Electronically transmitted to the Securities and Exchange Commission on
April 22, 2004
Registration No. 333-_____
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CASH SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 87-0398535
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
3201 WEST COUNTY ROAD 42, SUITE 106
BURNSVILLE, MN 55306
(952) 820-0080
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Christopher Larson, CFO
Cash Systems, Inc.
3201 West County Road 42, Suite 106
Burnsville, MN 55306
(952) 895-8399
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
Copies to:
John F. Wurm, Esq.
Fredrikson & Byron, P.A.
200 South Sixth Street
Minneapolis, Minnesota 55402
(612) 492-7000
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement as determined by
market conditions and other factors.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being offered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
Proposed Maximum Proposed Maximum Amount of
Amount Offering Price per Aggregate Offering Registration
Title of Securities to be Registered to be Registered Unit Price Fee
- ------------------------------------------------------------------------------------------------------------------------
common stock, $.001 par value per share 2,672,483 $6.50(1) $17,371,140(1) $2,201(1)
(1) For purposes of calculating the registration fee pursuant to Rule
457(c) under the Securities Act of 1933, such amount is based upon the
average of the high and low prices of the Registrant's common stock as
reported on the American Stock Exchange on April 20, 2004.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
Subject to completion, dated April 22, 2004
PROSPECTUS
CASH SYSTEMS, INC.
2,672,483 SHARES OF COMMON STOCK
This Prospectus relates to the offer and sale of up to 2,672,483 shares
of common stock, $0.001 par value, of Cash Systems, Inc., a Delaware
corporation, that may be offered and sold from time to time by persons who are
currently shareholders of Cash Systems or who may become shareholders upon
exercise of certain warrants or other stock purchase rights, or by pledgees,
donees, transferees, or other successors in interest that receive such shares as
a gift, distribution, or other non-sale related transfer. Cash Systems will not
receive any proceeds from the sale of shares by the selling shareholders. See
"Use of Proceeds."
Cash Systems will bear all expenses of the offering (estimated at
$17,000), except that the selling shareholders will pay any applicable
underwriter's commissions and expenses, brokerage fees or transfer taxes, as
well as any fees and disbursements of counsel and experts for the selling
shareholders.
The shares may be sold from time to time in transactions at the market
prices then prevailing on the American Stock Exchange ("AMEX"), in privately
negotiated transactions or otherwise. In connection with any sales, the selling
shareholders and any brokers and dealers participating in such sales may be
deemed to be "underwriters" within the meaning of the Securities Act. See "Plan
of Distribution."
Cash Systems' common stock is currently listed on the AMEX under the
symbol "CKN," and prior to January 6, 2004, was quoted on the OTC Bulletin Board
of the NASD under the symbol "CSHS." On April 20, 2004, the closing sale price
of Cash Systems common stock on the AMEX was $6.45 per share.
FOR INFORMATION CONCERNING CERTAIN RISKS RELATING TO AN INVESTMENT IN
CASH SYSTEMS COMMON STOCK, SEE "RISK FACTORS" BEGINNING ON PAGE 4.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SHARES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
THE SELLING SHAREHOLDERS MAY NOT SELL THESE SHARES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SHARES, AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SHARES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
The date of this prospectus is _________, 2004
ABOUT CASH SYSTEMS
Cash Systems' predecessor was organized under the laws of the State of
Utah on June 23, 1983, under the name "Cameron Resources, Inc." Effective
October 3, 1989, Cameron Resources merged into Unicom, Inc., a Delaware
corporation, for the sole purpose of changing its domicile to the State of
Delaware. Unicom changed its name to Unistone, Inc. on September 9, 1998.
Pursuant to a Plan of Reorganization and Stock Exchange Agreement dated
October 9, 2001, Unistone, Inc. acquired all of the outstanding capital stock of
Cash Systems, Inc., a Minnesota corporation, in exchange for the issuance of a
total of 10,550,000 shares of Unistone's common stock (the "Plan of
Reorganization"). In connection with the Plan of Reorganization, Unistone
changed its name to "Cash Systems, Inc."
Cash Systems provides credit/debit card cash advance, ATM and check
cashing solutions ("Cash Access Services"). These products are the primary means
by which casinos make cash available to gaming customers. Presently, our Cash
Access Services are utilized at over 200 gaming and retail locations nationwide.
Our credit/debit card cash advance products have been installed in over
90 casinos and allow casino patrons to obtain cash from their credit card or
checking account (for debit transactions), through the use of our software and
equipment.
Our ATM services are used by retailers (primarily convenience and
grocery stores) and casinos. Through these services, we process ATM transactions
through ATM networks with whom we have licensing agreements. We are also a
reseller of ATMs, and through lease agreements, we provide ATM vault cash.
We also offer two check cashing solutions to the gaming industry.
