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As filed with the Securities and Exchange Commission on August 16, 2000
Registration No. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
_________________
ALLOY ONLINE, INC.
(Exact name of registrant as specified in its charter)
Delaware 04-3310676
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
151 West 26/th/ Street, 11/th/ Floor
New York, NY 10001
(212) 244-4307
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
Matthew Diamond
President and Chief Executive Officer
151 West 26/th/ Street, 11/th/ Floor
New York, NY 10001
(212) 244-4307
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
With copies to each of:
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Tim Reusing, Esq. Richard M. Graf
Alloy Online, Inc. Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
151 West 26/th/ Street, 11/th/ Floor And 701 Pennsylvania Ave., N.W.
New York, NY 10001 Washington, DC 20004
(212) 244-4307 (202) 434-7300
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
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, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering.[_]
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.[_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.[_]
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CALCULATION OF REGISTRATION FEE
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Proposed maximum
Title of each class of Proposed maximum aggregate offering
securities to be Amount to be offering price per price (1)(2) Amount of
registered registered unit registration fee
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Common Stock, 2,864,891 $9.00(2) $25,784,019.00 $6,806.98
$0.01 par value
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(1) Pursuant to Rule 416(a) of the Securities Act of 1933, as amended (the
"Act"), this registration statement shall be deemed to cover additional
securities that may be offered or issued to prevent dilution resulting from
stock splits, stock dividends or similar transactions.
(2) The price of $9.00 per share, which was the average of the high and low
prices of the Registrant's Common Stock, as reported on the Nasdaq National
Market on August 11, 2000 is set forth solely for purposes of calculating the
registration fee pursuant to Rule 457(c) of the Securities Act of 1933, as
amended.
_______________________________________________
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.
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++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and it is not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted.
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Prospectus
Subject to Completion dated August ___, 2000
Alloy Online, Inc.
2,864,891 Shares of Common Stock
__________________________
This prospectus relates to the resale, from time to time, by the selling
stockholder named in this prospectus, of up to 2,864,891 shares of our common
stock. We issued or will issue these shares to the selling stockholder in
connection with our acquisition of all of the outstanding capital stock of Kubic
Marketing, Inc. We will not receive any of the proceeds from the sale of the
shares sold pursuant to this prospectus, and we will bear certain expenses
incident to their registration. The selling stockholder may sell the shares of
common stock described in this prospectus in a number of different ways and at
varying prices. The price to the public for the shares and the proceeds to the
selling stockholder will depend upon the market price of the securities when
sold. See "Selling Stockholder" and "Plan of Distribution."
Our common stock is traded on the Nasdaq National Market under the trading
symbol "ALOY." On August 15, 2000, the last reported sale price for the common
stock on the Nasdaq National Market was $8.00 per share.
__________________________
Investing in our common stock involves risks.
See "Risk Factors" beginning on page 4.
__________________________
You should rely only on the information incorporated by reference or
provided in this prospectus or any supplement to this prospectus. We have not
authorized anyone else to provide you with different information. Neither the
delivery of this prospectus nor any distribution of the shares of common stock
shall, under any circumstances, create any implication that there has been no
change in our affairs since the date of this prospectus.
Neither the Securities and Exchange Commission nor any state securities
regulator has approved or disapproved of these securities or passed upon the
accuracy or adequacy of this prospectus. It is a criminal offense to make any
representation to the contrary.
This prospectus is dated August ___, 2000.
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TABLE OF CONTENTS
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PROSPECTUS SUMMARY........................................................ 1
THE OFFERING.............................................................. 3
RISK FACTORS.............................................................. 3
RISK FACTORS THAT MAY AFFECT FUTURE RESULTS............................... 3
RISKS RELATED TO OUR BUSINESS............................................. 3
RISKS RELATED TO THE INTERNET INDUSTRY.................................... 7
USE OF PROCEEDS........................................................... 10
SELLING STOCKHOLDER....................................................... 10
PLAN OF DISTRIBUTION...................................................... 10
LEGAL MATTERS............................................................. 12
EXPERTS................................................................... 12
WHERE YOU CAN FIND MORE INFORMATION....................................... 12
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PROSPECTUS SUMMARY
You must also consult the more detailed financial statements, and notes to
financial statements, incorporated by reference in this prospectus. This
prospectus contains forward-looking statements and actual results could differ
materially from those projected in the forward-looking statements as a result of
certain of the risk factors as outlined in this prospectus.
Our Company
Alloy Online is a leading web-centric direct marketing company providing
community, content and commerce to Generation Y, the 56 million boys and girls
between the ages of 10 and 24. Alloy is a leading brand for this influential
generation, which the Census Bureau estimates will grow 19.5% faster than the
overall U.S. population and accounts for more than $250 billion of annual
disposable income. Our Web site, www.alloy.com, is a destination where
Generation Y boys and girls can interact, share information, explore compelling
and relevant content and shop. Our Web site, www.ccs.com, offers a complete
line of action sports (skate and snowboarding) inspired clothing, shoes and hard
goods from leading industry brands. We believe we have created one of the
largest and most vibrant Generation Y communities on the Internet. This growing
community drives merchandise sales, our principal source of revenues, and
positions us to be a leading channel for marketers that are increasingly looking
to the Internet to reach the boys and girls of Generation Y.
We created our Web sites to meet the unique interests and tastes of
Generation Y. Features of our Web sites include:
-- Community--we present an appealing environment for Generation Y boys and
girls to share their ideas, express their opinions and develop their interests
through a variety of free interactive services such as e-mail accounts, instant
messaging, personal homepages, chat rooms, interactive advice forums and
message boards;
-- Content--we deliver regularly updated Generation Y-focused content on
subjects such as music, relationships, celebrities, horoscopes, fashion,
entertainment, astrology, gossip and sports; and
-- Commerce--we market products and services in the major Generation Y
categories such as apparel, outerwear, accessories, footwear, cosmetics, and
room furnishings.
