___, 1996. The actual Price to Public will be
based on market prices on the respective dates of sale, which may be more
or less than the Price to Public set forth above.
(2) The Shares are being offered for the accounts of the Selling Shareholders.
The Company will pay the expenses of this offering except for the fees of
any counsel to the Selling Shareholders. The aggregate Proceeds to Selling
Shareholders will be the total Price to Public, less aggregate agent's
commissions and underwriters' discounts, if any, and other expenses to the
Selling Shareholders of the issuance and distribution.
----------------------
The Selling Shareholders may sell the Shares from time to time directly,
through agents designated from time to time, or through dealers or underwriters
also to be designated, on terms to be determined at the time of sale. To the
extent required, the specific Shares to be sold, the names of the Selling
Shareholders, the purchase price, the public offering price, the names of any
such agents, dealers or underwriters, and the amount of any applicable
commissions or discount with respect to a particular offer will be set forth in
an accompanying prospectus supplement. Such prospectus supplement will also set
forth information regarding indemnification by the Company of the Selling
Shareholders and any underwriter, dealer or agent against certain liabilities,
including liabilities under the Securities Act of 1933 ("Securities Act"). See
"Plan of Distribution."
The Selling Shareholders and any broker-dealers, agents or underwriters
that participate with the Selling Shareholders in the distribution of the Shares
may be deemed to be "underwriters" within the meaning of the Securities Act, and
any commissions received by them and any profit on the resale of the Shares
purchased by them may be deemed to be underwriting commissions or discounts
under the Securities Act. See "Plan of Distribution."
The date of this Prospectus is August __, 1996.
AVAILABLE INFORMATION
The Company is subject to the information requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). Reports, proxy and information statements and
other information can be inspected and copied at the public facilities
maintained by the Commission at 450 Fifth Street N.W., Room 1024, Washington,
D.C., and at the Commission's regional offices located at 7 World Trade Center,
14th Floor, New York, New York 10048, and Northwestern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can
be obtained at prescribed rates from the Public Reference Section of the
Commission, 450 Fifth Street N.W., Washington, D.C.
The Company has filed with the Commission a registration statement on Form
S-3 (together with all amendments and exhibits thereto) under the Securities Act
of 1933 with respect to the shares offered hereby. The Prospectus does not
contain all information set forth in such registration statement. For further
information with respect to the Company and the shares offered hereby, reference
is made to such registration statement, including the exhibits and financial
schedules filed as part thereof. Such information may be inspected at the
Chicago regional office of the Commission at Northwestern Atrium Center, 500
West Madison, Suite 1400, Chicago, Illinois 60661 and at the public reference
facilities at 450 Fifth Street N.W., Washington, D.C. 20549. Copies thereof may
be obtained from the Commission at prescribed prices.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents are hereby incorporated by reference in this
Prospectus except as superseded or modified herein:
1. The Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1995;
2. The Company's Quarterly Reports on Form 10-QSB for the
quarters ended March 31, 1996 and June 30, 1996;
3. The Company's Proxy Statement dated April 29, 1996 for the
1996 Annual Meeting of Shareholders; and
4. The description of the Company's Common Stock contained in the
Company's Form SB-2 Registration Statement dated March 25,
1994, Registration No. 33-75152C.
All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus
and prior to the termination of the offering of the shares offered hereby shall
be deemed to be incorporated by reference into this Prospectus and to be a part
hereof from the date of filing such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as modified or
superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including a
beneficial owner, to whom this Prospectus is delivered, upon written or oral
request of such person, a copy of any or all documents that have been or may be
incorporated by reference herein (other than exhibits to such documents which
are not specifically incorporated by reference into such documents). Requests
for such copies should be directed to Sheldon F. Jacobs, Woodroast Systems,
Inc., 10250 Valley View Road, Suite 145, Eden Prairie, Minnesota 55344,
telephone number (612) 944-5113.
PROSPECTUS SUMMARY
THE FOLLOWING INFORMATION IS QUALIFIED IN ITS ENTIRETY BY THE MORE
DETAILED INFORMATION AND FINANCIAL STATEMENTS OF WOODROAST SYSTEMS, INC.,
INCLUDING THE NOTES THERETO, APPEARING ELSEWHERE IN THIS PROSPECTUS OR
INCORPORATED HEREIN BY REFERENCE.