First, we provide casinos with full service check cashing. With full service
check cashing, we are given space within a casino to operate a check cashing
business. Our employees manage the booth, our cash is used to cash checks, and
we retain customer fees from check cashing. There are approximately 75 casinos
utilizing the services of a full service check cashing vendor. The second option
we provide are check guarantee services with the assistance of third party
providers.
Our principal offices are located at 3201 West County Road 42, Suite
106, Burnsville, Minnesota 55306 and our telephone number is (952) 895-8399.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
We have made forward-looking statements in this prospectus and in the
documents that are incorporated by reference in this prospectus, all of which
are subject to risks and uncertainties. Forward-looking statements broadly
involve our current expectations for future results. Our forward-looking
statements generally relate to financial results, growth strategies, product
development, competitive strengths, ability to obtain financing and sales
efforts. Words such as "anticipates," "believes," "could," "estimates,"
"expects," "forecast," "intend," "may,"
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"plan," "possible," "project," "should," "will" and similar expressions
generally identify our forward-looking statements. Any statement that is not a
historical fact, including estimates, projections, future trends and the outcome
of events that have not yet occurred, are forward-looking statements.
Our ability to actually achieve results consistent with our current
expectations depends significantly on certain factors that may cause actual
future results to differ materially from our current expectations. We caution
you to consider carefully the specific risk factors discussed in this prospectus
and our periodic reports filed with the SEC from time to time. These factors, in
some cases, have affected, and in the future (together with other unknown
factors) could affect, our ability to implement our business strategy and may
cause actual results to differ materially from those contemplated by such
forward-looking statements. No assurance can be made that any expectation,
estimate or projection contained in a forward-looking statement can be achieved.
It is not possible to foresee or identify all factors that may affect our
forward-looking statements, and you should not consider any list of such factors
to be an exhaustive list of all risks, uncertainties or potentially inaccurate
assumptions affecting such forward-looking statements.
You are also cautioned not to place undue reliance on forward-looking
statements, which speak only as of the date made. As a general policy, we do not
intend to release publicly any revisions to forward-looking statements as the
result of subsequent events or developments.
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RISK FACTORS
In addition to the other information in this prospectus, before
purchasing the shares you should carefully consider the following risk factors
in your evaluation of Cash Systems and its business. Investing in our common
stock involves a high degree of risk. The risks and uncertainties described are
not the only ones we face. Additional risks and uncertainties not presently
known to us or that we consider immaterial may also affect our business
operations. If any of these risks occur, our business could suffer, the market
price of our common stock could decline and you could lose all or part of your
investment in our common stock.
OUR PAST LOSSES PRESENT QUESTIONS REGARDING OUR ABILITY TO OPERATE PROFITABLY
LONG-TERM.
We incurred losses from operations of $(514,900) and $(273,615) in 2002
and 2001, respectively, and net losses for the same periods of $(971,051) and
$(776,090), respectively. For 2003, we generated operating income of $2,341,697
and net income of $1,654,659. Our ability to sustain our operating performance
we experienced in 2003 is primarily dependent on retaining existing clients with
acceptable business terms, obtaining new clients, developing new products,
acceptance of our current and future products by current and prospective
clients, maintaining the existing management team and hiring of additional
qualified management and sales personnel. Our ability to be profitable or
sustain profitability long-term is uncertain.
WE ARE HIGHLY DEPENDENT ON SHORT-TERM CONTRACTS AND CONTRACTS WITH TRIBES FOR
WHICH RENEWALS ARE UNCERTAIN.
We have relatively short-term contracts with the casino operators with
whom we do business. These contracts are generally from one to five years with
renewal clauses. As a consequence of these short-term contracts, we must
maintain favorable working relationships with such customers to maintain as
large a customer base as possible. Any loss of existing customers, or adverse
changes in our relationships with them, could materially harm our business.
Also, many of our contracts are with Native American tribes and are
subject to sovereign immunity and tribal jurisdiction. If a dispute arises with
respect to any of those agreements, it could be more difficult for us to protect
our rights.
OUR REVENUES DEPEND SUBSTANTIALLY ON PROCESSING COSTS.
Our processing costs associated with providing our Cash Access Services
are subject to increase by applicable networks such as VISA, including
interchange rates imposed for credit card cash advance transactions. Although we
are able to pass these cost increases on to our clients and/or cardholders in
most cases, increased processing costs would likely negatively impact revenues.
WE DEPEND ON THE GAMING INDUSTRY.
Our business currently is concentrated in the casino gaming industry,
and our plan of operation contemplates that we will continue to be focused
substantially on operations in casinos
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and other gaming locations. Accordingly, a decline in the popularity of gaming
or the rate of expansion of the gaming industry, or the occurrence of other
adverse changes in the gaming industry due to regulation or otherwise, would
have a material adverse effect on our operations.
WE DEPEND ON MARKET ACCEPTANCE OF OUR PRODUCTS AND SERVICES.
Our ability to increase revenues, cash flow and profitability will
depend, in part, upon continued market acceptance of our products and services.