Since inception, we have experienced rapid growth. Our revenues, primarily
merchandise sales, have grown from $1.8 million in fiscal 1997 to $31.2 million
in fiscal 1999 and our net losses have increased from $1.9 million to $14.9
million for the same periods. Revenues for the three months ended April 30, 2000
were $7.7 million. We incurred additional net losses of $6.3 million for the
three months ended April 30, 2000. Due to our unique blend of online and catalog
services, in June 2000 our Alloy Web site generated approximately 850,000 unique
visitors, according to Media Metrix, Inc., up from approximately 263,000 in
April 1999, and approximately 2.0 million users have registered to receive our
weekly electronic magazine, Alloy E-Zine. In August 1997, we introduced our
Alloy direct mail catalog to attract additional visitors to our Web site,
increase revenues and build recognition for the Alloy brand. During 2000, we
expect to mail approximately 35 million catalogs to boys and girls of Generation
Y. Through our acquisition of Kubic Marketing, Inc., we expect to mail
approximately 4 million CCS catalogs over the remainder of the calendar year
2000. As a result of our online and off-line marketing programs, catalog
circulation and Web site, Alloy has developed a database of over 4 million
Generation Y boys and girls, enabling us to effectively market to specific
segments of our audience. The acquisition of Kubic Marketing, Inc. adds another
1.5 million Generation Y names to our database. In addition to our sales of
Generation Y-focused merchandise, our community of Generation Y boys and girls
presents an important opportunity for marketers. Marketers are focusing on
Generation Y because of their significant and growing spending power and
tendency to carry brand loyalties established at a young age into adulthood. As
a result, we intend to pursue sponsorship and other revenue opportunities to
connect these marketers and our Generation Y community.
Our objective is to become the leading Generation Y online destination. In
order to achieve this objective, we intend to pursue the following strategies:
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-- Develop Leading Generation Y Brands. We will continue to build Alloy as
a Generation Y lifestyle brand for both boys and girls known for compelling
community, content and commerce. We plan to expand the CCS brand from a leading
commerce brand in the action sports market to encompass action sports community
and lifestyle.
-- Pursue Additional Revenue Opportunities. We intend to generate
sponsorship and other revenues by capitalizing on our growing Generation Y
community.
-- Strengthen Co-ed Community. We will continue to foster dynamic boy- girl
interaction on our Web sites. We believe that a strong co-ed focus is critical
to creating a successful Generation Y community and provides us an important
competitive advantage.
-- Expand Internationally. We intend to pursue the significant
opportunities to serve the large and growing international Generation Y
population.
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Our principal executive offices are located at 151 West 26th Street, 11th
Floor, New York, New York 10001. Our telephone number at that location is (212)
244-4307.
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THE OFFERING
Common stock offered.................. 2,864,891 shares
Common stock to be outstanding
after the offering.................... 20,899,625 shares
Use of proceeds....................... We will not receive any proceeds from
the sale by the selling stockholder of
our common stock.
Nasdaq National Market symbol
for our common stock.................. Our common stock is traded on the Nasdaq
National Market under the symbol "ALOY"
The number of shares of common stock to be outstanding after this offering
does not include, as of August 11, 2000, a total of 8,075,671 shares of common
stock, consisting of the following:
. 3,308,828 shares of common stock underlying options outstanding as of
August 11, 2000 at a weighted average exercise price of $15.24 per share;
. 473,180 shares of common stock underlying warrants presently exercisable as
of August 11, 2000 at an average exercise price of $5.06; and
. 4,293,663 shares of common stock available for issuance under our Restated
1997 Employee, Director and Consultant Stock Plan.
RISK FACTORS
An investment in our common stock involves a high degree of risk. You
should consider the risks and uncertainties and other information in this
prospectus carefully before deciding to buy our common stock. Our business,
financial condition and results of operations could be harmed by any of the
following risks. The trading price of our common stock could decline due to any
of the following risks, and you might lose all or part of your investment. The
risks and uncertainties described below are not the only ones facing our
company.
Risk Factors That May Affect Future Results
The following risk factors and other information included in this report
should be carefully considered. The risks and uncertainties described below are
not the only ones we face. Additional risks and uncertainties not presently
known to us or that we deem immaterial may also impair our business operations.
If any of the following risks actually occur, our business, financial condition
or results of operations could be materially and adversely affected.
Risks Related to Our Business
We have a limited operating history upon which to evaluate our potential
for future success. We were incorporated in January 1996 and did not begin to
generate meaningful revenues until August 1997. Accordingly, we have only a
limited operating history upon which you can evaluate our business and
prospects. You must consider the risks and uncertainties frequently encountered
by early stage companies in new and rapidly evolving markets, such as electronic
commerce. If we are unsuccessful in addressing these risks and uncertainties,
our business, results of operations and financial condition will be materially
and adversely affected.
We have a history of losses, and we expect losses for the foreseeable
future. Since our inception in January 1996, we have incurred significant net
losses, resulting primarily from costs related to developing our Alloy Web site
and database of Generation Y names, attracting users to our Alloy Web site,
establishing the Alloy brand, hiring employees, making strategic acquisitions
and becoming a public company. At January 31, 2000, we had an accumulated
deficit of approximately $23.2 million. Because of our plans to continue to
invest heavily in marketing and promotion, to hire additional employees, to
enhance our Web sites and operating infrastructure, and making additional
strategic acquisitions, we expect to incur significant net losses for the
foreseeable future. If our revenue growth is slower than we anticipate or our
operating expenses exceed our expectations, our losses will be significantly
greater. We may never achieve profitability.
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Our stock price may be adversely affected by significant fluctuations in
our quarterly operating results. Our revenues for the foreseeable future will
remain primarily dependent on sales of merchandise appearing in our catalogs and
on our Web sites, and secondarily on sponsorship and advertising revenues. We
cannot forecast with any degree of certainty the number of visitors to our Web
sites, the extent of our merchandise sales or the amount of sponsorship and
advertising revenues.
