As filed with the Securities and Exchange Commission on November 15, 2001
Registration No. 333-72132
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM S-3
AMENDMENT NO. 1
REGISTRATION STATEMENT
UNDER
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THE SECURITIES ACT OF 1933
LOG ON AMERICA, INC.
(Name of Issuer in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
(Primary Standard Industrial Classification Code Number)
05-0496586
(I.R.S. Employee Identification No.)
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One Cookson Place, 6th Floor
Providence, Rhode Island 02903
(401) 459-6298
(Address and telephone number of principal executive
offices and principal place of business)
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David R. Paolo, President
Log On America, Inc.
One Cookson Place, 6th Floor
Providence, Rhode Island 02903
(401) 459-6298
(Name, address and telephone number of agent for service)
Copies of all communications to:
John H. Shin, Esq.
Silverman, Chernis, Shin & Byrne, P.C.
381 Park Avenue South, Suite 1601
New York, New York 10016
(212) 779-8600
Approximate date of proposed sale to the public: From time to time or at
one time after the effective date 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, as amended ("Securities Act"), other than securities offered only in
connection with dividend or 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, please 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 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. [ ]
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CALCULATION OF REGISTRATION FEE
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Proposed Maximum
Title of Each Class of Amount to be Offering Price Proposed Maximum Amount of
Securities to be Registered Registered(1) Per Share (2) Aggregate Offering Price Registration Fee
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Common Stock 1,666,667 $4.50 $7,500,001.50 $1,875.00
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TOTAL 1,666,667 $4.50 $7,500,001.50 $1,875.00
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(1) For the purpose of estimating the number of shares of common stock to
be included in this registration statement, the registrant included
1,666,667 shares representing the number of shares of common stock
issuable upon the conversion of 7,500 series B preferred stock, determined
as if the stock was converted in full, without regard to any limitations
on conversion, at the conversion price of $4.50, based on dividing the
stated value of $1,000 by the conversion price. Pursuant to rule 416 of
the Securities Act, this registration statement also covers such
indeterminable additional shares as may become issuable as a result of any
future stock splits, stock dividends or similar transactions. The
registration statement does not cover an indeterminate number of shares
due to adjustments to the conversion prices.
(2) The maximum offering price per share is determined by the series B
preferred stock conversion price of $4.50 per share.
The registrant hereby amends this registration statement on the 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, as amended, or until the registration statement
shall become effective on a date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
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LOG ON AMERICA, INC.
This prospectus relates to the offer and sale of up to 1,666,667 shares of
common stock which are issuable upon the conversion of our series B preferred
stock.
Since the series B preferred stock provides for conversion into shares of
common stock without further payments to us, we will not receive any of the
proceeds from the conversion of the series B preferred stock.
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Please see the risk factors beginning on page 8 to read about certain
factors you should consider before converting your series B preferred stock.
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Our common stock was listed on the Nasdaq National Market under the
symbol, LOAX. Our common stock was delisted effective November 1, 2001 and is
presently included for quotation on the OTC Bulletin Board, under the symbol
LOAX. On November 13, 2001, the closing sale price of a share of our common
stock, as reported on the OTC Bulletin Board, was $.16.
The mailing address of our principal executive offices is One Cookson
Place, 6th Floor Providence, Rhode Island 02903, and the telephone number is
(401) 459-6298.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined that
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is _______, __, 2001
Where you can find more information about Log On
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You may read and copy
any document we file at the Securities and Exchange Commission's public
reference room in Washington, D.C., New York, New York, and Chicago, Illinois.
Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further
information on the public reference rooms. Our filings are also available at the
Commission's web site, http://www.sec.gov.
The terms of the series B preferred stock are only briefly summarized in
this prospectus. Shareholders may obtain further information concerning the
rights, preferences and terms of the series B preferred stock in more detail by
reviewing the exhibits attached to this registration statement.
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Prospectus Summary
Because this is a summary, it may not contain all information that may be
important to you. You should read this entire prospectus, including the
information incorporated by reference and the financial data and related notes,
before making an investment decision. When used in this prospectus, the terms
"we," "our" and "us" refer to Log On American, Inc., and not to the selling
stockholders.
Log On America, Inc.
Log On America is a solutions-centric Integrated Network Services Provider
("INSP"), offering digital IP transport and integrated network solutions to
individuals and businesses throughout New England. Our core products include
IT/Telecom/PBX managed services, high-speed Internet access, web and data
hosting, office productivity and security management application services, local
and long distance dial-tone and call management features utilizing a wide range
of system integration, broadband access, ASP technologies and partnerships.