We cannot predict whether market acceptance of our products and services will
continue. Changes in market conditions in the gaming industry and in the
financial condition of casino operators, such as consolidation within the
industry or other factors, could limit or decrease market acceptance of our
products and services. Insufficient market acceptance of our products and
services would have a material adverse effect on our business, financial
condition and results of operations.
WE OPERATE IN A HIGHLY COMPETITIVE INDUSTRY.
The casino cash access business is highly competitive, and there is no
assurance that we will be able to compete effectively long-term. We have focused
to a large extent on providing our services to the gaming industry. In our
market, we compete primarily with Global Cash Access, LLC, Comerica Bank/Global
Payments, Inc., and Game Financial Corporation (now owned by Certegy, Inc.). It
is possible that new competitors may provide the same services, some of which
may have greater financial resources than we have. If we face significant
competition, it may have a material adverse effect on our business, financial
condition and results of operations. We cannot predict whether we will be able
to compete successfully against current and future competitors.
In addition, more well-capitalized competitors may begin to offer
competitive technology and services. Therefore, due to the short-term contracts
described above, there is no assurance that we will be able to continue to grow
our market share or even maintain our existing market share if our competitors
begin offering products and services more comparable to those offered by us.
WE ARE SUBJECT TO GOVERNMENTAL AND TRIBAL GAMING REGULATIONS.
Many states require companies engaged in the business of providing Cash
Access Services or transmitting funds to obtain licenses from the appropriate
state agencies. Certain states require companies to post bonds or other
collateral to secure their obligations to their customers in those states. State
agencies have extensive discretion to deny or revoke licenses. We believe we
have obtained the necessary licenses and bonds to do business with the casinos
where we currently operate, and we will be subject to similar licensing
requirements as we expand our operations into other jurisdictions.
As part of our applications for licenses and permits, members of our
board of directors and our officers, key employees and stockholders holding five
percent (5%) or more of our stock must submit to a personal background check.
This process can be time consuming and intrusive. If an individual is unwilling
to provide this background information or is unsatisfactory to a licensing
authority such that we face a loss of a contract or the right to conduct a
portion of our
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business, our Bylaws generally give us the right to redeem all or a portion of
the outstanding shares of common stock held by such disqualified shareholder at
the then current fair market value.
Furthermore, many suppliers to Native American casinos are subject to
the rules and regulations of the local tribal gaming commission. These gaming
commissions have authority to regulate all aspects of casino operations,
including vendor selection. Some gaming commissions require vendors to obtain
licenses and may exercise extensive discretion to deny or revoke licenses. We
believe we have obtained the necessary licenses or approvals from the
appropriate tribal gaming commissions where we operate.
While there can be no assurance that we will be able to do so, we
anticipate that we will be able to obtain and maintain the licenses and
approvals necessary for the conduct of our business.
Our business may also be affected by state and federal regulations
governing the gaming industry in general. Changes in the approach to regulation
of casino gaming could affect the number of new gaming establishments in which
we may provide Cash Access Services.
WE MAY NOT BE ABLE TO ADEQUATELY ENFORCE OR PROTECT OUR INTELLECTUAL PROPERTY
RIGHTS OR TO PROTECT OURSELVES AGAINST INFRINGEMENT CLAIMS BY OTHERS.
Our continued success will depend in part on our ability to protect our
cash access technology, preserve our trade secrets and operate without
infringing the proprietary rights of third parties. We cannot assure you that
the scope of any protection we may seek will exclude competitors or provide
competitive advantages to us. Furthermore, we cannot assure you that others have
not developed or will not develop similar products, duplicate any of our
products or processes or design around our intellectual property. We also rely
on unpatented trade secrets to protect our proprietary technology, and we cannot
assure you that others will not develop independently or otherwise acquire
substantially equivalent techniques, gain access to our proprietary technology
or disclose our technology, or that we can ultimately protect meaningful rights
to our unpatented proprietary technology.
MANAGEMENT OWNS A SIGNIFICANT PORTION OF OUR STOCK.
Our officers and directors collectively own 7,332,134 shares of
outstanding common stock, or approximately 47.6% of the total number
outstanding, including 6,669,634 shares owned by Kristen Potts that are deemed
to be beneficially owned by her spouse, Craig Potts, our Chief Executive
Officer, President and a director. Our officers and directors also collectively
hold currently exercisable options to purchase an aggregate 772,000 shares of
common stock which, if exercised, would result in management owning
approximately 50.1% of the total number of outstanding shares (based on current
number of outstanding shares plus such option shares). Therefore, our officers
and directors will have significant influence on any shareholder vote and may be
able, by themselves, to effect shareholder action by written consent.
OUR SUCCESS IS HIGHLY DEPENDENT ON OUR ABILITY TO RETAIN OUR MANAGEMENT TEAM AND
TECHNICAL EXPERTISE.
