As filed with the Securities and Exchange Commission on May 27, 1997
Registration No. 333-13863
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Amendment No. 4
To
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
(State 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:[ ]
<PAGE>
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(2)
- ---------------- ---------- ------------- -------------- ------------
Common Stock
$.001 par value 2,904,199 $ 0.25 $ 726,050 $ 220.02
(1) Computed on the basis of the price at which stock of the same class was
sold on May 22, 1997, pursuant to Rule 457(h) of the Securities Act of
1933, as amended, solely for the purpose of calculating the amount of the
registration fee.
(2) The Company has previously paid $2,465.22 to the Securities and Exchange
Commission in connection with this filing.
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>
PROSPECTUS
LOTTOWORLD, INC.
2,904,199, SHARES OF
COMMON STOCK
This Prospectus relates to the offering of up to 2,904,199 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"). The Company 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 May 22, 1997 were $ 0.1875 and $ .25
respectively, as reported by Nasdaq.
SEE "RISK FACTORS" ON PAGES 4 THROUGH 7 FOR INFORMATION THAT SHOULD BE
CONSIDERED BY PROSPECTIVE INVESTORS.
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 Proceeds to
Discounts and Issuer or
Price to Public Commissions Other Persons
Per Share $ 0.25 (1) (2) (3)
Total $ 726,050 (1) (2) (3)
1) Estimate based upon a per share price of $ 0.25 as of May 22, 1997 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.
(3) All proceeds, net of underwriting discounts and commissions, are to go to
the Selling Shareholders.
THE DATE OF THIS PROSPECTUS IS May 23, 1997
<PAGE>
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: (i) the Company's
Annual Report on Form 10-KSB for the fiscal year ended December 31, 1996; (ii)
the Company's Current Report on Form 8-K dated April 9, 1997; (iii) the
Company's Current Report on Form 8-K and Form 8-K/A dated April 22, 1997; (iv)
the Company's Proxy Statement for the Annual Shareholders Meeting held on April
29, 1996 and (v) the Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1997. All documents filed by the Company pursuant to Sections 13
(a), 13 (c), 14 or 15 (d) of the Securities Exchange Act of 1934 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
newsstand distribution of the magazine is over 35,000 copies per issue in one
national edition.
2
<PAGE>
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 on 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 approximately 1,100,000 copies
monthly beginning in October 1996. The January 1997 issue had a circulation in
excess of 1,128,000.
The New York Players Monthly is 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, and state
lottery news.
BUSINESS DEVELOPMENT
The initial roll-out phase of the magazine resulted in the inaugural issue
of LottoWorld magazine in August 1993. During this stage, the Company published
a 16-24 page monthly magazine with a monthly print order of 20,000 copies. The
Company self-distributed the magazine primarily in Southwest Florida, Atlanta,
Georgia and Minneapolis, Minnesota.
The intermediate roll-out phase began in October 1993 and continued
through March 1995. During this period, the magazine increased to 100 pages per
issue and the national edition was supplemented with three separate state
editions (Florida, Georgia and Texas). During this phase, the Company increased
monthly prints to approximately 80,000 to 100,000 copies and expanded
distribution to 30 wholesalers in eight states.
In December 1994, the Company entered into a one-year agreement with
International Circulation Distributors The Hearst Corporation ("ICD") for the
national distribution of LottoWorld. The Company, in January 1995, also entered
into a contract with Time Distribution Services, Inc. ("TDS") to obtain the
approvals necessary to position the magazine in supermarket check-out lanes and
similar locations and perform certain follow-up marketing and merchandising
functions.
The national roll-out phase was targeted at 23 lottery states (primarily
east of the Mississippi River) As part of this phase, LottoWorld began
publishing the magazine every two weeks in 16 separate editions that were
distributed through 171 wholesalers in 23 states.
Due to the inherent time delay between the time a magazine is delivered to
the store, placed into the check-out counter pocket, purchased by the consumer,
and unsold copies returned to the wholesaler and reports and payments made to
the national distributor, a minimum of four months will transpire before the
publisher has any reasonable basis upon which to analysis sales of a particular
issue. In July 1995, the Company began to suspect substantial differences
between reports as to the number of properly placed and logoed pockets with
actual magazine sales reports.
Because the Company was unable to reconcile reports as to the number of
available pockets with corresponding sales reports for these pockets, the
Company began to send its own employees and, in some cases, independent
contractors, to stores purported to have pockets available for the magazine
and/or in which the magazine was already in place. The result of this
investigation was a determination by the Company that the Company was printing a
significantly greater quantity of magazines than were necessary to fill the
actual number of available pockets.