We expect our operating results to fluctuate significantly from quarter to
quarter. We have already experienced the effects of seasonality on our
merchandise sales, which are generally lower in the first half of each year. We
believe that sponsorship and advertising sales in traditional media, such as
television and radio, generally are lower in the first and third calendar
quarters of each year. If similar seasonal and cyclical patterns emerge in
Internet sponsorship and advertising spending, these revenues may vary
significantly based on these patterns.
Other factors which may cause our operating results to fluctuate
significantly from quarter to quarter include:
. our ability to attract new and repeat visitors to our Web sites and
convert them into customers;
. price competition;
. the level of merchandise returns we experience;
. unanticipated cost increases or delays in shipping, transaction
processing and catalog production;
. unanticipated delays or cost increases with respect to product
introductions; and
. the costs, timing and impact of our sales and marketing initiatives.
Because of these and other factors, we believe that quarter-to-quarter
comparisons of our results of operations are not good indicators of our future
performance. If our operating results fall below the expectations of securities
analysts and investors in some future periods, then our stock price may decline.
Our business will suffer if we fail to keep current with Generation Y
fashion and lifestyle trends. Our continued success will depend on our ability
to keep current with the changing fashion tastes and interests of our Generation
Y customers. If we fail to anticipate, identify or respond to changes in styles,
trends or brand preferences of our customers, we are likely to experience
reduced revenues from merchandise sales. Moreover, the Alloy or CCS brands could
be eroded by misjudgments in merchandise selection or a failure to keep our
community and content current with the evolving preferences of our audience.
These events would likely reduce the number of visitors to our Web sites and
limit opportunities for sponsorship and advertising sales. As a consequence of
these developments, our business would suffer.
Our planned online and traditional marketing campaigns may not attract
sufficient additional visitors to our Web sites or may detract from our image.
We plan to continue to pursue aggressive marketing campaigns online and in
traditional media to promote the Alloy and CCS brands and attract an increasing
number of visitors to our Web sites. We believe that maintaining and
strengthening the Alloy and CCS brands will be critical to the success of our
business. This investment in increased marketing carries with it significant
risks, including the following:
. Our advertisements may not properly convey the Alloy or CCS brand images,
or may even detract from our images. Unlike advertising on our Web sites
which gives us immediate feedback and allows us promptly to adjust our
messages, advertising in print and broadcast media is less flexible. These
advertisements typically take longer and cost more to produce and
consequently have longer run times. If we fail to convey the optimal
message in these advertising campaigns, the impact may be more lasting and
more costly to correct.
. Even if we succeed in creating the right messages for our promotional
campaigns, these advertisements may fail to attract new visitors to our Web
sites at levels commensurate with their costs. We may fail to choose the
optimal mix of television, radio, print and other media to cost-
effectively deliver our message. Moreover, if these efforts are
unsuccessful, we will face difficult and costly choices in deciding whether
and how to redirect our marketing dollars.
We rely heavily on third parties for essential business operations, and
disruptions or failures in service may adversely affect our ability to deliver
goods and services to our customers.
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General. We depend on third parties for important aspects of our business,
including:
. Internet access;
. development of software for new Web site features;
. content; and
. telecommunications.
We have limited control over these third parties, and we are not their only
client. We may not be able to maintain satisfactory relationships with any of
them on acceptable commercial terms. Further, we cannot be certain that the
quality of products and services that they provide may remain at the levels
needed to enable us to conduct our business effectively. Many of our agreements
with technology and content providers are on very favorable terms that do not
include license fees, but instead provide for revenue sharing. We may not be
able to renew these agreements on similar terms.
Reliance on OneSoft Corporation. We rely heavily on OneSoft Corporation to
maintain and operate our alloy.com Web site in its facilities in Annandale,
Virginia. This system's continuing and uninterrupted performance is critical to
our success. Growth in the number of users accessing our Web site may strain its
capacity, and we rely on OneSoft to upgrade our system's capacity in the face of
this growth. OneSoft also provides our connection to the Internet. Sustained or
repeated system failures or interruptions of our Web site connection services
would reduce the attractiveness of our Web site to customers and advertisers and
could therefore have a material and adverse effect on our business.
Reliance on Fulfillment Services Providers. We switched our fulfillment
services provider in May, 2000. We rely heavily on our third party fulfillment
services provider for the performance of order processing, order fulfillment,
customer service and shipping for merchandise sold via the alloy.com Web site
and the Alloy catalog. Disruptions or delays in these services could discourage
customers from ordering from us in the future and could therefore have a
material and adverse effect on our business. Service provision from our new
fulfillment service provider is untested and there is no assurance that such
service will be satisfactory. If our new fulfillment service provider does not
perform as expected, results of our business operations and financial condition
will be materially and adversely affected.
Our management is new and may have difficulty managing our expected growth.
In order to execute our business plan, we must continue to grow significantly.
This growth will strain our personnel, management systems and resources. To
manage our growth, we must implement operational and financial systems and
controls and recruit, train and manage new employees. Some key members of our
management have only recently been hired. These individuals have had little
experience working with our management team. We cannot be certain that we will
be able to integrate new executives and other employees into our organization
effectively. If we do not manage growth effectively, our business, results of
operations and financial condition will be materially and adversely affected.
We depend on our key personnel to operate our business, and we may not be
able to hire enough additional management and other personnel as our business
grows. Our performance is substantially dependent on the continued services and
on the performance of our executive officers and other key employees,
particularly Matthew C. Diamond, our Chief Executive Officer, James K. Johnson,
Jr., our Chief Operating Officer and Samuel A. Gradess, our Chief Financial
Officer. The loss of the services of any of our executive officers could
materially and adversely affect our business. Additionally, we believe we will
need to attract, retain and motivate talented management and other highly
skilled employees to be successful. Competition for employees that possess
knowledge of both the Internet industry and the Generation Y market is intense.
We may be unable to retain our key employees or attract, assimilate and retain
other highly qualified employees in the future.
