SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3/A
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 maximum aggregate Amount of
to be registered Amount to be Registered offering price (1 registration fee
---------------- ---------------------- -------------- ----------------
Class A Common Stock (includes
629,186 shares underlying warrants) 3,046,591 $1.30 $423.78
Rights attached to above shares of
Class A Common Stock Under Shareholder
Rights Plan (2) 3,046,591 $0.00 --
(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 November
10, 2006.
(2) Each share of the Company's Class A Common Stock has a Right attached to it
in accordance with the Company's Shareholder Rights Plan (more fully described
on page 17 of this Prospectus). These Rights are also being registered in this
Prospectus.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
SUBJECT TO COMPLETION, DATED November 10, 2006
PROSPECTUS
ALANCO TECHNOLOGIES, INC.
3,046,591 Shares of Class A Common Stock
(Including 629,186 Shares of Class A Common Stock Underlying Warrants)
And the Rights Attached to the Shares
THE SHARES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" ON PAGE 5 FOR INFORMATION THAT YOU SHOULD CONSIDER.
Effective October 16, 2006, the Company effected a 2:5 reverse stock split. All
references to both number of shares and price per share of Class A Common Stock
issued and outstanding, options and warrants granted, and common stock
equivalent shares are presented on a post-split basis.
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 2006, our June 2006 acquisition of StarTrak Systems, LLC, and a September
2006 financing transaction. 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 3,046,591 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 November 10, 2006, the last sale price of our Class
A Common Stock on NASDAQ was $1.29 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.
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 10
Use of Proceeds 11
Plan of Distribution 11
Selling Stockholders 13
Description of Securities 16
Legal Matters 20
Experts 20
Where You Can Find More Information 20
Information Incorporated by Reference 21
4
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 2006 (June 30, 2006) were diversified into three reporting business
segments including: (i) design, production, marketing and distribution of
wireless tracking and subscription information technology for the refrigerated
transportation industry (ii) design, production, marketing and distribution of
RFID tracking technology for the corrections market, and (iii) manufacturing,
marketing and distribution of data storage products.
Effective June, 2002, we acquired radio frequency identification (RFID) tracking
technology through the acquisition of the operations of Technology Systems
International, Inc., a Nevada corporation. Effective June 30, 2006, we acquired
the operations of StarTrak Systems, LLC, a provider of wireless tracking and
subscription data services to the transportation industry. We continue to
participate in the data storage market through our wholly-owned subsidiary,
Excel/Meridian Data, Inc., a manufacturer of network attached storage systems
for mid-range organizations.
Our principal executive offices are located at 15575 North 83rd Way, Suite 3,
Scottsdale, AZ 85260, and our telephone number is (480) 607-1010.
The Offering
Securities offered by the
Selling Shareholders................ 3,046,591 shares of Class A Common
Stock and 3,046,591 Rights attached
to the Class A Common Stock under
the Shareholder Rights Plan
Class A Common Stock currently
outstanding......................... 15,474,995 shares (1)
Use of proceeds..................... We will not receive any of the
proceeds of sales of Class A Common
Stock by the Selling Shareholders. We
may, however, receive proceeds from
the exercise of certain rights held by
some of the Selling Shareholders under
stock options or warrants to purchase
Class A Common Stock from us if that is
the origin of shares sold by those
Selling Shareholders.
Risk Factors........................ Prospective purchasers should carefully
consider the factors discussed under
"Risk Factors."
NASDAQ symbol....................... ALAN
(1) Excludes (i) 5,915,600 shares of Class A Common Stock reserved for
issuance upon exercise of stock options outstanding as of November 10,
2006; (ii) 49,700 shares reserved for issuance upon the exercise of
stock options that may be granted in the future under our stock option
plans; (iii) 3,448,184 shares reserved for issuance upon exercise of
outstanding warrants; (iv) 4,258,882 shares reserved for issuance upon
conversion of the Series A Convertible Preferred Stock; and (v) 399,828
shares reserved for issuance upon conversion of the Series B
Convertible Preferred Stock.
RISK FACTORS
An investment in Alanco involves a high degree of risk. In addition to the other
information included in this prospectus, you should carefully consider the
following risk factors in determining whether or not to purchase the shares of
Class A Common Stock offered under this prospectus. These matters should be
considered in conjunction with the other information included or incorporated by
reference in this prospectus. This prospectus contains statements which
constitute forward-looking statements within the meaning of the Private
5
Securities Litigation Reform Act of 1995. These statements appear in a number of
places in this prospectus and include statements regarding the intent, belief or
current expectations of our management, directors or officers primarily with
respect to our future operating performance. Prospective purchasers of our
securities are cautioned that these forward-looking statements are not
guarantees of future performance and involve risks and uncertainties. Actual
results may differ materially from those in the forward-looking statements as a
result of various factors. The accompanying information contained in this
prospectus, including the information set out below, identifies important
factors that could cause such differences. See "Safe Harbor Statements Under the
Private Securities Litigation Reform Act of 1995."
We may not be able to reach the sales goals anticipated from the StarTrak
Systems acquisition. We acquired the operations of StarTrak Systems, LLC
("StarTrak") effective June 30, 2006. StarTrak is a leading provider of wireless
tracking and subscription data services to the transportation industry, with a
focus upon the refrigerated or "Reefer" segment of the transport industry.
StarTrak provides wireless (including GPS, cellular and radio) tracking,
monitoring and control services to this market.
We are anticipating significant revenue growth from sales of StarTrak products
in the transportation market. We do not have experience in the transportation
market, and there is no certainty that we will be able to capture the required
market share for StarTrak to achieve its anticipated financial success. The
StarTrak system is currently being marketed to the transportation market as a
tool to increase efficiency and reduce costs of the refrigerated supply chain by
wireless monitoring and control of critical Reefer data, including GPS location,
cargo temperatures and Reefer fuel levels. Although StarTrak is the dominant
provider for tracking, management and control services of the refrigeration
transport market and is currently the only tracking system, to the best of our
knowledge, which is able to provide direct interaction with the customer
allowing for remote adjustments of variables controlled by the unit, there are
other tracking/monitoring systems being marketed to the refrigerated transport
industry. There is no certainty that the transportation industry will adopt this
technology broadly enough for us to reach our marketing projections.
The loss of key StarTrak personnel would have a negative impact. Our StarTrak
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.
We may continue to have difficulty in making sales in our TSI/PRISM division. We
acquired the business and assets of Technology Systems International, Inc.
("TSI") effective June 2002, creating the Company's RFID Technology segment.
During fiscal 2005, we changed the name of Technology Systems International,
Inc. to Alanco/TSI PRISM, Inc. ("ATSI").
