As filed with the Securities and Exchange Commission on July 23, 1996
Registration No. 333-
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
incorporation or organization) Identification No.)
10250 Valley View Road, Suite 145
Eden Prairie, Minnesota 55344
(612) 944-5113
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive office)
Sheldon F. Jacobs
President, Chief Executive Officer and Chief Financial Officer
Woodroast Systems, Inc.
10250 Valley View Road, Suite 145
Eden Prairie, Minnesota 55344
(612) 944-5113
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
COPIES TO:
Richard D. McNeil, Esq.
Lindquist & Vennum P.L.L.P.
4200 IDS Center
80 South Eighth Street
Minneapolis, Minnesota 55402
Telephone: (612) 371-3211
Approximate date of commencement of proposed sale to public:
From time to time after this Registration Statement becomes effective.
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 earliest 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
Proposed Proposed
Maximum Maximum
Amount to be Offering Aggregate Amount of
Title of Each Class of Registered Price Offering Price Registration
Securities to be Registered Per Unit Fee
<S> <C> <C> <C> <C>
Redeemable Class A Warrant......................................... 425,200 $1.41 $ $597,406 $206.00
</TABLE>
(1) Estimated solely for the purpose of determining the registration fee based
on the average of the closing bid and asked prices of the Redeemable Class
A Warrants on the NASDAQ SmallCap Market on July 19, 1996 pursuant to Rule
457(c).
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 THAT 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.
SUBJECT TO COMPLETION, DATED JULY 23, 1996
PROSPECTUS
WOODROAST SYSTEMS, INC.
425,200 REDEEMABLE CLASS A WARRANTS
This Prospectus relates to the offering of up to 425,200 Redeemable
Class A Warrants (the "Warrants") of Woodroast Systems, Inc. (the "Company")
which may be offered from time to time by the warrantholders named herein (the
"Selling Warrantholders"). Each Redeemable Class A Warrant entitles the holder
to purchase one share of the Company's Common Stock, par value $.005 per share
(the "Common Stock") for an exercise price of $6.00 per share. The Redeemable
Class A Warrants are subject to redemption by the Company for $.01 each, on 30
days written notice, provided that the closing bid price of the Common Stock
exceeds $7.50 per share (subject to adjustment) for any 20 consecutive trading
days prior to such notice. The Company will not receive any proceeds from the
sale of the Warrants by the Selling Warrantholders. See "Use of Proceeds."
The Company will bear all expenses of the offering hereunder other than
underwriting discounts and commissions incurred in connection with the sale of
the Warrants by the Selling Warrantholders. The Redeemable Class A Warrants are
traded on the NASDAQ SmallCap Market under the symbol "WRSIW." The closing bid
and asked prices of the Redeemable Class A Warrants on July 19, 1996 were $1.31
and $1.50, respectively, as reported by NASDAQ.
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK. SEE " RISK FACTORS"
BEGINNING ON PAGE 4 OF THIS PROSPECTUS.
The Selling Warrantholders have advised the Company that they intend to
sell the Warrants from time to time in transactions on the NASDAQ SmallCap
Market at prices prevailing at the time of the sale or otherwise as set forth
below. The Selling Warrantholders have also advised the Company that, as of the
date hereof, they have made no arrangement with any brokerage firm for the sale
of the Warrants. The Selling Warrantholders may be deemed to be "underwriters"
within the meaning of the Act, in which case any commissions received by a
broker or dealer may be deemed to be underwriting commissions or discounts under
the Act. See "Plan of Distribution."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
<TABLE>
<CAPTION>
UNDERWRITING DISCOUNTS PROCEEDS TO PROCEEDS TO SELLING
PRICE TO PUBLIC AND COMMISSIONS ISSUER WARRANTHOLDERS
<S> <C> <C> <C> <C>
Per Warrant $1.41(1) (2) None $1.41(1)
- ---------------------------------------------------------------------------------------------- --------------------------
Total $597,406(1) (2) None $597,406(1)
=============================== =================== =========================== ================= ==========================
</TABLE>
(1) Estimated based on the average of the closing bid and asked price of
Redeemable Class A Warrants as reported on the NASDAQ SmallCap Market
as of July 19, 1996 and assumes the sale of all Warrants by the Selling
Warrantholders, with no adjustment for commissions, discounts,
brokerage and other fees that may be paid by the Selling
Warrantholders, or expenses of the offering to be paid by the Company.
