As filed with the Securities and Exchange Commission on June 26, 1997
Registration No. __________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
-----------------
FIRST MONTAUK FINANCIAL CORP.
(Exact name of Registrant as specified in charter)
New Jersey 22-1737915
(State of Incorporation) (I.R.S. Employer
Identification Number)
Parkway 109 Office Center
328 Newman Springs Road
Red Bank, New Jersey 07701
(908) 842-4700
(Address, including zip code, and
telephone number, including area code, of
registrant's principal executive offices)
-----------------
Herbert Kurinsky, President
Parkway 109 Office Center
328 Newman Springs Road
Red Bank, New Jersey 07701
(908) 842-4700
(Name and address, including zip code, and telephone number,
including area code, of agent for service)
-----------------
With copies to:
GUY P. LANDER, ESQ.
GOLDSTEIN & DiGIOIA, LLP
369 Lexington Avenue
New York, New York 10017
================================================================================
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the effective date of this Registration Statement.
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 check the following box. [x]
If the registrant elects to deliver its latest report to security holders,
or a complete and legible facsimile thereof, pursuant to 11(a)(1) of this Form,
check the following box. [ ]
CALCULATION OF REGISTRATION FEE
========================================================================================
Proposed
Maximum Proposed
Offering Maximum Amount of
Title of Each Class of Price Aggregate Registra-
Securities Being Amount Being per Offering tion
Registered Registered Unit(1) Price(1) Fee(1)
- ----------------------------------------------------------------------------------------
Units (2) ................... 2,979,060 $.45 $ 1,340,577 $ 406
Class A Redeemable Common
Stock Purchase Warrants
Class B Redeemable Common
Stock Purchase Warrants
Class C Redeemable Common
Stock Purchase Warrants
- ----------------------------------------------------------------------------------------
Common Stock, no par
value(3).................... 2,979,060 $3.00 $ 8,937,180 $ 2,708
- ----------------------------------------------------------------------------------------
Common Stock, no par
value (4)................... 2,979,060 $5.00 $14,895,300 $ 4,514
- ----------------------------------------------------------------------------------------
Common Stock, no par
value (5)................... 2,979,060 $7.00 $20,853,420 $ 6,319
- ---------------------------------------------------------------------------------------
Total........................ $11,916,240 $46,026,477 $13,947
========================================================================================
(1) Estimated solely for the purpose of determining the registration fee.
(2) An aggregate of 2,979,060 Class A Redeemable Common Stock Purchase
Warrants 2,979,060 Class B Redeemable Common Stock Purchase Warrants
and 2,979,060 Class C Redeemable Common Stock Purchase Warrants
("Warrants") will be offered to the public in up to 2,979,060 Units.
Unit consists of one Class A Redeemable Common Stock Purchase
Warrant, one Class B Redeemable Common Stock Purchase Warrant and One
Class C Redeemable Common Stock Purchase Warrant.
(3) Shares of Common Stock issuable upon exercise of Class A Redeemable
Common Stock Purchase Warrants. Pursuant to Rule 416 there are also
ii
being registered such additional number of shares of Common Stock as
may become issuable pursuant to the anti-dilution provisions of the
Warrants. Upon exercise of each Warrant, the holder will receive one
share of Common Stock, subject to adjustment in certain
circumstances.
(4) Shares of Common Stock issuable upon exercise of Class B Redeemable
Common Stock Purchase Warrants. Pursuant to Rule 416 there are also
being registered such additional numbers of shares of Common Stock as
may become issuable pursuant to the anti-dilution provisions of the
Warrants.
(5) Shares of Common Stock issuable, upon exercise of Class C Redeemable
Common Stock Purchase Warrants. Pursuant to Rule 416 there are also
being registered such additional numbers of shares of Common Stock as
may become issuable pursuant to the anti-dilution provisions of the
Warrants.
---------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SECTION 8(A) MAY
DETERMINE.
================================================================================
iii
Subject to Completion, dated ______, 1997
P R O S P E C T U S
2,979,060 Units
Each Unit consists of one Class A Redeemable Common Stock Purchase Warrant,
one Class B Redeemable Common Stock Purchase Warrant and one Class C Redeemable
Common Stock Purchase Warrant.
FIRST MONTAUK FINANCIAL CORP.
First Montauk Financial Corp. (the "Company") is offering (the
"Rights Offering") up to 2,979,060 units (the "Units"), to holders
("Shareholders") of record of its common stock, no par value (the "Common
Stock") at the close of business on __________, 1997 (the "Record Date"),
pursuant to non-transferable rights (the "Rights") to purchase Units at a price
of $.45 per Unit (the "Subscription Price"). Holders of Rights ("Rights
Holders") will not be required to pay any brokerage fees for the subscription of
Units under the Rights Offering. Rights Holders will be able to exercise their
Rights until 5:00 p.m. Eastern time on __________, 1997 (the "Expiration Time").
Each Stockholder is receiving one Right for each share of Common
Stock held of record at the close of business on the Record Date. Three Rights
will entitle the Rights Holder (the "Basic Subscription Privilege") to subscribe
for one Unit. Any rights not duly subscribed for prior to the Expiration Time
will expire. Each Rights Holder will also be entitled to purchase at the
Subscription Price additional Units that are not otherwise subscribed for
pursuant to the exercise of the Basic Subscription Privilege, subject to
proration and reduction by the Company under certain circumstances (the
"Oversubscription Privilege"). Once a Rights Holder has exercised the Basic
Subscription Privilege or the Oversubscription Privilege, such exercise may not
be revoked. The Rights will be evidenced by non-transferable certificates (the
"Subscription Rights Certificates"). See "Rights Offering Procedures."
Each Unit consists of one Class A Redeemable Common Stock Purchase
Warrant, one Class B Redeemable Common Stock Purchase Warrant and one Class C
Redeemable Common Stock Purchase Warrant. First, the Class A Redeemable Common
Stock Purchase Warrants (the "Class A Warrants"), entitle the holder thereof to
purchase during the three years commencing on __ [the date of initial issuance]
one share of Common Stock of the Company (the "Class A Warrant Shares"), at an
exercise price of $3.00 per share, subject to
1
adjustment in certain circumstances. Second, the Class B Redeemable Common Stock
Purchase Warrants (the "Class B Warrants"), entitle the holder thereof to
purchase during the five years commencing on __ [the date of initial issuance]
one share of Common Stock of the Company (the "Class B Warrant Shares"), at an
exercise price of $5.00 per share, subject to adjustment in certain
circumstances. Last, the Class C Redeemable Common Stock Purchase Warrants (the
"Class C Warrants"), entitle the holder thereof to purchase during the seven
years commencing on __ [the date of initial issuance] one share of Common Stock
of the Company (the "Class C Warrant Shares"), at an exercise price of $7.00 per
share, subject to adjustment in certain circumstances. The Warrants will be
separately transferable immediately. No separate securities for the Units will
be issued.
The Company may redeem the Warrants, at any time at $.05 per Warrant,
upon thirty (30) days' prior written notice, if the closing bid price of the
Company's Common Stock for the ten consecutive trading days ending within ten
days of the date of the notice of redemption is not less than: (a) for the Class
A Warrants, $5.00 per share, (b) for the Class B Warrants $7.00 per share, and
(c) for the Class C Warrants, $12.00 per share.
Upon completion of the Rights Offering, Shareholders who do not fully
exercise their Rights will own a smaller proportional interest in the Company
than would otherwise be the case.
The Company's Common Stock is traded in the over-the-counter market
and reported on the NASD OTC Bulletin Board System and by the National Daily
Quotation Service published by the National Quotation Bureau. On June 16, 1997
the bid and asked prices of the Company's Common Stock as reported by a market
maker were $2.50 and $2.53125, respectively. The Company intends to apply for
inclusion of the Common Stock in the Nasdaq Smallcap Market. There can be no
assurance that the Company's application will be accepted or if accepted, that
the market for the securities will increase or even be sustained. See "Risk
Factors" "NASDAQ Listing." See "Price Range of Common Stock and Certain Market
Information."
THESE SECURITIES INVOLVE A HIGH DEGREE OF RISK AND SHOULD BE
PURCHASED ONLY BY THOSE PERSONS WHO CAN AFFORD THE LOSS OF THEIR
ENTIRE INVESTMENT. SEE "RISK FACTORS."
Rights are exercisable by properly completing a Subscription Rights
Certificate and returning it to the Company with full payment for the subscribed
Units. Payment may be made by personal check, certified check, cashier's check,
money order or wire transfer and must be received prior to the Expiration Time.
No interest will be paid to subscribers on any funds used to subscribe for the
Units. See "Rights Offering Procedures." The Company's Board of Directors makes
no recommendation as to whether any Rights
2
Holder should subscribe for the Units.
---------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------------------
PROCEEDS TO THE COMPANY
SUBSCRIPTION PRICE (1)(2)(3)
------------------ -----------------------
Per Unit.............. $0.45 $0.45
Total (1)............. $1,340,577.00 $1,340,577.00
1. The total Subscription Price and the total Proceeds to the
Company assume the purchase of 2,979,060 Units pursuant to the
exercise of Rights.
2. Before deducting offering expenses estimated at $___________
payable by the Company.
