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
class of securities Amount to be maximum aggregate Amount of
to be registered Registered offering price(1) registration fee
---------------- ---------- ------------------ ----------------
Class A Common Stock 7,883,262 $0.65 $548.28
(1) Calculated for purposes of this offering under Rule 457(c) under the
Securities Act of 1933 using the average of the high and low sales prices for
the Company's Class A Common Stock on the NASDAQ Capital Market as of January
13, 2006.
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 January 19, 2006
PROSPECTUS
ALANCO TECHNOLOGIES, INC.
7,883,262 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 private placement financings completed
in 2005 and 2006, extension of a line of credit agreement, execution of a
technology license and OEM distribution agreement, and payment for consulting
services. We also issued shares of Series A and Series B Convertible Preferred
Stock as payment of declared dividends "in-kind". The shares of the Company's
Class A Common Stock that the Series A and Series B Convertible Preferred Stock
may be converted in to are also offered by this prospectus. 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 beneficially own all 7,883,262 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 Capital Market, or NASDAQ,
under the symbol "ALAN." On January 13, 2006, the last sale price of our Class A
Common Stock on NASDAQ was $0.67 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 _______________, 2006.
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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 11
Selling Stockholders 12
Description of Securities 17
Legal Matters 21
Experts 21
Where You Can Find More Information 21
Information Incorporated by Reference 22
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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 2005 (June 30, 2005) 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 (RFID) tracking
technology 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.............. 7,883,262 shares of Class A Common Stock
Class A Common Stock currently
outstanding..................... 30,395,227 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) 9,500,000 shares of Class A Common Stock reserved for
issuance upon exercise of stock options outstanding as of January 19,
2006; (ii) 1,523,250 shares reserved for issuance upon the exercise of
stock options that may be granted in the future under our stock option
plans; (iii) 5,807,500 shares reserved for issuance upon exercise of
outstanding warrants; (iv) 8,841,384 shares reserved for issuance upon
conversion of the Series A Convertible Preferred Stock; and (v) 905,996
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
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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 acquired the business and assets of Technology Systems
International, Inc. ("TSI") effective June 2002, creating the Company's RFID
Technology segment. During fiscal 2005, we changed the name of Technology
Systems International, Inc. to Alanco/TSI PRISM, Inc. ("ATSI"). The following
risks are relevant with respect to the acquisition:
We are projecting significant revenue growth from sales of the TSI
PRISM tracking system in the corrections market. We do not have
experience in the corrections market, and there is no certainty that we
will be able to capture the required market share for ATSI to achieve
its anticipated financial success. The TSI PRISM system is currently
being marketed to the corrections market as a prison management tool
and officer safety system. Although there are other officer monitoring
systems being marketed to the corrections industry, the TSI PRISM
system is currently the only system, to the best of our knowledge, that
is able to continuously (every two seconds) monitor the location of
both officers and prisoners, both inside and outside of buildings.
There is no certainty that the corrections industry will adopt this
technology broadly enough for us to reach our marketing projections.
Our TSI PRISM technology is 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.
See Legal Matters for a discussion of a legal suit filed in connection
with our acquisition of the operations of TSI.
We are subject to the budget constraints of the governmental agencies purchasing
TSI PRISM systems, which could result in a significant decrease in our
anticipated revenues. We cannot assure you that 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 PRISM system may be
recommended for purchase by corrections facility managers, the governmental
agency responsible for the facility may not have sufficient budget resources to
purchase the system. As of the date of this filing, the Company has no
significant TSI PRISM sales backlog as defined by unfulfilled signed contracts.
General economic conditions. Both our RFID Technology and our Data Storage
segment rely on a strong economy to support technology spending by our
customers. Our Data Storage segment sells systems designed to upgrade and
enhance older legacy computer systems as well as network attached storage
systems to mid-sized network users. Previous deterioration in general economic
conditions resulted in reduced spending by our customers for technology in
general, including the products sold by us. We have the ability to reduce
overhead to assist in offsetting our reduced sales volume; however, if the
economic conditions were to deteriorate, we could experience a material adverse
impact on our business, operating results, and financial conditions. See
previous section discussing the budget constraints of our government customers.
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, and
in 2003 launched military attacks on Iraq with ongoing operations in both areas.
As a result of those terrorist acts and acts of war, there has been a disruption
in general economic activity. 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 impact the economy, and in turn, reduce the demand for our products
and services, which would harm our ability to make a profit. Also, as federal
dollars are redirected to military efforts, they may not be available for the
purchase of new federal prison monitoring systems. 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. The Company incurred significant losses during fiscal year 2005 and
has experienced significant losses in prior years. Although management cannot
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assure that future operations will be profitable or that additional debt and/or
equity capital will be raised, we believe that, based on our fiscal 2006
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 2006
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 continue operations will be
materially adversely affected.
Recent losses; Fluctuations in operating results. We had a consolidated loss
from operations of $4,311,700 for the fiscal year ending June 30, 2005, and a
consolidated loss from operations of $3,435,700 for the fiscal year ending June
30, 2004. In addition, our quarterly operating results have fluctuated
significantly in the past and could fluctuate significantly in the future. We
anticipate that our future financial performance will be significantly impacted
by our marketing efforts concerning the TSI RFID technology. As a result, our
past quarterly operating results should not be used to predict future
performance.
Intellectual property. Our primary business strategy is to develop the ATSI
business opportunity. The long-term success of this strategy depends in part
upon the ATSI intellectual property acquired. Third parties may hold United
States or foreign patents which may be asserted in the future against the ATSI
technology, and there is no assurance that any license that might be required
under such patents could be obtained on commercially reasonable terms, or
otherwise. Our competitors may also independently develop technologies that are
substantially equivalent or superior to our technology. In addition, the laws of
some foreign countries do not protect our proprietary rights to the same extent
as the laws of the United States.
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 PRISM
business/technology has no current, identified direct competitors. However, it
can be expected that if, and to the extent that, the demand for the ATSI
technology increases, the number of competitors will likely increase. 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 9,500,000
shares of our Class A Common Stock were outstanding, and the weighted average
exercise price of such options was $0.82. Additionally, warrants to purchase
5,807,500 shares of our Class A Common Stock were outstanding, and the weighted
average exercise price of such warrants was $0.97. 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.
