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As filed with the Securities and Exchange Commission on December 20, 2000
Registration No. 333-35626
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 6
FORM S-3
REGISTRATION STATEMENT
UNDER
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THE SECURITIES ACT OF 1933
LOG ON AMERICA, INC.
(Name of Issuer in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
(Primary Standard Industrial Classification Code Number)
05-0496586
(I.R.S. Employee Identification No.)
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One Cookson Place, 6th Floor
Providence, Rhode Island 02903
(401) 459-6298
(Address and telephone number of principal executive offices
and principal place of business)
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David R. Paolo, President
Log On America, Inc.
One Cookson Place, 6th Floor
Providence, Rhode Island 02903
(401) 459-6298
(Name, address and telephone number of agent for service)
Copies of all communications to:
Gary W. Mair, Esq.
Silverman, Collura & Chernis, P.C.
381 Park Avenue South, Suite 1601
New York, New York 10016
(212) 779-8600
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Approximate date of proposed sale to the public: From time to time or
at one time after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act of 1933, as amended ("Securities Act"), other than securities
offered only in connection with dividend or reinvestment plans, check the
following box. [X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act, check the following box and list the Securities
Act registration number of the earlier effective registration statement for the
same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule
434, please check the following box. [ ]
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<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
===================================== ================= =================== =================== =================
Proposed Maximum Proposed Maximum Amount of
Offering Price Per Aggregate Offering Registration Fee
Title of Each Class of Amount to be Share Price (2)
Securities to be Registered Registered(1)
===================================== ================= =================== =================== =================
<S> <C> <C> <C> <C>
Common Stock 668,333 $3.19 $2,131,982 $592.69
===================================== ================= ================== =================== =================
TOTAL 668,333 $2,131,982 $592.69
===================================== ================= ================== =================== =================
</TABLE>
(1) For the purpose of estimating the number of shares of common stock to be
included in this registration statement, the registrant included: (i)
468,333 shares of common stock; and (ii) up to 200,000 shares of common
stock issuable upon exercise of warrants issued by the registrant pursuant
to a Representative's Warrant Agreement. Pursuant to rule 416 of the
Securities Act, this registration statement also covers such indeterminable
additional shares as may become issuable as a result of any future stock
splits, stock dividends or similar transactions.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee in accordance with Rule 457 under the Securities Act of
1933, based on the average of the high and low prices of Log On America,
Inc., common stock as reported on the Nasdaq National Market on August 18,
2000.
The registrant hereby amends this registration statement on the date or
dates as may be necessary to delay its effective date until the Registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933, as amended, or until the registration statement
shall become effective on a date as the Securities and Exchange Commission,
acting pursuant to said Section 8(a), may determine.
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LOG ON AMERICA, INC.
Our selling stockholders, or their transferees, pledgees, donees or
successors are selling up to 668,333 shares of Log On America, Inc., common
stock. The shares of our common stock consist of: (i) 468,333 shares of common
stock; and (ii) 200,000 shares of common stock issuable upon exercise of
warrants issued by the registrant pursuant to a Representative's Warrant
Agreement.
We are not selling any of the shares of our common stock under this
prospectus and we will not receive any of the proceeds from the sales by the
selling stockholders of the shares. We will however receive proceeds from the
exercise of the warrants under this prospectus.
The selling stockholders may sell the shares of our common stock they
are offering in a number of different ways and at varying prices. We provide
more information about the selling stockholders and how they may sell their
shares in the section titled, "Plan of Distribution."
--------------------------------------------------------------------------------
Please see the risk factors beginning on page 8 to read about certain
factors you should consider before buying shares of our common stock.
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Our common stock is listed on the Nasdaq National Market under the
symbol, LOAX. On August 18, 2000, the closing sale price of a share of our
common stock, as reported on the Nasdaq National Market, was $3.19.
The mailing address of our principal executive offices is One Cookson
Place, 6th Floor Providence, Rhode Island 02903, and the telephone number is
(401) 459-6298.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined that
this prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
The date of this prospectus is _______, __, 2000
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Where you can find more information about Log On
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission. You may read and
copy any document we file at the Securities and Exchange Commission's public
reference room in Washington, D.C., New York, New York, and Chicago, Illinois.
Please call the Securities and Exchange Commission at 1-800-SEC-0330 for further
information on the public reference rooms. Our filings are also available at the
Commission's web site, http://www.sec.gov.
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Prospectus Summary
Because this is a summary, it may not contain all information that may
be important to you. You should read this entire prospectus, including the
information incorporated by reference and the financial data and related notes,
before making an investment decision. When used in this prospectus, the terms
"we," "our" and "us" refer to Log On American, Inc., and not to the selling
stockholders.
Log On America, Inc.
Overview
Log On America, Inc., has established a model of service delivery for
broadband value-added services effectively functioning as a solutions local
exchange carrier. We have determined that the traditional competitive local
exchange carrier or direct local exchange carrier service delivery models do not
adequately serve a large portion of the growing communications marketplace. We
also recognize that traditional communications products do not fulfill the
competitive business requirements of many of the economy's fastest growing
business segments. Some of these segments have not been addressed nor identified
by the existing service providers. Two of the market segments which will be
addressed by our highly leveraged, fully integrated end-to-end solutions based
business and management model are our small office/home office market and the
business solutions market.
We will address these two underserved markets with the existing
switch-based co-location broadband infrastructure, delivering high-speed &
direct service line services. By expanding into the business solutions market
with additional core broadband infrastructure we will extend our reach into
markets outside the limitations of the co-location facilities. This will allow
us to provide broadband access to the desktop at speeds of 10 megabytes per
second with native internal protocol access. This will also allow us to utilize
multiple access technologies to aggregate customer access from office buildings
and multiple dwelling units, over long distances. We will leverage partnerships
with content and application service providers to enhance the package of
services, which can be delivered as bundled solutions to both the small
office/home office and business solutions markets.
Using this model, we will begin to reduce our high EBITDA losses at an
accelerated pace, establish incumbency in the commercial/business solutions
small office/home office markets, precisely build-out our infrastructure,
strategically utilize capital and operations funding, and position ourselves as
the smart solutions-based delivery provider.
As a facilities-based communications solutions provider, we have
competitive local exchange carrier certification in Rhode Island, Massachusetts,
Maine, Connecticut, Vermont, New Hampshire, New York, Washington, D.C. and
Pennsylvania. We have completed the build out of 19 central offices and Nortel
has agreed to provide certain equipment and services to make our offices fully
operational. Once fully operational, we will begin to move our existing customer
traffic over to our own switch, which will lead to increased control over
service quality, the ability to offer enhanced high-speed offerings and greater
per line profitability. We plan to continue building additional aggregation
centers utilizing our smart build model strategy. This build out strategy will
give us the ability to offer expanded bundled services to our existing customer
base, broaden the geographic reach of our Nortel-powered integrated
communications network, enhance our product portfolio and substantially boost
bandwidth availability for our customers.
