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As filed with the Securities and Exchange Commission on April 2, 2001
Registration No. 333-_____
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
Under
The Securities Act of 1933
ULTIMATE FRANCHISE SYSTEMS, INC.
(formerly Jreck Subs Group, Inc.)
(Name of registrant as specified in its charter)
Colorado 6794 84-1317674
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(State or Jurisdiction of Primary Standard (IRS Employer
incorporation or organization) Industrial Classification Identification No.)
Code Number
300 International Parkway Chris Swartz
Heathrow, Florida, 32746 300 International Parkway
(407) 682-6363 Heathrow, Florida, 32746
(Address, including zip code, and (407) 682-6363
telephone number, including area code of (Name, address, including zip
Registrant's principal executive offices) code, and telephone number,
including area code, of agent
for service)
COPIES TO:
L. Van Stillman, Esq. James G. Dodrill II, Esq.
L. Van Stillman, P.A. James G. Dodrill II, PA
1177 George Bush Boulevard, Suite 307 3360 NW 53rd Circle
Delray Beach, Florida 33483 Boca Raton, Florida 33496
(561) 330-9903 (561) 862-0529
Facsimile (561) 330-9116 Facsimile (561) 862-0927
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Approximate date of commencement of proposed sale to public: As soon as
practicable after the effectiveness of this Registration Statement.
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If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
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Page 1
If any of the securities registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box.[ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration number of the earlier effective
registration statement for the same offering.[ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.[ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.[ ]
CALCULATION OF REGISTRATION FEE
====================================================================================
Proposed Proposed
Title of Maximum Maximum
Securities Amount of Shares Offering Aggregate Amount of
To Be To Be Price Per Offering Registration
Registered Registered(1) Share Price Fee
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Common Stock,
no par value per share 30,000,000 $0.03 $900,000.00 $225.00
====================================================================================
(1) Pursuant to Rule 416, this Registration Statement shall also cover any
additional shares of the Registrant's common stock that become issuable
by reason of any stock dividend, stock split, recapitalization or other
similar transaction effected without the receipt of consideration that
increases the number of the Registrant's outstanding shares of common
stock.
(2) Estimated solely for the purposes of calculating the registration fee
in accordance with Rule 457(c) under the Securities Act of 1933, as
amended, based on a share price of $0.03, the closing bid price per
share of the Registrant's common stock as reported on the Over the
Counter Bulletin Board on March 15, 2001.
The Registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE
SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS
PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN
OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT
PERMITTED.
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TABLE OF CONTENTS
Page
----
PROSPECTUS SUMMARY 5
FORWARD LOOKING STATEMENTS 13
RISK FACTORS 13
USE OF PROCEEDS 17
SELLING STOCKHOLDERS 18
PLAN OF DISTRIBUTION 19
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE 20
WHERE YOU CAN FIND MORE INFORMATION 21
LEGAL MATTERS AND EXPERTS 21
INDEMNIFICATION 21
We have not authorized anyone to provide you with information different
from that contained or incorporated by reference in this prospectus. The selling
stockholders are offering to sell, and seeking offers to buy, shares of our
common stock only in jurisdictions where offers and sales are permitted. The
information contained in this prospectus is accurate only as of the date of this
prospectus, regardless of the time of delivery of this prospectus or any sale of
shares.
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SUBJECT TO COMPLETION, DATED April 2, 2001
PROSPECTUS
ULTIMATE FRANCHISE SYSTEMS, INC.
30,000,000 Shares of Common Stock
(no par value per share)
This prospectus relates to resales of 30,000,000 shares of common stock
issuable upon the conversion of $575,000 principal amount of Convertible
Debentures that we issued and sold to the selling stockholders listed on page
18 (assuming conversion at an approximate price of $.02 per share). The selling
stockholders, or their pledgees, donees, transferees or other successors in
interest, may offer the shares through public or private transactions at
prevailing market prices, at prices related to prevailing market prices or at
privately negotiated prices. The eventual number of shares issuable upon
exercise of the Convertible Debentures will depend on market prices on the date
of conversion.
We will not receive any proceeds from the sale of the shares by the
selling stockholders. We will pay all expenses of registration incurred in
connection with this offering, but any and all selling and other expenses
incurred by security holders wishing to sell common stock will be paid by such
selling stock holder.
The Common Stock currently trades on the Over the Counter Bulletin
Board under the symbol "UFSI". On March 15, 2001, the last sale price of the
Common Stock as reported on the Bulletin Board was $0.03 per share.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
PURCHASE OF THESE SECURITIES INVOLVES RISKS. See "Risk Factors" on page 13.
The information in this prospectus is not complete and may be changed.
The Selling Stockholders may not sell these securities until the registration
statement filed with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not soliciting an
offer to buy these securities in any state where the offer or sale is not
permitted.
The date of this prospectus is April 2, 2001.
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PROSPECTUS SUMMARY
This summary highlights information contained in other parts of this
prospectus. Because it is a summary, it does not contain all of the information
that you should consider before investing in the common stock. You should read
the entire prospectus carefully.
Form and Year of Organization
In May 1996 we concluded a reverse acquisition wherein all of our
capital stock was acquired by Circa Media, Inc., a Colorado corporation,
incorporated on July 19, 1995 and formerly engaged in reproducing archival,
public domain art and photographs in digital form. Pursuant to an agreement and
Plan of Reorganization between us and Circa Media, Inc., Circa Media, Inc.
changed its name to JRECK Subs Group, Inc. (the "Company") on May 7, 1996 and
the former shareholders of JRECK Subs, Inc. received 5,000,000 of our common
shares in the transaction, or 56% of the outstanding shares. In addition the
former Series A Preferred shareholders of JRECK Subs, Inc. received 700,000
shares of our Series A Preferred stock. The former business of Circa Media, Inc.
was discontinued.
In June 2000, we changed the name of the corporation from Jreck Subs
Group, Inc. to Ultimate Franchise Systems, Inc. and changed our ticker symbol
from JSUB to UFSI.
