As filed with the Securities and Exchange Commission on
January, 2001 Registration No.
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3 REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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ALOTTAFUN, INC.
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(Exact Name of Registrant As Specified in Charter)
Delaware 39-1765590
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(State or jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
141 N. Main Street, Suite 207, West Bend, Wisconsin 53095
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (262) 334-4500
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Copies to:
Michael S. Krome, P.C.
8 Teak Court
Lake Grove, New York 11755
(631) 737-8381
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Securities to be registered pursuant to Section 12(b) of the Act:
Approximate date of commencement of proposed sale to the public: from time to
time after the effective date of this Registration Statement.
If 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, 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 statement number of the earlier effective registration statement
for the same offering. [ ]
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If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box [ ]
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 the 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.
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Subject to Completion - January , 2001
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CALCULATION OF REGISTRATION FEE
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Proposed Proposed
Title of Amount Maximum Maximum Amount of
Securities to to be Offering Price Aggregate Registration
Be Registered Registered Per Share (1) Offering Price (1) Fee
- ---------------- ---------- -------------- ------------------ ------------
Common Stock, 7,578,250 $ .07 $539,477 $240
par value $.01
per share
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(1) Estimated solely for the purpose of calculating the amount of the
registration fee pursuant to Rule 457, based on the closing price of the Common
Stock, as reported by the OTC Bulletin Board, on January 31, 2001.
- --------------------------------------------------------------------------------
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(1) The shares of common stock are being registered hereby for the account of
certain shareholders of Alottafun!, Inc. No other shares of common stock
are being registered pursuant to this offering. Pursuant to Rule 416, this
registration statement also covers such indeterminate number of additional
shares of common stock as may be issued because of future stock dividends,
stock distributions, stock splits, or similar capital readjustments.
(2) Estimated solely for the purpose of calculating the filing fee pursuant to
Rule 457(c) under the Securities Act of 1933.
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7,578,250 Shares
ALOTTAFUN, INC.
Common Stock
This prospectus relates to 7,578,250 shares of common stock of
Alottafun!, Inc., a Delaware corporation ("Alottafun!"). These shares are
offered by the selling shareholders and securityholders ("Selling
Shareholders"). Alottafun! will not receive any of the proceeds from any sales
of the shares. Some of the selling shareholders are entitled to acquire the
shares by converting convertible notes. If the selling securityholders fully
convert their convertible notes, Alottafun! will not have to repay the principal
amount of the convertible notes. See "Selling Securityholders."
The common stock is traded on the OTC Electronic Bulletin Board under
the symbol "ALFN." On January 31, 2001, the last reported sale price for the
common stock, as reported on the OTC Electronic Bulletin Board, was $.07 Per
share. The selling shareholders may, from time to time, sell the shares at
market prices prevailing on Nasdaq at the time of the sale or at negotiated
prices under the terms described under the caption "Plan of Distribution."
Price to the public: The selling shareholders may sell the common stock
in one or more transactions through brokers in the over-the-counter market, in
private transactions, or otherwise, at current market prices. Accordingly, sales
prices will depend upon price fluctuations and the manner of sale.
Proceeds to shareholders: Proceeds to the selling shareholders will
depend upon price fluctuations and the manner of sale.
Proceeds to Alottafun: Alottafun will not receive any of the cash
proceeds from the sale of shares of common stock. The sale of the shares
underlying this prospectus will have a depressive effect on the market price of
our common stock.
The last reported sale price for the common stock on January 31, 2001,
as reported on the Nasdaq OTC Electronic Bulletin Board, was $.07 per share.
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK AND SHOULD
BE CONSIDERED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE
INVESTMENT. SEE "RISK FACTORS" BEGINNING AT PAGE 6.
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.
This prospectus and the related registration statement filed with the
Securities and Exchange Commission have been prepared at Alottafun!'s expense as
required by the convertible notes. We estimate that our related expenses will be
approximately $50,000. No underwriting commissions or discounts will be paid by
Alottafun! in connection with this offering.
Underwriting discount: The selling shareholders may effect such
transactions by selling to or through one or more broker-dealers, and such
broker-dealers may receive compensation in the form of underwriting discounts,
brokerage commissions or similar fees in amounts which may vary from transaction
to transaction. Such brokerage commissions and charges and the legal fees, if
any, will be paid by the selling shareholders. Alottafun will bear all other
expenses in connection with registering the shares being offered, which expenses
are estimated to total approximately $30,000.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. Any representation to the contrary is a
criminal offense.
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AVAILABLE INFORMATION
Alottafun is subject to informational requirements of the Securities
Exchange Act of 1934. In accordance with the 1934 Act, Alottafun files reports
and other information with the Securities and Exchange Commission. Such reports
and other information can be inspected and copies at the Public Reference Room
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
Please call the Securities and Exchange Commission at 1-(800)-SEC-0330 for
further information on the Public Reference Room. Alottafun!'s Securities and
Exchange Commission filings are also available to the public at the Securities
and Exchange Commission's Internet site at http://www.sec.gov.
Alottafun has filed a registration statement for Form SB-2 under the
Securities Act of 1933, as amended, with respect to the common stock being
offered. This prospectus does not contain all the information set forth in the
registration statement, certain parts of which are omitted in accordance with
the rules and regulations of the Commission. Statements contained in this
prospectus concerning the provisions of documents are necessarily summaries of
such documents, and each statement is qualified in its entirety by reference to
the copy of the applicable document filed with the Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents previously filed with the Commission pursuant
to the 1934 Act are hereby incorporated in this prospectus by reference:
1. Alottafun!'s Annual Report on Form 10-KSB for the year ended December 31,
1999;
2. Alottafun!'s Quarterly Report on Form 10-QSB for the period ended September
30, 2000.
3. Alottafun!'s Registration Statement on Form SB-2/A filed on September
13, 2000.
All documents filed by Alottafun, pursuant to Section 13(a), 13(c), 14
or 15(d) of the 1934 Act subsequent to the date of this prospectus and prior to
the termination of this offering, shall be deemed to be incorporated by
reference into this prospectus. Any information incorporated by reference shall
be modified or superseded by any information contained in this prospectus or in
any other document filed later with the Commission, which modifies or supersedes
such information. Any information that is modified or superseded shall become a
part of this prospectus as the information has been so modified or superseded.
We will provide without charge to each person to whom a prospectus is
delivered, upon written or oral request of such person, a copy of any and all of
the information that has been incorporated by reference in this prospectus
(excluding exhibits unless such exhibits are specifically incorporated by
reference into such documents). Please direct such requests to Michael Porter,
141 N. Main Street, Suite 207, West Bend, Wisconsin 53095, telephone number
(262) 334-4500.
