As filed with the Securities and Exchange Commission on August 15, 1996.
Registration No. 333-8057
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
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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
President and Chief Executive Officer
Woodroast Systems, Inc.
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. |_|
---------------------------
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 15, 1996
PROSPECTUS
1,175,200 SHARES
WOODROAST SYSTEMS, INC.
COMMON STOCK
The shares of Common Stock offered hereby (the "Shares") are being
offered by Woodroast Systems, Inc. (the "Company"). The Shares are issuable upon
the exercise of the Company's Redeemable Class A Warrants (the "Redeemable
Warrants"). The terms of the Redeemable Warrants, as originally issued, were as
follows: Each Warrant entitles the holder (the "Warrantholder") thereof to
purchase one share of Common Stock at a price equal to $6.00 per Share, subject
to reduction by the Company or adjustment as a result of certain events. The
Redeemable Warrants are exercisable until June 6, 1997 (3 years following the
date of the Company's initial public offering), unless extended by the Company
or earlier called for redemption by the Company. The Redeemable Warrants are
redeemable by the Company at a redemption price of $.01 per Warrant following a
period of 20 consecutive trading days where the per share closing bid price of
the Common Stock exceeds $7.50 on not less than 30 days written notice.
Warrantholders may exercise their rights until the close of business on the date
fixed for redemption, unless extended by the Company. See "Description of
Securities."
As of July 2, 1996, the per share closing bid price of the Common Stock
had exceeded $7.50 per share for more than 20 consecutive trading 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.
The Company's Common Stock and Redeemable Warrants are currently traded
on the Nasdaq Small Cap Market under the symbol "WRSI" and "WRSIW",
respectively. On August 14, 1996, the last reported sale price thereon was $5.13
per share of Common Stock and $0.53 per Warrant.
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
PRICE TO DISCOUNTS AND PROCEEDS TO
PUBLIC COMMISSIONS COMPANY (1)
- -------------------------------------------------------------------------------
Per Share...................... $4.00 None $4.00
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Total (2)...................... $4,700,800 None $4,700,800
===============================================================================
(1) Before deducting expenses payable by the Company estimated at $37,000.
(2) Assumes the exercise of all 1,175,200 outstanding Redeemable Warrants.
Each Warrant entitles the Warrantholder to purchase one Share of Common
Stock at a price equal to $4.00 per share, subject to reduction by the
Company or adjustment as a result of certain events.
The date of this Prospectus is Agusut ___, 1996.
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.
NOTICE TO FLORIDA RESIDENTS
THE SECURITIES OFFERED HEREIN HAVE NOT BEEN REGISTERED UNDER THE
FLORIDA SECURITIES AND INVESTOR PROTECTION ACT AND ARE BEING SOLD IN RELIANCE
UPON AN EXEMPTION PROVIDED BY SECTION 517.061(11) THEREOF. UNLESS THE SECURITIES
ARE REGISTERED, THEY MAY NOT BE REOFFERED FOR SALE OR RESOLD IN THE STATE OF
FLORIDA EXCEPT AS AN EXEMPT SECURITY OR IN AN EXEMPT TRANSACTION UNDER SAID ACT.
THE FLORIDA SECURITIES AND INVESTOR PROTECTION ACT PROVIDES, WHERE
SALES ARE MADE TO FIVE OR MORE PERSONS IN FLORIDA, THAT ANY SALE MADE PURSUANT
TO SECTION 517.061(11) OF THE FLORIDA SECURITIES AND INVESTOR PROTECTION ACT
SHALL BE VOIDABLE BY SUCH FLORIDA PURCHASER EITHER WITHIN THREE DAYS AFTER THE
FIRST TENDER OF CONSIDERATION MADE BY SUCH PURCHASER TO THE ISSUER, AN AGENT OF
THE ISSUER, OR AN ESCROW AGENT OR WITHIN THREE DAYS AFTER THE AVAILABILITY OF
THAT PRIVILEGE IS COMMUNICATED TO SUCH PURCHASER, WHICHEVER OCCURS LATER. EACH
PERSON ENTITLED TO EXERCISE SUCH RIGHT TO WITHDRAW AND WHO WISHES TO EXERCISE
SUCH RIGHT MUST CAUSE A WRITTEN NOTICE OR TELEGRAM TO BE SENT TO THE AGENT
WITHIN THE AFOREMENTIONED THREE-DAY PERIOD.