We have primarily grown through acquisitions and the Company now
consists of Ultimate Franchise Systems, Inc. (UFSI) and its wholly owned
subsidiaries as follows:
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State of
Corporation Name Incorporation Predominant Restaurant Concept
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JRECK Subs, Inc. New York "JRECK Subs","Lox, Stox & Bagel"
Central Park of America, Inc. Delaware "Central Park"
SBK Franchise Systems, Inc. Florida "Sobik's"
Li'l Dino Corporation North Carolina "Li'l Dino"
Pastry Product Producers, LLC New York Bakery Operations
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Recent Acquisition and Dispositions
In July of 2000 we acquired the franchising rights and certain
corporately owned restaurants from Central Park USA, Inc., a twenty-year old
60-unit hamburger restaurant franchisor located primarily in the Southeastern
United States and the state of Utah. We paid the purchase price of $2,373,074 by
issuing notes with a value of $1,433,874, $800,000 in cash and 435,000 shares of
our common stock with a value of $139,200. We also entered into three
non-compete agreements with a discounted value of $364,020.
In April 2000, we sold our Mountain Mike's Pizza concept, a chain of
approximately 80 franchised restaurants to Concept Acquisitions, LLC ("COAC")
for $3,000,000 cash and two notes receivable with discounted value of $165,534
of $377,645, respectively. COAC is controlled by Bradley L. Gordon, the former
Chief Operating Officer and Director of the Company.
In August 2000, we sold the Seawest Subs sandwich chain, a chain of
approximately 30 franchised restaurants for a $55,000 note receivable plus the
assumption by the buyer of notes payable of approximately $207,000.
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We continue to have financial interests in the Mountain Mike's Pizza
and Seawest Subs franchise concepts.
In October 2000, we formed a wholly-owned subsidiary, Bakery
Acquisition Corporation ("Bakery"). It is our intention to merge Pastry Products
Producers, LLC ("PPPI") into Bakery and for Bakery to issue 2,750,000 shares of
its common stock to our current shareholders. We had completed our acquisition
of PPPI in October 1997. PPPI operates a bakery in Watertown, New York and
produces the Jreck Subs signature roll to Jreck Subs franchisees in upstate New
York. PPPI produces other baked goods such as bagels and cookies, however the
rolls supplied to Jreck Subs franchisees account for 99% of sales.
In February 2001, we completed a reverse merger whereby 100% of the
outstanding common stock of our wholly-owned subsidiary, SBK Franchise Systems,
Inc., the franchisor of the Sobik's Sub chain, was acquired by Krypton
Distribution Corp. ("Krypton"), a Florida corporation, in exchange for
17,445,664 shares of Krypton common stock, which constituted approximately 85%
of the issued and outstanding common stock of Krypton at the date of closing.
Upon closing, the board of directors of the former SBK Franchise Systems, Inc.
assumed control of Krypton and changed the company's name to Sobik's
International Franchising, Inc.
General Description of Business
We are a multiple concept franchisor of submarine sandwich restaurants
and drive-through hamburger restaurants. Through our concepts, we offer a menu
of high quality, fresh submarine sandwiches, hamburgers, chicken sandwiches,
french fries, soups and hot and cold side order items, and a full line of bagel
offerings at selected franchise locations.
Submarine Sandwich Menu and Stores
Through three of our subsidiaries, we offer a lunch and dinner menu of
different submarine sandwiches, soups and hot and cold side orders as well as a
line of bagels and additional breakfast items. Our submarine shop philosophy is
to offer a wider selection of menu items and higher quality ingredients (such as
rib eye steak) cooked on the premises. The food preparation area is open to
customer view to engage customer interest and to showcase cleanliness and
freshness. The food preparation process is designed to deliver a completed food
order within 60 seconds. Sandwich menu prices range from $2.50-$5.95. In
addition, we offer a selection of soft drinks, deep fried mushrooms, cheese
sticks and french fries as well as dessert items such as cookies. Certain
restaurant concepts also offer signature rolls baked fresh on the premises.
As of December 31, 2000 there was an aggregate of 102 franchised
locations under various submarine sandwich concepts as follows:
Concept: Number of Units Geographic Area
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"JRECK Subs","Lox, Stox & Bagel" 44 Upstate New York
"Sobik's" 28 Central Florida
"Li'l Dino" 30 Central North Carolina
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Each location is designed as a "dine in" location (with many offering a
drive up window). Restaurants range in size from 1,000 square feet to 2,000
square feet (1,400 to 1,500 square feet being typical), and are located in strip
shopping centers, shopping malls and freestanding buildings.
As is typical in sandwich shops, the majority of store sales occur
during lunch with the balance during the dinner hours. Dine in and take out
(including delivery) comprise 60% and 40% of sales respectively. Individual
franchisees may also offer catering services for special events and also may
provide a full line of products on a temporary site basis by utilizing
authorized mobile facilities.
Each franchisee leases or owns its own store facilities. Neither we,
nor any of our affiliates, engage in leasing any store premises to any
franchisees.
Hamburger Menu and Stores
Central Park provides its products under a fast service, double
drive-through restaurant format. Central Park offers hamburgers, french fries,
chicken sandwiches, hot dogs and soft drinks. Central Park also offers a limited
breakfast menu consisting of breakfast sandwiches, hashed browns and pastries.
The Central Park locations are designed for drive-through with some
walk-up order service. Some restaurants provide limited outside seating. The
approximate size of the real property for the unit is 10,000 to 40,000 square
feet to accommodate parking and drive-through lanes. Restaurants generally range
in size from 500 to 600 square feet.
As of December 31, 2000 there were 60 locations under the hamburger
concept (of which 53 are franchised and 7 are corporately owned) and are as
follows:
Concept: Number of Units Geographic Area
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"Central Park" 60 Southeast United States
Franchise Programs
Through the terms of our "Franchise Agreement" we authorize individuals
and/or companies to form or establish and operate concept restaurants at
approved locations. Under the agreement, we are obligated to provide certain
services both for the opening of, and the ongoing support of, each restaurant.