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At this stage of our development, our prospects for success depend, to
a significant degree, on the efforts of Craig Potts, our Chief Executive Officer
and President. There is no assurance that Mr. Potts' services will remain
available to us or that we will be successful under his management. We do not
maintain any key person insurance on the life of Mr. Potts, and we do not have
an employment agreement with Mr. Potts.
Our prospects for success also depend upon the efforts and abilities of
our sales and product development/IT teams. Our inability to retain such highly
skilled persons, due either to our current economic circumstances or the intense
competition faced in the market for such persons, would substantially limit our
ability to further our efforts in this business.
RAISING THE REQUIRED CAPITAL TO CONDUCT OUR OPERATIONS AND DEVELOP OUR PRODUCTS
IS TIME CRITICAL.
We will require substantial capital resources in order to introduce new
products and services and to invest in infrastructure. We believe that our
available cash, operating revenue and capital from warrant and option exercises
will be sufficient to finance operations for at least the next twelve months
unless we engage in significant acquisitions that require capital faster than
currently anticipated. There is no assurance that we will be able to obtain the
required financing at favorable or acceptable terms, if at all. Any additional
financing could result in further dilution to our shareholders. If we are not
able to raise sufficient funding from these financings, we may have to limit our
business operations and our expansion plans.
WE BEAR THE RISK OF LOSS OF CASH DURING TRANSFER FROM BANKS TO ATM MACHINES.
As described in detail in our annual and quarterly filings with the SEC
on Forms 10-KSB and 10-QSB, our products and services include ATM machines
throughout the country. In order to maintain cash in each of these machines, we
are responsible for transporting cash to each of these machines and we bear the
risk of loss of such cash during its transport. We hire armored car services to
transport the cash on our behalf. While we only hire bonded and insured armored
car services, we ultimately bear the risk of loss of the cash in the event that
we are unable to recover from the armored car company.
As described in the "legal proceedings" section of our recent SEC
filings, we incurred a loss of approximately $412,000 related to a cash shortage
in our automatic teller machines which we attribute to our armored car service.
During 2001, we, jointly with our bank, filed suit against an insurance company
and Dunbar Armored, Inc., a former armored car vendor, for approximately
$412,000. As the case proceeded, we continually added the accumulating legal
fees and at December 31, 2003, we booked an account receivable on our balance
sheet of $617,739. In July 2003, after a jury trial, judgment was entered in our
favor in the amount of $379,583 by the Hennepin County District Court. In
November 2003, the court awarded us $207,345 in attorney's fees, costs and
disbursements and pre-judgment interest. Defendant Dunbar subsequently filed an
appeal, which is pending. Unless the appeals court overturns the lower court's
verdict, we expect to be reimbursed for any additional legal fees incurred since
November 2003. If we are unable to recover any of such receivable, the write-off
of $617,739
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will represent approximately 8% of our total assets as set forth on our
consolidated balance sheet as of December 31, 2003.
The armored car companies engaged by us are all bonded and carry
routine insurance; however, there is no assurance that we will not experience
similar or greater losses related to armored car services in the future, which
losses may have a materially adverse effect on our cash flow and earnings.
WE MAY SEEK POTENTIAL ACQUISITIONS.
We continue to explore various potential acquisitions. If one or more
acquisitions occur, we may use substantial amounts of our cash and/or issue a
significant number of shares of our common stock in the transaction. There can
be no assurance that any acquisitions will occur or, if completed, that such
transactions will generate positive financial results for us.
OUR CORPORATE GOVERNANCE STRUCTURE NEEDS TO BE EXPANDED.
On March 1, 2004, we appointed two independent directors, Pat Cruzen
and Gordon Graves, to our board of directors and the audit committee in order to
comply with applicable AMEX regulations. We have not yet established, however,
compensation or nominating committees. Because we are now listed on the AMEX, we
will need to comply with all the recently approved AMEX corporate governance
rules and regulations on or before the applicable compliance dates, as well as
any additional rules which apply under the Sarbanes-Oxley Act of 2002.
THE PRICE OF OUR COMMON STOCK HAS EXPERIENCED SUBSTANTIAL VOLATILITY.
On January 6, 2004, shares of our common stock began trading on the
AMEX. Prior to that date and since October 2001, our common stock was quoted on
the OTC Bulletin Board. While on the OTC Bulletin Board, the market for our
common stock experienced substantial volatility. There is no assurance that the
volatility will not continue with our stock trading on the AMEX. Sales of shares
pursuant to this prospectus may adversely affect the market price of our common
stock on the AMEX. In addition, sales of "restricted securities" by persons who
have satisfied the required holding period for resales under Rule 144
promulgated by the SEC under the Act will substantially increase the number of
shares available in the "public float," and may also adversely affect the market
price of our common stock on the AMEX. Also, the filing of Notices on Form 144
can have the effect of a "cap" on the market, until the shares covered thereby
are sold.