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CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended. Forward-looking
statements include the information concerning possible or assumed future results
of operations of Alottafun and its subsidiaries. Also, when we use words such as
"believes," "expects," "anticipates," or similar expressions, we are making
forward-looking statements. Prospective investors should note that many factors,
some of which are discussed elsewhere in this documents and in the exhibits,
could affect the future financial results of Alottafun and its subsidiaries and
could cause the results to differ materially from those expressed in our
forward-looking statements contained in this document or the exhibits. These
factors include the following:
- Operating, legal and regulatory risks;
- Economic, political and competitive forces affecting our financial
services business; and
- The risk that our analysis of these risks and forces could be
incorrect and/or that the strategies developed to address them could
be unsuccessful.
The accompanying information contained in this prospectus, as well as
in Alottafun!'s 1934 Act filings, identifies important additional factors that
could adversely affect actual results and performance. Prospective investors are
urged to carefully consider such factors.
All forward-looking statements attributable to Alottafun are expressly
qualified in their entirety by the foregoing cautionary statements.
PROSPECTUS SUMMARY
Our Business
We were originally established on August 15, 1993 as a distributor, and
marketer of collectible toys and candy products for children between the ages of
three and twelve years old. We have marketed products that include tea sets,
games, puzzles, books, plush toys, purses, ride-on cars, and unique surprise
boxes that contain gum and candy, collectible toys, trading cards, milk caps
(pogs), comic strips, tattoos, stickers, and various promotional inserts.
Alottafun has not generated sufficient revenues in the last two years to fund
its ongoing operations and has sustained substantial losses since its inception
and we do not expect to become profitable until 2001. Accumulated losses to date
are approximately $5,200,000 as of September 30, 2000, and there is substantial
doubt about our ability to continue as a going concern.
In May 1999, Alottafun joint ventured with E-Commerce Fulfillment, LLC.
which has a contract with M.W Kasch, an independent U.S. toy distributor, to
launch an e-commerce Internet portal called TOYPOP.COM. The Joint venture was
owned 33.3% by E-Commerce Fulfillment and 67.7% by Alottafun, Inc. E-Commerce
Fulfillment (ECF) was a wholly owned by Jeffrey C. Kasch, President of M.W.
Kasch Company. ECF's responsibilities and obligations included selling toy
products to the joint venture, at prices which do not exceed the prices charged
to ECF's typical customers. ECF provided its products based on regular
availability. ECF also merchandised toys on the Web site and made decisions as
to which toys to highlight as special buys, to promote, or present as a `hot'
toy. M.W. Kasch Company warehoused and provided fulfillment to ECF. The
relationship between M.W. Kasch Company and ECF was exclusive as far as ECF was
concerned, but not exclusive with regard to M.W. Kasch. M.W. Kasch was free to
sell any and all other retailers, electronic or otherwise. The role of Alottafun
was to manage marketing strategies, and to provide the electronic mediums for
the sale, customer support, and fulfillment of products that the joint venture
purchases.
The company launched a toy and related products e-commerce Internet
portal called MRABA.COM, in May, 2000. This site is directed toward providing an
overwhelming need within the Toy Industry for a b2b community devoted to
addressing more efficient dealings between manufacturers, distributors, and
retailers. The toy industry represented the fastest growing segment of online
sales during the last quarter of 1999. According to Media Metrix, an Internet
market research firm, online toy commerce is expected to generate $1.5 billion
in sales by 2003.
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On February 28, 2000, M. W. Kasch gave notice to us that effective
March 28, 2000 our agreement with them was terminated. This followed the
shutdown of our TOYPOP site on February 10, 2000 at which time we sought to
remake the site into a channel in the new MRABA internet initiative. Sales of
toy products through the TOYPOP site amounted to $16,506 during the Holiday
selling season, primarily due to the lack of marketing and the limited
availability of the better selling toy products that was available through M. W.
Kasch. Insufficient working capital was available to us to exploit the selling
season opportunity presented by our opening of TOYPOP. Despite, this setback
that included M W. Kasch withdrawing from our joint venture, we are optimistic
that TOYPOP can be made a viable internet retail portal through a reorganization
and restructuring within our MRABA internet opportunity.
As a process of developing the MRABA.com site, we developed a sophisticated
software system called e-Logic. The e-Logic system is a web-based application
developed for companies to provide integrated, real-time information for all
aspects of a companies back office operations, including everything from order
entry and processing through inventory tracking and cost accounting. We have
initially entered into an agreement with Kamino International Transport, Inc., a
New York based transportation and logistics company to provide the e-Logic
System to their client base.
In December, 2000, we entered into a series of discussions to acquire 4 tire
recycling companies and a logistics company, allowing us to expand our
technology expertise into a fast growth industry. These transactions have not
yet been completed. There is always the possibility that the transaction will
not occur. The Company feels that it will complete the transactions in the
future.
Alottafun!'s growth strategy will focus on the following:
1. Expand our technology expertise into the scrap tire business.
2. Market and expand the e-Logic software system.
3. Expand and develop the MRABA.COM site to help implement a business to
business interaction between retailers and manufacturers.
THE OFFERING
Common stock offered by selling shareholders 7,578,250 shares
Common stock outstanding prior to the offering 23,428,114 shares
Common stock to be outstanding after the offering 23,428,114 shares
Nasdaq BB LISTING Market symbol.... ALFN
RISK FACTORS
You should carefully consider the risks described below before making a
decision to invest in ALOTTAFUN. Our business, financial condition and results
of operations could be adversely affected by these risks. You should be able to
bear a complete loss of your investment.
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The Toy Industry Is Highly Competitive.
The toy industry is highly competitive. Many of our competitors have
certain competitive advantages over us that include greater financial resources,
longer operating histories, strong name recognition; greater sales and marketing
and product development capabilities, and significant economies of scale.
In addition, the toy industry has no significant barriers to entry.
Competition is based primarily on the ability to design and develop new toys, to
procure licenses for popular characters and trademarks and to successfully
market products. Many of our prospective competitors offer similar products or
alternatives to our products. We cannot provide assurance that we will be able
to obtain adequate shelf space in retail stores to support our new or existing
products or to expand our products and product lines or that we will be able to
continue to compete effectively against our competitors.
We May Not Be Able To Manage Our Planned Rapid Growth.
We expect to grow rapidly in the future. As a result, comparing our
period-to-period operating results may not be meaningful and results of
operations from prior periods may not be indicative of future results.
Our growth strategy calls for us to exploit three areas within the toy
industry- a girls toy line; collectible toys and internet sales of toys. The
increased demand on management may necessitate the recruitment and retention by
our company of additional qualified management personnel. We cannot assure you
that we will successfully recruit and retain qualified personnel or expand and
manage our operations effectively and profitably.
In addition, implementation of our growth strategy is subject to risks
beyond our control, including competition, market acceptance of new products,
changes in economic conditions, and our ability to finance increased levels of
accounts receivable and inventory necessary to support sales growth, if any.
Accordingly, we cannot assure you that our growth strategy will be implemented
successfully.
A Few Customers May Account For A Large Portion Of Our Sales.
