SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
ALANCO TECHNOLOGIES, INC.
(Exact name of registrant specified in charter)
Arizona 86-0220694
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
15575 North 83rd Way, Suite 3
Scottsdale, Arizona 85260
(480) 607-1010
(Address and telephone number of principal executive offices)
Robert R. Kauffman
Chief Executive Officer
Alanco Technologies, Inc.
15575 North 83rd Way, Suite 3
Scottsdale, Arizona 85260
(480) 607-1010
(Name, address and telephone number of agent for service)
With a Copy to:
Steven P. Oman, Esq.
10446 N. 74th Street, Suite 130
Scottsdale, Arizona 85258
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: FROM TIME TO TIME AFTER THE EFFECTIVENESS OF THIS REGISTRATION
STATEMENT
IF THE ONLY SECURITIES BEING REGISTERED ON THIS FORM ARE BEING OFFERED PURSUANT
TO DIVIDEND OR INTEREST REINVESTMENT PLANS, PLEASE CHECK THE FOLLOWING BOX. [ ]
IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED ON A
DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF
1933, OTHER THAN SECURITIES OFFERED ONLY IN CONNECTION WITH DIVIDEND OR INTEREST
REINVESTMENT PLANS, CHECK THE FOLLOWING BOX. [X]
IF THIS FORM IS FILED TO REGISTER ADDITIONAL SECURITIES FOR AN OFFERING PURSUANT
TO RULE 462(b) UNDER THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE
SECURITIES ACT REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE
REGISTRATION STATEMENT FOR THE SAME OFFERING. [ ]
IF THIS FORM IS A POST-EFFECTIVE AMENDMENT FILED PURSUANT TO RULE 462(c) UNDER
THE SECURITIES ACT, CHECK THE FOLLOWING BOX AND LIST THE SECURITIES ACT
REGISTRATION STATEMENT NUMBER OF THE EARLIER EFFECTIVE REGISTRATION STATEMENT
FOR THE SAME OFFERING. [ ]
IF DELIVERY OF THE PROSPECTUS IS EXPECTED TO BE MADE PURSUANT TO RULE 434,
PLEASE CHECK THE FOLLOWING BOX. [ ]
CALCULATION OF REGISTRATION FEE
Title of each Proposed Amount of
class of securities maximum aggregate registration
to be registered Amount to be Registered offering price (1) fee
---------------- ----------------------- ----------------- ------------
Class A Common Stock 2,625,000 $0.45 $108.68
(1) Calculated for purposes of this offering under Rule 457(c) under the
Securities Act of 1933 using the average of the high and low sales prices for
the Company's Class A Common Stock on the NASDAQ SmallCap Market as of February
21, 2003.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
SUBJECT TO COMPLETION, DATED FEBRUARY 25, 2003
PROSPECTUS
ALANCO TECHNOLOGIES, INC.
2,625,000 Shares of Class A Common Stock
THE SHARES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" ON PAGE 5 FOR INFORMATION THAT YOU SHOULD CONSIDER.
This prospectus is being used in connection with offerings from time to time by
some of our stockholders. We issued the shares offered in this prospectus to the
selling stockholders in connection with a private placement financing completed
in 2002. We expect that sales of shares of Class A Common Stock under this
prospectus will be made
o in broker's transactions;
o in transactions directly with market makers; or
o in privately negotiated sales or otherwise.
The selling stockholders will determine when they will sell their shares, and in
all cases they will sell their shares at the current market price or at
negotiated prices at the time of the sale. We will pay the expenses incurred to
register the shares for resale, but the selling stockholders will pay any
underwriting discounts, concessions, or brokerage commissions associated with
the sale of their shares of Class A Common Stock. The selling stockholders and
the brokers and dealers that they utilize may be deemed to be "underwriters"
within the meaning of the securities laws, and any commissions received and any
profits realized by them on the sale of shares may be considered to be
underwriting compensation. See "Plan of Distribution."
The selling stockholders own all 2,625,000 shares of Class A Common Stock. We
will not receive any part of the proceeds from the sale of the shares. The
registration of the shares on behalf of the selling stockholders, however, does
not necessarily mean that any of the selling stockholders will offer or sell
their shares under this registration statement, or at any time in the near
future.
Our Class A Common Stock is listed on the NASDAQ SmallCap Market, or NASDAQ,
under the symbol "ALAN." On February 21, 2003, the last sale price of our Class
A Common Stock on NASDAQ was $0.46 per share.
You should read this prospectus and any prospectus supplements carefully before
deciding to invest.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectus is ____________________, 2002.
TABLE OF CONTENTS
Page
Summary 5
Risk Factors 5
Safe Harbor Statements Under the Private Securities
Litigation Reform Act of 1995 9
Issuance of Securities to Selling Stockholders 9
Use of Proceeds 10
Plan of Distribution 10
Selling Stockholders 12
Description of Securities 14
Legal Matters 17
Experts 17
Where You Can Find More Information 17
Information Incorporated by Reference 17
SUMMARY
The following summary does not contain all of the information that may
be important to purchasers of our Class A Common Stock. Prospective purchasers
of Class A Common Stock should carefully review the detailed information and
financial statements, including notes thereto, appearing elsewhere in or
incorporated by reference into this prospectus.
The Company
Our company, Alanco Technologies, Inc., together with our subsidiaries, is a
provider of advanced information technology solutions. Our operations at the end
of fiscal 2002 (June 30, 2002) were diversified into two reporting business
segments including: (i) design, production, marketing and distribution of RFID
tracking technology, and (ii) manufacturing, marketing and distribution of data
storage products.
Effective June, 2002, we acquired radio frequency identification tracking
technology, known as "RFID", through the acquisition of the operations of
Technology Systems International, Inc., a Nevada corporation. We continue to
participate in the data storage market through two wholly-owned subsidiaries:
Arraid, Inc., a manufacturer of proprietary storage products to upgrade older
"legacy" computer systems; and Excel/Meridian Data, Inc., a manufacturer of
network attached storage systems for mid-range organizations.
Our principal executive offices are located at 15575 North 83rd Way, Suite 3,
Scottsdale, AZ 85260, and our telephone number is (480) 607-1010.
The Offering
Securities offered by the Selling Shareholders....2,625,000 shares of Class A
Common Stock
Class A Common Stock currently outstanding........20,059,059 shares (1)
Use of proceeds...................................We will not receive any of the
proceeds of sales of Class A
Common Stock by the Selling
Shareholders. We may, however,
receive proceeds from the
exercise of certain rights
held by some of the Selling
Shareholders under stock
options or warrants to
purchase Class A Common Stock
from us if that is the origin
of shares sold by those
Selling Shareholders.
Risk Factors......................................Prospective purchasers should
carefully consider the
factors discussed under
"Risk Factors."
NASDAQ symbol.....................................ALAN
(1) Excludes (i) 5,755,875 shares of Class A Common Stock reserved for
issuance upon exercise of stock options outstanding as of January 22,
2003; (ii) 3,581,125 shares reserved for issuance upon the exercise of
stock options that may be granted in the future under our stock option
plans; (iii) 3,235,715 shares reserved for issuance upon exercise of
outstanding warrants; and (iv) 873,340 shares reserved for issuance
upon conversion of the Series B Convertible Preferred Stock.