Those services generally include:
-review and approval of restaurant location
-review and approval of plans and layout design
-identification of sources of supply of food purveyors and
other suppliers
-provide an operations manual with respect to service
guidelines and restaurant management techniques
-provide initial and ongoing training in acceptable methods of
operations, food preparation techniques, management controls,
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accounting functions, legal framework of restaurant
operations, human resources, promotional programs and public
relations
-provide ongoing support with respect to maintaining quality
products and insuring such products are offered at competitive
prices
-perform ongoing consistency and quality inspections of
restaurants in order to maintain uniform acceptable standards
As of December 31, 2000 we had a combined 162 submarine sandwich and
hamburger restaurants, of which 155 are franchised and 7 are corporately owned.
Also, we continue to have financial interests in the recently sold Mountain
Mike's Pizza and Seawest Subs franchise concepts that have approximately 80
restaurants and 30 restaurants, respectively.
We obtain prospective franchisees primarily from the ranks of our
current and former franchisees and employees, referrals from existing
franchisees and from selected marketing efforts such as restaurant trade shows.
We intend to develop new franchise locations primarily through existing
franchisees. The primary selective criteria we consider in the review and
approval of new franchisees is prior experience in operating restaurants or
comparable business acumen and the existence of sufficient capital resources to
reasonably insure success.
Management believes that we have a national presence. We intend to
strengthen this presence by developing each of our regional concepts.
From time to time we will take over the operations of a store from a
franchisee before the contract term has expired. We may operate such stores
until a suitable franchisee can be found, at which time all or part of our
investment in such operations may be recovered, or we may choose to close the
location.
Initial franchise fees are considered to be within industry norms and
currently range from $10,000-$12,500 for new locations in the sandwich segment
and are $20,000 in the hamburger segment. Initial franchise fees are due upon
the execution of the Franchise Agreement. Ongoing royalties are also considered
to be within industry norms ranging from 4%-7% of sales. In addition to ongoing
royalties, all franchisees are required to contribute 2%-4% of sales to a
concept based pooled marketing fund. The following table sets forth and
summarizes certain information about our concepts and current franchise
agreements:
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No. of Avg. Royalty Royalty
Franchised Rate on Rate on Currently
Units at Avg. Yrs. Existing Current Price of Selling
Sept 30, Remaining Franchise Franchise New New
Concept 2000 On Contract Agreements Agreement Franchise Franchises
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"JRECK Subs","Lox, Stox & Bagel" 44 8.2 4.3% 5.0% $10,000 Yes
"Sobik's" 28 5.8 4.6% 5.0% $12,500 Yes
"Li'l Dino" 30 14.0 5.9% 7.0% $12,500 Yes
"Central Park" 60 9.0 4.0% 4.0% $20,000 Yes
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In connection with our mandatory monitoring program, all franchisees
are required to adhere to our specifications and standards on the selection and
purchase of products used in the operation of the restaurant. We provide a
detailed "product profile" of acceptable food, paper and supply items for each
concept. Franchisees requesting to use products not falling under the concept
"product profile" must first receive our permission.
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Area Development Agreements
We offer to Area Developers a "Territory" within which to sell
franchised restaurants pursuant to the terms of an Area Development Agreement.
Territories are generally based on defined geographic areas and generally
require the Area Developer to increase the number of restaurants within that
territory and to provide continuing operational support.
As of December 31, 2000, we had five agreements with area developers
under the Li'l Dino's concept covering areas of North Carolina.
Each Area Developer pays us a negotiated fee for the non-exclusive
right to sell and open franchises in its defined geographic territory and also
requires the Area Developer to be responsible for marketing, soliciting and
screening prospective franchisees as well as identifying possible site
selections, providing on-site opening assistance and providing ongoing
operational support. The agreements also require the Area Developer to open a
minimum number of new franchised restaurants each year or forfeit future rights
to the territory. In some situations, we require the Area Developer to own and
operate at least one franchised restaurant in their territory.
The Area Development Agreement does not grant the Area Developer the
exclusive right to market or solicit franchisees in the territory. We reserve
the right, under the agreements, to market and sell franchises and/or establish
Company owned restaurants in any territory.
We pay the area developer 50% of the initial franchise fee for any
franchises it sells in its respective territory. The Area Developers are also
entitled to an ongoing fee of 40% to 50% of continuing franchise royalties as
consideration for providing ongoing support. Ongoing support includes many of
the tasks required to be performed by the franchisor and are described above. We
believe the shared ongoing revenue approach rewards the area developer for
selecting higher quality franchisees and higher quality locations while
discouraging the area developer from selecting sites that may have an adverse
effect on current locations.
The Area Development Agreements set increasing "Minimum Performance
Levels" that require the area developer to sell and open a specified number of
franchised restaurants each year. Our experience with the area development
program indicates that while some area developers will exceed their development
schedules, others will fail. Delays in the sale and opening of restaurants can
occur for many reasons. The most common reasons are delays in locating desirable
sites, in negotiating acceptable site lease terms or in obtaining project
financing.
Suppliers
We have entered into distribution and pricing agreements with national
and regional food product manufacturers and distributors that allow owners to
obtain meat products, produce, cheeses, condiments, spices, paper products and
supplies at prices more favorable than those that could be obtained by
individual owners.
We believe that if such regional and national distributors could no
longer provide such goods and services, adequate alternate suppliers or
distributors are available to provide such goods and services without a
significant increase in costs.
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As explained above, PPPI produces the Jreck Subs signature roll that is
supplied fresh (never frozen) to Jreck Subs franchisees in upstate New York.
PPPI produces other baked goods such as bagels and cookies, however the rolls
supplied to Jreck Subs franchisees account for 99% of sales. Currently, Jreck
Subs franchisees have committed to purchase their sub rolls exclusively from
PPPI through 2007.
Government Regulation
Our principal activity of selling restaurant franchises is regulated by
the Federal Trade Commission (the "FTC") and various states. Such regulations
govern disclosure, performance and procedure in the sale and transfer of new and
existing franchises. In general, the FTC's regulations require us to timely
furnish a franchise offering circular to prospective franchisees containing
prescribed information. Certain state laws also require registration of the
franchise offering circular with applicable state authorities. Other states
monitor or regulate the franchise relationship, particularly the sale, renewal
and termination of an agreement. We believe it is in compliance with the
applicable franchise disclosure and registration regulations of the FTC and the
various states that it operates in.