3. The Company has not employed any brokers, dealers or underwriters in
connection with the solicitation of exercises of Rights in the Rights
Offering and no underwriting commissions, fees or discounts will be
paid in connection with the Rights Offering.
---------------------------------
The Units offered hereby are offered by the Company subject to
withdrawal, cancellation or modification of the offer without notice. It is
expected that delivery of the Units will be made as soon as practicable
following the Expiration Time.
The date of this Prospectus is _____________, 1997
3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Washington, D.C. 20549 and at the following Regional Offices
of the Commission: New York Regional Office, 7 World Trade Center, New York, New
York 10048; and Chicago Regional Office, Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois, 60661. Copies of such material may be
obtained from the public reference section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission
maintains a Website that contains reports, proxy statements and other
information regarding issuers that file electronically with the Commission. The
address of that Website is: http://www.sec.gov.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, heretofore filed by the Company with the
Commission pursuant to the Exchange Act, are hereby incorporated by reference,
except as superseded or modified herein:
1. The Company's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1996; and
2. The Company's Quarterly Report on Form 10-Q for the three
months ended March 31, 1997.
3. The Company's Proxy Statement for its Annual Meeting of
Shareholders held on June 27, 1997.
Each document filed subsequent to the date of this Prospectus
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the
termination of this Offering shall be deemed to be incorporated by reference in
this Prospectus and shall be part hereof from the date of filing of such
document.
The Company will provide without charge to each person to whom a
copy of this Prospectus is delivered, upon the written or oral request of any
such person, a copy of any document described above (other than exhibits).
Requests for such copies should be directed to Robert Rabinowitz, Esq., First
Montauk Financial Corp., Parkway 109 Office Center, 328 Newman Springs Road, Red
Bank, New Jersey 07701, telephone (908) 842-4700.
4
PROSPECTUS SUMMARY
The following summary is intended to set forth certain pertinent facts and
highlights from material contained in the body of this Prospectus. The summary
is qualified in its entirety by the detailed information and financial
statements appearing elsewhere in this Prospectus.
THE COMPANY
First Montauk Financial Corp. ("FMFC") is a holding company, which,
through its principal wholly-owned subsidiary, First Montauk Securities Corp.
("FMSC"), is primarily engaged in the operation of an investment banking and
securities brokerage firm. FMFC also sells insurance products through its
subsidiary Montauk Insurance Services, Inc., ("MISI") and equipment leases
through Montauk Advisors, Inc. ("MAI"). FMFC, FMSC, MISI and MAI are sometimes
collectively referred to herein as the "Company". FMSC is a broker-dealer
registered with the Securities and Exchange Commission ("SEC"), a member of the
National Association of Securities Dealers Regulation, Inc. ("NASDR"), the
Municipal Securities Rulemaking Board ("MSRB"), and the Securities Investor
Protection Corporation ("SIPC"). FMSC's business activities consist primarily of
retail sales and trading of listed and unlisted equity and fixed-income
securities; sales of government, municipal and corporate securities; options;
commissions earned from individual and institutional securities transactions;
and market making activities. FMSC also provides investment banking activities
such as private and public securities offerings. In fiscal 1995, FMSC became a
registered advisor under the Investment Advisors Act of 1940 and began offering
investment advisory services.
FMSC is currently licensed to conduct its broker-dealer business in
49 states and the District of Columbia. FMSC maintains approximately 117 branch
and/or satellite offices, all of which are maintained by affiliates. FMSC has
approximately 356 registered representatives, and services approximately 25,000
retail customer accounts.
FMSC's primary method of operation is through its affiliate program.
The affiliate program is designed to attract experienced brokers with existing
clientele who desire to operate their own office. It is through this affiliate
program that FMSC has expanded its customer base and retail activities by adding
brokers with established clientele. In order to become an affiliate of FMSC, the
registered representative must enter into an affiliate agreement with FMSC. The
Company believes that one of the primary reasons its affiliate program is
attractive to such individuals is because the affiliate arrangement entitles the
affiliate representative to obtain a significantly higher percentage of the
commissions generated by his sales than a registered representative
5
would normally receive. Based on the experience of FMSC's management, and
information derived from professional associations, FMSC believes that the range
of standard commission payout rates for registered representatives of retail
forms is approximately 40%-50%, whereas the Company's affiliates receive
commissions of approximately 80%-85%. The terms of the affiliate agreement
provide that the the Company's affiliate establishes his own office and is
solely responsible for the payment of all expenses associated with the operation
of the branch office, including rent, utilities, furniture, equipment, stock
quotation machines, and general office supplies. All securities transactions are
cleared through FMSC's clearing firm on a fully disclosed basis. FMSC receives a
percentage (generally 15%-20% after deduction of clearing costs) of the
affiliates' commissions with no operating expenses directly attributable to the
maintenance of the specific affiliate office.
FMSC has also expanded its general securities business by adding
registered representatives to its main corporate office. FMSC is continuously
seeking to establish additional branch offices at sites and locations to be
selected, the timing and location of which will be based upon prevailing
business and economic conditions.
In 1991, MISI was formed for the purpose of offering and selling
variable annuity, variable life as well as traditional life and health insurance
products. Currently, MISI is licensed in the states of Alabama, Alaska, Arizona,
California, Connecticut, Delaware, Florida, Georgia, Illinois, Indiana,
Kentucky, Maine, Maryland, New Jersey, New York, North Carolina, Pennsylvania,
Rhode Island, South Carolina, Virginia, Washington and Wisconsin. MISI derives
revenue from insurance-related products and services from the existing base of
FMSC's Registered Representatives who are insurance licensed. In fiscal year
1996 MISI earned $523,868 in gross commissions from the sale of insurance.
In 1993, the Company formed Montauk Advisors, Inc., ("MAI") as a
wholly-owned subsidiary. MAI engages in the sale of equipment leasing contracts
on an agency basis. The equipment financed to date includes copiers, facsimile
machines and other business machines. These leases are sold to various customers
from which MAI derives a commission. In fiscal year 1996 MAI earned $373,216 in
gross commissions from the sale of leases.
In early 1995, FMSC became registered with the Securities and
Exchange Commission as an Investment Advisor under the Investment Advisors Act
of 1940 for the purpose of providing investment advisory services and fee-based
managed accounts to clients of FMSC. Currently, FMSC is licensed as an
Investment Advisor in the States of Alaska, Arizona, California, Connecticut,
Florida, Hawaii, Indiana, New Jersey, New York, North Carolina, Pennsylvania,
Texas, and West Virginia. Although to date FMSC has
6
received minimal revenues from its advisory services, management's goal is to
derive revenue by providing investment advisory services to FMSC's existing
client based as well as to additional clientele seeking fee-based managed
accounts.
FMFC and its subsidiaries (with the exception of MISI) each maintain
their principal executive offices at Parkway 109 Office Center, 328 Newman
Springs Road, Red Bank, New Jersey 07701, telephone (908) 842-4700. MISI
maintains its principal offices at One Mack Centre Drive, Paramus, New Jersey.
THE RIGHTS OFFERING
Rights....................................... Each record holder of Common
Stock as of the close of
business on the Record Date
will receive one nontrans-
ferable Right for every share
of Common Stock held of record
as of the close of business on
the Record Date. An aggregate
of up to 8,937,179 Rights will
be distributed. See "The
Rights Offering - The Rights".
Basic Subscription Privilege................. Holders will be entitled to
subscribe, up to the Expiration
Time and at the Subscription
Price, for one Unit for every
three Rights held. The
election of a Holder to
exercise Rights in the Rights
Offering is irrevocable.
Certificates representing
Warrants purchased pursuant to
both the Basic Subscription
Privilege and the
Oversubscription Privilege will
be delivered to subscribers as
soon as practicable after the
Expiration Time. Accordingly,
until certificates are
delivered, subscribing Holders
may not be able to sell the
Warrants that they have
purchased in the Rights
Offering. See "The Rights
Offering-Subscription
Privileges-Basic Subscription
Privilege."
7
Oversubscription Privilege................... Each record holder of Common
Stock as of the close of
business on the Record Date who
exercises all of his or her
Rights pursuant to the Basic
Subscription Privilege will be
entitled to subscribe, up to
the Expiration Time and at the
Subscription Price, for
additional Units, that are
available after satisfaction of
all subscriptions pursuant to
the Basic Subscription
Privilege (the "Excess Units").
The Oversubscription Privilege
is not transferable. A Holder
may, at the time of exercising
the Basic Subscription
Privilege, exercise the
Oversubscription Privilege for
up to the total number of
Units to be issued in the
Rights offering. If an
insufficient number of Excess
Units is available to satisfy
fully all elections to exercise
the Oversubscription Privilege,
then the Excess Units will be
prorated in proportion to the
number of shares of Common
Stock owned by such Holder as
of the close of business on the
Record Date. See "The Rights
Offering--Subscription
Privileges Oversubscription
Privilege."
Subscription Price of Units.................. The Subscription Price will be
$.45 per Unit. Each Holder
will be deemed to have
exercised first, the Basic
Subscription Privilege and
second, the Oversubscription
Privilege.