THE COMPANY
Woodroast Systems, Inc. (the "Company"), through its wholly-owned
subsidiary, Shelly's Woodroast-Two, Inc. ("Shelly's Two"), owns and operates a
Shelly's Woodroast restaurant in St. Louis Park, Minnesota, a suburb of
Minneapolis (the "St. Louis Park Restaurant"), and in Rockville, Maryland, a
suburb of Washington, D.C. (the "Rockville Restaurant," and together with the
St. Louis Park Restaurant, the "Restaurants"). The Shelly's Woodroast restaurant
concept is an integrated concept, involving a distinctive cooking style, menu
offerings, beverage selections and facility design. The inspiration of the
concept is the fresh, relaxed atmosphere of the north woods, from the great
fieldstone and timber lodges to the aroma of meat, fish and fowl roasting over a
hardwood fire. In addition to the Company's plans to expand its Shelly's
Woodroast restaurants, the Company has developed the "Shelly's Back Room"
concept. Shelly's Back Room is an upscale cigar parlor, full service bar and
restaurant featuring the Company's northwoods theme and catering to the growing
popularity of cigars.
The Company was incorporated in 1987 under the laws of the State of
Minnesota. Its principal executive offices are located at 10250 Valley View
Road, Suite 145, Eden Prairie, Minnesota 55344 and its telephone number is (612)
944-5113.
THE OFFERING
All references in this Prospectus to numbers of shares of the Company's
Common Stock give effect to the three-for-one split of outstanding shares of
Common Stock that was effected by a distribution on January 18, 1996 of two
shares for every one share held of record as of January 4, 1996.
Common Stock offered
by Selling Shareholders............................. 625,000 shares
Common Stock outstanding.............................. 2,958,390 shares (1)
NASDAQ Symbols
Common Stock........................................ "WRSI"
Redeemable Class A Warrants......................... "WRSIW"
- --------------------------
(1) Does not include (i) 1,175,200 Shares issuable upon exercise of the
Company's Redeemable Class A Warrants (the "Redeemable Warrants"), see
"Material Changes", (ii) 250,000 shares of Common Stock reserved for
issuance under the Company's 1994 Stock Plan, or (iii) 220,015 shares of
Common Stock issuable upon exercise of outstanding stock purchase
warrants, not including the Redeemable Warrants.
RISK FACTORS
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY IS SPECULATIVE AND INVOLVES
A HIGH DEGREE OF RISK. SEE "RISK FACTORS."
RISK FACTORS
Prospective investors should be aware of the following risk factors and
should review carefully the information contained elsewhere in this Prospectus
or incorporated herein by reference.
LACK OF PROFITABILITY; DEPENDENCE ON TWO RESTAURANTS. The Company has been
operating Shelly's Woodroast restaurants since 1987. The St. Louis Park
restaurant opened in autumn of 1989 and the Rockville Restaurant opened in
November 1995. The Company had net losses of ($415,916), ($1,167,433) and
($674,299) during the fiscal years ended December 25, 1994 and December 31,
1995 and the twenty-six weeks ended June 30,1996, respectively, and a working
capital deficit of ($199,259) at June 30, 1996. The Company expects losses to
continue for the near future.
Future revenues and profits will depend upon various factors, including
market acceptance of the Shelly's Woodroast restaurant and Shelly's Back Room
concepts and general economic conditions. There can be no assurance of the
Company's ability to attain profitability. The Company's present sole sources of
revenue are the two Restaurants, one of which has recently opened. The Company
also faces all of the risks, expenses and difficulties frequently encountered in
connection with the operation and development of a new and expanding business.
Furthermore, to the extent that the Company's expansion strategy is successful,
the Company must manage the transition to multiple site operations, higher
volume operations, the control of overhead expenses and the addition of
necessary personnel.
DEVELOPMENT OF COMPANY-OWNED RESTAURANTS; NEED FOR FINANCING
The Company's decisions to open additional Shelly's Woodroast restaurants
and Shelly's Back Rooms will depend upon several factors, including the success
of the Rockville Restaurant, the costs of developing and opening new facilities
and the Company's ability to obtain additional financing if necessary. The
Company estimates that the costs of developing additional facilities will range
from $350,,000 to $3,500,000 depending upon construction costs and the level of
landlord contributions. There can be no assurance, however, that additional
restaurants will be developed at such costs or that additional restaurants, if
developed, would be profitable.
The cost of developing, constructing and opening the Rockville Restaurant
was approximately $3,200,000, not including approximately $300,000 for
pre-opening costs. Management believes that each new location should be of a
form and size suitable to the particular location. Accordingly, the Company has
not developed a standardized restaurant layout, nor obtained actual current cost
estimates for development of new restaurants.