We have determined that the traditional competitive local exchange carrier /
direct local exchange carrier service delivery models do not adequately serve a
large portion of the growing communications marketplace in a cost effective
manner. We also have recognized that traditional communications products do not
fulfill the competitive business requirements of many of the fastest growing
business segments. Some of these segments have not been addressed nor identified
by the existing service providers. Two of the market segments, which will be
addressed by our highly leveraged, fully integrated end-to-end solutions based
business and management model will be the small to medium size business solution
market ("SMB markets") and the small office/home office market ("SOHO markets").
We have initiated penetrating target markets with assets that we already
possess, and we intend to build our delivery platform and our sales teams to
target the higher-end small to medium size business solution markets. Using this
approach, we should begin to reduce our EBITDA losses at an accelerated pace,
establish incumbency in the local targeted markets, precisely build-out our
infrastructure, strategically utilize capital and operations funding, and
position ourselves as the smart solutions-based delivery provider.
Nasdaq Delisting.
On May 3, 2001, we received a Nasdaq Staff determination indicating that
we failed to comply with certain requirements for continued listing on the
Nasdaq National Market. Specifically, the Nasdaq Staff notified us that we had
failed to maintain the $1 minimum bid price per share, as required for continued
listing on the Nasdaq National Market under Nasdaq Maketplace Rule 4450(a)(5).
On August 9, 2001, we were granted a formal oral hearing before a panel
authorized by The Nasdaq Stock Market. On August 29, 2001, prior to our formal
hearing, we received an additional Nasdaq Staff determination
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indicating that we currently did not comply with the tangible
assets/shareholders' equity/market capitalization/total assets and total revenue
requirement as set forth in Nasdaq Marketplace Rules 4450(a)(03) and
4450(b)(01). On October 31, 2001, we received notice from Nasdaq that the panel
has determined that we do not comply with the tangible assets or shareholder'
equity requirements. Accordingly, our common stock was delisted effective
November 1, 2001. Our common stock is presently included for quotation on the
OTC Bulletin Board.
Series B Convertible Preferred.
In August 2001, we settled our lawsuits against Credit Suisse First Boston
Corporation ("CSFB") and Marshall Capital Management Inc. ("Marshall"), the
holder of one half of our series A preferred stock. Pursuant to the terms of the
settlement, CSFB paid us $3,250,000 and Marshall exchanged its series A
preferred stock and warrants for 297,102 shares of common stock for a new series
B convertible preferred stock with a face value of $7,500,000, which shares
underlying the series B preferred stock are made a part of this registration
statement.
The series B preferred stock is convertible into our common stock at a fixed
conversion rate of $4.50 per share for a total of 1,666,667 common shares. We
will continue our pending lawsuit against the two remaining holders of our
series A preferred stock.
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Risk Factors
You should carefully consider the following factors and other information
in this prospectus before deciding to invest in shares of our common stock. This
prospectus contains forward-looking statements which can be identified by the
use of words such as "intend," "anticipate," "believe," "estimate," "project,"
or "expect" or other similar statements. These statements discuss future
expectations, contain projections of results of operations or of financial
condition, or state other "forward-looking" information. When considering these
statements, you should keep in mind the risk factors described below and other
cautionary statements in this prospectus. The risk factors described below and
other factors noted throughout this prospectus, including certain risks and
uncertainties, could cause our actual results to differ materially from those
contained in any forward-looking statement.
We have incurred net losses since our inception and anticipate continuing
losses.
To date, we have had limited revenues and have not shown a profit in our
operations. As of June 30, 2001, our accumulated deficit was approximately
$49,405,613. Although we intend to expand our marketing of products and
services, we may not be able to achieve these objectives or, if these objectives
are achieved, we may never be profitable. If profitability is achieved, we may
not be able to sustain it. We cannot predict when, or if, profitability might be
achieved.
We have a short operating history upon which you can judge our prospects.
We commenced our business in 1992 but did not produce significant revenues until
1996, therefore, we have a limited operating history upon which you can evaluate
our business and prospects. Our historical data is of limited value in
projecting future operating results. You must consider our business in light of
the risks, expenses and problems frequently encountered by companies with
limited operating histories.
We require substantial funds and may need to raise additional capital in the
future.
As a result of significant capital outlays our existing capital resources may
not be sufficient to fund our operating deficits through 2001. As a result, we
may require additional funding through commercial bank borrowings, equipment
financing or the private or public sale of equity or debt securities. If any
future financing involves the sale of our equity securities, the shares of our
common stock held by our shareholders would be substantially diluted. If we
incur indebtedness or otherwise issue debt securities, we will be subject to
risks associated with indebtedness, including the risk that interest rates may
fluctuate and the possibility that we may not be able to pay principal and
interest on the indebtedness.
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Failure to raise additional financing or funding may have a material impact on
our operations.