As soon as it was apparent that the Company was printing an excessive
number of copies of the magazine, the Company immediately reduced the frequency
of issues from every two weeks to monthly and the number of copies printed for
each issue from approximately 400,000 copies to approximately 210,000 copies. In
addition, the Company adopted a new strategic plan that significantly reduced
expenditures (including a lay-off of six employees and an across the board 15%
salary reduction), set magazine print orders to verified pocket availability,
accelerated development of a controlled circulation magazine to be published in
cooperation with State Lotteries and began to implement a subscription marketing
program with Publishers Clearing House and other national companies.
3
<PAGE>
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.
CURRENT BUSINESS
Through Lottery Players Publishing Company, Inc. ("LPPC") (a
wholly-owned subsidiary of LottoWorld, Inc.) the Company enters into exclusive
contractual agreements with individual state lottery authorities to publish a
48-page, four color, digest-size magazine specifically tailored to offer lottery
players information about new and existing lottery games, profiles of lottery
winners throughout the state and state lottery news.
The primary benefit of this program to state lottery authorities is that
they receive, without any cost, an efficient and effective means of educating
and communicating with their lottery players. The primary benefits to the
Company are: (i) a unique cost effective or free distribution system; (ii)
potential advertising revenue; (iii) instant circulation; and (iv) a monopoly.
With respect to the distribution system, the program is designed so that
each state lottery is responsible for distribution of their magazine, without
cost to LPPC, to each retail lottery location statewide and to display the
magazine with lottery tickets. In the aggregate, there are more than 220,000
retail lottery ticket locations in the 38 states. Concerning potential
advertising revenue, there can be no assurance that advertising revenue will be
generated in excess of expenses associated with the program. However, the
Company has devoted significant personnel and capital resources to generate
advertising revenue. Although advertising revenue to-date has been less than
expected, the Company believes advertising sales should increase as the
advertising community becomes aware of the aggregate circulation of the
magazines within the program (the circulation goal for 1997 is 1,900,000 copies
monthly) and third party advertising research corroborates readership patterns
and demographic information usually required by advertisers.
LPPC now has exclusive contracts to publish magazines in conjunction with
state lotteries in New York, West Virginia , Georgia and Nebraska totaling a
combined 1,800,000 copies distributed monthly. Under these Agreements, the
Company does not have to begin publishing the magazine until there is sufficient
advertising to pay for the printing.
Nebraska. On January 15, 1997, the Nebraska Lottery signed an exclusive three
year contract with LPPC to publish a new monthly magazine, the Nebraska Lottery
Players Digest. Specifically tailored for the Nebraska Lottery, the Nebraska
Lottery Players Digest will have an initial circulation of 150,000 copies
monthly and will be available at over 1,300 Nebraska lottery ticket outlets
statewide.
Georgia. On December 24, 1996, the Georgia Lottery Corporation signed an
exclusive three year contract with LPPC to publish a monthly Georgia Lottery
magazine similar in format to the New York Players Monthly. Initial projections
are for distribution of 400,000 copies monthly which will be available to more
than 5,700 retailers throughout Georgia.
West Virginia. On January 17, 1997, the West Virginia Lottery signed an
exclusive three year agreement with LPPC to publish a monthly West Virginia
Lottery magazine titled, West Virginia Lottery Players Digest. Initial
projections are for distribution of 150,000 copies monthly to all lottery
retailers throughout the state.
LOTTOWORLD MAGAZINE
- -------------------
LottoWorld(R) magazine continues to experience increasing subscriptions
sales and steady newsstand sales. Primarily due to the very significant capital
4
<PAGE>
outlays necessary to successfully maintain a traditional newsstand distribution
system and promotional campaigns, the Company has decided to conserve capital in
this area and focus expansion of LottoWorld(R) magazine circulation through
various subscription sales vehicles.
Subscription. Monthly subscribers to LottoWorld(R) magazine numbered
approximately 64,900 at year end 1996. Current subscription sales programs for
LottoWorld(R) magazine include: (i) the national Publishers Clearing House
Sweepstakes (PCH) mailing in March 1997, which PCH estimates could generate up
to 45,000 new subscribers; (ii) full-page advertising for LottoWorld(R) magazine
subscriptions in each issue of the New York Players Monthly; (iii) $3 Billion
Lotto Club promotions sponsored by civic organization like the Kiwanis Clubs;
and (iv) through various promotional activities of telemarketing organizations.