(2) Commissions, discounts and brokerage fees will be payable by the
Selling Warrantholders in such amounts as the Selling Warrantholders
may agree to from time to time.
THE DATE OF THIS PROSPECTUS IS JULY 23, 1996
AVAILABLE INFORMATION
The Company is subject to the informational 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 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. 20549.
The Company has filed with the Commission a registration statement
under the Securities Act of 1933 with respect to the shares offered hereby. This
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, which have been filed by the Company with the
Commission, are incorporated by reference in this Prospectus: (i) the Company's
Annual Report on Form 10-KSB for the fiscal year ended December 31, 1995; (ii)
the Company's Quarterly Report on Form 10-QSB for the quarter ended March 31,
1996; (iii) the Company's Proxy Statement dated April 29, 1996 for the 1996
Annual Meeting of Shareholders; and (iv) 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
pursuant to Sections 13(a), 13(c), 14 or 15 of the 1934 Act after the date of
this Prospectus and prior to the termination of the offering of securities
contemplated hereby shall also be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded hereby to the extent that a
statement contained herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy
of this Prospectus has been delivered, upon the written or oral request of such
person, a copy of any or all of the documents which are incorporated by
reference into this Prospectus, other than exhibits to such documents (unless
such exhibits are specifically incorporated by reference in 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 SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION AND FINANCIAL STATEMENTS APPEARING ELSEWHERE IN THIS PROSPECTUS AND
IN DOCUMENTS INCORPORATED HEREIN BY REFERENCE. ALL REFERENCES IN THIS PROSPECTUS
TO NUMBERS OF SHARES OF THE COMPANY'S COMMON STOCK AND NUMBERS OF REDEEMABLE
CLASS A WARRANTS AND NUMBER OF SHARES OF COMMON STOCK PURCHASABLE BY EXERCISE
THEREOF 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.
THE COMPANY
Woodroast Systems, Inc. (the "Company") owns and operates Shelly's
Woodroast restaurants 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 northwoods, from the great fieldstone and
timber lodges to the aroma of meat, fish and fowl roasting over a hardwood fire.
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
The 425,200 Warrants being offered by the Selling Warrantholders were
issued by the Company to 19 persons for no monetary consideration in May, 1996.
The reason the Company issued the additional Redeemable Class A Warrants relates
to apparent confusion in the market arising from a one-for-three reverse split
of the Company's Common Stock that was effective May 25, 1995. This reverse
stock split resulted in each Redeemable Class A Warrant representing the right
to purchase one-third of one share of Common Stock for $18.00 per share. While
this seemed clear in the months immediately following the reverse stock split,
by November the Company was informed that trading was occurring in the public
market for the Redeemable Class A Warrants based on the mistaken belief that
each Redeemable Class A Warrant created the right to buy a full share of Common
Stock, rather than one-third of a share. After considering the situation, the
Company announced on December 5, 1995 that it would make available, for no
additional monetary payment, to those who bought Redeemable Class A Warrants in
the public market on or after November 20, 1995 and before December 5, 1995, the
right to receive two additional Redeemable Class A Warrants (providing the right
to purchase what was then two-thirds of one share of Common Stock) for each one
Redeemable Class A Warrant purchased during that period.