We may be unsuccessful in raising additional financing or funding may not be
available or made available on commercially reasonable terms. If we fail to
raise sufficient funds, we may need to modify, delay or abandon some of the
planned future expansion or expenditures, which could have a material adverse
effect on the business, prospects, financial condition and results of
operations, including, possibly requiring us to curtail or cease operations.
We have not honored requests for conversion of our series A preferred stock,
which could subject us to substantial and additional penalties for failing to do
so.
We have not honored requests for conversion of our series A preferred stock nor
registered the common stock issuable upon the conversion of the series A
preferred stock. In response, the holders of the series A preferred stock
demanded that we redeem the series A preferred stock.
The holders of our series A preferred stock asserted that they are entitled to
redemption of their preferred stock under our certificate of designations,
preferences and rights of series A preferred stock by reason of the our public
announcement that we will not honor conversion requests and of the failure by us
to have our shares of common stock underlying the series A preferred stock and
their related warrants registered under Securities Act of 1933. We have refused
to honor the redemption requests upon the basis set forth in our action against
the series A preferred holders. The holders of our presently outstanding series
A preferred stock have requested an aggregate redemption amount of $10.8
million.
If the holders of our series A preferred stock are successful in defending the
pending actions, the holders could convert our series A preferred stock into
common stock or compel us to redeem the series A preferred stock. If the holders
of the series A preferred stock were to convert their preferred stock into
common stock and sell such shares of common stock into the market, such sales
could have a negative effect on the market price of our common stock and will
dilute your holdings in our common stock. Dilution or the potential for dilution
could also materially impair our ability to raise capital through the future
sale of equity securities and have a material adverse effect on our financial
condition. Moreover, we may not be in a position to redeem the series A
preferred stock and could be subject to substantial and additional penalties for
failing to do so.
Risks relating to the conversion of our Series A preferred stock could result in
a substantial number of additional shares being issued if the market price of
our common stock declines.
Each share of our series A preferred stock, is convertible into a number of
shares of common stock equal to the quotient of $1,000 plus (.08)(N/365)($1,000)
where N is equal to the number of days from the issuance of such series A stock
through and including the date of conversion divided by (ii) the applicable
conversion price, which price is equal to the lower of (i) 90% of the lowest
closing bid price of the common stock during the three consecutive trading days
ending on and including the date
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of the conversion or (ii) during the first 182 days after the issuance, $24.62
and (y) anytime after the first 182 days after the issuance of the series A
preferred stock, the lower of the amount in the immediately preceding clause (x)
or 120% of the average closing bid prices of the common stock during the ten
consecutive trading days immediately preceding the date which is 182 days after
the issuance of the series A preferred stock.
As a result, the lower the price of our common stock at the time a holder of our
series A preferred stock converts, the greater the number of shares of common
stock the holder will receive. To the extent the series A preferred stock is
converted, a significant number of additional shares of common stock may be sold
into the market, which could decrease the price of our common stock due to the
additional supply of shares relative to demand in the market. In that case, we
could be required to issue an increasingly greater number of shares of our
common stock upon future conversions of the series A preferred stock, sales of
which could further depress the price of our common stock. If the sale of a
large amount of shares of our common stock upon conversion of the series A
preferred stock results in a decline in the price of our common stock, this
event could encourage short sales of our common stock. Short sales could place
further downward pressure on the price of our common stock. The conversion of
the series A preferred stock may result in substantial dilution to the interests
of other holders of our common stock. Even though a selling stockholder may not
convert any portion of the series A preferred stock or their related warrants if
doing so will cause it or any of its affiliates to own more than 4.99% of our
total outstanding common stock (excluding for purposes of such determination
shares of common stock deemed beneficially owned through ownership of
unconverted shares of the series A preferred stock or unexercised related
warrants), this restriction does not prevent a selling stockholder from selling
a substantial number of shares in the market. By periodically selling shares
into the market, an individual selling stockholder could eventually sell more
than 4.99% of our outstanding common stock while never holding more than 4.99%
at any specific time.
Settlement of one half of our Series A Convertible Preferred for Series B
Convertible Preferred.
In August 2001, we settled our lawsuit against Credit Suisse First Boston
Corporation ("CSFB") and Marshall Capital Management Inc. ("Marshall"), the
holder of one half of our series A preferred stock. CSFB paid us $3,250,000 and
Marshall exchanged its series A preferred stock and warrants for 297,102 shares
of common stock for a new series B convertible preferred stock with a face value
of $7,500,000, which shares underlying the series B preferred stock are made a
part of this registration statement. The Series B Preferred Stock is convertible
into our common stock at a fixed conversion rate of $4.50 per share for a total
of 1,666,667 common shares. We will continue our pending lawsuit against the two
remaining holders of our series A preferred stock.