Corporate History
Log On America, Inc., a Rhode Island corporation, was formed in 1992 to
provide online Internet and related services. This company is our predecessor.
In 1997, the Rhode Island corporation sold 100% of its assets to System 4, Inc.,
a Delaware corporation and a wholly owned subsidiary of Global Telemedia
International, Inc., a Delaware corporation, and agreed to change its name to
Tekcom Inc. Tekcom remained a Rhode Island corporation with no operations. At
the time of the acquisition, Global Telemedia was engaged in the marketing of
telecommunications services. In consideration of the sale, Global Telemedia
agreed to assume all of the Rhode Island corporation's outstanding liabilities
and to pay the Rhode Island
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corporation's shareholders, on the third anniversary date of the purchase, 20%
of the value of all of the Rhode Island corporation's business as of that date.
After the transfer of assets and liabilities to System 4, Inc., System 4 changed
its name to Log On America, Inc.
Wan Secure, Inc. was organized in Delaware in January 1998 to purchase
100% of the successor to System 4's outstanding capital from Global Telemedia.
As a result, we became a wholly owned subsidiary of Wan Secure. In September
1998, Wan Secure merged with Log On America, Inc., the successor to System 4. As
a result of this merger, Wan Secure was the survivor. Simultaneously with the
merger, Wan Secure, a Delaware corporation, changed its name to Log On America,
Inc.
In and around February 1998, 100% of the shareholders of Tekcom. Inc.,
formerly the Rhode Island corporation, agreed to surrender and release their
rights and claims to 20% of the value of the Delaware Log On America's business
as of the third anniversary date of the Global Telemedia's purchase. As
consideration for this surrender and release, Tekcom shareholders received an
aggregate of 795,130 shares of the Delaware Log On America's common stock.
Legal Proceedings.
In February 2000 we sold 15,000 shares of Series A Redeemable
Convertible Preferred Stock (The "Preferred Shares") and issued 594,204 common
stock purchase warrants (the "Warrants") for an aggregate consideration of
$15,000,000. The proceeds of the Preferred Shares have been allocated between
the Warrants ($7,500,000 in Additional Paid-in Capital) and the Preferred Shares
based on the estimate of the fair value of these instruments at the time of the
transaction.
The Preferred Shares have a maturity date of February 23, 2003, at a
conversion price of $1,000 per share plus accumulated and unpaid additional
amounts, which accrue at a rate of 8% per annum and are treated as dividends.
Because the fair value of the Preferred Shares was less than the conversion
price at issuance, periodic accretions from stockholders' equity are made so
that the carrying amount equals the conversion price. Accretions amounted to
$1,513,699 as of September 30, 2000.
On August 18, 2000, we commenced an action against Promethean Asset
Management LLC, HFTP Investment LLC, Fisher Capital LTD, Wingate Capital, LTD,
Citadel Limited Partnership and Marshall Capital Management, Inc.
("Defendants"), in the United States District Court for the Southern District of
New York, Case No. 00 Civ. 6218 (RUB) (MHD). In the action, we allege that the
holders of our Preferred Shares and certain of their affiliates engaged in a
scheme to manipulate and intentionally drive down the trading price of our
common stock.
Our complaint asserts that the Defendants actions constitute:
o violation of federal securities laws, including, but not limited
to, insider trading, stock manipulation through cross sales and
massive short sales of our common stock and short swing profits,
o breach of contract,
o fraud, and
o breach of the covenant of good faith and fair dealing.
Our complaint seeks injunctive relief, rescission, compensatory damages
and punitive damages. We are also seeking a declaration that we are relieved of
our obligations to the holders of our Preferred Shares by reason of fraud,
illegality and manipulative conduct.
Following the commencement of the action against the holders of our
Preferred Shares we announced that we will not honor requests for conversions,
and the holders of the Preferred Shares requested redemption of their respective
Preferred Shares. The holders asserted that they are entitled to redemption of
their Preferred Shares under our Certificate of Designations, Preferences and
Rights of Preferred Shares by reason of the our announcement that we will not
honor conversion requests and of the failure by us to have our shares of common
stock underlying the Preferred Shares and their related warrants registered
under Securities Act of 1933. We have refused to honor the redemption requests
upon the basis set forth in our action against the holders of the Preferred
Shares. Holders of fifty percent of the Preferred Shares have requested an
aggregate redemption amount of $10.8 million. The holder of the other fifty
percent has not specified a redemption amount.
The Defendants have filed a motion to dismiss our complaint, which is
presently pending before the court.
On September 19, 2000, Belenos, Inc., a Delaware corporation, filed
suit against us alleging that certain sums are due to it for work performed and
equipment provided to us. The suit was filed in the Superior Court of Suffolk
County, Commonwealth of Massachusetts (Ca 00-4177 (F).
This controversy arises from certain work performed or to be performed,
and equipment provided or to be provided in the build-out of our network. The
vendor, Belenos, Inc., has been either unwilling or unable to provide detailed
invoices for the work performed and has failed to satisfactorily address our
concerns as to the quality of work performed. We refused to make payment as
invoiced by Belenos, Inc., until our concerns have been satisfactorily
addressed. Belenos filed a suit against us seeking payment on the above
mentioned invoices in the approximate amount of $1,200,000, and unspecified
money damages in connection with an alleged breach of contract by us with
Belenos.
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Risk Factors
You should carefully consider the following factors and other
information in this prospectus before deciding to invest in shares of our common
stock. This prospectus contains forward-looking statements which can be
identified by the use of words such as "intend," "anticipate," "believe,"
"estimate," "project," or "expect" or other similar statements. These statements
discuss future expectations, contain projections of results of operations or of
financial condition, or state other "forward-looking" information. When
considering these statements, you should keep in mind the risk factors described
below and other cautionary statements in this prospectus. The risk factors
described below and other factors noted throughout this prospectus, including
certain risks and uncertainties, could cause our actual results to differ
materially from those contained in any forward-looking statement.
We have incurred net losses since our inception and anticipate continuing
losses.
To date, we have had limited revenues and have not shown a profit in
our operations. For the nine months ended September 30, 2000, we had a net loss
of $15,885,790. Although we intend to expand our marketing of products and
services, we may not be able to achieve these objectives or, if these objectives
are achieved, we may never be profitable. If profitability is achieved, we may
not be able to sustain it. We cannot predict when, or if, profitability might be
achieved.
We have a short operating history upon which you can judge our prospects.
We commenced our business in 1992 but did not produce significant revenues
until 1996, therefore, we have a limited operating history upon which you can
evaluate our business and prospects. Our historical data is of limited value in
projecting future operating results. You must consider our business in light of
the risks, expenses and problems frequently encountered by companies with
limited operating histories.
