As filed with the Securities and Exchange Commission on October 10, 1996
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
LOTTOWORLD, INC.
(Exact name of registrant as specified in its charter)
Florida 65-0399794
(Sate or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
2150 Goodlette Road, Suite 200
Naples, Florida 34102
(941) 643-1677
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive office)
A. Richard Holman, President
LottoWorld, Inc.
2150 Goodlette Road, Suite 200
Naples, Florida 34102
(941) 643-1677
(Name, address, including zip code, and telephone number,
including area code, of agent of service)
Approximate date of commencement of proposed sale to public: From time to
time 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 conjunction 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 earliest 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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<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed Proposed
Amount Maximum Maximum Amount of
Title of Securities to be Offering Price Aggregate Registration
to be Registered Registered Per Share (1) Offering Price Fee
- ---------------- ---------- -------------- -------------- ------------
<S> <C> <C> <C> <C>
Common Stock
$.001 par value 2,772,073 $ 1.625 $ 4,504,619 $ 1,553.32
(1) Computed on the basis of the price at which stock of the same class was sold on
October 3, 1996, pursuant to Rule 457(h) of the Securities Act of 1933, as
amended, solely for the purpose of calculation of the amount of the registration
fee.
</TABLE>
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 THAT 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.
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.
<PAGE>
SUBJECT TO COMPLETION, DATED OCTOBER 10, 1996
PROSPECTUS
LOTTOWORLD, INC.
2,772,073 SHARES OF
COMMON STOCK
This Prospectus relates to the offering of up to 2,772,073 shares (the
"Shares") of Common Stock, $.001 par value, of LottoWorld, Inc. (the "Company")
which may be offered from time to time by the individuals named herein (the
"Selling Shareholders"), 1,202,409 shares of which are issuable by the Company
to certain of the Selling Shareholders upon the exercise of outstanding warrants
to purchase Common Stock (the "Warrants"). The Company will receive proceeds
upon the exercise of the Warrants, but will not receive any of the proceeds from
the sale of the Shares by the Selling Shareholders. See "Use of Proceeds".
The Company will bear all expenses of the offering hereunder other than
underwriting discounts and commissions incurred in connection with the sale of
the shares by the Selling Shareholders. The Company's Common Stock is traded on
the Nasdaq SmallCap Market under the symbol "LTTO". The closing bid and asked
price of the Company's Common Stock on October 3, 1996 were $ 1.625 and $ 1.875
respectively, as reported by Nasdaq.
SEE "RISK FACTORS" ON PAGES 3 THROUGH 5 FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
The Warrants and 1,569,664 of the Shares were originally issued by the
Company in June and September 1996 to the Selling Shareholders. The Selling
Shareholders have advised the Company that they intend to sell the Shares from
time to time in transactions on the Nasdaq SmallCap Market at prices prevailing
at the time of the sale or otherwise as set forth below. See "Plan of
Distribution".
The Selling Shareholders have advised the Company that, as of the date
hereof, they have made no arrangements with any brokerage firm for the sale of
the Shares. The Selling Shareholders may be deemed to be "underwriters" within
the meaning of the Act, in which case commissions received by a broker or dealer
may be deemed to be underwriting commissions or discounts under the Act. See
"Plan of Distribution".
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Underwriting
Discounts and
Price to Public Commissions
---------------- --------------
Per Share $ 1.625 (1) (2)
Total $ 4,504,619 (1) (2)
(1) Estimate based upon a per share price of $ 1.625 as of October 3, 1996 and
assumes the sale of all Shares by the Selling Shareholders, with no
adjustment for commissions, discounts, brokerage and other fees that may
be paid by the Selling Shareholders, or expenses of the offering to be
paid by the Company.
(2) Commissions, discounts and brokerage fees will be payable by the Selling
Shareholders in such amounts as the Selling Shareholders may agree to from
time to time.
<PAGE>
THE DATE OF THIS PROSPECTUS IS OCTOBER 10, 1996
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith files
reports, proxy statements and other information with the Securities and Exchange
Commission ( the "Commission"). Reports, proxy and information statements and
other information can be inspected and copied at the public facilities
maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington,
D.C., and the Commission's regional offices located at 7 World Trade Center,
14th Floor, New York, New York 10048, and Northeastern Atrium Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661. Copies of such material can
be obtained at prescribed rates from the Public Reference Section of the
Commission, 450 Fifth Street, N.W., Washington, D.C. 20549.