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We may issue additional shares, which would reduce your ownership percentage and
dilute the value of your shares.
Certain events over which you have no control over could result in the issuance
of additional shares of our common stock, which would dilute your ownership
percentage in us. We may issue additional shares of common stock or preferred
stock to raise additional capital or finance acquisitions or upon the exercise
or conversion of outstanding options and warrants. As of November 13, 2001,
there were outstanding warrants and options to acquire up to approximately
3,110,000 additional shares of common stock at prices ranging from $.28 to
$17.23 per share. If exercised, these securities will reduce your percentage
ownership of common stock and could dilute the value of your shares. Assuming no
exercise of outstanding warrants, options or conversion of our preferred stock,
of the 9,832,308 shares of common stock to be outstanding upon completion of
this offering, approximately 9,832,308 will be immediately tradeable without
restriction under the Securities Act. "Affiliates," as defined in the Securities
Act, must always sell their shares in accordance with the terms, including
volume limitations, of Rule 144 under the Securities Act.
Conversion of series B preferred stock and sales of common stock by our selling
stockholders may depress the price of our common stock and substantially dilute
your stock.
If the selling stockholders of our remaining preferred stock and our series B
preferred stock, which shares underlying the series B preferred stock are made a
part of this registration statement, were to convert all of the shares of series
B preferred stock they own, they would acquire 1,666,667 shares of our common
stock. If the selling stockholders were to sell these shares of our common stock
into the market, such sales could have a negative effect on the market price of
our common stock and will dilute your holdings in our common stock.
Additionally, dilution or the potential for dilution could materially impair our
ability to raise capital through the future sale of equity securities.
Nasdaq delisting may affect the price of our common stock and your ability to
sell your shares.
On May 3, 2001, we received a Nasdaq Staff determination indicating that we
failed to comply with certain requirements for continued listing on the Nasdaq
National Market. Specifically, the Nasdaq Staff notified us that we had failed
to maintain the $1 minimum bid price per share, as required for continued
listing on the Nasdaq National Market under Nasdaq Maketplace Rule 4450(a)(5).
On August 9, 2001, we were granted a formal oral hearing before a panel
authorized by The Nasdaq Stock Market. On August 29, 2001, prior to our formal
hearing, we received an additional Nasdaq Staff determination indicating that we
currently did not comply with the tangible assets/shareholders' equity/market
capitalization/total assets and total revenue requirement as set forth in Nasdaq
Marketplace Rules 4450(a)(03) and 4450(b)(01). On October 31, 2001, we received
notice from Nasdaq that the panel has determined that we do not comply with the
tangible assets or shareholder' equity requirements. Accordingly, our common
stock was delisted effective November 1, 2001. Our common stock is presently
included for quotation on the OTC Bulletin Board. The delisting can result in a
significantly less liquid market in our common stock, and a stockholder may find
it even more difficult to dispose of,
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or to obtain accurate quotations as to the price of, the common stock. In
addition, depending on several factors including, among others, the future
market price of our common stock, these securities could become subject to the
so-called "penny stock" rules that impose additional sales practice and market
making requirements on broker-dealers who sell and/or make a market in such
securities. These factors could affect the ability or willingness of
broker-dealers to sell and/or make a market in our common stock and the ability
of purchasers of our common stock to sell their shares in the secondary market.
The delisting can also negatively affect our ability to raise additional capital
in the future.
We are dependent upon the continued growth in the use of the Internet.
Our future operating results are highly dependent upon the increased use of the
Internet by small to medium size business solution market and the small
office/home office market consumers for information, publication, distribution
and commerce. Critical issues concerning the commercial use of the Internet,
including security, reliability, cost, ease of use, access, and quality of
service, remain unresolved and may impact the growth of Internet use. If
widespread commercial use of the Internet does not develop, our business,
results of operations and financial condition will be negatively affected.
We depend on the continued development and reliability of Internet
infrastructure.
We depend on the reliability, speed, data capacity, ease of use, accessibility
and security of the Internet as well as its continued development and acceptance
for commercial use. The success of our services and products depend, in large
part, upon the further development of an infrastructure for providing Internet
access and services. The infrastructure or complementary services necessary to
make the Internet a viable commercial marketplace may not develop, or the
Internet may not become a viable commercial marketplace for services and
products such as the services that we currently offer. If this happens, our
business, results of operations and financial condition will be negatively
affected.
We depend on our computer infrastructures and will be adversely affected by any
failure or damage to our systems.
Substantially all of our communications and computer hardware is located at our
offices in Providence, Rhode Island. Our system is vulnerable to damage from
fire, flood, earthquakes, power loss, telecommunications failures, break-ins and
similar events. Moreover, we do not presently have a disaster recovery plan,
carry any business interruption insurance or have any secondary "off-site"
systems or a formal disaster recovery plan. A system failure at our present
location would have a major adverse affect on the performance of our services.
