Electronically transmitted to the Securities and Exchange
Commission on January 21, 2005
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)
David S. Clifford, 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, Suite 4000
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 Aggregate Offering Registration
Title of Securities to be Registered to be Registered per Unit Price Fee
- ------------------------------------ ---------------- ---------------- ------------------ -------------
common stock, $.001 par value per share 6,650,125 $9.15(1) $60,848,644(1) $7,161.89(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 January 18,
2005.
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.
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PROSPECTUS
CASH SYSTEMS, INC.
6,650,125 SHARES OF COMMON STOCK
This Prospectus relates to the offer and sale of up to 6,650,125 shares of
common stock, $0.001 par value, of Cash Systems, Inc. ("Cash Systems", the
"Company", or the "Registrant"), a Delaware corporation, that may be offered and
sold from time to time by current shareholders of Cash Systems who purchased
such shares from Craig and Kristin Potts, formerly affiliates of Cash Systems
(the "Former Affiliates") or by persons who may become shareholders of Cash
Systems upon exercise of certain warrants, or 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."
The Former Affiliates will reimburse Cash Systems for all expenses of the
offering (estimated at $35,000), 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," On January 18, 2005, the closing sale price of Cash Systems common
stock on the AMEX was $9.09 per share.
FOR INFORMATION CONCERNING CERTAIN RISKS RELATING TO AN INVESTMENT IN CASH
SYSTEMS COMMON STOCK, SEE "RISK FACTORS" BEGINNING ON PAGE 5.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION ("SEC") 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 _________, 2005
TABLE OF CONTENTS
PAGE
----
ABOUT CASH SYSTEMS 3
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS 3
RISK FACTORS 5
USE OF PROCEEDS 8
SELLING SHAREHOLDERS 9
PLAN OF DISTRIBUTION 12
LEGAL MATTERS 13
EXPERTS 13
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES 14
WHERE YOU CAN FIND MORE INFORMATION 14
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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, automatic teller
machines ("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 150 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," "plan," "possible," "project," "should,"
"will" and similar expressions generally identify our
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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.
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 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
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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, Global Payments,
Inc., and Certegy, Inc.). It is possible that these current and/or new
competitors may provide the same services that we provide, and 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 shareholders 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 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.
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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.
NEW MANAGEMENT AND ADDITIONAL CORPORATE GOVERNANCE REQUIREMENTS.
We have recently experienced significant changes in our executive
management. Effective January 1, 2005, Michael D. Rumbolz became our Chief
Executive Officer and Craig Potts, former President and CEO, became a part-time
employee. Also effective January 1, 2005, David S. Clifford became our Executive
Vice President and Chief Financial Officer, and Christopher Larson, former CFO,
became our Chief Operating Officer. On January 6, 2005, Craig Potts resigned
from the Company's Board of Directors and Mr. Rumbolz was elected as director
and then appointed Chairman of the Board. Although we believe our new management
is experienced in the gaming and financial industries and well-qualified for
their positions with the Company, there is no assurance that the Company can
continue its recent success.
The Company also intends to appoint at least one additional independent
director to the Company's Board of Directors, to establish compensation or
nominating committees or procedures, and to take any other actions required by
AMEX corporate governance regulations and the Sarbanes-Oxley Act of 2002.
Starting with fiscal 2005, the Company ceased to qualify as a "small business
issuer" and therefore will be required to comply with additional AMEX and
Sarbanes-Oxley corporate governance requirements.
OUR SUCCESS IS HIGHLY DEPENDENT ON OUR TECHNICAL EXPERTISE.
Our prospects for success also depend upon the efforts and abilities of
our sales and product development/information technology ("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.
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WE MAY REQUIRE ADDITIONAL CAPITAL TO COMPLETE ACQUISITIONS.
We continue to explore various potential acquisitions. In connection with
such potential acquisitions, we will likely be required to use substantial
amounts of cash, incur substantial amounts of additional debt (commercial or
public), and/or issue a significant number of shares of our common stock. There
is no assurance that we will be able to obtain the required debt financing at
favorable or acceptable terms, if at all, and any additional equity financing
could result in dilution to our shareholders. If we are not able to obtain the
requisite financing to complete such acquisitions, we may have to limit our
business 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. The armored car companies
engaged by us are all bonded and carry routine insurance; however, there is no
assurance that we will not experience losses related to armored car services,
which losses may have a materially adverse effect on our cash flow and earnings.
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. The market for our common stock experienced substantial
volatility and may continue to do so. 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.
USE OF PROCEEDS
Cash Systems will not receive any proceeds from the sale of the common
stock offered by the selling shareholders.