We had anticipated significant revenue growth from sales of the TSI PRISM
tracking system in the corrections market in prior years which was not realized.
We continue to anticipate future significant revenue growth from sales of the
TSI PRISM tracking system; however, there is no certainty that we will be able
to capture the required market share for ATSI to achieve its anticipated
financial success. The TSI PRISM system is currently being marketed to the
corrections market as a prison and jail management tool and officer safety
system. Although there are other inmate and officer monitoring systems being
marketed to the corrections industry, the TSI PRISM system is currently the only
system, to the best of our knowledge, 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.
The loss of key TSI personnel would have a negative impact. 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.
We could incur financial losses as a result of the continuing litigation with
respect to our acquisition of ATSI. We have been sued concerning our acquisition
of ATSI. The lengthy continuance or ultimate loss of the litigation could have a
negative 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
6
recommended for purchase by corrections facility managers, the governmental
agency responsible for the facility may not have sufficient budget resources to
purchase the system. As of the date of this filing, the Company has no
significant TSI PRISM sales backlog as defined by unfulfilled signed contracts.
Worsening general economic conditions may negatively affect our Company. Both
our RFID Technology and our Data Storage segment rely on a strong economy to
support technology spending by our customers. Our Data Storage segment sells
network attached storage systems to mid-sized network users. Previous
deterioration in general economic conditions resulted in reduced spending by our
customers for technology in general, including the products sold by us. We have
the ability to reduce overhead to assist in offsetting our reduced sales volume;
however, if the economic conditions were to deteriorate, we could experience a
material adverse impact on our business, operating results, and financial
conditions. See previous section discussing the budget constraints of our
government customers.
Acts of domestic terrorism and war have impacted general economic conditions and
may impact the industry and our ability to operate profitably. On September 11,
2001, acts of terrorism occurred in New York City and Washington, D.C. On
October 7, 2001, the United States launched military actions on Afghanistan, and
in 2003 launched military attacks on Iraq with ongoing operations in both areas.
As a result of those terrorist acts and military actions, there has been a
disruption in general economic activity. There may be other consequences
resulting from those acts of terrorism, and any others which may occur in the
future, including civil disturbance, war, riot, epidemics, public demonstration,
explosion, freight embargoes, governmental action, governmental delay, restraint
or inaction, quarantine restrictions, unavailability of capital, equipment,
personnel, which we may not be able to anticipate. These terrorist acts and acts
of war may continue to impact the economy, and in turn, reduce the demand for
our products and services, which would harm our ability to make a profit. Also,
as federal dollars are redirected to military efforts, they may not be available
for the purchase of new federal prison monitoring systems from our TSI
subsidiary.
The Company may not have sufficient capital to meet its liquidity needs;
Uncertainty of proceeds and additional financing. The Company incurred
significant losses during fiscal year 2006 and has experienced significant
losses in prior years. Although management cannot assure that future operations
will be profitable or that additional debt and/or equity capital will be raised,
we believe that, based on our fiscal 2007 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 2007 operating plan are not met. If we
need to seek additional financing to meet working capital requirements, there
can be no assurance that additional financing will be available on terms
acceptable to us, or at all. If adequate funds are not available or are not
available on acceptable terms, our business, operating results, financial
condition and ability to continue operations will be materially adversely
affected.
If we raise additional funds through the sale of stock, our existing
shareholders will experience dilution and may be subject to newly issued senior
securities. If additional funds are raised through the issuance of equity
securities, the percentage ownership of the then current shareholders of the
Company will be reduced, and such equity securities may have rights, preferences
or privileges senior to those of the holders of Class A Common Stock.
We have had recent losses and fluctuations in operating results. We had a
consolidated loss from operations of $4,591,900 for the fiscal year ending June
30, 2006, and a consolidated loss from operations of $4,311,700 for the fiscal
year ending June 30, 2005. In addition, our quarterly operating results have
fluctuated significantly in the past and could fluctuate significantly in the
future. We anticipate that our future financial performance will be
significantly impacted by our acquisition of StarTrak and our marketing efforts
concerning the StarTrak and TSI RFID technology. As a result, our past quarterly
operating results should not be used to predict future performance.
Our Company's intellectual property may not be sufficient. Our primary business
strategy is to develop the StarTrak and ATSI business opportunities. The
long-term success of this strategy depends in part upon the StarTrak and ATSI
intellectual property acquired. Although we are not currently aware of any
conflicting technology rights, third parties may hold United States or foreign
patents which may be asserted in the future against the StarTrak and ATSI
technology, and there is no assurance that any license that might be required
under such patents could be obtained on commercially reasonable terms, or
otherwise. Our competitors may also independently develop technologies that are
substantially equivalent or superior to our technology. In addition, the laws of
some foreign countries do not protect our proprietary rights to the same extent
as the laws of the United States.
7
Our efforts to prohibit others from infringing upon our intellectually property
may not be adequate. Despite our efforts to safeguard and maintain our
proprietary rights both in the United States and abroad, there can be no
assurance that we will be successful in doing so or that the steps taken by us
in this regard will be adequate to deter infringement, misuse, misappropriation
or independent third-party development of our technology or intellectual
property rights or to prevent an unauthorized third party from copying or
otherwise obtaining and using our products or technology. Litigation may also
become necessary to defend or enforce our proprietary rights. Any of such events
could have a material adverse effect on our business, operating results and
financial condition.
The loss of key executives would have a negative effect on our Company. Our
performance is substantially dependent on the services and performance of our
executive officers and key employees. The loss of the services of any of our
executive officers or key employees could have a material adverse effect on our
business, operating results and financial condition. Our future success will
depend on our ability to attract, integrate, motivate and retain qualified
technical, sales, operations and managerial personnel. With the exception of the
two most senior StarTrak executives, none of our executive officers are bound by
an employment agreement, and none are covered by key-man insurance.
Additional competitors to StarTrak may arise. Although StarTrak currently is the
dominant provider of tracking, management and control services of refrigeration
transport Reefer units, it can be expected that if, and to the extent that, the
demand for the StarTrak technology increases, the number of competitors will
likely increase. Increasing competition could adversely affect the amount of new
business we are able to attract, the rates we are able to charge for our
services and/or products, or both.
Additional competitors to the TSI PRISM business may arise. Although early in
the market development cycle, the TSI PRISM business/technology has no current,
identified direct competitors capable of the same performance levels as the TSI
PRISM system. There are other companies attempting to introduce area location
and monitoring technologies in the correctional facilities market who offer area
or zone detection systems that are not capable of providing continuous real-time
tracking at this time. However, it can be expected that if, and to the extent
that, the demand for the ATSI technology increases, the number of competitors
will likely increase, as will their capabilities. Increasing competition could
adversely affect the amount of new business we are able to attract, the rates we
are able to charge for our services and/or products, or both.