Our services are susceptible to disruptive problems.
Despite our implementation of network security measures, our servers are
vulnerable to computer viruses, physical or electronic break-ins and similar
disruptive problems. Computer viruses, break-ins
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or other problems caused by third parties could lead to interruptions, delays or
cessation in service to users of our services and products. Any of these risks
could have a negative effect on our business, results of operations and
financial condition.
We may be held liable for online content provided by third parties.
Materials may be downloaded and distributed to others by the on-line or Internet
services offered by us or the Internet service providers with which we have a
relationship. If this happens, claims may be made against us for defamation,
negligence, copyright or trademark infringement, or some other reason. These
claims or the imposition of liability may have a negative effect on our
business, results of operations and financial condition.
Internet security concerns could hinder e-commerce and the demand for our
products and services.
A significant barrier to e-commerce and communications over the Internet has
been the need for the secure transmission of confidential information. Although
we are not aware of any attempts by programmers or "hackers" to penetrate our
network security, these actions could occur in the future. A party who is able
to penetrate our network security could misuse our users' personal information
or credit card information and users might sue us or bring claims against us.
Concerns over the security of Internet transactions and the privacy of users may
also inhibit the growth of the Internet generally, particularly as a means of
conducting commercial transactions. Security breaches or the inadvertent
transmission of computer viruses could expose us to a risk of loss or litigation
and possible liability. Our business, results of operations, and financial
condition could be negatively effected if contractual provisions attempting to
limit our liability in these areas are not successful or enforceable, or if
other parties do not accept these contractual provisions as part of our
agreements with them.
We need to manage our growth effectively.
Our growth has placed, and will continue to place, a significant strain on our
managerial, operational and financial resources. We need to:
o improve our financial and management controls, reporting systems and
procedures;
o expand, train and manage our work force for marketing, sales and support,
product development, site design, and network and equipment repair and
maintenance; and
o manage multiple relationships with various customers, strategic partners
and other third parties.
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Government regulation could add additional costs to doing business on the
Internet.
There are currently few laws or regulations that specifically regulate
communications or commerce on the Internet. However, laws and regulations may be
adopted in the future that address issues such as user privacy, pricing, and the
characteristics and quality of products and services. Any new laws or
regulations relating to the Internet could adversely affect our business.
We face significant competition from Internet service providers and others.
We compete with a wide range of service providers for each of the services that
we provide. Virtually all markets for voice, high-speed access, and video
services are extremely competitive, and we expect competition to intensify in
the future. We often face significant competition from larger, better-financed
national DSL companies, and cable companies. We compete directly with providers,
which have historically dominated their respective local telephone and cable
television markets.
Our operations depend on our ability to maintain favorable relationships with
third party suppliers.
We depend on third-party suppliers for our access to the Internet through leased
telecommunications lines, such as Verizon, MCI Worldcom, Inc./UUNET. Although we
believe this access is available from several alternative suppliers, we may not
be able to obtain substitute services from other providers at reasonable or
comparable prices or in a timely manner. We are also dependent upon the regional
telephone operating company, Verizon, to provide installations of circuits and
to maintain those circuits. Substantial failure by any of these third parties to
perform could negatively affect our business, results of operations, and
financial condition.
The loss of the services of our chief executive officer, David R Paolo, could
hurt our chances for success.
We are dependent on the continued employment and performance of our executive
officers and key employees, particularly of our CEO, David R. Paolo. The loss of
Mr. Paolo, or his incapacity to perform his duties, would have a materially
negative effect upon our activities and prospects. The loss of the services of
any of our key employees or officers could adversely affect on our business.
Our management has substantial control over us and investors in this offering
may have no effective voice in our management.
Our directors and executive officers possess substantial control over our
operations. This control may allow them to amend corporate filings, elect a
majority of our board of directors, and substantially control all matters
requiring approval by our shareholders, including approval of significant
corporate transactions. Management will also have the ability to delay or
prevent a change in our control and to discourage a potential acquirer for us or
our securities. If you purchase our common stock, you may
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have no effective voice in our management.
Disclosure Regarding Forward-Looking Statements
The discussion in this prospectus contains forward-looking statements that
involve substantial risks and uncertainties. In some cases you can identify
these statements by forward-looking words such as "anticipate," "estimate,"
"project," "intend," and similar expressions which we have used to identify
these statements as forward- looking statements. These statements appear
throughout this prospectus and are statements regarding our intent, belief, or
current expectations, primarily with respect to the operations of Log On
American, Inc., or related industry developments. You are cautioned that any
such forward-looking statements do not guarantee future performance and involve
risks and uncertainties, and that actual results could differ materially from
those discussed here, including "Risk Factors," and in the documents
incorporated by reference in this prospectus.