We require substantial funds and may need to raise additional capital in the
future.
We plan to realign our business plan to effectively meet the
increasingly challenging competitive local exchange carrier environment. We plan
to optimize the assets that we have deployed and limit future capital
expenditures to a success based smart build strategy. This will lower our
overall capital expenditure requirements and allow us to direct resources to
high EBITDA opportunities. In addition, we plan to reduce our overall EBITDA
loss by implementing various cost reduction programs which include a reduction
of staff headcount, a consolidation of certain redundant offices, and a
consolidation of certain network infrastructure. These programs will be
completed in the fourth quarter of this year and the first quarter next year.
With the implementation and completion of our various cost reduction
programs, we believe that the existing capital resources will be sufficient to
fund our expansion and operating deficits through 2001. If we are unsuccessful
in implementing these cost reductions or additional unanticipated costs are
incurred, we may not have sufficient funds to continue as a going concern
through December 31, 2001. As a result, we may decide to seek additional capital
earlier than the end of 2001, the timing of which will depend upon, among other
things, market conditions and terms which are acceptable to us. The actual
amount and timing of our future capital requirements may differ materially from
our estimates as a result of, among other things, the demand for our services
and regulatory, technological and competitive developments, including additional
market developments and new opportunities, in our industry. We may also need
additional financing if:
o We alter the schedule, targets or scope of the network rollout
plan;
o Our plans or projections change or prove to be inaccurate; or
o We acquire other companies or businesses.
We may obtain additional financing through commercial bank borrowings,
equipment financing or the private or public sale of equity or debt securities.
We may be unsuccessful in raising suffcient additional capital. In particular,
we may be unable to raise additional capital on terms that we consider
acceptable, that are within the limitations contained in our financing
agreements and that will not impair our ability to develop its business. If we
fail to raise sufficient funds, we may need to modify, delay or abandon some of
the planned future expansion or expenditures, which could have a material
adverse effect on the business, prospects, financial condition and results of
operations.
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Log On America is involved in legal proceedings which could adversely affect its
financial condition.
Log On America commenced legal proceedings against the holders of its
series A convertible preferred stock and certain of the holders' affiliates. We
also announced that we will neither honor requests for conversion of the
preferred stock nor register the common stock issuable upon the conversion of
the preferred stock. In response, the holders of the preferred stock demanded
that the company redeem the preferred stock.
The holders asserted that they are entitled to redemption of their
preferred shares under our Certificate of Designations, Preferences and Rights
of Series A Preferred Stock by reason of the our announcement that we will not
honor conversion requests and of the failure by us to have our shares of common
stock underlying the preferred shares and their related warrants registered
under Securities Act of 1933. We have refused to honor the redemption requests
upon the basis set forth in our action against the preferred holders. Holders of
fifty percent of the preferred stock have requested an aggregate redemption
amount of $10.8 million. The holder of the other fifty percent has not specified
a redemption amount.
If the holders of the preferred stock are successful in defending the
pending actions, the holders could convert the preferred stock into common stock
or compel us to redeem the preferred stock. If the holders of the preferred
stock were to convert the preferred stock into common stock and sell such shares
of common stock into the market, such sales could have a negative effect on the
market price of our common stock and will dilute your holdings in our common
stock. Dilution or the potential for dilution could also materially impair our
ability to raise capital through the future sale of equity securities and have a
material adverse effect on our financial condition. Moreover, we may not be in a
position to redeem the preferred stock and could be subject to substantial and
additional penalties for failing to do so.
We recently entered into an additional agreement with Nortel to settle various
claims arising out of certain services rendered by Nortel.
In February 2000, we entered into a Senior Secured Credit Agreement
with Nortel Networks, Inc. Under the Credit Agreement, Nortel committed to an
initial advance of up to $30,000,000 and a second advance of up to an additional
$15,000,000 to finance the purchase, by December 31, 2001, of up to $47,000,000
of equipment and services from Nortel. Under the Credit Agreement, we will begin
repayment of the facility over a five-year period upon completion of the
purchases from Nortel. We have granted a security interest in substantially all
of our assets under the Credit Agreement. The Credit Agreement has certain
restrictive financial covenants. Such covenants include minimum EBITDA and
annualized EBITDA with respect to financial ratios. At September 30, 2000, we
were substantially not in compliance with such covenants but have obtained the
necessary waivers from Nortel effective September 30, 2000 through March 1,
2001.
On November 20, 2000, we entered into an additional agreement with
Nortel. This agreement provides for a one-time cash payment of $3,500,000 by
Nortel to us. The agreement also provides for a $1,200,000 credit for products
and services which will assist in getting our existing network fully
operational. In addition, Nortel will provide a one-time reduction of $5,000,000
against the current amount drawn against the Credit Agreement.
As of September 30, 2000 Nortel has advanced us $9,211,640.
We may issue additional shares which would reduce your ownership percentage and
dilute the value of your shares.
Certain events over which you have no control over could result in the issuance
of additional shares of our common stock, which would dilute your ownership
percentage in us. We may issue additional shares of common stock or preferred
stock to raise additional capital or finance acquisitions or upon the exercise
or
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conversion of outstanding options and warrants. As of December 4, 2000,
excluding those warrants held by our selling stockholders, there were
outstanding warrants and options to acquire 3,353,871 additional shares of
common stock. If exercised, these securities will reduce your percentage
ownership of common stock and could dilute the value of your shares. A
significant number of our outstanding shares of common stock will also be
immediately tradeable without restriction under the Securities Act.
"Affiliates," as defined in the Securities Act, must always sell their shares in
accordance with the terms, including volume limitations, of Rule 144 under the
Securities Act.
We are dependent upon the continued growth in the use of the Internet.
Our future operating results are highly dependent upon the increased use
of the Internet by consumers for information, publication, distribution and
commerce. Critical issues concerning the commercial use of the Internet,
including security, reliability, cost, ease of use, access, and quality of
service, remain unresolved and may impact the growth of Internet use. If
widespread commercial use of the Internet does not develop,
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our business, results of operations and financial condition will be negatively
affected.
We depend on the continued development and reliability of Internet
infrastructure.
We depend on the reliability, speed, data capacity, ease of use,
accessibility and security of the Internet as well as its continued development
and acceptance for commercial use. The success of our services and products
depend, in large part, upon the further development of an infrastructure for
providing Internet access and services. The Internet has experienced, and it is
expected to continue to experience, significant growth in the number of users.
The Internet infrastructure may not be able to support the demands placed on it
by this continued growth in use. The Internet could also lose its viability due
to delays in the development or adoption of new standards and protocols to
handle increased levels of Internet activity, or due to increased governmental
regulation. The infrastructure or complementary services necessary to make the
Internet a viable commercial marketplace may not develop, or the Internet may
not become a viable commercial marketplace for services and products such as the
services that we currently offer. If this happens, our business, results of
operations and financial condition will be negatively affected.