RISK FACTORS
An investment in Alanco involves a high degree of risk. In addition to the other
information included in this prospectus, you should carefully consider the
following risk factors in determining whether or not to purchase the shares of
Class A Common Stock offered under this prospectus. These matters should be
considered in conjunction with the other information included or incorporated by
reference in this prospectus. This prospectus contains statements which
constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements appear in a number of
places in this prospectus and include statements regarding the intent, belief or
current expectations of our management, directors or officers primarily with
respect to our future operating performance. Prospective purchasers of our
securities are cautioned that these forward-looking statements are not
guarantees of future performance and involve risks and uncertainties. Actual
results may differ materially from those in the forward-looking statements as a
result of various factors. The accompanying information contained in this
prospectus, including the information set out below, identifies important
factors that could cause such differences. See "Safe Harbor Statements Under the
Private Securities Litigation Reform Act of 1995."
TSI acquisition. We recently acquired Technology Systems International, Inc.
("TSI"). The following risks are relevant with respect to the recent
acquisition:
o We must successfully operate the storage businesses that we already
have, as well as integrate and successfully operate the TSI operations
as contemplated by the acquisition. The process of integrating
management operations, facilities, accounting, billing and collection
systems, and other information systems requires continued investment of
time and resources and can involve difficulties, which could have a
material adverse effect on our business, financial condition, cash
flows and results of operations.
o Our business model for the TSI business projects significant growth in the
corrections market. We do not have experience in increasing market share
in the corrections market and there is no certainty that we will be able to
capture the required market share for TSI to achieve its anticipated
financial success. The TSI RFID technology is currently being marketed to
the corrections market to monitor the continuous location of incarcerated
prisoners. Although there are a number of monitoring systems being
marketed to the corrections industry, the TSI RFID system is currently the
only system, to the best of our knowledge, that is able to continuously
(every two seconds) monitor the location of prisoners, both inside and
outside of buildings. There is no certainty that the corrections industry
will adopt this technology broadly enough for us to reach our marketing
projections.
o We purchase sub-components for the location and tracking system
technology from a limited number of subcontractors that have the
required technology to produce the sub-components in the quantities
required. We cannot be assured that required sub-components will be
available in the quantities and at the prices and terms anticipated.
o Our TSI products are reliant on key personnel who developed and
understand the technology. The loss of the services of those key
technology personnel could have an adverse effect on the business,
operating results and financial condition of our company.
We are subject to the budget constraints of the governmental agencies purchasing
TSI's monitoring systems, which could result in a significant decrease in our
anticipated revenues. We are subject to the budget constraints of the
governmental agencies to whom we plan to sell the TSI monitoring systems. We
cannot assure you that such governmental agencies will have the necessary
revenue to purchase the systems even though they may want to do so. The funds
available to governmental agencies are subject to various economic and political
influences. Even though the TSI monitoring system may be recommended for
purchase by corrections facility managers, the governmental agency responsible
for the facility may not have sufficient budget resources to purchase the
system.
General economic conditions. Recent unfavorable economic conditions and reduced
information technology spending by our customers have adversely affected our
business in recent quarters. If the economic conditions worsen, we may
experience a material adverse impact on our business, operating results, and
financial condition. Our data storage product division sells systems designed to
up-grade and enhance older Legacy computer systems as well as network attached
storage systems to mid-sized network users. The recent economic conditions have
resulted in reduced spending by our customers for technology in general,
including the data storage systems sold by us. We have reduced overhead to
assist in offsetting our reduced sales volume; however, no assurance can be
given that the current economic conditions will not worsen further exacerbating
the sales slowdown. The TSI RFID system sales are less dependent upon current
economic conditions as most of the system purchasers are governmental agencies.
However, the current economic conditions do have an impact on governmental
budgets, thereby potentially impacting our sales. See the previous section
discussing the budget constraints of our governmental purchasers.
Acts of domestic terrorism and war have impacted general economic conditions and
may impact the industry and our ability to operate profitably. On September 11,
2001, acts of terrorism occurred in New York City and Washington, D.C. On
October 7, 2001, the United States launched military attacks on Afghanistan. As
a result of those terrorist acts and acts of war, there has been a disruption in
general economic activity. The demand for our data storage products and services
have declined as layoffs in industries affect the economy as a whole. There may
be other consequences resulting from those acts of terrorism, and any others
which may occur in the future, including civil disturbance, war, riot,
epidemics, public demonstration, explosion, freight embargoes, governmental
action, governmental delay, restraint or inaction, quarantine restrictions,
unavailability of capital, equipment, personnel, which we may not be able to
anticipate. These terrorist acts and acts of war may continue to cause a slowing
of the economy, and in turn, reduce the demand of our data storage products and
services, which would harm our ability to make a profit. Also, as federal
dollars are redirected to military efforts, they may not be available for the
purchase of new federal prison monitoring systems. We are unable to predict the
long-term impact, if any, of these incidents or of any acts of war or terrorism
in the United States or worldwide on the U.S. economy, on us or on the price of
our stock.
Future capital and liquidity needs; Uncertainty of proceeds and additional
financing. We believe that, based on our fiscal 2003 operating plan, cash flow
will be adequate to meet our anticipated future requirements for working capital
expenditures, scheduled lease payments and scheduled payments of interest on our
indebtedness. We will need to materially reduce expenses, or raise additional
funds through public or private debt or equity financing, or both, if the
revenue and cash flow elements of our 2003 operating plan are not met. If
additional funds are raised through the issuance of equity securities, the
percentage ownership of the then current shareholders of the company will be
reduced, and such equity securities may have rights, preferences or privileges
senior to those of the holders of Class A Common Stock. If we need to seek
additional financing to meet working capital requirements, there can be no
assurance that additional financing will be available on terms acceptable to us,
or at all. If adequate funds are not available or are not available on
acceptable terms, our business, operating results, financial condition and
ability to operate will be materially adversely affected.
Recent losses; Fluctuations in operating results. We had a consolidated net loss
of $6,011,200 for the fiscal year ending June 30, 2002, and a consolidated net
loss of $2,994,500 for the fiscal year ending June 30, 2001. In addition, our
quarterly operating results have fluctuated significantly in the past and could
fluctuate significantly in the future. We anticipate our financial performance
will be significantly impacted by our acquisition of the TSI RFID technology
effective June 1, 2002. As a result, our past quarterly operating results should
not be used to predict future performance.
Intellectual property. Our business strategy is to continue the growth of our
data storage businesses and develop the TSI business opportunity. The long-term
success of this strategy depends in part upon the TSI intellectual property
acquired. Third parties may hold United States or foreign patents which may be
asserted in the future against the TSI technology, and there is no assurance
that any license that might be required under such patents could be obtained on
commercially reasonable terms, or otherwise. Our competitors may also
independently develop technologies that are substantially equivalent or superior
to our technology. In addition, the laws of some foreign countries do not
protect our proprietary rights to the same extent as the laws of the United
States.
Despite our efforts to safeguard and maintain our proprietary rights both in the
United States and abroad, there can be no assurance that we will be successful
in doing so or that the steps taken by us in this regard will be adequate to
deter infringement, misuse, misappropriation or independent third-party
development of our technology or intellectual property rights or to prevent an
unauthorized third party from copying or otherwise obtaining and using our
products or technology. Litigation may also become necessary to defend or
enforce our proprietary rights. Any of such events could have a material adverse
effect on our business, operating results and financial condition.
Dependence on key personnel. Our performance is substantially dependent on the
services and performance of our executive officers and key employees. The loss
of the services of any of our executive officers or key employees could have a
material adverse effect on our business, operating results and financial
condition. Our future success will depend on our ability to attract, integrate,
motivate and retain qualified technical, sales, operations and managerial
personnel. None of our executive officers are bound by an employment agreement
or covered by key-man insurance.
Competition. Although early in the market development cycle, the TSI
business/technology has no current, identified direct competitors. However, it
can be expected that if and to the extent that the demand for the TSI technology
increases, the number of competitors will likely increase. Increasing
competition could adversely affect the amount of new business we are able to
attract, the rates we are able to charge for our services and/or products, or
both.