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USE OF PROCEEDS
Cash Systems will not receive any proceeds from the sale of the common
stock offered by the selling shareholders.
SELLING SHAREHOLDERS
Set forth below are the names of the selling shareholders, the number
of shares of Cash Systems common stock beneficially owned by each of them on the
date hereof, the number of shares that may be offered by each of them pursuant
to this prospectus, and the number of shares of common stock and percentage of
common stock to be beneficially owned by each of them if all shares hereunder
are sold by the selling shareholders. To our knowledge, none of the selling
shareholders has had within the past three years any material relationship with
us except as set forth in the footnotes to the following table. The shares
offered hereby shall be deemed to include shares offered by any pledgee, donee,
transferee or other successor in interest of any of the selling shareholders
listed below, provided that this prospectus is amended or supplemented if
required by applicable law.
BENEFICIAL OWNERSHIP PRIOR TO OFFERING BENEFICIAL OWNERSHIP AFTER OFFERING
----------------------------------------- -----------------------------------
NUMBER OF
SHARES
WARRANT TOTAL OFFERED TOTAL %
NAME SHARES SHARES(1)(2) SHARES(1)(2) HEREBY(1)(2) SHARES (3) OWNED(3)(4)
- ------------------------------------------------------------------------------------------------------------------------------------
Edward and Denise L. Adams 0 11,000 11,000 11,000 0 *
Alydar Fund, L.P. 7,728 0 7,728 7,728 0 *
Alydar Fund Limited 61,740 0 61,740 61,740 0 *
Alydar PP Fund, L.P. 70,532 0 70,532 70,532 0 *
David Ashfeld 45,000 8,125 53,125 8,125 45,000 *
Gerald Auchstetter and Linda
Auchstetter 12,000 7,500 19,500 7,500 12,000 *
Bald Eagle Fund, Ltd. 2,973 0 2,973 2,973 0 *
David A. Bester and Lanetha J. Bester 74,706 22,500 97,206 22,500 74,706 *
Bonanza Master Fund, Ltd. 150,000 0 150,000 150,000 0 *
Cougar Trading, LLC 40,000 0 40,000 40,000 0 *
Ken Denhardt 1,063 0 1,063 1,063 0 *
J. Steven Emerson Roth IRA
Bear Stearns Sec Corp. Cust 120,000 0 120,000 120,000 0 *
Richard C. Gage Special Trust 0 5,000 5,000 5,000 0 *
Gaming Venture Corp, U.S.A. (5) 0 40,000 40,000 40,000 0 *
Joseph A. Geraci, II 3,051 33,125 36,176 33,125 3,051 *
Glacier Partners 40,000 0 40,000 40,000 0 *
Lester Goetzke 5,000 1,250 6,250 1,250 5,000 *
Graves Properties, Ltd. (6) 160,000 0 160,000 160,000 0 *
William E. Hanneman 66,894 15,000 81,894 15,000 66,894 *
Jory M. Herman 10,000 2,500 12,500 12,500 0 *
Kensington Partners, L.P. 57,027 0 57,027 57,027 0 *
Mary Kinney, IRA
Southwest Securities, Inc. Custodian 5,750 5,750 11,500 11,500 0 *
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BENEFICIAL OWNERSHIP PRIOR TO OFFERING BENEFICIAL OWNERSHIP AFTER OFFERING
----------------------------------------- -----------------------------------
NUMBER OF
SHARES
WARRANT TOTAL OFFERED TOTAL %
NAME SHARES SHARES(1)(2) SHARES(1)(2) HEREBY(1)(2) SHARES (3) OWNED(3)(4)
- ------------------------------------------------------------------------------------------------------------------------------------
Patrick J. Kinney 26,196 7,500 33,696 7,500 26,196 *
Patrick J. Kinney, IRA
Southwest Securities, Inc. Custodian 6,750 6,750 13,500 6,750 6,750 *
Stephen H. Kleemann 20,000 0 20,000 20,000 0 *
Ervin M. Kramer 70,000 17,500 87,500 37,500 50,000 *
Becky Lindsay 0 1,250 1,250 1,250 0 *
Neal Linnihan IRA
SWS Securities, Inc. Custodian 201,000 60,000 261,000 200,000 61,000 *
Meadowbrook Opportunity Fund LLC 50,000 0 50,000 50,000 0 *
Rene Miville 20,000 0 20,000 20,000 0 *
Wilmer Nordin 10,000 2,500 12,500 12,500 0 *
Richard A. Perrott 11,000 5,000 16,000 10,000 6,000 *
Sandi Raines 40,000 10,000 50,000 50,000 0 *
Robert J. Revoir 10,000 2,500 12,500 12,500 0 *
Don A. Sanders 30,000 0 30,000 30,000 0 *
Sanders 1998 Children's Trust dtd
12/1/97, Donald Weir, Trustee 20,000 0 20,000 20,000 0 *
Sanders Opportunity Fund, LP 6,978 0 6,978 6,978 0 *
Sanders Opportunity fund (Inst.) L.P. 23,022 0 23,022 23,022 0 *
Sandor Capital Master Fund, L.P. (7) 52,000 0 52,000 50,000 2,000 *
Donald B. Schreifels 55,000 10,000 65,000 10,000 55,000 *
Donald B. Schreifels IRA
Southwest Securities, Inc. Custodian 40,000 40,000 80,000 40,000 40,000 *
Julie Etta Schreifels Revocable Trust
DTD 12-12-91 Donald B. Schreifels
TTEE 68,000 10,000 78,000 10,000 68,000 *
Isaac J. Sibley 0 4,670 4,670 4,670 0 *
SLS Investors, LP 84,241 0 84,241 84,241 0 *
SLS Offshore Fund, Ltd. 230,759 0 230,759 230,759 0 *
Straus Partners, L.P. 90,000 0 90,000 90,000 0 *
Straus-Gept Partners, L.P. 60,000 0 60,000 60,000 0 *