We depend on our computer infrastructures and will be adversely affected by any
failure or damage to our systems.
Substantially all of our communications and computer hardware is located
at our offices in Providence, Rhode Island. Our system is vulnerable to damage
from fire, flood, earthquakes, power loss, telecommunications failures,
break-ins and similar events. Moreover, we do not presently have a disaster
recovery plan, carry any business interruption insurance or have any secondary
"off-site" systems or a formal disaster recovery plan. A system failure at our
present location would have a major adverse affect on the performance of our
services.
Our services are susceptible to disruptive problems.
Despite our implementation of network security measures, our servers are
vulnerable to computer viruses, physical or electronic break-ins and similar
disruptive problems. Computer viruses, break-ins or other problems caused by
third parties could lead to interruptions, delays or cessation in service to
users of our services and products. Any of these risks could have a negative
effect on our business, results of operations and financial condition.
We may be held liable for online content provided by third parties.
Materials may be downloaded and distributed to others by the on-line or
Internet services offered by us or the Internet service providers with which we
have a relationship. If this happens, claims may be made against us for
defamation, negligence, copyright or trademark infringement, or some other
reason. These claims or the imposition of liability may have a negative effect
on our business, results of operations and financial condition.
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Internet security concerns could hinder e-commerce and the demand for our
products and services.
A significant barrier to e-commerce and communications over the Internet
has been the need for the secure transmission of confidential information. We
may incur significant costs to protect against the threat of security breaches
or to alleviate problems caused by breaches. Internet usage and the demand for
our services could decline if any well-publicized compromise of security occurs.
Although we are not aware of any attempts by programmers or "hackers" to
penetrate our network security, these actions could occur in the future. A party
who is able to penetrate our network security could misuse our users' personal
information or credit card information and users might sue us or bring claims
against us. Concerns over the security of Internet transactions and the privacy
of users may also inhibit the growth of the Internet generally, particularly as
a means of conducting commercial transactions. Security breaches or the
inadvertent transmission of computer viruses could expose us to a risk of loss
or litigation and possible liability. Our business, results of operations, and
financial condition could be negatively effected if contractual provisions
attempting to limit our liability in these areas are not successful or
enforceable, or if other parties do not accept these contractual provisions as
part of our agreements with them.
We need to manage our growth effectively.
Our growth has placed, and will continue to place, a significant strain on
our managerial, operational and financial resources. We need to:
o improve our financial and management controls, reporting systems and
procedures;
o expand, train and manage our work force for marketing, sales and support,
product development, site design, and network and equipment repair and
maintenance; and
o manage multiple relationships with various customers, strategic partners
and other third parties.
If we do not continually upgrade technology, we may not be able to compete in
our industry.
We will need to continually expand and upgrade our infrastructure and
systems and ensure high levels of service, speedy operation, and reliability. In
addition, we will have to improve our methods for measuring the performance and
commercial success of our different products to better respond to customers'
demands for information on product effectiveness and to better determine which
products and services can be developed most profitably. Our current and planned
personnel, financial and operating procedures and
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controls may not be adequate to support our future operations. If we are unable
to manage our growth effectively, our business will be negatively effected.
If we do not effectively develop our early stage products and technology, our
business may be negatively effected.
The Internet market is characterized by rapidly changing technology,
evolving industry standards, frequently introduced new services, products and
enhancements, as well as changing customer demands. Many of our products and
service applications are in the early stages of development and/or marketing,
including the products and services we will offer as a competitive local
exchange carrier. Many of our competitors have already introduced products that
include one or more of the features incorporated in our products. We expect that
our competitors may attempt to replicate the technology of our products or
employ competing technologies, if our products are commercially successful. Our
risks include unforeseen design or engineering problems with our products and
applications. These or other risks associated with new product and service
development or introduction may occur. If they do occur, they could have an
adverse effect on our financial condition and operating results.
If we do not develop a sufficient sales and marketing force, we may not be able
to generate significant revenues or become profitable.
Currently we have 175 full time and part time employees and we have not
established distribution channels for our services and products. We may not be
able to develop a sufficient sales force and marketing group. Our inability to
develop a sufficient sales force and marketing group would have a negative
effect on our business, results of operations and financial condition.
Government regulation and legal uncertainties could add additional costs to
doing business on the Internet.
There are currently few laws or regulations that specifically regulate
communications or commerce on the Internet. However, laws and regulations may be
adopted in the future that address issues such as user privacy, pricing, and the
characteristics and quality of products and services. For example, the
Telecommunications Act sought to prohibit transmitting various types of
information and content over the Internet. Several telecommunications companies
have petitioned the Federal Communications Commission to regulate Internet
service providers and online service providers in a manner similar to long
distance telephone carriers and to impose access fees on those companies. This
could increase the cost of transmitting data over the Internet. Moreover, it may
take years to determine the extent to which existing laws relating to issues
such as property ownership, libel and personal privacy are applicable to the
Internet. Any new laws or regulations relating to the Internet could adversely
affect our business.
We face significant competition from Internet and telephone service providers
and others.
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The Internet connectivity business is highly competitive, and there are no
substantial barriers to entry. We believe that competition will intensify.
Currently, our primary competitors include such companies as:
o national Internet service providers: Earthlink, PSINet, Inc., UUNET
Technologies, Inc., and GTE;
o regional telecommunications providers: Verizon, The Internet Access
Company or TIAC, and Winstar Communications, Inc.;
o on-line service providers: America Online, Inc. and Microsoft Corp.;
o regional telephone companies and long distance companies: MCI Worldcom,
Inc. and AT&T Corp.; and
o regional cable companies providing telephone and Internet services and
wireless providers of such services.
Many of our current and potential competitors have substantially greater
human and financial resources, experience, and brand name recognition than we
do, and may have significant competitive advantages through other lines of
business and existing business relationships. Furthermore, additional major
media and other companies with financial and other resources substantially
greater than ours may introduce new Internet products and services that compete
with the services and products we offer. Our future growth and profitability
will depend, in part, upon consumer and commercial acceptance of our voice, data
and Internet technology, and significant penetration of our related products and
services. Our competitors may develop products or services that are superior to
ours or achieve greater market acceptance than our products and services.
Our operations depend on our ability to maintain favorable relationships with
third party suppliers.
We depend on third-party suppliers for our access to the Internet
through leased telecommunications lines, such as Verizon and MCI Worldcom,
Inc./UUNET. Although we believe this access is available from several
alternative suppliers, we may not be able to obtain substitute services from
other providers at reasonable or comparable prices or in a timely manner. We are
also dependent upon the regional telephone operating company, Verizon, to
provide installations of circuits and to maintain those circuits. Substantial
failure by any of these third parties to perform could negatively affect our
business, results of operations, and financial condition.