Dividend Policy
We have not paid any cash dividends since its inception and we do not
anticipate paying cash dividends in the foreseeable future.
Description of Securities
The following section does not purport to be complete and is qualified in
all respects by reference to the detailed provisions of our certificate of
incorporation and by-laws, as amended, copies of which have been filed with our
registration statement of which this prospectus forms a part.
Our authorized capital stock consists of: (i) 50,000,000 shares of common
stock, $.01 par value; and (ii) 15,000,000 shares of preferred stock, 35,000
shares of which are designated as series A convertible preferred, and 7,500 of
which are designated as series B convertible preferred. As of November 13, 2001,
9,832,308 shares of common stock were issued and outstanding, 7,500 shares of
the series A preferred stock were issued and outstanding, and 7,500 shares of
the Series B preferred stock were issued and outstanding. As of this date, there
were 114 record holders of our common stock, three record holders of our Series
A preferred stock and one record holder of our Series B preferred stock.
Common Stock.
Shares of our common stock are entitled to one vote per share, either in
person or by proxy, on all matters that may be voted upon by the owners of our
shares at meetings of our shareholders. There is no provision for cumulative
voting with respect to the election of directors by the holders of common stock.
Therefore, the holders of more than 50% of our shares of outstanding common
stock can, if they choose to do so, elect all of our directors. In this event,
the holders of the remaining shares of common stock will not be able to elect
any directors.
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The holders of common stock:
o have equal rights to dividends from funds legally available therefore,
when and if declared by our board of directors;
o are entitled to share ratably in all of our assets available for
distribution to holders of common stock upon liquidation, dissolution or
winding up of our affairs subject to preferential rights or preferred
stock; and
o do not have preemptive rights, conversion rights, or redemption of sinking
fund provisions.
The outstanding shares of our common stock are duly authorized, validly
issued, fully paid and nonassessable.
Our Preferred Stock.
Under our certificate of incorporation, as amended, our board of directors
is authorized, subject to certain limitations prescribed by law, without further
stockholder approval, from time to time to issue up to an aggregate of
15,000,000 shares of preferred stock. The preferred stock may be issued in one
or more series. Each series may have different rights, preferences and
designations and qualifications, limitations and restrictions that may be
established by our board of directors without approval from the shareholders.
Series A.
The terms of the series A preferred stock are complex and are only briefly
summarized in this prospectus. To obtain further information concerning the
rights, preferences and terms of the series A preferred stock, please refer to
the full description contained in our reports on Form 8-K and exhibits filed
with the Securities Exchange Commission on February 28, 2000 (File No.
000-25761).
Series B.
Pursuant to the terms of the Exchange Agreement, dated as of August 21,
2001, by and between Log On America, Inc. and Marshall Capital Management, Inc.
and certain of the selling stockholders, we issued 7,500 shares of series B
preferred stock with a face value of $7, 500,000.
Series B Fixed Conversion Rate.
Each share of series B preferred stock is convertible into a number of
shares of common stock as is determined by dividing the stated value of $1,000
by the conversion price of $4.50. For
13
purposes of estimating the number of shares to be registered in this prospectus,
we included 1,666,667 shares, representing the number of shares of common stock
issuable upon conversion of the series B preferred stock, without regard to any
limitation on conversion, determined as if the series B preferred stock was
converted in full on November 13, 2001, at the conversion price of $4.50.
The series B preferred stock contain anti-dilution protection which
adjusts the conversion rate of the series B preferred stock in the event Log On
America's outstanding common stock is subdivided by stock dividend, stock split
or otherwise, combined or reclassified by reclassification or otherwise.
Series B Voting rights.
The series B preferred stock does not have any voting rights except as
required by law, provided however, the affirmative vote of the holders of at
least two-thirds of the shares of series B preferred stock then outstanding
shall be required in order to change the rights and priorities of the series B
preferred stock.
Use of Proceeds
We will not receive any of the proceeds from the conversion of the series
B preferred stock.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Continental Stock
Transfer and Trust Co., 2 Broadway, New York, New York 10004.
Legal Matters
The legality of the common stock offered in this prospectus has been
passed upon for us by Silverman, Chernis, Shin & Byrne, P.C., 381 Park Avenue
South, Suite 1601, New York, New York 10016.
Experts
The financial statements of Log On America, Inc. incorporated by reference
in Log On America's Annual Report (Form 10-KSB) for the year ended December 31,
2000 have been audited by Ernst & Young LLP, independent auditors, as set forth
in their report thereon (which contains an explanatory paragraph describing
conditions that raise substantial doubt about the Company's ability to continue
as a going concern as described in Note 3 to the financial statements)
incorporated by reference therein and incorporated herein by reference. Such
financial statements are incorporated herein by reference in reliance upon such
report given on the authority of such firm as experts in accounting and
auditing.