Shares outstanding Before
Rights Offering............................. 8,937,179
Shares of Common Stock
Outstanding After Rights
Offering.................................... 8,937,179
8
Shares of Common Stock to be
Issued Assuming the Exercise
of all of the Warrants...................... 8,937,179
Shares of Common Stock to be
Outstanding Assuming the
Exercise of All of
the Warrants................................ 17,874,358
Nontransferrability of Rights................ The Rights are not transferable
Procedure for Exercising Rights.............. Rights will be evidenced by
Rights Certificates ("Rights
Certificates") that will be
mailed to holders of Common
Stock as of the close of
business on the Record Date or,
if such shares are held by any
nominee or depository, to such
nominee or depository. The
Basic Subscription Privilege
and the Oversubscription
Privilege may be exercised by
properly completing the Rights
Certificates evidencing those
Rights and forwarding them (or
following the guaranteed
delivery procedures), with
payment of the Subscription
Price (as hereinafter defined)
of $.45 for each Unit or Excess
Unit subscribed for pursuant to
the Basic Subscription
Privilege and the
Oversubscription Privilege to
the Subscription Agent (as
hereinafter defined) prior to
the Expiration Time. If Rights
Certificates are sent by mail,
Holders are urged to use
insured, registered mail,
return receipt requested. Once
a Holder has exercised the
Basic Subscription Privilege
and the Oversubscription
Privilege, such exercise may
not be revoked. Any Rights
not duly exercised prior to the
Expiration Time will expire.
See "The Rights Offering--
Exercise of Rights."
9
Persons Holding Common Stock
Through Others.............................. Persons holding shares of
Common Stock and receiving the
Rights distributable with
respect thereto through a
broker, dealer, commercial
bank, trust company or other
nominee should contact the
appropriate institution or
nominee and request it to
effect such transactions on
their behalf. See "The Rights
Offering--Exercise of Rights."
Procedure for Exercising Rights
by Foreign Shareholders..................... Rights Certificates will not be
mailed to record holders of
Common Stock who addresses are
outside the United States and
Canada, but will be held by the
Subscription Agent for such
holders' accounts until the
Subscription Agent receives
instructions to exercise the
Rights. If no instructions are
received by the Expiration
Time, the Rights will be null
and void.
Certain Federal Income Tax
Consequences................................ For U. S. federal income tax
purposes, shareholders will not
recognize taxable income upon
receipt of the Rights, nor will
they recognize gain or loss
upon exercise or expiration of
the Rights. See "Certain
Federal Income Tax
Consequences."
Conditions................................... The Company reserves the right
at any time prior to the
Expiration Time to terminate
the Rights Offering if
consummation is prohibited by
law or applicable regulation.
Issuance of Units............................ Certificates representing
Warrants purchased pursuant to
the exercise of the Basic
Subscription Privilege and the
Oversubscription Privilege will
10
be delivered to subscribers and
the Standby Purchasers in a
single delivery as soon as
practicable after the
Expiration Time and after all
prorations contemplated by the
terms of the Rights Offering
have been affected. See "the
Rights Offering--Subscription
Privileges."
Expiration................................... The Rights Offering will expire
at 5:00 p.m., New York City
time on _______________, 1997,
subject to extension at the
sole discretion of the
Company's Board of Directors,
but not beyond 5:00 p.m., New
York City time, on ___________,
1997. Any Rights not duly
exercised prior to the
Expiration Time will expire.
Subscription Agent........................... North American Transfer Company
OTC Bulletin Board Symbol.................... FMFK
Important Dates for the Rights Offering
Event Date
----- ----
Record Date _______, 1997
Subscription Period Commences _______, 1997
Expiration Time _______, 1997(1)
- --------
(1)Unless the Rights Offering is extended to a date not later than
________________________, 1997.
11
SUMMARY FINANCIAL DATA
Quarters Ended
Years Ended December 31, March 31,
------------------------ ------------------------
1996 1995 1997 1996
---- ---- ---- ----
STATEMENT OF
OPERATIONS DATA:
Revenues .......... $35,089,688 $28,342,203 $ 8,992,579 $ 8,633,479
Net income
(loss) ............ $ 32,789 $ 768,088 $ 257,314 $ 442,121
Per Share:
Primary Net
income ............ $ .01 $ .09 $ .03 $ .05
Number of
shares ........... 8,623,538 8,422,365 9,845,255 8,776,799
BALANCE SHEET DATA:
Total assets ...... $ 8,742,039 $10,486,967 $ 8,277,809 $ 8,341,328
Total
liabilities ....... $ 4,625,260 $ 6,886,021 $ 3,418,404 $ 4,298,261
Common Stock
issued with
guaranteed
selling price ..... $ 421,500 $ 459,000
Stockholders'
Equity ...... ..... $ 3,695,279 $ 3,600,946 $ 4,400,405 $ 4,043,067
12
RISK FACTORS
The Shares offered hereby are speculative and involve a high degree
of risk. Prospective investors should carefully consider, among other things,
the following risk factors and speculative factors inherent in and affecting the
business of the Company and this offering.
SAFE HARBOR STATEMENT
Certain statements in this Prospectus constitute "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995 (the "Reform Act"). The Company desires to avail itself of certain "safe
harbor" provisions of the Reform Act and is therefore including this special
note to enable the Company to do so. Forward-looking statements in this
Prospectus or hereafter included in other publicly available documents filed
with the Securities and Exchange Commission, reports to the Company's
stockholders and other publicly available statements issued or released by the
Company involve known and unknown risks, uncertainties and other factors which
could cause the Company's actual results, performance (financial or operating)
or achievements to differ from the future results, performance (financial or
operating) or achievements expressed or implied by such forward looking
statements. Such future results are based upon management's best estimates based
upon current conditions and the most recent results of operations. These risks
include, but are not limited to risks associated with the intense competition in
the brokerage industry, potential litigation, regulatory matters and the
volitility of the securities markets as well as other risks which may detailed
in the Company's Securities and Exchange Commission filings, including its
Annual Report on Form 10-KSB for the year ended December 31, 1996, each of which
could adversely affect the Company's business and the accuracy of the
forward-looking statements contained herein.
1. ORGANIZATIONAL AND OPERATING HISTORY
For the years ended December 31, 1996 and 1995, the Company had
revenues of $35,089,688, and $28,342,203, respectively and had net income of
$32,789 and $768,088 for the years ended December 31, 1996 and 1995,
respectively. No assurance is given that the Company will not incur losses in
the future, and such losses would necessarily affect the nature, scope and level
of the Company's future operations. The results of operations to date are not
necessarily indicative of the result of future operations. The Company's
securities business, by its very nature, is subject to various risks and
contingencies, many of which are beyond the ability of the Company to control.
These include economic conditions generally and in particular those affecting
securities markets, interest rates, discretionary income available for
investment; losses which may be incurred from underwriting and
13
trading activities; customer inability to meet commitments (such as margin
obligations); customer fraud; and employee misconduct and errors. Further, the
nature and extent of the Company's underwriting, trading and market activities,
and hence the volume and scope of its business is directly affected by its
available "Net Capital".
2. FLUCTUATING SECURITIES VOLUME AND PRICES
The Company and the securities industry in general are directly
affected by national and international economic and political conditions, broad
trends in business and finance, the level and volatility of interest rates,
changes in and uncertainty regarding tax laws and substantial fluctuations in
the volume and price levels of securities transactions. The Company and the
securities industry in general are subject to other risks, including risks of
loss from the underwriting of securities, counterparty (a party to which the
Company has credit or performance exposure) failures to meet commitments,
customer fraud, employee errors or misconduct and litigation. In addition, price
fluctuations may cause losses on securities positions. As the Company expands
its investment banking activities and more frequently serves as manager or
co-manager of public offerings of securities, it expects to make increased
commitments of capital to market-making activities in securities of those
issuers. The expected additional concentration of capital in the securities of
those issuers held in inventory will increase the risk of loss from reductions
in the market price. Low trading volume or declining prices generally result in
reduced revenues. Under these conditions, profitability is adversely affected
since many costs, other than commission compensation and bonuses, are fixed.
Heavy trading volume has caused serious operating problems, including delays in
clearing and processing, for many securities firms in the past and may do so in
the future.
3. COMPETITION AND OTHER DEVELOPMENTS
The Company encounters intense competition in all aspects of its
business and competes directly with many other securities firms, a significant
number of which offer their customers a broader range of financial services,
have substantially greater resources and may have greater operating
efficiencies. In addition, a number of firm offer discount brokerage services to
individual retail customers and generally effect transactions at lower
commission rates on an "execution only" basis without offering other services
such as investment recommendations and research. The further expansion of
discount brokerage firms could adversely affect the Company's retail business.
Moreover, there is substantial commission discounting by full-service
broker-dealers competing for institutional and individual brokerage business.
The possible increase of this discounting could adversely affect the
14
Company. Other financial institutions, notably commercial banks and savings and
loan associations, offer customers some of the services and products presently
provided by securities firms. In addition, certain large corporations have
entered the securities industry by acquiring securities firms. While it is not
possible to predict the type and extent of competitive services which banks and
other institutions ultimately may offer to customers, the Company may be
adversely affected to the extent those services are offered on a large scale.