The Company has filed with the Commission a registration statement under
the Securities Act of 1933 with respect to the shares offered hereby. This
Prospectus does not contain all information set forth in such registration
statement. For further information with respect to the Company and the shares
offered hereby, reference is made to such registration statement, including the
exhibits and financial schedules filed as part thereof. Such information may be
inspected in the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. Copies thereof may be obtained from the Commission
at prescribed prices.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission are incorporated by reference in this Prospectus: (in) the Company's
Annual Report on Form 10-KSB and Form-10KSB/A for the fiscal year ended December
31, 1995; (ii) the Company's Quarterly Report on Form-10QSB for the quarters
ended March 31, 1996 and June 30, 1996; and (iii) the Company's Proxy Statement
for the Annual Shareholders Meeting held on April 29, 1996. All documents filed
by the Company pursuant to Sections 13 (a), 13 (c), 14 or 15 (d) of the
Securities Exchange Act of 1934 Act after the date of this Prospectus and prior
to the termination of the offering of the securities contemplated hereby shall
also be deemed to be incorporated by reference in this Prospectus and to be a
part hereof from the date of filing of such documents.
Any statement contained in a document incorporated by reference herein
shall be deemed to be modified or superseded hereby to the extent that a
statement contained herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except as so modified
or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person to whom a copy of
this Prospectus has been delivered, upon the written or oral request of such
person, a copy of any or all of the documents which are incorporated by
reference into this Prospectus, other than exhibits to such documents (unless
such exhibits are specifically incorporated by reference in such documents.)
Requests for such copies should be directed to James D. Cullen, 2150 Goodlette
Road, Suite 200,. Naples, Florida 34102, telephone number (941) 643-1677.
THE COMPANY
LottoWorld, Inc., a Florida corporation (the "Company") was founded in
1993 as Dynamic World Distributors, Inc. and changed its name to LottoWorld,
Inc. in April 1995. The Company publishes and distributes LottoWorld magazine, a
publication directed at lottery players, primarily through subscription and
retail sales at checkout and service counters. The 100+ page, four color
magazine, which currently is published monthly in a digest size format, deals
with all aspects of state lottery games, information and news. LottoWorld is
nationally distributed in 48 states, the District of Columbia and in twelve
foreign countries. At present there are over 50,000 subscribers and monthly
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distribution of the magazine is over 210,000 copies per issue in nine separate
state and one national edition.
On April 8, 1996, the New York State Division of Lottery announced that
Lottery Players Publishing Company, Inc. (a wholly-owned subsidiary of
LottoWorld, Inc.) had won the award to publish a monthly New York Lottery
magazine based of the Company's response to a Request for Proposal. Initial
projections for the monthly magazine, NEW YORK PLAYERS MONTHLY, was to have been
650,000 copies distributed at more than 12,000 lottery retailers throughout the
state. On May 23, 1996, the New York Lottery increased the initial projection
from 650,000 copies monthly to a minimum of 1,100,000 copies monthly beginning
in September 1996.
The NEW YORK PLAYERS MONTHLY will be a free 48-page, four color,
digest-size magazine offering lottery players information about new and existing
New York lottery games, profiles of lottery winners throughout the state,
playing tips and strategies, and state lottery news.
At 1,100,000 copies monthly the Company believes the NEW YORK PLAYERS
MONTHLY will be the largest newsstand distributed magazine in New York state
(more than twice the size of TV Guide's New York newsstand circulation). Based
on advertising revenue generated by other publications with a minimum of
circulation of at least 1,100,000 copies monthly, the Company estimates revenue
from the NEW YORK PLAYERS MONTHLY MAGAZINE could be in excess of $3,700,000
annually. There can be no assurance that the NEW YORK PLAYERS MONTHLY magazine
will generate revenue at the levels of similarly sized publications.