The success of such development will also be dependent upon customer
acceptance of the Shelly's Woodroast restaurant and Shelly's Back Room concepts
in new markets. Until November 1995, the Company's operating experience has been
limited to the Minneapolis-St. Paul metropolitan area. Although the Company
believes that the Shelly's Woodroast restaurant concept has been accepted by the
public in the Minneapolis-St. Paul metropolitan market, and preliminary
indications in Rockville, Maryland suggest acceptance there, no assurance can be
given that such acceptance will be received in new markets. Successful expansion
of the Company's operations will be largely dependent upon a variety of factors,
some of which are currently unknown or beyond the Company's control, including:
customer acceptance of the Shelly's Woodroast restaurant and Shelly's Back Room
concepts; the ability of the Company's management to identify suitable sites and
to negotiate leases or purchases of such sites; timely and economic development
and construction of restaurants; the hiring of skilled management and other
personnel; the ability of the Company's management to apply standardized
policies and procedures to a larger number of restaurants; the availability of
adequate financing; the general ability to successfully manage growth (including
monitoring restaurants, controlling costs and maintaining effective quality
controls); and the general state of the economy. There can be no assurance that
the Company will be able to open new restaurants.
The opening of additional Shelly's Woodroast restaurants and Shelly's Back
Rooms outside of the Minneapolis- St. Paul metropolitan market will give rise to
additional expenses associated with managing restaurants located in multiple
markets. Such expenses include: advertising in more than one market; lease rates
and construction costs which may be higher in the new markets; travel costs; and
other similar expenses. Moreover, the Company's results of operations may be
adversely affected by economic conditions in those regions and other geographic
areas in which the Company may expand. Achieving consumer awareness and market
acceptance will require substantial efforts and expenditures by the Company. An
extraordinary amount of management's time may be drawn to such matters and
result in a dilution of potential earnings.
COMPETITION; CERTAIN FACTORS AFFECTING THE RESTAURANT INDUSTRY
The restaurant industry is highly competitive with respect to price,
service, food quality (including taste, freshness, healthfulness and nutritional
value) and location, and, as a result, has a high failure rate. There are
numerous well-established competitors, including national, regional and local
restaurant chains, possessing substantially greater financial, marketing,
personnel and other resources than the Company. There can be no assurance that
the Company will be able to respond to various competitive factors affecting the
restaurant industry. The restaurant industry is also generally affected by:
changes in consumer preferences; national, regional and local economic
conditions; and demographic trends. The performance of individual restaurants
may also be affected by factors such as traffic patterns, demographic
considerations, and the type, number and location of competing restaurants. In
addition, factors such as inflation, increased food, labor and employee benefit
costs, and the availability of experienced management and hourly employees may
also adversely affect the restaurant industry in general and the Company's
restaurants in particular. Restaurant operating costs are further affected by
increases in the minimum hourly wage, unemployment tax rates and similar matters
over which the Company has no control.
LONG-TERM, NON-CANCELABLE LEASES
The Company leases the land under its restaurants pursuant to long-term,
non-cancelable leases. Any additional restaurants developed by the Company may
be subject to similar long-term leases. If an existing or future restaurant does
not perform at a profitable level, and the decision is made to close the
restaurant, the Company will nonetheless be committed to perform its obligations
under the applicable lease.
GOVERNMENT REGULATION
The restaurant business is subject to various federal, state and local
government regulations, including those relating to the sale of food and
alcoholic beverages. While the Company to date has not experienced an inability
to obtain or maintain any necessary governmental licenses, permits or approvals,
the failure to maintain food and liquor licenses could have a material adverse
effect on the Company's operating results. In addition, restaurant operating
costs are affected by increases in the minimum hourly wage, unemployment tax
rates, sales taxes and similar costs over which the Company has no control.
Since many of the Company's restaurant personnel are paid at rates based on the
federal minimum wage, increases in the minimum wage will result in an increase
in the Company's labor costs. The Company also may be subject in certain states
to "dram shop" statutes which generally provide a person injured by an
intoxicated person the right to recover damages from an establishment that
served alcoholic beverages to an intoxicated person.
DEPENDENCE ON KEY PERSONNEL; LACK OF AN EXPERIENCED CHIEF FINANCIAL OFFICER;
NEED FOR ADDITIONAL MANAGEMENT
The Company is highly dependent upon the personal efforts and abilities of
Sheldon F. Jacobs, its President and Chief Executive Officer. Mr. Jacobs is also
the Company's Chief Financial Officer, but has no accounting background. The
loss of the services of Mr. Jacobs could have a substantial adverse effect on
the Company's ability to achieve its objectives, and the Company has not
obtained key-man life insurance on his life. The Company will need to hire other
corporate level and management employees to help implement and operate its
expansion plans. The failure to obtain, or delays in obtaining, such employees
could have a material adverse affect on the Company.