NASDAQ Listing. Our Class A Common Stock currently trades on the NASDAQ Capital
Market under the symbol "ALAN." However, there can be no assurance that an
active trading market in our Class A Common Stock will be available at any
particular future time.
In February of 2005, we received notification from NASDAQ indicating that due to
the failure of the Company to maintain the minimum $1.00 per share requirement,
its securities were subject to delisting from the NASDAQ Small Cap Market. In
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April of 2005, we received a letter from NASDAQ stating that the closing bid
price of the Company's common stock had been at $1.00 per share or greater for
at least 10 consecutive trading days and the Company had regained compliance.
However, in August 2005, we again received notification from NASDAQ indicating
that due to the failure of the Company to maintain the minimum $1.00 per share
requirement, its securities were subject to delisting from the NASDAQ Small Cap
Market. In accordance with Marketplace Rule 4310(c) (8) (D), the Company has
been given 180 calendar days to comply with the Rule. If compliance with this
Rule cannot be demonstrated by January 31, 2006, NASDAQ officials will determine
whether the Company meets the NASDAQ Capital Market initial listing criteria as
set forth in Marketplace Rule 4310 (c), except for the bid price requirement. If
the Company meets the initial listing criteria, the Company will be notified
that it has been granted an additional 180 calendar days to meet the $1.00
minimum bid price requirement. If the Company is not eligible for an additional
compliance period, we will receive written notification that our securities will
be delisted. At that time, we may appeal Staff's determination to delist our
securities to a listing qualifications panel.
While realizing the importance of our NASDAQ listing and the effect its loss
could have on the price and liquidity of our Common Stock, we received approval
from our Shareholders at our Annual Meeting of Shareholders held on December 22,
2003, for a proposal authorizing a reverse split to be effected only if
necessary to maintain our NASDAQ listing. This authorization, which remains in
effect until December 31, 2006, will allow our Board of Directors to effect up
to a one for ten reverse split if it becomes necessary to maintain our NASDAQ
listing. The Proxy Statement for our Annual Shareholders Meeting to be held on
January 20, 2006, includes a similar proposal to extend the deadline until
December 31, 2008, for authorization to allow our Board of Directors to effect
up to a one for ten reverse split if necessary to maintain our NASDAQ listing.
Payment of dividends. We do not anticipate that we will pay cash dividends on
our Class A Common Stock in the foreseeable future. The payment of dividends by
us will depend on our earnings, financial condition, and such other factors, as
our Board of Directors may consider relevant. We currently plan to retain
earnings to provide for the development of our business.
Our articles of incorporation and Arizona law may have the effect of making it
more expensive or more difficult for a third party to acquire, or to acquire
control, of us. Our articles of incorporation make it possible for our Board of
Directors to issue preferred stock with voting or other rights that could impede
the success of any attempt to change control of us. Arizona law prohibits a
publicly held Arizona corporation from engaging in certain business combinations
with certain persons, who acquire our securities with the intent of engaging in
a business combination, unless the proposed transaction is approved in a
prescribed manner. This provision has the effect of discouraging transactions
not approved by our Board of Directors as required by the statute which may
discourage third parties from attempting to acquire us or to acquire control of
us even if the attempt would result in a premium over market price for the
shares of common stock held by our stockholders.
Certain provisions in our shareholder rights plan may discourage a takeover
attempt. We have implemented a shareholder rights plan which could make an
unsolicited takeover of our company more difficult. As a result, shareholders
holding a controlling block of shares may be deprived of the opportunity to sell
their shares to potential acquirers at a premium over prevailing market prices.
This potential inability to obtain a premium could reduce the market price of
our common stock.
The market price of 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;
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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 relates to securities issued
by us to the selling shareholder pursuant to a number of separate transactions.
We agreed in each of these transactions to file a registration statement, of
which this prospectus is a part, to register the resale of the securities issued
by us in these transactions. All of the shares of Class A common stock covered
by this prospectus were "restricted securities" under the Securities Act prior
to this registration. The transactions under which the securities were issued
are described in the following paragraphs.
The first transaction involves issuance of a warrant to purchase 75,000 shares
of Class A Common Stock at an exercise price of $0.90 per share to The Anderson
Family Trust, a lender who established a revolving credit facility for the
Company in June 2002. This prospectus covers the resale of the 75,000 shares of
Class A Common Stock underlying the warrant, which was granted to the lender in
March 2005 in consideration for amending the line of credit agreement. The Third
Amendment to the Loan and Security Agreement was filed as Exhibit 99.1 to our
Form 8-K filed with the SEC on March 28, 2005.
The second transaction involves the issuance of Class A Common Stock and
warrants to purchase additional shares of Class A Common Stock in connection
with a Technology License and OEM Distribution Agreement executed in March 2005
and extended in December 2005 with AeroScout, Inc. AeroScout, Inc. is a
developer of RFID real-time location services technology ("RTLS Technology")
utilizing 2.4 GHz wireless networking standards. A total of 400,000 shares of
common stock, plus warrants to purchase 500,000 shares of our common stock at an
exercise price of $1.00 per share, were issued in exchange for an AeroScout
licensing agreement granting us exclusive use in the corrections industry of
their RTLS Technology. This prospectus includes a total of 900,000 shares of
Class A Common Stock issued in connection with this agreement, including the
shares of common stock underlying the warrants.
The third transaction involves the issuance of warrants to purchase a total of
855,000 shares of Class A Common Stock at an exercise price of $0.95 to a group
of private investors in June 2005. The warrants were granted to the investors in
consideration for exercising warrants in June 2005, which otherwise would have
expired, at an exercise price of $1.00, which was above the current market
price. The original exercised warrants were issued in January 2002 in connection
with a private offering completed in December 2001. This prospectus includes the
855,000 shares of common stock underlying the warrants.