From time to time we will operate Company owned stores. While operating
stores, we are subject to a variety of federal, state and local laws regarding
minimum wage standards, sanitation, health, fire, alcoholic beverage and safety
codes.
We are also subject to "Federal Fair Labor Standards Act", which
governs minimum wages, overtime, working conditions and other matters as well as
the "Americans With Disabilities Act".
While we believe we are in compliance with all applicable federal,
state and local laws and regulations, there can be no assurance that we will
continue to meet the requirements of such laws and regulations. Such a default
could result in a withdrawal of approval to market franchises in one or more
jurisdictions. Any such loss of approval may have a material adverse effect upon
our ability to successfully market our franchises. Violations of federal and
state franchising laws and/or regulations regulating substantive aspects of our
business activity could subject us and our affiliates to rescission offers,
monetary damages, penalties or injunctive proceedings. In addition, under court
decisions in certain states, absolute and vicarious liability may be imposed
upon franchisors based upon the facts and circumstances of the claim. Current
expected changes in federal and individual state laws and regulations concerning
the sale, termination and non-renewal of franchises are not expected to have a
material impact on our operation. There can be no assurance that existing or
future franchise regulations will not have an adverse effect on our ability to
maintain and expand our franchise program.
Competition
We compete in the fast food sandwich and hamburger segments of the
restaurant industry. As a franchisor of fast food sandwich and double
drive-through hamburger restaurants, we compete on two fronts. First we must
attract successful franchisees; and, second, we must assist our franchisees in
attracting customers in each of those two niches of the restaurant industry. We
and our franchisees compete with an increasing number of national chains of
quick service outlets, several of which have dominant market positions, and
possess substantially greater financial resources and longer operating histories
than us.
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The segments of the restaurant industry that we and our franchisees
compete in are highly competitive with respect to price, service, outlet
location, and food quality and are often affected by changes in consumer taste,
local and national economic conditions, population trends and local traffic
patterns.
The three most prolific submarine sandwich chains that we and our
franchisees compete with are Subway, Blimpie and Quiznos. Subway currently has
approximately 14,000 units while Blimpie and Quiznos have about 2,000 and 1,000
units, respectively. Our franchisees operate 102 units. Both Subway and Blimpie
offer a low cost product in a fast food style environment while Quiznos is
positioned between the traditional fast food style of Subway and Blimpie and
full service dining. Through its regional concepts, the Company offers a
comfortable, fast food style, family atmosphere in which to dine on higher
quality food products.
Competitiors of our Central Park hamburger chain include Checkers
Drive-In Restaurants and Back Yard Burgers. Checkers currently has approximately
440 units while Back Yard Burgers has about 90 units. Our franchisee operates 53
units while we operate 7 corporately owned units. Both Checkers and Back Yard
Burgers offer a drive-through format, with a low cost product in a fast food
style environment.
A number of companies have adopted "value pricing" strategies in
response to flattening growth rates and/or declines in average sale per
restaurant. Such strategies could draw customers away from companies that do not
engage in "value pricing", or discount pricing, and could also negatively impact
the operating margins by attempting to match competition pricing points.
In addition to competing with these chains as restaurants, we also
compete with these and other fast food chains for qualified franchisees. Many
franchisors, including but not limited to, those in the restaurant industry,
have greater market recognition and financial resources than we have. We believe
our well established regional concepts offer prospective franchisees the balance
of a moderately priced alternative with which to enter the fast food restaurant
industry and the pride of ownership in a well established and recognized name.
Trademarks
Through our affiliates, we currently own the following trademarks or
service marks, each of which is registered and listed on the Principal Register
of the United States Patent and Trademark Office:
Registration
Number or Registration
Application or Renewal
Trademark Type Number Date
--------- ---- ------ ----
"JRECK Subs" Service Mark 1,022,898 Oct 14, 1975
"Li'l Dino" Name, Service Mark & Design 1,411,762 Sept 30, 1986
"Li'l Dino Bagel Deli and Grille" Name, Service Mark & Design 2,101,316 Sept 30, 1997
"Sobik's Subs" Name, Service Mark & Design 2,087,639 Aug 12, 1997
"Central Park" Name, Service Mark & Design 1,240,692 May 31, 1983
"Central Park" Name, Service Mark & Design 1,278,181 May 15, 1984
"Central Park" Name, Service Mark 1,280,984 Jun 5, 1984
"Central Park" Name, Service Mark 1,290,349 Aug 14, 1984
"Central Park" Name, Service Mark & Design 1,297,136 Sept 18, 1984
"Drive Through the Park" Name & Service Mark 1,287,395 July 24, 1984
Employees
As of February 28, 2001 we had approximately 144 employees consisting
of 22 administrative employees, 103 restaurant employees at the Company's seven
Central Park corporately owned restaurants and 19 employees at the Watertown
bakery of PPPI.
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THE OFFERING
Common stock offered by the selling stockholders: 30,000,000
----------
Common stock to be outstanding after the offering: 94,548,449
----------
Use of Proceeds We will not receive any
of the proceeds from the
sale of the common stock
registered by this
registration statement.
Over the Counter Bulletin Board symbol "UFSI"
The amount of common stock to be outstanding after the offering is based on
64,548,449 shares of common stock outstanding on March 13, 2001.
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FORWARD LOOKING STATEMENTS
Some statements in this prospectus and the documents incorporated in it
by reference contain forward-looking statements about our plans, objectives,
expectations and intentions. You can identify these statements by words such as
"estimate," "expect," "project," "plan," "intend," "believe," "may," "will,"
"anticipate" or other similar words. You should read statements that contain
these words carefully. They discuss our future expectations, contain projections
concerning our future results of operations or our financial conditions or state
other forward-looking information, and may involve known and unknown risks over
which we have no control. We cannot guarantee any future results, level of
activity, performance or achievements. Moreover, we assume no obligation to
update forward-looking statements or update the reasons why actual results could
differ materially from those anticipated in forward-looking statements. The
factors discussed in the section captioned "Risk Factors," and elsewhere in this
prospectus and the documents incorporated in it by reference identify important
factors that may cause our actual results to differ materially from the
expectations we described in our forward-looking statements.