4. RISKS OF PRINCIPAL AND BROKERAGE TRANSACTIONS AND LENDING
ACTIVITIES
The Company's trading, market making and underwriting activities
involve the purchase, sale or short sale of securities as a principal and,
accordingly, involve the risk of changes in the market prices of those
securities and the risk of a decrease in the liquidity of markets which would
limit the Company's ability to resell securities purchased or to repurchase
securities sold in principal transactions. The Company's brokerage activities
and its principal transactions are subject to credit risks. For example a
customer may not respond to a margin call, and since the securities being held
as collateral have diminished in value, there is a risk that the Company may not
recover the funds it loaned to the customer.
5. LITIGATION
Many aspects of the Company's business involve substantial risk of
liability, including exposure to substantial liability under federal and state
securities laws in connection with the activity of its sales people as well the
underwriting and distribution of securities. In recent years, there has been an
increasing incidence of litigation involving the securities industry, including
class actions which generally seek rescission and substantial damages. See
"Legal Proceedings" in Form 10-KSB.
6. PERSONNEL; DEPENDENCE UPON REGISTERED REPRESENTATIVES
Most aspects of the Company's business are dependent on highly
skilled and experienced individuals. The Company has devoted considerable
efforts to recruiting and compensating those individuals and provides incentives
to encourage them to remain with the Company. Individuals associated with the
Company may in the future leave the Company at any time to pursue other
opportunities.
7. DEPENDENCE UPON FOUNDERS
For the foreseeable future, the Company will be substantially
dependent upon the personal efforts and abilities of its President,
Mr. Herbert Kurinsky and its Vice-President, Mr. William Kurinsky
15
to coordinate, implement and manage its business plans and programs. The loss or
unavailability of the services of either of them would likely have a material
adverse affect on the business, operations and prospects of the Company. The
Company has obtained, for its benefit, a policy of life insurance on the lives
of Messrs. Herbert Kurinsky and William Kurinsky in the amount of $250,000 and
$500,000, respectively. The Company has entered into a three year Employment
Agreement with each of these employees.
8. REGULATION
The Company's business, and the securities industry generally, are
subject to extensive regulation at both the federal and state levels. In
addition, self-regulatory organizations such as the NASD require strict
compliance with their rules and regulations. Failure to comply with any of these
laws, rules or regulations could result in fines, suspension or expulsion, which
could have a material adverse affect upon the Company.
9. NET CAPITAL REQUIREMENTS
The Company's business, like that of other securities firms, is
capital intensive. The SEC and the NASD have stringent provisions with respect
to net capital requirements applicable to the operation of securities firms. A
significant operating loss or any charge against net capital that could
adversely affect the ability of the Company to expand or, depending upon the
magnitude of the loss or charge, to maintain its present level of business.
10. RISKS ASSOCIATED WITH INVESTMENT BANKING ACTIVITIES
Participation in an underwriting syndicate or a selling group
involves both economic and regulatory risks. An underwriter may incur losses if
it is unable to resell the securities it is committed to purchase, or if it is
forced to liquidate its commitment at less than the purchase price. In addition,
under federal securities laws, other laws and court decisions with respect to
underwriters' liabilities and limitations on the indemnification of underwriters
by issuers, an underwriter is subject to substantial potential liability for
misstatements or omissions of material facts in Prospectuses and other
communications with respect to such offerings. Acting as a managing underwriter
increases these risks. Underwriting commitments constitute a charge against net
capital and the Company's ability to make underwriting commitments may be
limited by the requirement that it must at all times be in compliance with the
Net Capital Rule.
11. DIVIDEND POLICY
Anticipated capital requirements of the Company make it unlikely that
any dividends will be declared in the foreseeable
16
future on the Shares. Further, applicable statutory regulations under the
Securities Act of 1933, as amended, as well as regulations of the NASDR may
affect the ability of the Company to declare and pay dividends. See "Dividend
Policy".
12. POTENTIAL ADVERSE IMPACT ON MARKET PRICE OF WARRANTS
UNDERLYING COMMON STOCK AND RULE 144 SALES
Sales of substantial amounts of the Company's Common Stock in the
public market after this Offering, or the perception that such sales may occur,
could adversely affect the market prices of the Company's Common Stock and may
impair the Company's ability to raise additional capital by the sale of its
equity securities. Upon completion of this Offering the Company will have
8,937,179 Warrants to purchase 8,937,179 shares of Common Stock. Holders of
those Warrants are likely to exercise them when, in all likelihood the Company
could obtain additional capital on terms more favorable than those provided by
the Warrants. Further, while the Warrants are outstanding, the Company's ability
to obtain additional financing on favorable terms may be adversely affected.
Of the 8,937,179 issued and outstanding shares of the Company's
Common Stock, approximately 2,092,941 shares may be deemed "restricted shares"
and, in the future, may be sold in compliance with Rule 144 under the Securities
Act of 1933, as amended. Rule 144 provides that a person holding restricted
securities for a period of one year may sell in brokerage transactions an amount
equal to 1% of the Company's outstanding Common Stock every three months. A
person who is a "non-affiliate" of the Company and who has held restricted
securities for over three years is not subject to the aforesaid volume
limitations as long as the other conditions of the Rule are met. Possible or
actual sales of the Company's Common Stock by certain of the Company's present
shareholders under Rule l44 may, in the future, have a depressive effect on the
price of the Company's Common Stock in any market which may develop for such
shares. Such sales at that time may have a depressive effect on the price of the
Company's Common Stock in the open market. See "Certain Transactions" and
"Description of Capital Stock--Shares Eligible for Future Sale".
13. LIMITED PUBLIC MARKET AND ARBITRARY DETERMINATION OF OFFERING
PRICE
The Company's Common Stock is traded in the over-the-counter market
and reported by the National Daily Quotation Service ("Pink Sheets") published
by the National Quotation Bureau, Inc and the Electronic Bulletin Board
maintained by the NASD. Although the Company is applying for inclusion of its
Common Stock in the Nasdaq SmallCap Market, there an be no assurance that the
Company's application will be accepted. Additionally, there can be no assurance
that the Company will be able to maintain its Nasdaq listing nor be delisted in
the future as Nasdaq has the authority
17
to delist companies for various reasons. Further, there has been no trading
market in the Company's Warrants. Last, the exercise prices of the Units and
Warrants have been determined by the Company, arbitrarily and do not relate to
price quotations for the Company's Common Stock.
14. POTENTIAL ADVERSE EFFECT OF REDEMPTION OF WARRANTS
The Warrants may be redeemed by the Company at a redemption price of
$.05 per Warrant provided that (a) 30 days prior written notice is given to the
holders of the Warrants, (b) the closing bid price per share of Common Stock as
reported on Nasdaq has been at least $5.00 for the ten consecutive trading days
ending within ten days of the date of the notice of redemption and (c) a valid
registration statement for the shares of Common Stock underlying such Warrants
is then in effect. Redemption of the Warrants could force the holders (i) to
exercise the Warrants and pay the exercise price therefore when it may be
disadvantageous for the holders to do so, (ii) to sell the Warrants at the then
current market price when they might otherwise wish to hold the Warrants or
(iii) to accept the nominal redemption price which, at the time the Warrants are
called for redemption, is likely to be substantially less than the market value
of the Warrants. See "Description of Securities -- Units and Warrants."
15. CURRENT PROSPECTUS REQUIRED TO EXERCISE WARRANTS
Holders of Warrants will be able to exercise the Warrants only if (i)
a current prospectus under the Securities Act for the Shares of Common Stock
underlying the Warrants (the "Warrants Shares") is then in effect and (ii) such
securities are qualified for sales or exempt from qualifications under the
applicable securities laws of the states in which the various holders of
Warrants reside. Although the Company has undertaken and intends to use its best
efforts to maintain a current prospectus covering the Warrant Shares following
completion of the Offering to the extent required by federal securities law,
there can be no assurance that the Company will be able to do so. The value of
the Warrants may be greatly reduced if a prospectus covering the Warrants Shares
is not kept current or if the Warrant Shares are not qualified, or exempt from
qualification, in the state in which the holders of Warrants reside. Persons
holding Warrants who reside in jurisdictions in which such securities are not
qualified and in which there is no exemption will be unable to exercise their
Warrants and would either have to sell their Warrants in the open market or
allow them to expire unexercised. If and when the Warrants become redeemable by
the terms thereof, the Company may exercise its redemption right even if it is
unable to qualify the Warrant Shares for sale under all applicable state
securities laws. See "Description of
18
Securities -- Units and Warrants."
16. LIMITATIONS ON TRADING AND MARKET-MAKING ACTIVITIES ON THE
COMPANY'S BROKER-DEALER SUBSIDIARY IN THE COMPANY'S SECURITIES
Due to regulatory positions and requirements of both the SEC and the
NASDR relating to the circumstances and extent to which a registered
broker-dealer and NASDR member may engage in market-making transactions in the
securities of its parent company, FMSC does not engage in trading or
market-making activities relating to the Company's Common Stock, Units or
Warrants where it would speculate in, purchase or sell the Company's securities
for its own account. The purpose and effect of such limitation restrict FMSC
from being a factor in the determination of the market or price of the Company's
securities. FMSC does, however, execute transactions for its customers on an
"agency basis" where it does not acquire the Company's securities for its own
trading account. FMSC will, however, earn usual and customary brokerage
commissions in connection with the execution of such brokerage transactions. If,
under current or future regulations of both the SEC and NASDR, the Company is
permitted to participate as a market-maker, it may do so on the basis of showing
a bid and offer for the Company's securities at specified prices representing
customer interest.