POTENTIAL LITIGATION
Mathews, Holmquist & Associates, Inc., which acted as underwriter for the
Company's initial public offering in June 1994, entered involuntary bankruptcy
proceedings in September 1994. The Company has been advised by the Trustee of
the bankruptcy estate (the "Estate") the Estate believes it has a claim against
the Company based on the assertion that entering into the underwriting agreement
for the Company's initial public offering rendered Mathews, Holmquist &
Associates, Inc. insolvent. The Trustee has not commenced any action against the
Company, but has indicated that due to applicable statutes of limitations, a
claim may be filed in September 1996. The Company believes the potential claim
is without merit and, if an action is commenced, will defend it vigorously.
There can be no assurance, however, as to the ultimate outcome of the action,
if commenced.
ABSENCE OF DIVIDENDS
The Company has not paid any dividends on its capital stock since its
incorporation and does not intend to pay any cash dividends in the foreseeable
future.
CONTROL BY EXISTING MANAGEMENT
Sheldon F. Jacobs, the Company's Chief Executive Officer, owns
approximately 43.9% of the issued and outstanding shares of the Common Stock of
the Company. Accordingly, Mr. Jacobs will be able to control the Company's
affairs, including without limitation, the sale of equity or debt securities of
the Company, the appointment of officers, and the determination of officers'
salaries.
OUTSTANDING STOCK PURCHASE WARRANTS
In connection with a private placement in November 1995, the Company
issued warrants to purchase 200,016 shares of Common Stock with an exercise
price of $.01 per share, of which warrants for the purchase of 160,015 shares
are currently outstanding. The nominal amount of the exercise price of such
warrants may not provide a meaningful deterrent to immediate exercise. Further,
the Company has registered the resale of the shares of Common Stock underlying
such warrants. The exercise of such warrants and the resale of a significant
portion of the underlying shares could have an adverse impact on the trading
price of the Company's Common Stock. In addition, the Company has outstanding
Redeemable Warrants for the purchase of up to 1,175,200 shares of Common Stock.
The Redeemable Warrants are redeemable by the Company at a redemption price of
$0.01 per share upon 30 days notice. On August 15, 1996, the Company reduced the
exercise price of the Redeemable Warrants from $6.00 per share to $4.00 per
share and elected to redeem the Redeemable Warrants. The reduction in exercise
price and the redemption call may cause the warrant holders to exercise their
Redeemable Warrants. The exercise of the Redeemable Warrants and the subsequent
sale of the shares received upon exercise could have an adverse impact on the
trading price of the Company's Common Stock.
UNDESIGNATED STOCK
The Company's authorized capital consists of 33,000,000 shares of capital
stock. The Board of Directors, without any action by the Company's stockholders,
is authorized to designate and issue shares in such classes or series (including
classes or series of preferred stock) as it deems appropriate and to establish
the rights, preferences and privileges of such shares, including dividends,
liquidation and voting rights. The Company currently has 2,958,390 shares of
Common Stock outstanding. No other class of common stock, or preferred stock, is
currently designated and there is no current plan to designate or issue any such
securities. The rights of holders of preferred stock and other classes of common
stock that may be issued may be superior to the rights granted to the holders of
the Common Stock. Further, the ability of the Board of Directors to designate
and issue such undesignated shares could impede or deter an unsolicited tender
offer or takeover proposal regarding the Company and the issuance of additional
shares having preferential rights could adversely affect the voting power and
other rights of holders of Common Stock.
MINNESOTA ANTI-TAKEOVER LAW
The Company is subject to Minnesota statutes regulating business
combinations and restricting voting rights of certain persons acquiring shares
of the Company, which may hinder or delay a change in control of the Company.
See "DESCRIPTION OF SECURITIES."
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the shares of
Common Stock by the Selling Shareholders.
SELLING SHAREHOLDERS
The following table sets forth the number of shares of Common Stock
beneficially owned by each of the Selling Shareholders before and after the
offering.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY
SHARES BENEFICIALLY OWNED SHARES OWNED
PRIOR TO OFFERING (1) TO BE SOLD AFTER OFFERING (1)
------------------------------------------ ---------------- ---------------------
BENEFICIAL OWNER NUMBER PERCENT(2) NUMBER PERCENT(2)
- ---------------- --------------------------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Pyramid Partners, LP 100,000 3.5 100,000 -0- -0-
Larry P. Arnold 75,000 2.6 45,000 30,000 1.0
Deephaven Inc. 30,000 1.0 30,000 -0- -0-
Wayne W. Mills 50,000(3) 1.7 50,000 (3) -0- -0-
Richard W. Perkins
FBO Richard W. Perkins Trust 25,000 * 25,000 -0- -0-
Jack S. Kohler 20,000 * 20,000 -0- -0-
Daniel S. Perkins and Patrice M.