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The fourth transaction involves the issuance of 2,512 shares of our Series B
Convertible Preferred Stock to one private investor as payment in kind for
dividends declared. Each share of our Series B Convertible Preferred Stock is
convertible into 13 shares of Class A Common Stock. Our S-3 Registration
Statement effective on December 11, 2002, included the original 50,000 shares of
Series B Convertible Preferred Stock purchased by the investor, plus a total of
17,180 shares issued as dividends. As of October 20, 2005, a total of 19,692
Series B Preferred dividend shares have been issued. This prospectus covers
resale of the 32,656 shares of Class A Common Stock into which the remaining
2,512 preferred dividend shares are convertible.
The fifth transaction involves the issuance of 597,702 shares of our Series A
Convertible Preferred Stock to a group of private investors as payment in kind
for dividends declared from January 2004 through July 2005. Each share of our
Series A Convertible Preferred Stock is convertible into 3 shares of Class A
Common Stock. The original Series A Convertible Preferred Stock purchased in the
June and July 2003 private offering were registered under our S-3 Registration
Statement effective on December 11, 2003. This prospectus covers resale of the
1,793,106 shares of Class A Common Stock into which the 597,702 dividend shares
are convertible.
The sixth transaction involves the issuance of warrants to purchase a total of
700,000 shares of Class A Common Stock at an exercise price of $1.00 per share
to a group of private investors in August 2005. The warrants were issued to the
private investors in August 2005 in consideration for exercising warrants in
August 2005, which otherwise would have expired. This prospectus includes the
700,000 shares of common stock underlying the warrants.
The seventh transaction involves the issuance of 75,000 shares of Class A Common
Stock in September 2005 to The Ashcroft Group, LLC as payment for consulting
services.
The eighth transaction involves the issuance of warrants to purchase a total of
1,150,000 shares of Class A Common Stock at an exercise price of $0.50 to a
group of private investors in November 2005. The warrants were granted to the
investors in consideration for exercising warrants in November 2005, which
otherwise would have expired, at an exercise price of $0.50, which was above the
current market price. The original exercised warrants were issued in October
through December 2002 in connection with a private offering completed in
December 2002. This prospectus includes the 1,150,000 shares of common stock
underlying the warrants.
The ninth transaction involves the issuance of Class A Common Stock and warrants
to purchase additional shares of Class A Common Stock in connection with a
private offering to Whalehaven Capital, LP completed in January 2006. The
offering was comprised of units sold at a price of $0.60 per unit, each unit
consisting of one share of Class A Common Stock and a warrant to purchase
one-half share of Class A Common Stock. A total of 1,500,000 shares of Class A
Common Stock were issued in exchange for $900,000, or $0.60 per share. In
addition, three-year warrants to purchase a total of 802,500 shares of our Class
A Common Stock at an exercise price of $0.85 per share were issued by us as
follows: warrants to purchase 750,000 shares were issued to Whalehaven Capital,
LP, warrants to purchase 21,000 shares were issued to Midtown Partners & Co.,
LLC., and warrants to purchase 31,500 shares were issued to J. Rory Rohan. This
prospectus includes all shares and warrants issued under the private offering.
The agreement pertaining to this transaction was filed as Exhibit 99.1 to our
Form 8-K filed with the SEC on January 17, 2006.
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
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 warrants previously,
or contemporaneously to the selling shareholders' sale of such stock. Such
proceeds, when and if received, would be utilized by the Company for general
working capital.
10
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 ordinary brokerage transactions and transactions in which the broker-
dealer solicits purchasers;
o block trades in which the broker-dealer will attempt to sell the shares
as agent but may position and resell a portion of the block as
principal to facilitate the transaction;
o purchases by a broker-dealer as principal and resale by the broker-
dealer for its account;
o an exchange distribution in accordance with the rules of the applicable
exchange;
o privately negotiated transactions;
o short sales;
o broker-dealers may agree with the selling stockholders to sell a
specified number of such shares at a stipulated price per share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The selling stockholders may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
The selling stockholders may also engage in short sales against the box, puts
and calls and other transactions in our securities or derivatives of our
securities and may sell or deliver shares in connection with these trades.
Broker-dealers engaged by the selling stockholders may arrange for other
brokers-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling stockholders (or, if any broker-dealer acts as
agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The selling stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved. Any
profits on the resale of shares of common stock by a broker-dealer acting as
principal might be deemed to be underwriting discounts or commissions under the
Securities Act. Discounts, concessions, commissions and similar selling
expenses, if any, attributable to the sale of shares will be borne by a selling
stockholder. The selling stockholders may agree to indemnify any agent, dealer
or broker-dealer that participates in transactions involving sales of the shares
if liabilities are imposed on that person under the Securities Act.
The selling stockholders may from time to time pledge or grant a security
interest in some or all of the shares of common stock owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured
parties may offer and sell the shares of common stock from time to time under
this prospectus after we have filed an amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act of 1933 amending
the list of selling stockholders to include the pledgee, transferee or other
successors in interest as selling stockholders under this prospectus.
The selling stockholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors in
interest will be the selling beneficial owners for purposes of this prospectus
and may sell the shares of common stock from time to time under this prospectus
after we have filed an amendment to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act of 1933 amending the list of
selling stockholders to include the pledgee, transferee or other successors in
interest as selling stockholders under this prospectus.
11
The selling stockholders and any broker-dealers or agents that are involved in
selling the shares of common stock may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares of common stock purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act.
We are required to pay all fees and expenses incident to the registration of the
shares of common stock. We have agreed to indemnify the selling stockholders
against certain losses, claims, damages and liabilities, including liabilities
under the Securities Act.
The selling stockholders have advised us that they have not entered into any
agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their shares of common stock, nor is there
an underwriter or coordinating broker acting in connection with a proposed sale
of shares of common stock by any selling stockholder. If we are notified by any
selling stockholder that any material arrangement has been entered into with a
broker-dealer for the sale of shares of common stock, if required, we will file
a supplement to this prospectus. If the selling stockholders use this prospectus
for any sale of the shares of common stock, they will be subject to the
prospectus delivery requirements of the Securities Act.
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 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 January 19,
2006, 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.
