SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3S-3/A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Amendment No. 1
ALANCO TECHNOLOGIES, INC.
(Exact name of registrant specified in charter)
Arizona 86-0220694
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
15575 North 83rd Way, Suite 3
Scottsdale, Arizona 85260
(480) 607-1010
(Address and telephone number of principal executive offices)
Robert R. Kauffman
Chief Executive Officer
Alanco Technologies, Inc.
15575 North 83rd Way, Suite 3
Scottsdale, Arizona 85260
(480) 607-1010
(Name, address and telephone number of agent for service)
With a Copy to:
Steven P. Oman, Esq.
8664 E. Chama Rd
Scottsdale, Arizona 85255
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: FROM TIME TO TIME AFTER THE EFFECTIVENESS OF THIS REGISTRATION
STATEMENT
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 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. [X]
IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN OFFERING PURSUANT
TO RULE 462(b) UNDER THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE
SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE
REGISTRATION STATEMENT FOR THE SAME OFFERING. [ ]
IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(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 Amount
Title of each aggregate of
class of securities Amount to be offering registration
to be registered Registered price (1) fee
------------------- ------------ --------- ------------
Class A Common Stock
(includes 1,450,000 shares
underlying warrants and 5,570,238 $1.25 $213.76
1,710,602 shares upon
conversion of preferred shares)
Rights attached to above shares
of Class A Common Stock Under 5,570,238 $0.00 --
Shareholder Rights Plan (2)
(1) Calculated for purposes of this offering under Rule 457(c) under the
Securities Act of 1933 using the average of the high and low sales prices for
the Company's Class A Common Stock on the NASDAQ Capital Market as of February
26, 2008.
(2) Each share of the Company's Class A Common Stock has a Right attached to it
in accordance with the Company's Shareholder Rights Plan (more fully described
on page 20 of this Prospectus). These Rights are also being registered in this
Prospectus.
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.
SUBJECT TO COMPLETION, DATED February 28,March 31, 2008
PROSPECTUS
ALANCO TECHNOLOGIES, INC.
5,570,238 Shares of Class A Common Stock
(Including 1,450,000 Shares of Class A Common Stock Underlying Warrants
and 1,710,602 Shares Upon Conversion of Series A Preferred Stock)
And the Rights Attached to the Shares
THE SHARES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" ON PAGE 6 FOR INFORMATION THAT YOU SHOULD CONSIDER.
This prospectus is being used in connection with offerings from time to time by
some of our stockholders. The shares covered by this prospectus became issuable
in connection with private placement financings completed in 2007 and 2008, our
June 2006 acquisition of StarTrak Systems, LLC, a February 2008 amendment to a
loan agreement, and December 2007 and February 2008 amendments to a line of
credit agreement. The selling stockholders, which as used herein includes
donees, pledgees, transferees or other successors-in-interest selling shares of
Class A Common Stock or interests in shares of Class A Common Stock received
after the date of this prospectus from a selling stockholder as a gift, pledge,
partnership distribution or other transfer, may, from time to time, sell,
transfer or otherwise dispose of any or all of their shares of Class A Common
Stock or interests in shares of Class A Common Stock on any stock exchange,
market or trading facility on which the shares are traded or in private
transactions. These dispositions may be at fixed prices, at prevailing market
prices at the time of sale, at prices related to the prevailing market price, at
varying prices determined at the time of sale, or at negotiated prices. We will
pay the expenses incurred to register the shares for resale, but the selling
stockholders will pay any underwriting discounts, concessions, or brokerage
commissions associated with the sale of their shares of Class A Common Stock.
The selling stockholders and the brokers and dealers that they utilize may be
deemed to be "underwriters" within the meaning of the securities laws, and any
commissions received and any profits realized by them on the sale of shares may
be considered to be underwriting compensation. See "Plan of Distribution."
The selling stockholders beneficially own all 5,570,238 shares of Class A Common
Stock. We will not receive any part of the proceeds from the sale or other
disposition of the shares. We may, however, receive proceeds from the exercise
of certain rights held by some of the Selling Shareholders under stock options
or warrants to purchase Class A Common Stock from us if that is the origin of
shares covered hereby. The registration of the shares on behalf of the selling
stockholders, however, does not necessarily mean that any of the selling
stockholders will offer or sell their shares under this registration statement,
or at any time in the near future.
Our Class A Common Stock is listed on the NASDAQ Capital Market, or NASDAQ,
under the symbol "ALAN." On February 26, 2008 the last sale price of our Class A
Common Stock on NASDAQ was $1.24 per share.
You should read this prospectus and any prospectus supplements carefully before
deciding to invest.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is _______________, 2008.
TABLE OF CONTENTS
Page
Summary 5
Risk Factors 6
Safe Harbor Statements Under the Private
Securities Litigation Reform Act of 1995 10
Issuance of Securities to Selling Stockholders 10
Use of Proceeds 12
Plan of Distribution 12
Selling Stockholders 13
Description of Securities 18
Legal Matters 21
Experts 21
Where You Can Find More Information 22
Information Incorporated by Reference 22
SUMMARY
The following summary does not contain all of the information that may
be important to purchasers of our Class A Common Stock. Prospective purchasers
of Class A Common Stock should carefully review the detailed information and
financial statements, including notes thereto, appearing elsewhere in or
incorporated by reference into this prospectus.
Effective October 16, 2006, the Company effected a 2:5 reverse stock split. All
references to both number of shares and price per share of Class A Common Stock
issued and outstanding, options and warrants granted, and common stock
equivalent shares are presented on a post-split basis.
The Company
Our Company, Alanco Technologies, Inc., together with our subsidiaries, is a
provider of advanced information technology solutions. Our operations at the end
of fiscal 2007 (June 30, 2007) were diversified into three reporting business
segments including: (i) design, production, marketing and distribution of
wireless tracking and subscription information technology for the refrigerated
transportation industry (ii) design, production, marketing and distribution of
RFID tracking technology for the corrections market, and (iii) manufacturing,
marketing and distribution of data storage products.
Effective June, 2002, we acquired radio frequency identification (RFID) tracking
technology through the acquisition of the operations of Technology Systems
International, Inc., a Nevada corporation. Effective June 30, 2006, we acquired
the operations of StarTrak Systems, LLC, a provider of wireless tracking and
subscription data services to the transportation industry. We continue to
participate in the data storage market through our wholly-owned subsidiary,
Excel/Meridian Data, Inc., a manufacturer of network attached storage systems
for mid-range organizations.
Our principal executive offices are located at 15575 North 83rd Way, Suite 3,
Scottsdale, AZ 85260, and our telephone number is (480) 607-1010.
The Offering
Securities covered hereby..............5,570,238 shares of Class A Common Stock
and 5,570,238 Rights attached to the
Class A Common Stock under our
Shareholder Rights Plan
Class A Common Stock
currently outstanding................23,528,035 shares (1)
Use of proceeds........................We will not receive any of the proceeds
of sales of Class A Common Stock by the
Selling Shareholders. We may, however,
receive proceedsfrom the exercise of
certain rights held by some of the
Selling Shareholders under stock options
or warrants to purchase Class A Common
Stock from us if that is the origin of
shares.
Risk Factors...........................Prospective purchasers should carefully
consider the factors discussed under
"Risk Factors."
NASDAQ symbol..........................ALAN
(1) Excludes (i) 6,736,700 shares of Class A Common Stock reserved for
issuance upon exercise of stock options outstanding as of February 28,
2008; (ii) 2,928,600 shares reserved for issuance upon the exercise of
stock options that may be granted in the future under our stock option
plans; (iii) 5,331,904 shares reserved for issuance upon exercise of
outstanding warrants; (iv) 6,776,751 shares reserved for issuance upon
conversion of the Series A Convertible Preferred Stock; (v) 452,094
shares reserved for issuance upon conversion of the Series B
Convertible Preferred Stock; and 1,609,636 shares reserved for issuance
upon conversion of debt.
RISK FACTORS
An investment in Alanco involves a high degree of risk. In addition to the other
information included in this prospectus, you should carefully consider the
following risk factors in determining whether or not to purchase the shares of
Class A Common Stock offered under this prospectus. These matters should be
considered in conjunction with the other information included or incorporated by
reference in this prospectus. This prospectus contains statements which
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements appear in a number of
places in this prospectus and include statements regarding the intent, belief or
current expectations of our management, directors or officers primarily with
respect to our future operating performance. Prospective purchasers of our
securities are cautioned that these forward-looking statements are not
guarantees of future performance and involve risks and uncertainties. Actual
results may differ materially from those in the forward-looking statements as a
result of various factors. The accompanying information contained in this
prospectus, including the information set out below, identifies important
factors that could cause such differences. See "Safe Harbor Statements Under the
Private Securities Litigation Reform Act of 1995."
We may not be able to reach the sales goals anticipated from the StarTrak
Systems acquisition. We acquired the operations of StarTrak Systems, LLC
("StarTrak") effective June 30, 2006. StarTrak is a leading provider of wireless
tracking and subscription data services to the transportation industry, with a
focus upon the refrigerated or "Reefer" segment of the transport industry.
StarTrak provides wireless (including GPS, cellular and radio) tracking,
monitoring and control services to this market. We are anticipating significant
revenue growth from sales of StarTrak products in the transportation market. We
do not have experience in the transportation market, and there is no certainty
that we will be able to capture the required market share for StarTrak to
achieve its anticipated financial success. The StarTrak system is currently
being marketed to the transportation market as a tool to increase efficiency and
reduce costs of the refrigerated supply chain by wireless monitoring and control
of critical Reefer data, including GPS location, cargo temperatures and Reefer
fuel levels. Although StarTrak is the dominant provider for tracking, management
and control services of the refrigeration transport market and is currently the
only tracking system, to the best of our knowledge, which is able to provide
direct interaction with the customer allowing for remote adjustments of
variables controlled by the unit, there are other tracking/monitoring systems
being marketed to the refrigerated transport industry. There is no certainty
that the transportation industry will adopt this technology broadly enough for
us to reach our marketing projections.
The loss of key StarTrak personnel would have a negative impact on our StarTrak
business and technology development. Our StarTrak technology is reliant on key
personnel who developed and understand the technology. We have short-term
contracts with some key personnel, but have no assurance that such personnel
will remain with the Company on a long-term basis. The loss of the services of
those key technology personnel could have an adverse effect on the business,
operating results and financial condition of our company.