Perkins, Joint Tenants 20,000 * 20,000 -0- -0-
John T. Kubinski 20,000 * 20,000 -0- -0-
Pamela L. Brown Trustee
FBO Pamela L. Brown Trust 10,000 * 10,000 -0- -0-
Joseph J. Buska 10,000 * 10,000 -0- -0-
Glenn E. Diamond 10,000 * 10,000 -0- -0-
Henry Fong 10,000 * 10,000 -0- -0-
Michael T. Mulligan 10,000 * 10,000 -0- -0-
D. Bradley Olah 10,000 * 10,000 -0- -0-
Richard C. Perkins 20,000(4) * 20,000 (4) -0- -0-
Dale Ragan 10,000 * 10,000 -0- -0-
Wyncrest Capital, Inc. 10,000 * 10,000 -0- -0-
Steven T. Newby 137,500 4.7 40,000 97,500 3.3
Michael J. Hankinson 5,000 * 5,000 -0- -0-
Okabena Partnership K 135,000 4.7 135,000 -0- -0-
John C. Rudolf 10,000 * 10,000 -0- -0-
Summit Capital Partners 25,000 * 25,000 -0- -0-
All Selling Shareholders
as a group....................... 752,500 25.4% 625,000 127,500 4.3%
======= ===== ======= ======= ====
</TABLE>
- ---------------------
* Less than one percent.
(1) Each person has sole voting and sole dispositive power with respect to all
outstanding shares, except as noted.
(2) Based on 2,958,390 shares outstanding at August 15, 1996. Such amounts do
not include: (i) 1,175,000 shares of Common Stock issuable upon the
exercise of the Company's Redeemable Warrants, (ii) 250,000 shares of
Common Stock reserved for issuance under the Company's 1994 Stock Plan or
(iii) 220,015 shares of Common Stock issuable upon exercise of outstanding
stock purchase warrants, not including the Redeemable Warrants.
(3) Includes 25,000 shares held in Mr. Mills' individual retirement account.
(4) Includes 10,000 shares held in Mr. Perkins' individual retirement
account.
PLAN OF DISTRIBUTION
Any or all of the Shares may be sold from time to time to purchasers
directly by the Selling Shareholders. Alternatively, the Selling Shareholders
may from time to time offer the Shares through underwriters, dealers or agents
who may receive compensation in the form of underwriting discounts, concessions
or commissions from the Selling Shareholders and/or the purchasers of Shares for
whom they may act as agents. The Selling Shareholders and any such underwriters,
dealers or agents that participate in the distribution of Shares may be deemed
to be underwriters, and any profit on the sale of the Shares by them and any
discounts, commissions or concessions received by them may be deemed to be
underwriting discounts and commissions under the Securities Act. The Shares may
be sold from time to time in one or more transactions at a fixed offering price,
which may be changed, or at varying prices determined at the time of sale or at
negotiated prices.
At the time a particular offer of Shares is made, to the extent required,
a supplement to this Prospectus will be distributed which will identify and set
forth the aggregate amount of Shares being offered and the terms of the
offering, including the name or names of any underwriters, dealers or agents,
the purchase price paid by any underwriter for Shares purchased from the Selling
Shareholders, any discounts, commissions and other items constituting
compensation from the Selling Shareholders and/or the Company, and any
discounts, commissions or concessions allowed or reallowed or paid to dealers,
including the proposed selling price to the public. The Company will not receive
any of the proceeds from the sale by the Selling Shareholders of the Shares
offered hereby.
Under applicable rules and regulations under the Exchange Act, any person
engaged in a distribution of the Shares may not simultaneously engage in market
making activities with respect to the Shares for a period of up to nine business
days prior to the commencement of such distribution. In addition, and without
limiting the foregoing, the Selling Shareholders will be subject to applicable
provisions of the Exchange Act and the rules and regulations thereunder,
including, without limitation, Rules 10b-2, 10b-6 and 10b-7, which provisions
may limit the timing of purchases and sales of the Shares by the Selling
Shareholders.
In order to comply with certain states' securities laws, if applicable,
the Shares will be sold in such jurisdictions only through registered or
licensed brokers or dealers. In certain states the Shares may not be sold unless
the Shares have been registered or qualified for sale in such state, or unless
an exemption from registration or qualification is available and is obtained.
DESCRIPTION OF COMMON STOCK
COMMON STOCK The Company is authorized to issue up to 33,000,000 shares of
Common Stock, $.005 par value. At August 15, 1996, there were 2,958,390 shares
outstanding and approximately 70 holders of record of the Company's Common Stock
and approximately 600 other beneficial owners whose shares are held in street
name at brokerage houses.