Intense competition from Internet- and catalog-based businesses may
decrease our market share, revenues and gross margins and cause our stock price
to decline. We face intense competition in electronic commerce, catalog sales
and online services. Our Web sites and Alloy and CCS catalogs compete for
Generation Y customers with traditional department store retailers, catalog
retailers, direct marketers, specialty apparel and accessory retailers and
discount retailers. This competition is likely to increase because it is not
difficult to enter the online commerce market, and current and new competitors
can launch Web sites at relatively low cost. Competition could result in price
reductions for our products and services, reduced margins or loss of market
share. Consolidation within the online commerce industry may also increase
competition.
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The market for Internet users and community services is highly competitive
and rapidly evolving. Competition for users and advertisers is intense and is
expected to increase significantly. There are no substantial barriers to entry
in these markets. Competition could result in fewer visitors to our Web sites
and reduced sponsorship and advertising revenues.
Many of our existing competitors, as well as potential new competitors,
have longer operating histories, greater brand recognition, larger customer user
bases and significantly greater financial, technical and marketing resources
than we do. If we fail to compete effectively, our business will be materially
and adversely affected and our stock price will decline.
We may fail to successfully manage and use our databases of Web site users
and customers. An important component of our business model involves the use of
our lists of catalog requesters and Web site registrants to more effectively
target direct marketing messages. We depend upon personal information we collect
from our Web site users for data we need to create direct mailing and e-mailing
lists, tailor our Web site offerings to the tastes of our Generation Y users and
attract marketers to our Web sites. We must continuously expand and update our
lists to identify new, prospective Generation Y customers. Names derived from
purchased or rented lists may generate lower response rates and, therefore, a
lower return on our investment in these lists. We must also continually develop
and refine our techniques for segmenting these lists to maximize their
usefulness to us and our marketing partners. If we fail to capitalize on these
important business assets, our business model will be less successful. In
addition, laws or regulations that could impair our ability to collect user
names and other information on our Web sites may adversely affect our business.
For example, a recently enacted federal law limits our ability to collect
personal information from Web site visitors who may be under age 13.
We must effectively manage our vendors to minimize inventory risk and
maintain our margins. In order to fulfill our orders, we depend upon our vendors
to produce sufficient quantities of products according to schedule. We may
maintain high inventory levels in some categories of merchandise in an effort to
maintain satisfactory fulfillment rates for our customers. This may expose us to
risk of excess inventories and outdated merchandise, which could have a material
and adverse effect on our business. If we underestimate quantities and vendors
cannot restock, then we may disappoint customers who may turn to our
competitors. We also negotiate with our vendors to get the best quality
available at the best prices and increase our profit margins. Our failure to be
able to manage our vendors effectively would adversely affect our operating
results.
We may fail to establish and maintain strategic relationships with other
Web sites to increase numbers of web site users and increase our revenues. We
intend to establish numerous strategic alliances with popular Web sites to
increase the number of visitors to our Web sites. There is intense competition
for placements on these sites, and we may not be able to enter into these
relationships on commercially reasonable terms or at all. Even if we enter into
strategic alliances with other Web sites, they themselves may not attract
significant numbers of users. Therefore, our sites may not receive additional
users from these relationships. Moreover, we may have to pay significant fees to
establish these relationships. Our inability to enter into new distribution
relationships or strategic alliances and expand our existing ones could have a
material and adverse effect on our business.
We may not be able to adapt as Internet technologies and customer demands
continue to evolve. To be successful, we must adapt to rapidly changing Internet
technologies and continually enhance the features and services provided on our
Web sites. We could incur substantial, unanticipated costs if we need to modify
our Web sites, software and infrastructure to incorporate new technologies
demanded by our audience. We may use new technologies ineffectively or we may
fail to adapt our Web sites, transaction-processing systems and network
infrastructure to user requirements or emerging industry standards. If we fail
to keep pace with the technological demands of our Web- savvy audience for new
services, products and enhancements, our users may not use our Web sites and
instead use those of our competitors.
We may not be able to protect and enforce our trademarks, Web addresses and
intellectual property rights. Our Alloy and CCS brand names and our Web
addresses, www.alloy.com and www.ccs.com, are critical to our success. We have
registered the "Alloy" and "CCS" names, along with other trademarks with the
U.S. Patent and Trademark Office. Applications for the registration of our other
trademarks and service marks are currently pending. We cannot guarantee that any
of these trademark applications will be granted. In addition, we may not be able
to prevent third parties from acquiring Web addresses that are confusingly
similar to our addresses, which could harm our business.
We may experience fluctuations in postage and paper expenses. Catalog
production and distribution expenses represented approximately 47% of our total
revenues in the fiscal years ended January 31, 1998 and 1999, and
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approximately 37% of our total revenues in the fiscal year ended January 31,
2000. A substantial portion of these expenses have been attributable to paper
and postage costs. Material increases in paper or catalog delivery costs could
have a material and adverse effect on our business.
We may be unable to identify and successfully integrate potential
acquisitions and investments. We have acquired three businesses and we may
acquire or make investments in other complementary businesses, products,
services or technologies on an opportunistic basis when we believe they will
assist us in carrying out our business strategy. We could have difficulty in
assimilating personnel and operations of the three businesses we have acquired
and may have similar problems in future acquisitions. In addition, the key
personnel of the acquired company may decide not to work for us. If we acquire
products, services or technologies, we could have difficulty in assimilating
them into our operations. These difficulties could disrupt our ongoing business,
distract our management and employees and increase our expenses. Furthermore, we
may have to incur debt or issue equity securities to pay for any future
acquisitions, the issuance of which could be dilutive to our existing
shareholders.
We are vulnerable to new tax obligations that could be imposed on online
commerce transactions. We do not expect to collect sales or other similar taxes
in respect of shipments of goods into most states. However, various states or
foreign countries may seek to impose sales tax obligations on us and other
online commerce and direct marketing companies. A number of proposals have been
made at the state and local levels that would impose additional taxes on the
sale of goods and services through the Internet. These proposals, if adopted,
could substantially impair the growth of online commerce and cause purchasing
through our Web site to be less attractive to customers as compared to
traditional retail purchasing. The United States Congress has passed legislation
limiting for three years the ability of the states to impose taxes on Internet-
based transactions. Failure to renew this legislation could result in the
imposition by various states of taxes on online commerce. Further, states have
attempted to impose sales taxes on catalog sales from businesses such as ours. A
successful assertion by one or more states that we should have collected or be
collecting sales taxes on the sale of products could have a material and adverse
effect on our business.