We may continue to experience lower than anticipated sales in our TSI PRISM
division. We acquired the business and assets of Technology Systems
International, Inc. ("TSI") effective June 2002, creating the Company's RFID
Technology segment. During fiscal 2005, we changed the name of Technology
Systems International, Inc. to Alanco/TSI PRISM, Inc. ("ATSI"). We had
anticipated significant revenue growth from sales of the TSI PRISM tracking
system in the corrections market in prior years which was not realized. We
continue to anticipate future significant revenue growth from sales of the TSI
PRISM tracking system; however, there is no certainty that we will be able to
capture the required market share for ATSI to achieve its anticipated financial
success. The TSI PRISM system is currently being marketed to the corrections
market as a prison and jail management tool and officer safety system. Although
there are other inmate and officer monitoring systems being marketed to the
corrections industry, the TSI PRISM system is currently the only system, to the
best of our knowledge, which is able to continuously (every two seconds) monitor
the location of both officers and prisoners, both inside and outside of
buildings. There is no certainty that the corrections industry will adopt this
technology broadly enough for us to reach our marketing projections.
The loss of key ATSI personnel would have a negative impact on our ATSI business
and technology development. Our TSI PRISM technology is reliant on key personnel
who developed and understand the technology. We have no employment contracts
with any of our ATSI personnel. The loss of the services of those key technology
personnel could have an adverse effect on the business, operating results and
financial condition of our company, and our ability to continue to develop
products economically and competitively.
We could incur financial losses as a result of the continuing litigation with
respect to our acquisition of ATSI. We have been sued concerning our acquisition
of ATSI. We recently entered into a Settlement Agreement pursuant to which the
value of the TSI assets acquired and the value of the consideration we gave for
such assets will be determined by an independent third-party appraiser. If we
paid less than 85% of the value of the assets, we will have to pay the
difference to the TSI bankruptcy estate. See Legal Matters for a discussion of a
legal suit filed in connection with our acquisition of the operations of TSI.
We are subject to the budget constraints of the governmental agencies purchasing
TSI PRISM systems, which could result in a significant decrease in our
anticipated revenues. We cannot assure you that the governmental agencies we
anticipate purchasing our TSI PRISM systems will have the necessary revenue to
purchase the systems even though they may want to do so. The funds available to
governmental agencies are subject to various economic and political influences.
Even though the TSI PRISM system may be recommended for purchase by corrections
facility managers, the governmental agency responsible for the facility may not
have sufficient budget resources to purchase the system. As of the date of this
filing, the Company has no significant TSI PRISM sales backlog as defined by
unfulfilled signed contracts.
Worsening general economic conditions may negatively affect our potential
customers' ability and willingness to purchase the products sold by our Company.
Both our RFID Technology and our Data Storage segment rely on a strong economy
to support technology spending by our customers. Our Data Storage segment sells
network attached storage systems to mid-sized network users. Previous
deterioration in general economic conditions resulted in reduced spending by our
customers for technology in general, including the products sold by us. We have
the ability to reduce overhead to assist in offsetting our reduced sales volume;
however, if the economic conditions were to deteriorate, we could experience a
material adverse impact on our business, operating results, and financial
conditions. See previous section discussing the budget constraints of our
government customers. As some governmental funding is supplied by sales tax and
income tax revenues, a reduction in economic activity reduces governmental
revenues and the monies that can be budgeted for TSI PRISM systems.
Acts of domestic terrorism and war have impacted general economic conditions and
may impact the industry and our ability to operate profitably. On September 11,
2001, acts of terrorism occurred in New York City and Washington, D.C. On
October 7, 2001, the United States launched military actions on Afghanistan, and
in 2003 launched military attacks on Iraq with ongoing operations in both areas.
As a result of those terrorist acts and military actions, there has been a
disruption in general economic activity and a diversion of governmental funding
to those endeavors that would otherwise have been available for the purchase of
products and systems such as those sold by the Company. There may be other
consequences resulting from those acts of terrorism, and any others which may
occur in the future, including civil disturbance, war, riot, epidemics, public
demonstration, explosion, freight embargoes, governmental action, governmental
delay, restraint or inaction, quarantine restrictions, unavailability of
capital, equipment, personnel, which we may not be able to anticipate. These
terrorist acts and acts of war may continue to impact the economy, and in turn,
reduce the demand for our products and services, which would harm our ability to
make a profit. Also, as federal dollars are redirected to military efforts, they
may not be available for the purchase of new federal prison monitoring systems
from our ATSI subsidiary.
The Company may not have sufficient capital to meet its liquidity needs if we
are not able to carry out our fiscal year 2008 operating plan; Uncertainty of
proceeds and additional financing. The Company incurred significant losses
during fiscal year 2007 and the first half of fiscal year 2008 and has
experienced significant losses in prior years. Although management cannot assure
that future operations will be profitable or that additional debt and/or equity
capital will be raised, we believe that, based on our fiscal 2008 operating
plan, cash flow will be adequate to meet our anticipated future requirements for
working capital expenditures, scheduled lease payments and scheduled payments of
interest on our indebtedness. We will need to materially reduce expenses, or
raise additional funds through public or private debt or equity financing, or
both, if the revenue and cash flow elements of our 2008 operating plan are not
met. If we need to seek additional financing to meet working capital
requirements, there can be no assurance that additional financing will be
available on terms acceptable to us, or at all. If adequate funds are not
available or are not available on acceptable terms, our business, operating
results, financial condition and ability to continue operations will be
materially adversely affected.
If we raise additional funds through the sale of stock, our existing Alanco
shareholders will experience dilution and may be subject to newly issued senior
securities. If additional funds are raised through the issuance of equity
securities, the percentage ownership of the then current shareholders of the
Company will be reduced, and such equity securities may have rights, preferences
or privileges senior to those of the holders of Class A Common Stock.
We have had recent losses and fluctuations in operating results which may or may
not be reliable as an indication of future performance. We had a consolidated
loss from operations of ($5,871,700) for the fiscal year ending June 30, 2007,
and a consolidated loss from operations of ($4,591,900) for the fiscal year
ending June 30, 2006. In addition, our quarterly operating results have
fluctuated significantly in the past and could fluctuate significantly in the
future. We anticipate that our future financial performance will be
significantly impacted by our acquisition of StarTrak and our marketing efforts
concerning the StarTrak and TSI RFID technology. As a result, our past quarterly
operating results should not be used to predict future performance.
Our StarTrak and ATSI intellectual property protection may not be sufficient to
maintain the value of such property rights. Our primary business strategy is to
develop the StarTrak and ATSI business opportunities. The long-term success of
this strategy depends in part upon the StarTrak and ATSI intellectual property
acquired. Although we are not currently aware of any conflicting technology
rights, third parties may hold United States or foreign patents which may be
asserted in the future against the StarTrak and ATSI technology, and there is no
assurance that any license that might be required under such patents could be
obtained on commercially reasonable terms, or otherwise. Our competitors may
also independently develop technologies that are substantially equivalent or
superior to our technology. In addition, the laws of some foreign countries do
not protect our proprietary rights to the same extent as the laws of the United
States.
Our efforts to prohibit others from infringing upon our StarTrak and ATSI
intellectual property may not be adequate. Despite our efforts to safeguard and
maintain our proprietary rights both in the United States and abroad, there can
be no assurance that we will be successful in doing so or that the steps taken
by us in this regard will be adequate to deter infringement, misuse,
misappropriation or independent third-party development of our technology or
intellectual property rights or to prevent an unauthorized third party from
copying or otherwise obtaining and using our products or technology. Litigation
may also become necessary to defend or enforce our proprietary rights. Any of
such events could have a negative impact on our competitive position in the
markets we serve.
The loss of key corporate or subsidiary executives would have a negative effect
on our Company. Our performance is substantially dependent on the services and
performance of our executive officers and key employees. The loss of the
services of any of our executive officers or key employees could have a material
adverse effect on our business, operating results and financial condition due to
their extensive industry specific knowledge and comprehensive operating plans
for the Company. Our future success will depend on our ability to attract,
integrate, motivate and retain qualified technical, sales, operations and
managerial personnel. With the exception of the two most senior StarTrak
executives, none of our executive officers are bound by an employment agreement,
and none are covered by key-man insurance.
Additional competitors to StarTrak may arise that could affect the future
projected StarTrak business. Although StarTrak currently is the dominant
provider of tracking, management and control services of refrigeration transport
Reefer units, it can be expected that if, and to the extent that, the demand for
the StarTrak technology increases, the number of competitors will likely
increase. Increasing competition could adversely affect the amount of new
business we are able to attract, the rates we are able to charge for our
services and/or products, or both.
Additional competitors to the TSI PRISM business may arise that could affect the
future projected TSI PRISM business. Although early in the market development
cycle, the TSI PRISM business/technology has no current, identified direct
competitors capable of the same performance levels as the TSI PRISM system.
There are other companies attempting to introduce area location and monitoring
technologies in the correctional facilities market who offer area or zone
detection systems that are not capable of providing continuous real-time
tracking at this time. However, it can be expected that if, and to the extent
that, the demand for the ATSI technology increases, the number of competitors
will likely increase, as will their capabilities. Increasing competition could
adversely affect the amount of new business we are able to attract, the rates we
are able to charge for our services and/or products, or both.
We may lack the capital for our Excel Meridian Data subsidiary to compete
effectively in the data storage market. Because we are significantly smaller
than many of our competitors in the data storage business, we may lack the
capital required to increase our market share. We operate in a very competitive
environment, competing against numerous other companies, many of whom have
greater financial resources and market position than we do.
Possible exercise and issuance of options and warrants issued by the Company may
dilute interest of shareholders. As of the date of this prospectus, options to
purchase 6,736,700 shares of our Class A Common Stock were outstanding, and the
weighted average exercise price of such options was $2.00. Additionally,
warrants to purchase 5,331,904 shares of our Class A Common Stock were
outstanding, and the weighted average exercise price of such warrants was
$2.21. To the extent that any stock options currently outstanding or granted in
the future are exercised, dilution to the interests of our shareholders may
occur.
We may not be able to maintain our NASDAQ Listing if we are unable to keep our
stock price above the minimum $1.00 bid price per share. Our Class A Common
Stock currently trades on the NASDAQ Capital Market under the symbol "ALAN."
However, there can be no assurance that an active trading market in our Class A
Common Stock will be available at any particular future time.