Holders of Common Stock are entitled to receive such dividends as are
declared by the Board of Directors of the Company out of funds legally available
for the payment of dividends. The Company expects to retain any earnings to
finance the development of its business. Accordingly, the Company does not
anticipate payment of any dividends on the Common Stock for the foreseeable
future. In the event of any liquidation, dissolution or winding-up of the
Company, the holders of Common Stock will be entitled to receive a pro rata
share of the net assets of the Company remaining after payment or provision for
payment of the debts and other liabilities of the Company.
Holders of Common Stock are entitled to one vote per share in all matters
to be voted upon by stockholders. There is no cumulative voting for the election
of directors, which means that the holders of shares entitled to exercise more
than 50% of the voting rights in the election of directors are able to elect all
of the directors.
Holders of Common Stock have no preemptive rights to subscribe for or to
purchase any additional shares of Common Stock or other obligations convertible
into shares of Common Stock which may hereafter be issued by the Company.
The rights of holders of the shares of Common Stock may become subject in
the future to prior and superior rights and preferences in the event the Board
of Directors establishes one or more additional classes of Common Stock, or one
or more additional series of Preferred Stock. The Board of Directors has no
present plan to establish any such additional class or series.
All of the outstanding shares of Common Stock are, and the Shares to be
sold pursuant to this Offering will be, fully paid and non-assessable. Holders
of Common Stock of the Company are not liable for further calls or assessments.
MINNESOTA ANTI-TAKEOVER LAW
The Company is governed by the provisions of Sections 302A.671 and
302A.673 of the Minnesota Business Corporation Act. In general, Section 302A.671
provides that the shares of a corporation acquired in a "control share
acquisition" have no voting rights unless voting rights are approved in a
prescribed manner. A "control share acquisition" is an acquisition, directly or
indirectly, of beneficial ownership of shares that would, when added to all
other shares beneficially owned by the acquiring person, entitle the acquiring
person to have voting power of 20% or more in the election of directors. In
general, Section 302A.673 prohibits a publicly-held Minnesota corporation from
engaging in a "business combination" with an "interested shareholder" for a
period of four years after the date of transaction in which the person became an
interested shareholder, unless the business combination is approved in a
prescribed manner. "Business combination" includes mergers, asset sales and
other transactions resulting in a financial benefit to the interested
shareholder. An "interested shareholder" is a person who is the beneficial
owner, directly or indirectly, or 10% or more of the corporation's voting stock
or who is an affiliate or associate of the corporation and at any time within
four years prior to the date in question was the beneficial owner, directly or
indirectly, of 10% or more of the corporation's voting stock.
INDEMNIFICATION AND WAIVER OF DIRECTOR LIABILITY
The Company's Articles of Incorporation eliminate or limit certain
liabilities of its directors and the Company's Bylaws provide for
indemnification of directors, officers and employees of the Company in certain
instances. Insofar as exculpation of, or indemnification for, liabilities
arising under the Securities Act of 1933 may be permitted to directors, officers
or persons controlling the Company pursuant to the foregoing provisions, the
Company has been informed that in the opinion of the Securities and Exchange
Commission such exculpation or indemnification is against public policy as
expressed in the Act and is therefore unenforceable.
TRANSFER AGENT AND REGISTRAR
Norwest Bank Minnesota, National Association, is the Transfer Agent and
registrar for the Common Stock and Redeemable Warrants of the Company.
LEGAL MATTERS
The validity of the shares of Common Stock being offered hereby will be
passed upon for the Company by Winthrop & Weinstine, P.A., Minneapolis,
Minnesota.
EXPERTS
The financial statements of the Company contained in the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1996, incorporated by
reference in the Registration Statement of which this Prospectus is a part, have
been audited by Lund Koehler Cox and Company, PLLP, independent public
accountants, as indicated in their report with respect thereto, and are
incorporated herein in reliance upon the authority of said firm as experts in
giving said report.
MATERIAL CHANGES
The Company has begun to actively promote and develop the Shelly's Back
Room concept. Shelly's Back Room is an upscale cigar parlor offering
comfortable, casual seating, full-service bar, food service and a state-of-
the-art air purification system in the Company's northwoods atmosphere. The
first Shelly's Back Room is located in the Rockville Restaurant, and the Company
is pursuing plans for additional stand alone operations.
In August 1996, the Company entered into a lease agreement for the
location of a new Shelly's Back Room in Washington, D.C. which is scheduled to
open by the end of 1996. Modelled after the Shelly's Back Room located in the
Company's Rockville Restaurant, the Washington, D.C. location will be the
Company's first stand alone cigar parlor. The cigar parlor, which is expected to
cover 3,l00 square feet, will offer Shelly's Birch Bay beer, wine and liquors,
comfortable club seating, selected retail and custom cigars and a light
Woodroast menu. The Company plans to develop additional storefront Back Room
locations in other downtown retail and business centers and upscale shopping
malls.