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................................... 1,175,200 shares
Common Stock outstanding
before the offering.................................. 2,958,390 (1)(2)
Common Stock outstanding
after the offering................................... 4,133,590 (2)(3)
NASDAQ Symbols
Common Stock......................................... WRSI
Redeemable Warrants.................................. WRSIW
- --------------------------
(1) Excludes the 1,175,200 Shares issuable upon exercise of the Redeemable
Warrants.
(2) Does not include (i) 250,000 shares of Common Stock reserved for issuance
under the Company's 1994 Stock Plan or (ii) 220,015 shares of Common Stock
issuable upon exercise of outstanding stock purchase warrants, not
including the Redeemable Warrants.
(3) Assumes exercise of all of the Redeemable Warrants.
USE OF PROCEEDS
The Company plans to use the proceeds received upon exercise of the
Redeemable Warrants for working capital and general corporate purposes. See "USE
OF PROCEEDS."
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 MinneapolisSt. 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 intial 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") that 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
Upon the exercise of the Redeemable Warrants, Mr. Jacobs will own
approximately 27.8% 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. 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.
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 net proceeds to the Company from the exercise of the Redeemable
Warrants, after deducting estimated costs and expenses, are estimated to be as
much as $4,663,800, assuming all of the Redeemable Warrants are exercised, or as
little as nothing. The closing bid price for the Company's Common Stock on
August 14, 1996, was higher than the exercise price of the Redeemable Warrants.
The Company does not expect any Redeemable Warrants to be exercised unless the
market price of the Company's Common Stock exceeds the exercise price of the
Redeemable Warrants.
The net proceeds (if any) from the exercise of the Redeemable Warrants
will be used to expand the Company's management and to finance the operation and
expansion of the Company's business, including establishing Shelly's Back Room
locations. The foregoing discussion assumes that the Company will receive net
proceeds of $4,663,800. Since the actual amount of net proceeds is uncertain,
the foregoing uses and amounts only represent management's current expectations
as to the application of such proceeds as they are received by the Company.
DILUTION
The net tangible book value of the Company's Common Stock at June 30,
1996 was $3,202,080 or $1.11 per share. Net tangible book value per share of
Common Stock represents the tangible assets reduced by total liabilities,
divided by the number of outstanding shares of Common Stock. Assuming the
exercise of 1,175,200 Redeemable Warrants at an exercise price of $4.00 per
share and the receipt of the net proceeds therefrom, and assuming no further
changes in net tangible book value since such date, the adjusted net tangible
book value of the Company's Common Stock at June 30, 1996, would have been
approximately $7,865,880, or $1.94 per share. This represents an immediate
dilution upon exercise of the Redeemable Warrants of $2.06 per share.
The following table illustrates the dilution, in terms of net tangible
book value, that will be experienced by purchasers of the securities offered
hereby, and the increase in terms of net tangible book value that will be
experienced by the existing stockholders:
Exercise price per share................................ $ 4.00
Net tangible book value per share
at June 30, 1996..................................... $ 1.11
Increase per share to existing stockholders
attributable to sale of shares to new investors 0.83
------
Adjusted net tangible book value per share after
exercise of Redeemable Warrants...................... 1,94
------
Dilution per share upon exercise of Redeemable Warrants $ 2.06
======
The foregoing discussion assumes no exercise of currently outstanding
options and warrants to purchase Common Stock other than purchase of the shares
offered hereby upon exercise of the Redeemable Warrants. The issuance of shares
upon the exercise of such options or warrants may result in additional dilution
to stockholders.