In August, 2005, we received notification from NASDAQ indicating that due to the
failure of the Company to maintain the minimum $1.00 bid price per share
requirement, the Company's securities were subject to delisting from NASDAQ. In
accordance with Marketplace Rule 4310(c) (8) (D), the Company had 180 days, or
until January 31, 2006, to comply with the Rule. The minimum bid price
requirement was not met by the date specified, and again in accordance with
Marketplace Rule 4310(c), NASDAQ officials determined the Company met the NASDAQ
Capital Market initial listing criteria except for the bid price requirement and
notified the Company that it had been granted an additional 180 calendar days
(until July 31, 2006) to meet the $1.00 minimum bid price requirement. In
August, 2006, we received notification from NASDAQ indicating that we had not
regained compliance with the minimum $1.00 bid price per share requirement and
that the Company's securities would be delisted. We elected to appeal the NASDAQ
Staff delisting determination and an oral hearing before the NASDAQ Listing
Qualifications Panel ("Panel") was held on September 14, 2006, with
representatives from the Company present. Effective October 16, 2006, the
Company's Board of Directors elected to effect a 2:5 reverse stock split
pursuant to approval of a proposal authorizing a reverse split obtained from the
shareholders at the Company's Annual Meeting of Shareholders held on January 20,
2006. The Company's stock began trading on a post-split adjusted basis under the
interim trading symbol "ALAND" on October 16, 2006 for a period of 20 trading
days, after which the Company's trading symbol returned to "ALAN." The Company's
stock has traded above the $1.00 minimum bid price since the reverse stock split
was effected. On November 2, 2006, the Company received a letter from NASDAQ
indicating that the Company had remedied its minimum bid price deficiency and
had regained compliance with the continued listing requirements of The NASDAQ
Capital Market. There can be no assurance that the Company's stock will continue
to trade above the minimum NASDAQ $1.00 per share bid requirement, and the
Company may again in the future be notified that delisting may occur.
The Company does not anticipate payment of dividends. We do not anticipate that
we will pay cash dividends on our Class A Common Stock in the foreseeable
future. The payment of dividends by us will depend on our earnings, financial
condition, and such other factors, as our Board of Directors may consider
relevant. We currently plan to retain earnings to provide for the development of
our business.
Our articles of incorporation and Arizona law may have the effect of making it
more expensive or more difficult for a third party to acquire, or to acquire
control of, us. Our articles of incorporation make it possible for our Board of
Directors to issue preferred stock with voting or other rights that could impede
the success of any attempt to change control of us. Arizona law prohibits a
publicly held Arizona corporation from engaging in certain business combinations
with certain persons, who acquire our securities with the intent of engaging in
a business combination, unless the proposed transaction is approved in a
prescribed manner. This provision has the effect of discouraging transactions
not approved by our Board of Directors as required by the statute which may
discourage third parties from attempting to acquire us or to acquire control of
us even if the attempt would result in a premium over market price for the
shares of common stock held by our stockholders.
Certain provisions in our Alanco shareholder rights plan may discourage a
takeover attempt. We have implemented a shareholder rights plan which could make
an unsolicited takeover of our company more difficult. As a result, shareholders
holding a controlling block of shares may be deprived of the opportunity to sell
their shares to potential acquirers at a premium over prevailing market prices.
This potential inability to obtain a premium could reduce the market price of
our common stock.
The market price of Alanco Class A Common Stock may fluctuate significantly in
response to a number of factors, some of which are beyond our control. These
factors include:
o progress of our products through development and marketing;
o announcements of technological innovations or new products by us or our
competitors;
o government regulatory action affecting our products or competitors'
products in both the United States and foreign countries;
o developments or disputes concerning patent or proprietary rights;
o actual or anticipated fluctuations in our operating results;
o the loss of key management or technical personnel;
o the loss of major customers or suppliers;
o the outcome of any future litigation;
o changes in our financial estimates by securities analysts;
o general market conditions for emerging growth and technology companies;
o broad market fluctuations;
o recovery from natural disasters; and
o economic conditions in the United States or abroad.
Future sales of Alanco Class A Common Stock in the public market could adversely
affect our stock price and our ability to raise funds in new equity offerings.
We cannot predict the effect, if any, that future sales of shares of our common
stock or the availability for future sale of shares of our common stock or
securities convertible into or exercisable for our common stock will have on the
market price of our common stock prevailing from time to time. For example, the
availability of the shares covered by this S-3 registration statement for sale,
or of common stock by our existing stockholders under Rule 144, or the
perception that such sales could occur, could adversely affect prevailing market
prices for our common stock and could materially impair our future ability to
raise capital through an offering of equity securities.
SAFE HARBOR STATEMENTS UNDER THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
This prospectus includes "forward-looking statements" as that term is defined in
the Private Securities Litigation Reform Act of 1995. The safe harbor provisions
of the Securities Exchange Act of 1934 and the Securities Act of 1933 apply to
forward-looking statements made by us. These statements can be identified by the
use of forward-looking terminology such as "believes," "expects," "may," "will,"
"should" or "anticipates" or the negatives or variations of these terms, and
other comparable terminology. In addition, any statements discussing strategy
that involve risks and uncertainties are forward-looking. Forward-looking
statements include statements concerning plans, objectives, goals, strategies,
future events or performance, and underlying assumptions and other statements,
which are other than statements of historical facts. From time to time, the
Company may publish or otherwise make available forward-looking statements of
this nature. All such forward-looking statements are based on the expectations
of management when made and are subject to, and are qualified by, risks and
uncertainties that could cause actual results to differ materially from those
expressed or implied by those statements. These risks and uncertainties include,
but are not limited to, the following factors, among others, that could affect
the outcome of the Company's forward-looking statements: general economic and
market conditions; reduced demand for information technology equipment;
competitive pricing and difficulty managing product costs; development of new
technologies which make the Company's products obsolete; rapid industry changes;
failure by the Company's suppliers to meet quality or delivery requirements; the
inability to attract, hire and retain key personnel; failure of an acquired
business to further the Company's strategies; the difficulty of integrating an
acquired business; undetected problems in the Company's products; the failure of
the Company's intellectual property to be adequately protected; unforeseen
litigation; unfavorable result of current pending litigation; the ability to
maintain sufficient liquidity in order to support operations; the ability to
maintain satisfactory relationships with lenders and to remain in compliance
with financial loan covenants and other requirements under current banking
agreements; the ability to maintain satisfactory relationships with suppliers;
federal and/or state regulatory and legislative actions; customer preferences
and spending patterns; the ability to implement or adjust to new technologies
and the ability to secure and maintain key contracts and relationships.
Forward-looking statements involve risks and uncertainties, including those
risks and uncertainties identified in the section of this prospectus beginning
on page 6 titled "Risk Factors" and those risks and uncertainties identified
elsewhere in, or incorporated by reference into, this prospectus. Due to these
risks and uncertainties, the actual results that we achieve may differ
materially from these forward-looking statements. These forward-looking
statements are based on current expectations. In preparing this prospectus, we
have made a number of assumptions and projections about the future of our
business. These assumptions and projections could be wrong for several reasons
including, but not limited to, those factors identified in the "Risk Factors"
section.
You are urged to carefully review and consider the various disclosures that we
make in this prospectus, any subsequent prospectus supplements and in our other
reports filed with the SEC. These disclosures attempt to advise interested
parties of the risk factors that may affect our business.
ISSUANCE OF SECURITIES TO SELLING SHAREHOLDERS
The Class A Common Stock subject to this prospectus relates to securities
issuable by us pursuant to a number of separate transactions. We agreed in each
of these transactions to file a registration statement, of which this prospectus
is a part, to register the resale or other disposition of the Class A Common
Stock issued or issuable by us in these transactions. All of the shares of Class
A Common Stock covered by this prospectus were "restricted securities" under the
Securities Act prior to this registration. Each of the shares of Class A Common
Stock includes a Right under the Shareholder Rights Plan that is also being
registered in this Prospectus. The transactions under which the securities were
issued are described in the following paragraphs.
The first transaction involves the issuance of warrants to purchase 24,500
shares of Class A Common Stock issued as commissions in connection with a
private offering to accredited investors in August 2007. A warrant to purchase
18,375 shares of Class A Common Stock was issued to Berry-Shino Securities,
Inc., and a warrant to purchase 6,125 shares of Class A Common Stock was issued
to Robert L. Berry. The offering involved the issuance of 2,453,948 shares of
our Class A Common Stock and three-year warrants to purchase 981,579 shares of
Class A Common Stock at a price of $3.00 per share, both of which were
previously registered on our S-3 Registration Statement effective October 20,
2007. This prospectus covers only the 24,500 shares of Class A Common Stock
underlying the warrants that were issued as commissions. The transaction
documents pertaining to this offering were filed as Exhibits to our Form 8-K
filed with the SEC on August 9, 2007.
The second transaction involves the issuance of 1,425,500 shares of Series A
Convertible Preferred Stock, which is convertible, at the option of the holder,
into 1.2 shares of our Class A Common Stock for each share of Series A
Convertible Preferred Stock for a total, when rounded up for individual holders,
of 1,710,602 shares of Class A Common Stock, and warrants to purchase 1,425,500
shares of Class A Common Stock in connection with a private offering to
accredited investors in January 2008. The offering was comprised of 1,425,500
units sold at a price of $1.50 per unit, each unit consisting of one share of
Series A Convertible Preferred Stock together with a 5-year warrant to purchase
one share of Class A Common Stock at a price of $1.75 per share. 560,500 units
were purchased by directors and officers of the Company, including 100,000 units
purchased by Robert R. Kauffman, director and CEO; 20,000 units purchased by
John A. Carlson, director and CFO; 333,500 units purchased by Programmed Land,
Inc., which is beneficially owned by Donald E. and Rebecca E. Anderson, Donald
E. Anderson being a director of the Company; 67,000 units purchased by Harold S.
Carpenter, director; 10,000 units purchased by James T. Hecker, director; and
30,000 units purchased by Thomas A. Robinson, Executive Vice President of the
Company's subsidiary, StarTrak Systems LLC. In addition, the following units
were purchased by accredited investors: 50,000 units by Robert L. Berry, 13,333
units by MacDonald Hawley, 33,000 units by Dwight W. Babcock, 72,000 units by WS
Opportunity Fund (QP), L.P., 79,833 units by WS Opportunity Fund, L.P., 98,167
units by WS Opportunity Fund International, Ltd., 50,000 units by Diane L.
Howard Marital Trust, 50,000 units by Malcolm B. Howard, 50,000 units by Dave
Brown Development, ACC, 67,500 units by David P. and Heidi J. Anderson, 67,500
units by David J. and Julie R. Dickerson, 67,000 units by Heartland Systems Co.,
and 166,667 units by The Rhino Fund LLP. The Company received $2,108,200, net of
expenses, from the offering. This prospectus covers 1,710,602 shares of Class A
Common Stock issuable by us upon conversion of the Series A Preferred Stock
issued in the private offering and 1,425,500 shares of Class A Common Stock
issuable by us upon exercise of the warrants issued in the private offering. The
Form of Agreement and the Form of Warrant pertaining to this transaction were
included as Exhibits to our Form 8-K filed with the SEC on January 23, 2008.