Risk Factors
- ------------
An investment in the Units offered hereby is speculative and involves a
risk of loss. The following risk factors should be considered carefully in
evaluating an investment in the Units offered hereby. The order in which the
risk factors appear is not intended as an indication of the relative weight or
importance thereof. Prospective investors should carefully review all risk
factors.
CONTINUING LOSSES. The Company commenced operations in August 1993, and
has had losses in each of the years since that date. For the year ended December
31, 1995, the Company incurred a net loss of $5,595,000 and for the first
quarter ended March 31, 1996, incurred a net loss of $857,000. The Company has
incurred a cumulative net loss through March 31, 1996 of $8,646,000. The Company
expects losses to continue at least through the fourth quarter ending December
31, 1996, as the Company prepares to begin publication of a minimum of 1,100,000
copies of the New York Lottery Players Monthly magazine and possibly similar
monthly magazines for several other states. There is no assurance that the
Company will ever be able to conduct its operations profitably.
NEED FOR ADDITIONAL CAPITAL. Management currently anticipates that revenue
generated from magazine/advertising sales will be sufficient to fund its
operations for the foreseeable future. However, any delays in market acceptance
of the state digest magazine program, significant complications in deriving
acceptable advertising sales revenue, along with numerous other factors, could
cause the Company to require additional capital. No assurance can be given that
the Company will be able to obtain additional funding on satisfactory terms. Any
securities issued to raise additional capital may be sold on terms more
favorable to new investors that those offered to investors in this offering.
MARKET ACCEPTANCE. The success of the Company is dependent upon the
ability to sell a substantial number of copies of each issue of LottoWorld(R)
through subscription or newsstand sales. Further, the success of the Company is
dependent upon the acceptance of the Monthly State Lottery Players Digest
program by state lottery authorities.
COMPETITION. Management is aware of only a few competitors in its market,
none of which has product lines or distribution channels which are comparable to
the Company's. However, there can be no assurance that other competitors, which
may have greater financial and other resources than the Company, will not be
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drawn into the market, or that the Company's resources and marketing strategies
will allow the Company to compete successfully.
LIMITATIONS ON COPYRIGHT AND TRADEMARK PROTECTION. Although LottoWorld(R)
is copyrighted by the Company, much of the information contained therein is
readily available from a number of sources, including daily newspapers. The
Company believes its copyrights and trademarks are highly important to the
Company's business and intends to vigorously defend its rights. However, while
copyright and trademark laws give owners of copyrights and trademarks certain
remedies against infringers, such laws do not assure that infringement will not
occur, and there can be no assurance that the available remedies would
adequately compensate the Company for any damage incurred if infringement were
to occur. In addition, since the playing methods and game strategies in the
Company's magazines are not protectible under the trademark and service mark
laws, the Company cannot preclude other parties from offering instructional aids
which might also employ these methods and strategies. Furthermore, there can be
no assurance that any action by the Company against an infringer would be
successful, or that any recovery by the Company would adequately compensate it
for any damages it might incur.
DEPENDENCE UPON OUTSIDE SUPPLIERS. Much of the content of each issue of
LottoWorld(R) is obtained from outside sources, including columnists, freelance
writers, state lottery news releases and wire services. In addition, the Company
is dependent upon an outside printer, a subscription fulfillment firm and a
national newsstand distributor. Although the Company intends to expand its
internal staff, it will continue to be dependent on a number of sources outside
the Company in connection with its operations. No assurance can be given that
these sources will be available indefinitely or, that if such a source ceases to
supply the Company, it would be able to find an adequate substitute for it on a
timely basis, if at all. The loss of any of these suppliers could have a
material adverse affect on the Company.
LOTTERY INDUSTRY FACTORS. Although the lottery industry as a whole has
recently experienced significant growth and an increase in public interest,
there can be no assurance that this trend will continue. Management of the
Company believes that the expansion of state lottery games has been, to a
certain extent, the result of efforts by state and local governments to create a
new revenue source for government operations. If these efforts do not achieve
their desired effects, or have adverse side effects, there can be no assurance
that lottery operations will sustain their current rates of growth, that
government authorization of lotteries will not be restricted or eliminated, or
that public interest in, or acceptance of, lottery games will not decline, any
of which could result in a substantial decline in the demand for the Company's
products.