Relative to our data storage businesses, we operate in a very competitive
environment, competing against numerous other companies, many of whom have
greater financial resources and market position than we do.
Possible exercise and issuance of options and warrants may dilute interest of
shareholders. As of the date of this prospectus, options to purchase 5,755,875
shares of our Class A Common Stock were outstanding, and the weighted average
exercise price of such options was $0.97. Additionally, warrants to purchase
3,235,715 shares of our Class A Common Stock were outstanding, and the weighted
average exercise price of such warrants was $1.04. To the extent that any stock
options currently outstanding or granted in the future are exercised, dilution
to the interests of our shareholders may occur.
Possible de-listing of our stock on NASDAQ. Our Class A Common Stock currently
trades on the NASDAQ SmallCap Market under the symbol "ALAN." However, there can
be no assurance that an active trading market in our Class A Common Stock will
be available at any particular future time. As of the date of this prospectus,
we have received notice from NASDAQ that our stock price does not meet the
NASDAQ listing eligibility requirement of a minimum closing bid price of $1.00.
NASDAQ determined that we did meet the initial listing requirements for the
NASDAQ SmallCap Market and gave us until February 10, 2003, to meet the closing
bid price requirement. However, pursuant to a press release issued by NASDAQ on
January 30, 2003, wherein NASDAQ announced plans to extend the bid price grace
period for SmallCap issuers who demonstrate compliance with the core SmallCap
initial listing criteria from 180 to up to 540 days, the Company's grace period
for meeting the minimum closing bid price would be extended to February 2004. As
the NASDAQ proposal awaits approval by the Securities and Exchange Commission,
the Company cannot be assured that the bid price grace period will be extended.
If the proposal is not approved, we may receive written notification from NASDAQ
that our securities will be delisted. At that time, we may appeal NASDAQ's
delisting determination to a Listing Qualification Panel. There can be no
assurance that we will be in compliance with the continued listing standards in
the future. If we are delisted, we may not be able to secure listing on other
exchanges or quotation systems. This would materially adversely affect the price
and liquidity of our common stock.
Payment of dividends. We do not anticipate that we will pay cash dividends on
our Class A Common Stock in the foreseeable future. The payment of dividends by
us will depend on our earnings, financial condition, and such other factors, as
our Board of Directors may consider relevant. We currently plan to retain
earnings to provide for the development of our business.
Our articles of incorporation and Arizona law may have the effect of making it
more expensive or more difficult for a third party to acquire, or to acquire
control, of us. Our articles of incorporation make it possible for our Board of
Directors to issue preferred stock with voting or other rights that could impede
the success of any attempt to change control of us. Arizona law prohibits a
publicly held Arizona corporation from engaging in certain business combinations
with certain persons, who acquire our securities with the intent of engaging in
a business combination, unless the proposed transaction is approved in a
prescribed manner. This provision has the effect of discouraging transactions
not approved by our Board of Directors as required by the statute which may
discourage third parties from attempting to acquire us or to acquire control of
us even if the attempt would result in a premium over market price for the
shares of common stock held by our stockholders.
The market price of our Class A Common Stock may fluctuate significantly in
response to a number of factors, some of which are beyond our control. These
factors include:
o progress of our products through development and marketing;
o announcements of technological innovations or new products by us or our
competitors;
o government regulatory action affecting our products or competitors'
products in both the United States and foreign countries;
o developments or disputes concerning patent or proprietary rights;
o actual or anticipated fluctuations in our operating results;
o the loss of key management or technical personnel;
o the loss of major customers or suppliers;
o the outcome of any future litigation;
o changes in our financial estimates by securities analysts;
o general market conditions for emerging growth and technology companies;
o broad market fluctuations;
o recovery from natural disasters; and
o economic conditions in the United States or abroad.
Future sales of our Class A Common Stock in the public market could adversely
affect our stock price and our ability to raise funds in new equity offerings.
We cannot predict the effect, if any, that future sales of shares of our common
stock or the availability for future sale of shares of our common stock or
securities convertible into or exercisable for our common stock will have on the
market price of our common stock prevailing from time to time. For example, the
availability of the shares covered by this S-3 registration statement for sale,
or of common stock by our existing stockholders under Rule 144, or the
perception that such sales could occur, could adversely affect prevailing market
prices for our common stock and could materially impair our future ability to
raise capital through an offering of equity securities.
SAFE HARBOR STATEMENTS UNDER THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
This prospectus includes "forward-looking statements" as that term is defined in
the Private Securities Litigation Reform Act of 1995. The safe harbor provisions
of the Securities Exchange Act of 1934 and the Securities Act of 1933 apply to
forward-looking statements made by us. These statements can be identified by the
use of forward-looking terminology such as "believes," "expects," "may," "will,"
"should" or "anticipates" or the negatives or variations of these terms, and
other comparable terminology. In addition, any statements discussing strategy
that involve risks and uncertainties are forward-looking.
Forward-looking statements involve risks and uncertainties, including those
risks and uncertainties identified in the section of this prospectus beginning
on page 5 titled "Risk Factors" and those risks and uncertainties identified
elsewhere in, or incorporated by reference into, this prospectus. Due to these
risks and uncertainties, the actual results that we achieve may differ
materially from these forward-looking statements. These forward-looking
statements are based on current expectations. In preparing this prospectus, we
have made a number of assumptions and projections about the future of our
business. These assumptions and projections could be wrong for several reasons
including, but not limited to, those factors identified in the "Risk Factors"
section.
You are urged to carefully review and consider the various disclosures that we
make in this prospectus, any subsequent prospectus supplements and in our other
reports filed with the SEC. These disclosures attempt to advise interested
parties of the risk factors that may affect our business.
ISSUANCE OF SECURITIES TO SELLING SHAREHOLDERS
The Class A Common Stock subject to this prospectus was issued by us to the
selling shareholders pursuant to a private offering completed in December 2002.
We agreed in this transaction to file a registration statement, of which this
prospectus is a part, to register the resale of the securities issued by us in
this transaction. All of the shares of Class A Common Stock covered by this
prospectus were "restricted securities" under the Securities Act prior to this
registration. The transaction under which the securities were issued is
described in the following paragraph.
The transaction involved the issuance by us of Class A Common Stock, and
warrants to purchase additional shares of Class A Common Stock, to accredited
investors through a private offering in December of 2002. The offering was
comprised of units sold at a price of $1.00 per unit, each unit consisting of
two shares of Class A Common Stock and a warrant to purchase one share of Class
A Common Stock. A total of 3,000,000 shares of Class A Common Stock were issued
in exchange for $1,500,000, or $0.50 per share. In addition, warrants to
purchase 1,500,000 shares of our Class A Common Stock at an exercise price of
$1.00 per share were issued by us to the investors. This prospectus includes all
shares and warrants issued under the private offering, with the exception of
1,250,000 shares of Class A Common Stock and warrants to purchase 625,000 shares
of Class A Common Stock, which were purchased by officers and directors of the
Company through the private offering.
USE OF PROCEEDS
All of the shares of Class A Common Stock being offered under this prospectus
are offered by the selling shareholders, which term includes their transferees,
pledgees or donees or other successors in interest. The proceeds from the sale
of the Class A Common Stock are solely for the account of the selling
shareholders. Accordingly, we will not receive any proceeds from the sale of
Class A Common Stock by the selling shareholders. However, if shares to be sold
by the selling shareholders are first to be acquired by them through exercise of
options or warrants to purchase shares of Class A Common Stock as described in
the previous section (See "Issuance of Securities to Selling Shareholders"),
then we would have received the proceeds required for the exercise of the
options or warrants previously, or contemporaneously to the selling
shareholders' sale of such stock.