The third transaction involves the issuance of 800,000 shares of Class A Common
Stock to Tenix Holding, Inc. in February 2008 in connection with an amendment to
a loan agreement that renegotiated a $1.5 million note acquired in the
acquisition of StarTrak Systems, LLC in June 2006. The agreement converts $1
million of the note amount into equity through the issuance of 800,000 shares of
Class A Common Stock, valued at $1.25 per share. Payment terms for the remaining
$500,000 balance require monthly installments of $20,000, commencing May 1, 2008
and continuing through November 2008 with the remaining $360,000 balance due on
December 1, 2008. A $50,000 fee was paid as consideration for the transaction
and as interest on the remaining $500,000. The transaction was disclosed in Note
L - Subsequent Events of our Form 10-QSB for the quarter ended December 31, 2007
filed with the SEC on February 14, 2008. This prospectus covers the 800,000
shares issued pursuant to the amended agreement. The terms of the original loan
agreement were included in the June 25, 2006 Agreement and Plan of
Reorganization pursuant to which Alanco acquired StarTrak Systems, LLC, which
was filed with the SEC on June 27, 2006 as an exhibit to our Form 8-K. The
amendment to the loan agreement completed February 11, 2008 is included as
Exhibit 99.1 to this Form S-3 Registration Statement.
The fourth transaction involves 1,209,636 shares of Class A Common Stock to be
issued pursuant to the February 5, 2008 Amendment No. 4 to the Loan Agreement
with ComVest Capital LLC, upon conversion of approximately $1.7 million of the
outstanding term loan balance into shares of Class A Common Stock at $1.69 per
share (1,021,775 shares) and approximately $600,000 of the outstanding term loan
balance into shares of Class A Common Stock at $3.00 per share (187,861 shares).
The amendment served to reduce the prepayment requirements and delay the monthly
installment payments in the event the Company raised additional equity capital.
Under the amended agreement, the prepayment requirement was reduced from 50% of
the equity raised to 17.5% of the net equity raised in excess of $1.25 million
through January 2008 and the monthly installment payments were delayed by
approximately 9 months. The amended Agreement pertaining to this transaction was
included as an Exhibit to our Form 8-K filed with the SEC on January 2, 2008.
This prospectus covers the 1,209,636 shares that may be issued upon conversion
of the debt at the option of the holder.
The final transaction involves 400,000 shares of Class A Common Stock to be
issued pursuant to the February 26, 2008 and December 21, 2007 amendments to the
Line of Credit Agreement with The Anderson Family Trust upon conversion of up to
$500,000 of the outstanding Line of Credit balance into shares of Class A Common
Stock at $1.25$1.50 per share. The Anderson Family Trust is controlled by Donald E.
and Rebecca E. Anderson, with Mr. Anderson being a director of the Company. The
amended Agreement pertaining to this transaction was included as an Exhibit to
our Form 8-K filed with the SEC on December 27, 2007 with an additional
amendment filed as an Exhibit to our Form 8-K filed with the SEC on February 28,
2008. This prospectus covers the 4500,000400,000 shares that may be issued upon
conversion of the debt at the option of the holder.
USE OF PROCEEDS
The proceeds from the sale or other disposition of all of the shares of Class A
Common Stock covered by this prospectus will be for the account of the selling
shareholders, which term includes their transferees, pledgees or donees or other
successors in interest. Accordingly, we will not receive any proceeds from the
sale or other disposition of Class A Common Stock by the selling shareholders.
We may, however, receive proceeds from the exercise of certain rights held by
some of the selling shareholders under stock options or warrants to purchase
Class A Common Stock from us if that is the origin of the shares. Such proceeds,
when and if received, would be utilized by the Company for general working
capital.
PLAN OF DISTRIBUTION
The selling stockholders, which as used herein includes donees, pledgees,
transferees or other successors-in-interest selling shares of common stock or
interests in shares of common stock received after the date of this prospectus
from a selling stockholder as a gift, pledge, partnership distribution or other
transfer, may, from time to time, sell, transfer or otherwise dispose of any or
all of their shares of common stock or interests in shares of common stock on
any stock exchange, market or trading facility on which the shares are traded or
in private transactions. These dispositions may be at fixed prices, at
prevailing market prices at the time of sale, at prices related to the
prevailing market price, at varying prices determined at the time of sale, or at
negotiated prices.
The selling stockholders may use any one or more of the following
methods when disposing of shares or interests therein:
- 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;
- through the writing or settlement of options or other hedging
transactions, whether through an options exchange or otherwise;
- broker-dealers may agree with the selling stockholders to sell a
specified number of such shares at a stipulated price per share; and
- a combination of any such methods of sale.
The selling stockholders 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
amending the list of selling stockholders to include the pledgee, transferee or
other successors in interest as selling stockholders under this prospectus. The
selling stockholders 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.
In connection with the sale of our common stock or interests therein,
the selling stockholders may enter into hedging transactions with broker-dealers
or other financial institutions, which may in turn engage in short sales of the
common stock in the course of hedging the positions they assume. The selling
stockholders may also enter into option or other transactions with
broker-dealers or other financial institutions or the creation of one or more
derivative securities which require the delivery to such broker-dealer or other
financial institution of shares offered by this prospectus, which shares such
broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction).
The aggregate proceeds to the selling stockholders from the sale of the
common stock offered by them will be the purchase price of the common stock less
discounts or commissions, if any. Each of the selling stockholders reserves the
right to accept and, together with their agents from time to time, to reject, in
whole or in part, any proposed purchase of common stock to be made directly or
through agents. We will not receive any of the proceeds from this offering. Upon
any exercise of the warrants by payment of cash, however, we will receive the
exercise price of the warrants.
The selling stockholders also may resell all or a portion of the shares
in open market transactions in reliance upon Rule 144 under the Securities Act
of 1933, provided that they meet the criteria and conform to the requirements of
that rule.
The selling stockholders and any underwriters, broker-dealers or agents
that participate in the sale of the common stock or interests therein may be
"underwriters" within the meaning of Section 2(11) of the Securities Act. Any
discounts, commissions, concessions or profit they earn on any resale of the
shares may be underwriting discounts and commissions under the Securities Act.
Selling stockholders who are "underwriters" within the meaning of Section 2(11)
of the Securities Act will be subject to the prospectus delivery requirements of
the Securities Act.
To the extent required, the shares of our common stock to be sold, the
names of the selling stockholders, the respective purchase prices and public
offering prices, the names of any agents, dealer or underwriter, any applicable
commissions or discounts with respect to a particular offer will be set forth in
an accompanying prospectus supplement or, if appropriate, a post-effective
amendment to the registration statement that includes this prospectus.
In order to comply with the securities laws of some states, if
applicable, the common stock may be sold in these jurisdictions only through
registered or licensed brokers or dealers. In addition, in some states the
common stock may not be sold unless it has been registered or qualified for sale
or an exemption from registration or qualification requirements is available and
is complied with.
We have advised the selling stockholders that the anti-manipulation
rules of Regulation M under the Exchange Act may apply to sales of shares in the
market and to the activities of the selling stockholders and their affiliates.
In addition, to the extent applicable we will make copies of this prospectus (as
it may be supplemented or amended from time to time) available to the selling
stockholders for the purpose of satisfying the prospectus delivery requirements
of the Securities Act. The selling stockholders may indemnify any broker-dealer
that participates in transactions involving the sale of the shares against
certain liabilities, including liabilities arising under the Securities Act.
In certain cases, we have agreed to indemnify the selling stockholders
against liabilities, including liabilities under the Securities Act and state
securities laws, relating to the registration of the shares offered by this
prospectus.
We have agreed with the selling stockholders to keep the registration
statement of which this prospectus constitutes a part effective until the
earlier of (1) such time as all of the shares covered by this prospectus have
been disposed of pursuant to and in accordance with the registration statement
or (2) the date on which the shares may be sold pursuant to Rule 144(k) of the
Securities Act.
SELLING STOCKHOLDERS
The following table sets forth certain information, received through February
28, 2008, with respect to the number of shares of our Class A Common Stock
beneficially owned by each selling stockholder. The information set forth below
is based on information provided by or on behalf of the selling stockholders
and, with regard to the beneficial holdings of the selling stockholders, is
accurate only to the extent beneficial holdings information was disclosed to us
by or on behalf of the selling stockholders. The selling stockholders listed in
any supplement to this prospectus, and any transferors, pledgees, donees or
successors to these persons, may from time to time sell or otherwise dispose of,
pursuant to this prospectus and any subsequent prospectus supplement, any and
all of these shares.
Except as otherwise described below, no selling stockholder, to our knowledge,
held beneficially one percent or more of our outstanding Class A Common Stock as
of the date of this prospectus. Because the selling stockholders may sell or
otherwise dispose of all, some or none of the shares of our Class A Common Stock
listed below, the Company is not able to estimate the amount or percentage of
our Class A Common Stock that will be held by the selling stockholders upon
completion of this offering. The following table assumes that all of the shares
of Class A Common Stock being registered and the shares underlying the warrants
being registered will be sold by the selling stockholders.
The shares purchased by the selling shareholders were purchased in the ordinary
course of business; and at the time of the purchase of the securities to be
resold, none of the sellers had any agreements or understandings, directly or
indirectly, with any person to distribute the securities. None of the selling
shareholders are affiliates of broker-dealers.
Except as indicated below, none of the selling stockholders has held any
position or office or had any other material relationship with us or any of our
predecessors or affiliates within the past three years other than as a result of
the ownership of our securities or the securities of our predecessors. We may
amend or supplement this prospectus from time to time to update the disclosure
set forth in it.
Shares
Shares Class A Being Shares Beneficial Ownership
Beneficially Common Offered by Being After Offering
Owned Shares Conversion Offered by
Prior Being Of Exercise
To Offering Offered Preferred Of
Selling Stockholder (1) (2) Stock Warrants Number Percent
- ------------------------------------ ------ -------------- ------------ ------------- ------------- ------------- ----------
Programmed Land, Inc.
9414 E. San Salvador Drive
Suite 99
Scottsdale, AZ 85258 (3) 5,067,652 0 400,200 333,500 4,333,952 13.33%
Robert R. Kauffman
15575 N. 83rd Way, Suite 3
Scottsdale, AZ 85260 (4) 2,788,361 0 120,000 100,000 2,568,361 8.00%
Harold S. Carpenter
Revocable Trust dtd 9/30/2005
13801 Bay Hill Drive
Clive, IA 50325-8567 (5) 994,289 0 80,400 67,000 846,889 2.72%
The Rhino Fund LLP
32065 Castle Court, Suite 100
Evergreen, CO 80439 (6) 1,380,515 0 200,001 166,667 1,013,847 3.26%
Heartland Systems Co.
13801 Bay Hill Drive
Clive, IA 50325-8567 (7) 994,577 0 80,400 67,000 847,177 2.74%
WS Opportunity Fund
International, Ltd.
300 Crescent Court, Suite 1111 (8)
Dallas, TX 72201 (9) 1,352,715 0 117,801 98,167 1,136,747 3.65%
WS Opportunity Fund , L.P.
300 Crescent Court, Suite 1111 (8)
Dallas, TX 72201 (10) 917,813 0 95,800 79,833 742,180 2.39%
WS Opportunity Fund (Q.P.), L.P.