Risks Related to the Internet Industry
We are dependent on the continued development of the Internet
infrastructure. Our industry is new and rapidly evolving. Our business would be
adversely affected if Internet usage and online commerce does not continue to
grow. Internet usage may be inhibited for a number of reasons, including:
. inadequate Internet infrastructure;
. inconsistent quality of service; or
. unavailability of cost-effective, high-speed service.
If Internet usage grows, the Internet infrastructure may not be able to
support the demands placed on it by this growth, or its performance and
reliability may decline. In addition, Web sites, including ours, have
experienced a variety of interruptions in their service as a result of outages
and other delays occurring throughout the Internet network infrastructure. If
these outages or delays frequently occur in the future, Web usage, including
usage of our Web sites, could grow slowly or decline.
Our long-term success depends on the development of the online commerce
market, and on the increased online purchasing by Generation Y, both of which
are uncertain. Our future revenues and profits substantially depend upon the
widespread acceptance and use of the Internet as an effective medium of commerce
by consumers. Demand for recently introduced services and products over the
Internet and online services is subject to a high level of uncertainty. The
development of the Internet and online services as a viable commercial
marketplace is subject to a number of factors, including the following:
. online commerce is at an early stage and buyers may be unwilling to
shift their purchasing from traditional vendors to online vendors;
. insufficient availability of telecommunications services or changes in
telecommunications services could result in slower response times; and
. the inability of our target demographic group to have regular access
to a credit card could cause a slower growth in online commerce for us
than for companies targeting consumers in general.
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Adoption of the Internet as an advertising medium is uncertain. The growth
of Internet sponsorships and advertising requires validation of the Internet as
an effective advertising medium. This validation has yet to fully occur. In
order for us to generate sponsorship and advertising revenues, marketers must
direct a significant portion of their budgets to the Internet and, specifically,
to our Web sites. To date, sales of Internet sponsorships and advertising
represent only a small percentage of total advertising sales. Also,
technological developments could slow the growth of sponsorships and advertising
on the Internet. For example, widespread use of filter software programs that
limit access to advertising on our Web site from the Internet user's browser
could reduce advertising on the Internet. Our business, financial condition and
operating results would be adversely affected if the market for Internet
advertising fails to develop or develops slower than expected.
Breaches of security on the Internet may slow the growth of online commerce
and Web advertising and subject us to liability. The need to securely transmit
confidential information (such as credit card and other personal information)
over the Internet has been a significant barrier to online commerce and
communications over the Web. Any well-publicized compromise of security could
deter more people from using the Web or from using it to conduct transactions
that involve transmitting confidential information, such as purchases of goods
or services. Furthermore, decreased traffic and online sales as a result of
general security concerns could cause advertisers to reduce their amount of
online spending. To the extent that our activities or the activities of third-
party contractors involve the storage and transmission of information, such as
credit card numbers, security breaches could disrupt our business, damage our
reputation and expose us to a risk of loss or litigation and possible liability.
We could be liable for claims based on unauthorized purchases with credit card
information, impersonation or other similar fraud claims. Claims could also be
based on other misuses of personal information, such as for unauthorized
marketing purposes. We may need to spend a great deal of money and use other
resources to protect against the threat of security breaches or to alleviate
problems caused by security breaches.
We could face liability for information displayed on and communications
through our Web sites. We may be subjected to claims for defamation, negligence,
copyright or trademark infringement or based on other theories relating to the
information we publish on our Web sites. These types of claims have been
brought, sometimes successfully, against Internet companies as well as print
publications in the past. Based on links we provide to other Web sites, we could
also be subjected to claims based upon online content we do not control that is
accessible from our Web sites. Claims may also be based on statements made and
actions taken as a result of participation in our chat rooms or as a result of
materials posted by members on bulletin boards at our Web sites. We also offer
e-mail services, which may subject us to potential risks, such as:
. liabilities or claims resulting from unsolicited e-mail;
. lost or misdirected messages;
. illegal or fraudulent use of e-mail; or
. interruptions or delays in e-mail service.
These claims could result in substantial costs and a diversion of our
management's attention and resources.
Efforts to regulate or eliminate the use of mechanisms which automatically
collect information on users of our Web site may interfere with our ability to
target our marketing efforts and tailor our Web site offerings to the tastes of
our users. Web sites typically place a tracking program on a user's hard drive
without the user's knowledge or consent. These programs automatically collect
data on anyone visiting a Web site. Web site operators use these mechanisms for
a variety of purposes, including the collection of data derived from users'
Internet activity. Most currently available Web browsers allow users to elect to
remove these mechanisms at any time or to prevent this information from being
stored on their hard drive. In addition, some commentators, privacy advocates
and governmental bodies have suggested limiting or eliminating the use of these
tracking mechanisms. Any reduction or limitation in the use of this software
could limit the effectiveness of our sales and marketing efforts.
We could face additional burdens associated with government regulation of
and legal uncertainties surrounding the Internet. Any new law or regulation
pertaining to the Internet, or the application or interpretation of existing
laws, could increase our cost of doing business or otherwise have a material and
adverse effect on our business, results of operations and financial condition.
Laws and regulations directly applicable to Internet communications, commerce
and advertising are becoming more prevalent. The law governing the Internet,
however, remains largely unsettled, even in areas where there has been some
legislative action. It may take years to determine whether and how
8
<PAGE>
existing laws governing intellectual property, copyright, privacy, obscenity,
libel and taxation apply to the Internet. In addition, the growth and
development of online commerce may prompt calls for more stringent consumer
protection laws, both in the United States and abroad. We also may be subject to
future regulation not specifically related to the Internet, including laws
affecting direct marketers.
Risks relating to our common stock
We do not anticipate declaring and paying cash dividends on our common
stock at any time in the foreseeable future.