17. LIMITATION OF DIRECTOR LIABILITY; INDEMNIFICATION
The Company has amended its Certificate of Incorporation to include
provisions eliminating the personal liability of directors, except for breach of
a director's duty of loyalty to the Company or to its shareholders, acts or
omissions not in good faith or which involve intentional misconduct or a knowing
violation of the law, and in respect of any transaction in which a director
receives an improper personal benefit. These provisions pertain only to breaches
of duty by directors as such, and not in any other corporate capacity, e.g., as
an officer. As a result of the inclusion of such provisions, if adopted, neither
the Company nor shareholders may be able to recover monetary damages against
directors for actions taken by them which are ultimately found to have
constituted negligence or gross negligence, or which are ultimately found to
have been in violation of their fiduciary duties, although it may be possible to
obtain injunctive or other equitable relief with respect to such actions. If
equitable remedies are found not to be available to shareholders in any
particular case, shareholders may not have an effective remedy against the
challenged conduct.
The Company believes that, based upon recent developments in the
market for directors' and officers' liability insurance, such provisions are
necessary to attract and retain qualified
19
individuals to serve as directors. In addition, such provisions will allow
directors to perform their duties in good faith without concern for the
application of monetary liability on a retroactive basis in the event that a
court determines their conduct to have been negligent or grossly negligent. On
the other hand, the potential remedies available to the Company or a Company
stockholder are significantly limited by such provisions, and it is possible
that the protection afforded by such provisions may reduce the level of
diligence or care demonstrated by such directors.
18. TAX CONSIDERATIONS
There are various applicable income tax consequences associated with
an investment in the Common Stock. Each investor is urged to consult with his
own tax advisor concerning the effects of applicable income tax laws and
regulations on an investment by him in the Company's securities and his
individual tax situation. The Company will not seek or receive a ruling from the
Internal Revenue Service or a tax opinion as to the tax consequences of the
distribution of the Rights or an investment in the Common Stock. See "Certain
Federal Income Tax Considerations" for a summary of certain federal income tax
aspects of the Rights and the Common Stock offered hereby.
USE OF PROCEEDS
The net proceeds from the sale of the Shares offered hereby, after
deduction of other estimated expenses of the offering, are estimated to be
approximately $____________ if the maximum number of Rights are exercised.
The Company expects to use the net proceeds for general corporate
purposes, primarily for use in the Company's retail, institutional, trading and
investment banking and underwriting activities. The amount of the net proceeds
that will be invested in particular areas of the Company's business will depend
upon future economic conditions and business opportunities. To the extent that
the Company may incur a loss from operations, such loss will be funded from the
Company's general funds, including the net proceeds of this offering. In such
event the amount available for use in the expansion of the various aspects of
the Company's business will be reduced by the amounts expended in the course of
day-to-day operations, including working capital requirements and by any
operating losses.
20
MARKET FOR COMPANY'S COMMON STOCK
The Common Stock is traded in The NASD's Over-the-Counter Bulletin
Board, trading symbol "FMFK". Although the Company is applying for inclusion of
its Common Stock in the Nasdaq Small Cap Market, there can be no assurance that
the Company's application will be accepted.
The following table presents, on a quarterly basis, the high and low
bid quotations for the Common Stock as reported by the Nasdaq National Market
for the period from January 1, 1995 through December 31, 1996. Such quotations
reflect inter-dealer prices, without retail markup, markdown or commission and
do not necessarily represent actual transactions.
Period High Low
- ------ ---- ---
1997
First Quarter ................. $3.125 $ .96
Second Quarter
(through June 8, 1997) ........ $2.78125 $2.5625
1996:
First Quarter ................. $1.06 $ .84375
Second Quarter ................ $2.1875 $ .8125
Third Quarter ................. $1.53 $1.03125
Fourth Quarter ................ $1.13 $ .80
1995:
First Quarter ................. $ .56 $ .22
Second Quarter ................ $ .91 $ .19
Third Quarter ................. $1.06 $ .50
Fourth Quarter ................ $1.19 $ .50
The number of shares of Common Stock of the Company held of record as
of the close of business on May 23, 1997 was 8,937,179.
THE RIGHTS OFFERING
THE RIGHTS
The Company is issuing to each record holder of Common Stock
21
as of the close of business on the Record Date one nontransferable Right for
every share of Common Stock held of record as of the class of business on the
Record Date. The Rights will be evidenced by Rights Certificates. An aggregate
of up to 8,937,179 Rights will be distributed.
EXPIRATION TIME
The Rights Offering will expire at the Expiration Time, 5:00 p.m. New
York City time on __________, 1997, subject to extension at the sole discretion
of the Company's Board of Directors, but not beyond 5:00 p.m. New York City time
on _________, 1997. After the Expiration Time, unexercised Rights will be null
and void. The Company will not be obligated to honor any purported exercise of
Rights received by the Subscription Agent after the Expiration Time, regardless
of when the documents relating to that exercise were sent except pursuant to the
guaranteed delivery procedures described under "Payment for Shares."
SUBSCRIPTION PRIVILEGES
Basic Subscription Privilege. These Rights will entitle the Holder to
subscribe up to the Expiration Time and at the Subscription Price for one Unit.
Certificates representing Units purchased pursuant to the exercise of the Basic
Subscription Privilege will be delivered to subscribers as soon as practicable
after the Expiration Time and after all prorations contemplated by the terms of
the Rights offering have been effected.
Oversubscription Privilege. Subject to allocation described below
each Right also carries the right to subscribe up to the Expiration Time and at
the Subscription Price for an unlimited number of additional Units up to the
total number of Units to be issued in the Rights Offering. Only Holders who
exercise all their Rights pursuant to the Basic Subscription Privilege will be
entitled to exercise the Oversubscription Privilege.
Units. Will be available for subscription pursuant to the
Oversubscription Privilege only to the extent that any Units remain available
for purchase after the exercise of the Basic Subscription Privilege. The
Oversubscription Privilege is not transferable. A Holder may at the time of
exercising the Basic Subscription Privilege exercise the Oversubscription
Privilege for up to the total number of Units to be issued in the Rights
Offering. If an insufficient number of Excess Units is available to satisfy
fully all elections to exercise the Oversubscription Privilege, then the Excess
Units will be prorated in proportion to the number of shares of Common Stock
owned by such Holder as of the close of business on the Record Date.
Banks, brokers and other nominee holders who exercise the
Basic Subscription Privilege and the Oversubscription Privilege on
22
behalf of beneficial owners of Rights will be required to certify to the
Subscription Agent and the Company in connection with the exercise of the
Oversubscription Privilege as to the aggregated number of Rights that have been
exercised and the number of Units thereby subscribed for pursuant to the
Oversubscription Privilege by each beneficial owner of Rights on whose behalf
such nominee holder is acting.
SUBSCRIPTION PRICE
The Subscription Price will be $.45 per Unit. If the aggregate
Estimated Subscription Price paid by an exercising Holder exceeds the amount
necessary to purchase at the Subscription Price the number of Units for which
the Holder has indicated an intention to subscribe, then the holder will be
deemed to have exercised, first, the Basic Subscription Privilege (if not
already fully exercised) and, second, the Oversubscription privilege to purchase
shares at the Subscription Price to the full extent of the excess payment
tendered. The Subscription Price is payable in cash, by check, money order or
wire transfer, all as more completely set forth under "Exercise of Rights."
EXERCISE OF RIGHTS
Holders may exercise their Rights by delivering to the Subscription
Agent, at or prior to the Expiration Time, the properly completed and executed
Rights Certificates evidencing those Rights, with any signatures guaranteed as
required, together with payment in full of the Estimated Subscription Price for
each Unit subscribed for pursuant to the Basic Subscription Privilege and the
Oversubscription Privilege. Rights may also be exercised by contacting the
holder's broker, banker or trust company, which can arrange, on the Holder's
behalf, to guarantee delivery of payment and of a properly completed and
executed Rights Certificate. A fee may be charged for this service. Completed
Rights Certificates must be received by the Subscription Agent prior to the
Expiration Time (unless the guaranteed delivery procedures are complied with as
described under "Payment for Shares") at the offices of the Subscription Agent
at the address set forth in "Subscription Agent".
Holders Who Are Record Owners. Holders who are record owners can
choose either option set forth under "Payment for Shares". If time is of the
essence, option (2) will permit delivery of the Rights Certificate and payment
after the Expiration Time.
Holders Whose Shares Are Held by a Nominee. Holders whose shares are
held by a nominee, such as a broker or trustee, must contact that nominee to
exercise their Rights. In that case, the nominee will complete the Rights
Certificate on behalf of the Holder and arrange for proper payment by one of the
methods set forth under "Payment for Shares".
23
Nominees. Nominees who hold shares for the account of others should
notify the beneficial owners of such shares as soon as possible to ascertain
such beneficial owners' intentions and to obtain instructions with respect to
the Rights. If the beneficial owner so instructs, the nominee should complete
the Rights Certificate and submit it to the Subscription Agent along with the
proper payment described under "Payment for Shares".