PLAN OF DISTRIBUTION
The shares of Class A Common Stock covered by this prospectus and, if
applicable, any prospectus supplements may be offered and sold from time to time
in one or more transactions by the selling stockholders, which term includes
their transferees, pledgees or donees or other successors in interest. These
transactions may involve crosses or block transactions. The selling stockholders
will act independently of us in making decisions with respect to the timing,
manner and size of each sale. The shares of Class A Common Stock may be sold by
one or more of the following means of distribution:
o on any of the U.S. securities exchanges or quotation services where shares
of our common stock are listed or quoted at the time of sale, including
NASDAQ where our common stock is listed as of the date of this prospectus;
o in the over-the-counter market in accordance with the rules of NASDAQ;
o in transactions otherwise than on the exchanges or services or in the
over-the-counter market described above;
o in negotiated transactions or otherwise;
o by pledge or by grant of a security interest in the shares to secure debts
and other obligations; o through the writing of options, whether the
options are listed on an options exchange or otherwise;
o in connection with the writing of non-traded and exchange-traded call
options or put options, in hedge transactions and in settlement of other
transactions in standardized or over-the-counter options;
o through the distribution of the shares by any selling stockholder to its
partners, members or stockholders;
o a block trade in which the broker-dealer so engaged will attempt to
sell shares of common stock as agent, but may position and resell a
portion of the block as principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the broker-dealer
for its own account pursuant to this prospectus;
o short sales;
ordinary brokerage transactions and transactions in which the broker
solicits purchasers; or
o a combination of any of the above transactions.
The selling stockholders may also transfer the shares by gift. We do not know of
any arrangements by the selling stockholders for the sale of any of the shares.
To the extent required, this prospectus may be amended and/or supplemented from
time to time to describe a specific plan of distribution. In addition, any
shares of common stock that qualify for sale pursuant to Rule 144 under the
Securities Act may be sold under Rule 144 rather than pursuant to this
prospectus.
In effecting sales, broker-dealers or agents engaged by the selling stockholders
may arrange for other broker-dealers or agents to participate. The selling
stockholders and any broker-dealers or agents who participate in the
distribution of these shares may be deemed to be "underwriters" under the
Securities Act and any discount, commission, concession or profits received by
these persons might be deemed to be an underwriting discount or commission under
the Securities Act. The selling stockholders who are "underwriters" within the
meaning of the Securities Act will be subject to the prospectus delivery
requirements of the Securities Act.
The selling stockholders may sell their shares at market prices prevailing at
the time of sale, at varying prices at the time of sale, at negotiated prices or
at fixed prices. Each of the selling stockholders reserves the right to accept
and, together with their agents from time to time, to reject, in whole or in
part, any proposed purchase of the shares of common stock to be made directly or
through agents.
The selling stockholders may sell their shares directly to purchasers or may use
broker-dealers or agents to sell their shares. Broker-dealers or agents who sell
the shares may receive compensation in the form of discounts, concessions or
commissions from the selling stockholders or they may receive compensation from
purchasers of the shares for whom they acted as agents or to whom they sold the
shares as principal, or both.
Broker-dealers may agree with the selling stockholders to sell a specified
number of shares at a stipulated price per share. To the extent that these
broker-dealers are unable to do so acting as agent for the selling stockholders,
they may purchase as principals any unsold shares at the price required to
fulfill the broker-dealers' commitment to the selling stockholders.
Broker-dealers who acquire shares as principals may thereafter resell these
shares from time to time in transactions on any of the U.S. securities exchanges
or quotation services where our common stock is listed or quoted, in the
over-the-counter market, in negotiated transactions or by a combination of these
methods of sale or otherwise. These transactions may involve crosses and block
transactions and may involve sales to and through other broker-dealers,
including transactions of the nature described above. Moreover, these
transactions may be at market prices prevailing at the time of sale or at
negotiated prices and, in connection with these resales, these broker-dealers
may pay to or receive from the purchasers of these shares commissions computed
as described above.
From time to time, one or more of the selling stockholders may pledge,
hypothecate or grant a security interest in some or all of the shares owned by
it or them. The pledgees, secured parties or persons to whom the shares have
been hypothecated will, upon foreclosure in the event of default, be deemed to
be selling stockholders. The number of a selling stockholder's shares offered
under this prospectus will decrease as and when the selling stockholder takes
such actions. The plan of distribution for that selling stockholder's shares
will otherwise remain unchanged. In addition, a selling stockholder may, from
time to time, sell the shares short, and, in those instances, this prospectus
may be delivered in connection with the short sales and the shares offered under
this prospectus may be used to cover short sales.
A selling stockholder may enter into hedging transactions with broker-dealers or
other financial institutions, and the broker-dealers or other financial
institutions may engage in short sales of the shares in the course of hedging
the positions they assume with that selling stockholder, including, without
limitation, in connection with distributions of the shares by those
broker-dealers or other financial institutions. A selling stockholder may enter
into options or other transactions with broker-dealers or other financial
institutions that involve the delivery of the shares offered hereby to the
broker-dealers or other financial institutions, who may then resell or otherwise
transfer those shares pursuant to this prospectus. A selling stockholder may
also loan or pledge the securities offered hereby to a broker-dealer, and the
broker-dealer may sell the loaned shares offered hereby pursuant to this
prospectus or upon a default may sell or otherwise transfer the pledged shares
offered hereby pursuant to this prospectus.
The selling stockholders are subject to the applicable provisions of the
Exchange Act and the rules and regulations thereunder, including Regulation M.
This regulation may limit the timing of purchases and sales of any of the shares
by the selling stockholders. The anti-manipulation rules under the Exchange Act
may apply to sales of shares in the market and to the activities of the selling
stockholders and their affiliates. Furthermore, Regulation M may restrict the
ability of any person engaged in the distribution of the shares to engage in
market-making activities with respect to the particular securities being
distributed for a period of up to five business days before the distribution.
These restrictions may affect the marketability of the shares and the ability of
any person or entity to engage in market-making activities with respect to the
shares. In addition, under the securities laws of certain states, the shares of
common stock may be sold in these states only through registered or licensed
brokers or dealers.
We have agreed to indemnify the selling stockholders, each of their officers,
directors and partners and each person controlling such selling stockholders
(within the meaning of Section 15 of the Securities Act) against certain
liabilities, including liabilities under the Securities Act. The selling
stockholders have agreed to indemnify us, each of our officers and directors and
each person controlling us (within the meaning of Section 15 of the Securities
Act) against certain liabilities, including liabilities under the Securities
Act.
We have agreed to maintain the effectiveness of the registration statement until
the earlier of the following registration termination dates:
(1) The time that all of the shares of common stock covered by
this registration statement are sold in accordance with the
intended plan of distribution set forth in this prospectus
and/or in a prospectus supplement; or
(2) January 31, 2005.
No sales may be made pursuant to this prospectus after the earlier of these
registration termination dates unless we amend or supplement this prospectus to
indicate that we have agreed to extend the period of the effectiveness of the
registration statement.
We will pay all fees and expenses incurred in connection with preparing and
filing the registration statement, any amendments to the registration statement,
this prospectus and any prospectus supplements. The selling stockholders will
pay any legal fees of the selling stockholders, broker's fees or commissions and
similar selling expenses, if any, attributable in connection with the sale of
common stock, including stock transfer taxes due or payable in connection with
the sale of the shares.