On January 23, 1996 the Company issued a press release and sent a
letter to all holders of Redeemable Class A Warrants providing a procedure for
claims to be made prior to February 29, 1996 by all those who believed
themselves entitled to the additional Redeemable Class A Warrants based on the
December 5, 1995 announcement. In response to the claims that were submitted,
the Company issued the Warrants which are the subject of this Prospectus to the
19 Warrantholders.
On January 18, 1996 the Company effected a three-for-one split of the
outstanding shares of Common Stock by means of a distribution of two shares of
Common Stock for every one share held of record as of January 4, 1996. This had
the effect of (i) undoing the three-for-one reverse stock split of the Common
Stock in May, 1995, (ii) restoring each Redeemable Class A Warrant to constitute
the right to purchase one share of Common Stock for $6.00 per share, and (iii)
converting the right to receive additional Redeemable Class A Warrants pursuant
to the Company's December 5, 1995 announcement to constitute the right to
receive two additional Redeemable Class A Warrants (providing the right to
purchase two shares of Common Stock) for each one Redeemable Class A Warrant
purchased in the public market on or after November 20, 1995 and before December
5, 1996. Thus in response to claims submitted, the Company on May 10, 1996
issued the 425,200 Redeemable Class A Warrants (referred to as the "Warrants")
to the 19 persons referred to herein as Warrantholders. The Warrants were issued
in a private placement to the Selling Warrantholders, and the registration which
is being made under this Prospectus is being made to permit the Warrants to be
resold by the Selling Warrantholders in the public market for Redeemable Class A
Warrants.
The closing bid and asked prices of the Redeemable Class A Warrants on
the NASDAQ SmallCap Market on December 5, 1995, when the issuance of the
Warrants was announced, were $1.125 and $1.25, and on May 10, 1996, when the
Warrants were issued, were $0.75 and $1.00.
Redeemable Class A Warrants offered by Selling Warrantholders.. 425,200
Redeemable Class A Warrants outstanding after offering ....... 1,175,200
NASDAQ Symbol.................................................. WRSIW
USE OF PROCEEDS
The Company will not receive any proceeds from sales of the Warrants
by the Selling Warrantholders. See "USE OF PROCEEDS."
RISK FACTORS
This offering involves substantial investment risk and the Warrants
should be purchased only by persons who can afford the loss of their entire
investment. See "RISK FACTORS."
RISK FACTORS
AN INVESTMENT IN THE SECURITIES OFFERED HEREBY IS HIGHLY SPECULATIVE
AND INVOLVES A HIGH DEGREE OF RISK. INVESTORS COULD LOSE THEIR ENTIRE
INVESTMENT. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING
FACTORS, ALONG WITH THE OTHER INFORMATION SET FORTH OR INCORPORATED BY REFERENCE
IN THIS PROSPECTUS, IN EVALUATING THE COMPANY, ITS BUSINESS AND PROSPECTS BEFORE
PURCHASING THE SECURITIES OFFERED HEREBY.
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 ($259,802) for the fiscal years ended December 25, 1994 ,
December 31, 1995, and the thirteen weeks ended March 31, 1996, respectively,
and a working capital deficit of ($261,611) at March 31, 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 decision to consider opening additional Shelly's
Woodroast restaurants and Shelly's Back Room 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 was
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 Shelly's Woodroast restaurants and Shelly's Back
Rooms outside of the Minneapolis-St. Paul metropolitan market gives 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.
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.
Upon the exercise of all of the outstanding Redeemable Class A
Warrants, Mr. Jacobs will own approximately 28.3% of the issued and outstanding
shares of the Common Stock of the Company. Accordingly, Mr. Jacobs will have a
significant degree of control over 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.
MARKET OVERHANG; REDEMPTION OF REDEEMABLE CLASS A WARRANTS.
The resale of a significant number of the Warrants could depress the
trading price of the Redeemable Class A Warrants during the course of the
Offering. The Redeemable Class A Warrants may be called for redemption by the
Company if the closing bid price of the Common Stock on the NASDAQ Small Cap
market is more than $7.50 for a period of 20 consecutive trading days. This
condition was satisfied on July 2, 1996, and thus the Company has the right to
call the Redeemable Class A Warrants for redemption at any time. If issued, such
a call could depress the trading price of the Redeemable Class A Warrants.
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
2,874,967 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.
USE OF PROCEEDS
The Warrants will be offered solely by the Selling Warrantholders
and none of the proceeds of the sale thereof will be received by the Company.
SELLING WARRANTHOLDERS
The Warrants being offered by the Selling Warrantholders are
Redeemable Class A Warrants, each of which entitles the holder to purchase one
share of Common Stock for an exercise price of $6.00 per share. The following
table sets forth certain information with respect to the beneficial ownership of
the Company's Redeemable Class A Warrants by the Selling Warrantholders as of
June 30, 1996, and as adjusted to reflect the sale of the Warrants.