We may lack the capital to compete effectively in the data storage market.
Because we are significantly smaller than many of our competitors in the data
storage business, we may lack the capital required to increase our market share.
We operate in a very competitive environment, competing against numerous other
companies, many of whom have greater financial resources and market position
than we do.
Possible exercise and issuance of options and warrants issued by the Company may
dilute interest of shareholders. As of the date of this prospectus, options to
purchase 5,915,600 shares of our Class A Common Stock were outstanding, and the
weighted average exercise price of such options was $1.95. Additionally,
warrants to purchase 3,448,184 shares of our Class A Common Stock were
outstanding, and the weighted average exercise price of such warrants was $2.21.
To the extent that any stock options currently outstanding or granted in the
future are exercised, dilution to the interests of our shareholders may occur.
We may not be able to maintain our NASDAQ Listing. Our Class A Common Stock
currently trades on the NASDAQ Capital Market under the symbol "ALAN." However,
there can be no assurance that an active trading market in our Class A Common
Stock will be available at any particular future time.
In August, 2005, we received notification from NASDAQ indicating that due to the
failure of the Company to maintain the minimum $1.00 bid price per share
requirement, the Company's securities were subject to delisting from NASDAQ. In
accordance with Marketplace Rule 4310(c) (8) (D), the Company had 180 days, or
until January 31, 2006, to comply with the Rule. The minimum bid price
requirement was not met by the date specified, and again in accordance with
Marketplace Rule 4310(c), NASDAQ officials determined the Company met the NASDAQ
Capital Market initial listing criteria except for the bid price requirement and
notified the Company that it had been granted an additional 180 calendar days
(until July 31, 2006) to meet the $1.00 minimum bid price requirement. In
August, 2006, we received notification from NASDAQ indicating that we had not
8
regained compliance with the minimum $1.00 bid price per share requirement and
that the Company's securities would be delisted. We elected to appeal the NASDAQ
Staff delisting determination and an oral hearing before the NASDAQ Listing
Qualifications Panel ("Panel") was held on September 14, 2006, with
representatives from the Company present. Effective October 16, 2006, the
Company's Board of Directors elected to effect a 2:5 reverse stock split
pursuant to approval of a proposal authorizing a reverse split obtained from the
shareholders at the Company's Annual Meeting of Shareholders held on January 20,
2006. The Company's stock began trading on a post-split adjusted basis under the
interim trading symbol "ALAND" on October 16, 2006 for a period of 20 trading
days, after which the Company's trading symbol will return to "ALAN." The
Company's stock has traded above the $1.00 minimum bid price since the reverse
stock split was effected. On November 2, 2006, the Company received a letter
from NASDAQ indicating that the Company had remedied its minimum bid price
deficiency and had regained compliance with the continued listing requirements
of The NASDAQ Capital Market. There can be no assurance that the Company's stock
will continue to trade above the minimum NASDAQ $1.00 per share bid requirement,
and the Company may again in the future be notified that delisting may occur.
The Company does not anticipate payment of dividends. We do not anticipate that
we will pay cash dividends on our Class A Common Stock in the foreseeable
future. The payment of dividends by us will depend on our earnings, financial
condition, and such other factors, as our Board of Directors may consider
relevant. We currently plan to retain earnings to provide for the development of
our business.
Our articles of incorporation and Arizona law may have the effect of making it
more expensive or more difficult for a third party to acquire, or to acquire
control, of us. Our articles of incorporation make it possible for our Board of
Directors to issue preferred stock with voting or other rights that could impede
the success of any attempt to change control of us. Arizona law prohibits a
publicly held Arizona corporation from engaging in certain business combinations
with certain persons, who acquire our securities with the intent of engaging in
a business combination, unless the proposed transaction is approved in a
prescribed manner. This provision has the effect of discouraging transactions
not approved by our Board of Directors as required by the statute which may
discourage third parties from attempting to acquire us or to acquire control of
us even if the attempt would result in a premium over market price for the
shares of common stock held by our stockholders.
Certain provisions in our 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;
9
o the outcome of any future litigation;
o changes in our financial estimates by securities analysts;
o general market conditions for emerging growth and technology
companies;
o broad market fluctuations;
o recovery from natural disasters; and
o economic conditions in the United States or abroad.
Future sales of our Class A Common Stock in the public market could adversely
affect our stock price and our ability to raise funds in new equity offerings.
We cannot predict the effect, if any, that future sales of shares of our common
stock or the availability for future sale of shares of our common stock or
securities convertible into or exercisable for our common stock will have on the
market price of our common stock prevailing from time to time. For example, the
availability of the shares covered by this S-3 registration statement for sale,
or of common stock by our existing stockholders under Rule 144, or the
perception that such sales could occur, could adversely affect prevailing market
prices for our common stock and could materially impair our future ability to
raise capital through an offering of equity securities.
SAFE HARBOR STATEMENTS UNDER THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995
This prospectus includes "forward-looking statements" as that term is defined in
the Private Securities Litigation Reform Act of 1995. The safe harbor provisions
of the Securities Exchange Act of 1934 and the Securities Act of 1933 apply to
forward-looking statements made by us. These statements can be identified by the
use of forward-looking terminology such as "believes," "expects," "may," "will,"
"should" or "anticipates" or the negatives or variations of these terms, and
other comparable terminology. In addition, any statements discussing strategy
that involve risks and uncertainties are forward-looking. Forward-looking
statements include statements concerning plans, objectives, goals, strategies,
future events or performance, and underlying assumptions and other statements,
which are other than statements of historical facts. From time to time, the
Company may publish or otherwise make available forward-looking statements of
this nature. All such forward-looking statements are based on the expectations
of management when made and are subject to, and are qualified by, risks and
uncertainties that could cause actual results to differ materially from those
expressed or implied by those statements. These risks and uncertainties include,
but are not limited to, the following factors, among others, that could affect
the outcome of the Company's forward-looking statements: general economic and
market conditions; reduced demand for information technology equipment;
competitive pricing and difficulty managing product costs; development of new
technologies which make the Company's products obsolete; rapid industry changes;
failure by the Company's suppliers to meet quality or delivery requirements; the
inability to attract, hire and retain key personnel; failure of an acquired
business to further the Company's strategies; the difficulty of integrating an
acquired business; undetected problems in the Company's products; the failure of
the Company's intellectual property to be adequately protected; unforeseen
litigation; unfavorable result of current pending litigation; the ability to
maintain sufficient liquidity in order to support operations; the ability to
maintain satisfactory relationships with lenders and to remain in compliance
with financial loan covenants and other requirements under current banking
agreements; the ability to maintain satisfactory relationships with suppliers;
federal and/or state regulatory and legislative actions; customer preferences
and spending patterns; the ability to implement or adjust to new technologies
and the ability to secure and maintain key contracts and relationships.