14
Documents Incorporated by Reference
The Commission allows us to incorporate by reference the information we
file with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information that we file
with the Commission will automatically update and supercede this information. We
incorporate by reference the documents listed below and any future filings made
with the Commission under Sections 13(a), 14, or 15(d) of the Securities
Exchange Act of 1934, until the selling stockholders, sell all of their shares
included in this prospectus.
1. The description of our common stock included in our registration statement
on Form 8-A, filed with the Commission on April 13, 1999, and all
amendments or reports filed for the purpose of updating such description
(File No. 000-25761);
2. Our quarterly report on Form 10-QSB, filed with the Commission on August
20, 2001, for the fiscal quarter ended June 30, 2001;
3. Our quarterly report on Form 10-QSB, filed with the Commission on May 18,
2001 for the fiscal quarter ended March 31, 2001 (File No. 000-25761);
4. Our annual report on Form 10-KSB, filed with the Commission on April 2,
2001, for the fiscal year ended December 31, 2000;
5. Our report on Form 8-K, filed with the SEC on June 1, 2001, for the event
of June 1, 2001 (File No. 000-25761);
6. Our report on Form 8-K, filed with the SEC on January 16, 2001, for the
event of January 12, 2001 (File No. 000-25761);
7. Our report on schedule Def. 14A, filed on April 2, 2001 for our annual
meeting of stockholders held on May 26, 2001;
8. Our registration statement on Form SB-2, filed with the SEC on April 23,
1999, and all amendments or reports filed for the purpose of updating such
description (Registration No. 333-70307); and
9. All other reports filed by us with the Commission since December 31, 1999,
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934.
All documents filed by the us pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Securities Exchange Act of 1934 after the date of this registration
statement and prior to the filing of a post-effective amendment to this
registration statement, which indicates that all securities offered hereunder
have been sold, or which deregisters all securities then remaining unsold under
this registration
15
statement, shall be deemed to be incorporated by reference in this registration
statement and to be a part hereof from the date of filing of such documents.
Any statement contained in a document or incorporated or deemed to be
incorporated by reference shall be deemed to be modified or superseded for
purposes of this registration statement to the extent that a statement contained
herein or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this registration statement. All
information in this registration statement is qualified in its entirety by the
information and financial statements (including the preferred stock thereto)
appearing in the documents incorporated herein by reference, except to the
extent set forth in the immediately preceding statement.
Disclosure of Commission Position on Indemnification
for Securities Act Liabilities
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers, and controlling persons, we
have been advised that in the opinion of the Commission this indemnification is
against public policy as expressed in the Securities Act and is, therefore
unenforceable. In the event that a claim for indemnification against these
liabilities, other than our payment of expense incurred or paid by one of our
directors, officers, or controlling persons in the successful defense of any
action, suit or proceeding, is asserted by that director, officer or controlling
person in connection with the securities being registered, we will, unless in
the opinion of our counsel the matter has been settled by a controlling
precedent, submit to a court of appropriate jurisdiction the question whether
this indemnification by us is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of these issues.
16
================================================================================
No dealer, salesman or any other person is authorized to give any
information or to represent anything not contained in this prospectus. You must
not rely on any unauthorized information or representations. This prospectus is
an offer to sell these securities and it is not a solicitation of an offer to
buy these securities in any state where the offer or sale is not permitted. The
information contained in this prospectus is current only as of this date
TABLE OF CONTENTS
Page
Where you can find more
information about Log On.......................................................2
Summary........................................................................3
Risk Factors...................................................................4
Description of Securities.....................................................12
Transfer Agent................................................................14
Legal Matters.................................................................14
Experts.......................................................................14
Disclosure of Commission Position.............................................16
================================================================================
================================================================================
1,666,667 SHARES OF
COMMON STOCK
ON AMERICA, INC.
------------------
PROSPECTUS
------------------
_________, ___, 2001
================================================================================
17
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
SEC Registration Fee $ 1,875
Printing $ 5,000*
Legal Fees and Expenses $ 7,000*
Accounting Fees and Expenses $ 4,000*
Miscellaneous Expenses (including travel
and promotional expenses) $ 1,000*
TOTAL $18,875*
*Estimated
Item 15. Indemnification of Directors and Officers.
Our certificate of incorporation, as amended, and bylaws, as amended,
limit the liability of directors and officers to the maximum extent permitted by
Delaware law. We will indemnify any person who was or is a party, or is
threatened to be made a party to, an action, suit or proceeding, whether civil,
criminal, administrative or investigative, if that person is or was a director,
officer, employee or agent of us or serves or served any other enterprise at our
request.