<TABLE>
<CAPTION>
Common Stock
(including Warrants)
Common Stock Number of Maximum to be Beneficially
Beneficially Owned Warrants Beneficially Number of Owned After
Prior to Owned Prior Warrants to the Offering
Name Offering to Offering be Sold(1) Number Percent
<S> <C> <C> <C> <C>
Greg R. Barron 5,298 2,500 1,000 6,798 *
Lester Beernink 0 2,000 2,000 0 *
George Brookes 0 4,000 4,000 0 *
Diana M. Brookes
Michel Abi Chaker 0 4,000 4,000 0 *
Walter B. Davis 57,198 20,000 20,000 57,198 *
Michael A. Dillon 0 21,000 14,000 7,000 *
Arnold E. Feuerlicht 8,401 3,000 2,000 9,401 *
Edna G. Feuerlicht
Patrick J. Hale 0 6,000 6,000 0 *
James Janis 15,000 20,000 20,000 15,000 *
Andrew Lassak 0 63,000 42,000 21,000 *
Stephen R. Montgomery 0 800 800 0 *
Steven T. Newby 137,500 275,000 275,000 137,500 *
Jeffrey C. Rubin 0 3,000 2,000 1,000 *
John Steve Ruiz 0 16,000 16,000 0 *
Eli Silkes 0 1,000 1,000 0 *
Shoshana Silkes
Stefan Slowinski 0 1,500 1,000 500 *
John A. Stanley 2,000 4,000 4,000 2,000 *
Eric C. Sugrue 0 400 400 0 *
Vincent J. Welte 0 15,000 10,000 5,000 *
-------- --------- -------- ---------
TOTALS: 225,397 462,200 425,200 262,397
</TABLE>
- ----------------------------
* Less than 1%.
(1) For each Selling Warrantholder named above, the Selling
Warrantholder may sell the number of Warrants indicated pursuant to
this Prospectus. The remaining Warrants owned by each Selling
Warrantholder (indicated as "Warrants to be Beneficially Owned After
the Offering") do not represent "restricted securities," and the
Selling Warrantholder may sell such remaining Warrants from time to
time, in addition to the Warrants offered pursuant to this
Prospectus.
PLAN OF DISTRIBUTION
The Company has been advised that the Selling Warrantholders may sell
the Warrants from time to time in one or more transactions (which may include
block transactions) on the NASDAQ SmallCap Market at market prices prevailing at
the time of the sale or at prices otherwise negotiated.
The Warrants may, without limitation, be sold by one or more of the
following: (i) a block trade in which the broker or dealer so engaged will
attempt to sell the securities as agent but may position and resell a portion of
the block as principal to facilitate the transaction; (ii) purchases by a broker
or dealer as principal and resale by such broker or dealer for its account
pursuant to this Prospectus; and (iii) ordinary brokerage transactions and
transactions in which the broker solicits purchasers.
The Company has been advised that, as of the date hereof, the Selling
Warrantholders have made no arrangement with any broker for the sale of the
Warrants. Underwriters, brokers or dealers may participate in such transactions
as agents and may, in such capacity, receive brokerage commissions from the
Selling Warrantholders or purchasers of such securities. Such underwriters,
brokers or dealers may also purchase Warrants and resell such Warrants for their
own account in the manner described above. The Selling Warrantholders and such
underwriters, brokers or dealers may be considered "underwriters" as that term
is defined by the Securities Act of 1933, although the Selling Warrantholders
disclaim such status. Any commissions, discounts or profits received by such
underwriters, brokers or dealers in connection with the foregoing transactions
may be deemed to be underwriting discounts and commissions under the Securities
Act of 1933.
LEGAL MATTERS
The validity of the issuance of the Warrants offered hereby will be
passed upon for the Company by Lindquist & Vennum P.L.L.P., Minneapolis,
Minnesota.
EXPERTS
The financial statements of the Company 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. The Company is currently
negotiating the terms of a lease for the first stand alone Shelly's Back Room to
be located in Washington, D.C., in a street level store front location. 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 execute 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.