Forward-looking statements involve risks and uncertainties, including those
risks and uncertainties identified in the section of this prospectus beginning
on page 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.
10
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. Each of the shares of Class A Common Stock includes a
Right under the Shareholder Rights Plan that is also being registered in this
Prospectus. The transactions under which the securities were issued are
described in the following paragraphs.
The first transaction involves the issuance of 328,000 shares of Class A Common
Stock and a warrant to purchase 328,000 shares of Class A Common Stock at an
exercise price of $1.62 per share to The Anderson Family Trust on April 26,
2006. The offering was comprised of 820,000 units sold at a price of $0.61 per
unit, each unit consisting of two-fifths of one share of Class A Common Stock
and a warrant to purchase two-fifths of one share of Class A Common Stock.
Donald E. and Rebecca E. Anderson control the trust. Mr. Anderson is a director
of the Company. Due to NASDAQ requirements, the Anderson Family Trust has agreed
not to exercise the warrants until their issuance is approved by the Alanco
shareholders. A proposal for such approval is slated to be on the Proxy for the
next Annual Shareholders' Meeting scheduled in December 2006. This prospectus
covers only the resale of the 328,000 shares of Class A Common Stock. The
agreement pertaining to this transaction was filed as Exhibit 99.1 to our Form
8-K filed with the SEC on May 4, 2006.
The second transaction involves the issuance in June 2006 of 333,999 shares of
Class A Common Stock and warrants to purchase 166,998 shares of Class A Common
Stock at an exercise price of $2.12 per share in connection with a private
offering to three accredited investors, Iroquois Master Fund Ltd, Cranshire
Capital, L.P., and Rockmore Investment Master Fund Ltd. The offering was
comprised of units sold at a price of $0.60 per unit, each unit consisting of
two-fifths of one share of Class A Common Stock and a warrant to purchase
one-fifth of one share of Class A Common Stock. This prospectus includes a total
of 500,997 shares of Class A Common Stock issued in connection with this
offering, including the shares of common stock underlying the warrants. The
agreement pertaining to this transaction was filed as Exhibit 99.1 to our Form
8-K filed with the SEC on June 9, 2006.
The third 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 Fund, Ltd. completed in June 2006. The
offering was comprised of units sold at a price of $0.60 per unit, each unit
consisting of two-fifths of one share of Class A Common Stock and a warrant to
purchase one-fifth of one share of Class A Common Stock. A total of 334,000
shares of Class A Common Stock were issued in the offering. In addition,
three-year warrants to purchase a total of 178,688 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 167,000 shares were issued to Whalehaven Capital Fund,
Ltd., warrants to purchase 5,844 shares were issued to Midtown Partners & Co.,
LLC., warrants to purchase 5,260 shares were issued to J. Rory Rohan, and
warrants to purchase 584 shares were issued to Gordon A. Maner. 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 June 21, 2006.
The fourth transaction involves the issuance of Class A Common Stock in
connection with our acquisition of the operations of StarTrak Systems, LLC,
effective June 30, 2006. This prospectus covers the resale of 1,211,406 shares
of Class A Common Stock issued in connection with the acquisition as follows:
400,000 shares issued to Timothy P. Slifkin, President and Chief Executive
Officer of StarTrak, 400,000 shares issued to Thomas A. Robinson, Executive Vice
President of StarTrak, 350,000 shares issued to Tenix Holding, Inc., a Delaware
corporation and partial owner of StarTrak Systems, LLC, and 61,406 shares issued
to Cronus Partners LLC, an investment banker representing StarTrak in the
transaction. The agreement pertaining to this transaction was filed as Exhibit
99.1 to our Form 8-K filed with the SEC on June 27, 2006.
The final transaction involves the issuance of Class A Common Stock and warrants
to purchase shares of Class A Common Stock in connection with a $4 million debt
11
financing agreement closed in September 2006 with ComVest Capital LLC
("ComVest"), based in West Palm Beach, Florida. The loan has an interest rate of
prime plus two and one-half percent per annum and matures in September 2010. As
part of the agreement, ComVest received 200,000 shares of Class A Common Stock
and five-year warrants to purchase 270,000 shares of Class A Common Stock at an
exercise price of $1.80 per share. Compensation in the form of stock and
warrants paid to brokers in connection with the transaction was as follows:
Midtown Partners & Co., LLC received 4,000 shares of Class A Common Stock and a
five-year warrant to purchase 6,750 shares of Class A Common Stock at an
exercise price of $1.80; J. Rory Rohan received 6,000 shares of Class A Common
Stock and a five-year warrant to purchase 6,350 shares of Class A Common Stock
at an exercise price of $1.80; and Gordon A. Maner received a five-year warrant
to purchase 400 shares of Class A Common Stock at an exercise price of $1.80.
The loan agreement and form of warrant pertaining to this transaction were filed
as Exhibit 99.1 and Exhibit 99.2 to our Form 8-K filed with the SEC on October
3, 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.
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.
12
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.
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.
13
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 November
10, 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, the Company
is not able to estimate the amount or percentage of our Class A Common Stock
that will be held by the selling stockholders upon completion of this offering.
The following table assumes that all of the shares of Class A Common Stock being
registered and the shares underlying the warrants being registered will be sold
by the selling stockholders.
The shares purchased by the selling shareholders were purchased in the ordinary
course of business; and at the time of the purchase of the securities to be
resold, none of the sellers had any agreements or understandings, directly or
indirectly, with any person to distribute the securities. None of the selling
shareholders are affiliates of broker-dealers.
Except as indicated below, none of the selling stockholders has held any
position or office or had any other material relationship with us or any of our
predecessors or affiliates within the past three years other than as a result of
the ownership of our securities or the securities of our predecessors. We may
amend or supplement this prospectus from time to time to update the disclosure
set forth in it.