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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 AFTER
BENEFICIAL OWNERSHIP PRIOR TO OFFERING NUMBER OF OFFERING
-------------------------------------- SHARES ---------------------------
WARRANT TOTAL OFFERED TOTAL SHARES
NAME SHARES SHARES(1)(2) SHARES(1)(2) HEREBY(1)(2) (3) % OWNED(3)(4)
-------------------------------------- --------- ------------ ------------ ------------ ------------ -------------
033 Growth Partners I, LP(5) 659,270 0 659,270 639,250 20,020 *
033 Growth Partners II, LP(5) 207,081 0 207,081 200,861 6,220 *
033 Growth International Fund Ltd.(5) 327,296 0 327,296 317,466 9,830 *
Oyster Pond Partners, LP(5) 146,853 0 146,853 142,423 4,430 *
Baron Small Cap Fund(6) 1,432,600 0 1,432,600 1,300,000 132,600 *
The Pinnacle Fund, L.P.(7) 1,100,000 0 1,100,000 1,100,000 0 *
Lagunitas Partners, L.P.(8) 361,600 0 361,600 250,000 111,600 *
Gruber McBaine International(8) 104,400 0 104,400 75,000 29,400 *
Firefly Partners LP(8) 172,100 0 172,100 75,000 97,100 *
Jon D. Gruber and Linda W. Gruber(8) 135,900 0 135,900 80,000 55,900 *
J. Patterson McBaine(8) 34,700 0 34,700 20,000 14,700 *
Westpark Capital, L.P.(9) 580,700 0 580,700 400,000 180,700 1.1
Presidio Partners(10) 183,500 0 183,500 183,500 0 *
Geary Partners(10) 130,500 0 130,500 130,500 0 *
Brady Retirement Fund, L.P.(10) 36,000 0 36,000 36,000 0 *
Smithfield Fiduciary LLC(11) 300,000 0 300,000 300,000 0 *
MicroCapital Fund LP(12) 384,270 0 384,270 192,000 192,270 1.2
MicroCapital Fund Ltd.(12) 224,929 0 224,929 108,000 116,929 *
Clippership & Co.(13) 812,000 0 812,000 300,000 512,000 3.2
SF Capital Partners, Ltd. 150,000 0 150,000 150,000 0 *
Steelhead Investments, Ltd.(14) 150,000 0 150,000 150,000 0 *
Iroquois Capital, L.P.(15) 102,000 0 102,000 102,000 0 *
Omicron Master Trust(16) 75,000 0 75,000 75,000 0 *
Kensington Partners, L.P.(17) 28,630 0 28,630 28,630 0 *
Bald Eagle Fund, Ltd.(17) 1,370 0 1,370 1,370 0 *
Western Reserve Hedged Equity LP(18) 47,321 0 47,321 47,321 0 *
Western Reserve Hedged Equity (AI) LP(18) 2,679 0 2,679 2,679 0 *
Gryphon Master Fund L.P.(19) 50,000 0 50,000 50,000 0 *
Capital Ventures International(20) 50,000 0 50,000 50,000 0 *
Southwell Partners, L.P.(21) 100,000 0 100,000 100,000 0 *
Ronald S. Boyum 2,500 3,125 5,625 3,125 2,500 *
David L. Flod 265,000 25,000 290,000 25,000 265,000 1.6
William R. Hartzell 33,236 7,500 40,736 7,500 33,236 *
August M. Stoffel 43,500 7,500 51,000 7,500 43,500 *
* Less than 1.0%.
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(1) Includes an aggregate of 43,125 shares that may be purchased from time to
time by certain selling shareholders upon exercise of warrants, which
shares are being offered hereby.
(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 16,277,070 shares of common stock outstanding as of January 12,
2005, which includes an additional 43,125 shares to be outstanding if all
of the warrants listed above are exercised.
(5) 033 Asset Management, LLC, as investment manager, has voting and
dispositive power over the shares. The persons exercising these powers on
behalf of the advisor are Lawrence C. Longo, Jr., the manager's Chief
Operating Officer, and Michael T. Vigo, one of the Managing Members.
(6) This selling stockholder has identified BAMCO, Inc., a New York
corporation as a natural person with control over Baron Small Cap Fund, a
series of Baron Investment Funds Trust. BAMCO, Inc., a registered
investment adviser, has investment control over the securities held by the
selling stockholder. In his capacity as portfolio manager at BAMCO, Inc.,
Mr. Clifford Greenberg makes investment decisions on behalf of BAMCO, Inc.
with respect to these securities.