PLAN OF DISTRIBUTION
The Company is not using an underwriter or selling agent in connection
with this offering. The 1,175,200 shares of Common Stock being offered by the
Company hereby are issuable upon the exercise of the Redeemable Warrants. The
Company does not currently intend to engage any solicitation agent. If the
Company determines to do so in the future, the Company anticipates that it would
be required to pay such warrant solicitation agent a fee and reimburse the
expenses of such agent.
Any broker-dealers that act in connection with the sale of the Common
stock as a solicitation agent on behalf of the Company might be deemed to be
"underwriters" within the meaning of Section 2(11) of the Securities Act.
DESCRIPTION OF SECURITIES
COMMON STOCK
The Company is authorized to issue up to 33,000,000 shares of Common
Stock, $.005 par value. At August 14, 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.
REDEEMABLE WARRANTS
WARRANT AGREEMENT
The Redeemable Warrants were issued under and are governed by the
provisions of the Warrant Agreement between the Company and Norwest Bank
Minnesota, National Association, as Warrant Agent. A copy of the Warrant
Agreement has been filed as an exhibit to the Registration Statement of which
this Prospectus is a part. The following statements are summaries of certain
provisions contained therein, are not complete, and are qualified in their
entirety by reference to the Warrant Agreement.
The Redeemable Warrants are transferrable separately from the Common
Stock with which they were issued. One Redeemable Warrant entitles the
Warrantholder thereof to purchase one share of Common Stock during the three
year period ending June 6, 1997, unless earlier called for redemption by the
Company. Each Warrant is exercisable at a price equal to $6.00 per share,
subject to adjustment as a result of certain events. The Redeemable Warrants are
redeemable, by the Company at a redemption price of $.01 per Redeemable Warrant
on not less than 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. As of July 2, 1996 this
requirement has been satisfied. For these purposes, the closing bid price of the
Common Stock shall be determined by the closing bid price as reported by NASDAQ
so long as the Common Stock is quoted on NASDAQ and, if the Common Stock is
listed on a national securities exchange, shall be determined by the last
reported sale price on the primary exchange on which the Common Stock is traded.
Holders of Redeemable Warrants will automatically forfeit all rights thereunder
except the right to receive the $.01 redemption price per warrant unless the
Redeemable Warrants are exercised before they are redeemed. Holders of
Redeemable Warrants may exercise their rights until the close of business on the
date fixed for redemption, unless extended by the Company.
Warrantholders as such are not entitled to vote, receive dividends, or
exercise any of the rights of holders of shares of Common Stock for any purpose
until such Redeemable Warrants have been duly exercised and payment of the
purchase price has been made. The Redeemable Warrants are in registered form and
may be presented for transfer, exchange, or exercise at the corporate office of
the Warrant Agent. The Redeemable Warrants are quoted on the Nasdaq SmallCap
Market under the symbol "WRSIW."
The Warrant Agreement permits the Company to reduce the exercise price
of the Redeemable Warrants during all or any portion of the originally stated
exercise period upon reasonable notice to the Warrantholders. The Warrant
Agreement also permits the Company to extend the exercise period and to increase
the exercise price for any period the exercise period is extended upon
reasonable notice to the Warrantholders.
The Warrant Agreement provides for adjustment of the exercise price and
the number of shares of Common Stock purchasable upon exercise of the Redeemable
Warrants to protect Warrantholders against dilution in certain events, including
stock dividends, stock splits, reclassification, and any combination of Common
Stock, or the merger, consolidation, or disposition of substantially all the
assets of the Company.