The shares of Class A Common Stock offered by this prospectus may be offered
from time to time by the selling stockholders named below:
14
Shares Being
Selling Stockholder Shares Beneficially Shares Offered by Beneficial Ownership
Owned Shares Being Exercise of After Offering
Prior to Offering Offered Warrants Number Percent
-----------------------------------------------------------------------------------------------------
Anderson Family Trust (3) 3,776,124 328,000 0 3,448,124 17.13%
11804 N. Sundown Drive
Scottsdale, AZ 85260
Iroquois Master Fund Ltd. (4) 258,999 111,333 55,666 92,000 **
641 Lexington Avenue, 26th Floor
New York, NY 10022
Cranshire Capital, LP (5) 350,999 111,333 55,666 184,000 **
3100 Dundee Road, Suite 703
Northbrook, IL 60062
Rockmore Investment Master Fund Ltd. (6) 166,999 111,333 55,666 0 **
650 Fifth Avenue, 24th Floor
New York, NY 10019
Whalehaven Capital Fund Limited (7) 1,216,560 334,000 167,000 715,560 3.52%
3rd Floor, 14 Par-La-Ville Road
Hamilton HM08 Bermuda
Midtown Partners & Co., LLC (8) 24,994 4,000 12,594 8,400 **
4902 Eisenhower Blvd., Suite 185
Tampa, FL 33634
J. Rory Rohan 30,210 6,000 11,610 12,600 **
405 Lexington Avenue, 26th Floor
New York, NY 10174
Gordon A. Maner 984 0 984 0 **
405 Lexington Avenue, 26th Floor
New York, NY 10174
Tenix Holding, Inc. (9) 350,000 350,000 0 0 **
c/o Louis J. Marrett
Choate Hall & Stewart LLP
Two International Place
Boston, MA 02110
Timothy P. Slifkin (10) 1,025,882 400,000 0 625,882 3.11%
47-A Lake Road
Morristown, NJ 07960
Thomas A. Robinson (11) 737,255 400,000 0 337,255 1.68%
3 Connet Lane
Mendham, NJ 07945
Cronus Partners LLC (12) 61,406 61,406 0 0 **
101 Merritt 7
Norwalk, CT 06851
ComVest Capital LLC (13) 470,000 200,000 270,000 0 **
One North Clematis, Suite 300
West Palm Beach, FL 33401
____________________
TOTALS 2,417,405 629,186
====================
* Less than 1%
---------------------------------
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
20,133,705 Common Equivalent shares outstanding, which is comprised of
15,474,995 shares of Class A Common Stock, 4,258,882 shares of Class A
Common Stock into which the Series A Preferred Stock is convertible,
and 399,828 shares of Class A Common Stock into which the Series B
Preferred Stock is convertible as of November 10, 2006.
(2) Each share of Class A Common Stock being registered in this Prospectus
also has a Right attached to it under the Shareholder Rights Plan
(described on page 17). Those Rights are also being registered in this
Prospectus.
(3) Donald E. and Rebecca E Anderson, who have beneficial ownership of all
of the outstanding shares of the Anderson Family Trust, have beneficial
ownership of 17.86% of the Company. This includes shares owned by
Programmed Land, Inc., which are beneficially owned by the Mr. and Mrs.
Anderson, and shares owned directly by Mr. Anderson. Mr. Anderson is a
director of the Company.
(4) Iroquois Master Fund Ltd. is the beneficial owner of 1.28% of the
Company's Class A Common Stock. Joshua Silverman has voting control and
investment decision over securities held by Iroquois Master Fund. Mr.
Silverman disclaims beneficial ownership of the shares held by Iroquois
Master Fund.
(5) Cranshire Capital, LP is the beneficial owner of 1.72% 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.
(6) Rockmore Investment Master Fund Ltd is the beneficial owner of 0.83% of
the Company's Class A Common Stock. Rockmore Capital, LLC ("Rockmore
Capital") and Rockmore Partners, LLC ("Rockmore Partners"), each a
limited liability company formed under the laws of the State of
Delaware, serve as the investment manager and general partner,
respectively, to Rockmore Investments (US) LP, a Delaware limited
partnership, which invests all of its assets through Rockmore
Investment Master Fund Ltd., an exempted company formed under the laws
of Bermuda ("Rockmore Master Fund"). By reason of such relationships,
Rockmore Capital and Rockmore Partners may be deemed to share
dispositive power over the shares of common stock owned by Rockmore
Master Fund. Rockmore Capital and Rockmore Partners disclaim beneficial
ownership of such shares of common stock. Rockmore Partners has
delegated authority to Rockmore Capital regarding the portfolio
management decisions with respect to the shares of common stock owned
by Rockmore Master Fund and, as of August 5, 2006, Mr. Bruce T.
Bernstein and Mr. Brian Daly, as officers of Rockmore Capital, are
responsible for the portfolio management decisions of the shares of
common stock owned by Rockmore Master Fund. By reason of such
authority, Messrs. Bernstein and Daly may be deemed to share
dispositive power over the shares of common stock owned by Rockmore
Master Fund. Messrs. Bernstein and Daly disclaim beneficial ownership
of such shares of common stock and neither of such persons has any
legal right to maintain such authority. No other person has sole or
shared voting or dispositive power with respect to the shares of common
stock as those terms are used for purposes under Regulation 13D-G of
the Securities Exchange Act of 1934, as amended. 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 Rockmore
Master Fund.
16
(7) Whalehaven Capital Fund, Ltd. is the beneficial owner of 5.91% of the
Company's Class A Common Stock. Michael Finkelstein has voting control
and investment decision over securities held by Whalehaven Capital
Fund. Mr. Finkelstein disclaims beneficial ownership of the shares held
by Whalehaven Capital Fund.
(8) Midtown Partners & Co., LLC is the beneficial owner of 0.12% 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.
(9) Tenix Holding, Inc. is the beneficial owner of 1.74% of the Company's
Class A Common Stock. Robert Leece has voting control and investment
decision over securities held by Tenix Holding. Mr. Leece disclaims
beneficial ownership of the shares held by Tenix Holding.
(10) Timothy P. Slifkin is the beneficial owner of 5.06% of the Company's
Class A Common Stock. Mr. Slifkin is a director of the Company and
President and Chief Executive Officer of the Company's subsidiary,
StarTrak Systems LLC.
(11) Thomas A. Robinson is the beneficial owner of 3.63% of the Company's
Class A Common Stock. Mr. Robinson is the Executive Vice President of
the Company's subsidiary, StarTrak Systems LLC.
(12) Cronus Partners LLC is the beneficial owner of 0.30% of the Company's
Class A Common Stock. Mr. Alan Canzano has voting control and
investment decision over securities held by Cronus Partners LLC. Mr.
Canzano disclaims beneficial ownership of the shares held by Cronus
Partners LLC
(13) ComVest Capital LLC is the beneficial owner of 2.30% of the Company's
Class A Common Stock. The managing member of ComVest Capital LLC is
ComVest Capital Management LLC ("Management"), a Delaware limited
liability company, the managing member of which is ComVest Group
Holdings, LLC ("CGH"), a Delaware limited liability company. Michael
Falk ("Falk") is the Chairman and principal member of CGH. As a result
of these relationships, ComVest Capital LLC, Management, CGH, and Mr.
Falk may be deemed to have a beneficial interest in shares acquired by
ComVest Capital LLC.