We have never declared cash dividends on our common stock and we do not
anticipate declaring and paying cash dividends on our common stock at any time
in the foreseeable future. The decision whether to apply legally available funds
to the payment of dividends on our common stock will be made by our board from
time to time in the exercise of its business judgment, taking into account,
among other things, results of operations and financial condition, any then
existing or proposed commitments by us for the use of available funds, and our
obligations with respect to the holders of any then outstanding indebtedness or
preferred stock. In addition, we may in the future issue debt securities or
preferred stock or enter into loan agreements or other agreements that restrict
the payment of dividends on, and repurchases of, our common stock.
Safe Harbor Provision
Statements in this prospectus expressing our expectations and beliefs
regarding our future results or performance are forward-looking statements that
involve a number of substantial risks and uncertainties. When used in this
prospectus, the words "anticipate," "believe," "estimate," "expect" and "intend"
and similar expressions as they relate to the Company or its management are
intended to identify such forward-looking statements. Our actual future results
may differ significantly from those stated in any forward- looking statements.
These statements include statements regarding our ability to increase revenues,
generate multiple revenue streams, increase visitors to our Web sites and build
customer loyalty; our ability to develop our sales and marketing teams; our
ability to capitalize on our sales and marketing efforts; our ability to
capitalize on our promotions, sponsorship, advertising and other revenue
opportunities; our ability to build the Alloy and CCS brand names and develop
our on-line community; our ability to develop commercial relationships with
advertisers; our Web sites' appeal to marketers and users; our ability to meet
anticipated cash needs for working capital and capital expenditures for the next
24 months; our ability to enhance our infrastructure technology, transaction-
processing and automation capabilities of our Web sites; our ability to increase
the efficiency of our supply chain and fulfillment system; and our ability to
expand into international markets.
Such statements are based upon management's current expectations that are
subject to risks and uncertainties that could cause actual results to differ
materially from those set forth in or implied by the forward-looking statements.
We caution that there can be no assurance that actual results or business
conditions will not differ materially from those projected or suggested in such
forward-looking statements as a result of various factors, including but not
limited to the following: our expected future losses; our planned sales and
marketing campaigns may not attract sufficient additional visitors to our Web
sites; our planned sales and marketing campaigns may not increase our revenues
or generate additional revenue streams; we lack experienced management and
personnel; we may fail to further develop our internal sales and marketing
organization to attract promotions, sponsorship, advertising and other revenues;
we may not be able to adapt as internet technologies and customer demands
continue to evolve; increased competition in the online commerce market would
reduce our revenues; and we may experience business disruptions with third
parties that provide us with essential business operations.
As a result of the foregoing and other factors, we may experience material
fluctuations in future operating results on a quarterly or annual basis which
could materially and adversely affect our business, financial condition,
operating results and stock price. We are not under any duty to update any of
the forward-looking statements in this report to conform these statements to
actual results, unless required by law. For further information, refer to the
more specific risks and uncertainties discussed above and throughout this
prospectus.
9
<PAGE>
USE OF PROCEEDS
This prospectus relates to shares of our common stock being offered and
sold for the accounts of the selling stockholder named in this prospectus. We
will not receive any proceeds from the sale of common stock by the selling
stockholder in this offering, but will pay certain expenses related to the
registration of the shares of the common stock. See "Plan of Distribution."
SELLING STOCKHOLDER
Based upon information available to us as of August 13, 2000, the
following table sets forth the name of the selling stockholder, the number of
shares owned, the number of shares registered by this prospectus and the number
and percent of outstanding shares that will be owned after the sale of the
registered shares, assuming all of the shares are sold. The information provided
in the table and discussions below has been obtained from the selling
stockholder. Except as otherwise disclosed below, the selling stockholder does
not, or within the past three years has not had, any position, office or other
material relationship with us. Because the selling stockholder may sell all or
some portion of the shares of common stock it owns, we cannot estimate the
number of shares of common stock that the selling stockholder will beneficially
own after this Offering. In addition, the selling stockholder may have sold,
transferred or otherwise disposed of, or may sell, transfer or otherwise dispose
of, at any time or from time to time since the date on which it provided the
information regarding the shares beneficially owned, all or a portion of the
shares of common stock beneficially owned in transactions exempt from the
registration requirements of the Securities Act of 1933.
Beneficial ownership is determined in accordance with Rule 13d-3(d)
promulgated by the Commission under the Securities Exchange Act of 1934. Unless
otherwise noted, each person or group identified possesses sole voting and
investment power with respect to the shares, subject to community property laws
where applicable.
Shares Beneficially % of Class after
Owned Prior to the Shares being Completion of this
Name Offering Offered (1) Offering (2)
---- -------- ------- --------
SWI Holdings LLC 3,267,981 2,864,891 15.6
----------------------
(1) Sales of such shares may also be restricted pursuant to agreements entered
into by us with the selling stockholder.
(2) Based on 20,899,625 shares of our common stock outstanding on August 9,
2000.
PLAN OF DISTRIBUTION
We are registering the shares offered under this prospectus on behalf of
SWI Holdings, LLC ("SWI"), the selling stockholder. As used in this prospectus,
"selling stockholder" includes donees, pledgees, transferees or other
successors-in-interest selling shares received after the date of this prospectus
from the named selling stockholder as a gift, pledge, partnership or limited
liability company distribution or other non-sale related transfer. All costs,
expenses and fees in connection with the registration of the shares offered
hereby will be borne by us. Brokerage commissions and similar selling expenses,
if any, attributable to the sale of shares will be borne by the selling
stockholder, subject to reimbursement as described below.
Sales of shares may be effected by the selling stockholder from time to
time in one or more types of transactions (which may include block transactions)
on the Nasdaq National Market, in the over-the-counter market, in negotiated
transactions otherwise than on the Nasdaq National Market or in the over-the-
counter market, through put or call options transactions relating to the shares,
through short sales of shares, or a combination of such methods of sale, at
market prices prevailing at the time of sale or at negotiated prices. Such
transactions may or may not involve brokers or dealers. The selling stockholder
has advised us that it has not, as of the date of this Prospectus, entered into
any agreements, understandings or arrangements with any underwriters or broker-
dealers regarding the sale of its shares and that no underwriter or coordinating
broker is acting in connection with the proposed sale of shares by the selling
stockholder.