REGISTRATION
The Company has sufficient shares of Common Stock authorized and
reserved for issuance upon exercise of the Redeemable Warrants, and such shares
when issued will be fully paid and nonassessable. The Company must have a
current registration statement on file with the Securities and Exchange
Commission (the "Commission") and, unless exempt therefrom, with the securities
commission of the state in which the Warrantholder resides in order for the
Warrantholder to exercise his Redeemable Warrants and obtain shares of Common
Stock free of any transfer restrictions. The shares so reserved for issuance
upon exercise of the Redeemable Warrants are registered pursuant to the
Registration Statement of which this Prospectus is a part. Furthermore, the
Company has agreed to use its best efforts to maintain an effective registration
statement (by filing any necessary post-effective amendments or supplements to
the Registration Statement) throughout the term of the Redeemable Warrants with
respect to the shares of Common Stock issuable upon exercise thereof. The
Company will incur significant legal and other related expenses in order to keep
such registration statement current. However, there can be no assurance that the
Company will be able to keep any such registration statement current or that
such registration statement will be effective at the time the Warrantholder
desires to exercise his or her Redeemable Warrants. Additionally, the Company
has agreed to use its best efforts to maintain exemptions or qualifications in
those jurisdictions where the Redeemable Warrants were originally qualified for
sale to permit exercise of the Redeemable Warrants and issuance of shares of
Common Stock upon such exercise. However, there can be no assurance that any
such exemption will be available or qualification will be effective at the time
the Warrantholder desires to exercise his or her Redeemable Warrants. If for any
reason the Company's registration statement is not kept current, or if the
Company is unable to qualify its Common Stock underlying the Redeemable Warrants
for sale in particular states, Warrantholders in those states will, absent an
applicable exemption, have no choice but to either sell such Warrants or let
them expire.
EXERCISE
The Redeemable Warrants may be exercised upon surrender of the
certificate therefor on or prior to the expiration date (or earlier redemption
date) at the offices of the Company's Warrant Agent, with the form of "Purchase
Form" on the reverse side of the certificate filled out and executed as
indicated, accompanied by payment of the full exercise price (by certified or
cashier's check payable to the order of the Company) for the number of
Redeemable Warrants being exercised.
For the term of the Redeemable Warrants, the Warrantholders are given
the opportunity to profit from a rise in the market price of the Company's
Common Stock with a resulting dilution in the interest of the Company's
stockholders. During such term, the Company may be deprived of opportunities to
sell additional equity securities at a favorable price. The Warrantholders may
be expected to exercise their Redeemable Warrants at a time when the Company
would, in all likelihood, be able to obtain equity capital by a sale or a new
offering on terms more favorable to the Company than the terms of the Redeemable
Warrants.
TAX CONSIDERATIONS
No gain or loss will be recognized by a holder of a Redeemable Warrant
upon purchase of Common Stock for cash pursuant to the exercise of the
Redeemable Warrant. The adjusted basis of a share of Common Stock so acquired
will equal the adjusted basis of the Redeemable Warrant plus the exercise price.
There may be other federal tax considerations, and state, local, or foreign tax
considerations. Investors should consult their own tax advisors before
determining whether to purchase the Units or exercise the Redeemable Warrants.
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 its Annual Report
on Form 10-KSB for the year ended December 31, 1995, 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-ofthe-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 3,100 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.
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.
===========================================================
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
Incorporation of Certain Documents by Reference.........2
Notice to Florida Residents.............................2
Prospectus Summary......................................3
Risk Factors............................................4
Use of Proceeds.........................................7
Dilution................................................7
Plan of Distribution....................................7
Description of Securities...............................8
Legal Matters..........................................10
Experts................................................10
Material Changes.......................................10
Available Information..................................11
===========================================================
===========================================================
1,175,200 SHARES
WOODROAST SYSTEMS, INC.
COMMON STOCK
--------------------
PROSPECTUS
--------------------
AUGUST ___, 1996
========================================================
SUPPLEMENT
TO PROSPECTUS DATED AUGUST 15, 1996
WOODROAST SYSTEMS, INC.
REDEMPTION OF WARRANTS
On August 15, 1996 Woodroast Systems, Inc. (the "Company") called all
of its outstanding Redeemable Class A Warrants (the "Redeemable Warrants"),
for redemption on September 17, 1996 (the "Redemption Date") at
the price of $.01 per Redeemable Warrant (the "Redemption Price"), for a total
redemption price of $11,752.