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 15,474,995 shares of Class A Common Stock outstanding,
and no shares of Class B Common Stock issued and outstanding as of November 10,
2006. There were 3,549,061 shares of Series A Convertible Preferred Stock
outstanding and 76,890 shares of Series B Convertible Preferred Stock
outstanding as of November 10, 2006. Shares of the Series A Convertible
Preferred Stock are convertible into shares of Class A Common Stock at a rate of
1.2 shares of Class A Common Stock for every one share of Series A Convertible
Preferred Stock. Shares of the Series B Convertible Preferred Stock are
convertible into shares of Class A Common Stock at a rate of 5.2 shares of Class
A Common Stock for every one share of Series B Convertible Preferred Stock. As
of November 10, 2006, options to purchase 5,915,600 shares of Class A Common
Stock were outstanding, and the weighted average exercise price of such options
was $1.95. In addition, as of November 10, 2006, the Company had 3,448,184
warrants to purchase Class A Common Stock outstanding, and the weighted average
exercise price of such warrants was $2.21. Our Class A Common Stock is traded on
the NASDAQ Capital Market under the symbol "ALAN". No other securities of the
Company are currently traded on any market.
Common Stock
Holders of shares of our Class A Common Stock are entitled to one vote per share
on all matters to be voted on by our shareholders. Holders of shares of Class B
Common Stock are entitled to one-one hundredth of one vote per share of Class B
Common Stock on all matters to be voted on by our shareholders. Our Class A
Common Stock and our Class B Common Stock have cumulative voting rights with
respect to the election of directors. Our bylaws require that only a majority of
the issued and outstanding voting shares of common stock need be represented to
constitute a quorum and to transact business at a shareholders' meeting.
17
Subject to the dividend rights of the holders of preferred stock, if applicable,
holders of shares of common stock are entitled to share, on a ratable basis,
such dividends as may be declared by the Board of Directors out of funds legally
available.
Upon our liquidation, dissolution or winding up, after payment of creditors and
holders of any of our senior securities, including preferred stock, our assets
will be divided pro rata on a per share basis among the holders of the shares of
common stock. Our common stock has no preemptive or other subscription rights,
and there are no conversion rights or redemption or sinking fund provisions. All
outstanding shares of common stock are fully paid and non-assessable.
Preferred Stock
Our Board of Directors is authorized to issue preferred stock in one or more
series and denominations and to fix the rights, preferences, privileges, and
restrictions, including dividend, conversion, voting, redemption, liquidation
rights or preferences, and the number of shares constituting any series and the
designation of such series, without any further vote or action by our
shareholders. The issuance of preferred stock may have the effect of delaying,
deferring, or preventing a change of control of our company without further
action by the shareholders. The issuance of preferred stock with voting and
conversion rights may adversely affect the voting power of the holders of common
stock.
Our Board of Directors has previously authorized the issuance of a series of
preferred stock referred to as Series B Convertible Preferred Stock. Without the
affirmative vote of a majority of the holders of the Series B Preferred Stock,
we may not amend, alter or repeal any of the provisions of our articles of
incorporation or articles of designation for the Series B Convertible Preferred
Stock. We also need the affirmative vote of a majority of the holders of the
Series B Convertible Preferred Stock if we want to authorize any
reclassification of the Series B Convertible Preferred Stock that would
adversely affect the preferences, special rights or privileges or voting power
of the Series B Convertible Preferred Stock. We may not create or issue any
class of stock ranking prior to the Series B Convertible Preferred Stock as to
dividends or distribution of assets, or create or issue any shares of any series
of the authorized preferred stock ranking prior to the Series B Convertible
Preferred Stock's rights to dividends or distribution on liquidation. The Series
B Convertible Preferred Stock shall have voting rights as if converted into
Class A Common Stock.
Our Board of Directors has also authorized the issuance of a series of preferred
stock referred to as Series A Convertible Preferred Stock. Without the
affirmative vote of a majority of the holders of the Series A Preferred Stock,
we may not amend, alter or repeal any of the provisions of our articles of
incorporation or articles of designation for the Series A Convertible Preferred
Stock. We also need the affirmative vote of a majority of the holders of the
Series A Convertible Preferred Stock if we want to authorize any
reclassification of the Series A Convertible Preferred Stock that would
adversely affect the preferences, special rights or privileges or voting power
of the Series A Convertible Preferred Stock. We may not create or issue any
class of stock ranking prior to the Series A Convertible Preferred Stock (other
than the existing Series B Convertible Preferred Stock) as to dividends or
distribution of assets, or create or issue any shares of any series of the
authorized preferred stock ranking prior to the Series A Convertible Preferred
Stock's rights to dividends or distribution on liquidation. The Series A
Convertible Preferred Stock shall have voting rights as if converted into Class
A Common Stock.
Arizona Corporate Takeover Act and Certain Charter Provisions
We are subject to the provisions of the Arizona Corporate Takeover Act. The
Arizona Corporate Takeover Act and certain provisions of our articles of
incorporation and bylaws, as summarized in the following paragraphs, may have
the effect of discouraging, delaying, or preventing hostile takeovers (including
those that might result in a premium over the market price of our common stock),
or discouraging, delaying, or preventing changes in control or management of our
company.
Arizona Corporate Takeover Act
Article 1 of the Arizona Corporate Takeover Act is intended to restrict
"greenmail" attempts by prohibiting us from purchasing any shares of our capital
stock from any beneficial owner of more than 5% of the voting power of our
company at a per share price in excess of the average market price during the 30
trading days prior to the purchase, unless
18
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 a
fter such three-year period; or
o the business combination satisfies each of certain statutory
requirements.
Article 3 defines an "interested shareholder" as any person (other than us and
our subsidiaries) that either (a) beneficially owns 10% or more of the voting
power of our outstanding shares, or (b) is an affiliate or associate of our
company and who, at any time within the three-year period preceding the
transaction, was the beneficial owner of 10% or more of the voting power of our
outstanding shares.
Certain Charter Provisions
In addition to the provisions of the Arizona Corporate Takeover Act described
above, our articles of incorporation and bylaws contain a number of provisions
relating to corporate governance and the rights of shareholders. These
provisions include the following:
19
o the authority of our Board of Directors to fill vacancies on the Board
of Directors;
o the authority of our Board of Directors to issue preferred stock in
series with such voting rights and other powers as our Board of
Directors may determine;
o a provision that, unless otherwise prohibited by law, special
meetings of the shareholders may be called only by our Board
of Directors, or by holders of not fewer than 10% of all
shares entitled to vote at the meeting; and
o a provision for cumulative voting in the election of directors,
pursuant to Arizona law.
Shareholder Rights Plan
In addition to the shares of Class A Common Stock included in this Prospectus,
we are also registering the Right per our Shareholder Rights Plan attached to
each of these shares. The definition of a Right, as well as a description of our
Shareholder Rights Plan, follows.