(7) Pinnacle Advisers LP is the general partner of The Pinnacle Fund L.P.
Barry M. Kitt is the sole member of Pinnacle Fund Management, L.L.C.,
which is the general partner of Pinnacle Advisers LP., and has investment
authority to dispose of such shares.
(8) Gruber McBaine Capital Management ("GMCM") is the general partner for
Lagunitas Partners, L.P. and Firefly Partners LP, and the Investment
Advisor of Gruber McBaine International. GMCM managers, Jon D. Gruber and
J Patterson McBaine, control the voting and investment activities of the
securities held under management. The GMCM managers have investment
authority to dispose of such shares for the foregoing selling shareholders
managed by GMCM.
(9) Mr. Patrick J. Brosnahan is the general partner of this selling
shareholder and has investment authority to dispose of such shares.
(10) Mr. William Brady is the general partner for each of these selling
shareholders and has investment authority to dispose of such shares.
(11) Highbridge Capital Management, LLC is the trading manager of Smithfield
Fiduciary LLC and has voting control and investment discretion over
securities held by Smithfield Fiduciary LLC. Glenn Dubin and Henry Swieca
control Highbridge Capital
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Management, LLC. Each of Highbridge Capital Management, LLC, Glenn Dubin
and Henry Swieca disclaims beneficial ownership of the securities held by
Smithfield Fiduciary LLC.
(12) MicroCapital LLC is the general partner and investment advisor to
MicroCapital Fund LP and MicroCapital Fund Ltd. Ian P. Ellis is the
principal owner of MicroCapital LLC and has sole responsibility for the
election, acquisition and disposition of portfolio securities by
MicroCapital LLC on behalf of its funds.
(13) Forstmann-Leff Associates, LLC is the investment advisor for this selling
shareholder and has investment authority to dispose of such shares.
Clippership & Co. may or may not have beneficial ownership of additional
shares for which Forstmann-Leff Associates, LLC does not have investment
authority.
(14) HBK Investments L.P. may be deemed to have sole voting and investment
power with respect to the shares of common stock beneficially owned by
Steelhead Investments Ltd. pursuant to an Investment Management Agreement
between HBK Investments L.P. and Steelhead Investments Ltd. Additionally,
the following individuals may have control over HBK Investments L.P.:
Kenneth M. Hirsh, Laurence H. Lebowitz, William E. Rose, Richard L. Booth,
David C. Haley and Jamiel A. Akhtar.
(15) Mr. Joshua Silverman is the general partner for this selling shareholder
and has investment authority to dispose of such shares.
(16) Omicron Capital, L.P., a Delaware limited partnership ("Omicron Capital"),
serves as investment manager to Omicron Master Trust, a trust formed under
the laws of Bermuda ("Omicron"). Omicron Capital, Inc., a Delaware
corporation ("OCI"), serves as general partner of Omicron Capital, and
Winchester Global Trust Company Limited ("Winchester") serves as the
trustee of Omicron. By reason of such relationships, Omicron Capital and
OCI may be deemed to share dispositive power over the shares of our common
stock owned by Omicron, and Winchester may be deemed to share voting and
dispositive power over the shares of our common stock owned by Omicron.
Omicron Capital, OCI and Winchester disclaim beneficial ownership of such
shares of our common stock. No other person has sole or shared voting or
dispositive power with respect to the shares of our common stock being
offered by Omicron, as those terms are used for the purposes of Regulation
13D-G under the Securities Exchange Act of 1934, as amended. Omicron and
Winchester are not "affiliates" of one another, as that term is used for
purposes of the Securities Exchange Act of 1934, as amended, or of any
other person named in this prospectus as a selling shareholder. No person
or "group" (as that term is used in Section 13(d) of the Securities
Exchange Act of 1934, as amended, or the SEC's Regulation 13D-G controls
Omicron and Winchester.
(17) Mr. Richard Keim is the managing member for these selling shareholders and
has investment authority to dispose of such shares.
(18) Mr. Michael P. Durante is the Principal and Managing Partner for these
selling shareholders and has investment authority to dispose of such
shares.
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(19) Mr. E.B. Lyon is authorized agent for this selling shareholder and has
investment authority to dispose of such shares.
(20) Heights Capital Management, Inc., the authorized agent of Capital Ventures
International ("CVI"), has discretionary authority to vote and dispose of
the shares held by CVI and may be deemed to be the beneficial owner of
these shares. Martin Kobinger, in his capacity as Investment Manager of
Heights Capital Management, Inc., may also be deemed to have investment
discretion and voting power over the shares held by CVI. Mr. Kobinger
disclaims any such beneficial ownership of the shares.