12
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 A COMMON STOCK
OFFERED BY THIS PROSPECTUS
SHARES
OF CLASS A Shares
NAMES COMMON Available Shares
AND STOCK Shares of By Available
ADDRESSES OF BENEFICIALLY Class A Conversion By
THE SELLING OWNED Common of Exercise Total
STOCKHOLDERS PRIOR TO THE Stock Preferred Of Shares
OFFERING (1) Available Stock Warrants
-----------------------------------------------------------------------------------------------
Anderson Family Trust (2) 4,156,863 0 339,219 575,000 914,219
11804 N. Sundown Drive
Scottsdale, AZ 85260
AeroScout, Inc. (3)
901 Mariners Island Blvd.
Suite 725
San Mateo, CA 94404 900,000 400,000 0 500,000 900,000
John S. Anderson
15249 Abierto Drive
Rancho Murieta, CA 95683 162,500 0 0 62,500 62,500
David J. and Julie R. Dickerson
11804 N. Sundown Drive
Scottsdale, AZ 85260 385,565 0 34,065 62,500 96,565
Paul D. Anderson
1180 Luane Circle
Prescott, AZ 86305 326,565 0 34,065 62,500 96,565
David P. & Heidi J. Anderson
Family Trust Dated 12/8/04
4620 N. 68th Street #164
Scottsdale, AZ 85251 364,165 0 34,065 62,500 96,565
Programmed Land, Inc. (4)
9414 E. San Salvador Drive
Suite 99
Scottsdale, AZ 85258 2,585,584 0 272,484 500,000 772,484
Robert R. Kauffman (5)
15575 N. 83rd Way, Suite 3
Scottsdale, AZ 85260 5,303,661 0 394,161 107,500 501,661
The Lee Adams Trust
4012 E. Elm Street
Phoenix, AZ 85018 102,500 0 0 37,500 37,500
13
SHARES OF CLASS A COMMON STOCK
OFFERED BY THIS PROSPECTUS
SHARES
OF CLASS A Shares
NAMES COMMON Available Shares
AND STOCK Shares of By Available
ADDRESSES OF BENEFICIALLY Class A Conversion By
THE SELLING OWNED Common of Exercise Total
STOCKHOLDERS PRIOR TO THE Stock Preferred Of Shares
OFFERING (1) Available Stock Warrants
-----------------------------------------------------------------------------------------------
Rhino Fund LLLP (6)
32065 Castle Court, Suite 100
Evergreen, CO 80439 1,765,206 0 205,206 255,000 460,206
Heartland Systems Co. (7)
939 Office Park Road, Suite 120
West Des Moines, IA 50265 1,574,173 0 184,173 230,000 414,173
M. Jamil Akhtar, M.D.(8)
215 S. Power Road, Suite 103
Mesa, AZ 85206 1,405,996 0 32,656 0 32,656
Harold S. Carpenter (9)
939 Office Park Road, Suite 120
West Des Moines, IA 50265 1,364,836 0 134,295 100,000 234,295
James T. Hecker (10)
32065 Castle Court, Suite 100
Evergreen, CO 80439 345,871 0 4,149 0 4,149
James T. Hecker - IRA
32065 Castle Court, Suite 100
Evergreen, CO 80439 86,343 0 9,807 0 9,807
John A. Carlson (11)
15575 N. 83rd Way, Suite 3
Scottsdale, AZ 85260 1,718,386 0 55,242 25,000 80,242
John A. Carlson, IRA
15575 N. 83rd Way, Suite 3
Scottsdale, AZ 85260 110,283 0 12,783 0 12,783
Thomas C. LaVoy (12)
29555 N. 69th Place
Scottsdale, AZ 85262 468,045 0 26,985 0 26,985
Steven P. & Catherine A. Oman (13)
10446 N. 74th Street, Suite 130
Scottsdale, AZ 85258 332,887 0 7,887 0 7,887
Lincoln Trust Co., Custodian
FBO Greg M. Oester (14)
11878 N. 114th Way
Scottsdale, AZ 85259 1,315,208 0 7,320 0 7,320
14
SHARES OF CLASS A COMMON STOCK
OFFERED BY THIS PROSPECTUS
SHARES
OF CLASS A Shares
NAMES COMMON Available Shares
AND STOCK Shares of By Available
ADDRESSES OF BENEFICIALLY Class A Conversion By
THE SELLING OWNED Common of Exercise Total
STOCKHOLDERS PRIOR TO THE Stock Preferred Of Shares
OFFERING (1) Available Stock Warrants
-----------------------------------------------------------------------------------------------
Thomas E. Burns, III, Inc.
Employee Bene Tr dtd 8-1-83
25097 Champlain Road
Laguna Hills, CA 92653 77,394 0 15,483 0 15,483
Thomas E. Burns, III
Revocable Living Trst dtd 9-26-98
25097 Champlain Road
Laguna Hills, CA 92653 109,806 0 21,717 0 21,717
Vertical Ventures, LLC (15)
641 Lexington Avenue, 26th Floor
New York, NY 10022 280,000 0 0 140,000 140,000
Omicron Master Trust (16)
810 Seventh Avenue, 39th Floor
New York, NY 10019 690,000 0 0 230,000 230,000
Cranshire Capital, LP (17)
666 Dundee Road, Suite 1901
Northbrook, IL 60062 490,856 0 0 230,000 230,000
Iroquois Capital (18)
641 Lexington Avenue, 26th Floor
New York, NY 10022 200,000 0 0 100,000 100,000
The Ashcroft Group, LLC (19)
1399 New York Avenue, NW
Suite 925
Washington, D.C. 20005 75,000 75,000 0 0 75,000
Whalehaven Capital Fund Limited
3rd Floor, 14 Par-La-Ville Road(20)
Hamilton HMO8 Bermuda 2,250,000 1,500,000 0 750,000 2,250,000
J. Rory Rohan
405 Lexington Avenue
26th Floor
New York, NY 10174 31,500 0 0 31,500 31,500
Midtown Partners & Co., LLC (21)
4902 Eisenhower Blvd.
Suite 185
Tampa, FL 33634 21,000 0 0 21,000 21000
----------------------------------------------
TOTALS 1,975,000 1,825,762 4,082,500 7,883,262
==============================================
---------------------------------
15
(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
40,142,607 Common Equivalent shares outstanding, which is comprised of
30,395,227 shares of Class A Common Stock, 8,841,384 shares of Series A
Preferred Stock, and 905,996 shares of Series B Preferred Stock as of
January 19, 2006.