300 Crescent Court, Suite 1111 (8)
Dallas, TX 72201 (11) 861,067 0 86,400 72,000 702,667 2.27%
Dave Brown Development, ACC
2152 E. Cedar Street
Tempe, AZ 85281 285,000 0 60,000 50,000 175,000 **
Shares
Shares Class A Being Shares Beneficial Ownership
Beneficially Common Offered by Being After Offering
Owned Shares Conversion Offered by
Prior Being Of Exercise
To Offering Offered Preferred Of
Selling Stockholder (1) (2) Stock Warrants Number Percent
- ----------------------------------- ------ -------------- ------------ ------------- ------------- ------------- ----------
Diane L. Howard Marital Trust
8926 East Ann Way
Scottsdale, AZ 85260 197,500 0 60,000 50,000 87,500 **
Malcolm B. Howard
8926 East Ann Way
Scottsdale, AZ 85260 197,500 0 60,000 50,000 87,500 **
Thomas A. Robinson
3 Connet Lane
Mendham, NJ 07945 (12) 1,838,320 0 36,000 30,000 1,772,320 5.71%
John A. Carlson
15575 N. 83rd Way, Suite 3
Scottsdale, AZ 85260 (13) 939,928 0 24,000 20,000 895,928 2.86%
James T. Hecker
32065 Castle Court, Suite 100
Evergreen, CO 80439 (14) 256,288 0 12,000 10,000 234,288 **
David J. & Julie R. Dickerson
11804 N. Sundown Drive
Scottsdale, AZ 85260 301,848 0 81,000 67,500 153,348 **
David P. & Heidi J. Anderson
Family Trust Dated 12/8/04
4620 N. 68th Street #164
Scottsdale, AZ 85251 301,848 0 81,000 67,500 153,348 **
Dwight W. Babcock
6464 E. Grant Road
Tucson, AZ 85715 72,600 0 39,600 33,000 0 **
MacDonald Hawley
32065 Castle Court, Suite 100
Evergreen, CO 80439 29,333 0 16,000 13,333 0 **
Tenix Holding, Inc.
c/o Collin O'Niell
1595 Spring Hill Road,
Suite 330 (15) 1,126,200 800,000 0 0 326,200 1.06%
Vienna, VA 22181
Robert L. Berry
8740 E. Celtic Drive
Scottsdale, AZ 85260 116,125 0 60,000 56,125 0 **
Shares
Shares Class A Being Shares Beneficial Ownership
Beneficially Common Offered by Being After Offering
Owned Shares Conversion Offered by
Prior Being Of Exercise
To Offering Offered Preferred Of
Selling Stockholder (1) (2) Stock Warrants Number Percent
- ----------------------------------- ------ -------------- ------------ ------------- ------------- ------------- ----------
Berry-Shino Securities, Inc.
15100 N. 78th Way, Suite 100 (16)
Scottsdale, AZ 85260 18,375 0 0 18,375 0 **
ComVest Capital LLC
One North Clematis, Suite 300
West Palm Beach, FL 33401 (16)(17) 1,209,636 1,209,636 0 0 0 **
The Anderson Family Trust
11804 N. Sundown Drive (17)(18) 5,067,652 400,000 0 0 4,667,652 14.36%
Scottsdale, AZ 85260
------------ ------------- -------------
TOTALS 2,409,636 1,710,602 1,450,000
============ ============= =============
** Less than 1.00%
- -------------------------------
(1) The number of shares beneficially owned is determined in accordance
with Rule 13d-3 of the Exchange Act and the information is not
necessarily indicative of beneficial ownership for any other purpose.
Under such rule, beneficial ownership includes any shares as to which
the person has sole or shared voting power or investment power and also
any shares which the person has the right to acquire within 60 days of
the date set forth in the applicable footnote through the conversion of
a security or the exercise of any stock option or other right.
Percentage ownership indicated in the footnotes below is based on
30,756,880 Common Equivalent shares outstanding, which is comprised of
23,528,035 shares of Class A Common Stock, 6,776,751 shares of Class A
Common Stock into which the Series A Preferred Stock is convertible,
and 452,094 shares of Class A Common Stock into which the Series B
Preferred Stock is convertible as of February 28, 2008.
(2) Each share of Class A Common Stock being registered in this Prospectus
also has a Right attached to it under the Shareholder Rights Plan
(described on page 20). Those Rights are also being registered in this
Prospectus.
(3) Donald E. and Rebecca E. Anderson, who have beneficial ownership of all
of the outstanding shares of Programmed Land, Inc., have beneficial
ownership of 15.59% of the Company. This includes shares owned by the
Anderson Family Trust, which are beneficially owned by Mr. and Mrs.
Anderson, shares owned directly by Mr. Anderson, and 400,000 shares of
Class A Common Stock that are also being registered on this S-3 that
may be issued upon conversion of up to $500,000 of the Company's
outstanding line of credit balance at the option of the Andersons. Mr.
Anderson is a director of the Company. Mr. Anderson also holds the
following non-vested options: 32,500 options exercisable in fiscal year
2009; 37,500 options exercisable in fiscal year 2010; 37,500 options
exercisable in fiscal year 2011; and 12,500 options exercisable in
fiscal year 2012.
(4) Robert R. Kauffman is the beneficial owner of these shares. Mr.
Kauffman is the Chief Executive Officer and a director of the Company.
Mr. Kauffman has beneficial ownership of 8.69% of the Company. Mr.
Kauffman also holds the following non-vested options: 45,000 options
exercisable in fiscal year 2009; 65,000 options exercisable in fiscal
year 2010; 65,000 options exercisable in fiscal year 2011; and 50,000
options exercisable in fiscal year 2012.
(5) Harold S. Carpenter is a director of the Company and is the beneficial
owner of 3.20% of the Company. Mr. Carpenter also holds the following
non-vested options: 17,500 options exercisable in fiscal year 2009;
22,500 options exercisable in fiscal year 2010; 22,500 options
exercisable in fiscal year 2011; and 12,500 options exercisable in
fiscal year 2012. Mr. Carpenter is an officer of Heartland Systems Co.,
whose shares are also offered under this prospectus; however, Mr.
Carpenter disclaims beneficial ownership of the Heartland Systems Co.
shares.
(6) The Rhino Fund, LLP beneficially owns 4.44% of the Company. MacDonald
Hawley, president of Rhino Capital, Inc., the fund manager, holds
voting and dispositive powers over the shares of the Company's stock
owned by The Rhino Fund, LLP.
(7) Heartland Systems Co. is the beneficial owner of 3.22% of the Company's
stock. Leanna Hansch, Treasurer, holds voting and dispositive powers
over the shares of the Company's stock owned by Heartland Systems Co.
(8) WSV Management, L.L.C. ("WSV") is the general partner of WS Ventures
Management, L.P. ("WSVM"). WSVM is the general partner of WS
Opportunity Fund, L.P. ("WSO") and WS Opportunity Fund (Q.P.), L.P.
("WSOQP") and is the agent and attorney-in-fact for WS Opportunity Fund
International, Ltd. ("WSO International"). Reid S. Walker, G. Stacy
Smith and Patrick P. Walker are the controlling principals of WSV.
Through their control of WSV, Messrs. R. Walker, Smith and P. Walker
share voting and investment control over the portfolio securities of
each of WSO, WSOQP and WSO International.
(9) WSO International is the beneficial owner of 4.34% of the Company's
stock.
(10) WSO is the beneficial owner of 2.96% of the Company's stock.
(11) WSOQP is the beneficial owner of 2.78% of the Company's stock.
(12) Thomas A. Robinson, Executive Vice President of the Company's
subsidiary, StarTrak Systems, LLC, is the beneficial owner of 5.93% of
the Company's stock. Mr. Robinson also holds the following non-vested
options: 60,000 options exercisable in fiscal year 2008; 75,000 options
exercisable in fiscal year 2009; 85,000 options exercisable in fiscal
year 2010; 25,000 options exercisable in fiscal year 2011; and 25,000
options exercisable in fiscal year 2012.
(13) John A. Carlson, Director and Chief Financial Officer of Alanco
Technologies, Inc., is the beneficial owner of 3.00% of the Company's
stock. Mr. Carlson also holds the following non-vested options: 20,000
options exercisable in fiscal year 2009; 30,000 options exercisable in
fiscal year 2010; 30,000 options exercisable in fiscal year 2011; and
25,000 options exercisable in fiscal year 2012.
(14) James T. Hecker is a director of the Company and has beneficial
ownership of 0.83% of the Company's stock. Mr. Hecker is the treasurer
and general counsel for Rhino Capital Incorporated, which controls The
Rhino Fund, whose shares are also offered under this prospectus;
however, Mr. Hecker disclaims beneficial ownership of The Rhino Fund
shares. Mr. Hecker also holds the following non-vested options: 7,500
options exercisable in fiscal year 2009; 12,500 options exercisable in
fiscal year 2010; 12,500 options exercisable in fiscal year 2011; and
12,500 options exercisable in fiscal year 2012.
(15) Tenix Holding, Inc. is the beneficial owner of 3.66% of the Company's
stock. Robert Leece has voting control and investment decision over
securities held by Tenix Holding. Mr. Leece disclaims beneficial
ownership of the shares held by Tenix Holding.
(16) Berry-Shino Securities, Inc. beneficially owns 0.06% of the Company's
Class A Common Stock. Robert L. Berry, President of Berry-Shino
Securities, has voting control and investment decision over securities
held by Berry-Shino Securities, Inc.
(17) ComVest Capital LLC is the beneficial owner of 3.78% of the Company's
Class A Common Stock. The percentage owned is comprised solely of
1,209,636 shares of Class A Common Stock that may be issued at the
option of the holder upon conversion of a portion of the Company's
outstanding term loan balance. The managing member of ComVest Capital
LLC is ComVest Capital Management LLC ("Management"), a Delaware
limited liability company, the managing member of which is ComVest
Group Holdings, LLC ("CGH"), a Delaware limited liability company.
Michael Falk ("Falk") is the Chairman and principal member of CGH. As a
result of these relationships, ComVest Capital LLC, Management, CGH,
and Mr. Falk may be deemed to have a beneficial interest in shares
acquired by ComVest Capital LLC.
(17)(18) Donald E. and Rebecca E. Anderson, who have beneficial ownership of all
of the outstanding shares of The Anderson Family Trust, have beneficial
ownership of 15.59% of the Company. This includes shares owned by
Programmed Land, Inc., which are beneficially owned by Mr. and Mrs.
Anderson, shares owned directly by Mr. Anderson, and 400,000 shares of
Class A Common Stock that may be issued upon conversion of up to
$500,000 of the Company's outstanding line of credit balance at the
option of the Andersons. Mr. Anderson is a director of the Company. Mr.
Anderson also holds the following non-vested options: 32,500 options
exercisable in fiscal year 2009; 37,500 options exercisable in fiscal
year 2010; 37,500 options exercisable in fiscal year 2011; and 12,500
options exercisable in fiscal year 2012.