In the early stage of our development of new products, a few customers
may account for a large portion of sales. Except for receiving purchase orders
for our products, we do expect to have written contracts with or commitments
from any of our customers. A substantial reduction in or termination of orders
from any large customer could adversely affect our business, financial condition
and results of operations. In addition, pressure by a large customer seeking a
reduction in prices, financial incentives, a change in other terms of sale or
for our company to bear the risks and the cost of carrying inventory could also
adversely affect our business, financial condition and results of operations.
We Depend On Our Key Personnel.
Our success is largely dependent upon the experience and continued
services of Michael Porter, our President and Chief Executive Officer, and David
Bezalel, our Executive Vice President. We cannot assure you that we would be
able to find an appropriate replacement for Mr. Porter or Mr. Bezalel if the
need should arise, and any loss or interruption of Mr. Porter's or Mr. Bezalel's
services could adversely affect our business, financial condition and results of
operations.
We don't maintain key-man life on Mr. Porter or Mr. Bezalel. Should
either or both die, there may be serious and adverse consequences for the
company. Our Business May Be Adversely Affected By Political Or Economic
Developments In China.
It is expected that all of our products will be produced by
unaffiliated manufacturers in the People's Republic of China. As a result, our
operations may be affected by many factors, including economic, political,
governmental and labor conditions in China; the possibility of expropriation,
supply disruption, currency controls and exchange fluctuations; China's
relationship with the United States; and fluctuations in the exchange rate of
the U.S. dollar against foreign currencies.
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Loss Of China's "Most Favored Nation" Status.
China currently enjoys "Most Favored Nation" status under United States
tariff laws. China's Most Favored Nation status is reviewed annually by
Congress, and the renewal of this status is subject to significant political
uncertainties. The loss of China's Most Favored Nation status or the imposition
of retaliatory or protectionist trade policies, such as a substantial increase
in the duty on products we import into the United States from China, would
adversely affect our business, financial condition and results of operation.
Imposition Of Trade Restrictions.
China may be subject to retaliatory trade restrictions imposed by the
United States under various provisions of the Trade Act of 1974. In the past,
the United States has threatened the imposition of punitive 100% tariffs on
selected goods and has withdrawn this threat very shortly before sanctions were
to take effect. The imposition by the United States of trade sanctions and
subsequent actions by China would result in manufacturing and distribution
disruptions or higher costs to us which, in turn, would adversely affect our
business, financial condition and results of operations.
Political Uncertainty In Hong Kong.
We have manufacturers in Hong Kong that may not be able to timely
supply us with products should there be political turmoil and uncertainty. On
July 1, 1997, sovereignty over Hong Kong was transferred from the United Kingdom
to China. If Hong Kong's business climate were to become less favorable as a
result of the transfer of sovereignty, our business, financial condition and
results of operations could be materially and adversely affected.
Political Uncertainty In Israel.
We have manufacturers in Israel that may not be able to timely supply
us with products should there be political turmoil and uncertainty. If Israel's
business climate were to become less favorable as a result of political unrest
or terrorism, our business, financial condition and results of operations could
be materially and adversely affected.
Our Product Sales Are Subject To Seasonal And Quarterly Fluctuations.
Our product sales will be highly seasonal, with a majority of our sales
occurring between September and December, the traditional holiday season of the
Toy industry. As a result, approximately 70-75% of our shipments will occur in
the third and fourth quarters. This seasonality causes our quarterly operating
results and working capital needs to fluctuate significantly.
Our Business Is Subject To Extensive Government Regulation And To Potential
Product Liability Claims.
Our business is subject to various laws, including the Federal
Hazardous Substances Act, the Consumer Product Safety Act, the Flammable Fabrics
Act and the rules and regulations promulgated under these acts. These statutes
are administered by the Consumer Product Safety Commission, which has the
authority to exclude from the market products that are found to be hazardous and
which can require a manufacturer to repurchase these products under certain
circumstances. We cannot assure you that defects in our products will not be
alleged or found. Any such allegations or findings could result in:
- product liability claims;
- loss of sales;
- diversion of resources;
- damage to our reputation; and
- increased warranty costs;
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any of which may adversely affect our business, financial condition and results
of operations. There can be no assurance that our product liability insurance
will be sufficient to avoid or limit our loss in the event of an adverse outcome
of any product liability claim.
We Depend On Third-Party Manufacturers.
We will depend on third parties to manufacture all our products.
Although we own the tools, dies and molds used to manufacture our products, we
have limited control over the manufacturing processes themselves. As a result,
any difficulties encountered by the third-party manufacturers that result in
product defects, production delays, cost overruns or the inability to fulfill
orders on a timely basis could have a material adverse effect on our business,
financial condition and results of operations.
We do not have long-term contracts with our third-party manufacturers.
Although we believe we would be able to secure other third-party manufacturers
to produce our products as a result of our ownership of the tools, dies and
molds used in the manufacturing process, our operations would be adversely
affected if we lost our relationship with any of our current suppliers or if our
current suppliers' operations or sea or air transportation with our China-based
manufacturers were disrupted or terminated even for a relatively short period of
time. Our tools, dies and molds are located at the facilities of our third-party
manufacturers. Accordingly, significant damage to these facilities could result
in the loss of or damage to a material portion of our tools, dies and molds, in
addition to production delays while new facilities were being arranged and
replacement tools, dies and molds were being produced. We do not maintain an
inventory of sufficient size to provide protection for any significant period
against an interruption of supply, particularly if we were required to utilize
alternative sources of supply.
Although we do not purchase the raw materials used to manufacture our
products, we are potentially subject to variations in the prices we pay our
third-party manufacturers for products, depending on what they pay for their raw
materials.
Future Business Acquisitions.
The Company is engaging in preliminary talks, through various
consultants, to make acquisitions outside its current business, such as tire
recycling. If such acquisitions do occur, it is the intention of the Company to
change the name of the Company and the business focus of the Company. Tire
recycling business is volatile. There is no assurance that we will be successful
in operating in this field.
The Market Price Of Our Common Stock Will Be Volatile.
Market prices of the securities of toy companies are often volatile.
The market price of our common stock will be affected by many factors,
including:
- fluctuations in our financial results;
- the actions of our customers and competitors (including new
product line announcements and instructions);
- new regulations affecting foreign manufacturing;
- other factors affecting the toy industry in general; and
- sales of our common stock into the public market.
In addition, the stock market periodically has experienced significant
price and volume fluctuations which may have been unrelated to the operating
performance of particular companies. The registration of these shares will have
a depressive effect on the market price of our common stock.
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Future Sales Of Our Shares Could Adversely Affect Our Stock Price.
As of January 1, 2001, there were 23,425,114 shares of our common stock
outstanding. An additional 26,025,000 shares of our common stock are issuable
upon the conversion of our convertible preferred stock and upon the exercise of
currently exercisable warrants and options. If all these shares were issued, we
would have 54,710,614 shares of our common stock outstanding. Of this,
20,000,000 are shares that may be obtained from the conversion of the
convertible preferred stock that requires the company to first obtain sales of
$5 million and $10 million, respectively.