RISK FACTORS
This section highlights specific risks with respect to an investment in
our business. Investing in our common stock involves a high degree of risk.
Purchasing our common stock is very risky and you should be able to bear the
complete loss of your investment. We also caution you that this prospectus
includes forward-looking statements that are based on management's beliefs and
assumptions and on information currently available to management. You should
carefully consider the risks described below and the other information in this
prospectus before purchasing our common stock. The risks and uncertainties
described below are not the only ones we face. Additional risks and
uncertainties not presently known by us or that we currently deem immaterial
also may impair our business operations. If any of the following risks actually
occur, our business could be harmed. In such case, the trading price of our
common stock could decline, and you may lose all or part of your investment.
An investment in the securities offered hereby is speculative in nature
and involves a high degree of risk. In addition to the other information in this
Prospectus, the following factors should be considered carefully in evaluating
us and our business.
We Require Additional Financing.
At September 30, 2000 we had a working capital deficit of approximately
$1,490,301. Our operations have been financed to date through sales of our
securities, and more recently through the sale of our "Mountain Mike's Pizza"
chain. We believe that cash flow from operations and from the sale of the
Mountain Mike's Pizza franchise will continue to fund our operations as well as
generate a portion of the capital necessary to meet our obligations on our
long-term debt. We intend to seek other sources of financing and/or pay off some
of our long-term debt. There is no assurance that additional funding will be
available, or that if available, it can be obtained on terms favorable to us.
Failure to obtain such funding could adversely affect our financial position.
Also, to the extent that additional funds are obtained by the sale of equity
securities, our stockholders may sustain significant dilution. If adequate
capital is not available we will have to reduce or eliminate our planned
expansion activities, which could otherwise ultimately provide significant
revenue to us. Even if such additional financing is available on satisfactory
terms, it, nonetheless, could entail significant additional dilution of the
equity ownership of our existing shareholders and the book value of their
outstanding shares.
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We Face Intense Competition.
The fast food restaurant industry is highly competitive and can be
significantly affected by many factors, including changes in local, regional or
national economic conditions, changes in consumer tastes, consumer concerns
about the nutritional quality of quick-service food and increases in the number
of, and particular locations of, competing restaurants. Factors such as
inflation, increases in food, labor and energy costs, the availability and cost
of suitable sites, fluctuating interest and insurance rates, state and local
regulations and licensing requirements and the availability of an adequate
number of hourly paid employees can also adversely affect the fast food
restaurant industry. Multi-unit restaurant chains like ours can also be
substantially adversely affected by publicity resulting from food quality,
illness, injury, or other health concerns. Major chains, which have
substantially greater financial resources and longer operating histories than we
have, dominate the fast food restaurant industry. We compete primarily on the
basis of location, food quality and price. Changes in pricing or other marketing
strategies by these competitors can have an adverse impact on our sales,
earnings and growth. There can be no assurance that we will be able to compete
effectively against our competitors. In addition, with respect to the sale of
franchises, we compete with many franchisors of restaurants and other business
concepts for qualified and financially capable franchisees.
Our Management Controls a Significant Amount of Our Common Stock.
As of the date of this Prospectus, our officers and directors owned
approximately 11.57% of the outstanding shares of Common Stock. Following
completion of this Offering, such persons will likely continue to own a
significant portion of the outstanding Common Stock, and will likely be able to
significantly influence the election of all of the directors and will thus be
able to continue to control the Company.
We Do Not Currently Meet the Nasdaq Stock Market Listing Requirements and
Accordingly, Our Common Stock is Relatively Illiquid.
Our Common Stock does not currently meet the current Nasdaq listing
requirements for the SmallCap(R) Market. If we are unable to satisfy Nasdaq's
requirements for listing, trading, if any, the Common Stock will continue to be
conducted on the NASD's OTC Bulletin Board, established for securities that do
not meet the Nasdaq SmallCap(R) Market listing requirements. Consequently, the
liquidity of our securities could be impaired, not only in the number of
securities which could be bought and sold, but also through delays in the timing
of transactions, reduction in security analysts' and the news media's coverage
of our operations, and lower prices for our securities than might otherwise be
attained.
There are Specific Risks Associated With Low-priced or "Penny" Stocks.
Until such time, if any, that our securities are listed on The Nasdaq
SmallCap(R) Market or a registered U.S. securities exchange they will continue
to be subject to Rule 15g-9 under the 1934 Act, which imposes additional sales
practice requirements on broker-dealers which sell such securities to persons
other than established customers and institutional accredited investors. For
transactions covered by this rule, a broker-dealer must make a special
suitability determination for the purchaser and have received the purchaser's
written consent to the transaction prior to sale. Consequently, the rule may
affect the ability of broker-dealers to sell our Common Stock and may affect the
ability of purchasers in this Offering to sell any of the Common Stock acquired
pursuant to this Memorandum in the secondary market. The Commission's
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regulations define a "penny stock" to be any equity security that has a market
price (as therein defined) less than $5.00 per share or with an exercise price
of less than $5.00 per share, subject to certain exceptions. The penny stock
restrictions will not apply to our Common Stock if the Common Stock is listed on
The Nasdaq SmallCap(R) Market and has certain price and volume information
provided on a current and continuing basis, or meets certain minimum net
tangible assets and other criteria. There can be no assurance that our
securities will qualify for exemption from these restrictions. If our Common
Stock continues to be subject to the rules on penny stocks, the market liquidity
for the Common Stock could be severely adversely affected.
We Do Not Anticipate Paying Any Common Stock Dividends.
We presently intend to retain future earnings, if any, in order to
provide funds for use in the operation and expansion of its business and,
accordingly, do not anticipate paying cash dividends on our Common Stock in the
foreseeable future.
There are Many Shares Eligible for Future Sale.