We have established a shareholder rights plan under which each share of common
stock presently outstanding or which is issued hereafter prior to the
"distribution date," defined below, is granted one preferred share purchase
right, or a right, and each share of Series A or Series B preferred stock
presently outstanding or hereafter issued prior to the distribution date, which
is convertible into common stock of the Company, is granted such number of
rights equal to the number of common shares such preferred stock is convertible
in to. Each right entitles the registered holder to purchase from us one
one-hundredth (1/100th) of a share of the series C junior participating
preferred stock of the Company at a price of $25.00 per 1/100th of a series C
preferred share, subject to adjustment in the event of stock dividends and
similar events occurring prior to the distribution date. Each 1/100th of a
series C preferred share would have voting, dividend and liquidation rights
which are the approximate equivalent of one share of Class A common stock.
The rights are not exercisable until the distribution date, which is the earlier
to occur of (i) 10 days following the date, or the stock acquisition date, of a
public announcement that a person or group, or an acquiring person, has acquired
beneficial ownership, of 25% or more of the outstanding common stock of the
Company, or (ii) 10 business days, unless extended by our board, following the
commencement of a tender offer or exchange offer the consummation of which would
result in the beneficial ownership by a person or group of 25% or more of the
outstanding common stock.
Until the distribution date, the rights will be transferred with and only with
the common stock or the preferred stock, and the surrender for transfer of any
certificate for common stock or preferred stock will also constitute the
transfer of the rights associated with the shares represented by such
certificate. As soon as practicable following the distribution date, separate
certificates evidencing the rights will be mailed to holders of record of the
common stock and preferred stock as of the close of business on the distribution
date, and the rights will then become separately tradable.
In the event that any person or group becomes the beneficial owner of 25% or
more of the outstanding shares of common stock, other than pursuant to a tender
or exchange offer for all outstanding shares of common stock at a price and on
terms determined by a majority of our board who are not representatives,
affiliates or associates of an acquiring person, to be at a price which is fair
to our shareholders and otherwise in the best interests of our Company and our
shareholders, each holder of a right, other than rights beneficially owned by,
or in certain circumstances acquired from, the acquiring person or its
associates or affiliates, which will be void, will thereafter have the right to
receive upon exercise that number of shares of common stock, or, in certain
circumstances, cash, property or other securities of our Company, having a value
equal to two times the exercise price of the right. However, the rights are not
exercisable following any such event until such time as the rights are no longer
redeemable by us as set forth below.
In the event that after the stock acquisition date, (i) we engage in a merger or
consolidation in which we are not the surviving corporation or in which shares
of our common stock are converted or exchanged, other than a transaction
pursuant to a qualifying offer, or (ii) 50% or more of the Company's
consolidated assets or earning power are sold or transferred, proper provision
will be made so that each holder of a right, other than rights which have
previously been voided as set forth above, will thereafter have the right to
receive, upon exercise of the right, that number of shares of common stock of
the acquiring company which at the time of such transaction will have a market
value of two times the exercise price of the right.
At any time after a person or group becomes an acquiring person and prior to the
acquisition by such person or group of 50% or more of the outstanding common
stock, our board may exchange the rights, other than rights owned by such person
or group, which have become void, in whole or in part, at an exchange ratio of
one share of common stock, or 1/100th of a series C junior participating
preferred share, into a share of a class or series of our preferred stock having
equivalent rights, preferences and privileges, per right, subject to adjustment.
20
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 194,060 shares of our Class A Common
Stock on an as-converted basis.
Lawyers and employees of The Law Office of Steven P. Oman, P.C. and entities
controlled by lawyers at The Law Office of Steven P. Oman, P.C. may engage in
transactions in the open market or otherwise to purchase or sell our securities
from time to time.
The Company is a party to litigation which is more fully described in our Form
10-KSB for the fiscal year ended June 30, 2006, filed with the SEC on September
28, 2006.
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, 2006 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 100 F Street NE, Washington,
D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the
public reference room. The SEC also maintains an Internet site
(http://www.sec.gov) that contains reports, proxy and information statements,
and other information regarding issuers that file electronically with the SEC.
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 to be held on
January 20, 2006, filed with the SEC on December 9, 2005.
3. Our Form 8-K filed with the SEC on May 4, 2006.
4. Our quarterly report on Form 10-QSB for the quarter ended March 31, 2006,
filed with the SEC on May 15, 2006.
5. Our amended annual report on Form 10-KSB/A 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 June 2, 2006.
6. Our Form 8-K filed with the SEC on June 2, 2006.
7. Our Form 8-K filed with the SEC on June 9, 2006.
8. Our Form 8-K filed with the SEC on June 20, 2006.
9. Our Form 8-K filed with the SEC on June 21, 2006.
10. Our Form 8-K filed with the SEC on June 27, 2006.
11. Our Form 8-K filed with the SEC on July 6, 2006.
12. Our Form 8-K filed with the SEC on July 14, 2006.
13. Our Form 8-K filed with the SEC on July 17, 2006.
14. Our Form 8-K filed with the SEC on August 4, 2006.
15. Our Form 8-K filed with the SEC on August 25, 2006.
16. Our Form 8-K filed with the SEC on August 30, 2006.
17. Our Form 8-K filed with the SEC on September 11, 2006.
18. Our Form 10-KSB filed with the SEC on September 28, 2006.
19. Our Form 8-K filed with the SEC on October 3, 2006.
20. Our Form 8-K filed with the SEC on October 3, 2006.
21. Our Form 8-K filed with the SEC on October 23, 2006.
22. Our Form 8-K filed with the SEC on October 23, 2006.
23. Our Preliminary Proxy Statement filed with the SEC on November 1, 2006.
24. Our Form 8-K filed with the SEC on November 6, 2006.
22
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.
23
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 $ 424
Printing expenses* $ 100
Accounting fees, legal fees and expenses* $ 4,500
Miscellaneous* $ 500
----------
Total* $ 5,524
* 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 1
permissible under the circumstances because the person met the applicable
standard of conduct. This determination is required to be made:
24
o by the Board of Directors by a majority vote of a quorum
consisting of directors not, at the o time, parties to the
proceeding or, if a quorum cannot be obtained, then by a majority
vote of a committee of the board consisting solely of two or more
directors not, at the time, parties to the proceeding and who a
majority of the Board of Directors designated to act in the matter;
o by special legal counsel selected by the board or board committee by
the vote set forth above, or, if such vote cannot be obtained, by a
majority of the entire board; or
o by the stockholders.
If the proceeding is one by or in the right of the corporation, indemnification
may not be provided as to any proceeding in which the person is found liable to
the corporation.