The loss of the services of our chief executive officer, David R Paolo, could
hurt our chances for success.
We are dependent on the continued employment and performance of our
executive officers and key employees, particularly of our CEO, David R. Paolo.
The loss of Mr. Paolo, or his incapacity to perform his duties, would have a
materially negative effect upon our activities and prospects. The loss of the
services of any of our key employees or officers could adversely affect our
business.
14
<PAGE>
We face significant competition from Internet and telephone service providers
and others.
We compete with a wide range of service providers for each of the services
that we provide. Virtually all markets for voice, high-speed access, and video
services are extremely competitive, and we expect competition to intensify in
the future. We often face significant competition from larger, better-financed
Incumbent Local Exchange Carriers, national Digital Subscriber Line companies,
and cable companies. We compete directly with providers, which have historically
dominated their respective local telephone and cable television markets.
Among the existing competitors, the Incumbent Local Exchange Carriers,
cable providers and the Competitive Local Exchange Carriers provide the most
direct competition in the delivery of connections for voice, high-speed access
and video services. In each of our target markets, we face, and expect to
continue to face, significant competition from Incumbent Local Exchange Carriers
such as Verizon and SNET.
o LEC, Voice Service Competition.
With respect to local telephone services, we compete with the Local
Exchange Carrier, Bell Atlantic, and alternative service providers including
Competitive Local Exchange Carriers. With respect to long distance telephone
services, we face, and expect to continue to face, significant competition from
the Interexchange Carriers, including AT&T, Sprint and MCIWorldcom.
o Internet/ISP Service Competition.
The market for Internet access services is extremely competitive and
highly fragmented. No significant barriers to entry exist, and accordingly
competition in this market is expected to intensify. We may compete directly or
indirectly with:
o national and regional Internet Service Providers;
o established online services;
o computer software and technology companies;
o national telecommunications companies;
o Local Exchange Carriers;
o cable operators; and
o nonprofit or educational Internet Service Providers.
o Bundled Long Distance Competition.
Regional Bell Operating Companies are currently allowed to offer
"incidental" long distance service in-region and to offer out-of-region long
distance service. Once
15
<PAGE>
Regional Bell Operating Companies are allowed to offer in-region long distance
services, they may also be in a position to offer single source local and long
distance service similar to that offered by us and proposed by established
Interexchange Carriers: AT&T, MCIWorldcom and Sprint.
o Our Anticipated Video Competition.
Our anticipated video service businesses will compete with wireline cable
companies in their respective service areas. In particular, our networks will
compete for cable subscribers with the major wireline cable operators, since
cable television systems generally operate pursuant to franchises granted on a
non-exclusive basis. All of our intended video services may face competition
from alternative methods of receiving and distributing television signals and
from other sources of news, information and entertainment sources. Some of these
sources include off-air television broadcast programming, newspapers, movie
theaters, live sporting events, interactive online computer services and home
video products, including videotape cassette recorders. We may also compete with
Local Exchange Carriers and others which currently provide a variety of video
services directly to subscribers within and outside their telephone service
areas through a variety of distribution methods, including both the deployment
of broadband wire facilities and the use of wireless transmission facilities.
Many of our current and potential competitors have substantially greater
human and financial resources, experience, and brand name recognition than we
do, and may have significant competitive advantages through other lines of
business and existing business relationships. Potential competitors capable of
offering private line and special access services also include other smaller
long distance carriers, cable television companies, electric utilities,
microwave carriers, wireless telephone system operators and private networks
built by large end-users. Our competitors may develop products or services that
are superior to ours or achieve greater market acceptance than our products and
services.
Our operations depend on our ability to maintain favorable relationships with
third party suppliers.
We depend on third-party suppliers for our access to the Internet through
leased telecommunications lines, such as Bell Atlantic Corp. and MCI Worldcom,
Inc./UUNET. Although we believe this access is available from several
alternative suppliers, we may not be able to obtain substitute services from
other providers at reasonable or comparable prices or in a timely manner. We are
also dependent upon the regional telephone operating company, Verizon, to
provide installations of circuits and to maintain those circuits. Substantial
failure by any of these third parties to perform could negatively affect our
business, results of operations, and financial condition.
16
<PAGE>
Our management has substantial control over us and investors in this offering
may have no effective voice in our management.
Our directors and executive officers will own approximately 31% of the
then outstanding shares of our common stock as of December 3, 2000. Accordingly,
these shareholders will possess substantial control over our operations. This
control may allow them to amend corporate filings, elect a majority of our board
of directors, and substantially control all matters requiring approval by our
shareholders, including approval of significant corporate transactions.
Management will also have the ability to delay or prevent a change in our
control and to discourage a potential acquirer for us or our securities. If you
purchase our common stock, you may have no effective voice in our management.
Unless we maintain a public market for our securities, you may not be able to
sell your shares.
Failure to maintain an active trading market on the Nasdaq National Market
by us could negatively affect the price of our securities, as well as affect
your ability to sell your shares.
Shares released from lock-up on April 22, 2000.
Certain of our shareholders and warrant holders, agreed to not directly or
indirectly, offer, sell, pledge, grant any option to purchase, or otherwise sell
or dispose of any of our shares for a period of twelve months after April 22,
1999. On April 22, 2000, all of our shares under lock-up were released.
If our shareholders' subject to the lock-up sell their shares into the market,
such sales could have a negative effect on the market price of our common stock
and will dilute your holdings in our common stock. Additionally, dilution or the
potential for dilution could materially impair our ability to raise capital
through the future sale of equity securities.
17
<PAGE>
Disclosure Regarding Forward-Looking Statements
The discussion in this prospectus contains forward-looking statements that
involve substantial risks and uncertainties. In some cases you can identify
these statements by forward-looking words such as "anticipate," "estimate,"
"project," "intend," and similar expressions which we have used to identify
these statements as forward- looking statements. These statements appear
throughout this prospectus and are statements regarding our intent, belief, or
current expectations, primarily with respect to the operations of Log On
American, Inc., or related industry developments. You are cautioned that any
such forward-looking statements do not guarantee future performance and involve
risks and uncertainties, and that actual results could differ materially from
those discussed here, including "Risk Factors," and in the documents
incorporated by reference in this prospectus.
Dividend Policy
We have not paid any cash dividends since its inception and does not anticipate
paying cash dividends in the foreseeable future.
Selling Stockholders
The following table sets forth the number of shares of our common stock
owned by each of our selling stockholders as of the date of this prospectus
and the shares of common stock issuable under certain warrants.