Approximately 5,000,000 of the presently issued and outstanding shares
of Common Stock are "restricted securities" as that term is defined under Rule
144 promulgated under the Securities Act. Rule 144 governs resales of such
restricted securities for the account of any person (other than an issuer), and
restricted and unrestricted securities for the account of an "affiliate" of the
issuer. Restricted securities generally include any securities acquired directly
or indirectly from an issuer of its affiliates that were not issued or sold in
connection with a public offering registered under the Securities Act. An
affiliate of the issuer is any person who directly or indirectly controls, is
controlled by, or is under common control with, the issuer. Affiliates of the
Company may include its directors, executive officers and persons directly or
indirectly owning 10% or more of the outstanding Common Stock. Under Rule 144
unregistered resales of restricted Common Stock cannot be made until it has been
held for one year from the later of its acquisition from the Company or an
affiliate of the Company. Thereafter, shares of Common Stock may be resold
without registration subject to Rule 144's volume limitation, aggregation,
broker transaction, notice filing requirements, and requirements concerning
publicly available information about the Company (the "Applicable
Requirements"). Resales by our affiliates of restricted and unrestricted Common
Stock are subject to the Applicable Requirements. The volume limitations provide
that a person (or persons who must aggregate their sales) cannot, within any
three-month period, sell more than the greater of (i) one percent of the then
outstanding shares, or (ii) the average weekly reported trading volume during
the four calendar weeks preceding each such sale. A person who is not deemed an
"affiliate" of the Company and who has beneficially owned shares for at least
one year would be entitled to sell such shares under Rule 144 without regard to
the Applicable Requirements. If a broad public market develops for the Company's
Common Stock, the Company is unable to predict the effect that sales made under
Rule 144 or other sales may have on the then prevailing market price of the
Common Stock.
We Must Manage our Growth
Our growth to date has required and is expected to continue to require,
the full utilization of our management, financial and other resources, to date
without adequate working capital. Our ability to manage growth effectively will
depend on our ability to improve and expand our operations, including our
financial and management information systems, and to recruit, train and manage
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Page 15
executive staff and employees. There can be no assurance that management will be
able to manage growth effectively, and the failure to effectively manage growth
may have a materially adverse effect on our results of operations.
We are Dependent on Key Personnel.
We are dependent upon Christopher M. Swartz, President and CEO and
other key employees with respect to our operations. We have entered into an
employment agreement with Christopher M. Swartz and have also obtained key man
life insurance on his life in the amount of $3,000,000. We have also entered
into an employment agreement with Michael E. Cronin, our Chief Financial
Officer. Our future success also depends on our ability to attract and retain
other qualified personnel, for which competition is intense. The loss of certain
key employees or our inability to attract and retain other qualified employees
could have a material adverse effect on our results of operations.
There are Risks Associated with Forward-looking Statements.
This Prospectus contains certain forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Securities
and Exchange Act of 1934, as amended (the "Exchange Act") and we intend that
such forward-looking statements be subject to the safe harbors for such
statements under such sections. Our forward-looking statements include the plans
and objectives of management for future operations, including plans and
objectives relating to our planned national marketing campaign and our future
economic performance. The forward-looking statements and associated risks set
forth in this Prospectus include or relate to: (i) our ability to maintain
market share in its current operating markets, (ii) our ability to integrate
acquisitions, (iii) our ability to develop product identification, (iv) our
ability to make additional acquisitions on advantageous terms and (v) our
ability to obtain and retain sufficient capital for our future operations.
The forward-looking statements herein are based on current expectations
that involve a number of risks and uncertainties. Such forward-looking
statements are based on assumptions that there will be no material adverse
competitive changes in conditions in our business, and that there will be no
material adverse change in our operations or business or in governmental
regulations affecting us or our suppliers. The foregoing assumptions are based
on judgments with respect to, among other things, future economic, competitive
and market conditions, and future business decisions, all of which are difficult
or impossible to predict accurately and many of which are beyond our control.
Accordingly, although we believe that the assumptions underlying the
forward-looking statements are reasonable, any such assumption could prove to be
inaccurate and therefore there can be no assurance that the results contemplated
in forward-looking statements will be realized. In addition, as disclosed
elsewhere in the "Risk Factors" section of this Prospectus, there are a number
of other risks inherent in our business and operations which could cause our
operating results to vary markedly and adversely from prior results or the
results contemplated by the forward-looking statements. Growth in absolute and
relative amounts of cost of goods sold and selling, general and administrative
expenses or the occurrence of extraordinary events could cause actual results to
vary materially from the results contemplated by the forward-looking statements.
Management decisions, including budgeting, are subjective in many respects and
periodic revisions must be made to reflect actual conditions and business
developments, the impact of which may cause us to alter our marketing, capital
investment and other expenditures, which may also materially adversely affect
our results of operations. In light of significant uncertainties inherent in the
forward-looking information included in this Prospectus, the inclusion of such
information should not be regarded as a representation by us or any other person
that our objectives or plans will be achieved.
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USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares by the
selling stockholders. The selling stockholders will receive all of the net
proceeds from the sale of the shares.
The selling stockholders will pay any underwriting discounts and
commissions and expenses incurred by them for brokerage, accounting, tax, legal
services or other expenses incurred by the selling stockholders in disposing of
their shares. We will bear all other costs, fees and expenses incurred in
effecting the registration of the shares covered by this prospectus, which we
estimate to be $38,225.00.
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SELLING STOCKHOLDERS
The following table sets forth information regarding the beneficial
ownership of the shares of common stock by the selling stockholders as of March
15, 2001. The selling stockholders acquired beneficial ownership of the shares
listed below through the conversion of Convertible Debentures purchased from us
in a private transaction in December 2000. The information regarding the selling
stockholders' beneficial ownership after this offering assumes that all of the
shares of the common stock offered by the selling stockholders through this
prospectus are actually sold. None of the selling stockholders has held a
position or office with, or has otherwise had a material relationship with us,
within the past thee years. The presentation is based on 64,548,449 shares of
our common stock outstanding as of March 13, 2001:
The number of shares of Common Stock issuable upon conversion of each
of the Convertible Debentures, and the consequent number of shares of Common
Stock available for resale under this Prospectus, is based upon a conversion
price of 65% of the closing bid price of the Common Stock on the Electronic
Bulletin Board NASDAQ averaged over the three trading days immediately prior to
the date of conversion. Based upon an assumed conversion price of $0.02 per
share, 1,250,000 shares of Common Stock would be issuable per each $25,000
Convertible Debenture. Any relationship between any Selling Stockholder and us
is set forth below. The Percentage Before Offering has been computed in
accordance with Rule 13d-3 of the Securities Exchange Act of 1934, by dividing
the number of shares held by each Selling Shareholder by the sum of the number
of shares outstanding and the number of shares, if any, issuable to the Selling
Shareholder within 60 days (but assuming no issuances to any other person).