GOVERNMENT REGULATION.. Lotteries, and activities associated therewith,
such as promotion, are subject to substantial regulation under federal laws and
by each state which conducts a lottery. The application of such regulation is
subject to the interpretation by, and the enforcement policy of, each state's
lottery commission and/or attorney general. The Company actively attempts to
comply with all applicable laws and has no knowledge of any regulatory action
that has been taken or threatened that would impact the activities of the
Company. Nevertheless, there can be no assurance that such regulatory action
could not be taken. Any regulatory action could have a material effect upon the
Company's business.
LIMITED LIQUIDITY, MARKET-RELATED FACTORS AND DETERMINATION OF OFFERING
PRICE. The Company's shares are publicly traded on the NASDAQ SmallCap
over-the-counter stock market. Investors may be subject to the risks commonly
associated with the over-the-counter trading markets. These markets are often
volatile, and such volatility can result in wide fluctuations in price and
trading volume. Accordingly, there can be no assurance that investors will be
able to resell the Shares at the offering price, or at all. In addition, the
offering price of the Shares offered hereby was determined by the Company and is
not related to any recognized criterion of value such as revenue, earnings or
net worth. There can be no assurance that the over-the-counter trading market
will value the Common Stock at or near the offering price.
4
<PAGE>
LACK OF CASH DIVIDENDS. The Company has never paid or declared any cash
dividends on its Common Stock and does not contemplate paying any cash dividends
on its Common Stock in the foreseeable future. The payment by the Company of
cash dividends, if any, in the future rests within the discretion of its Board
of Directors and will depend, among other things, upon the Company's earnings,
its financial condition, any restrictions under credit agreements and other
relevant factors. The Company is prohibited from paying any dividends on its
Common Stock until all accrued dividends on the outstanding Preferred Stock have
been paid in full.
RESTRICTED SHARES; LIMITED PUBLIC MARKET TRADING. The shares purchased in
this Offering are restricted securities and may only be sold pursuant to an
effective registration statement under federal and applicable state securities
laws or exemptions therefrom. Prior to completion of this Offering, the Company
had outstanding 5,964,849 shares of its common stock, of which approximately
2,851,667 shares are traded in the public market. There can be no assurance that
an active market will exist for the stock purchased in this transaction, even if
registered with the Securities and Exchange Commission, or that such stock could
be sold without a significant negative impact on the publicly quoted price per
share.
DILUTION. The purchasers of Units offered hereby will experience an
immediate and substantial dilution in tangible book value per common share. As
of June 30, 1996, the net tangible book value per share was $.41. Assuming the
receipt of the proceeds of this offering (net of the MJK commission and offering
expenses estimated at $15,000, but assuming no other changes in the Company's
financial position subsequent to September 19, 1996 (and assigning no value to
the warrants), at an offering price of $1.625 per Unit investors in this
offering will suffer dilution of $.98 per share.
USE OF PROCEEDS
The Company will receive the proceeds from the exercise of the Warrants,
which have an exercise price of $3.00 per share. If the maximum number of shares
issuable under the Warrants are exercised, the Company's proceeds therefrom,
after expenses of this Offering (estimated at $15,000), will be $3,592,227.
The Company received net proceeds of $2,270,600 upon the issuance of
1,569,664 of the Shares to the Selling Shareholders. The Company intends to use
the proceeds to retain certain personnel required to efficiently commence and
expand the State Monthly Digest programs, estimated to be $250,000; the
remainder will be applied to working capital.
Pending their anticipated use, the proceeds will be invested in short term
interest bearing securities and other similar obligations.