18
<PAGE>
The third column lists, for each selling stockholder, each selling stockholder's
portion, based on its ownership of the 468,333 shares of common stock and the
200,000 shares issuable under warrants, which in the aggregate consists of
668,333 shares of common stock being offered by this prospectus.
For purposes of estimating the number of shares of common stock to be
registered for resale by this prospectus, we included:(i) 468,333 shares of our
common stock; and (ii) 200,000 shares issuable under warrants. The fourth column
assume the sale of all of the shares offered by each selling stockholder.
To our knowledge, none of the selling stockholders has had any position
with, held any office of, or had any other material relationship with us except
for Stephen Gilbert an officer of ours.
The information is based on information provided by or on behalf of the
selling stockholders, the selling stockholders may offer all, some or none of
their shares of our common stock.
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Percentage calculations are based upon
8,795,704 shares of our common stock outstanding as of December 8, 2000.
19
<PAGE>
Beneficial Number of
Ownership of Shares Percent of
Securities Registered Outstanding
Prior to for Shares Owned
Offering Sale Hereby After Offering
------------ ----------- ---------------
Name of Selling Common Common Common
Stockholder Stock Stock Stock
----------- ----- ----- -----
Gary Seekins 136,133 136,133 -0-
Philip Freed 136,133 136,133 -0-
Stephen J. Gilbert 222,411 222,411 -0-
Thomas E. Millitzer 10,000 10,000 -0-
Kevin E. Grinies 1,500 1,500 -0-
Karen Searle 500 500 -0-
Prime Investors, LLC 10,000 10,000 -0-
Casale Caliri & Jaroma, LLC 25,000 25,000 -0-
Dirks & Co. 139,575 139,575 -0-
Jessy Dirks 35,000 35,000 -0-
Ronald Heineman 25,425 25,425 -0-
<PAGE>
Description of Securities
The following section does not purport to be complete and is qualified in
all respects by reference to the detailed provisions of our certificate of
incorporation and by-laws, as amended, copies of which have been filed with our
registration statement of which this prospectus forms a part.
Our authorized capital stock consists of: (i) 125,000,000 shares of common
stock, $.01 par value; and (ii) 15,000,000 shares of a new class of preferred
stock, 35,000 shares of which are designated as series A convertible preferred.
As of December 8, 2000, 8,795,704 shares of common stock were issued and
outstanding, and 15,000 shares of the series A preferred stock were issued and
outstanding. As of this date, there were 132 record holders of our common
stock, and four record holders of our preferred stock.
Common Stock.
Shares of our common stock are entitled to one vote per share, either in
person or by proxy, on all matters that may be voted upon by the owners of our
shares at meetings of our shareholders. There is no provision for cumulative
voting with respect to the election of directors by the holders of common stock.
Therefore, the holders of more than 50% of our shares of outstanding common
stock can, if they choose to do so, elect all of our directors. In this event,
the holders of the remaining shares of common stock will not be able to elect
any directors.
The holders of common stock:
o have equal rights to dividends from funds legally available therefore,
when and if declared by our board of directors;
o are entitled to share ratably in all of our assets available for
distribution to holders of common stock upon liquidation, dissolution or
winding up of our affairs; and
o do not have preemptive rights, conversion rights, or redemption of sinking
fund provisions.
The outstanding shares of our common stock are duly authorized, validly
issued, fully paid and nonassessable.
21
<PAGE>
Series A Preferred Stock.
Under our certificate of incorporation, as amended, our board of directors
is authorized, subject to certain limitations prescribed by law, without further
stockholder approval, from time to time to issue up to an aggregate of
15,000,000 shares of preferred stock. The preferred stock may be issued in one
or more series. Each series may have different rights, preferences and
designations and qualifications, limitations and restrictions that may be
established by our board of directors without approval from the shareholders.
The terms of the series A preferred stock are complex and are only briefly
summarized in this prospectus. To obtain further information concerning the
rights, preferences and terms of the series A preferred stock, please refer to
the full description contained in our current reports on Form 8-K and exhibits
filed with the Securities Exchange Commission on February 28, 2000 (File No.
000-25761).
Pursuant to the terms of the Securities Purchase Agreement, dated as of
February 23, 2000, by and among us and certain of the selling stockholders, we
issued series A preferred stock in the aggregate principal amount of
$15,000,000. A copy of the Securities Purchase Agreement is attached as an
exhibit to our Form 8-K filed on February 28, 2000, and incorporated by
reference.
Use of Proceeds
We will not receive any of the proceeds from the sale of our common stock
by the selling stockholders.
22
<PAGE>
Plan of Distribution
The shares of our common stock offered by this prospectus may be sold from
time to time by the selling stockholders, to purchasers directly by them in one
or more transactions at a fixed price, which may be changed, or at varying
prices determined at the time of sale or at negotiated prices. Such prices will
be determined by the holders of such securities or by agreement between such
holders and underwriters or dealers who may receive fees or commissions in
connection with such sales.
Each of the selling stockholders, may from time to time offer shares of
our common stock beneficially owned by them through underwriters, dealers or
agents, who may receive compensation in the form of underwriting discounts,
commissions or concessions from the selling stockholder and the purchasers of
the shares for whom they may act as agent. Each of the selling stockholders will
be responsible for payment of commissions, concessions and discounts of
underwriters, dealers or agents. The aggregate proceeds to the selling
stockholders, from the sale of the shares of our common stock offered by them
will be the purchase price of such shares less discounts and commissions, if
any. Each of the selling stockholders reserves the right to accept and, together
with their agents, from time to time to reject, in whole or in part, any
proposed purchase of shares to be made directly or through agents. We will not
receive any of the proceeds from this offering. Alternatively, the selling
stockholders may sell all or a portion of the shares of our common stock
beneficially owned by them and offered from time to time on any exchange on
which the securities are listed on terms to be determined at the times of such
sales. The selling stockholders may also make private sales directly or through
a broker or brokers.
From time to time, the selling stockholders may transfer, pledge, donate
or assign shares of our common stock to lenders or others, and each of such
persons will be deemed to be a "selling stockholder" for purposes of this
prospectus. The number of shares beneficially owned by a selling stockholder who
transfers, pledges, donates or assigns shares of our common stock will decrease
as and when they take such actions. The plan of distribution for shares sold
under this prospectus will otherwise remain unchanged, except that the
transferees, pledgees, donees or other successors will be selling stockholders
under this prospectus and may sell their shares in the same manner as the
selling stockholders.