Newsstand. Effective with the March 1997 edition, the single issue cover price
of LottoWorld(R) magazine was increased from $1.95 to $2.49 per copy. Further
changes to be instituted with this issue include consolidation of 8 separate
state/regional editions to a single national edition and reduction of the number
of copies printed for newsstand sales to more closely match actual newsstand
sales. Monthly newsstand sales have been averaging approximately 22,000 copies
monthly.
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, 1996, the Company incurred a net loss of $4,359,000.The Company expects
losses to continue at least through the fourth quarter ending December 31, 1997,
as the Company publishes a minimum of 1,100,000 copies of the New York Lottery
Players Monthly magazine and prepares to publish 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 not be sufficient to fund its
operations for the foreseeable future. The Company anticipates a need for
additional financing of a total of $4.0 million by the end of 1997. The Company
does not have a definitive source of this financing, but management feels
confident that the financing can be accomplished within the time frame required.
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 than
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
drawn into the market, or that the Company's resources and marketing strategies
will allow the Company to compete successfully.
5
<PAGE>
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.
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,
6
<PAGE>
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 7,125,670 shares of its common stock, of which approximately
2,900,000 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.
EXECUTIVE EMPLOYMENT AGREEMENTS. The Company has entered into employment
agreements with the Chief Executive Officer and the President (collectively the
"employees"). Each agreement provides for an annual base salary and incentive
bonuses conditioned upon the Company's achieving certain levels of annual
after-tax earnings and certain levels of monthly circulation of the magazines.
Pursuant to the earnings bonus, each employee will receive a bonus of two
percent of annual after-tax earnings at the end of the fiscal year in which the
Company's first annual after-tax earnings are $3,000,000 or more. In addition,
for each subsequent year in which the Company's annual after-tax earnings
increase by additional $3,000,000 increments, each employee will receive a
one-time bonus of between three and five percent of such increase. Pursuant to
the circulation bonus, each employee will receive $.10 per copy of the first
time monthly sales of LottoWorld magazine reach 500,000. In addition, the first
time in which monthly sales of LottoWorld reach 1,000,000 copies, and for each
subsequent 1,000,000 copies, up to 6,000,000, each employee will receive a
one-time bonus ranging from $.12 to $.15 per additional copy. The agreements
also provide that the Company will grant an option to each employee for 50,000
shares at the end of each fiscal year in which the Company's annual after-tax
earnings first are $3,000,000 or more. In addition, for each subsequent year in
which the Company's annual after-tax earnings increase by an additional
$3,000,000, the Company will grant an option to each employee for an additional
50,000 shares. The agreements also provide that the Company will grant an option
to each employee for 25,000 shares at the end of the first month n which the
Company first sells 500,000 or more copies of LottoWorld magazine and at the end
of each subsequent month that monthly sales of the magazine increase by an
additional 500,000 copies. The Company has also agreed to give the employees an
option to purchase 25,000 shares at the end of the first month in which the
circulation of the Digest program exceeds 1,000,000 and an additional option for
25,000 shares for each additional 1,000,000 of circulation up to 5,000,000, and
option for 50,000 shares when the Digest circulation exceeds 5,000,0000 and an
option for 100,000 shares when the circulation reaches 7,500,000. The initial
options of 25,000 shares for each officer have been issued by the Company.
RECENT DEVELOPMENTS WITH THE NASDAQ STOCK MARKET
On April 18, 1997, the Company received a letter from The Nasdaq Stock
Market, Inc. ("Nasdaq") informing the Company that based upon its Annual Report
on Form 10-KSB for the year ended December 31, 1996, the Company's capital and
surplus was less than $1,000,000 and that Nasdaq required companies listed on
The Nasdaq SmallCap Market must maintain capital and surplus of at least
$1,000,000 for continued listing. Nasdaq went on to say "in light of the
circumstances, the Company's shares of common stock are subject to delisting
effective with the close of business on May 2, 1997 unless the Company can
provide three (3) copies of an SEC-filed report, which demonstrates that the
Company currently meets all The Nasdaq SmallCap Market listing criteria."
On May 6, 1997, Nasdaq wrote the Company, "Although the Company reported
capital and surplus of $1,031,467 ..., the Company only achieved minimal
compliance.." and the Company's common stock will be delisted from Nasdaq
effective with the close of business May 13, 1997.
The Company was entitled to a review of the delisting determination by
Nasdaq's staff and has asked for an appeal of the determination at the earliest
7
<PAGE>
time available. Until the review and appeal process is completed, the Company's
common stock will continue to be listed on The Nasdaq SmallCap Market. Until the
review and appeal process is completed, the Company's common stock will continue
to be listed on The Nasdaq SmallCap Market.Nasdaq has set June 12, 1997 for that
hearing.