PAYMENT FOR SHARES
Holders who acquire Units by exercising the Basic Subscription
Privilege and the Oversubscription Privilege may choose between the following
methods of payment.
(1) A Holder can send the Rights Certificate, together with payment
for the Units subscribed for pursuant to the Basic Subscription Privilege and
for Excess Shares subscribed for pursuant to the Oversubscription Privilege, to
the Subscription Agent, calculating the total payment on the basis of the
subscription price of $.45 per Unit (the "Subscription Price"). To be accepted,
such payment, together with the executed Rights Certificate, must be received by
the Subscription Agent at one of its offices at the addresses set forth under
"Subscription Agent" prior to the Expiration Time. The Subscription Agent will
deposit all checks and money orders received by it prior to the final payment
date into a segregated interest-bearing account(which interest will be paid to
the Company) pending proration and distribution of Units or Excess Units. A
PAYMENT PURSUANT TO THIS METHOD MUST BE IN UNITED STATES DOLLARS BY MONEY ORDER
OR CHECK DRAWN ON A BANK LOCATED IN THE UNITED STATES, MUST BE PAYABLE TO "FMFC
RIGHTS OFFERING" AND MUST ACCOMPANY AN EXECUTED RIGHTS CERTIFICATE FOR SUCH
RIGHTS CERTIFICATE TO BE ACCEPTED.
(2) Alternatively, a subscription will be accepted by the
Subscription Agent if, prior to the Expiration Time, the Subscription Agent has
received a notice of guaranteed delivery by facsimile (telecopy) or otherwise
from a bank, a trust company or a New York stock Exchange member guaranteeing
delivery of (a) payment of the Estimated Subscription Price for the Underlying
Shares subscribed for pursuant to the Basic Subscription Privilege and for any
Excess Units subscribed for pursuant to the Oversubscription Privilege and (b) a
properly completed and executed Rights Certificate. The Subscription Agent will
not honor a notice of guaranteed delivery unless a properly completed and
executed Rights Certificate is received by the Subscription Agent by the close
of business on the fifth business day after the Expiration Time (______, 1997)
and full payment of the Estimated Subscription Price is received by the
Subscription Agent by the close of business on such date.
Within 10 business days following the Expiration Time (____, 1997), a
confirmation will be sent by the Subscription Agent to
24
each subscribing Holder (or, if the Holder's shares are held by a depository or
nominee, to such depository or nominee), showing (a) the number of Units and the
number of Excess Units, if any, acquired, (b) the per share and total purchase
price for such Units or Excess Units, and (c) any excess payment that would
otherwise result in a fractional share that is to be refunded by the Company to
such Holder. Any excess payment to be refunded by the Company to a Holder will
be mailed by the Subscription Agent to such Holder as promptly as possible.
The Estimated Subscription Price will be deemed to have been received
by the Subscription Agent only upon (a) clearance of any uncertified check, (b)
receipt by the Subscription Agent of any certified check or cashier's check or
of any postal, telegraphic or express money order, or (c) receipt of notice of
guaranteed delivery. If paying by uncertified personal check, please note that
the funds paid thereby may take at least five business days to clear.
Accordingly, Holders who wish to pay the Subscription Price by means of an
uncertified personal check are urged to make payment sufficiently in advance of
the Expiration Time to ensure that such payment is received and clears by such
time and are urged to consider in the alternative payment by means of certified
or cashiers check, money order or wire transfer of funds. All funds received in
payment of the Subscription Price made by the Subscription Agent and invested at
the direction of the Company in short-term certificates of deposit, short-term
obligations of the United States, or any state or agency thereof, or money
market mutual funds invested in the foregoing instruments. The account in which
such funds will be held will not be insured by the Federal Deposit Insurance
Corporation. Earnings on such funds will be retained by the Company whether or
not the Rights Offering is consummated.
Whichever of the two methods described above are used, issuance and
delivery of certificates for the shares of common Stock purchased are subject to
collection of checks and actual payment pursuant to any notice of guaranteed
delivery.
The instructions accompanying the Rights Certificates should be read
carefully and followed in detail RIGHTS CERTIFICATES SHOULD BE SENT WITH PAYMENT
TO THE SUBSCRIPTION AGENT. DO NOT SEND RIGHTS CERTIFICATES TO THE COMPANY.
THE METHOD OF DELIVERY OF RIGHTS CERTIFICATES AND PAYMENT OF THE
ESTIMATED SUBSCRIPTION PRICE TO THE SUBSCRIPTION AGENT WILL BE AT THE ELECTION
AND RISK OF THE HOLDERS. IF SENT BY MAIL, HOLDERS ARE URGED TO SEND RIGHTS
CERTIFICATE AND PAYMENTS BY REGISTERED MAIL, PROPERLY INSURED, WITH RETURN
RECEIPT REQUESTED, AND ARE URGED TO ALLOW A SUFFICIENT NUMBER OF DAYS TO ENSURE
DELIVERY TO THE SUBSCRIPTION AGENT AND CLEARANCE OF PAYMENT PRIOR TO THE
EXPIRATION TIME. BECAUSE UNCERTIFIED PERSONAL CHECKS MAY TAKE AT LEAST FIVE
BUSINESS DAYS TO CLEAR, HOLDERS ARE STRONGLY URGED TO
25
PAY, OR ARRANGE FOR PAYMENT, BY MEANS OF CERTIFIED OR CASHIER'S CHECK, MONEY
ORDER, WIRE TRANSFER OF FUNDS OR NOTICE OF GUARANTEED DELIVERY.
All questions concerning the timeliness, validity, form and
eligibility of any exercise of Rights will be determined by the Company, whose
determinations will be final and binding. The Company, in its sole discretion,
may waive any defect or irregularity, or permit a defect or irregularity to be
corrected within such time as it may determine or reject the purported exercise
of any Right. Rights Certificates will not be deemed to have been received or
accepted until all irregularities have been waived or cured within such time as
the company, in its sole discretion, determines. Neither the Company nor the
Subscription Agent will be under any duty to give notification of any defect or
irregularity in connection with the submission of Rights Certificates or incur
any liability for failure to give such notification.
Any questions or requests for assistance concerning the method of
exercising Rights or requests for additional copies of this Prospectus, the
instructions or the notice of guaranteed delivery should be directed to the
Information Agent at the address and telephone numbers set forth under
"Information."
NO REVOCATION
ONCE A HOLDER HAS PROPERLY EXERCISED HIS OR HER BASIC
SUBSCRIPTION PRIVILEGE AND OVERSUBSCRIPTION PRIVILEGE, SUCH
EXERCISE MAY NOT BE REVOKED.
NONTRANSFERRABILITY OF RIGHTS
RIGHTS MAY NOT BE PURCHASED, SOLD OR OTHERWISE TRANSFERRED.
ANY PURPORTED TRANSFER OF RIGHTS WILL BE DEEMED NULL AND VOID.
DETERMINATION OF SUBSCRIPTION PRICE AND TERMS OF THE RIGHTS OFFERING.
The Company's objective in establishing the Subscription Price was
the achievement of the targeted net proceeds from the Rights Offering while
providing Shareholders with an opportunity to make an additional investment in
the Company, and thus avoid an excessive dilution of their proportionate
ownership position in the Company.
In approving the Subscription Price, the Board of Directors of the
Company considered such factors as the alternative available to the Company for
raising capital, the market price of the common
26
Stock, the business prospects for the Company and the general condition of the
securities markets. There can be no assurance, however, that the market price of
the common Stock will not decline during the subscription period to a level
equal to or below the Subscription Price, or that, following the issuance of the
Rights and of the Warrants upon exercise of Units, a subscribing Rights Holder
will be able to sell Warrants purchased in the Rights Offering at a price equal
to or greater than the Subscription Price.
SUBSCRIPTION AGENT
The Company has appointed North American Transfer Company as
Subscription Agent for the Rights Offering. The Subscription Agent's address,
which is the address to which the Rights Certificates and payment of the
Subscription Price should be delivered, as well as the address to which a notice
of guaranteed delivery must be delivered, is:
North American Transfer Company
147 West Merrick Road
Freeport, NY 11521
The Subscription Agent's telephone number is (516) 379-8501, an its
facsimile number is (516) 379-8525.
The Company will pay the Subscription Agent's fees and expenses, and
has also agreed to indemnify the Subscription Agent against certain liabilities
it may incur in connection with the Rights Offering.
INFORMATION
Any questions or requests for assistance concerning the method of
exercising Rights or requests for additional copies of this Prospectus, the
instructions or the notice of guaranteed delivery should be directed to: Robert
I. Rabinowitz, Esq. at the Company.
FOREIGN SHAREHOLDERS
Due to the requirements and restrictions of securities laws of
foreign countries, Rights Certificates will not be mailed to record holders of
common Stock whose addresses are outside the United States and Canada, but will
be held by the Subscription Agent for such holders' accounts until the
Subscription Agent receives instructions to exercise the Rights. If no
instructions are received by the Expiration Time, the Rights will be null and
void.