Our Management Exercises Substantial Control Over Our Business.
As of January 1, 2001, our directors and executive officers
beneficially own upon conversion of stock options, in the aggregate, 6,521,407
shares of our common stock, representing approximately 47.7% of common stock
outstanding. In addition, the Series A Preferred Stock held by Mr. Porter and
Mr. Bezalel has the right to cast 25 votes per share on all matters submitted to
the vote of other holders of Common Stock. The Series A Preferred Stock was
issued to Mr. Porter and Mr. Bezalel, the Company's founders, to assure complete
and unfettered control of the Company by its founders during its formative
stages. The issuance of the Series A Preferred Stock constitute and
anti-takeover device since the approval of any merger or acquisition of the
Company will be completely dependent upon the approval of Mr. Porter and Mr.
Bezalel.
Each share of the Series A Preferred Stock is convertible into 10
shares of the Company's Common Stock at any time by the election or either Mr.
Porter or Mr. Bezalel. If either Mr. Porter or Mr. Bezalel elect to convert the
Series A Preferred Stock into Common Stock, their relative ability to control
the affairs of the Company would be reduced because upon conversion the Common
Stock, which replaces the Preferred Stock, would only have one (1) per share as
opposed to 25 votes per share.
In Our Operating History, We May Not Be Able To Successfully Manage Our Business
To Achieve Profitability.
We may not be able to grow our business as planned or ever become a
profitable business. We began the most recent phase of our commercial operations
that includes the MRABA web network in January 2000. Because of this very
limited operating history, there are no meaningful financial results which you
can use to evaluate the merits of making an investment in us. Accordingly,
investment decisions must be made based on our business prospects. Our business
prospects are subject to all the risks, expenses and uncertainties encountered
by any new venture. We also face the risks inherent in operating in the rapidly
evolving markets for Internet products and services. If we are unable to
successfully address these risks or grow our business as planned, the value of
our common stock will be diminished.
Because Our Operating Expenses And Capital Expenditures Will Outpace Our
Revenues, We Will Incur Significant Losses In The Near Term.
We expect to incur significant operating expenses and make relatively
high capital expenditures as we develop our MRABA Internet business. These
operating expenses and capital expenditures will initially outpace revenues and
result in significant losses in the near term. We may never be able to reduce
these losses. We have generated nominal revenues since 1993 and have incurred an
aggregate net loss of approximately $5,800,000 during the period from our
inception to September 30, 2000.
The Report Of Our Independent Accountants Contains A Going Concern Qualification
Which States That We May Not Be Able To Continue Our Operations.
Our independent certified public accountants' report for the last
fiscal year ended December 31, 1999 contains an explanatory paragraph. This
paragraph states that our limited working capital position raises substantial
doubt about our ability to continue as a going concern.
Because Our Executive Officers Lack Significant Management Experience In The
Internet, We May Not Be Able To Effectively Manage Our Growth.
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The growth of our business may place a significant strain on our
management team and we may not be able to effectively manage our growth. None of
our executive officers has significant experience in managing a internet company
or overseeing such a company's rapid growth.
This Prospectus Contains Forward-Looking Statements. These Statements May Prove
To Be Inaccurate.
Some of the statements in this prospectus are forward-looking
statements that involve risks and uncertainties. These forward-looking
statements include statements about our plans, objectives, expectations,
intentions and assumptions that are not statements of historical fact. You can
identify these statements by the following words:
"may," "plans," "will," "expects," "should," "believes," "estimates,"
"intends" and similar expressions. We cannot guarantee our future results,
performance or achievements. Our actual results and the timing of corporate
events may differ significantly from the expectations discussed in the
forward-looking statements. You are cautioned not to place undue reliance on any
forward-looking statements.
USE OF PROCEEDS
The Company will not receive any proceeds from this registration. All
the Selling Shareholder's will have the opportunity to sell their registered
shares after the effective date of this registration statement become effective.
DILUTION
A company's net tangible book value is equal to its total tangible
assets minus its total liabilities. A company's net tangible book value per
share is calculated by dividing its net tangible book value, by the total number
of shares of common stock outstanding. As of September 30, 2000, we had a net
tangible book value of ($354,388), or approximately ($0.03) per share of common
stock.
There is no dilution upon the registration of the shares of the Selling
Shareholders.
SELLING SHARHOLDERS and SECURITY HOLDERS
Except as otherwise indicated, the following table sets forth certain
information regarding the beneficial ownership of our common stock as of January
1, 2001 by the shareholders of the Company who are offering securities pursuant
to this prospectus. Beneficial ownership includes shares for which an
individual, directly or indirectly, has or shares, voting or investment power or
both. All of the listed persons have sole voting and investment power over the
shares listed opposite their names unless otherwise indicated in the notes
below. None of the Selling Shareholders has been an officer, or held any other
material relationship with Alottafun or its affiliates or predecessors within
the last three years. We will receive no proceeds from the sale of these shares.
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Number of % of shares
Name shares offered Outstanding
---- -------------- -----------
Thomas Narekian 70,000 .002
Thomas Narekian, Jr. 57,000 .001
Stephan Happas(3) 600,000 .021
Steven Donnelly 193,750 .007
Gregory Boyd 30,000 .001
Anita Harrington 30,000 .001
Michael Petrilli 60,000 .002
Larry Petrilli 60,000 .002
Harry & Beverly Oxford 25,000 .0008
Jeff Hull(1) 75,000 .002
Chris Nguyen 150,000 .005
W.J. Manion 250,000 .008
Clay Realty, Inc.(2) 4,000,000 .139
Hornblower & Weeks(1) 740,000 .025
Don Aue(1) 40,000 .001
Jacob Perl(1) 330,000 .012
Michele Carew(1) 200,000 .006
Bruce Lipshitz(1) 175,000 .006
Herman Heinlein(1) 400,000 .014
James Hohrine(1) 2,500 ----
Mike Ferrara(1) 20,000 ----
Joseph Grinbaum(1) 20,000 ----
Frank Teresa 50,000 .002
Total: 7,578,250
----- ---------
(1) Represents shares issued in exchange for services.
(2) Includes 250,000 Shares issued in connection with penalty
provisions of Loan Agreement.
(3) Represents shares issued in exchange for services and settlement
of debt.
DESCRIPTION OF SECURITIES
GENERAL
Our authorized capital stock consists of 50,000,000 shares of common
stock, $.01 par value per share, and 5,000,000 shares of preferred stock, $.0001
par value per share. Upon consummation of this offering, there will be
23,428,114 shares of common stock and 2,000,000 shares of preferred stock
outstanding. The Company is contemplating amending its certificate of
Incorporation to increase its authorized shares, based upon an affirmative vote
of shareholders.
COMMON STOCK
The authorized capital stock consists of 50,000,000 shares of common
stock, $.01 par value ("Common Stock"), and 5,000,000 of preferred stock, $.0001
par value ("Preferred Stock"), issuable in series. The following description of
our capital stock does not purport to be complete and is subject to and
qualified in its entirety by our Certificate of Incorporation and Bylaws, which
are included as exhibits to this registration statement and by the provisions of
applicable Delaware law.