INDEMNIFICATION
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.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14: OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
SEC registration fee ........................ $ 206
Accounting fees and expenses ................ 1,500
Legal fees and expenses ..................... 5,000
Miscellaneous ............................... 1,294
------
Total .................................. $8,000
======
Except for the SEC fee, all of the foregoing expenses have been
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
Exhibit No. Description
- ----------- -----------
5.1 Opinion and Consent of Lindquist & Vennum P.L.L.P., counsel to
the Company
23.1 Consent of Lund Koehler Cox and Company, PLLP, independent
public accountants
23.2 Consent of Lindquist & Vennum P.L.L.P. (included in Exhibit 5.1
above)
24 Powers of Attorney (included on signature page hereof)
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) to reflect in the Prospectus any facts or events arising
after the effective date of the registration statement (or the
most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form
of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement; and
(iii) to include any material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
Registration Statement is on Form S-3, Form S-8 or Form F-3, 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) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) If the registrant is a foreign private issuer, to file a
post-effective amendment to the registration statement to include any financial
statements required by Rule 3-19 of this chapter at the start of any delayed
offering or throughout a continuous offering. Financial statements and
information otherwise required by Section 10(a)(3) of the Act need not be
furnished, provided, that the registrant includes in the prospectus, by means of
a post-effective amendment, financial statements required pursuant to this
paragraph (a)(4) and other information necessary to ensure that all other
information in the prospectus is at least as current as the date of those
financial statements. Notwithstanding the foregoing, with respect to
registration statements on Form F-3, a post-effective amendment need not be
filed to include financial statements and information required by Section
10(a)(3) of the Act or Rule 3-19 of this chapter if such financial statements
and information are contained in periodic reports filed with or furnished to the
Commission 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 Form
F-3.
(b) The undersigned Registrant 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.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions or otherwise, the registrant has
been advised that, in the opinion of the 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 registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe it meets all of
the requirements for filing a 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 Eden Prairie, State of Minnesota, on the 23rd day of
July, 1996.
WOODROAST SYSTEMS, INC.
By /s/ Sheldon F. Jacobs
Sheldon F. Jacobs, President,
Chief Executive Officer and Chief
Financial Officer
POWER OF ATTORNEY
The undersigned officers and directors of Woodroast Systems, Inc.
hereby constitute and appoint Sheldon F. Jacobs our true and lawful
attorney-in-fact and agent, with full power of substitution and resubstitution
for us and in our stead, in any and all capacities, to sign any or all
amendments to this registration statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents 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, hereby ratifying and confirming all that
said attorney-in-fact and agent or his 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 on July 23, 1996
in the capacities indicated.
Signature Title
/s/ Sheldon F. Jacobs President,
Sheldon F. Jacobs Chief Executive Officer,
Chief Financial Officer and Director
(principal executive, financial and
accounting officer)
/s/ Lee M. Cohn Director
Lee M. Cohn
/s/ Byron L. Frank Director
Byron L. Frank
Exhibit 5.1
July 23, 1996
Woodroast Systems, Inc.
10250 Valley View Road, Suite 145
Eden Prairie, MN 55344-3542
Re: Registration Statement on Form S-3
Ladies and Gentlemen:
In connection with the Registration Statement on Form S-3 filed by
Woodroast Systems, Inc. (the "Company") with the Securities and Exchange
Commission on July 23, 1996, relating to a public offering of 425,200 Redeemable
Class A Warrants (the "Warrants"), to be offered by certain holders of Warrants,
please be advised that as special counsel to the Company, upon examination of
such corporate documents and records as we have deemed necessary or advisable
for the purpose of this opinion, it is our opinion that:
1. The Company is a validly existing corporation in good standing under
the laws of the State of Minnesota.
2. The Warrants have been duly authorized by the Company and constitute
binding obligations of the Company.
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 heading
"Legal Matters" in the Prospectus comprising a part of the Registration
Statement.
Very truly yours,
LINDQUIST & VENNUM P.L.L.P.
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
July 23, 1996