In May 1996, the Company signed a non-binding letter of intent with Grand
Casinos, Inc. ("Grand") to design and construct Shelly's Back Room locations in
one or more of Grand's gaming properties. However, the specific locations have
not been determined and the final terms and conditions of the arrangements are
subject to further negotiation.
The Company has retained an executive search firm to identify candidates
for the positions of chief financial officer and chief operating officer.
Management is seeking to identify and hire candidates within 90 days.
On August 15, 1996, the Company called all of the outstanding
Redeemable Warrants for redemption on September 17, 1996 (the "Redemption
Date"), at the price of $.01 per Redeemable Warrant. On August 15, 1996, the
Company also reduced the exercise price of the Redeemable Warrants from $6.00
per share of Common Stock to $4.00 per share of Common Stock. Therefore, each
Redeemable Warrant now entitles the registered holder thereof to purchase one
share of Common Stock at $4.00 per share until September 16, 1996, the last full
business day prior to the Redemption Date.
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS OR
INCORPORATED HEREIN BY REFERENCE IN CONNECTION WITH
THE OFFER MADE HEREBY. IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR
SOLICITATION OF AN OFFER TO PURCHASE BY ANY PERSON IN
ANY JURISDICTION IN WHICH SUCH OFFER WOULD BE
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE
INFORMATION CONTAINED HEREIN OR INCORPORATED HEREIN
BY REFERENCE IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE HEREOF OR THE DATE OF THE REPORT FROM WHICH IT
IS INCORPORATED.
TABLE OF CONTENTS
PAGE
Available Information...................................
Incorporation of Certain Documents by Reference.........
Prospectus Summary......................................
Risk Factors............................................
Use of Proceeds.........................................
Selling Shareholders....................................
Plan of Distribution....................................
Description of Common Stock.............................
Legal Matters...........................................
Experts.................................................
Material Changes........................................
625,000 SHARES
WOODROAST SYSTEMS, INC.
COMMON STOCK
-------------------
PROSPECTUS
-------------------
AUGUST ___, 1996
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the estimated expenses to be incurred in
connection with the distribution of the shares of Common Stock offered hereby:
SEC registration fee.......................... $ 902
Legal fees and expenses....................... 4,000
Accounting fees and expenses.................. 2,500
Printing expenses............................. 500
Miscellaneous................................. 1,098
--------
TOTAL.................................... $9,000
======
Each amount set forth above, except the SEC registration fee, is
estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 302A.521 of the Minnesota Statutes requires, among other things,
the indemnification of persons made or threatened to be made a party to a
proceeding by reason of acts or omissions performed in their official capacity
as an officer, director, employee or agent of the corporation against judgments,
penalties and fines (including attorneys' fees) if such person is not otherwise
indemnified, acted in good faith, received no improper benefit, reasonably
believed that such conduct was in the best interests of the corporation, and, in
the case of criminal proceedings, had no reason to believe the conduct was
unlawful. In addition, Section 302A.521, subd. 3, of the Minnesota Statutes
requires payment by the corporation, upon written request, of reasonable
expenses in advance of final disposition in certain instances if a decision as
to required indemnification is made by a disinterested majority of the Board of
Directors present at a meeting at which a disinterested quorum is present, or by
a designated committee of the Board, by special legal counsel, by the
Shareholders or by a court.
The Company's Bylaws provide for the indemnification of its directors,
officers, employees, and agents in accordance with, and to the fullest extent
permitted by, the provisions of the Minnesota Business Corporation Act, as
amended from time to time.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
The following exhibits are filed as part of this Registration Statement on
Form S-3:
EXHIBIT
NO. DESCRIPTION
5.1 Opinion of Winthrop & Weinstine, P.A., counsel to the Company.
23.1 Consent of Winthrop & Weinstine, P.A. (included in Exhibit 5.1).
23.2 Consent of Lund Koehler Cox and Company, PLLP, independent public
accountants.
24.1 Powers of Attorney (included in signature page on page II-3 hereof).
ITEM 17. UNDERTAKINGS
(a) The Company will:
(1) File, during any period in which it offers or sells securities,
a post-effective amendment to this Registration Statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the Registration Statement; and
(iii) Include any additional or changed material information
on the plan of distribution.
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
Registration Statement is on Form S-3 or Form S-8, and 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 or Section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) For determining liability under the Securities Act of 1933, as
amended, treat each post-effective amendment as a new registration
statement of the securities offered, and the offering of the securities at
that time to be the initial bona fide offering.