(2) Donald E. and Rebecca E Anderson, who have beneficial ownership of all
of the outstanding shares of the Anderson Family Trust, have beneficial
ownership of 16.71% of the Company. This includes shares owned by
Programmed Land, Inc., which are also offered under this prospectus and
are beneficially owned by the Andersons, and shares owned directly by
Mr. Anderson. Mr. Anderson is a director of the Company.
(3) AeroScout, Inc. is the beneficial owner of 2.21% of the Company. Yuval
Bar Gil, CEO of AeroScout, Inc. holds voting and dispositive powers
over the shares of the Company's stock owned by AeroScout, Inc.
(4) Donald E. and Rebecca E. Anderson have beneficial ownership of all of
the outstanding shares of Programmed Land, Inc., and therefore are the
beneficial owners of these shares. See footnote 2 above.
(5) Robert R. Kauffman is the beneficial owner of these shares. Mr.
Kauffman is the Chief Executive Officer and a director of the Company.
Mr. Kauffman has beneficial ownership of 12.34% of the Company.
(6) The Rhino Fund, LLLP beneficially owns 4.37% of the Company's Class A
Common Stock. MacDonald Hawley, president of Rhino Capital, Inc, the
fund manager, holds voting and dispositive powers over the shares of
the Company's stock owned by The Rhino Fund, LLLP.
(7) Heartland Systems Co. is the beneficial owner of 3.37% of the Company's
Class A Common Stock. Leanna Hansch, Treasurer, holds voting and
dispositive powers over the shares of the Company's stock owned by
Heartland Systems Co.
(8) Dr. Akhtar is the beneficial owner of 3.46% of the Company. Dr.
Akhtar is the sole owner of the Company's Series B Preferred
Stock.
(9) Harold S. Carpenter is a director of the Company and is the beneficial
owner of 3.37% of the Company's Class A Common Stock. Mr. Carpenter is
an officer of Heartland Systems Co., whose shares are also offered
under this prospectus; however, Mr. Carpenter disclaims beneficial
ownership of the Heartland Systems Co. shares.
(10) James T. Hecker is the beneficial owner of these shares, as well as the
beneficial owner of shares held by his IRA, which are also offered
under this prospectus. Mr. Hecker is a director of the Company, and has
beneficial ownership of 1.07% of the Company. Mr. Hecker is the
treasurer and general counsel for Rhino Capital Incorporated, which
controls The Rhino Fund, whose shares are also offered under this
prospectus; however, Mr. Hecker disclaims beneficial ownership of The
Rhino Fund shares.
(11) John A. Carlson is the beneficial owner of these shares, as well as the
beneficial owner of shares held by his IRA, which are also offered
under this prospectus. Mr. Carlson is the Chief Financial Officer and a
director of the Company. Mr. Carlson has beneficial ownership of 4.42%
of the Company.
(12) Thomas C. LaVoy is a director of the Company and has a beneficial
ownership of 1.16% of the Company.
(13) Steven P. Oman is a director of the Company and has a beneficial
ownership of 0.82% of the Company.
(14) Greg M. Oester, who is an officer of the Company's wholly owned
subsidiary, Alanco/TSI PRISM, Inc., is the beneficial owner of these
shares. Mr. Oester has beneficial ownership of 3.18% of the Company.
(15) Vertical Ventures, LLC is the beneficial owner of 0.69% of the
Company's Class A Common Stock. Joshua Silverman has voting control and
16
investment decision over securities held by Vertical Ventures, LLC. Mr.
Silverman disclaims beneficial ownership of the shares held by Vertical
Ventures, LLC.
(16) Omicron Master Trust is the beneficial owner of 1.70% of the Company's
Class A Common Stock. Omicron Capital, L.P., a Delaware limited
partnership ("Omicron Capital"), serves as investment manager to
Omicron Master Trust, a trust formed under the laws of Bermuda
("Omicron"), Omicron Capital, Inc., a Delaware corporation ("OCI"),
serves as general partner of Omicron Capital, and Winchester Global
Trust Company Limited ("Winchester") serves as the trustee of Omicron.
By reason of such relationships, Omicron Capital and OCI may be deemed
to share dispositive power over the shares of our common stock owned by
Omicron, and Winchester may be deemed to share voting and dispositive
power over the shares of our common stock owned by Omicron. Omicron
Capital, OCI and Winchester disclaim beneficial ownership of such
shares of our common stock. Omicron Capital has delegated authority
from the board of directors of Winchester regarding the portfolio
management decisions with respect to the shares of common stock owned
by Omicron and, as of June 1, 2004, Mr. Olivier H. Morali and Mr. Bruce
T. Bernstein, officers of OCI, have delegated authority from the board
of directors of OCI regarding the portfolio management decisions of
Omicron Capital with respect to the shares of common stock owned by
Omicron. By reason of such delegated authority, Messrs. Morali and
Bernstein may be deemed to share dispositive power over the shares of
our common stock owned by Omicron. Messrs. Morali and Bernstein
disclaim beneficial ownership of such shares of our common stock and
neither of such persons has any legal right to maintain such delegated
authority. No other person has sole or shared voting or dispositive
power with respect to the shares of our common stock being offered by
Omicron, as those terms are used for purposes under Regulation 13D-G of
the Securities Exchange Act of 1934, as amended. Omicron and Winchester
are not "affiliates" of one another, as that term is used for purposes
of the Securities Exchange Act of 1934, as amended, or of any other
person named in this prospectus as a selling stockholder. No person or
"group" (as that term is used in Section 13(d) of the Securities
Exchange Act of 1934, as amended, or the SEC's Regulation 13D-G
controls Omicron and Winchester.