A selling stockholder may enter into hedging transactions with
broker-dealers, and the broker-dealers may engage in short sales of the shares
of our common stock in the course of hedging the positions they assume with such
selling stockholder, including in connection with distribution of the shares of
our common stock by such broker-dealers. In addition, a selling stockholder may,
from time to time, sell short the shares of our common stock, and in such
instances, this prospectus may be delivered in connection with such short sales
and the shares offered may be used to cover such short sales. The selling
stockholders may also enter into option swap or other derivative or similar
transactions with broker-dealers that involve the delivery of the shares of our
common stock to the broker-dealers, who may then resell or otherwise transfer
such shares. The selling stockholders may also loan or pledge the shares to a
broker-dealer and the broker-dealer may sell the shares as loaned or upon a
default may sell or otherwise transfer the pledge shares.
23
<PAGE>
The selling stockholders and any underwriters, dealers or agents that
participate in the distribution of the shares of our common stock offered by
this prospectus may be deemed to be underwriters within the meaning of the
Securities Act, and any discounts, commissions or concessions received by them
and any provided pursuant to the sale of shares by them might be deemed to be
underwriting discounts and commissions under the Securities Act.
In addition, any securities covered by this prospectus which qualify for
sale pursuant to Rule 144 or Rule 144A of the Securities Act may be sold under
Rule 144 or Rule 144A rather than pursuant to this prospectus. There is no
assurance that any selling stockholder will sell any or all of the shares of our
common stock described in this prospectus, and any selling stockholder may
transfer, devise or gift such securities by other means not described in this
prospectus.
If necessary, the specific shares of our common stock to be sold in this
prospectus, the names of the selling stockholders, the respective purchase
prices and public offering prices, the names of any agent, dealer or
underwriter, and any applicable commissions or discounts with respect to a
particular offer will be set forth in an accompanying prospectus supplement or,
if appropriate, a post-effective amendment to the registration statement of
which this prospectus is a part.
We will pay substantially all of the expenses incurred by the selling
stockholders and us incident to the offering and sale of the shares of our
common stock, excluding any underwriting discounts or commissions.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Continental Stock
Transfer and Trust Co., 2 Broadway, New York, New York 10004.
Legal Matters
The legality of the common stock offered in this prospectus has been
passed upon for us by Silverman, Collura & Chernis, P.C., 381 Park Avenue South,
Suite 1601, New York, New York 10016.
24
<PAGE>
Experts
The consolidated financial statements of Log On America, Inc. appearing in
Log On America, Inc.'s Annual Report (Form 10-KSB) at December 31, 1999 and for
the year then ended, incorporated by reference in this Prospectus and
Registration Statement have been audited by Ernst & Young LLP, independent
auditors, and at December 31, 1998, and for the year then ended, by Tauber &
Balser, P.C., independent auditors, as set forth in their respective reports
incorporated by reference and incorporated herein by reference. Such financial
statements are incorporated herein by reference in reliance upon such reports
given on the authority of such firms as experts in accounting and auditing.
Documents Incorporated by Reference
The Commission allows us to incorporate by reference the information we
file with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and later information that we file
with the Commission will automatically update and supercede this information. We
incorporate by reference the documents listed below and any future filings made
with the Commission under Sections 13(a), 14, or 15(d) of the Securities
Exchange Act of 1934, until the selling stockholders, sell all of their shares
included in this prospectus.
1. The description of our common stock included in our registration statement
on Form 8-A, filed with the SEC on April 13, 1999, and all amendments or
reports filed for the purpose of updating such description (File
No. 000-25761);
2. our annual report on Form 10-KSB, filed with the SEC on March 30, 2000,
for the fiscal year ended December 31, 1999 (File No. 000-25761);
3. our quarterly report on Form 10-QSB filed with the SEC on May 15, 2000,
for the fiscal quarter ended March 31, 2000;
4. our quarterly report on Form 10-QSB filed with the Commission on
August 14, 2000, for the fiscal quarter ended, June 30, 2000;
5. our quarterly report on Form 10-QSB filed with the Commission on November
20, 2000, for the fiscal quarter ended, September 30, 2000.
6. our report on Form 8-K filed with the SEC on June 17, 1999, for the event
of June 14, 1999 (File No. 000-25761);
7. our report on Form 8-K filed with the SEC on August 12, 1999, for the
event of August 3, 1999 (File No. 000-25761);
25
<PAGE>
8. our report on Form 8-K filed with the SEC on December 16, 1999, for the
event of December 10, 1999 (File No. 000-25761);
9. our report on Form 8-K filed with the SEC on February 28, 2000, for the
event of February 23, 2000 (File No. 000-25761);
10. our proxy and information statement, as amended, filed with the SEC on May
3, 2000 (File No. 000-25761);
11. our current report on Form 8-K filed with the SEC on August 21, 2000, for
the event of August 18, 2000 (File No. 000-25761);
12. our registration statement on Form SB-2, filed with the SEC on April 23,
1999, and all amendments or reports filed for the purpose of updating such
description (Registration No. 333-70307); and
13. all other reports filed by us with the Commission since December 31, 1999,
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934.
All documents filed by the us pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Securities Exchange Act of 1934 after the date of this registration
statement and prior to the filing of a post-effective amendment to this
registration statement, which indicates that all securities offered hereunder
have been sold, or which deregisters all securities then remaining unsold under
this registration statement, shall be deemed to be incorporated by reference in
this registration statement and to be a part hereof from the date of filing of
such documents.
Any statement contained in a document or incorporated or deemed to be
incorporated by reference shall be deemed to be modified or superseded for
purposes of this registration statement to the extent that a statement contained
herein or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this registration statement. All
information in this registration statement is qualified in its entirety by the
information and financial statements (including the preferred stock thereto)
appearing in the documents incorporated herein by reference, except to the
extent set forth in the immediately preceding statement.
Disclosure of Commission Position on Indemnification
for Securities Act Liabilities
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers, and controlling persons, we
have been advised that in the opinion of the Commission this indemnification is
against public policy as expressed in the Securities Act and is, therefore
unenforceable. In the event that a claim for indemnification against these
liabilities, other than our payment of expense incurred or paid by one of our
directors, officers, or controlling persons in the successful defense of any
action, suit or proceeding, is asserted by that director, officer or controlling
person in connection with the
26
<PAGE>
securities being registered, we will, unless in the opinion of our counsel the
matter has been settled by a controlling precedent, submit to a court of
appropriate jurisdiction the question whether this indemnification by us is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of these issues.
27
<PAGE>
================================================================================
================================================================================
No dealer, salesman or any other person is authorized to give any information or
to represent anything not contained in this prospectus. You must not rely on any
unauthorized information or representations. This prospectus is an offer to sell
these securities and it is not a solicitation of an offer to buy these
securities in any state where the offer or sale is not permitted. The
information contained in this prospectus is current only as of this date
TABLE OF CONTENTS
Page
Where you can find more information about Log On...........................5
Summary....................................................................6
Risk Factors...............................................................8
Selling Stockholders......................................................18
Description of Securities.................................................21
Plan of Distribution......................................................23
Transfer Agent............................................................24
Legal Matters.............................................................24
Experts...................................................................25
Disclosure of Commission Position.........................................26
--------------------
================================================================================
================================================================================
668,333 SHARES OF
COMMON STOCK
LOG ON AMERICA, INC.