We may suspend the effectiveness of the registration statement and, upon receipt
of written notice from us, the selling stockholders shall cease using this
prospectus if at any time we determine, in our reasonable judgment and in good
faith, that sales of shares of common stock pursuant to the registration
statement or this prospectus would require public disclosure by us of material
nonpublic information that is not included in the registration statement and
that immediate disclosure of such information would be detrimental to us.
If we suspend the effectiveness of the registration statement, we shall use our
reasonable best efforts to amend the registration statement and/or amend or
supplement the related prospectus if necessary and to take all other actions
necessary to allow any proposed sales by the selling stockholders to take place
as promptly as possible, subject, however, to our right to delay further sales
of shares of common stock until the conditions or circumstances referred to
above have ceased to exist or have been disclosed. We agreed with the selling
stockholders that our right to delay sales of shares of common stock held by the
selling stockholders will not be exercised by us more than twice in any twelve
month period and will not exceed 60 days as to any single delay in any twelve
month period.
We cannot assure you that the selling stockholders will sell all or any of the
common stock offered under the registration statement or any amendment of it.
SELLING STOCKHOLDERS
The following table sets forth certain information, received through December
31, 2002, with respect to the number of shares of our Class A Common Stock
beneficially owned by each selling stockholder. The information set forth below
is based on information provided by or on behalf of the selling stockholders
and, with regard to the beneficial holdings of the selling stockholders, is
accurate only to the extent beneficial holdings information was disclosed to us
by or on behalf of the selling stockholders. The selling stockholders and
holders listed in any supplement to this prospectus, and any transferors,
pledgees, donees or successors to these persons, may from time to time offer and
sell, pursuant to this prospectus and any subsequent prospectus supplement, any
and all of these shares.
Except as otherwise described below, no selling stockholder, to our knowledge,
held beneficially one percent or more of our outstanding Class A Common Stock as
of the date of this prospectus. Because the selling stockholders may offer all,
some or none of the shares of our Class A Common Stock listed below, no estimate
can be given as to the amount or percentage of our Class A Common Stock that
will be held by the selling stockholders upon termination of any of the sales.
Except as indicated below, none of the selling stockholders has held any
position or office or had any other material relationship with us or any of our
predecessors or affiliates within the past three years other than as a result of
the ownership of our securities or the securities of our predecessors. We may
amend or supplement this prospectus from time to time to update the disclosure
set forth in it.
The shares of Class A Common Stock offered by this prospectus may be offered
from time to time by the selling stockholders named below:
SHARES OF CLASS SHARES OF CLASS A COMMON STOCK
NAMES AND ADDRESSES OF THE A COMMON STOCK OFFERED BY THIS PROSPECTUS
SELLING STOCKHOLDERS BENEFICIALLY
OWNED PRIOR TO Shares Shares Available Total
THE OFFERING (1) Owned Under Warrants Shares
John S. Anderson 140,000 50,000 25,000 75,000
11804 N. Sundown Drive
Scottsdale, AZ 85260
David J. & Julie R. Dickerson 140,000 50,000 25,000 75,000
11804 N. Sundown Drive
Scottsdale, AZ 85260
Paul D. Anderson 140,000 50,000 25,000 75,000
9715 N. 94th Place #112
Scottsdale, AZ 85258
David P. & Heidi J. Anderson 140,000 50,000 25,000 75,000
4620 N. 68th Street #164
Scottsdale, AZ 85251
Heartland Systems Co. (2) 700,000 400,000 200,000 600,000
939 Office Park Road, Suite 120
West Des Moines, IA 50265
Richard S. Vanek (3) 710,000 400,000 200,000 600,000
2216 Creekview
Carrollton, TX 75006
Byron L. Stoeser (4) 500,000 300,000 150,000 450,000
19524 230th Avenue, N.E.
Woodinville, WA 98072
The Rhino Fund LLLP (5) 775,000 450,000 225,000 675,000
32065 Castle Court, Suite 700
Evergreen, CO 80439
---------------------------------
(1) The number of shares beneficially owned is determined in accordance
with Rule 13d-3 of the Exchange Act and the information is not
necessarily indicative of beneficial ownership for any other purpose.
Under such rule, beneficial ownership includes any shares as to which
the person has sole or shared voting power or investment power and also
any shares which the person has the right to acquire within 60 days of
the date set forth in the applicable footnote through the conversion of
a security or the exercise of any stock option or other right.
Percentage ownership indicated in the footnotes below is based on
20,059,059 shares of our Class A Common Stock outstanding as of January
22, 2003.
(2) Heartland Systems Co. is the beneficial owner of 3.45% of the Company's
Class A Common Stock. (Refer to Footnote 5 above.)
(3) Richard S. Vanek is the beneficial owner of 3.49% of the Company's
Class A Common Stock. Mr. Vanek is the President of Excel/Meridian
Data, Inc., a wholly owned subsidiary of the Company.
(4) Byron Stoeser is the beneficial owner of 2.47% of the Company's Class
A Common Stock.
(5) The Rhino Fund, LLLP beneficially owns 3.82% of the Company's Class A
Common Stock.
DESCRIPTION OF SECURITIES
Our authorized capital consists of 75,000,000 shares of Class A Common Stock,
25,000,000 shares of Class B Common Stock, and 25,000,000 shares of preferred
stock. The preferred stock is issuable in series with such designation,
preferences, voting rights, privileges, and other restrictions and
qualifications as our Board of Directors may establish in accordance with
Arizona law. There were 20,559,059 shares of Class A Common Stock issued,
20,059,059 shares of Class A Common Stock outstanding, and no shares of Class B
Common Stock issued and outstanding as of January 22, 2003. There were 53,186
shares of Series B Convertible Preferred Stock outstanding as of January 22,
2003. There were no other shares of preferred stock outstanding at January 22,
2003. Shares of the Series B Convertible Preferred Stock are convertible into
shares of Class A Common Stock at a rate of thirteen shares of Class A Common
Stock for every one share of Series B Convertible Preferred Stock. As of January
22, 2003, options to purchase 5,755,875 shares of Class A Common Stock were
outstanding, and the weighted average exercise price of such options was $0.97.
In addition, as of January 22, 2003, the Company had 3,235,715 warrants to
purchase Class A Common Stock outstanding, and the weighted average exercise
price of such warrants was $1.04. Our Class A Common Stock is traded on the
NASDAQ SmallCap Market under the symbol "ALAN". No other securities of the
Company are currently traded on any market.
Common Stock
Holders of shares of our Class A Common Stock are entitled to one vote per share
on all matters to be voted on by our shareholders. Holders of shares of Class B
Common Stock are entitled to one-one hundredth of one vote per share of Class B
Common Stock on all matters to be voted on by our shareholders. Our Class A
Common Stock and our Class B Common Stock have cumulative voting rights with
respect to the election of directors. Our bylaws require that only a majority of
the issued and outstanding voting shares of common stock need be represented to
constitute a quorum and to transact business at a shareholders' meeting.
Subject to the dividend rights of the holders of preferred stock, if applicable,
holders of shares of common stock are entitled to share, on a ratable basis,
such dividends as may be declared by the Board of Directors out of funds legally
available.
Upon our liquidation, dissolution or winding up, after payment of creditors and
holders of any of our senior securities, including preferred stock, our assets
will be divided pro rata on a per share basis among the holders of the shares of
common stock. Our common stock has no preemptive or other subscription rights,
and there are no conversion rights or redemption or sinking fund provisions. All
outstanding shares of common stock are fully paid and non-assessable.