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, as permitted by the Warrant Agreement under which the Redeemable
Warrants were issued. Therefore, each Redeemable Warrant now entitles the
registered holder thereof to purchase one share of Common Stock at $4.00 per
share.
THE RIGHT TO EXERCISE THE REDEEMABLE WARRANTS EXPIRES AT 5:00 P.M.,
MINNEAPOLIS TIME ON SEPTEMBER 16, 1996, WHICH IS THE LAST FULL BUSINESS DAY
PRIOR TO THE REDEMPTION DATE. THEREAFTER THE REDEEMABLE WARRANTS WILL NO LONGER
BE EXERCISABLE, AND THE HOLDERS OF REDEEMABLE WARRANTS WILL HAVE ONLY THE RIGHT
TO RECEIVE THE REDEMPTION PRICE.
The Redeemable Warrants may be exercised upon surrender of the
certificate therefor on or prior to 5:00 p.m., Minneapolis time, on
September 16, 1996, at the offices of the Company's warrant agent,
Norwest Bank Minnesota, N.A. (the "Warrant Agent") with the form of "Election to
Purchase" on the reverse side of the certificate filled out (with guaranteed
signature) and executed as indicated, accompanied by payment (in the form of a
certified or bank check payable to the order of Woodroast Systems, Inc.) of the
full exercise price for the number of Redeemable Warrants being exercised.
Holders of the Redeemable Warrants will automatically forfeit all rights
thereunder except the right to receive the $.01 Redemption Price unless the
Redeemable Warrants are exercised on or before September 16, 1996.
If all of the Redeemable Warrants are exercised, the Company will
receive an aggregate of approximately $4,663,800 in net proceeds from the
issuance of the Common Stock upon exercise of all of the Redeemable Warrants,
after deducting expenses of this Offering of approximately $37,000. There can be
no assurance as to the number of Redeemable Warrants that will be exercised, or
the net proceeds to be received by the Company upon exercise of the Redeemable
Warrants.
The date of this Prospectus Supplement is 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................................ $ 2,446
Legal fees and expenses............................. 16,000
Accounting fees and expenses........................ 8,000
Printing expenses................................... 10,000
Miscellaneous....................................... 554
--------
TOTAL.......................................... $ 37,000
========
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*
99.1 Notice of Redemption dated August 15, 1996.
* Previously filed.
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 Amendment
No. 1 to Registration Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Minneapolis, State of Minnesota, on
August 15, 1996.
WOODROAST SYSTEMS, INC.
By /s/ Sheldon F. Jacobs
Sheldon F. Jacobs, President
Chief Executive Officer and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to Registration Statement has been signed by the following
persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
/s/ Sheldon F. Jacobs President, Chief Executive Officer, August 15, 1996
Sheldon F. Jacobs Chief Financial Officer and Director
(principal executive, financial and
accounting officer)
* Director August 15, 1996
Lee M. Cohn
* Director August 15, 1996
Byron L. Frank
* /s/ Sheldon F. Jacobs August 15, 1996
---------------------
Sheldon F. Jacobs, Attorney-in-Fact
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............................. *
99.1 Notice of Redemption dated August 15, 1996.....
- ------------
* Previously filed.
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 15, 1996
WOODROAST SYSTEMS, INC.
10250 VALLEY VIEW ROAD, SUITE 145
EDEN PRAIRIE, MN 55344-3542
NOTICE OF REDEMPTION
OF
REDEEMABLE CLASS A WARRANTS
August 15, 1996
To: Holders of Redeemable Class A Warrants
of Woodroast Systems, Inc.
Woodroast Systems, Inc. (the "Company") hereby exercises its right,
pursuant to the Warrant Agreement dated June 6, 1994 by and between the Company
and Norwest Bank Minnesota, N.A., as Warrant Agent (the "Warrant Agent"), to
redeem on September 17, 1996 (the "Redemption Date"), all of the Company's then
outstanding Redeemable Class A Warrants (the "Redeemable Warrants").