SELLING SHAREHOLDERS
The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock by Selling Shareholders as of
September 24, 1996, and as adjusted to reflect the sale of the shares
<TABLE>
<CAPTION>
Shares to be Shares to be
Beneficially Maximum Beneficially
Owned Prior Number of Owned After
To Offering Shares to be the Offering
Number Percent Sold Number Percent
------ ------- ------ ------ -------
<S> <C> <C> <C> <C> <C>
Elaine Millard 48,333 * 48,333 -0-
Isadore J. Goldstein
Rev. Living Trust
dtd 3/14/90 16,667 * 16,667 -0-
Everett Jensen Rev
Trust 25,000 * 25,000 -0-
Dr. Robert Kay
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Profit Sharing Tr. 16,667 * 16,667 -0-
Robert and Harriet
Terhaar 16,667 * 16,667 -0-
Michelle K. Cheng 250,000 4.12 250,000 -0-
Aaron Boxer Rev Trusr
TTEE dtd 8/1/89 381,904 6.26 333,333 48,571 *
Lawrence Schrader 16,667 * 16,667 -0-
William Van De Kreeke
Janice Van De Kreeke 16,667 * 16,667 -0-
Robert W., Clark
Slf-Del Trust 18,667 * 16,667 2,000 *
Joyce Guinther and
Marie Ackerman 16,667 * 16,667 -0-
Robert W. Johnson 33,333 * 33,333 -0-
W. Harold and
Joyce Lee Davis 66,667 1.11 66,667 -0-
Betty Happel 17,167 * 16,666 500 *
Darel Happel 17,167 * 16,666 500 *
Donald Kettner 16,667 * 16,667 -0-
Kenneth Benson 16,667 * 16,667 -0-
Myron A. Naugle 16,667 * 16,667 -0-
Ila Waseka 51,667 * 41,667 10,000 *
Sanford Greeley 16,667 * 16,667 -0-
Frederick and
Betty Taylor 16,667 * 16,667 -0-
Grace Anderson
REV TRUST 16,667 * 16,667 -0-
Raymond Boisvert 3,332 * 1,665 1,667 *
Robert P. Lyon 1,110 * 1,110 -0-
Erik Dobberstein 3,332 * 1,665 1,667 *
VBS General Partnership 51,667 * 41,667 10,000 *
Kenneth R. Parker 88,667 1.47 83,667 5,000 *
John R. Albers 251,667 4.16 221,667 30,000 *
John & Jeannette
VonGunten Liv. Trust 16,667 * 16,667 -0-
Delores Merkley 25,000 * 25,000 -0-
Paul R. Owings 25,000 * 25,000 -0-
Phillip A. Dunbar 16,667 * 16,667 -0-
Paul and
Lenore Owings 25,000 * 25,000 -0-
Edward H. Rudoy
REV TRUST 16,667 * 16,667 -0-
Leola Vidger 16,667 * 16,667 -0-
Jerry N. Dedrick 16,667 * 16,667 -0-
James Owens
REV TRUST 83,333 1.39 83,333 -0-
Steve Romanek 33,333 * 33,333 -0-
Industricorp & Co., Inc.
FBO T. C. Carpenters 108,333 1.81 83,333 25,000 *
Ellis Limited Partnership 50,000 * 50,000 -0-
Perkins Capital Management
Profit Sharing Plan &
Trust 33,333 * 33,333 -0-
Pyramid Partners, L.P. 250,000 4.12 250,000 -0-
</TABLE>
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<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
Harold Roitenberg Trust 33,333 * 33,333 -0-
Quest Venture Partners 83,333 1.39 83,333 -0-
Archie & Glenndora
Whitehead 25,000 * 25,000 -0-
Ed Koller 34,167 * 34,167 -0-
Alan & Corrine
Metcalf 83,333 1.39 83,333 -0-
Mitchell M. Boxer
Rev Trust 30,833 * 30,833 -0-
First Bank NA TTEE
for John Albers 171,667 2.85 171,667 -0-
Ebner Trust 13,333 * 8,333 5,000 *
Earl L. Ferris 25,000 * 25,000 -0-
Alphonse Kraft 10,000 * 10,000 -0-
Dr. Robert Kay 8,333 * 8,333 -0-
David B. Johnson 128,487 2.13 58,487 70,000 1.18
Paul R. Kuehn 58,487 * 58,487 -0-
Eldon C. Miller 19,496 * 19,496 -0-
Stanley D. Rahm 19,496 * 19,496 -0-
Judy Peterson 8,333 * 8,333 -0-
Wolf Pack Holdings 3,333 * 3,333 -0-
--------- --------- --------- ------- ------
Total 2,981,978 41.61% 2,772,073 209,905 3.52%
</TABLE>
* Less than 1%
PLAN OF DISTRIBUTION
The Company has been advised that the Selling Shareholders may sell the
Shares, from time to time, in one or more transactions (which may include block
transactions) on the Nasdaq SmallCap Market at market prices prevailing at the
time of the sale or at prices otherwise negotiated.