Preferred Stock
Our Board of Directors is authorized to issue preferred stock in one or more
series and denominations and to fix the rights, preferences, privileges, and
restrictions, including dividend, conversion, voting, redemption, liquidation
rights or preferences, and the number of shares constituting any series and the
designation of such series, without any further vote or action by our
shareholders. The issuance of preferred stock may have the effect of delaying,
deferring, or preventing a change of control of our company without further
action by the shareholders. The issuance of preferred stock with voting and
conversion rights may adversely affect the voting power of the holders of common
stock.
Our Board of Directors has previously authorized the issuance of a series of
preferred stock referred to as Series B Convertible Preferred Stock. Without the
affirmative vote of a majority of the holders of the Series B Preferred Stock,
we may not amend, alter or repeal any of the provisions of our articles of
incorporation or articles of designation for the Series B Convertible Preferred
Stock. We also need the affirmative vote of a majority of the holders of the
Series B Convertible Preferred Stock if we want to authorize any
reclassification of the Series B Convertible Preferred Stock that would
adversely affect the preferences, special rights or privileges or voting power
of the Series B Convertible Preferred Stock. We may not create or issue any
class of stock ranking prior to the Series B convertible Preferred Stock as to
dividends or distribution of assets, or create or issue any shares of any series
of the authorized preferred stock ranking prior to the Series B Convertible
Preferred Stock's rights to dividends or distribution on liquidation.
Arizona Corporate Takeover Act and Certain Charter Provisions
We are subject to the provisions of the Arizona Corporate Takeover Act. The
Arizona Corporate Takeover Act and certain provisions of our articles of
incorporation and bylaws, as summarized in the following paragraphs, may have
the effect of discouraging, delaying, or preventing hostile takeovers (including
those that might result in a premium over the market price of our common stock),
or discouraging, delaying, or preventing changes in control or management of our
company.
Arizona Corporate Takeover Act
Article 1 of the Arizona Corporate Takeover Act is intended to restrict
"greenmail" attempts by prohibiting us from purchasing any shares of our capital
stock from any beneficial owner of more than 5% of the voting power of our
company at a per share price in excess of the average market price during the 30
trading days prior to the purchase, unless
o the 5% owner has beneficially owned the shares to be purchased for a period
of at least three years prior to the purchase;
o a majority of our shareholders (excluding the 5% owner, its affiliates or
associates, and any officer or director of our company) approves the
purchase; or
o we make the offer available to all holders of shares of our capital stock.
Article 2 of the Arizona Corporate Takeover Act is intended to discourage the
direct or indirect acquisition by any person of beneficial ownership of our
shares (other than an acquisition of shares from us) that would constitute a
control share acquisition. A "control share acquisition" is defined as an
acquisition of shares by any person, when added to other shares of our company
beneficially owned by such person, immediately after the acquisition entitles
such person to exercise or direct the exercise of
o at least 20% but less than 33 1/3%;
o at least 33 1/3% but less than or equal to 50%; or
o more than 50% of the voting power of our capital stock.
The Arizona Corporate Takeover Act (1) gives our shareholders other than any
person that makes or proposes to make a control share acquisition or our
company's directors and officers the right to limit the voting power of the
shares acquired by the acquiring person that exceed the threshold voting ranges
described above, other than in the election of directors, and (2) gives us the
right to redeem such shares from the acquiring person at a price equal to their
fair market value under certain circumstances.
Article 3 of the Arizona Corporate Takeover Act is intended to discourage us
from entering into certain mergers, consolidations, share exchanges, sales or
other dispositions of our assets, liquidation or dissolution of our company,
reclassification of securities, stock dividends, stock splits, or other
distribution of shares, and certain other transactions with any interested
shareholder (as defined in the takeover act) or any of the interested
shareholder's affiliates for a period of three years after the date that the
interested shareholder first acquired the shares of common stock that qualify
such person as an interested shareholder, unless either the business combination
or the interested shareholder's acquisition of shares is approved by a committee
of our Board of Directors (comprised of disinterested directors or other
persons) prior to the date on which the interested shareholder first acquired
the shares that qualify such person as an interested shareholder. In addition,
Article 3 prohibits us from engaging in any business combination with an
interested shareholder or any of the interested shareholder's affiliates after
such three-year period unless:
o the business combination or acquisition of shares by the interested
shareholder was approved by our Board of Directors prior to the date on
which the interested shareholder acquired the shares that qualified such
person as an interested shareholder;
o the business combination is approved by our shareholders (excluding the
interested person or any of its affiliates) at a meeting called after such
three-year period; or
o the business combination satisfies each of certain statutory requirements.
Article 3 defines an "interested shareholder" as any person (other than us and
our subsidiaries) that either (a) beneficially owns 10% or more of the voting
power of our outstanding shares, or (b) is an affiliate or associate of our
company and who, at any time within the three-year period preceding the
transaction, was the beneficial owner of 10% or more of the voting power of our
outstanding shares.
Certain Charter Provisions
o In addition to the provisions of the Arizona Corporate Takeover Act
described above, our articles of incorporation and bylaws contain a number
of provisions relating to corporate governance and the rights of
shareholders. These provisions include the following:
o the authority of our Board of Directors to fill vacancies on the Board of
Directors;
o the authority of our Board of Directors to issue preferred stock in series
with such voting rights and other powers as our Board of Directors may
determine;
o a provision that, unless otherwise prohibited by law, special meetings of
the shareholders may be called only by our Board of Directors, or by holders
of not fewer than 10% of all shares entitled to vote at the meeting; and
o a provision for cumulative voting in the election of directors, pursuant to
Arizona law.
Transfer Agent and Registrar
The transfer agent and registrar for our Class A Common Stock is Computershare
Trust Company, 350 Indiana Street, Suite 800, Golden, Colorado 80401.
LEGAL MATTERS
Certain legal matters with respect to the validity of the issuance of the Class
A Common Stock offered hereby will be passed upon by The Law Office of Steven
P. Oman, P.C., Scottsdale, Arizona. Said firm, and Steven P. Oman, owned,
as of the date of this prospectus, an aggregate of 145,000 shares of our Class
A Common Stock on an as-converted basis. Additionally, Steven P. Oman, Esq. is
a director of our company and serves as our general counsel.
Lawyers and employees of The Law Office of Steven P. Oman, P.C. and entities
controlled by lawyers at The Law Office of Steven P. Oman, P.C. may engage in
transactions in the open market or otherwise to purchase or sell our securities
from time to time.
The only material litigation in which the Company is a party to is a derivative
suit, filed on January 30, 2003, by Richard C. Jones on behalf of Technology
Systems International, Inc., a Nevada corporation ("TSIN") versus the Company,
its wholly owned subsidiary, Technology Systems International, Inc., an Arizona
corporation ("TSIA"), and all of the directors of TSIN. The venue for the action
is the Arizona Superior Court in and for Maricopa County, Arizona, as case
number CV2003-001937. The complaint sets forth various allegations and seeks
equitable remedies and damages arising out of the Company's acquisition of
substantially all of the assets of TSIN. As stated in previous periodic reports
filed by the Company with the SEC concerning this matter, the Company's
management, in consultant with legal counsel, believes the plaintiff's claims
are without merit and the Company will aggressively defend the action.
EXPERTS
The consolidated financial statements and related financial statement schedule
incorporated in this prospectus by reference from our Annual Report on Form
10-KSB for the fiscal year ended June 30, 2002 have been audited by Semple &
Cooper, LLP, independent auditors, as stated in their reports, which are
incorporated herein by reference, and have been so incorporated in reliance upon
the reports of such firm given upon their authority as experts in accounting and
auditing.