10
<PAGE>
In connection with the sale of shares, the selling stockholder may: enter
into hedging transactions with brokers, dealers or others, who in turn may
engage in short sales of the shares in the course of hedging the positions they
assume; sell short or deliver shares to close out positions; or loan shares to
brokers, dealers or others that may in turn sell such shares.
The selling stockholder may effect transactions by selling shares directly
to purchasers or to or through broker-dealers, which may act as agents or
principals. Those broker-dealers may receive compensation in the form of
discounts, concessions, or commissions from the selling stockholder and/or the
purchasers of shares for whom such broker-dealers may act as agents or to whom
they sell as principal, or both (that compensation as to a particular broker-
dealer might be in excess of customary commissions).
The selling stockholder and any broker-dealers that act in connection with
the sale of shares may be deemed to be an "underwriter" within the meaning of
Section 2(11) of the Securities Act, and any commissions received by those
broker-dealers and any profit on the resale of the shares sold by them while
acting as principals might be deemed to be underwriting discounts or commissions
under the Securities Act.
Because the selling stockholder may be deemed to be an "underwriter" within
the meaning of Section 2(11) of the Securities Act, the selling stockholder will
be subject to the prospectus delivery requirements of the Securities Act. We
have informed the selling stockholder that the anti-manipulative provisions of
Regulation M promulgated under the Exchange Act may apply to its sales in the
market.
The selling stockholder also may resell all or a portion of the shares in
open market transactions in reliance upon Rule 144 under the Securities Act,
provided it meets the criteria and conforms to the requirements of Rule 144.
Upon notification to us by the selling stockholder that any material
arrangement has been entered into with a broker-dealer for the sale of shares
through a block trade, special offering, exchange distribution or secondary
distribution for an exercise price of $ .01 per share or a purchase by a broker
or dealer, a supplement to this prospectus will be filed, if required, pursuant
to Rule 424(b) under the Securities Act. That supplement will disclose
. the name of the selling stockholder and of the participating broker-
dealer(s),
. the number of shares involved,
. the price at which such shares were sold,
. the commissions paid or discounts or concessions allowed to such broker-
dealer(s), where applicable,
. that such broker-dealer(s) did not conduct any investigation to verify the
information set out or incorporated by reference in this prospectus, and
. other facts material to the transaction.
SWI received the shares that it is offering for sale on July 18, 2000, as
part of a transaction effected pursuant to an Agreement and Plan of
Reorganization by and between us, Alloy Acquisition Sub, Inc. ("Acquisition
Sub"), a wholly owned subsidiary of ours, Kubic Marketing, Inc. ("Kubic") and
SWI, the sole stockholder of Kubic, pursuant to which Acquisition Sub was merged
with and into Kubic (the "Merger"), with Kubic continuing as the surviving
corporation and a wholly-owned subsidiary of ours. 141,872 of the shares being
registered hereby are subject to an escrow pending final determination of
certain financial results of Kubic prior to consummation of the Merger, and some
or all of such shares may be returned to us when such financial results are
finalized. SWI also received 403,090 shares that are subject to an escrow for a
period of up to one year to satisfy the indemnification obligations of SWI that
run in favor of us, and none of those shares are being registered in connection
with this offering. In addition, we issued SWI a warrant to purchase additional
shares of our common stock for an exercise price of $.01 par value per share in
an amount, if any, as may be determined pursuant to the warrant. We granted SWI
certain rights to register subsequently the escrowed shares and the shares, if
any, that may be issued pursuant to the warrant. SWI executed a lock-up
agreement pursuant to which it agreed to sell not more than 1/12th of the shares
of our common stock it received in the Merger in any one-month period and agreed
to certain other limitations on its ability to sell or otherwise transfer the
shares received in the Merger. In addition, in order to obtain the consent of
certain lenders to the Merger, SWI agreed to sell, in each of the four calendar
quarters following effectiveness of the registration statement of which this
prospectus is a part, certain of the shares of our common stock received in the
Merger in order to retire its subsidiaries' existing debt obligations to such
lenders.
11
<PAGE>
The descriptions of each of the agreements referred to by name in this
section are only summaries of the complete documents, each of which is
incorporated by reference as an exhibit to the registration statement of which
this prospectus forms a part. We refer you to these documents for a complete
discussion of the agreements that are summarized above.
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for
Alloy Online, Inc. by Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
Certain attorneys at Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
beneficially own an aggregate of 3,450 shares of our common stock.
EXPERTS
The financial statements of Alloy Online, Inc. and subsidiaries as of
January 31, 2000 and 1999, have been incorporated by reference herein in
reliance upon the report of Arthur Andersen LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
Firm as experts in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. Our SEC filings are available to the public over the
Internet at the SEC's Web site at http://www.sec.gov. You may also read and copy
any document we file at the SEC's public reference room at 450 Fifth Street,
N.W., Washington, D.C. 20549. You may obtain information on the operation of the
Public Reference Room by calling the SEC at 1-800-SEC-0330. Our common stock is
listed and traded on the Nasdaq National Market under the symbol "ALOY."
This prospectus, which constitutes a part of a registration statement on
Form S-3 filed by us with the SEC under the Securities Act of 1933, omits
certain of the information set forth in the registration statement. Accordingly,
you should refer to the registration statement and its exhibits for further
information with respect to us and our common stock. Copies of the registration
statement and its exhibits are on file at the offices of the SEC. Furthermore,
statements contained in this prospectus concerning any document filed as an
exhibit are not necessarily complete and, in each instance, we refer you to the
copy of the document filed as an exhibit to the registration statement.