The Shares may, without limitation, be sold by one or more of the
following: (in) a block trade in which the broker or dealer so engaged will
attempt to sell the securities as agent but may position and resell a portion of
the block as principal to facilitate the transaction; (ii) purchases by a broker
or dealer as principal and resale by such broker or dealer for its account
pursuant to this Prospectus; and (iii) ordinary brokerage transactions and
transactions in which the broker solicits purchasers.
The Company has been advised that, as of the date hereof, the Selling
Shareholders have made no arrangement with any broker for the sale of the
shares. Underwriters, brokers or dealers may participate in such transactions as
agents and may, in such capacity, receive brokerage commissions from the Selling
Shareholders or purchasers of such securities. Such underwriters, brokers or
dealers may also purchase Shares and resell such Shares for their own account in
the manner described above. The Selling Shareholders and such underwriters,
brokers or dealers may be considered "underwriters" as that term is defined by
the Securities Act of 1933, although the Selling Shareholders disclaim such
status. Any commissions, discounts or profits received by such underwriters,
brokers or dealers in connection with the foregoing transactions may be deemed
to be underwriting discounts and commissions under the Securities Act of 1933.
LEGAL MATTERS
The validity of the issuance of the Common Stock offered hereby will be
passed upon for the Company by James D. Cullen Esquire. Mr. Cullen is a Director
and a holders of Common Stock and options to purchase Common Stock of the
Company.
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EXPERTS
The financial statements of the Company incorporated in this Prospectus by
reference to the Annual Report on Form 10-KSB/A of LottoWorld, Inc. for the year
ended December 31, 1995 have been so incorporated on reliance on the report of
McGladrey & Pullen, LLP, independent accountants, given on the authority of said
firm as experts in accounting and auditing.
INDEMNIFICATION
The Company's Articles of Incorporation and the Company's Bylaws eliminate
or limit certain liabilities of its directors, officers and employees of the
Company in certain instances. Insofar as exculpation of, or indemnification for,
liabilities arising under the Securities Act of 1933 may be permitted to
directors, officers or persons controlling the Company pursuant to the foregoing
provisions, the Company has been informed that in the opinion of the Securities
and Exchange Commission such exculpation or indemnification is against public
policy as expressed in the Act and is therefore unenforceable.
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14: OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
SEC registration fee $ 1,553
Accounting fees and expenses 1,500
Legal fees and expenses 5,000
Miscellaneous 6,947
------------
Total $ 15,000
=+==========
Except for the SEC fee, all of the foregoing expenses have been estimated.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 607.0805 of the Florida Corporation Act empowers the Company to,
and Article IX of the Company's Bylaws require it to:
(1) indemnify any person who was or is a party to any proceeding (other
than an action by, or in the right of, the corporation or is or was serving at
the request of the corporation as a director, officer, employee, or agent of
another corporation, partnership, joint venture, trust , or other enterprise
against liability incurred in connection with such proceeding, including any
appeal thereof, if he acted in good faith and in a manner he reasonably believed
to be in, or not opposed to, the best interests of the corporation and, with
respect to any criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful.
(2) indemnify any person, who was or is a party to any proceeding by or in
the right of the corporation to procure a judgment in its favor by reason of the
fact that he is or was a director, officer employee, or agent of the corporation
or is or was serving at the request of the corporation as a director, officer,
employee, or agent of another corporation, partnership, joint venture, trust, or
other enterprise, against expenses and amounts paid in settlement not exceeding,
in the judgement of the board of directors, the estimated expense of litigating
the proceeding to conclusion, actually and reasonable incurred in connection
with the defense or settlement of such proceeding, including any appeal thereof.
Such indemnification is authorized if such person acted in good faith and in a
manner he reasonable believed to be in, or not opposed to, the best interests of
the corporation, except that no indemnification shall be made under this
subsection in respect of any claim, issue, or matter a to which such person
shall have been adjudged to be liable unless, and only to extent that, the court
in which such proceeding was brought, or any other court of competent
jurisdiction, shall determine upon application that, despite the adjudication of
liability but in view of all circumstances of the case, such person is fairly
and reasonable entitled to indemnity for such expenses which such court shall
deem proper.