DESCRIPTION OF SECURITIES
Our authorized capital consists of 75,000,000 shares of Class A Common Stock,
25,000,000 shares of Class B Common Stock, and 25,000,000 shares of preferred
stock. The preferred stock is issuable in series with such designation,
preferences, voting rights, privileges, and other restrictions and
qualifications as our Board of Directors may establish in accordance with
Arizona law. There were 23,528,035 shares of Class A Common Stock outstanding,
and no shares of Class B Common Stock issued and outstanding as of February 28,
2008. There were 5,647,285 shares of Series A Convertible Preferred Stock
outstanding and 86,941 shares of Series B Convertible Preferred Stock
outstanding as of February 28, 2008. Shares of the Series A Convertible
Preferred Stock are convertible into shares of Class A Common Stock at a rate of
1.2 shares of Class A Common Stock for every one share of Series A Convertible
Preferred Stock. Shares of the Series B Convertible Preferred Stock are
convertible into shares of Class A Common Stock at a rate of 5.2 shares of Class
A Common Stock for every one share of Series B Convertible Preferred Stock. As
of February 28, 2008, options to purchase 6,736,700 shares of Class A Common
Stock were outstanding, and the weighted average exercise price of such options
was $2.00. In addition, as of February 28, 2008, the Company had 5,331,904
warrants to purchase Class A Common Stock outstanding, and the weighted average
exercise price of such warrants was $2.21. Our Class A Common Stock is traded on
the NASDAQ Capital Market under the symbol "ALAN". No other securities of the
Company are currently traded on any market.
Common Stock
Holders of shares of our Class A Common Stock are entitled to one vote per share
on all matters to be voted on by our shareholders. Holders of shares of Class B
Common Stock are entitled to one-one hundredth of one vote per share of Class B
Common Stock on all matters to be voted on by our shareholders. Our Class A
Common Stock and our Class B Common Stock have cumulative voting rights with
respect to the election of directors. Our bylaws require that only a majority of
the issued and outstanding voting shares of common stock need be represented to
constitute a quorum and to transact business at a shareholders' meeting.
Subject to the dividend rights of the holders of preferred stock, if applicable,
holders of shares of common stock are entitled to share, on a ratable basis,
such dividends as may be declared by the Board of Directors out of funds legally
available.
Upon our liquidation, dissolution or winding up, after payment of creditors and
holders of any of our senior securities, including preferred stock, our assets
will be divided pro rata on a per share basis among the holders of the shares of
common stock. Our common stock has no preemptive or other subscription rights,
and there are no conversion rights or redemption or sinking fund provisions. All
outstanding shares of common stock are fully paid and non-assessable.
Preferred Stock
Our Board of Directors is authorized to issue preferred stock in one or more
series and denominations and to fix the rights, preferences, privileges, and
restrictions, including dividend, conversion, voting, redemption, liquidation
rights or preferences, and the number of shares constituting any series and the
designation of such series, without any further vote or action by our
shareholders. The issuance of preferred stock may have the effect of delaying,
deferring, or preventing a change of control of our company without further
action by the shareholders. The issuance of preferred stock with voting and
conversion rights may adversely affect the voting power of the holders of common
stock.
Our Board of Directors has previously authorized the issuance of a series of
preferred stock referred to as Series B Convertible Preferred Stock. Without the
affirmative vote of a majority of the holders of the Series B Preferred Stock,
we may not amend, alter or repeal any of the provisions of our articles of
incorporation or articles of designation for the Series B Convertible Preferred
Stock. We also need the affirmative vote of a majority of the holders of the
Series B Convertible Preferred Stock if we want to authorize any
reclassification of the Series B Convertible Preferred Stock that would
adversely affect the preferences, special rights or privileges or voting power
of the Series B Convertible Preferred Stock. We may not create or issue any
class of stock ranking prior to the Series B Convertible Preferred Stock as to
dividends or distribution of assets, or create or issue any shares of any series
of the authorized preferred stock ranking prior to the Series B Convertible
Preferred Stock's rights to dividends or distribution on liquidation. The Series
B Convertible Preferred Stock shall have voting rights as if converted into
Class A Common Stock.
Our Board of Directors has also authorized the issuance of a series of preferred
stock referred to as Series A Convertible Preferred Stock. Without the
affirmative vote of a majority of the holders of the Series A Preferred Stock,
we may not amend, alter or repeal any of the provisions of our articles of
incorporation or articles of designation for the Series A Convertible Preferred
Stock. We also need the affirmative vote of a majority of the holders of the
Series A Convertible Preferred Stock if we want to authorize any
reclassification of the Series A Convertible Preferred Stock that would
adversely affect the preferences, special rights or privileges or voting power
of the Series A Convertible Preferred Stock. We may not create or issue any
class of stock ranking prior to the Series A Convertible Preferred Stock (other
than the existing Series B Convertible Preferred Stock) as to dividends or
distribution of assets, or create or issue any shares of any series of the
authorized preferred stock ranking prior to the Series A Convertible Preferred
Stock's rights to dividends or distribution on liquidation. The Series A
Convertible Preferred Stock shall have voting rights as if converted into Class
A Common Stock.
Arizona Corporate Takeover Act and Certain Charter Provisions
We are subject to the provisions of the Arizona Corporate Takeover Act. The
Arizona Corporate Takeover Act and certain provisions of our articles of
incorporation and bylaws, as summarized in the following paragraphs, may have
the effect of discouraging, delaying, or preventing hostile takeovers (including
those that might result in a premium over the market price of our common stock),
or discouraging, delaying, or preventing changes in control or management of our
company.
Arizona Corporate Takeover Act
Article 1 of the Arizona Corporate Takeover Act is intended to restrict
"greenmail" attempts by prohibiting us from purchasing any shares of our capital
stock from any beneficial owner of more than 5% of the voting power of our
company at a per share price in excess of the average market price during the 30
trading days prior to the purchase, unless
o the 5% owner has beneficially owned the shares to be purchased for a
period of at least three years prior to the purchase;
o a majority of our shareholders (excluding the 5% owner, its affiliates or
associates, and any officer or director of our company) approves the
purchase; or
o we make the offer available to all holders of shares of our capital stock.
Article 2 of the Arizona Corporate Takeover Act is intended to discourage the
direct or indirect acquisition by any person of beneficial ownership of our
shares (other than an acquisition of shares from us) that would constitute a
control share acquisition. A "control share acquisition" is defined as an
acquisition of shares by any person, when added to other shares of our company
beneficially owned by such person, immediately after the acquisition entitles
such person to exercise or direct the exercise of
o at least 20% but less than 33 1/3%;
o at least 33 1/3% but less than or equal to 50%; or
o more than 50% of the voting power of our capital stock.
The Arizona Corporate Takeover Act (1) gives our shareholders other than any
person that makes or proposes to make a control share acquisition or our
company's directors and officers the right to limit the voting power of the
shares acquired by the acquiring person that exceed the threshold voting ranges
described above, other than in the election of directors, and (2) gives us the
right to redeem such shares from the acquiring person at a price equal to their
fair market value under certain circumstances.
Article 3 of the Arizona Corporate Takeover Act is intended to discourage us
from entering into certain mergers, consolidations, share exchanges, sales or
other dispositions of our assets, liquidation or dissolution of our company,
reclassification of securities, stock dividends, stock splits, or other
distribution of shares, and certain other transactions with any interested
shareholder (as defined in the takeover act) or any of the interested
shareholder's affiliates for a period of three years after the date that the
interested shareholder first acquired the shares of common stock that qualify
such person as an interested shareholder, unless either the business combination
or the interested shareholder's acquisition of shares is approved by a committee
of our Board of Directors (comprised of disinterested directors or other
persons) prior to the date on which the interested shareholder first acquired
the shares that qualify such person as an interested shareholder. In addition,
Article 3 prohibits us from engaging in any business combination with an
interested shareholder or any of the interested shareholder's affiliates after
such three-year period unless:
o the business combination or acquisition of shares by the
interested shareholder was approved by our Board of Directors
prior to the date on which the interested shareholder acquired
the shares that qualified such person as an interested
shareholder;
o the business combination is approved by our shareholders
(excluding the interested person or any of its affiliates) at
a meeting called after such three-year period; or
o the business combination satisfies each of certain statutory
requirements.
Article 3 defines an "interested shareholder" as any person (other than us and
our subsidiaries) that either (a) beneficially owns 10% or more of the voting
power of our outstanding shares, or (b) is an affiliate or associate of our
company and who, at any time within the three-year period preceding the
transaction, was the beneficial owner of 10% or more of the voting power of our
outstanding shares.
Certain Charter Provisions
In addition to the provisions of the Arizona Corporate Takeover Act described
above, our articles of incorporation and bylaws contain a number of provisions
relating to corporate governance and the rights of shareholders. These
provisions include the following:
o the authority of our Board of Directors to fill vacancies on the Board
of Directors;
o the authority of our Board of Directors to issue preferred stock in
series with such voting rights and other powers as our Board of
Directors may determine;
o a provision that, unless otherwise prohibited by law, special meetings
of the shareholders may be called only by our Board of Directors, or by
holders of not fewer than 10% of all shares entitled to vote at the
meeting; and
o a provision for cumulative voting in the election of directors, pursuant
to Arizona law.
Shareholder Rights Plan
In addition to the shares of Class A Common Stock included in this Prospectus,
we are also registering the Right per our Shareholder Rights Plan attached to
each of these shares. The definition of a Right, as well as a description of our
Shareholder Rights Plan, follows.
We have established a shareholder rights plan under which each share of common
stock presently outstanding or which is issued hereafter prior to the
"distribution date," defined below, is granted one preferred share purchase
right, or a right, and each share of Series A or Series B preferred stock
presently outstanding or hereafter issued prior to the distribution date, which
is convertible into common stock of the Company, is granted such number of
rights equal to the number of common shares such preferred stock is convertible
in to. Each right entitles the registered holder to purchase from us one
one-hundredth (1/100th) of a share of the series C junior participating
preferred stock of the Company at a price of $25.00 per 1/100th of a series C
preferred share, subject to adjustment in the event of stock dividends and
similar events occurring prior to the distribution date. Each 1/100th of a
series C preferred share would have voting, dividend and liquidation rights
which are the approximate equivalent of one share of Class A common stock.
The rights are not exercisable until the distribution date, which is the earlier
to occur of (i) 10 days following the date, or the stock acquisition date, of a
public announcement that a person or group, or an acquiring person, has acquired
beneficial ownership, of 25% or more of the outstanding common stock of the
Company, or (ii) 10 business days, unless extended by our board, following the
commencement of a tender offer or exchange offer the consummation of which would
result in the beneficial ownership by a person or group of 25% or more of the
outstanding common stock.