An Arizona corporation may pay, before final disposition, the expenses,
including attorneys' fees, incurred by a director, officer, employee or agent in
defending a proceeding. Under Arizona law, expenses may be advanced to a
director or officer when the director or officer gives a written affirmation of
his or her good faith belief that he or she has met the standard of conduct
necessary for indemnification and a written undertaking to the corporation to
repay the amounts advanced if it is ultimately determined that he or she is not
entitled to indemnification. Arizona law does not require that the undertaking
be secured, and the undertaking may be accepted without reference to the
financial ability of the director or officer to repay the advance. An Arizona
corporation is required to indemnify any director who has been successful, on
the merits or otherwise, in defense of a proceeding for reasonable expenses. The
determination as to reasonableness of expenses is required to be made in the
same manner as required for indemnification.
Under Arizona law, the indemnification and advancement of expenses provided by
statute are not exclusive of any other rights to which a person who is not a
director seeking indemnification or advancement of expenses may be entitled
under any articles of incorporation, bylaw, agreement, vote of stockholders,
vote of directors or otherwise.
Our bylaws provide that we shall indemnify each director, officer or employee
o oo 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.
25
Reasonable expenses incurred in defending any action, suit or proceeding
described above shall be paid by the corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such director, officer or employee to repay such amount to the
corporation if it shall ultimately be determined that he is not entitled to be
indemnified by us.
In addition to the general indemnification described above, Arizona law permits
corporations to include any provision expanding or limiting the liability of its
directors and officers to the corporation or its stockholders for money damages,
but may not include any provision that restricts or limits the liability of its
directors or officers to the corporation or its stockholders:
o to the extent that it is proved that the person actually received an
improper benefit or profit in money, property, or services for the
amount of the benefit or profit in money, property or services
actually received; or
o to the extent that a judgment or other final adjudication adverse to
the person is entered in a proceeding based on a finding in the
proceeding that the person's action, or failure to act, was the
result of active and deliberate dishonesty and was material to the
cause of action adjudicated in the proceeding.
We have adopted, in our articles of incorporation, a provision that eliminates
and limits the personal liability of each of our directors and officers to the
full extent permitted by the laws of the State of Arizona.
Item 16. Exhibits.
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
5 Opinion of Law Office of Steven P. Oman, P.C.
23.1 Consent of Law Office of Steven P. Oman, P.C. (included in
Exhibit 5).
23.2 Consent of Semple & Cooper, LLP, Independent Auditors.
24.1 Power of Attorney. Located following signature page of this
Registration Statement.
26
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 which,
individually or together, represent a fundamental change in the
information set forth in the registration statement. Notwithstanding
the foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20
percent change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement;
(C) To include any additional or changed material information with
respect to the plan of distribution;
provided, however, that paragraphs (1)(A), (1)(B) and (1)(C) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant under the
Exchange Act, or is contained in a form of prospectus filed pursuant to Rule
424(b) that is deemed part of and included in the registration statement
material.
(2) That, for the purpose of determining any liability under the Securities Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(4) That, for the purposes of determining any liability under the Securities
Act, each filing of the registrant's annual report pursuant to Section 13(a) or
15(d) of the Exchange Act that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(5) That, for purposes of determining any liability under the Securities Act to
any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a
registration statement relating to an offering shall be deemed to be part of and
included in the registration statement as of the date it was first used after
effectiveness. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made in a
document incorporated or deemed incorporated by reference into the registration
statement or prospectus that is part of the registration statement will, as to a
purchaser with a time of contract of sale prior to such first use, supersede or
modify any statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any document immediately
prior to such date of first use.
27
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 November 10, 2006.
ALANCO TECHNOLOGIES, INC.
an Arizona corporation
By: /s/ Robert R. Kauffman
Robert R. Kauffman
Chief Executive Officer
(Principal Executive Officer)
28
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 Chairman of the Board
Robert R. Kauffman November 10, 2006
/s/ John A. Carlson Chief Financial Officer (Principal Financial
------------------- Officer and Principal Accounting Officer) and
John A. Carlson Director November 10, 2006
/s/ Harold S. Carpenter
------------------------
Harold S. Carpenter Director November 10, 2006
/s/ Donald E. Anderson
-----------------------
Donald E. Anderson Director November 10, 2006
/s/ James T. Hecker
-------------------
James T. Hecker Director November 10, 2006
/s/ Thomas C. LaVoy
-------------------
Thomas C. LaVoy Director November 10, 2006
/s/ Timothy P. Slifkin
-----------------------
Timothy P. Slifkin Director November 10, 2006
29
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
November 10, 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 3,046,591 shares of its Class
A Common Stock (the "Shares") that may be offered and sold by certain
stockholders of the Company from time to time and the Rights attached to said
common stock pursuant to the Company's Shareholder Rights Plan. We have assisted
the Company in the preparation of a Registration Statement on Form S-3 (the
"Registration Statement") filed on the date hereof by the Company with the
Securities and Exchange Commission (the "Commission") pursuant to the Securities
Act of 1933, as amended (the "Securities Act"). This opinion is provided
pursuant to the requirements of Item 16 of Form S-3 and Item 601(b) (5) of
Regulation S-B.
In connection with the foregoing, we have examined, among other things, the
Registration Statement and 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, the Company's Shareholder Rights Plan, 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) 2,417,405 of the Shares
issued as of the date of this letter were validly issued, fully paid and
nonassessable at the time of their issuance, and (ii) when 629,186 Shares are
issued out of the Company's duly authorized Class A Common Stock 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. In
addition, we are of the opinion that the Rights attached to the Shares pursuant
to the Company's Shareholder Rights Plan represent valid and binding obligations
of the Company in accordance with the Company's Shareholder Rights Plan.
This opinion is limited to the corporate laws of the State of Arizona, including
its constitution and judicial interpretations, and we are expressing no opinion
as to the effect of the laws of any other jurisdiction. This opinion is rendered
as of the date hereof to be effective as of the effective date of the
Registration Statement, and we undertake no obligation to advise you of any
changes in applicable law or other matters that may come to our attention after
said effective date.
We hereby consent to be named in the Registration Statement under the heading
"Legal Matters" as attorneys who passed upon the validity of the Shares and to
the filing of a copy of this opinion as Exhibit 5 to the Registration Statement.
Very truly yours,
LAW OFFICE OF STEVEN P. OMAN, P.C.
By: /s/ Steven P. Oman
Steven P. Oman
30
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 15, 2006, included in the Company's Form 10-KSB for the year ended
June 30, 2006, and to all references to our firm included in this registration
statement.
/S/ SEMPLE & COOPER, LLP
Phoenix, Arizona
November 10, 2006