Symmetry Peak, LP 105,000 0 105,000 105,000 0 *
Symmetry Peak Offshore, Ltd. 45,000 0 45,000 45,000 0 *
3 Notch Capital Partners, L.P. 50,000 0 50,000 50,000 0 *
Harold Trestman and Marilyn
Trestman 40,000 25,000 65,000 25,000 40,000 *
Brian Trygstad 0 250 250 250 0 *
Wall Street Capital Partners, L.P. 30,000 0 30,000 30,000 0 *
Don Weir and Julie Ellen Weir 20,000 0 20,000 20,000 0 *
Bruce Westman 0 16,250 16,250 16,250 0 *
WestPark Capital, L.P. 286,800 0 286,800 280,000 6,800 *
Elizabeth Zbikowski 96,279 5,000 101,279 5,000 96,279 *
Scott Zbikowski 156,000 20,000 176,000 40,000 136,000 *
Zinc Partners, LP 23,842 0 23,842 23,842 0 *
Zinc Partners II, LP 251 0 251 251 0 *
Zinc Partners Offshore, Ltd. 50,907 0 50,907 50,907 0 *
David P. Zipkin 4,000 16,750 20,750 14,750 6,000 *
* Less than 1.0%.
(1) Includes an aggregate of 412,670 shares that may be purchased from time
to time by certain selling shareholders upon exercise of warrants,
which shares are being offered hereby.
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(2) The share amounts set forth herein assume that the selling shareholders
will exercise the warrants for cash. If the selling shareholders use
the cashless exercise alternative, the actual number of shares of
Common Stock issued will be fewer, depending on the market value of the
underlying shares of Common Stock immediately prior to exercise.
(3) Assumes the sale of all the shares being offered hereby.
(4) The percentage of shares beneficially owned by each selling shareholder
is based on 15,811,268 shares of Common Stock outstanding, including
15,398,598 shares outstanding as of April 20, 2004 and 412,670 shares
to be outstanding if all of the warrants and options listed herein are
exercised.
(5) These warrant shares represent shares which may be acquired upon
exercise of a non-transferable stock option issued in partial
consideration of consulting services performed for Cash Systems.
(6) All outstanding equity interests of Graves Properties, Ltd. are
beneficially owned by Gordon Graves, a director of Cash Systems.
(7) Includes 2,000 shares held by John S. Lemak, the General Partner of
Sandor Capital Master Fund, L.P.
PLAN OF DISTRIBUTION
The selling shareholders may sell the shares of common stock on the
AMEX or otherwise at prices and on terms then prevailing or at prices related to
the then current market price, or in negotiated transactions. When used in this
prospectus, "selling shareholder" includes pledgees, donees, transferees, or
other successors in interest that receive such shares as a gift, distribution,
or in other non-sale related transfers from the named selling shareholder after
the date of this prospectus. The common stock may be sold in:
- a block trade, where a broker or dealer will try to sell the
common stock as agent but may position and resell a portion of
the block as principal to facilitate the transaction;
- transactions where a broker or dealer acts as principal and
resells the common stock for its account pursuant to this
prospectus;
- an exchange distribution in accordance with the rules of such
exchange; and/or
- ordinary brokerage transactions and transactions in which the
broker solicits purchases.
The common stock may also be sold through short sales of shares, put or
call option transactions, loans or pledges of the shares, hedging or similar
transactions, or a combination of such methods. A shareholder may or may not
involve brokers or dealers in any of these transactions. In effecting sales,
brokers or dealers engaged by the selling shareholders may arrange for other
brokers or dealers to participate. The selling shareholders may, from time to
time, authorize underwriters acting as its agent to offer and sell the common
stock upon such terms and conditions as shall be set forth in a prospectus
supplement. Underwriters, brokers or dealers will receive commissions or
discounts from the selling shareholders in amounts to be
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negotiated immediately prior to sale. Offers and sales may also be made directly
by the selling shareholders, or other bona fide owners of the common stock, so
long as an applicable exemption from state broker-dealer registration
requirements is available in the jurisdiction of sale. The selling shareholders,
underwriters, brokers or dealers and any other participating brokers or dealers
may be deemed to be "underwriters" within the meaning of the Securities Act in
connection with these sales, and any discounts and commissions received by them
and any profit realized by them on the resale of the common stock may be deemed
to be underwriting discounts and commissions under the Securities Act.