As of January 3, 2001, there were 23,428,114 shares of Common Stock
outstanding, held of record by approximately 200 stockholders. In addition, as
of September 30 2000, there were 5,575,000 shares of Common Stock subject to
outstanding options.
The holders of Common Stock are entitled to one vote per share for the
selection of directors and all other purposes and do not have cumulative voting
rights. However, Mr. Porter and Mr. Bezalel, through their holdings of the
voting Preferred Stock, control the affairs of the Company, including the
election of directors. The holders of Common Stock are entitled to receive
dividends when, as, and if declared by the Board of Directors, and in the event
of the liquidation by the Company, to receive pro-rata, all assets remaining
after payment of debts and expenses and liquidation of the preferred stock.
Holders of the Common Stock do not have any pre-emptive or other rights to
subscribe for or purchase additional shares of capital stock, no conversion
rights, redemption, or sinking-fund provisions. In the event of dissolution,
whether voluntary or involuntary, of the Company, each share of the Common Stock
is entitled to share ratably in the assets available for distribution to holders
of the equity securities after satisfaction of all liabilities. All the
outstanding shares of Common Stock are fully paid and non-assessable.
12
PREFERRED STOCK
The Board of Directors of the Company (without further action by the
shareholders), has the option to issue from time to time authorized un-issued
shares of Preferred Stock and determine the terms, limitations, residual rights,
and preferences of such shares. The Company has the authority to issue up to
5,000,000 shares of Preferred Stock pursuant to action by its Board of
Directors. As of the date of this registration statement, the Company has
outstanding 2,000,000 shares of Series A Preferred Stock. One million of these
shares are held by Mr. Porter and the other one million are held by Mr. Bezalel.
Each share of the Series A Preferred Stock has the right to cast 25 votes per
share on each and any matter on which the Common Stock is entitled to vote.
Accordingly, Mr. Porter and Mr. Bezalel are able to control the affairs and
operations of the Company including, but not limited to, election of directors,
sale of assets or other business opportunities. The Series A Preferred Stock has
no dividend rights, redemption provisions, sinking fund provisions or preemptive
rights. However, the Series A Preferred Stock holders have the right to convert
each share of Series A Preferred Stock into ten (10) shares of the Company's
Common Stock based upon the following targets. Each one-half (1/2) share of
Series A Preferred Stock is convertible into five (5) shares of Common Stock at
such time as the Corporation generates $5,000,000 of annual revenues in any
twelve month period. Each remaining one half (1/2) share of Series A Preferred
Stock is convertible into an additional five (5) shares of Common Stock at such
time as the Corporation generates $10,000,000 in annual revenues in any twelve
month period.
In the future, the Board of Directors of the Company has the authority
to issue additional shares of Preferred Stock in series with rights,
designations and preferences as determined by the Board of Directors. When any
shares of Preferred Stock are issued, certain rights of the holders of Preferred
Stock may affect the rights of the holders of Common Stock. The authority of the
Board of Directors to issue shares of Preferred Stock with characteristics which
it determines (such as preferential voting, conversion, redemption and
liquidation rights) may have a deterrent effect on persons who might wish to
take a takeover bid to purchase shares of the Company at a price, which might be
attractive to its shareholders. However, the Board of Directors must fulfill its
fiduciary obligation of the Company and its shareholders in evaluating an
takeover bid.
CERTAIN PROVISIONS OF THE CERTIFICATE OF INCORPORATION AND BYLAWS
The Company's Certificate of Incorporation provides that no director of
the Company shall be personally liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director except as limited by
Delaware law. The Company's Bylaws provide that the Company shall indemnify to
the full extent authorized by law each of its directors and officers against
expenses incurred in connection with any proceeding arising by reason of the
fact that such person is or was an agent of the corporation.
Insofar as indemnification for liabilities may be invoked to disclaim
liability for damages arising under the Securities Act of 1933, as amended, or
the Securities Act of 1934, (collectively, the "Acts") as amended, it is the
position of the Securities and Exchange Commission that such indemnification is
against public policy as expressed in the Acts and are therefore, unenforceable.
DELAWARE ANTI-TAKEOVER LAW AND OUR CERTIFICATE OF INCORPORATION AND BYLAW
PROVISIONS
Provisions of Delaware law and our Certificate of Incorporation and
Bylaws could make more difficult our acquisition by a third party and the
removal of our incumbent officers and directors. These provisions, summarized
below, are expected to discourage coercive takeover practices and inadequate
takeover bids and to encourage persons seeking to acquire control of the Company
to first negotiate with us. We believe that the benefits of increased protection
of our ability to negotiate with proponent of an unfriendly or unsolicited
acquisition proposal outweigh the disadvantages of discouraging such proposals
because, among other things, negotiation could result in an improvement of their
terms.
13
We are subject to Section 203 of the Delaware General Corporation Law,
which regulates corporate acquisitions. In general, Section 203 prohibits a
publicly held Delaware corporation from engaging in a "business combination"
with an "interested stockholder" for a period of three years following the date
the person became an interested stockholder, unless:
- the Board of Directors approved the transaction in which such
stockholder became an interested stockholder prior to the date
the interested stockholder attained such status;
- upon consummation of the transaction that resulted in the
stockholder's becoming an interested stockholder, he or she owned
at least 85% of the voting stock of the corporation outstanding
at the time the transaction commenced, excluding shares owned by
persons who are directors and also officers; or
- on or subsequent to such date the business combination is
approved by the Board of Directors and authorized at an annual or
special meeting of stockholders.
A "business combination" generally includes a merger, asset or stock
sale, or other transaction resulting in a financial benefit to the interested
stockholder. In general, an "interested stockholder" is a person who, together
with affiliates and associates, owns, or within three years prior to the
determination of interested stockholder status, did own, 15% or more of the
corporation's voting stock.
DIVIDENDS
The Company has not paid any cash dividends on its common or preferred
stock and does not anticipate paying any such cash dividends in the foreseeable
future. Earnings, if any, will be retained to finance future growth. The Company
may issue shares of its common stock and preferred stock in private or public
offerings to obtain financing, capital or to acquire other businesses that can
improve the performance and growth of the Company. Issuance and or sales of
substantial amounts of common stock could adversely affect prevailing market
prices in the common stock of the Company.
TRANSFER AGENT
The transfer agent for the Company is: Manhattan Transfer Registrar Company
of Lake Ronkonkoma, New York.
SHARES ELIGIBLE FOR FUTURE SALE
As of the date of this Prospectus, the Company had outstanding
23,428,114 shares of its Common Stock. Of this amount, 7,578,250 shares of
Common Stock are being registered on behalf of the Selling Shareholders. Of
these shares, the 7,578,250 shares of Common Stock sold in this offering will be
freely tradable without restriction or limitation under the Securities Act,
except for any shares purchased by "Affiliates" or persons acting as
"Underwriters" as these terms are defined under the Securities Act.
