U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
WINMARK, INC.
THIRD AMENDMENT
(Name of Small Business Issuer in its charter)
| Nevada | 6770 | 58-2679116 |
(State or Jurisdiction of Incorporation orOrganization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification No.) |
Mark Winstein
166 E. 3rd Street
Suite 212
Moscow, Idaho 83843
(208) 596-6500
(Address and telephone number of Registrant's principal executive offices and
principal place of business)
Mark Winstein
166 E. 3rd Street
Suite 212
Moscow, Idaho 83843
(208) 596-6500
(Name, address, and telephone number of agent for service)
With a copy to:
The O’Neal Law Firm, P.C.
Attention: William D. O’Neal, Esq.
17100 E. Shea Boulevard
Suite 400-D
Fountain Hills, Arizona 85268
(480) 812-5058
(480) 816-9241(fax)
Approximate date of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b)under the Securities Act, please check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, 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(d) 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 the delivery of the prospectus is expected to be made pursuant to Rule 434, check the following box. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 415, check the following box. [x]
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Indemnification of Directors and Officers.
Our Articles of Incorporation provide that we must indemnify our directors and officers to the fullest extent permitted under Nevada law against all liabilities incurred by reason of the fact that the person is or was a director or officer or a fiduciary of our company. The effect of these provisions is potentially to indemnify our directors and officers from all costs and expenses of liability incurred by them in connection with any action, suit or proceeding in which they are involved by reason of their affiliation with WINMARK. Pursuant to Nevada law, a corporation may indemnify a director, provided that such indemnity shall not apply on account of:
| (a) | acts or omissions of the director finally adjudged to be intentional misconduct or a knowing |
violation of law;
| (b) | unlawful distributions; or |
| (c) | any transaction with respect to which it was finally adjudged that such director personally received a benefit in money, property, or services to which the director was not legally entitled. |
Such indemnification provisions are intended to increase the protection provided directors and, thus, increase out ability to attract and retain qualified persons to serve as directors. Because directors liability insurance is only available at considerable cost and with low dollar limits of coverage and broad policy exclusions, we do not currently maintain a liability insurance policy for the benefit of our directors although we may attempt to acquire such insurance in the future. We believe that the substantial increase in the number of lawsuits being threatened or filed against corporations and their directors and the general unavailability of directors liability insurance to provide protection against the increased risk of personal liability resulting from such lawsuits have combined to result in a growing reluctance on the part of capable persons to serve as members of boards of directors of public companies. We also believe that the increased risk of personal liability without adequate insurance or other indemnity protection for its directors could result in overcautious and less effective direction and management of our company. Although no directors have resigned or have threatened to resign as a result of our failure to provide insurance or other indemnity protection from liability, it is uncertain whether our directors would continue to serve in such capacities if improved protection from liability were not provided.
The provisions affecting personal liability do not abrogate a director's fiduciary duty to WINMARK and our shareholders, but eliminate personal liability for monetary damages for breach of that duty. The provisions do not, however, eliminate or limit the liability of a director for failing to act in good faith, for engaging in intentional misconduct or knowingly violating a law, for authorizing the illegal payment of a dividend or repurchase of stock, for obtaining an improper personal benefit, for breaching a director's duty of loyalty (which is generally described as the duty not to engage in any transaction which involves a conflict between the interest of the registrant and those of the director) or for violations of the federal securities laws. The provisions also limit or indemnify against liability resulting from grossly negligent decisions including grossly negligent business decisions relating to attempts to change control of WINMARK.
The provisions regarding indemnification provide, in essence, that we will indemnify our directors against expenses (including attorneys' fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with any action, suit or proceeding arising out of the director's status as a director of WINMARK, including actions brought by or on behalf of WINMARK (shareholder derivative actions). The provisions do not require a showing of good faith. Moreover, they do not provide indemnification for liability arising out of willful misconduct, fraud, or dishonesty, for "short-swing" profits violations under the federal securities laws, or for the receipt of illegal remuneration. The provisions also do not provide indemnification for any liability to the extent such liability is covered by insurance. One purpose of the provisions is to supplement the coverage provided by such insurance. However, as mentioned above, we do not currently provide such insurance to our directors, and there is no guarantee that we will provide such insurance to our directors in the near future although we may attempt to obtain such insurance.
The provisions diminish the potential rights of action that might otherwise be available to shareholders by limiting the liability of officers and directors to the maximum extent allowable under Nevada law and by affording indemnification against most damages and settlement amounts paid by a director of WINMARK in connection with any shareholders derivative action. However, the provisions do not have the effect of limiting the right of a shareholder to enjoin a director from taking actions in breach of his fiduciary duty, or to cause us to rescind actions already taken, although as a practical matter courts may be unwilling to grant such equitable remedies in circumstances in which such actions have already been taken. Also, because the registrant does not presently have directors liability insurance and because there is no assurance that we will procure such insurance or that if such insurance is procured it will provide coverage to the extent directors would be indemnified under the provisions, we may be forced to bear a portion or all of the cost of the director's claims for indemnification under such provisions. If we are forced to bear the costs for indemnification, the value of our stock may be adversely affected. In the opinion of the Commission, indemnification for liabilities arising under the Securities Act is contrary to public policy and, therefore, is unenforceable.