(17) Cranshire Capital, LP is the beneficial owner of 1.21% of the Company's
Class A Common Stock. Mitchell Kopin, President of Downsview Capital,
Inc., the General Partner of Cranshire Capital, LP, has voting control
and investment decision over securities held by Cranshire Capital, LP.
Mr. Kopin disclaims beneficial ownership of the shares held by
Cranshire Capital, LP.
(18) Iroquois Capital is the beneficial owner of 0.50% of the Company's
Class A Common Stock. Joshua Silverman has voting control and
investment decision over securities held by Iroquois Capital. Mr.
Silverman disclaims beneficial ownership of the shares held by Iroquois
Capital.
(19) The Ashcroft Group is the beneficial owner of 0.19% of the Company's
Class A Common Stock. John Ashcroft and David Ayres equally share
voting control and investment decision over securities held by The
Ashcroft Group.
(20) Whalehaven Capital Fund Limited is the beneficial owner of 5.50% of the
Company's Class A Common Stock. Michael Finkelstein has voting control
and investment decision over securities held by Whalehaven Capital Fund
Limited. Mr. Finkelstein disclaims beneficial ownership of the shares
held by Whalehaven Capital Fund Limited.
(21) Midtown Partners & Co., LLC is the beneficial owner of 0.05% of the
Company's Class A Common Stock. Bruce Jordan, President of Midtown
Partners & Co., LLC, has voting control and investment decision over
securities held by Midtown Partners & Co., LLC. Mr. Jordan disclaims
beneficial ownership of the shares held by Midtown Partners & Co., LLC.
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 30,395,227 shares of Class A Common Stock outstanding,
and no shares of Class B Common Stock issued and outstanding as of January 19,
2006. There were 2,947,128 shares of Series A Convertible Preferred Stock
outstanding and 69,692 shares of Series B Convertible Preferred Stock
outstanding as of January 19, 2006. Shares of the Series A Convertible Preferred
Stock are convertible into shares of Class A Common Stock at a rate of three
shares of Class A Common Stock for every one share of Series A Convertible
Preferred Stock. Shares of the Series B Convertible Preferred Stock are
17
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 19, 2006, options to purchase 9,500,000 shares of Class A
Common Stock were outstanding, and the weighted average exercise price of such
options was $0.82. In addition, as of January 19, 2006, the Company had
5,807,500 warrants to purchase Class A Common Stock outstanding, and the
weighted average exercise price of such warrants was $0.97. Our Class A Common
Stock is traded on the NASDAQ Capital Market under the symbol "ALAN". No other
securities of the Company are currently traded on any market.
Common Stock
Holders of shares of our Class A Common Stock are entitled to one vote per share
on all matters to be voted on by our shareholders. Holders of shares of Class B
Common Stock are entitled to one-one hundredth of one vote per share of Class B
Common Stock on all matters to be voted on by our shareholders. Our Class A
Common Stock and our Class B Common Stock have cumulative voting rights with
respect to the election of directors. Our bylaws require that only a majority of
the issued and outstanding voting shares of common stock need be represented to
constitute a quorum and to transact business at a shareholders' meeting.
Subject to the dividend rights of the holders of preferred stock, if applicable,
holders of shares of common stock are entitled to share, on a ratable basis,
such dividends as may be declared by the Board of Directors out of funds legally
available.
Upon our liquidation, dissolution or winding up, after payment of creditors and
holders of any of our senior securities, including preferred stock, our assets
will be divided pro rata on a per share basis among the holders of the shares of
common stock. Our common stock has no preemptive or other subscription rights,
and there are no conversion rights or redemption or sinking fund provisions. All
outstanding shares of common stock are fully paid and non-assessable.
Preferred Stock
Our Board of Directors is authorized to issue preferred stock in one or more
series and denominations and to fix the rights, preferences, privileges, and
restrictions, including dividend, conversion, voting, redemption, liquidation
rights or preferences, and the number of shares constituting any series and the
designation of such series, without any further vote or action by our
shareholders. The issuance of preferred stock may have the effect of delaying,
deferring, or preventing a change of control of our company without further
action by the shareholders. The issuance of preferred stock with voting and
conversion rights may adversely affect the voting power of the holders of common
stock.
Our Board of Directors has previously authorized the issuance of a series of
preferred stock referred to as Series B Convertible Preferred Stock. Without the
affirmative vote of a majority of the holders of the Series B Preferred Stock,
we may not amend, alter or repeal any of the provisions of our articles of
incorporation or articles of designation for the Series B Convertible Preferred
Stock. We also need the affirmative vote of a majority of the holders of the
Series B Convertible Preferred Stock if we want to authorize any
reclassification of the Series B Convertible Preferred Stock that would
adversely affect the preferences, special rights or privileges or voting power
of the Series B Convertible Preferred Stock. We may not create or issue any
class of stock ranking prior to the Series B Convertible Preferred Stock as to
dividends or distribution of assets, or create or issue any shares of any series
of the authorized preferred stock ranking prior to the Series B Convertible
Preferred Stock's rights to dividends or distribution on liquidation. The Series
B Convertible Preferred Stock shall have voting rights as if converted into
Class A Common Stock.
Our Board of Directors has also authorized the issuance of a series of preferred
stock referred to as Series A Convertible Preferred Stock. Without the
affirmative vote of a majority of the holders of the Series A Preferred Stock,
we may not amend, alter or repeal any of the provisions of our articles of
incorporation or articles of designation for the Series A Convertible Preferred
Stock. We also need the affirmative vote of a majority of the holders of the
Series A Convertible Preferred Stock if we want to authorize any
reclassification of the Series A Convertible Preferred Stock that would
adversely affect the preferences, special rights or privileges or voting power
of the Series A Convertible Preferred Stock. We may not create or issue any
class of stock ranking prior to the Series A Convertible Preferred Stock (other
than the existing Series B Convertible Preferred Stock) as to dividends or
distribution of assets, or create or issue any shares of any series of the
authorized preferred stock ranking prior to the Series A Convertible Preferred
Stock's rights to dividends or distribution on liquidation. The Series A
Convertible Preferred Stock shall have voting rights as if converted into Class
A Common Stock.