---------------
PROSPECTUS
---------------
, , 2000
--------- ---
================================================================================
28
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
SEC Registration Fee $ 1,592.69
Printing $ 5,000*
Legal Fees and Expenses $ 30,000*
Accounting Fees and Expenses $ 4,000*
Miscellaneous Expenses (including travel
and promotional expenses) $ 1,000*
TOTAL $ 40,592.69*
*Estimated
The Selling Stockholders will not pay any portion of the foregoing
expenses of issuance and distribution.
Item 15. Indemnification of Directors and Officers.
Our certificate of incorporation, as amended, and bylaws, as amended,
limit the liability of directors and officers to the maximum extent permitted by
Delaware law. We will indemnify any person who was or is a party, or is
threatened to be made a party to, an action, suit or proceeding, whether civil,
criminal, administrative or investigative, if that person is or was a director,
officer, employee or agent of us or serves or served any other enterprise at our
request.
In addition, our certificate of incorporation provides that a director
shall not be personally liable to us or our stockholders for monetary damages
for breach of the director's fiduciary duty. The certificate does not eliminate
or limit the liability of a director for any of the following reasons:
<PAGE>
o breach of the directors' duty of loyalty to us or our stockholders;
o acts or omissions not in good faith or which involve intentional misconduct
or a knowing violation of the law;
o the unlawful payment of a dividend or unlawful stock purchase or redemption;
and
o any transaction from which the director derives an improper personal
benefit.
We have purchased directors' and officers' insurance in the amount of
$5,000,000. This insurance insures directors against any liability arising out
of the director's status as our director, regardless of whether we have the
power to indemnify the director against the liability under applicable law.
We have been advised that it is the position of the Commission that
insofar as the indemnification provisions referenced above may be invoked to
disclaim liability for damages arising under the Securities Act, these
provisions are against public policy as expressed in the Securities Act and are,
therefore, unenforceable.
There is no litigation pending, and neither the registrant nor any of its
directors know of any threatened litigation, which might result in a claim for
indemnification by any director or officer.
Item 16. Exhibits and Financial Statement Schedule
(a) The following exhibits unless noted otherwise were filed with the
initial filing of this Form S-3:
Exhibit
Number Description
------ -----------
3.1 Certificate of Designations, Preferences and Rights of Series A
Convertible Preferred Stock, as filed with the Delaware Secretary of
State on February 23, 2000 (incorporated by reference to our Form 8-K,
dated February 23, 2000 (File No. 000-25761)).
4.1 Specimen certificate representing registrant's common stock
(incorporated by reference to our registration statement on Form SB-2
(Registration No. 333-70307).
4.2 Representatives Warrant Agreement (incorporated by reference to our
registration statement on Form SB-2 (Registration No. 333-70307)).
4.3* Form of Warrant to Dirks & Co.
4.4* Form of Warrant to Jessy Dirks.
4.5* Form of Warrant to Ronald Heineman.
II-2
<PAGE>
4.6 Registration Rights Agreement, dated as of February 23, 2000, by and
among the registrant and certain buyers (incorporated by reference to
our Form 8-K, dated February 23, 2000 (File No. 000-25761).
4.7 Securities Purchase Agreement, dated as of February 28, 2000, by and
among the registrant and certain buyers (incorporated by reference to
our Form 8-K, dated February 23, 2000 (File No. 000-25761).
5.1* Opinion of Silverman, Collura & Chernis, P.C.
23.1*** Consent of Ernst & Young LLP
23.2*** Consent of Tauber & Balser, P.C.
23.3* Consent of Silverman, Collura & Chernis, P.C. (incorporated in Ex 5.1).
24.1 Power of Attorney, see signature page as in initial filing.
* Filed with Amendment No. 4
** Filed with Amendment No. 5
*** Filed with this Amendment No. 6
II-3
<PAGE>
Exhibit No. Description
----------- -----------
b. Financial Statement Schedules.
All schedules are omitted from this registration statement because they
are not required or the required information is included in the consolidated
financial statement or the notes thereto.
Item 17. Undertakings.
(a) Rule 415 Offerings.
The undersigned issuer hereby undertakes that it will:
(1) File, during any period in which it offers or sells
securities, a post-effective amendment to this Registration Statement to:
(i) Include any prospectus required by Section 10(a)(3)
of the Securities Act;
(ii) Reflect in the prospectus any facts or events
which, individually or together, represent a
fundamental change in the information in the
Registration Statement; and
(iii) Includes any additional or changed material
information on the plan of distribution.
provided, however, the paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
registration statement is on Form S-3 or Form S-8, and the information required
in a post-effective amendment by those paragraphs is contained in periodic
reports filed by the Registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
Registration Statement.
(2) For determining liability under the Securities Act, treat
each post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial bona
fide offering.
(3) File a post-effective amendment to remove from
registration any of the securities that remain unsold at the end of the
offering.
(b) Request for acceleration of effective date.
(1) Insofar as indemnification for liabilities arising under
the Securities Act, may be permitted to directors, officers and controlling
persons of the small business issuer pursuant to the foregoing provisions, or
otherwise, the issuer has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the issuer of expenses incurred or paid by a director,
II-4
<PAGE>
officer or controlling person of the issuer in the successful defense of any
action, suit or proceedings) is asserted by such director, officer or
controlling person in connection with the securities being registered, the
issuer will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such court.
(2) For determining any liability under the Securities Act,
treat each post-effective amendment that contains a form of prospectus as a new
registration statement for the securities offered in the registration statement,
and that offering of the securities at that time as the initial bona fide
offering of those securities.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing this Form S-3 Amendment No. 5 and has duly caused
this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Providence, State of Rhode Island, on
December 20, 2000.
LOG ON AMERICA, INC.
By: \s\ David R. Paolo
-------------------------
David R. Paolo, President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURES TITLES DATE
---------- ------ ----
<S> <C> <C>
\s\ David R. Paolo
------------------------
David R. Paolo President, CEO, and Chairman December 20, 2000
*
------------------------ Executive Vice President,
Raymond E. Paolo Secretary, Director December 20, 2000
*
------------------------
Kenneth M. Cornell Chief Financial Officer, Treasurer
and Director December 20, 2000
*
------------------------
Charles F. Cleary Chief Operating Officer, Director December 20, 2000
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
*
------------------------
Shastri Divakaruni Director December 20, 2000
*
------------------------
David M. Robert Director December 20, 2000
*
------------------------
Robert Annunziata Director December 20, 2000
</TABLE>
* By: \s\ David R. Paolo
------------------
David R. Paolo
Attorney-in-fact