(21) Mr. Wilson S. Jaeggli is the Managing Director of this selling shareholder
and has sole investment authority to dispose of such shares.
PLAN OF DISTRIBUTION
The selling shareholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The selling shareholders may use any one or more of the
following methods when selling shares:
- ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
- block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction;
- purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
- an exchange distribution in accordance with the rules of the
applicable exchange;
- privately negotiated transactions;
- settlement of short sales;
- broker-dealers may agree with the selling shareholders to sell a
specified number of such shares at a stipulated price per share;
- a combination of any such methods of sale; and
- any other method permitted pursuant to applicable law.
The selling shareholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus. Broker-dealers
engaged by the selling shareholders
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may arrange for other brokers-dealers to participate in sales. Broker-dealers
may receive commissions or discounts from the selling shareholders (or, if any
broker-dealer acts as agent for the purchaser of shares, from the purchaser) in
amounts to be negotiated. The selling shareholders do not expect these
commissions and discounts to exceed what is customary in the types of
transactions involved.
The selling shareholders may from time to time pledge or grant a security
interest in some or all of the shares of common stock owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured
parties may offer and sell the shares of common stock from time to time under
this prospectus, or under an amendment to this prospectus under Rule 424(b)(3)
or other applicable provision of the Securities Act of 1933 amending the list of
selling shareholders to include the pledgee, transferee or other successors in
interest as selling shareholders under this prospectus.
The selling shareholders also may transfer the shares of common stock in
other circumstances, in which case the transferees, pledgees or other successors
in interest will be the selling beneficial owners for purposes of this
prospectus.
The selling shareholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. The selling shareholders have
informed the Company that none of them have any agreement or understanding,
directly or indirectly, with any person to distribute the common stock.
The Former Affiliates are required to reimburse the Company for all fees
and expenses incurred by the Company incident to the registration of the shares.
The Company has agreed to indemnify the selling shareholders against certain
losses, claims, damages and liabilities, including liabilities under the
Securities Act.
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.
-13-
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
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 SEC 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;
-14-
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 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;
3. Quarterly Reports on Form 10-QSB for quarters ended March 31, 2004,
June 30, 2004, and September 30, 2004;
4. Definitive Information Statement dated March 15, 2004 filed with the
SEC on March 19, 2004;
5. Definitive Proxy Statement for June 23, 2004 Annual Meeting filed
with the SEC on May 27, 2004.
6. Current Reports on Form 8-K filed December 29, 2004, December 3,
2004, August 10, 2004 and May 20, 2004.
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:
David S. Clifford, Chief Financial Officer
Cash Systems, Inc.
3201 West County Road 42, Suite 106
Burnsville, Minnesota 55306
(952) 895-8399
Information about the Company can also be obtained from our public relations
firm:
Integrated Corporate Relations, Inc.
450 Post Road East
Westport, Connecticut 06880
(203) 222-9013
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.
-15-
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 Former Affiliates of the
Registrant are 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 .................................. $ 7,162
Legal Fees and Expenses ............................... 20,000
Accountants' Fees and Expenses ........................ 2,000
Printing Expenses ..................................... 2,000
Miscellaneous ......................................... 3,838
Total .................................. $ 35,000
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) Reflect in the prospectus any facts or events arising
after the effective date of the Registration Statement
(or the most recent post-effective
II-1
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 material information with respect to the
plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
Provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the 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, to
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) To file a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the
offering.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each
filing of the Registrant's annual report pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934 (and, where
applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Securities Exchange Act of 1934)
that is incorporated by reference in the Registration Statement
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 (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,
II-2
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-3
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 January 21, 2005.
CASH SYSTEMS, INC.
By /s/ Michael D. Rumbolz
------------------------
Michael D. Rumbolz,
Chief Executive Officer
POWER OF ATTORNEY
The undersigned each hereby constitutes and appoints any one or both of
Michael D. Rumbolz 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/ Michael D. Rumbolz Chief Executive Officer and Chairman January 21, 2005
- -------------------------------------- (principal executive officer)
Michael D. Rumbolz
/s/ David S. Clifford Executive Vice President and Chief January 21, 2005
- -------------------------------------- Financial Officer (principal financial
David S. Clifford officer)
/s/ Christopher Larson Director January 21, 2005
- --------------------------------------
Christopher Larson
/s/ Patrick R. Cruzen Director January 21, 2005
- --------------------------------------
Patrick R. Cruzen
/s/ Gordon T. Graves Director January 21, 2005
- --------------------------------------
Gordon T. Graves
II-4
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-5