Arizona Corporate Takeover Act and Certain Charter Provisions
We are subject to the provisions of the Arizona Corporate Takeover Act. The
Arizona Corporate Takeover Act and certain provisions of our articles of
18
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.
19
Certain Charter Provisions
In addition to the provisions of the Arizona Corporate Takeover Act described
above, our articles of incorporation and bylaws contain a number of provisions
relating to corporate governance and the rights of shareholders. These
provisions include the following:
o the authority of our Board of Directors to fill vacancies on the
Board of Directors;
o the authority of our Board of Directors to issue preferred
stock in series with such voting rights and other powers as
our Board of Directors may determine;
o a provision that, unless otherwise prohibited by law, special
meetings of the shareholders may be called only by our Board
of Directors, or by holders of not fewer than 10% of all
shares entitled to vote at the meeting; and
o a provision for cumulative voting in the election of directors,
pursuant to Arizona law.
Shareholder Rights Plan
We have established a shareholder rights plan under which each share of common
stock presently outstanding or which is issued hereafter prior to the
"distribution date," defined below, is granted one preferred share purchase
right, or a right, and each share of Series A or Series B preferred stock
presently outstanding or hereafter issued prior to the distribution date, which
is convertible into common stock of the Company, is granted such number of
rights equal to the number of common shares such preferred stock is convertible
in to. Each right entitles the registered holder to purchase from us one
one-hundredth (1/100th) of a share of the series C junior participating
preferred stock of the Company at a price of $25.00 per 1/100th of a series C
preferred share, subject to adjustment in the event of stock dividends and
similar events occurring prior to the distribution date. Each 1/100th of a
series C preferred share would have voting, dividend and liquidation rights
which are the approximate equivalent of one share of Class A common stock.
The rights are not exercisable until the distribution date, which is the earlier
to occur of (i) 10 days following the date, or the stock acquisition date, of a
public announcement that a person or group, or an acquiring person, has acquired
beneficial ownership, of 25% or more of the outstanding common stock of the
Company, or (ii) 10 business days, unless extended by our board, following the
commencement of a tender offer or exchange offer the consummation of which would
result in the beneficial ownership by a person or group of 25% or more of the
outstanding common stock.
Until the distribution date, the rights will be transferred with and only with
the common stock or the preferred stock, and the surrender for transfer of any
certificate for common stock or preferred stock will also constitute the
transfer of the rights associated with the shares represented by such
certificate. As soon as practicable following the distribution date, separate
certificates evidencing the rights will be mailed to holders of record of the
common stock and preferred stock as of the close of business on the distribution
date, and the rights will then become separately tradable.
In the event that any person or group becomes the beneficial owner of 25% or
more of the outstanding shares of common stock, other than pursuant to a tender
or exchange offer for all outstanding shares of common stock at a price and on
terms determined by a majority of our board who are not representatives,
affiliates or associates of an acquiring person, to be at a price which is fair
to our shareholders and otherwise in the best interests of our Company and our
shareholders, each holder of a right, other than rights beneficially owned by,
or in certain circumstances acquired from, the acquiring person or its
associates or affiliates, which will be void, will thereafter have the right to
receive upon exercise that number of shares of common stock, or, in certain
circumstances, cash, property or other securities of our Company, having a value
equal to two times the exercise price of the right. However, the rights are not
exercisable following any such event until such time as the rights are no longer
redeemable by us as set forth below.
In the event that after the stock acquisition date, (i) we engage in a merger or
consolidation in which we are not the surviving corporation or in which shares
of our common stock are converted or exchanged, other than a transaction
pursuant to a qualifying offer, or (ii) 50% or more of the Company's
consolidated assets or earning power are sold or transferred, proper provision
will be made so that each holder of a right, other than rights which have
previously been voided as set forth above, will thereafter have the right to
receive, upon exercise of the right, that number of shares of common stock of
the acquiring company which at the time of such transaction will have a market
value of two times the exercise price of the right.
20
At any time after a person or group becomes an acquiring person and prior to the
acquisition by such person or group of 50% or more of the outstanding common
stock, our board may exchange the rights, other than rights owned by such person
or group, which have become void, in whole or in part, at an exchange ratio of
one share of common stock, or 1/100th of a series C junior participating
preferred share, into a share of a class or series of our preferred stock having
equivalent rights, preferences and privileges, per right, subject to adjustment.
At any time until 10 days following the stock acquisition date, our board may
redeem the rights in whole, but not in part, at a redemption price of $.001 per
right, subject to adjustment.
Prior to the distribution date, the terms of the rights may without the consent
of the holders of the rights be amended by our board in any respect whatever,
except for an amendment that would change the redemption price, the exercise
price of the rights, the number of 1/100ths of a series C preferred share
purchasable upon exercise of the rights or the final expiration date of the
rights. After the distribution date, our board may amend the rights agreement to
cure any ambiguity or inconsistency, to make changes which do not adversely
affect the interests of holders of rights, excluding the interest of any
acquiring person, or to shorten or lengthen any time period under the rights
agreement; provided, however, that no amendment to adjust the time period
governing redemption may be made at such time as the rights are not redeemable.
The rights will expire on June 30, 2014, unless the rights are earlier redeemed
by us as described above.
Transfer Agent and Registrar
The transfer agent and registrar for our Class A Common Stock is Computershare
Trust Company, 350 Indiana Street, Suite 800, Golden, Colorado 80401.
LEGAL MATTERS
Certain legal matters with respect to the validity of the issuance of the Class
A Common Stock offered hereby will be passed upon by The Law Office of Steven P.
Oman, P.C., Scottsdale, Arizona. Said firm, and Steven P. Oman, owned, as of the
date of this prospectus, an aggregate of 332,887 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 Company is a party to litigation which is more fully described in our Form
10-QSB for the quarter ended September 30, 2005, filed with the SEC on November
14, 2005, and our Form 10-KSB for the fiscal year ending June 30, 2005, filed
with the SEC on September 28, 2005.
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, 2005 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.