Until the distribution date, the rights will be transferred with and only with
the common stock or the preferred stock, and the surrender for transfer of any
certificate for common stock or preferred stock will also constitute the
transfer of the rights associated with the shares represented by such
certificate. As soon as practicable following the distribution date, separate
certificates evidencing the rights will be mailed to holders of record of the
common stock and preferred stock as of the close of business on the distribution
date, and the rights will then become separately tradable.
In the event that any person or group becomes the beneficial owner of 25% or
more of the outstanding shares of common stock, other than pursuant to a tender
or exchange offer for all outstanding shares of common stock at a price and on
terms determined by a majority of our board who are not representatives,
affiliates or associates of an acquiring person, to be at a price which is fair
to our shareholders and otherwise in the best interests of our Company and our
shareholders, each holder of a right, other than rights beneficially owned by,
or in certain circumstances acquired from, the acquiring person or its
associates or affiliates, which will be void, will thereafter have the right to
receive upon exercise that number of shares of common stock, or, in certain
circumstances, cash, property or other securities of our Company, having a value
equal to two times the exercise price of the right. However, the rights are not
exercisable following any such event until such time as the rights are no longer
redeemable by us as set forth below.
In the event that after the stock acquisition date, (i) we engage in a merger or
consolidation in which we are not the surviving corporation or in which shares
of our common stock are converted or exchanged, other than a transaction
pursuant to a qualifying offer, or (ii) 50% or more of the Company's
consolidated assets or earning power are sold or transferred, proper provision
will be made so that each holder of a right, other than rights which have
previously been voided as set forth above, will thereafter have the right to
receive, upon exercise of the right, that number of shares of common stock of
the acquiring company which at the time of such transaction will have a market
value of two times the exercise price of the right.
At any time after a person or group becomes an acquiring person and prior to the
acquisition by such person or group of 50% or more of the outstanding common
stock, our board may exchange the rights, other than rights owned by such person
or group, which have become void, in whole or in part, at an exchange ratio of
one share of common stock, or 1/100th of a series C junior participating
preferred share, into a share of a class or series of our preferred stock having
equivalent rights, preferences and privileges, per right, subject to adjustment.
At any time until 10 days following the stock acquisition date, our board may
redeem the rights in whole, but not in part, at a redemption price of $.001 per
right, subject to adjustment.
Prior to the distribution date, the terms of the rights may without the consent
of the holders of the rights be amended by our board in any respect whatever,
except for an amendment that would change the redemption price, the exercise
price of the rights, the number of 1/100ths of a series C preferred share
purchasable upon exercise of the rights or the final expiration date of the
rights. After the distribution date, our board may amend the rights agreement to
cure any ambiguity or inconsistency, to make changes which do not adversely
affect the interests of holders of rights, excluding the interest of any
acquiring person, or to shorten or lengthen any time period under the rights
agreement; provided, however, that no amendment to adjust the time period
governing redemption may be made at such time as the rights are not redeemable.
The rights will expire on June 30, 2014, unless the rights are earlier redeemed
by us as described above.
Transfer Agent and Registrar
The transfer agent and registrar for our Class A Common Stock is Computershare
Trust Company, 350 Indiana Street, Suite 800, Golden, Colorado 80401.
LEGAL MATTERS
Certain legal matters with respect to the validity of the issuance of the Class
A Common Stock offered hereby will be passed upon by The Law Office of Steven P.
Oman, P.C., Scottsdale, Arizona. Said firm, and Steven P. Oman, owned, as of the
date of this prospectus, an aggregate of 248,249 shares of our Class A Common
Stock on an as-converted basis.
Lawyers and employees of The Law Office of Steven P. Oman, P.C. and entities
controlled by lawyers at The Law Office of Steven P. Oman, P.C. may engage in
transactions in the open market or otherwise to purchase or sell our securities
from time to time.
The Company is a party to litigation which is more fully described in our Form
10-KSB for the fiscal year ended June 30, 2007, filed with the SEC on October 1,
2007.
EXPERTS
The consolidated financial statements and related financial statement schedule
incorporated in this prospectus by reference from our Annual Report on Form
10-KSB for the fiscal year ended June 30, 2007 have been audited by Semple,
Marchal & Cooper, LLP, independent auditors, as stated in their reports, which
are incorporated herein by reference, and have been so incorporated in reliance
upon the reports of such firm given upon their authority as experts in
accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement on Form S-3 which was filed
with the Securities and Exchange Commission. This prospectus and any subsequent
prospectus supplements do not contain all of the information in the registration
statement. We have omitted from this prospectus some parts of the registration
statement as permitted by the rules and regulations of the SEC. In addition, we
file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any documents that we have filed
with the SEC at the SEC's Public Reference Room at 100 F Street NE, Washington,
D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference room. The SEC also maintains an Internet site
(http://www.sec.gov) that contains reports, proxy and information statements,
and other information regarding issuers that file electronically with the SEC.
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" information into this prospectus
and any subsequent prospectus supplements, which means that we can disclose
important information to you by referring you to another document filed
separately with the SEC. This prospectus incorporates by reference documents
which are not presented in this prospectus or delivered to you with it. The
information incorporated by reference is an important part of this prospectus
and any subsequent prospectus supplements. Information that we file subsequently
with the SEC, but prior to the termination of this offering, will automatically
update this prospectus and any outstanding prospectus supplements and supersede
this information. We incorporate by reference the documents listed below and
amendments to them. These documents and their amendments were previously filed
with the SEC.
The following documents filed by us with the SEC are incorporated by reference
in this prospectus:
1. The description of our Class A Common Stock set forth in our
registration statement on Form 10/A filed with the SEC on March 27, 1981, and
any subsequent amendment or report filed for the purpose of updating this
description.
2. Our Form 8-K filed with the SEC on June 27, 2006.
3. Our Definitive Proxy Statement filed with the SEC on December 28, 2006.
4. Our Form 8-K filed with the SEC on July 27, 2007.
5. Our Form 8-K filed with the SEC on August 9, 2007.
5.6. Our Form 8-K filed with the SEC on August 15, 2007.
7. Our Form 8-K filed with the SEC on September 21, 2007.
8. Our annual report on Form 10-KSB for the fiscal year ended June 30,
2007 filed with the SEC on October 1, 2007.
6.9. Our Form 8-K filed with the SEC on October 3, 2007.
10. Our quarterly report on Form 10-QSB for the quarter ended September 30,
2007 filed with the SEC on November 14, 2007.
7.11. Our Definitive Proxy Statement filed with the SEC on December 19, 2007.
12. Our Form 8-K filed with the SEC on December 27, 2007.
8.13. Our Form 8-K filed with the SEC on January 2, 2008.
9.14. Our Form 8-K filed with the SEC on January 23, 2008.
10.15. Our quarterly report on Form 10-QSB for the quarter ended December 31,
2007 filed with the SEC on February 14, 2008.
11.16. Our Form 8-K filed with the SEC on February 28,15, 2008.
17. Our Form 8-K filed with the SEC on February 29, 2008.
We also are incorporating by reference in this prospectus and any subsequent
prospectus supplements all reports and other documents that we file pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
prospectus and prior to the termination of this offering of common stock. These
reports and documents will be incorporated by reference in and considered to be
a part of this prospectus and any subsequent prospectus supplements as of the
date of filing of such reports and documents.
Upon request, whether written or oral, we will provide without charge to each
person to whom a copy of this prospectus is delivered, including any beneficial
owner, a copy of any or all of the information that has been or may be
incorporated by reference in this prospectus or any prospectus supplements but
not delivered with the prospectus or any subsequent prospectus supplements. You
should direct any requests for this information to the office of the Secretary,
at our principal executive offices, located at 15575 North 83rd Way, Suite 3,
Scottsdale, AZ 85260. The telephone number at that address is (480) 607-1010.
Any statement contained in a document which is incorporated by reference in this
prospectus or in any subsequent prospectus supplements will be modified or
superseded for purposes of this prospectus or any subsequent prospectus
supplements to the extent that a statement contained in this prospectus or
incorporated by reference in this prospectus or in any prospectus supplements or
in any document that we file after the date of this prospectus that also is
incorporated by reference in this prospectus or in any subsequent prospectus
supplements modifies or supersedes the prior statement. Any modified or
superseded statement shall not be deemed, except as so modified or superseded,
to constitute a part of this prospectus or any subsequent prospectus
supplements. Subject to the foregoing, all information appearing in this
prospectus is qualified in its entirety by the information appearing in the
documents incorporated by reference in this prospectus.
You should rely only on the information contained or incorporated by reference
in this prospectus or any applicable prospectus supplement. We have not
authorized anyone to provide you with any other information. The securities
offered in this prospectus may only be offered in states where the offer is
permitted, and we and the selling stockholders are not making an offer of these
securities in any state where the offer is not permitted. You should not assume
that the information in this prospectus or any applicable prospectus supplement
is accurate as of any date other than the dates on the front of these documents.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following is an itemization of all expenses (subject to future
contingencies) incurred or to be incurred by us in connection with the issuance
and distribution of the securities being registered. None of the following
expenses will be borne by the selling stockholders unless specifically indicated
below.
Registration fee $ 214
Printing expenses* $ 100
Accounting fees, legal fees and expenses* $ 4,500
Miscellaneous* $ 500
-------------------
Total* $ 5,314
* Estimated
Item 15. Indemnification of Directors and Officers.
The General Corporation Law of the State of Arizona allows corporations to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that he
or she is or was a director, officer, employee or agent of the corporation or is
or was serving at the request of the corporation as a director, officer,
employee, partner, trustee, or agent of another corporation, partnership, joint
venture, trust, other enterprise or employee benefit plan, unless it is
established that:
o the act or omission was material to the matter giving rise to the
proceeding and either was committed in bad faith or was the result of
active and deliberate dishonesty;
o the person actually received an improper personal benefit in money,
property or services; or
o in the case of any criminal proceeding, the person had reasonable cause
to believe that the act or omission was unlawful.
Under Arizona law, indemnification may be provided against judgments, penalties,
fines, settlements and reasonable expenses actually incurred by the person in
connection with the proceeding. The indemnification may be provided, however,
only if authorized for a specific proceeding after a determination has been made
that indemnification is permissible under the circumstances because the person
met the applicable standard of conduct. This determination is required to be
made:
o by the Board of Directors by a majority vote of a quorum
consisting of directors not, at the o time, parties to the
proceeding or, if a quorum cannot be obtained, then by a majority
vote of a committee of the board consisting solely of two or more
directors not, at the time, parties to the proceeding and who a
majority of the Board of Directors designated to act in the
matter;
o by special legal counsel selected by the board or board
committee by the vote set forth above, o or, if such vote cannot
be obtained, by a majority of the entire board; or
o by the stockholders.