(3) File a post-effective amendment to remove from registration any
of the securities that remain unsold at the end of the offering.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to directors, officers, and
controlling persons of the small business issuer pursuant to the provisions
summarized in Item 15 above, or otherwise, the small business issuer has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the small business issuer of
expenses incurred or paid by a director, officer or controlling person of the
small business issuer 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 small business issuer 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 Act, as
amended, and will be governed by the final adjudication of such issue.
(c) The Company will:
(1) For determining any liability under the Securities Act of 1933,
treat 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 Company under Rule 424(b)(1) or (4) or
497(h) under the Securities Act of 1933 as part of this registration
statement as of the time the Commission declared it effective.
(2) For determining any liability under the Securities Act of 1933,
treat each post-effective amendment that contains a form of prospectus as
a new registration for the securities offered in the registration
statement, and that offering of the securities at that time as the initial
bona fide offering of those securities.
(d) The Company hereby undertakes that, for purposes of determining any
liability under the Securities Act of 1933, each filing of the Registrant's
Annual Report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 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.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, 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, in the City of Minneapolis, State of Minnesota, on August 20, 1996.
WOODROAST SYSTEMS, INC.
By /s/ Sheldon F. Jacobs
F. Jacobs, President
Chief Executive Officer and Chief Financial Officer
POWER OF ATTORNEY
Each person whose signature appears below hereby constitutes and appoints
Sheldon F. Jacobs, such person's true and lawful attorney-in-fact and agent with
full power of substitution and resubstitution for such person and in such
person's name, place and stead, in any and all capacities, to sign the
Registration Statement on Form S-3 of Woodroast Systems, Inc. and any or all
amendments (including post-effective amendments) to the Registration Statement,
and to file the same, with all exhibits hereto and other 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 such person
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, or either of them, 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, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/s/ Sheldon F. Jacobs President, Chief Executive Officer, August 20, 1996
- ------------------- Chief Financial Officer and Director
Sheldon F. Jacobs (principal executive, financial and
accounting officer)
/s/ Lee M. Cohn Director August 20, 1996
- -------------------
Lee M. Cohn
/s/ Byron L. Frank Director August 20, 1996
- -------------------
Byron L. Frank
</TABLE>
INDEX TO EXHIBITS
EXHIBIT
NO. DESCRIPTION PAGE
5.1 Opinion of Winthrop & Weinstine, P.A., counsel to the
Company..............................
23.1 Consent of Winthrop & Weinstine, P.A. (included in Exhibit
5.1).
23.2 Consent of Lund Koehler Cox and Company, PLLP, independent
public accountants...............
24.1 Powers of Attorney (included in signature page on page II-3
hereof).
Exhibit 5.1
WINTHROP & WEINSTINE, P.A.
3000 Dain Bosworth Plaza
60 South Sixth Street
Minneapolis, Minnesota 55402
(612) 347-0700
August 21, 1996
Woodroast Systems, Inc.
10250 Valley View Road, Suite 145
Eden Prairie, Minnesota 55344
Re: Registration Statement on Form S-3
Gentlemen:
We have acted as legal counsel for Woodroast Systems, Inc. (the "Company") in
connection with the preparation of a Registration Statement on Form S-3 (the
"Registration Statement") to be filed with the Securities and Exchange
Commission, and the Prospectus to be used in conjunction with the Registration
Statement (the "Prospectus"), relating to the registration under the Securities
Act of 1933, as amended, of 625,000 shares (the "Shares") of common stock, par
value $.005 per share (the "Common Stock"), to be sold by certain selling
shareholders of the Company.
In connection therewith, we have examined (a) the Articles of Incorporation and
Bylaws of the Company, both as amended to date; (b) the corporate proceedings of
the Company relative to its organization and to the authorization and issuance
of the Shares; and (c) the Registration Statement and the Prospectus. In
addition to such examination, we have reviewed such other proceedings, documents
and records and have ascertained or verified such additional facts as we deem
necessary or appropriate for purposes of this opinion.
Based upon the foregoing, we are of the opinion that:
1. The Company has been legally incorporated and is validly existing under
the laws of the State of Minnesota.
2. All necessary corporate action has been taken by the Company to authorize
the issuance of the Shares.
3. The Shares are validly authorized by the Company's Articles of
Incorporation, as amended, and are validly issued, fully paid, and
non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption "Legal
Matters" in the Prospectus.
Very truly yours,
WINTHROP & WEINSTINE, P.A.
By - /s/ Eric O. Madson
Eric O. Madson
Exhibit 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to incorporation by
reference of our report dated March 1, 1996 included in the Company's Form
10-KSB for the year ended December 31, 1995 and to all references to our Firm
included in or made part of this Registration Statement on Form S-3.
LUND KOEHLER COX & COMPANY, PLLP
Minneapolis, Minnesota
August 21, 1996