21
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" information into this prospectus
and any subsequent prospectus supplements, which means that we can disclose
important information to you by referring you to another document filed
separately with the SEC. This prospectus incorporates by reference documents
which are not presented in this prospectus or delivered to you with it. The
information incorporated by reference is an important part of this prospectus
and any subsequent prospectus supplements. Information that we file subsequently
with the SEC, but prior to the termination of this offering, will automatically
update this prospectus and any outstanding prospectus supplements and supersede
this information. We incorporate by reference the documents listed below and
amendments to them. These documents and their amendments were previously filed
with the SEC.
The following documents filed by us with the SEC are incorporated by reference
in this prospectus:
1. The description of our Class A Common Stock set forth in our registration
statement on Form 10/A filed with the SEC on March 27, 1981, and any subsequent
amendment or report filed for the purpose of updating this description.
2. Our Proxy Statement for our Annual Meeting of Shareholders held on December
22, 2003, filed with the SEC on November 7, 2003.
3. Our annual report on Form 10-KSB for the fiscal year ended June 30, 2005,
including our audited consolidated financial statements for the fiscal year
ended June 30, 2005 attached thereto, filed with the SEC on September 28, 2005.
4. Our quarterly report on Form 10-QSB for the quarter ended September 30, 2005,
filed with the SEC on November 14, 2005.
5. Our Proxy Statement for our Annual Meeting of Shareholders to be held on
January 20, 2006, filed with the SEC on December 9, 2005.
6. Our Form 8-K filed with the SEC on January 19, 2006.
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.
22
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 $ 548
Printing expenses* $ 200
Accounting fees and expenses* $ 1,000
Legal fees and expenses* $ 1,000
Miscellaneous* $ 500
-------------
Total* $ 3,248
* Estimated
Item 15. Indemnification of Directors and Officers.
The General Corporation Law of the State of Arizona allows corporations to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action or suit or proceeding, whether
civil, criminal, administrative or investigative, by reason of the fact that he
or she is or was a director, officer, employee or agent of the corporation or is
or was serving at the request of the corporation as a director, officer,
employee, partner, trustee, or agent of another corporation, partnership, joint
venture, trust, other enterprise or employee benefit plan, unless it is
established that:
o the act or omission was material to the matter giving rise
to the proceeding and either was committed in bad faith or was
the result of active and deliberate dishonesty;
o the person actually received an improper personal benefit in
money, property or services; or
o in the case of any criminal proceeding, the person had
reasonable cause to believe that the act or omission was
unlawful.
Under Arizona law, indemnification may be provided against judgments, penalties,
fines, settlements and reasonable expenses actually incurred by the person in
connection with the proceeding. The indemnification may be provided, however,
only if authorized for a specific proceeding after a determination has been made
that indemnification is permissible under the circumstances because the person
met the applicable standard of conduct. This determination is required to be
made:
o by the Board of Directors by a majority vote of a quorum
consisting of directors not, at the 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.
23
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.
24
Item 16. Exhibits.
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
5 Opinion of Law Office of Steven P. Oman, P.C.
23.1 Consent of Law Office of Steven P. Oman, P.C. (included in
Exhibit 5).
23.2 Consent of Semple & 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:
(1) To file, during any period in which offers or sales are being made, a post-
effective amendment to this registration statement:
(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.
25
(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 January 19, 2006.
ALANCO TECHNOLOGIES, INC.
an Arizona corporation
By: /s/ Robert R. Kauffman
Robert R. Kauffman
Chief Executive Officer
(Principal Executive Officer)
26
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
Robert R. Kauffman Chairman of the Board January 19, 2006
/s/ John A. Carlson Chief Financial Officer (Principal
------------------- Financial Officer and Principal
John A. Carlson Accounting Officer) and Director January 19, 2006
/s/ Harold S. Carpenter
------------------------
Harold S. Carpenter Director January 19, 2006
/s/ Donald E. Anderson
-----------------------
Donald E. Anderson Director January 19, 2006
/s/ James T. Hecker
-------------------
James T. Hecker Director January 19, 2006
/s/ Thomas C. LaVoy
--------------------
Thomas C. LaVoy Director January 19, 2006
/s/ Steven P. Oman
-------------------
Steven P. Oman Director January 19, 2006
27
Law Office of
STEVEN P. OMAN, P.C.
Gold Dust Corporate Center
10446 N. 74th Street, Suite 130
Scottsdale, Arizona 85258
Telephone: (480) 348-1470 Facsimile: (480) 348-1471
e-mail: soman@omanlaw.net
January 19, 2006
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 7,883,262 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
documents containing description of the rights, privileges and liabilities of
the Preferred Stock of the Company and warrant agreements.
In connection with our review, we have assumed: (i) the genuineness of all
signatures; (ii) the authenticity of all documents submitted to us as originals
and the conformity to original documents of all documents submitted to us as
certified or photostatic copies; and (iii) the proper issuance and accuracy of
certificates of officers and agents of the Company and public officials.
Based on the foregoing, we are of the opinion that (i) 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 conversion of the Preferred Stock of the Company as permitted
thereby, or 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, including
its constitution and judicial interpretations, and we are expressing no opinion
as to the effect of the laws of any other jurisdiction. This opinion is rendered
as of the date hereof to be effective as of the effective date of the
Registration Statement, and we undertake no obligation to advise you of any
changes in applicable law or other matters that may come to our attention after
said effective date.
We hereby consent to be named in the Registration Statement under the heading
"Legal Matters" as attorneys who passed upon the validity of the Shares and to
the filing of a copy of this opinion as Exhibit 5 to the Registration Statement.
Very truly yours,
LAW OFFICE OF STEVEN P. OMAN, P.C.
By: /s/ Steven P. Oman
------------------
Steven P. Oman
28
Consent of Independent Certified Public Accountants
Alanco Technologies, Inc. and Subsidiaries
As independent certified public accountants, we hereby consent to the
incorporation by reference in the S-3 registration statement of our report dated
September 1, 2005, included in the Company's Form 10-KSB for the year ended June
30, 2005, and to all references to our firm included in this registration
statement.
/S/ SEMPLE & COOPER, LLP
Phoenix, Arizona
January 19, 2006
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