Shares Shares
Beneficially Owned Beneficially Owned
Prior to Offering After Offering
------------------- ------------------
Name of Selling Stockholder Number Percent Number Percent
Agricola Coco Bonh, SA 11,250,000 14.84% 0 0.00%
Short Capital, Inc. 5,000,000 7.19% 0 0.00%
Olympus Capital, Inc. 3,750,000 5.49% 0 0.00%
Gary Pereira 2,500,000 3.73% 0 0.00%
John Mitchell 2,500,000 3.73% 0 0.00%
Fred Lenz 2,500,000 3.73% 0 0.00%
Gotris, SA 1,250,000 1.90% 0 0.00%
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PLAN OF DISTRIBUTION
We are registering the shares on behalf of the selling stockholders. As
used herein, "selling stockholders" includes donees, pledgees, transferees or
other successors in interest (including, without limitation, corporate or
partnership distributees of the selling stockholders which are privately held
corporations or partnerships) selling shares received from a named selling
stockholder after the date of this prospectus. We will bear all costs, expenses
and fees in connection with the registration of the shares offered hereby. Any
brokerage commissions and similar selling expenses attributable to the sale of
shares will be borne by the selling stockholders. Sales of shares may be
effected by selling stockholders from time to time in one or more types of
transactions (which may include block transactions) on the Over the Counter
Bulletin Board or on any other market on which our shares may then be trading,
in negotiated transactions, through put or call options transactions relating to
the shares, through short sales of shares, or a combination of such methods of
sale, at market prices prevailing at the time of sale, or at negotiated prices.
Such transactions may or may not involve brokers, dealers or underwriters. The
selling stockholders have advised us that they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their shares. The selling stockholders have
also advised us that no underwriter or coordinating broker is acting in
connection with the proposed sale of shares by the selling stockholders,
however, the selling stockholders may enter into agreements, understandings or
arrangements with an underwriter or broker-dealer regarding the sale of their
shares in the future.
The selling stockholders may effect sales by selling shares directly to
purchasers or to or through broker-dealers which may act as agents or
principals. These broker-dealers and underwriters may receive compensation in
the form of discounts, concessions, or commissions from the selling stockholders
and/or the purchasers of shares for whom the broker-dealers and underwriters may
act as agents or to whom they sell as principal, or both. This compensation to a
particular broker-dealer or underwriter might be in excess of customary
commissions.
The selling stockholders may enter into hedging transactions with
broker-dealers or other financial institutions. In connection with such
transactions, broker-dealers or other financial institutions may engage in short
sales of our common stock in the course of hedging the positions they assume
with the selling stockholders. The selling stockholders may also enter into
options or other transactions with broker-dealers or other financial
institutions which require the delivery to such broker-dealers or other
financial institutions of shares offered hereby, which shares such
broker-dealers or other financial institutions may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction).
The selling stockholders and any broker-dealers or underwriters that
act in connection with the sale of shares might be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act, and any commissions
received by broker-dealers or underwriters and any profit on the resale of the
shares sold by them while acting as principals might be deemed to be
underwriting discounts or commissions under the Securities Act. We have agreed
to indemnify each selling stockholder against certain liabilities, including
liabilities arising under the Securities Act. The selling stockholders may agree
to indemnify any agent, dealer, broker-dealer or underwriter that participates
in transactions involving sales of the shares against certain liabilities,
including liabilities arising under the Securities Act.
Because selling stockholders may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act, the selling stockholders
will be subject to the prospectus delivery requirements of the Securities Act
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and the rules promulgated thereunder. We have informed the selling stockholders
that the anti-manipulative provisions of Regulation M promulgated under the
Exchange Act may apply to their sales in the market.
Selling stockholders may also resell all or a portion of their shares
in open market transactions in reliance upon Rule 144 under the Securities Act,
provided they meet the criteria and conform to the requirements of that rule.
All or any part of the shares offered hereby may or may not be sold by
the selling stockholders.
After being notified by a selling stockholder that any material
arrangement has been entered into with a broker-dealer or underwriter for the
sale of shares through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker, dealer or underwriter, we will
file a supplement to this prospectus, if required, pursuant to Rule 424(b) under
the Securities Act.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Securities and Exchange Commission allows us to "incorporate by
reference" the information we file with the Securities and Exchange Commission,
which means we can satisfy our legal obligations to disclose important
information contained in those documents by referring you to them. The
information included in the following documents is incorporated by reference and
is considered part of this prospectus. More recent information that we file with
the Securities and Exchange Commission automatically updates and supersedes any
inconsistent information contained in prior filings.
The documents listed below have been filed under the Exchange Act with
the Securities and Exchange Commission and are incorporated by reference:
(a) Our annual report on Form 10-KSB for the fiscal year ended
September 30, 2000;
(b) A description of the Registrant's activities and common stock
contained in exhibits to Registrant's filing pursuant to the previously stated
10-KSB in (a) above.
(c) Our current reports on Form 8-K filed June 22, 2000 and November 1,
2000; and
We also incorporate by reference all documents subsequently filed by us
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act until the
offering of the shares of common stock under this prospectus is completed. You
may request a copy of these filings, at no cost, by writing or telephoning us at
Ultimate Franchise Systems, Inc. 300 International Parkway, Heathrow, Florida,
32746, attention: Michael E. Cronin, telephone: (407) 682-6363
We will provide to each person, including any beneficial owner, to whom
a prospectus is delivered, a copy of any or all of the information that has been
incorporated by reference in the prospectus but not delivered with the
prospectus. We will provide this information upon written or oral request, at
not cost to the requester. You may request a copy of this information, by
writing or telephoning us at Ultimate Franchise Systems, Inc. 300 International
Parkway, Heathrow, Florida, 32746, attention: Michael E. Cronin, telephone:
(407) 682-6363.