This Notice also serves as notice to you of the Company's decision to
reduce the exercise price of the Redeemable Warrants from $6.00 to $4.00 per
share. The reduction in the exercise price is effective as of August 15, 1996,
and each Warrant holder shall thereafter be entitled to exercise the Redeemable
Warrants for the purchase of Common Stock at $4.00 per share until September 16,
1996, the last business day prior to the Redemption Date.
The terms of redemption of the Redeemable Warrants and certain other
matters relating to the redemption or exercise of the Redeemable Warrants are
summarized below.
TERMS OF REDEMPTION
Redemption Date: September 17, 1996
Redemption Price: $.01 per Redeemable Warrant
CESSATION OF RIGHT TO EXERCISE AND OTHER RIGHTS OF WARRANT HOLDERS
WARRANT HOLDERS WILL CONTINUE TO HAVE THE RIGHT TO EXERCISE THE
REDEEMABLE WARRANTS UNTIL 5:00 P.M., MINNEAPOLIS, MINNESOTA TIME, ON SEPTEMBER
16, 1996, AT WHICH TIME THE RIGHT TO EXERCISE THE REDEEMABLE WARRANTS WILL
TERMINATE. THEREAFTER, HOLDERS OF REDEEMABLE WARRANTS WILL HAVE NO RIGHTS EXCEPT
TO RECEIVE, UPON SURRENDER OF THEIR REDEEMABLE WARRANTS, THE REDEMPTION PRICE.
The Redemption Price of $.01 per Redeemable Warrant is less than either
(i) the market price of the Company's Common Stock or (ii) the price that could
be obtained upon the sale of the Redeemable Warrants in the open market.
REDEMPTION PROCEDURE
Payment of the amount to be received on redemption will be made by the
Company upon the presentation and surrender of the Redeemable Warrants for
payment at any time on or after the Redemption Date. To surrender Redeemable
Warrants for redemption, Redeemable Warrant holders should deliver certificates
representing the Redeemable Warrants to the Warrant Agent at the following
address, accompanied by the enclosed Letter of Transmittal:
Norwest Bank Minnesota, N.A.
Shareowner Services
Reorganization Department
P.O. Box 64858
South Saint Paul, Minnesota 55164-0858
EXERCISE RIGHT; EXERCISE PRICE
In lieu of surrendering the Redeemable Warrants for redemption, Warrant
holders may, at their option, exercise their Redeemable Warrants. Each
Redeemable Warrant entitles the holder to purchase one share of Common Stock at
a price of $4.00 per share until the close of business on September 16, 1996.
After 5:00 p.m., Minneapolis, Minnesota Time, on September 16, 1996, the
Redeemable Warrants will no longer be exercisable.
The last sale prices as reported on the Nasdaq SmallCap Market on
August 14, 1996, were $5.13 per share of Common Stock and $.53 per Redeemable
Warrant.
EXERCISE PROCEDURE
The Redeemable Warrants may be exercised by delivery of the Redeemable
Warrants to the Warrant Agent, at the address set forth above, on or before 5:00
p.m., Minneapolis, Minnesota Time, on September 16, 1996. The Redeemable
Warrants so delivered must be accompanied by (i) a certified or bank cashier's
check made payable to Woodroast Systems, Inc. for the full amount of the
exercise price ($4.00 for each Redeemable Warrant exercised), and (ii) the
enclosed Letter of Transmittal, completed in accordance with the instructions
therein.
Each Redeemable Warrant will be deemed exercised on the date upon which
it, the fully completed and signed Letter of Transmittal and the exercise price
are received by the Warrant Agent.