If the proceeding is won by or in the right of the corporation, indemnification
may not be provided as to any proceeding in which the person is found liable to
the corporation.
An Arizona corporation may pay, before final disposition, the expenses,
including attorneys' fees, incurred by a director, officer, employee or agent in
defending a proceeding. Under Arizona law, expenses may be advanced to a
director or officer when the director or officer gives a written affirmation of
his or her good faith belief that he or she has met the standard of conduct
necessary for indemnification and a written undertaking to the corporation to
repay the amounts advanced if it is ultimately determined that he or she is not
entitled to indemnification. Arizona law does not require that the undertaking
be secured, and the undertaking may be accepted without reference to the
financial ability of the director or officer to repay the advance. An Arizona
corporation is required to indemnify any director who has been successful, on
the merits or otherwise, in defense of a proceeding for reasonable expenses. The
determination as to reasonableness of expenses is required to be made in the
same manner as required for indemnification.
Under Arizona law, the indemnification and advancement of expenses provided by
statute are not exclusive of any other rights to which a person who is not a
director seeking indemnification or advancement of expenses may be entitled
under any articles of incorporation, bylaw, agreement, vote of stockholders,
vote of directors or otherwise.
Our bylaws provide that we shall indemnify each director, officer or employee
o to the fullest extent permitted by the General Corporation Law
of the State of Arizona, or any similar provision or provisions of
applicable law at the time in effect, in connection with any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by
reason of the fact that he is or was at any time serving at the
request of the corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust,
other enterprise or employee benefit plan; and
o to the fullest extent permitted by the common law and by any
statutory provision other than the General Corporation Law of the
State of Arizona in connection with any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is
or was at any time a director, officer or employee of the
corporation, or is or was at any time serving at the request of
the corporation as a director, officer, or employee of another
corporation, partnership, joint venture, trust, other enterprise
or employee benefit plan.
Reasonable expenses incurred in defending any action, suit or proceeding
described above shall be paid by the corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such director, officer or employee to repay such amount to the
corporation if it shall ultimately be determined that he is not entitled to be
indemnified by us.
In addition to the general indemnification described above, Arizona law permits
corporations to include any provision expanding or limiting the liability of its
directors and officers to the corporation or its stockholders for money damages,
but may not include any provision that restricts or limits the liability of its
directors or officers to the corporation or its stockholders:
o to the extent that it is proved that the person actually received an
improper benefit or profit in money, property, or services for the
amount of the benefit or profit in money, property or services
actually received; or
o to the extent that a judgment or other final adjudication adverse to
the person is entered in a proceeding based on a finding in the
proceeding that the person's action, or failure to act, was the result
of active and deliberate dishonesty and was material to the cause of
action adjudicated in the proceeding.
We have adopted, in our articles of incorporation, a provision that eliminates
and limits the personal liability of each of our directors and officers to the
full extent permitted by the laws of the State of Arizona.
Item 16. Exhibits.
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
5 Opinion of Law Office of Steven P. Oman, P.C.
23.1 Consent of Law Office of Steven P. Oman, P.C. (included in
Exhibit 5).
23.2 Consent of Semple, Marchal & Cooper, LLP, Independent
Auditors.
24.1 Power of Attorney. Located following signature page of
this Registration Statement.
99.1 Tenix Note Agreement dated 2/11/2008
99.1 Agreement and Schedules - Filed as Exhibit to Form 8-K filed
on 6/27/2006
99.1 Amended and Restated Loan and Security Agreement -
Filed as Exhibit to Form 8-K filed on 12/27/2007
99.1 Amendment No. 3 to Loan Agreement - Filed as Exhibit to Form
8-K filed on 1/2/2008
99.1 Purchase Agreement - Filed as Exhibit to Form 8-K filed on
1/23/2008
99.1 First Amendment to Restated Loan and Security Agreement -
Filed as Exhibit to Form 8-K filed on 2/29/2008
99.1 Stock Purchase Agreement - Offering I - Filed as Exhibit to
Form 8-K filed on 8/9/2007
99.2 Registration Rights Agreement - Offering I - Filed as
Exhibit to Form 8-K filed on 8/9/2007
99.3 Warrant Agreement - Offering I - Filed as Exhibit to Form
8-K filed on 8/9/2007
99.4 Form of Private Placement Agreement - Offering II -
Filed as Exhibit to Form 8-K filed on 8/9/2007
99.5 Declaration of Registration Rights Agreement - Offering II -
Filed as Exhibit to Form 8-K filed on 8/9/2007
99.6 Warrant Agreement - Offering II - Filed as Exhibit to Form
8-K filed on 8/9/2007
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a post-effectivepost-
effective amendment to this registration statementstatement:
(A) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(B) To reflect in the prospectus any facts or events which,
individually or together, represent 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
percent change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement;
(C) To include any additional or changed material information with
respect to the plan of distribution;
provided, however, that paragraphs (1)(A), (1)(B) and (1)(C) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant under the
Exchange Act, or is contained in a form of prospectus filed pursuant to Rule
424(b) that is deemed part of and included in the registration statement
material.
(2) That, for the purpose of determining any liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(4) That, for the purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to Section 13(a) or
15(d) of the Exchange Act 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.
(5) That, for purposes of determining any liability under the Securities Act to
any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a
registration statement relating to an offering shall be deemed to be part of and
included in the registration statement as of the date it was first used after
effectiveness. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made in a
document incorporated or deemed incorporated by reference into the registration
statement or prospectus that is part of the registration statement will, as to a
purchaser with a time of contract of sale prior to such first use, supersede or
modify any statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any document immediately
prior to such date of first use.
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 foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the SEC 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.
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 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 Scottsdale, State of Arizona, on February 28,March 31, 2008.
ALANCO TECHNOLOGIES, INC.
an Arizona corporation
By: /s/ Robert R. Kauffman
Robert R. Kauffman
Chief Executive Officer
(Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature
appears below constitutes and appoints jointly and severally, Robert R. Kauffman
and John A. Carlson, and each one of them, as his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including pre-effective and
post-effective amendments) to this registration statement, and to sign any
registration statement and amendments thereto for the same offering pursuant to
Rule 462(b) under the Securities Act of 1933, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all which said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do, or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act, this registration statement
has been signed by the following persons in the capacities and on the dates
indicated:
Signature Title Date
/s/ Robert R. Kauffman Chief Executive Officer
---------------------- (Principal Executive
Robert R. Kauffman Officer), Director and February 28,March 31, 2008
Chairman of the Board
/s/ John A. Carlson Chief Financial Officer
------------------- (Principal Financial
John A. Carlson Officer and Principal February 28,March 31, 2008
Accounting Officer)
and Director
/s/ Harold S. Carpenter
- ------------------------
Harold S. Carpenter Director February 28,March 31, 2008
/s/ Donald E. Anderson
- -----------------------
Donald E. Anderson Director February 28,March 31, 2008
/s/ James T. Hecker
- --------------------
James T. Hecker Director February 28,March 31, 2008
/s/ Thomas C. LaVoy
- --------------------
Thomas C. LaVoy Director February 28,March 31, 2008
/s/ Timothy P. Slifkin
- -----------------------
Timothy P. Slifkin Director February 28,March 31, 2008
EXHIBIT 5
Law Office of
STEVEN P. OMAN, P.C.
8664 E. Chama Road
Telephone:(480) 348-1470 Scottsdale, Arizona 85255 Facsimile:(480) 348-1471
e-mail: soman@omanlaw.net
February 28,March 31, 2008
Alanco Technologies, Inc.
15575 N. 83rd Way, Suite 3
Scottsdale, Arizona 85260
Re: Registration Statement on Form S-3
Gentlemen:
We have acted as counsel to Alanco Technologies, Inc. (the "Company") in
connection with the registration by the Company of 5,570,238 shares of its Class
A Common Stock (the "Shares") that may be offered and sold by certain
stockholders of the Company from time to time and the Rights attached to said
common stock pursuant to the Company's Shareholder Rights Plan. We have assisted
the Company in the preparation of a Registration Statement on Form S-3 (the
"Registration Statement") filed on the date hereof by the Company with the
Securities and Exchange Commission (the "Commission") pursuant to the Securities
Act of 1933, as amended (the "Securities Act"). This opinion is provided
pursuant to the requirements of Item 16 of Form S-3 and Item 601(b) (5) of
Regulation S-B.
In connection with the foregoing, we have examined, among other things, the
Registration Statement and the Company's Second Restated Articles of
Incorporation, the Company's Bylaws, as amended, Resolutions of the Company's
Board of Directors, the Company's Shareholder Rights Plan, and such other
documents, including copies of documents containing a description of the rights,
privileges and liabilities of the Preferred Stock of the Company and warrant
agreements.
In connection with our review, we have assumed: (i) the genuineness of all
signatures; (ii) the authenticity of all documents submitted to us as originals
and the conformity to original documents of all documents submitted to us as
certified or photostatic copies; and (iii) the proper issuance and accuracy of
certificates of officers and agents of the Company and public officials.
Based on the foregoing, we are of the opinion that (i) 800,000 of the Shares
issued as of the date of this letter were validly issued, fully paid and
nonassessable at the time of their issuance, and (ii) when 4,770,238 Shares are
issued out of the Company's duly authorized Class A Common Stock pursuant to the
provisions of the existing warrant agreements, conversion of the Series A
Preferred Stock, conversion of debt and the Company has received the
consideration therefor in accordance with the terms of the warrant agreements,
the Shares so issued will be validly issued, fully paid and non-assessable. In
addition, we are of the opinion that the Rights attached to the Shares pursuant
to the Company's Shareholder Rights Plan represent valid and binding obligations
of the Company in accordance with the Company's Shareholder Rights Plan.
This opinion is limited to the corporate laws of the State of Arizona, including
its constitution and judicial interpretations, and we are expressing no opinion
as to the effect of the laws of any other jurisdiction. This opinion is rendered
as of the date hereof to be effective as of the effective date of the
Registration Statement, and we undertake no obligation to advise you of any
changes in applicable law or other matters that may come to our attention after
said effective date.
We hereby consent to be named in the Registration Statement under the heading
"Legal Matters" as attorneys who passed upon the validity of the Shares and to
the filing of a copy of this opinion as Exhibit 5 to the Registration Statement.
Very truly yours,
LAW OFFICE OF STEVEN P. OMAN, P.C.
By: /s/ Steven P. Oman
------------------
Steven P. Oman
EXHIBIT 23.2
Consent of Independent Registered Public Accounting Firm
Alanco Technologies, Inc. and Subsidiaries
We hereby consent to the incorporation by reference in the S-3 registration
statement of our report dated September 28, 2007, included in the Company's Form
10-KSB for the year ended June 30, 2007, and to all references to our firm
included in the registration statement.
/S/ SEMPLE, MARCHAL, & COOPER, LLP
Phoenix, Arizona
February 28,March 31, 2008