In addition, our certificate of incorporation provides that a director
shall not be personally liable to us or our stockholders for monetary damages
for breach of the director's fiduciary duty. The certificate does not eliminate
or limit the liability of a director for any of the following reasons:
o breach of the directors' duty of loyalty to us or our stockholders;
o acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of the law;
o the unlawful payment of a dividend or unlawful stock purchase or
redemption; and
o any transaction from which the director derives an improper personal
benefit.
We have purchased directors' and officers' insurance in the amount of
$5,000,000. This insurance insures directors against any liability arising out
of the director's status as our director, regardless of whether we have the
power to indemnify the director against the liability under applicable law.
We have been advised that it is the position of the Commission that
insofar as the indemnification provisions referenced above may be invoked to
disclaim liability for damages arising under the Securities Act, these
provisions are against public policy as expressed in the Securities Act and are,
therefore, unenforceable.
II-1
There is no litigation pending, and neither the registrant nor any of its
directors know of any threatened litigation, which might result in a claim for
indemnification by any director or officer.
Item 16. Exhibits and Financial Statement Schedule
(a) The following exhibits are filed herewith:
Exhibit
Number Description
- ------ -----------
3.1* Certificate of Designations, Preferences and Rights of Series B
Convertible Preferred Stock, as filed with the Delaware Secretary of
State on August 17, 2001.
4.1 Specimen certificate representing registrant's common stock
(incorporated by reference to our registration statement on Form SB-2
(Registration No. 333-70307).
4.2 Settlement Agreement, dated as of August 14, 2001, among Log On
America, Inc., Credit Suisse First Boston Corporation and Marshall
Capital Management, Inc., and related exhibits (incorporated by
reference to our Quarterly Report on Form 10-QSB for the quarter ended
June 30, 2001)
5.1* Opinion and consent of Silverman, Chernis, Shin & Byrne, P.C.
23.1** Consent of Ernest & Young, LLP
24.1* Power of Attorney, see signature page.
* Previously filed.
** To be filed with amendment.
Exhibit No. Description
----------- -----------
b. Financial Statement Schedules.
All schedules are omitted from this registration statement because they
are not required or the required information is included in the consolidated
financial statement or the notes thereto.
II-2
Item 17. Undertakings.
(a) Rule 415 Offerings.
The undersigned issuer hereby undertakes that it will:
(1) File, during any period in which it offers or sells securities,
a post-effective amendment to this Registration Statement to:
(i) Include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in
the information in the Registration Statement; and
(iii) Includes any additional or changed material information
on the plan of distribution.
provided, however, the paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information required
in a post-effective amendment by those paragraphs is contained in periodic
reports filed by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from registration any
of the securities that remain unsold at the end of the offering.
(b) Request for acceleration of effective date.
(1) Insofar as indemnification for liabilities arising under the
Securities Act, may be permitted to directors, officers and controlling persons
of the small business issuer pursuant to the foregoing provisions, or otherwise,
the issuer has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the issuer
of expenses incurred or paid by a director, officer or controlling person of the
issuer in the successful defense of any action, suit or proceedings) is asserted
by such director, officer or controlling person in connection with the
securities being registered, the issuer 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
II-3
public policy as expressed in the Securities Act and will be governed by the
final adjudication of such court.
(2) For determining any liability under the Securities Act, treat
each post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration statement,
and that offering of the securities at that time as the initial bona fide
offering of those securities.
II-4
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements of filing this 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 Providence, State of Rhode Island, on November 14,
2001.
LOG ON AMERICA, INC.
By: /s/ David R. Paolo
--------------------------------
David R. Paolo, President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
SIGNATURES TITLES DATE
- ---------- ------ ----
/s/ David R. Paolo* President, CEO, and Chairman November 14, 2001
- ---------------------------
David R. Paolo
/s/ Raymon E. Paolo* Executive Vice President, November 14, 2001
- --------------------------- Secretary, Director
Raymond E. Paolo
/s/ Kenneth M. Cornell* Treasurer, Director November 14, 2001
- ---------------------------
Kenneth M. Cornell
/s/ Charles F. Cleary* Chief Operating Officer, November 14, 2001
- --------------------------- Director
Charles F. Cleary
/s/ John Whitesell* Vice President of Finance November 14, 2001
- ---------------------------
John Whitesell
/s/ David M. Robert* Director November 14, 2001
- ---------------------------
David M. Robert
/s/ Jerry MacArthur Hultin* Director November 14, 2001
- ---------------------------
Jerry MacArthur Hultin
* By: /s/ David R. Paolo
--------------------------------------------
David R. Paolo
Attorney-in-Fact, pursuant to the Power
of Attorney previously filed as Part of this
Registration Statement