The SEC allows us to "incorporate by reference" the information we file
with the SEC, 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 information that we file later
with the SEC will automatically update and supersede the information in this
prospectus. We incorporate by reference the documents listed below and any
future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 until the selling stockholder sells all of
the shares offered by this prospectus:
. Quarterly Report on Form 10-Q for the fiscal quarter ended April 30, 2000,
filed on June 14, 2000;
. Annual Report on Form 10-K for the fiscal year ended January 31, 2000,
filed on May 1, 2000;
. Definitive Proxy Statement, filed on May 30, 2000;
. Current Report on Form 8-K filed on August 2, 2000; and
. The description of the our Common stock contained in the Registration
Statement on Form S-1 declared effective by the Commission on May 13, 1999,
including any amendment or report filed for the purpose of updating such
description.
You may request a copy of any of these filings at no cost, by writing or
telephoning us at the following address:
Alloy Online, Inc.
151 West 26th Street, 11th Floor
New York, NY 10001
(212) 244-4307
Attention: Tim Reusing, Esq.
12
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the various expenses, all of which will
be borne by the Registrant, in connection with the sale and distribution of the
securities being registered, other than the underwriting discounts. All amounts
shown are estimates except for the Securities and Exchange Commission
registration fee.
SEC registration fee............... $ 6,807
Transfer Agent and Registrar fees.. 2,500
Accounting fees and expenses....... 5,000
Legal fees and expenses............ 25,000
Printing and mailing expenses...... 5,000
Miscellaneous...................... 5,000
--------
Total.............................. $ 49,307
Item 15. Indemnification of Directors and Officers.
Incorporated herein by reference from the Company's Registration
Statement on Form S-1, File No. 333-74159.
Item 16. Exhibits.
See Exhibit Index on page II-4.
Item 17. Undertakings.
(a) The 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:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the
registration statement;
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) 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
pursuant to Section 13(a) or Section 15(d) of the 1934 Act that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, 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.
II-1
<PAGE>
(b) The Registrant hereby undertakes that, for the purpose of
determining any liability under the Securities Act, each filing of the issuer's
annual report pursuant to Section 13(a) or 15(d) of the Exchange Act of (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 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 the time shall be deemed to be the initial bona fide offering hereof.
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 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 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.
II-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, 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 New York, State of New York, on August 15, 2000.
ALLOY ONLINE, INC.
(Registrant)
By: /s/ Matthew C. Diamond
-----------------------
Name: Matthew C. Diamond
Title: Chief Executive Officer and
Chairman
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that each individual whose signature
appears below constitutes and appoints Matthew C. Diamond and Samuel A. Gradess,
and each of them, as his or her true and lawful attorneys-in-fact and agent,
with full power of substitution, for him or her and in his or her name, place
and stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this registration statement, and to sign any
registration statement for the same offering covered by this registration
statement that is to be effective upon filing pursuant to Rule 462 promulgated
under the Securities Act, and all post-effective amendments thereto, and to file
the same, with all exhibits thereto and all 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 and about the
premises, as fully to all intents and purposes as he or she might or could do in
person, hereby ratifying and confirming all that said attorneys-in-fact and
agents or any of them, or his, her or their substitute or substitutes, may
lawfully do or cause to be done by virtue thereof.
In accordance with the requirements of the Securities Act, this
registration statement was signed by the following persons in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
Signatures Title Date
<S> <C> <C>
/s/ MATTHEW C. DIAMOND
--------------------------------
Matthew C. Diamond Chief Executive Officer (Principal August 16, 2000
Executive Officer) and Chairman
/s/ SAMUEL A. GRADESS
--------------------------------
Samuel A. Gradess Executive Vice President, Chief August 16, 2000
Financial Officer (Principal
Financial and Accounting Officer)
and Director
/s/ JAMES K. JOHNSON, JR.
--------------------------------
James K. Johnson, Jr. President, Chief Operating Officer August 16, 2000
and Director
/s/ PETER M. GRAHAM
--------------------------------
Peter M. Graham Director August 16, 2000
/s/ DAVID YARNELL
________________________________
David Yarnell Director August 16, 2000
________________________________
Lee Masters Director August 16, 2000
</TABLE>
II-3
<PAGE>
Exhibit Index
-------------
DESCRIPTION
-----------
EXHIBIT
NUMBER
------
2.1* Agreement and Plan of Reorganization dated as of July 17, 2000, by and
between Alloy Online, Inc., Alloy Acquisition Sub, Inc., Kubic
Marketing, Inc. and SWI Holdings, LLC (incorporated by reference to
Exhibit 2.1 to the Registrant's Current Report on Form 8-K filed on
August 2, 2000).
4.1* Restated Certificate of Incorporation of Alloy Online, Inc.
(incorporated by reference to Exhibit 3.1 to the Registrant's
Registration Statement on Form S-1 (Registration Number 333-74159)).
4.2* Restated Bylaws (incorporated by reference to Exhibit 3.2 to the
Registrant's Registration Statement on Form S-1 (Registration Number
333-74159)).
4.3* Form of Common Stock Certificate (incorporated by reference to Exhibit
4.1 to the Registrant's Registration Statement on Form S-1
(Registration Number 333-74159)).
4.4* Warrant to Purchase Shares of Common Stock of Alloy Online, dated as
of July 18, 2000 between Alloy Online, Inc. and SWI Holdings, LLC
(incorporated by reference to Exhibit 4.1 to the Registrant's Current
Report on Form 8-K filed on August 2, 2000).
5.1 Opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo P.C.
23.1 Consent of Independent Accountants
23.2 Consent of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo P.C.
(included in Exhibit 5.1)
99.1* Investment Representation and Lockup Agreement dated as of July 18,
2000, by and between Alloy Online, Inc. and SWI Holdings, LLC
(incorporated by reference to Exhibit 99.1 to the Registrant's Current
Report on Form 8-K filed on August 2, 2000).
99.2* Amendment to Loan and Security Agreement, dated as of July 18, 2000,
by and among Phase Three, Inc., the financial institutions party
thereto and the other parties named therein (incorporated by reference
to Exhibit 99.2 to the Registrant's Current Report on Form 8-K filed
on August 2, 2000).
99.3 Registration Rights Agreement, dated as of July 18, 2000, by and
between Alloy Online, Inc. and SWI Holdings, LLC.
*Previously filed
II-4