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WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-3 with the Securities
and Exchange Commission registering the shares of our common stock that are
being offered by this prospectus. This prospectus is a part of the registration
statement and, as the Securities and Exchange Commission rules permit, does not
contain all of the information that stockholders can find in the registration
statement or the exhibits to the registration statement.
We file annual, quarterly and current reports, proxy statements and
other information with the Securities and Exchange Commission. You may read and
copy any document we file at the Securities and Exchange Commission's public
reference rooms at 450 Fifth Street, N.W., Washington, D.C. 20549 and at the
Securities and Exchange Commission's regional offices in New York (7 World Trade
Center, Suite 1300, New York, New York 10048) and Chicago (Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois, 60661-2511). You may obtain
information on the operation of the Public Reference Room by calling the
Securities and Exchange Commission at 1-800-SEC-0330. In addition, registration
statements and certain other filings made with the Securities and Exchange
Commission through its "EDGAR" system are publicly available through the
Securities and Exchange Commission's Web site on the Internet located at
http://www.sec.gov. This registration statement, including all exhibits, has
been filed with the Securities and Exchange Commission through EDGAR.
LEGAL MATTERS AND EXPERTS
The validity of the shares of common stock offered by this prospectus
will be passed upon for us by L. Van Stillman, P.A., Delray Beach, Florida.
The financial statements incorporated into this prospectus by reference
to our annual report on Form 10-KSB, for the fiscal year ended September 30,
2000 audited by Berman Hopkins Wright & LaHam, CPA's, LLP independent public
accountants, as indicated in their report with respect thereto, are included
herein in reliance upon the authority of said firm as experts in accounting and
auditing in giving said report.
INDEMNIFICATION
We have adopted provisions in our Articles of Incorporation as well as
our By-Laws that provide for the indemnification of our directors, officers,
employees and agents to the fullest extent provided by the Corporate Law of the
State of Colorado, as well as is described in our Articles of Incorporation and
the By-Laws. These sections generally provide that the corporation may indemnify
any person who was or is a party to any threatened, pending or completed action,
suit or proceeding whether civil, criminal, administrative or investigative
except for an action by or in right of corporation by reason of the fact that he
or she is or was a director, officer, employee or agent of the corporation.
Generally, no indemnification may be made where the person has been determined
to be negligent or guilty of misconduct in the performance of his or her duties
to us. Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers and controlling persons pursuant
to the foregoing bylaw 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 Securities Act and is therefore
unenforceable.
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TABLE OF CONTENTS
Page
ULTIMATE FRANCHISE
Prospectus Summary...................... 5 SYSTEMS, INC.
The Offering............................ 12
Forward Looking Statements.............. 13
Risk Factors............................ 13
Use of Proceeds......................... 17
Selling Stockholders.................... 18
Plan of Distribution.................... 19 30,000,000 SHARES
Incorporation of Certain Documents
by Reference............................ 20
Where You Can Find More Information..... 21
Legal Matters and Experts............... 21
Indemnification......................... 21 PROSPECTUS
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PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
SEC registration fee............................. $ 225.00
Legal fees and expenses*......................... $38,000.00
----------
TOTAL........................................... $38,225.00
==========
* Represents the Registrant's estimate of such expenses.
Item 15. Indemnification of Directors and Officers
The Company has adopted provisions in its articles of incorporation and
bylaws that limit the liability of its directors and provide for indemnification
of its directors and officers to the full extent permitted under the Colorado
Business Corporation Act. Under the Company's articles of incorporation, and as
permitted under the Colorado Business Corporation Act, directors are not liable
to the Company or its stockholders for monetary damages arising from a breach of
their fiduciary duty of care as directors. Such provisions do not, however,
relieve liability for breach of a director's duty of loyalty to the Company or
its stockholders, liability for acts or omissions not in good faith or involving
intentional misconduct or knowing violations of law, liability for transactions
in which the director derived as improper personal benefit or liability for the
payment of a dividend in violation of Florida law. Further, the provisions do
not relieve a director's liability for violation of, or otherwise relieve the
Company or its directors from the necessity of complying with, federal or state
securities laws or affect the availability of equitable remedies such as
injunctive relief or recision.
At present, there is no pending litigation or proceeding involving a
director, officer, employee or agent of the Company where indemnification will
be required or permitted. The Company is not aware of any threatened litigation
or proceeding that may result in a claim for indemnification by any director or
officer.
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Item 16. Exhibits
Exhibit
No. Description
------- -----------------------
3.1 Articles of Amendment to the Company's Articles of
Incorporation
4.1 Form of 12% Series G Convertible Debenture
4.2 Registration Rights Agreement
5 Opinion of L. Van Stillman, P.A.
23.1 Consent of Berman Hopkins Wright & LaHam, CPA's, LLP
23.2 Consent of L. Van Stillman, P.A. (included as part of Exhibit
5).
Item 17. Undertakings
The undersigned registrant hereby undertakes that, for the 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.
The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report, to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver, or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report that is specifically incorporated by reference in
the prospectus to provide such interim financial information.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions described in Item 15 above, 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 Securities 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
Securities Act and will be governed by the final adjudication of such issue.
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Signatures
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable ground to believe that it meets all
of 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 Longwood state of Florida, on March 28, 2001.
ULTIMATE FRANCHISE SYSTEMS, INC.
By: /s/ Christopher M. Swartz
-----------------------------
Christopher M. Swartz
President, CEO and Director
In accordance with the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities indicated on March 28, 2001.
By: /s/ Christopher M. Swartz President, CEO and Director
-----------------------------------------
Christopher M. Swartz
By: /s/ Michael E. Cronin Chief Financial Officer and
--------------------------------- Principal Accounting Officer
Michael E. Cronin
By: /s/ Eric Swartz Secretary and Director
-----------------------------------------
Eric Swartz
By: /s/ S. Elliott Davenport Director
-----------------------------------------
S. Elliott Davenport
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