27
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion summarizes certain federal income tax
consequences applicable to the Company's shareholders upon the issuance of the
Rights, and to Holders upon the exercise of the Rights. This summary provides
only a general discussion and does not represent a complete analysis of the
consequences that may occur for a particular Holder based on his or her
individual circumstances, or of the provisions of the Internal Revenue code of
1986, as amended (the "Code"), that may subject certain Holders to special
treatment (for example, banks, dealers in securities, life insurance companies
and tax-exempt organizations). Moreover, this summary does not address any
aspects of state, local or foreign tax laws or of any federal laws other than
those pertaining to income tax.
This summary is based on the Code, Treasury Regulations promulgated
thereunder and their judicial and administrative interpretations as of the date
of this Prospectus. There can be no assurance that further legislation,
regulations, administrative pronouncements or court decisions will not
significantly change the law and materially affect the conclusions expressed
herein. Any such change, even though made after the distribution of the Rights,
could be applied retroactively.
The Company has not requested a ruling from the Internal Revenue
Service (the "Service") with respect to the matters discussed in this summary.
This summary does not in any way bind the Service or the courts or in any way
constitute an assurance that the federal income tax consequences discussed
herein will be accepted by the Service or the courts.
ISSUANCE OF THE RIGHTS
The Company shareholders will not recognize taxable income upon
receipt of the Rights.
BASIS OF THE RIGHTS
Except as provided in the following sentence, a Holder's adjusted
basis in the Common Stock with respect to which the distribution was made will
be allocated between the Common Stock and the Rights in proportion to the fair
market value of each on the date on which the Rights are received. If the fair
market value of the Rights on the date of receipt is less than 15% of the fair
market value of the Common Stock upon which the distribution is made, the
adjusted basis of the Rights will be zero. The Holder may elect, however, to
allocate the adjusted basis between the Common Stock and the Rights based on
relative fair market value, as described above. Such an election is to be made
by a statement attached to the Holder's return for the year in which the Rights
are received, and is irrevocable.
28
EXERCISE OF THE RIGHTS; BASIS AND HOLDING PERIOD OF UNDERLYING SHARES
Holders will not recognize gain or loss upon exercise of their
Rights. The holding period for common stock underlying the Warrants will begin
on the date the Warrants are exercised.
EXPIRATION OF THE RIGHTS
Holders who allow the Rights received by them to expire unexercised
will not recognize gain or loss and the basis (if any) allocable to such Rights
will revert to the Common Stock with respect to which the Rights were received.
THE FOREGOING SUMMARY IS INCLUDED FOR GENERAL INFORMATION ONLY.
ACCORDINGLY, EACH HOLDER IS URGED TO CONSULT WITH HIS OR HER OWN TAX ADVISOR
WITH RESPECT TO THE TAX CONSEQUENCES OF THE RIGHTS OFFERING ON SUCH HOLDER'S OWN
PARTICULAR TAX SITUATION, INCLUDING THE APPLICATION AND EFFECT OF STATE, LOCAL
AND FOREIGN INCOME AND OTHER TAX LAWS.
DESCRIPTION OF SECURITIES
The Company is authorized to issue 30,000,000 shares of Common Stock,
no par value, and 5,000,000 shares of Preferred Stock, par value $.10 per share.
As of the date hereof, there were 8,937,179 shares of Common Stock issued and
outstanding, and no shares of Preferred Stock issued and outstanding.
COMMON STOCK
Subject to the rights of the holders of any shares of Preferred Stock
which may be issued in the future, holders of shares of Common Stock of the
Company are entitled to cast one vote for each share held at all shareholders'
meetings for all purposes, including the election of directors. Directors are
elected each year at the Company's annual meeting of shareholders to serve for a
period of one year and until their respective successors have been duly elected
and qualified.
Common shareholders have the right to share ratably in such dividends
on shares of Common Stock as may be declared by the Board of Directors out of
funds legally available therefor. Upon liquidation or dissolution, each
outstanding share of Common Stock will be entitled to share equally in the
assets of the Company legally available for distribution to shareholders after
the payment of all debts and other liabilities, subject to any superior rights
of any future holders of Preferred Stock.
29
Common shareholders have no pre-emptive rights. There are no
conversion or redemption privileges or sinking fund provisions with respect to
the Common Stock. All of the outstanding shares of Common Stock are, and all of
the shares of Common Stock offered hereby will be, validly issued, fully paid
and nonassessable. The common Stock does not have cumulative voting rights so
holders of more than 50% of the outstanding Common Stock can elect 100% of the
Directors of the Company if they choose to do so.
PREFERRED STOCK
The Board of Directors is authorized to issue 5,000,000 shares of
Preferred Stock, $.10 par value per share, from time to time in one or more
series. The Board may issue a series of Preferred Stock having the right to vote
on any matter submitted to shareholders, including, without limitation, the
right to vote by itself as a series, or as a class together with any other or
all series of Preferred Stock. The Board of Directors may determine that the
holder of Preferred Stock voting as a class will have the right to elect one or
more additional members of the Board of Directors, or the majority of the
members of the Board of Directors.
UNITS AND WARRANTS
THE FOLLOWING DISCUSSION IS SUBJECT TO THE TERMS AND CONDITIONS OF
THE WARRANTS, AND SUBSCRIBERS ARE REFERRED TO THE WARRANTS FOR MORE DETAILED
INFORMATION.
Each Unit consists of one Class A Redeemable Common Stock Purchase
Warrant, one Class B Redeemable Common Stock purchase Warrant and one Class C
Redeemable Common Stock Purchase Warrant. First, the Class A Redeemable Common
Stock Purchase Warrants (the "Class A Warrants"), entitle the holder thereof to
purchase during the three years commencing on __ [the date of initial issuance]
one share of Common Stock of the Company (the "Class A Warrant Shares"), at an
exercise price of $3.00 per share, subject to adjustment in certain
circumstances. Second, the Class B Redeemable Common Stock Purchase Warrants
(the "Class B Warrants"), entitle the holder thereof to purchase during the five
years commencing on __ [the date of initial issuance] one share of Common Stock
of the Company (the "Class B Warrant Shares"), at an exercise price of $5.00 per
share, subject to adjustment in certain circumstances. Last, the Class C
Redeemable Common Stock Purchase Warrants (the "Class C Warrants"), entitle to
holder thereof to purchase during the seven years commencing on __ [the date of
the initial issuance] one share of Common Stock of the Company (the "Class C
Warrant Shares"), at an exercise price of $7.00 per share, subject to adjustment
in certain circumstances. The Warrants may be exercised in whole or in part.
Unless exercised within the applicable exercise period, the Warrants will
automatically expire in the last day of the applicable exercise period.
30
The Company may redeem the Warrants, at any time at $.05 per
Warrant, upon and within thirty (30) days prior notice, if the closing bid price
of the Company's common stock for the ten consecutive trading days ending within
ten days of the date of the notice of redemption is not less than: (a) for the
Class A Warrants, $5.00 per share, (b) for the Class B Warrants $7.00 per share,
and (c) for the Class C Warrants, $12.00.
The Warrants will be issued pursuant to a warrant agreement (the
"Warrant Agreement"), among the Company and North American Transfer Company, as
warrant agent ("Warrant Agent"), and will be evidenced by warrant certificates
in registered form. The warrants provide for adjustment of the exercise price
and for a change in the number of shares issuable upon exercise to protect
holders against dilution in the event of a stock dividend, stock split,
combination or reclassification of the Common Stock.
The exercise price of the Warrants was determined arbitrarily by the
Company and should not be construed to be predictive of or to imply that any
price increases in the Company's securities will occur.
The Company has reserved from its authorized but unissued shares a
sufficient number of shares of Common Stock for issuance upon the exercise of
the Warrants. A Warrant may be exercised upon surrender of the Warrant
certificate on or before its expiration date (or earlier redemption date) at the
offices of the Warrant Agent, with the form of "Election to Purchase" on the
reverse side of the Warrant certificate completed and executed as indicated,
accompanied by payment of the full exercise price (by certified or bank check
payable to the order of the Company) for the number of shares with respect to
which the Warrant is being exercised. The holders of the Warrants may exercise
the Warrants at any time up to the business day prior to the date of redemption,
provided that (i) a current registration statement relating to the shares of
Common Stock underlying the Warrants is on file with the Commission and then in
effect and (ii) such securities are qualified for sale or exempt from
qualification under the securities laws of the state in which the particular
holder of the Warrants resides. The Warrant Agreement requires the Company to
endeavor to maintain a registration statement current and effective for these
purposes. However, there can be no assurance that the Company will be able to do
so. (See "Risk Factors -- Current Prospectus Required to Exercise Warrants.")
Shares issued upon exercise of Warrants and payment in accordance with the terms
of the Warrants will be validly issued, fully paid and non-assessable. For the
life of the Warrants, the holders thereof have the opportunity to profit from a
rise in the market value of the Common Stock, with a resulting dilution in the
interest of all other shareholders. So long as the Warrants are outstanding, the
terms on which the Company could obtain additional capital may be adversely
affected. The holders of the Warrants might be expected to exercise them at a
time when the Company would, in all likelihood, be able to obtain any needed
capital by a new offering
31
of securities on terms more favorable than those provided for by the Warrants.
The Warrants do not confer upon the Warrant holder any voting or other rights of
a stockholder of the Company.