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement on Form S-3 which was filed
with the Securities and Exchange Commission. This prospectus and any subsequent
prospectus supplements do not contain all of the information in the registration
statement. We have omitted from this prospectus some parts of the registration
statement as permitted by the rules and regulations of the SEC. In addition, we
file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any documents that we have filed
with the SEC at the SEC's Public Reference Room at 450 Fifth Street, N.W.,
Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference room. The SEC also maintains an Internet
site (http://www.sec.gov) that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC.
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" information into this prospectus
and any subsequent prospectus supplements, which means that we can disclose
important information to you by referring you to another document filed
separately with the SEC. This prospectus incorporates by reference documents
which are not presented in this prospectus or delivered to you with it. The
information incorporated by reference is an important part of this prospectus
and any subsequent prospectus supplements. Information that we file subsequently
with the SEC, but prior to the termination of this offering, will automatically
update this prospectus and any outstanding prospectus supplements and supersede
this information. We incorporate by reference the documents listed below and
amendments to them. These documents and their amendments were previously filed
with the SEC.
The following documents filed by us with the SEC are incorporated by reference
in this prospectus:
1. Our annual report on Form 10-KSB for the fiscal year ended June 30, 2002,
including our audited consolidated financial statements for the fiscal year
ended June 30, 2002 attached thereto, filed with the SEC on September 30, 2002;
2. The description of our Class A Common Stock set forth in our registration
statement on Form 10/A filed with the SEC on March 27, 1981, and any subsequent
amendment or report filed for the purpose of updating this description.
3. Our quarterly report on Form 10-QSB for the quarter ended December 31, 2002,
filed with the SEC on February 14, 2003
4. Our quarterly report on Form 10-QSB for the quarter ended September 30, 2002,
filed with the SEC on November 14, 2002.
5. Our Proxy Statement for our Annual Meeting of Shareholders to be held on
November 22, 2002, filed with the SEC on October 16, 2002.
6. Our Form S-3 Registration Statement filed with the SEC on November 27, 2002.
7. Our Form S-8 Registration Statement filed with the SEC on January 22, 2003.
We also are incorporating by reference in this prospectus and any subsequent
prospectus supplements all reports and other documents that we file pursuant to
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
prospectus and prior to the termination of this offering of common stock. These
reports and documents will be incorporated by reference in and considered to be
a part of this prospectus and any subsequent prospectus supplements as of the
date of filing of such reports and documents.
Upon request, whether written or oral, we will provide without charge to each
person to whom a copy of this prospectus is delivered, including any beneficial
owner, a copy of any or all of the information that has been or may be
incorporated by reference in this prospectus or any prospectus supplements but
not delivered with the prospectus or any subsequent prospectus supplements. You
should direct any requests for this information to the office of the Secretary,
at our principal executive offices, located at 15575 North 83rd Way, Suite 3,
Scottsdale, AZ 85260. The telephone number at that address is (480) 607-1010.
Any statement contained in a document which is incorporated by reference in this
prospectus or in any subsequent prospectus supplements will be modified or
superseded for purposes of this prospectus or any subsequent prospectus
supplements to the extent that a statement contained in this prospectus or
incorporated by reference in this prospectus or in any prospectus supplements or
in any document that we file after the date of this prospectus that also is
incorporated by reference in this prospectus or in any subsequent prospectus
supplements modifies or supersedes the prior statement. Any modified or
superseded statement shall not be deemed, except as so modified or superseded,
to constitute a part of this prospectus or any subsequent prospectus
supplements. Subject to the foregoing, all information appearing in this
prospectus is qualified in its entirety by the information appearing in the
documents incorporated by reference in this prospectus.
You should rely only on the information contained or incorporated by reference
in this prospectus or any applicable prospectus supplement. We have not
authorized anyone to provide you with any other information. The securities
offered in this prospectus may only be offered in states where the offer is
permitted, and we and the selling stockholders are not making an offer of these
securities in any state where the offer is not permitted. You should not assume
that the information in this prospectus or any applicable prospectus supplement
is accurate as of any date other than the dates on the front of these documents.
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following is an itemization of all expenses (subject to future
contingencies) incurred or to be incurred by us in connection with the issuance
and distribution of the securities being registered. None of the following
expenses will be borne by the selling stockholders unless specifically indicated
below.
Registration fee $ 109
Printing expenses* $ 200
Accounting fees and expenses* $ 1,000
Legal fees and expenses* $ 1,000
Miscellaneous* $ 500
-----------
Total* $ 2,809
* Estimated
Item 15. Indemnification of Directors and Officers.
The General Corporation Law of the State of Arizona allows corporations to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that he
or she is or was a director, officer, employee or agent of the corporation or is
or was serving at the request of the corporation as a director, officer,
employee, partner, trustee, or agent of another corporation, partnership, joint
venture, trust, other enterprise or employee benefit plan, unless it is
established that:
o the act or omission was material to the matter giving rise to the
proceeding and either was committed in bad faith or was the result of
active and deliberate dishonesty;
o the person actually received an improper personal benefit in money,
property or services; or
o in the case of any criminal proceeding, the person had reasonable cause
to believe that the act o or omission was unlawful.
Under Arizona law, indemnification may be provided against judgments, penalties,
fines, settlements and reasonable expenses actually incurred by the person in
connection with the proceeding. The indemnification may be provided, however,
only if authorized for a specific proceeding after a determination has been made
that indemnification is permissible under the circumstances because the person
met the applicable standard of conduct. This determination is required to be
made:
o by the Board of Directors by a majority vote of a quorum consisting of
directors not, at the time, parties to the proceeding or, if a quorum
cannot be obtained, then by a majority vote of a committee of the board
consisting solely of two or more directors not, at the time, parties to
the proceeding and who a majority of the Board of Directors
designated to act in the matter;
o by special legal counsel selected by the board or board committee by the
vote set forth above, o or, if such vote cannot be obtained, by a majority
of the entire board; or
o by the stockholders.
If the proceeding is one by or in the right of the corporation, indemnification
may not be provided as to any proceeding in which the person is found liable to
the corporation.
An Arizona corporation may pay, before final disposition, the
expenses, including attorneys' fees, incurred by a director, officer, employee
or agent in defending a proceeding. Under Arizona law, expenses may be advanced
to a director or officer when the director or officer gives a written
affirmation of his or her good faith belief that he or she has met the standard
of conduct necessary for indemnification and a written undertaking to the
corporation to repay the amounts advanced if it is ultimately determined that he
or she is not entitled to indemnification. Arizona law does not require that the
undertaking be secured, and the undertaking may be accepted without reference to
the financial ability of the director or officer to repay the advance. An
Arizona corporation is required to indemnify any director who has been
successful, on the merits or otherwise, in defense of a proceeding for
reasonable expenses. The determination as to reasonableness of expenses is
required to be made in the same manner as required for indemnification.
Under Arizona law, the indemnification and advancement of expenses provided by
statute are not exclusive of any other rights to which a person who is not a
director seeking indemnification or advancement of expenses may be entitled
under any articles of incorporation, bylaw, agreement, vote of stockholders,
vote of directors or otherwise.
Our bylaws provide that we shall indemnify each director, officer or employee
o to the fullest extent permitted by the General Corporation Law of
the State of Arizona, or any similar provision or provisions of
applicable law at the time in effect, in connection with any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that he is or was at
any time serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture,
trust, other enterprise or employee benefit plan; and
o to the fullest extent permitted by the common law and by any
statutory provision other than the General Corporation Law of the State of
Arizona in connection with any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or
investigative, by reason of the fact that he is or was at any time a
director, officer or employee of the corporation, or is or was at any time
serving at the request of the corporation as a director, officer, or
employee of another corporation, partnership, joint venture, trust, other
enterprise or employee benefit plan.