Other Expenses of Issuance and Distribution.
The following is an itemization of estimated total offering expenses in connection with the issuance and distribution of the securities being offered hereby.
| Commission Registration and Filing Fee | $ 5.89 |
| Transfer Agent Fees | 250.00 |
| Financial Printing | 200.00 |
| Accounting Fees | 1,500.00 |
| Legal Fees | 20,000.00 |
| Escrow Fees | 4,000.00 |
| Miscellaneous | 0 |
| | TOTAL | 25,955.89 |
Mr. Winstein shall be responsible for the payment of any and all expenses incurred by registrant in connection with the issuance and distribution of securities being offered hereby that exceed our initial pre-offering capital of $22,000.
Recent Sales of Unregistered Securities.
On December 22, 2003, we issued 5,000,000 shares of our common stock to our sole officer and director, Mark Winstein, at a price of 0.0044 per share, or $22,000. Mr. Winstein’s capital contribution of $22,000 is our pre-offering working capital. There have been no other sales of our unregistered securities.
All unregistered securities issued by us prior to this offering are deemed "restricted securities" within the meaning of that term as defined in Rule 144 of the Securities Act and have been issued pursuant to certain "private placement" exemptions under Sections 4(2) of the Securities Act , such that the sales of the securities were to sophisticated or accredited investors, as that latter term is defined in Rule 215 and Rule 501 of Regulation D of the Securities Act, and were transactions by an issuer not involving any public offering. Such sophisticated or accredited investors had access to information on the registrant necessary to make an informed investment decision.
All of the aforesaid securities have been appropriately marked with a restricted legend and are "restricted securities," as defined in Rule 144 of the rules and regulations of the Commission, unless otherwise registered. All of the aforesaid securities were issued for investment purposes only and not with a view to redistribution, absent registration. All of the aforesaid persons have been fully informed and advised concerning WINMARK, our business, financial and other matters. Transactions by us involving the sales of these securities set forth above were issued pursuant to the "private placement" exemptions under the Securities Act, as amended, as transactions by an issuer not involving any public offering. We have been informed that each person is able to bear the economic risk of his investment and is aware that the securities were not registered under the Securities Act, and cannot be re-offered or re-sold until they have been so registered or until the availability of an exemption therefrom. Our transfer agent will be instructed to mark "stop transfer" on its ledgers to assure that these securities will not be transferred, absent registration, or until the availability of an exemption therefrom is determined.
Exhibits
The following is a list of Exhibits filed herewith by the registrant as part of the SB-2 Registration Statement and related Prospectus:
3.1 | | Articles of Incorporation. (1) |
| 3.2 | | Certificate of Amendment to Articles of Incorporation. (1) |
| 4.1 | | Form of Common Stock Certificate. (1) |
| 5.1 | | Opinion and Consent of The O’Neal Law Firm, P.C. (2) |
| 10.1 | | Form of Escrow Agreement. (1) |
| 10.2 | | Form of Subscription Agreement. (1) |
| 23.1 | | Consent of Moore & Associates, Chartered |
(1) Incorporated by reference from Form SB-2 filed January 18, 2006
(2) Incorporated by reference from Form SB-2 filed May 5, 2006
Undertakings
(1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
| (i) | To include any prospectus required by section 10(a)(3) of the Securities Act; |
| (ii) | To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement: |
| (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; |
(2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering 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) For determining liability of the undersigned small business issuer under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned small business issuer undertakes that in a primary offering of securities of the undersigned small business issuer pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned small business issuer will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:
| i. | Any preliminary prospectus or prospectus of the undersigned small business issuer relating to the offering required to be filed pursuant to; |
| ii. | Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned small business issuer or used or referred to by the undersigned small business issuer; |
| iii. | The portion of any other free writing prospectus relating to the offering containing material information about the undersigned small business issuer or its securities provided by or on behalf of the undersigned small business issuer; and |
| iv. | Any other communication that is an offer in the offering made by the undersigned small business issuer to the purchaser. |
(5) 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 forgoing provisions, 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 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 of 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
In accordance with the requirements of the Securities Act of 1933, WINMARK certifies that we have reasonable grounds to believe that we meets all of the requirements of filing Form SB-2 and authorized this Registration Statement to be signed on our behalf by the undersigned, in the City of Moscow, in the State of Idaho.
WINMARK, INC.
By: /s/ Mark Winstein
Mark Winstein
Principal Executive Officer
Dated: May 11, 2006
By: /s/ Mark Winstein
Mark Winstein
Principal Financial Officer
Dated: May 11, 2006
By: /s/ Mark Winstein
Mark Winstein
Principal Accounting Officer
Dated: May 11, 2006
In accordance with the requirements of the Securities Act of 1933, this Registration Statement was signed by the following person in the capacity and on the date stated.
By: /s/ Mark Winstein
Mark Winstein
Director
Dated: May 11, 2006