The 7,903,911 shares of Common Stock held by existing shareholders are
"Restricted" within the meaning of Rule 144 adopted under the Securities Act
(the "Restricted Shares"), and may not be sold unless they are registered under
the Securities Act or sold pursuant to an exemption from registration, such as
the exemptions provided by Rule 144 and Rule 701 promulgated under the
Securities Act. The Restricted Shares were issued and sold by the Company in
private transactions in reliance upon exemptions from registration under the
Securities Act and may only be sold in accordance with the provisions of Rule
144 or Rule 701 of the Securities Act.
14
In general, under Rule 144 as currently in effect, beginning 90 days
after the date of this prospectus, any person (or persons whose shares are
aggregated), including an affiliate, who has beneficially owned shares for a
period of at least one year is entitled to sell, within any three-month period,
a number of shares that does not exceed the greater of:
(1) 1% of the then-outstanding shares of common stock; and
(2) the average weekly trading volume in the common stock during
the four calendar weeks immediately preceding the date on
which the notice of such sale on Form 144 is filed with the
Securities and Exchange Commission.
Sales under Rule 144 are also subject to provisions relating to notice
and manner of sale and the availability of current public information about us.
In addition, a person (or persons whose shares are aggregated) who has not been
an affiliate of us at any time during the 90 days immediately preceding a sale,
and who has beneficially owned the shares for at least two years, would be
entitled to sell such shares under Rule 144(k) without regard to the volume
limitation and other conditions described above. While the foregoing discussion
is intended to summarize the material provisions of Rule 144, it may not
describe all of the applicable provisions of Rule 144, and, accordingly, you are
encouraged to consult the full text of that Rule.
In addition, our employees, directors, officers, advisors or
consultants who were issued shares pursuant to a written compensatory plan or
contract may be entitled to rely on the resale provisions of Rule 701, which
permits non-affiliates to sell their Rule 701 shares without having to comply
with the public information, holding period, volume limitation or notice
provisions of Rule 144, and permits affiliates to sell their Rule 701 shares
without having to comply with Rule 144's holding period restrictions, in each
case commencing 90 days after the date of this prospectus.
The possibility of future sales by existing stockholders under Rule 144
or otherwise including the sale of 5,001,383 shares registered under the
Securities Act pursuant to this prospectus, will, in the future, have a
depressive effect on the market price of our Common Stock, and such sales, if
substantial might also adversely affect the Company's ability to raise
additional capital. See "Description of Securities" and "Plan of Distribution."
PLAN OF DISTRIBUTION
Alottafun is registering the shares on behalf of the selling
shareholders. Selling shareholders include donees and pledgees selling shares
received from a named selling shareholder after the date of this prospectus. All
costs, expenses and fees in connection with the registration of the shares
offered by this prospectus will be borne by Alottafun. Brokerage commissions and
similar selling expenses, if any, attributable to the sale of shares will be
borne by the selling shareholders.
Sales of shares may be effected by selling shareholders from time to
time in one or more types of transactions (which may include block transactions)
on Nasdaq, in the over-the-counter market, in negotiated transactions, through
put or call options transactions relating to the shares, through short sales of
shares, or a combination of such methods of sale, at market prices prevailing at
the time of sale, or at negotiated prices. Such transactions may or may not
involve brokers or dealers.
The selling shareholders have advised Alottafun that they have not
entered into any agreements, understandings or arrangements with any
underwriters or brokers-dealers regarding the sale of their securities. In
addition, there is not an underwriter or coordinating broker acting in
connection with the proposed sale of shares by the selling shareholders.
15
The selling shareholders may effect such transactions by selling shares
directly to purchasers or to or through broker-dealers, which may act as agents
or principals. Such broker-dealers may receive compensation in the form of
discounts, concessions, or commissions from the selling shareholders and/or the
purchasers of shares for whom such broker-dealers may act as agents or to whom
they sell as principal, or both. The compensation paid as to a particular
broker-dealer might be in excess of customary commissions.
The selling shareholders and any broker-dealers that act in connection
with the sale of shares might be deemed to be underwriters within the meaning of
Section 2(11) of the Securities Act. And, any commissions received by such
broker-dealers and any profit on the resale of the shares sold by them while
acting as principals might be deemed to be underwriting discounts or commissions
under the Securities Act.
Because selling shareholders may be deemed to be underwriters within
the meaning of Section 2(11) of the Securities Act, the selling shareholders
will be subject to the prospectus delivery requirements of the Securities Act.
Alottafun has informed the selling shareholders that the anti-manipulative
provisions of Regulation M promulgated under the Exchange Act may apply to their
sales in the market.
Upon Alottafun being notified by a selling shareholder that any
material arrangement has been entered into with a broker-dealer for the sale of
shares through a block trade, special offering, exchange distribution or
secondary distribution or a purchase by a broker or dealer, a supplement to this
prospectus will be filed, if required, pursuant to Rule 424(b) under the Act.
The supplement shall disclose (1) the name of each such selling shareholder and
of the participating broker-dealer(s), (2) the number of shares involved, (3)
the price at which such shares were sold, (4) the commissions paid or discounts
or concessions allowed to such broker-dealer(s), where applicable, (5) that such
broker-dealer(s) did not conduct any investigation to verify the information set
out or incorporated by reference in this prospectus and (6) other facts material
to the transaction. In addition, upon Alottafun being notified by a selling
shareholder that a donee or pledgee intends to sell more than 500 shares, a
supplement to this prospectus will be filed.
WHERE YOU CAN FIND MORE INFORMATION
We will continue to file annual, quarterly and special reports, proxy
statements and other information with the SEC. Our SEC filings will be available
to the public over the Internet at the SEC's web site at http://www.sec.gov. You
may also read and copy any document we file at the SEC's public reference room
at 450 Fifth Street, N.W., Washington, D.C. 20549. These documents are also
available at the public reference rooms at the SEC's regional offices in New
York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference rooms.
We have filed a registration statement on Form SB-2 under the
Securities Act of 1933 with the SEC. This prospectus is part of that
registration statement and, as permitted by the SEC's rules, does not contain
all of the information included in the registration statement. For further
information about us and our common stock, you may refer to the registration
statement and its exhibits and schedules. You can review and copy these
documents at the public reference facilities maintained by the SEC or on the
SEC's web site as described above.
This prospectus may contain summaries of contracts or other documents.
If you would like complete information about a contract or other document, you
should read the copy filed as an exhibit to the registration statement.
16
LEGAL MATTERS
Legal matters in connection with this offering are being passed upon by
the law firm of Michael S. Krome, P.C. Michael S. Krome, P.C. was the owner of
300,000, paid in exchange legal services performed in connection with this
registration statement and other general corporate matters.
EXPERTS
The financial statements included in this prospectus and in the
registration statement have been audited by Pender Newkirk and Company,
independent certified public auditors, to the extent and for the period set
forth in their report appearing elsewhere herein and in the registration
statement, and are included in reliance upon such report, given upon the
authority of Pender Newkirk and Company, as experts in auditing and accounting.