All or any portion of the shares of common stock covered by this
prospectus that qualify for sale under Rule 144 under the Securities Act may be
sold under Rule 144 rather than pursuant to this prospectus.
There is no assurance that the selling shareholders will offer for sale
or sell any or all of the shares of common stock covered by this prospectus.
We will pay all expenses associated with registering the selling
shareholders' shares. The selling shareholders will pay any brokerage
commissions and similar expenses attributable to the sale of the shares. In
connection with sales made pursuant to this prospectus, we will indemnify the
selling shareholders against liabilities, including some liabilities under the
Securities Act of 1933, in accordance with the registration rights agreement or
the selling shareholder may be entitled to contribution from us. We will be
indemnified by a selling shareholder against civil liabilities, including
liabilities under the Securities Act of 1933, that may arise from any written
information furnished to us by such selling shareholder for use in this
prospectus, in accordance with the related registration rights agreement or we
will be entitled to contribution from such selling shareholder.
LEGAL MATTERS
Certain legal matters associated with the shares being offered hereby
will be passed upon for the Company by Fredrikson & Byron, P.A., Minneapolis,
Minnesota.
EXPERTS
The consolidated financial statements for the years ended December 31,
2003 and 2002 incorporated in this prospectus have been audited by Virchow,
Krause & Company, LLP, independent auditors, as stated in their report, which is
incorporated herein, and have been so incorporated in reliance upon the report
of such firm given upon their authority as experts in accounting and auditing.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
- 12 -
Our Amended and Restated Certificate of Incorporation provides that we
will indemnify our directors, officers, employees and agents to the fullest
extent permitted by the applicable section of the Delaware General Corporation
Law. Specifically, we will indemnify our directors, officers, employees and
agents against any expenses, judgments, fines, and settlements reasonably
incurred by such person who was made a party (or threatened to be made a party)
to an action, suit or proceeding by reason of the fact that such person is or
was a director, officer, employee or agent of Cash Systems if, with respect to
the acts or omissions of the person complained of in the proceeding, the person:
(i) acted in good faith, (ii) reasonably believed the conduct was in or not
opposed to the best interests of the corporation, and (iii) in the case of a
criminal proceeding, had no reasonable cause to believe the conduct was
unlawful.
Our Amended and Restated Certificate of Incorporation limits the
liability of our directors to the fullest extent permitted by the applicable
section of the Delaware General Corporation Law. Specifically, directors will
not be personally liable for monetary damages for breach of fiduciary duty as
directors except liability for (i) any breach of the duty of loyalty to Cash
Systems or our shareholders, (ii) acts or omissions not in good faith or that
involve intentional misconduct or a knowing violation of law, (iii) dividends or
other distributions of corporate assets that are in contravention of certain
restrictions, or (iv) any transaction from which the director derives an
improper personal benefit.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to our directors, officers and
controlling persons pursuant to the foregoing provisions, or otherwise, we have
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Our SEC filings are also available to the public
from the SEC's website at "http://www.sec.gov."
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings (File
No. 0-18317) we will make with the SEC under Sections 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934 (the "1934 Act"):
1. Annual Report on Form 10-KSB for the fiscal year ended
December 31, 2003;
2. The description of Cash Systems common stock which is
contained or incorporated by reference in the Registration
Statement on Form 8-A filed with
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the SEC on January 6, 2004 pursuant to Section 12 of the 1934
Act, and any description of any of our securities which is
contained in any registration statement filed after the date
hereof under Section 12 of the 1934 Act, including any
amendment or report filed for the purpose of updating any such
description.
We will provide, at no cost, a copy of these filings to each person,
including any beneficial owner, to whom a prospectus is delivered upon oral or
written request to our Chief Financial Officer at the following address and
telephone number:
Christopher Larson, Chief Financial Officer
Cash Systems, Inc.
3201 West County Road 42, Suite 106
Burnsville, Minnesota 55306
(952) 895-8399
This prospectus is part of a registration statement we filed with the
SEC. You should rely only on the information or representations provided in this
prospectus. We have authorized no one to provide information other than that
provided in this prospectus. You should not assume that the information in this
prospectus is accurate as of any date other than the date on the front of the
document.
- 14 -
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following expenses will be paid by the Registrant in connection
with the distribution of the shares registered hereby. The Registrant is paying
all of the expenses related to this offering, except the selling shareholders
will pay any applicable broker's commissions and expenses as well as fees and
disbursements of counsel and experts for the selling shareholders. All of such
expenses, except for the SEC registration fee, are estimated.