Reasonable expenses incurred in defending any action, suit or proceeding
described above shall be paid by the corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such director, officer or employee to repay such amount to the
corporation if it shall ultimately be determined that he is not entitled to be
indemnified by us.
In addition to the general indemnification described above, Arizona law permits
corporations to include any provision expanding or limiting the liability of its
directors and officers to the corporation or its stockholders for money damages,
but may not include any provision that restricts or limits the liability of its
directors or officers to the corporation or its stockholders:
o to the extent that it is proved that the person actually received an
improper benefit or profit in money, property, or services for the
amount of the benefit or profit in money, property or services
actually received; or
o to the extent that a judgment or other final adjudication adverse to
the person is entered in a proceeding based on a finding in the
proceeding that the person's action, or failure to act, was the result
of active and deliberate dishonesty and was material to the cause of
action adjudicated in the proceeding.
We have adopted, in our articles of incorporation, a provision that eliminates
and limits the personal liability of each of our directors and officers to the
full extent permitted by the laws of the State of Arizona.
Item 16. Exhibits.
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
4.1 Second Restated Articles of Incorporation. Exhibit 3.1 to the
quarterly report on Form 10-QSB for Alanco Technologies, Inc. for
the quarter ended September 30, 2002 filed with the SEC on November
14, 2002 is incorporated by reference herein.
4.2 Amended and Restated Bylaws. Exhibit 3.2 to the annual report on
Form 10-KSB for Alanco Technologies, Inc. for the fiscal year ended
June 30, 2002 filed with the SEC on September 30, 2002 is
incorporated by reference herein.
5 Opinion of Law Office of Steven P. Oman, P.C.
23.1 Consent of Law Office of Steven P. Oman, P.C.(included in Exhibit 5).
23.2 Consent of Semple & Cooper, LLP, Independent Auditors.
24.1 Power of Attorney. Located following signature page of this
Registration Statement.
Item 17. Undertakings.
The undersigned registrant hereby undertakes:
(A) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(B) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes
in volume and price represent no more than a 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement;
(C) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or
any material change to such information in the registration statement;
provided, however, that paragraphs (1)(A) and (1)(B) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed with or furnished to the SEC
by the registrant pursuant to Section 13 or 15(d) of the Exchange Act that are
incorporated by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(4) That, for the purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to Section 13(a) or
15(d) of the Exchange Act that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(5) That, for purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of the
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed 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 the registration
statement as of the time it was declared effective.
(6) That, for the purposes of determining any liability under the Securities
Act, 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.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the SEC such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. In
the event that a claim for indemnification against such liabilities (other than
the payment by the registrant of expenses incurred or paid by a director,
officer or controlling person of the registrant in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Scottsdale, State of Arizona, on February 25, 2003.
ALANCO TECHNOLOGIES, INC.
an Arizona corporation
By: /s/ Robert R. Kauffman
Robert R. Kauffman
Chief Executive Officer
(Principal Executive Officer)
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that the person whose signature
appears below constitutes and appoints jointly and severally, Robert R. Kauffman
and John A. Carlson, and each one of them, as his true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including pre-effective and
post-effective amendments) to this registration statement, and to sign any
registration statement and amendments thereto for the same offering pursuant to
Rule 462(b) under the Securities Act of 1933, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite and necessary to be done in connection therewith,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all which said attorneys-in-fact and agents, or any of
them, or their or his substitute or substitutes, may lawfully do, or cause to be
done by virtue hereof.
Pursuant to the requirements of the Securities Act, this registration statement
has been signed by the following persons in the capacities and on the dates
indicated:
Signature Title Date
/s/ Robert R. Kauffman Chief Executive Officer(Principal
---------------------- Executive Officer), Director and February 25, 2003
Robert R. Kauffman Chairman of the Board
/s/ John A. Carlson ChiefFinancial Officer(Principal
------------------- Financial Officer and Principal February 25, 2003
John A. Carlson Accounting Officer) and Director
/s/ Harold S. Carpenter Director February 25, 2003
-----------------------
Harold S. Carpenter
/s/ Donald E. Anderson Director February 25, 2003
----------------------
Donald E. Anderson
/s/ James T. Hecker Director
------------------
James T. Hecker February 25, 2003
/s/ Thomas C. LaVoy Director
-------------------
Thomas C. LaVoy February 25, 2003
/s/ Steven P. Oman Director February 25, 2003
------------------
Steven P. Oman
Law Office of
STEVEN P. OMAN, P.C.
Gold Dust Corporate Center
10446 N. 74th Street, Suite 130
Telephone:(480)348-1470 Scottsdale, Arizona 85258 Facsimile:(480)348-1471
e-mail: soman@omanlaw.net
February 24, 2003
Alanco Technologies, Inc.
15575 N. 83rd Way, Suite 3
Scottsdale, Arizona 85260
Re: Registration Statement on Form S-3
Gentlemen:
We have acted as counsel to Alanco Technologies, Inc. (the "Company") in
connection with the registration by the Company of 2,625,000 shares of its Class
A Common Stock (the "Shares"), that may be offered and sold by certain
stockholders of the Company from time to time. We have assisted the Company in
the preparation of a Registration Statement on Form S-3 (the "Registration
Statement") filed on the date hereof by the Company with the Securities and
Exchange Commission (the "Commission") pursuant to the Securities Act of 1933,
as amended (the "Securities Act"). This opinion is provided pursuant to the
requirements of Item 16 of Form S-3 and Item 601(b)(5) of Regulation S-B.
In connection with the foregoing, we have examined, among other things, the
Registration Statement and certified copies of the Company's Second Restated
Articles of Incorporation, the Company's Bylaws, as amended, Resolutions of the
Company's Board of Directors, and such other documents, including copies of
warrant agreements, subscription agreements, and the Company's Private Offering
Memorandum pursuant to which shares of the Company's Class A Common Stock were
or may be issued.
In connection with our review, we have assumed: (i) the genuineness of all
signatures; (ii) the authenticity of all documents submitted to us as originals
and the conformity to original documents of all documents submitted to us as
certified or photostatic copies; and (iii) the proper issuance and accuracy of
certificates of officers and agents of the Company and public officials.
Based on the foregoing, we are of the opinion that (i) the Shares issued were
validly issued, fully paid and nonassessable at the time of their issuance, and
(ii) when Shares are issued out of the Company's duly authorized Class A Common
Stock upon exercise of, and pursuant to the provisions of, the existing warrant
agreements and the Company has received the consideration therefor in accordance
with the terms of the warrant agreements, the Shares so issued will be validly
issued, fully paid and non-assessable.
This opinion is limited to the corporate laws of the State of Arizona, and we
are expressing no opinion as to the effect of the laws of any other
jurisdiction. This opinion is rendered as of the date hereof, and we undertake
no obligation to advise you of any changes in applicable law or other matters
that may come to our attention after the date hereof.
We hereby consent to be named in the Registration Statement under the heading
"Legal Matters" as attorneys who passed upon the validity of the Shares and to
the filing of a copy of this opinion as Exhibit 5 to the Registration Statement.
Very truly yours,
LAW OFFICE OF STEVEN P. OMAN, P.C.
By: /s/ Steven P. Oman
-------------------
Steven P. Oman
Consent of Independent Certified Public Accountants
Alanco Technologies, Inc.
Scottsdale, Arizona
As independent public accountants, we hereby consent to the incorporation by
reference in the S-3 registration statement of our report dated September 27,
2002, included in the Company's Form 10-KSB for the year ended June 30, 2002,
and to all references to our firm included in this registration statement.
/S/ SEMPLE & COOPER, LLP
Phoenix, Arizona
February 24, 2003