TRANSFER AND WARRANT AGENT
The transfer and Warrant agent for the Company's Common Stock
is North American Transfer Company, 47 West Merrick Road, Freeport,
New York 11521.
LEGAL MATTERS
The legality of the offering of the Shares will be passed upon for
the Company by Goldstein & DiGioia, 369 Lexington Avenue, New York, New York
l00l7.
EXPERTS
The financial statements of the Company as of and for the years ended
December 3l, 1995 and 1996 have been incorporated by reference herein and in the
Registration Statement in reliance upon the report of Schneider Ehrlich &
Wengrover LLP, independent certified public accountants, appearing elsewhere
herein, and upon the authority of said firm as experts in accounting and
auditing.
ADDITIONAL INFORMATION
The Company has filed a Registration Statement under the Act with the
Securities and Exchange Commission (the "Commission"), with respect to the
securities offered by this Prospectus. This Prospectus does not contain all of
the information set forth in the Registration Statement. For further information
with respect to the Company and such securities, reference is made to the
Registration Statement and to the exhibits and schedules filed therewith. Each
statement made in this Prospectus referring to a document filed as an exhibit to
the Registration Statement is qualified by reference to the exhibit for a
complete statement of its terms and conditions. The Registration Statement,
including exhibits thereto, may be inspected without charge to anyone at the
office of the Commission, and copies of all or any part thereof may be obtained
from the Commission's principal office in Washington, D.C. upon payment of the
Commission's charge for copying.
32
No dealer, salesman, or any other person
has been authorized to give any 2,979,060 Units
information or to make any
representations other than those
contained in this Prospectus, and if FIRST MONTAUK FINANCIAL CORP.
given or made, such information or
representations must not be relied upon
as having been authorized by the Units
Company. This Prospectus does not
constitute an offer to sell or a
solicitation of an offer to buy, by
anyone in any jurisdiction in which such ------------------------------
offer or solicitation is not authorized,
or in which the person making such offer PROSPECTUS
or solicitation is not qualified to do
so, or to any person to whom it is ------------------------------
unlawful to make such offer or
solicitation. Neither the delivery of
this Prospectus nor any sale made
hereunder shall under any circumstances,
create an implication that there has _______________, 1997
been no change in the affairs of the
Company since the date hereof.
33
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Expenses in connection with the issuance and distribution of the
securities being registered herein are estimated.
Amount
-------
Securities and Exchange Commission Registration Fee.................. $13,947
Printing and Engraving Expenses...................................... $15,000
Accounting Fees and Expenses......................................... $ 5,000
Legal Fees and Expenses..............................................
Blue Sky Fees and Expenses...........................................
Transfer Agent and Registrar Fees.................................... $ 5,000
Miscellaneous Fees and Expenses...................................... $ 5,000
-------
Total............................................ $
=======
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's By-Laws require the Company to indemnify, to the full
extent authorized by Section 14A:3-5 of the New Jersey Business Corporation Act,
any person with respect to any civil, criminal, administrative or investigative
action or proceeding instituted or threatened by reason of the fact that he, his
testator or intestate is or was a director, officer or employee of the Company
or any predecessor of the Company is or was serving at the request of the
Company or a predecessor of the Company as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise.
Section 14A:3-5 of the New Jersey Business Corporation Act authorized
the indemnification of directors and officers against liability incurred by
reason of being a director or officer and against expenses (including attorneys
fees) in connection with defending any action seeking to establish such
liability, in the case of third-party claims, if the officer or director acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation and if such officer or director shall not
have been adjudged liable for negligence or misconduct, unless a court otherwise
determines. Indemnification is also authorized with respect to any criminal
action or proceeding where the officer or director had no reasonable cause to
believe his conduct was unlawful.
In accordance with Section 14A:2-7 of the New Jersey Business
Corporation Act, the Company's Certificate of Incorporation
II-1
eliminates the personal liability of officers and directors to the Company and
to shareholders for monetary damage for violation of a director's duty owed to
the Company or its Shareholders, under certain circumstances.
Insofar as 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, or otherwise, the
Company has been informed that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in such
Act and is therefore unenforceable.
ITEM 16. EXHIBITS
The exhibits designated with an asterisk (*) have previously been
filed with the Commission in connection with the Company's Registration
Statement on Form S-l, File No. 33-24696, and pursuant to l7 C.F.R. Sections
20l.24 and 240.l2b-32, are incorporated by reference to the document referenced
in brackets following the description of such exhibits. (**) denotes exhibits
filed herewith. (***) denotes exhibits to be filed by Amendment to this
Registration Statement.
Exhibit No. Description
- ---------- -----------
3.l* Amended and Restated Certificate of
Incorporation adopted at l989 Special Meeting
in lieu of Annual Meeting of Shareholders
3.2* Amended and Restated By-Laws
4.l* Form of Common Stock Certificate
4.2** Form of Subscription Rights Certificate
4.3** Form of Class A Redeemable Common Stock
Purchase Warrant Certificate
4.4** Form of Class B Redeemable Common Stock
Purchase Warrant Certificate
4.5** Form of Class C Redeemable Common Stock
Purchase Warrant Certificate
4.6** Form of Warrant Agent Agreement
5*** Opinion of Goldstein & DiGioia
23** Consent of Schneider Ehrlich & Wengrover, LLP
II-2
99.1** Letter to Rights Holders
99.2** Instructions for Use of the Subscription
Rights Certificate including Notice of
Guaranteed Delivery
99.3** Letter to Rights Holders with addresses
outside the United States
99.4** Letter to Securities Dealers, Commercial
Banks, Brokers, Trust Companies, and other
Nominees, including Nominee Holder
Oversubscription Certification
99.5** Letter from Nominees to Beneficial Owners,
including Letter of Instruction from
Beneficial Owners of Nominees.
99.6** DTC Participant Oversubscription Exercise
Form, including Nominee Holder Subscription
Certificate
99.7*** Subscription Agent Agreement between the
Registrant and North American Transfer
Company.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement (a) to include
any prospectus required by Section 10(a)(3) of the Securities Act of 1933, (b)
to reflect in the prospectus any fact 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, and (c) 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) and (b) do not apply if 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 purpose of determining any liability under the Securities Act
of 1933, each post effective amendment shall be deemed to be a new Registration
Statement relating to the
II-3
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 post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) 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 following provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against pubic 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 begin 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.
(5) The undersigned registrant hereby undertakes that
(1) For purposes of determining any liability under the Securities
Act of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this registration
statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each posteffective amendment that contains a form of prospectus shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
II-4
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 the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the Borough of Red Bank, State of Jersey, on the 23rd day of
June, 1997.
FIRST MONTAUK FINANCIAL CORP.
By: /s/Herbert Kurinsky
----------------------------
Herbert Kurinsky, President
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature
appears below substitutes and appoints Herbert Kurinsky and William J. Kurinsky,
and each of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution, for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective 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, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or their or his substitute or substitute, 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 below by the following persons in the
capacities and on the dates indicated:
Signature Capacity Date
--------- -------- ----
/s/ Herbert Kurinsky
- ---------------------------- President June 23, 1997
Herbert Kurinsky Chief Executive Officer
and Director
/s/ William J. Kurinsky
- ---------------------------- Vice President, Chief June 23, 1997
William J. Kurinsky Operating and Chief
Financial Officer,
Secretary and Director
/s/ Norma Doxey
- ---------------------------- Director June 23, 1997
Norma Doxey
- ---------------------------- Director , 1997
Ward R. Jones, Jr.
- ---------------------------- Director , 1997
David I. Portman
II-5
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We hereby consent to the use of our report dated March 10, 1997 on the
financial statements of First Montauk Financial Corp. for the years ended
December 31, 1996 and 1995, and the use of our name under the heading "Experts"
in this Form S-3 of First Montauk Financial Corp.
__________________, 1997 Schneider Ehrlich & Wengrover LLP
II-6
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
3.1* Amended and Restated Certificate of Incorporation adopted at 1989
Special Meeting in lieu of Annual Meeting of Shareholders
3.2* Amended and Restated By-Laws
4.1* Form of Common Stock Certificate
4.2** Form of Subscription Rights Certificate
4.3** Form of Class A Redeemable Common Stock Purchase Warrant Certificate
4.4** Form of Class B Redeemable Common Stock Purchase Warrant Certificate
4.5** Form of Class C Redeemable Common Stock Purchase Warrant Certificate
4.6** Form of Warrant Agreement
5*** Opinion of Goldstein & DiGioia
23** Consent of Schneider Ehrlich & Wengrover, LLP
99.1** Letter to Rights Holders
99.2** Instructions for Use of the Subscription Rights Certificate including
Notice of Guaranteed Delivery
99.3** Letter to Rights Holders with addresses outside the United States
99.4** Letter to Securities Dealers, Commercial Banks, Brokers, Trust
Companies, and other Nominees, including Nominee Holder
Oversubscription Certification
99.5** Letter from Nominees to Beneficial Owners, including Letter of
Instruction from Beneficial Owners of Nominees
99.6** DTC Participant Oversubscription Exercise Form, including Nominee
Holder Subscription Certificate
99.7*** Subscription Agent Agreement between the Registrant and North
American Transfer Company.
- ----------
* Previously filed.
** Filed herewith.
*** To be filed by amendment.