SEC Registration Fee ............................... $ 2,201
Legal Fees and Expenses ............................ 7,500
Accountants' Fees and Expenses ..................... 3,000
Printing Expenses .................................. 2,000
Miscellaneous ...................................... 2,299
-------
Total ........................................... $17,000
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law authorizes a court
to award, or a corporation's board of directors to grant, indemnity to directors
and officers in terms sufficiently broad to permit such indemnification under
certain circumstances for liabilities (including reimbursement for expenses
incurred) arising under the Securities Act of 1933. Our amended and restated
certificate of incorporation provides for indemnification of our directors,
officers, employees and other agents to the maximum extent permitted by Delaware
law.
Cash Systems and the selling shareholders listed herein have agreed to
indemnify each other, under certain conditions, against certain liabilities
arising under the Securities Act.
Item 16. Exhibits.
See Exhibit Index on page following signatures.
Item 17. Undertakings.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales
are being made, a post-effective amendment to this
Registration Statement to:
(i) Include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
II - 1
(ii) Reflect in the prospectus any facts or
events arising after the effective date of
the Registration Statement (or the most
recent post-effective amendment thereof)
which, individually or in the aggregate,
represents a fundamental change in the
information set forth in the Registration
Statement. Notwithstanding the foregoing,
any increase or decrease in volume of
securities offered (if the total dollar
value of securities offered would not exceed
that which was registered) and any deviation
from the low or high end of the estimated
maximum offering range may be reflected in
the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and
price represent no more than a 20% change in
the maximum aggregate offering price set
forth in the "Calculation of Registration
Fee" table in the effective Registration
Statement;
(iii) Include any additional or changed material
information on the plan of distribution;
Provided, however, that paragraphs (a)(1)(i) and
(a)(1)(ii) do not apply if the information required
to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed
with or furnished to the Commission by the Registrant
pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 that are incorporated by
reference in the Registration Statement.
(2) For determining liability under the Securities Act of
1933, treat each post-effective amendment as a new
registration statement of the securities offered, and
the offering of the securities at that time to be the
initial bona fide offering.
(3) File a post-effective amendment to remove from
registration any of the securities that remain unsold
at the end of the offering.
(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (the "Act") may be permitted to
directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a
director, officer or controlling person of the Registrant in
the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in
connection with the securities being registered, the
Registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in
the Act and will be governed by final adjudication of such
issue.
II - 2
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 City of Burnsville, State of Minnesota, on April 22, 2004.
CASH SYSTEMS, INC.
By /s/ Craig K. Potts
-------------------------------------
Craig K. Potts, Chief Executive Officer
and President
POWER OF ATTORNEY
The undersigned each hereby constitutes and appoints any one or both of
Craig K. Potts and Christopher Larson his true and lawful attorney-in-fact and
agent, with full power of substitution and resubstitution, for him and in his
name, place and stead, in any and all capacities, to sign and perform any acts
necessary to file any or all amendments (including post-effective amendments) to
the Registration Statement on Form S-3 of Cash Systems, Inc. with all exhibits
thereto, and any and all registration statements, prospectuses, instruments or
other documents as a part of or in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and agent 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 attorney-in-fact or his substitute may lawfully do or cause to be done
by virtue hereof.
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the date stated.
Signature Title Date
--------- ----- ----
/s/ Craig K. Potts Chief Executive Officer, President
- ---------------------------------------- and Director (principal executive
Craig K. Potts officer) April 22, 2004
/s/ Christopher Larson Chief Financial Officer and Director
- ---------------------------------------- (principal financial officer) April 22, 2004
Christopher Larson
/s/ Patrick R. Cruzen Director April 22, 2004
- ----------------------------------------
Patrick R. Cruzen
/s/ Gordon T. Graves Director April 22, 2004
- ----------------------------------------
Gordon T. Graves
II - 3
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------
EXHIBITS
to
Form S-3 Registration Statement
----------------
Cash Systems, Inc.
(Exact name of Registrant as specified in its charter)
----------------
INDEX
Exhibit
4.1 Amended and Restated Certificate of Incorporation (incorporated by
reference to Exhibit 2.1 to the Registrant's Registration Statement on
Form 8-A filed with the SEC on January 6, 2004).
4.2 Amended and Restated Bylaws (incorporated by reference to Exhibit 3 to
the Registrant's Form 10-KSB for the fiscal year ended December 31,
2002).
4.3* Form of Registration Rights Agreement between the Company and certain
selling shareholders.
5.1* Opinion and Consent of Fredrikson & Byron, P.A.
23.1* Consent of Virchow, Krause & Company, LLP.
23.2* Consent of Fredrikson & Byron, P.A. (included in Exhibit 5.1).
24.1* Power of attorney from directors (included on signature page of this
Registration Statement).
- -------------------
* Filed herewith
II - 4