(3) To the extent that a director, officer, employee, or agent of a
corporation has been successful on the merits or otherwise in defense of any
proceeding referred to in subsection (1) or subsection (2), or in defense of any
claim, issue, or matter therein, he shall be indemnified against expenses
actually and reasonably incurred by him in connection therewith.
(4) Expenses incurred by an officer or director in defending a civil or
criminal proceeding may be paid by the corporation in advance of the final
disposition of such proceeding upon receipt of an undertaking by or on behalf of
such director or officer to repay such amount if he is ultimately found not to
be entitled to indemnification by the corporation pursuant to this section.
9
<PAGE>
ITEM 16. EXHIBITS
Exhibit No. Description
- ---------- ------------
5. Opinion of James D. Cullen, Esquire
23.3 Consent of McGladrey and Pullen, LLP
23.4 Consent of James D. Cullen, Esquire (included in Exhibit 5)
ITEM 17. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes:
(1) to file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(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; and
(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) (in) and (a) (1) (ii) do not apply if
the Registration Statement is on Form S-3 or Form S-8, and 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 or
Section 15 (d) of the Securities Exchange Act of 1934 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 herein, 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.
(b) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's Annual Report pursuant to Section 13(a) or Section 15 (d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 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 Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event hat a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
10
<PAGE>
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 Act and will be governed by the final adjudication of
such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, hereunto duly
authorized, in the City of Naples and State of Florida, on this 9th day of
October, 1996.
LottoWorld, Inc.
Registrant
By /s/ Dennis B. Schroeder
------------------------------------
Dennis B. Schroeder
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
Signatures Title Date
/s/ Dennis B. Schroeder
- ---------------------- Director, Chairman and October 9, 1996
Dennis B. Schroeder Chief Executive Officer
(principal executive officer)
/s/ A. Richard Holman
- ---------------------- Director and President October 9, 1996
A. Richard Holman
/s/ James D. Cullen
- ---------------------- Director October 9,, 1996
James D. Cullen
/s/ Stuart Dubow
- ---------------------- Senior Vice President and October 9, 1996
Stuart Dubow Chief Financial Officer
(principal accounting officer)
11
James D. Cullen, P.A.
Legal Professional Association
James D. Cullen, Jr. 2150 Goodlette Road, Suite 200 Business Law
Admitted in Florida Naples, Florida 34102 Corporations
and Missouri Securities
Telephone: 941-434-8405
Facsimile: 941-643-6670
Email: [email protected]
10 October 1996
Dennis B. Schroeder
LottoWorld, Inc.
2150 Goodlette Road
Suite 200
Naples, FL 34102
RE: LottoWorld, Inc. ("LWI") Form S-3 Registration Statement
Dear Mr. Schroeder:
As counsel for LWI I have reviewed the Registration Statement on Form
S-3 (the "Registration Statement") dated as of the date of this opinion and to
be filed by LWl with the Securities and Exchange Commission with respect to
2,772,073 shares of the $.001 par value LWI common stock. As General Counsel, I
have examined such documents, corporate records and instruments as I have deemed
necessary or appropriate for the purposes of this opinion.
Based on the foregoing, I am of the opinion that these shares of LWI
common stock will be validly issued, fully paid and non-assessable.
I hereby consent to the filing of this opinion with the Securities and
Exchange Commission as an Exhibit to the Registration Statement.
Very truly yours,
/s/ James D. Cullen, Esq.
---------------------------
James D. Cullen, Esq.
MCGLADREY & PULLEN, LLP
Certified Public Accountants and Consultants
CONSENT OF INDEPENDENT AUDITOR
We hereby consent to the incorporation by reference in the October 10, 1996
Registration Statement on Form S-3 our report dated March 15, 1996, which
appears on Page F-2 of the annual report on Form 10-KSB/A of LottoWorld, Inc.
for the year ended December 31, 1995 and to the reference to our Firm under the
heading "Experts" in such Prospectus.
/s/ MCGLADREY & PULLEN, LLP
Naples, Florida
October 10, 1996