This report contains an explanatory paragraph indicating substantial doubt about
our ability to continue as a going concern.
You should rely only on the information contained in this prospectus. We have
not authorized anyone to provide you with different information. We are not
making an offer of these securities in any jurisdiction where the offer or sale
is not permitted. You should not assume that the information contained in this
prospectus is accurate as of any date other than the date on the front cover of
this prospectus.
TABLE OF CONTENTS
Page
----
Prospectus Summary...........................
Summary Financial Information................
Risk Factors.................................
Forward-Looking Information..................
Use of Proceeds..............................
Dilution.....................................
Selected Financial Data......................
Management's Discussion and
Analysis of Financial Condition
and Results of Operations....................
Business.....................................
Management...................................
Security Ownership of Certain
Beneficial Owners and Management.............
Selling and Principal Shareholders...........
Certain Transactions.........................
Description of Securities....................
Shares Eligible for Future Sale..............
Plan of Distribution.........................
Legal Matters................................
Experts......................................
Financial Statements.........................
Until January ___, 2001, all dealers that effect transaction in these
securities, whether or not participating in this offering, may be required to
deliver a prospectus. This is in addition to the obligation of dealers to
deliver a prospectus when acting as underwriters and with respect to their
unsold allotments or subscriptions
ALOTTAFUN, INC.
----------------
PROSPECTUS
----------------
----------------
January , 2001
17
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
-------------------------------------------
The following table sets forth the expenses, other than the
underwriting discounts and commissions, paid or payable by the Registrant in
connection with the distribution of the securities being registered. All amounts
are estimates except the SEC registration fee, the NASD filing fee and the
Nasdaq National Market listing fee.
Securities and Exchange Commission registration fee........ $240
Accounting fees and expenses............................... $10,000
Legal fees and expenses.................................... $25,000
Printing and engraving expenses............................ $ 2,500
Blue Sky fees and expenses (including legal fees).......... $ 2,500
TOTAL.............................................. $40,240
=======
Item 14. Indemnification of Directors and Officers.
-----------------------------------------
Limitation of Liability and Indemnification matters
The Registrant's certificate of incorporation limits the
liability of the Registrant's directors to the maximum extent permitted by
Delaware law. Delaware law provides that a director of a corporation will not be
personally liable for monetary damages for breach of that individual's fiduciary
duties as a director except for liability for (1) a breach of the director's
duty of loyalty to the corporation or its stockholders, (2) any act or omission
not in good faith or that involves intentional misconduct or a knowing violation
of the law, (3) unlawful payments of dividends or unlawful stock repurchases or
redemptions, or (4) any transaction from which the director derived an improper
personal benefit.
This limitation of liability does not apply to liabilities
arising under federal securities laws and does not affect the availability of
equitable remedies such as injunctive relief or rescission.
The Delaware General Corporation Law provides that a
corporation may indemnify directors and officers, as well as other employees and
individuals, against attorneys' fees and other expenses, judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with any threatened, pending or completed actions, suits or
proceedings in which such person was or is a party or is threatened to be made a
party by reason of such person being or having been a director, officer,
employee or agent of the corporation. The Delaware General Corporation Law
provides that this is not exclusive of other rights to which those seeking
indemnification may be entitled under any bylaw, agreement, vote of stockholders
or disinterested directors or otherwise.
The Registrant's certificate of incorporation and bylaws
provide that the Registrant is required to indemnify its directors and officers
to the maximum extent permitted by law. The Registrant's bylaws also require the
Registrant to advance expenses incurred by an officer or director in connection
with the defense of any action or proceeding arising out of that party's status
or service as a director or officer of the Registrant or as a director, officer,
employee benefit plan or other enterprise, if serving as such at the
Registrant's request. The Registrant's bylaws also permit the Registrant to
secure insurance on behalf of any director or officer for any liability arising
out of his or her actions in a representative capacity. The Registrant intends
to enter into indemnification agreements with its directors and some of its
officers containing provisions that (1) indemnify, to the maximum extent
permitted by Florida law, those directors and officers against liabilities that
may arise by reason of their status or service as directors or officers except
liabilities arising from willful misconduct of a culpable nature, (2) to advance
their expenses incurred as a result of any proceeding against them as to which
they could be indemnified, and (3) to obtain directors' and officers' liability
insurance if maintained for other directors or officers.
18
The Registrant's predecessor limited liability company had
liability insurance for its management committee members and officers and the
Registrant intends to obtain directors' and officers' liability insurance for
its directors and officers.
Reference is also made to the Underwriting Agreement to be
filed as Exhibit 3(g) to the Registration Statement for information concerning
the underwriters' obligation to indemnify the Registrant and its officers and
directors in certain circumstances.
Item 15. Recent Sales of Unregistered Securities.
---------------------------------------
The following information describes sales of unregistered
securities by the Registrant since September 30, 1999.
------------------
Recent Sales of Unregistered Securities
For the 12 months ended, December 31, 1999, we raised approximately
$205,000 through the sale of 3,675,750 shares of our Common Stock to
approximately 11 unaffiliated investors. We relied upon Rule 504 of Regulation D
and Section 4(2) for the issuance of these securities.
In connection with the execution of their employment agreements in
January, 1999, Mr. Porter and Mr. Bezalel were each granted options to acquire
up to 2,500,000 shares of the Common Stock at an exercise price of $.15 per
share. In addition, Mr. Couture was granted an option to acquire 500,000 shares
of the Common Stock also at an exercise price of $.15. We relied upon Section
4(2) for the issuance of these securities. See "Executive Compensation
Employment Agreements".
In April, 1999, Mr. Porter agreed to transfer 325,000 shares of
Alottafun! Common Stock he owns to an unaffiliated party as part of an agreement
to satisfy obligations of Alottafun! he personally assumed in 1996. The resale
of these shares in satisfaction of this indebtedness pursuant to Rule 144 may
have an adverse effect on the market price of our Common Stock.
In January, 2001, we issued an aggregate of 1,000,000 shares of our
restricted Common Stock to Couture & Company in connection with consulting
services. We relied upon Section 4(2) for the issuance of these securities. See
"Certain Relationships and Related Transactions".
In January, 2001 We have agreed to issue a total of 550,000 shares to
our outside general corporate counsel for legal services. We relied upon Section
4(2) for the issuance of these securities.
We have 10,000,000 of our Common Stock reserved for issue under our Stock
Option Plan.
In February 1999, Mr. Porter and Mr. Bezalel entered into a stockholders
agreement with Alottafun! in connection with issuance of 1,000,000 shares each
to Mr. Porter and Mr. Bezalel of Series A Voting Preferred Stock. These shares
were issued for nominal consideration. We relied upon Section 4(2) for the
issuance of these securities. See "Description of Securities - Preferred Stock".