ANY REDEEMABLE WARRANT RECEIVED WHICH IS NOT ACCOMPANIED BY PAYMENT OF
THE EXERCISE PRICE OR WHICH IS RECEIVED WITHOUT THE LETTER OF
TRANSMITTAL HAVING BEEN PROPERLY COMPLETED AND SIGNED WILL BE DEEMED TO
HAVE BEEN DELIVERED FOR REDEMPTION, AND NOT FOR EXERCISE. ANY
REDEEMABLE WARRANT RECEIVED WITH A COMPLETED AND SIGNED LETTER OF
TRANSMITTAL BUT WHICH IS NOT ACCOMPANIED BY THE FULL EXERCISE PRICE
WILL BE DEEMED TO HAVE BEEN EXERCISED ONLY FOR THE NUMBER OF REDEEMABLE
WARRANTS FOR WHICH THE EXERCISE PRICE WAS PAID IN FULL.
RIGHT TO EXERCISE IN CERTAIN JURISDICTIONS
The shares of Common Stock issuable upon exercise of the Redeemable
Warrants must be registered, or qualified for an exemption from registration,
under the securities or "blue sky" laws of the state in which a holder seeking
to exercise such Redeemable Warrant resides. The Company has taken action to
register or qualify the shares of Common Stock issuable upon exercise of the
Redeemable Warrants or to determine the availability of an exemption from
registration in various jurisdictions, based on the most recent information
available to the Company with respect to the jurisdictions in which holders of
the Redeemable Warrants reside.
In each of the following jurisdictions, the Redeemable Warrants may
be exercised:
California Illinois(1) New York
Connecticut Maryland Pennsylvania(4)
District of Columbia Minnesota South Dakota
Florida Missouri(2) Texas
Hawaii New Jersey(3) Wisconsin
(1) The Company has filed an Application for Registration in the State of
Illinois covering the exercise of up to 41,666 warrants. Exercises in
excess of such registration must be made pursuant to either an amended
registration or an exemption.
(2) Based on the Company's most recent information regarding ownership of
the Redeemable Warrants, action has been taken to obtain approval for
the issuance of shares to one warrant holder. Additional exercises may
require further action.
(3) An exemption is available for exercises by certain institutional
investors, including banks, insurance companies, pension or profit
sharing trusts and broker-dealers.
(4) The Company is currently awaiting approval of its application for an
exemption in the State of Pennsylvania. Warrant holders in the State of
Pennsylvania should contact the Warrant Agent to confirm the
availability of the exemption prior to exercising their Redeemable
Warrants.
In each of the following jurisdictions, the Redeemable Warrants may not
be exercised unless the Common Stock issuable upon exercise of the Redeemable
Warrant is registered or an application for exemption is filed with and accepted
by the respective jurisdiction's securities authorities:
Alabama Iowa Nebraska Rhode Island
Alaska Kansas Nevada South Carolina
Arizona Kentucky New Hampshire Tennessee
Arkansas Louisiana New Mexico Utah
Colorado Maine North Carolina Vermont
Delaware Massachusetts North Dakota Virginia
Georgia Michigan Ohio Washington
Idaho Mississippi Oklahoma West Virginia
Indiana Montana Oregon Wyoming
Applications for registration or exemption have not been filed in these
jurisdictions. Residents of the above jurisdictions may not be entitled to
exercise their Redeemable Warrants unless and until registration of the
underlying securities has been accomplished or other necessary approvals have
been obtained. The Company will use reasonable best efforts to obtain such
appropriate approvals or registrations prior to the Redemption Date in
jurisdictions in which holders of Redeemable Warrants are known to reside, but
no assurance can be given that it will be successful in doing so. If any
required registration or approval is not obtained in any jurisdiction, residents
of that jurisdiction will not be permitted to exercise their Redeemable
Warrants.
If any approval or exemption from registration is available only for a
limited number of exercises in any jurisdiction, exercises will be permitted on
a first-come, first-served basis in the order that Redeemable Warrants are
received by the Warrant Agent for exercise. If the Company determines that any
Redeemable Warrants received for exercise are not permitted to be exercised, any
amount previously delivered to the Warrant Agent in payment of the exercise
price of any such Redeemable Warrant will be returned, without interest or
deduction, and the Redeemable Warrants will be redeemed for the Redemption
Price.