In addition, we have issued 4,557,500 shares of Common Stock to certain of
our stockholders for the period of January 1, 2000 through December 31, 2000,
which are being registered hereunder as set forth in the following table:
19
Number of % of shares
Name shares offered Outstanding
---- -------------- -----------
Thomas Narekian 70,000 .002
Thomas Narekian, Jr. 57,000 .001
Stephan Happas(3) 600,000 .021
Steven Donnelly 193,750 .007
Gregory Boyd 30,000 .001
Anita Harrington 30,000 .001
Michael Petrilli 60,000 .002
Larry Petrilli 60,000 .002
Harry & Beverly Oxford 25,000 .0008
Jeff Hull(1) 75,000 .002
Chris Nguyen 150,000 .005
W.J. Manion 250,000 .008
Clay Realty, Inc.(2) 4,000,000 .139
Hornblower & Weeks(1) 740,000 .025
Don Aue(1) 40,000 .001
Jacob Perl(1) 330,000 .012
Michele Carew(1) 200,000 .006
Bruce Lipshitz(1) 175,000 .006
Herman Heinlein(1) 400,000 .014
James Hohrine(1) 2,500 ----
Mike Ferrara(1) 20,000 ----
Joseph Grinbaum(1) 20,000 ----
Frank Teresa 50,000 .002
Total: 7,578,250
----- ---------
(1) Represents shares issued in exchange for services.
(2) Includes 250,000 Shares issued in connection with penalty
provisions of Loan Agreement
(3) Represents shares issued in exchange for services and settlement
of debt.
For all such transactions, the Company relied upon Sections 4(2) and 3(b) of the
Securities Act of 1933 as an exemption available from the registration
requirements of Section 5 of the Securities Act of 1933 for transactions by an
issuer not involving a public offering. Each person receiving options or shares
represented that such person was acquiring interest for investment purposes
only.
Item 16. Exhibits and Financial Statement Schedule.
-----------------------------------------
(a) The following documents are filed as part of this report:
(1)(2) CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL
STATEMENT SCHEDULES. A list of the Consolidated Financial
Statements filed as part of this Report is set forth in Item
8 and appears at Page F-1 of this Report; which list is
incorporated herein by reference. The Financial Statement
Schedules and the Report of Independent Auditors as to
Schedules follow the Exhibits.
(b) (3) EXHIBITS.
All of the items below are incorporated by reference to the Registrant's
General Form 10-SB and amendments for Registration of Securities as previously
filed.
20
EXHIBITS AND SEC REFERENCE NUMBERS
Number Title of Document
------ -----------------
2(a) Certificate of Incorporation (2)
2(b) Plan of Merger (2)
2(c) Agreement and Plan of Merger (2)
2(d) Certificate of Merger (2)
2(e) Amendment to Certificate of Incorporation to Increase Authorized Shares (2)
2(f) ByLaws (2)
3(a) Amended and Restated Certificate of Designation, Preferences and Rights of
Preferred Stock(2)
3(b) Convertible Debenture Agreement by and between Alottafun! and Lampton, Inc. and GEM
Management Limited dated December 8, 1998 (2)
3(c) 2% Convertible Debenture (2)
3(d) Warrant to Purchase Common Stock (2)
3(e) Escrow Agreement (2)
3(f) Preferred Shareholder Agreement (2)
3(g) Form of Subscription Agreement for Selling Shareholders (5)
5.1 Legal Opinion of Johnson, Blakely, Pope, Bokor, Ruppel & Burns, P.A.(1)
6(a) Agreement by and between Michael Porter and Brian Henke (2)
6(b) Employment Contract with Michael Porter dated 1/22/99 (2)
6(c) Employment Contract with David Bezalel dated 1/22/99 (2)
6(d) Employment Contract with Gerald Couture dated 1/22/99 (2)
6(e) Amended Investment Agreement by and between Alottafun! and Swartz
Private Equity, LLC dated June 3, 1999 (4)
6(f) Amended Registration Rights Agreement by and between Alottafun! and Swartz Private Equity,
LLC dated June 3, 1999 (2)
6(g) Stock Option Plan of Alottafun! dated May 1999 (3)
6(h) Joint Venture Agreement by and between Alottafun! and E-Commerce Fulfillment, L.L.C. dated May 17, 1999 (3)
6(i) Agreement of Waiver dated February 7, 2000 between Alottafun and Swartz Private Equity, LLC (5)
23.1 Consent of Pender, Newkirk & Company, C.P.A.'s, independent auditors (1)
(1) Filed herewith.
(2) Filed as exhibits to Form 10-SB filed on June 9, 1999.
(3) Filed as exhibits to Form 10-SB/A filed on September 21, 1999.
(4) Filed as exhibits to Form 10-SB/A filed on November 2, 1999.
(5) Filed as exhibits to Form SB-2 filed on July 12, 2000
(c) Reports on Form 8-K
21
Item 17. Undertakings.
------------
The undersigned registrant hereby undertakes to provide to the
underwriters at the closing, specified in the Underwriting Agreement,
certificates in such denominations and registered in such names as required by
the underwriters to permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933, as amended, may be permitted to directors, officers, and
controlling persons of the Company pursuant to the foregoing provisions, or
otherwise, the Company 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 Company of expenses incurred or paid by a director, officer, or
controlling person of the Company 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 Company 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 of 1933, as amended, and will be governed by the final adjudication of such
issue.
The undersigned registrant hereby further undertakes that:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended (the "Act");
(ii) To reflect in the Prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereto) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement;
(iii)To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under
the 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.
For purposes of determining any liability under
the Securities Act of 1933, the information omitted from the form of Prospectus
filed as part of this Registration Statement in reliance upon Rule 430A and
contained in a form of prospectus filled by the registrant pursuant to Rule
424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part
of this Registration Statement as of the time it was declared effective.
For the purpose of determining any liability under
the Securities Act of 1933, each post-effective amendment that contains a form
of prospectus 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.
22
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant has duly caused this Amendment No. 1 to Form SB-2 to Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in West Bend, Wisconsin, on this day of January, 2001.
ALOTTAFUN, INC.
Date: January 31, 2001 By: /s/ Michael Porter
-----------------------
Michael Porter
Chief Executive Officer,
Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Registration Statement has been signed below by the following persons, in
the capacities indicated, on the dates stated.
Signature Capacity Date
- --------- -------- ----
/s/ Michael Porter Chairman of the Board January 31, 2001
- ------------------ Chief Executive Officer,
Michael Porter President
/s/ David Bezalel Chief Operating Officer, January 31, 2001
- ----------------- Vice President and Director
David Bezalel
LEGEND TO BE INSERTED ALONG LEFT-HAND SIDE OF COVER PAGE OF PROSPECTUS:
The information in this prospectus is not complete and may be changed.
Alottafun!, Inc. may not sell these securities until the registration statement
filed with the Securities and Exchange Commission is effective. This prospectus
is not an offer to sell these securities and it is not soliciting an offer to
buy these securities in any jurisdiction where the offer or sale is not
permitted.