The Company is currently negotiating with several sources for the needed
capital and while the Company is confident it will raise the necessary capital,
there can be no assurance the Company will be successful.
USE OF PROCEEDS
The Company shall receive no proceeds from the sale of these securities.
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
May 22, 1997, 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 of Class Sold Number Percent
of Class
------ ---------------- ---- ------ ---------
<S> <C> <C> <C> <C> <C>
Elaine Millard 29,000 * 29,000 -0-
Isadore J. Goldstein
Rev. Living Trust
dtd 3/14/90 10,000 * 10.000 -0-
Everett Jensen Rev
Trust 15,000 * 15,000 -0-
Dr. Robert Kay
Profit Sharing Tr. 10,000 * 10,000 -0-
Robert and Harriet
Terhaar 10,000 * 10,000 -0-
Michelle K. Cheng 212,500 3.09 212,500 -0-
Aaron Boxer Rev Trusr
TTEE dtd 8/1/89 248,571 3.62 200,000 48,571 *
Lawrence Schrader 10,000 * 10,000 -0-
William Van De Kreeke
Janice Van De Kreeke 10,000 * 10,000 -0-
Robert W., Clark
Slf-Del Trust 12,000 * 10,000 2,000 *
Joyce Guinther and
Marie Ackerman 10,000 * 10,000 -0-
Robert W. Johnson 20,000 * 20,000 -0-
8
<PAGE>
W. Harold and
Joyce Lee Davis 40,000 * 40,000 -0-
Betty Happel 10,500 * 10,000 500 *
Darel Happel 10,500 * 10,000 500 *
Donald Kettner 10,000 * 10,000 -0-
Kenneth Benson 10,000 * 10,000 -0-
Myron A. Naugle 10,000 * 10,000 -0-
Ila Waseka 35,000 * 25,000 10,000 *
Sanford Greeley 10,000 * 10,000 -0-
Frederick and
Betty Taylor 10,000 * 10,000 -0-
Grace Anderson
REV TRUST 10,000 * 10,000 -0-
Raymond Boisvert 2,666 * 999 1,667 *
Robert P. Lyon 666 * 666 -0-
Erik Dobberstein 2,666 * 999 1,667 *
VBS General Partnership 35,000 * 25,000 10,000 *
Kenneth R. Parker 55,000 * 50,000 5,000 *
John R. Albers 163,000 2.37 133,000 30,000 *
John & Jeannette
VonGunten Liv. Trust 10,000 * 10,000 -0-
Delores Merkley 15,000 * 15,000 -0-
Paul R. Owings 15,000 * 15,000 -0-
Phillip A. Dunbar 10,000 * 10,000 -0-
Paul and
Lenore Owings 15,000 * 15,000 -0-
Edward H. Rudoy
REV TRUST 10,000 * 10,000 -0-
Leola Vidger 10,000 * 10,000 -0-
Jerry N. Dedrick 10,000 * 10,000 -0-
James Owens
REV TRUST 50,000 * 50,000 -0-
Steve Romanek 20,000 * 20,000 -0-
Industricorp & Co., Inc.
FBO T. C. Carpenters 75,000 1.09 50,000 25,000 *
Ellis Limited Partnership 30,000 * 30,000 -0-
Perkins Capital Management
Profit Sharing Plan &
Trust 20,000 * 20,000 -0-
Pyramid Partners, L.P. 150,000 2.18 150,000 -0-
Harold Roitenberg Trust 20,000 * 20,000 -0-
Quest Venture Partners 50,000 * 50,000 -0-
Archie & Glenndora
Whitehead 15,000 * 15,000 -0-
Ed Koller 20,500 * 20,500 -0-
Alan & Corrine
Metcalf 50,000 * 50,000 -0-
Mitchell M. Boxer
Rev Trust 18,500 * 18,500 -0-
First Bank NA TTEE
for John Albers 103,000 1.50 103,000 -0-
Ebner Trust 10,000 * 5,000 5,000 *
Earl L. Ferris 15,000 * 15,000 -0-
Alphonse Kraft 6,000 * 6,000 -0-
9
<PAGE>
Dr. Robert Kay 5,000 * 5,000 -0-
David B. Johnson 128,487 1.85 58,487 70,000 1.02
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 5,000 * 5,000 -0-
Grayson & Associates 48,375 * 48,375 -0-
Jack Gernes 20,475 * 10,000 10,475
Brightstone Fund V, Ltd
Partnership 10,000 * 20,000 -0-
Walter S. Spokowski 14,000 * 10,000 4,000
Dennis B. Schroeder (1) 816,913 11.80 304,513 512,400 7.45
A. Richard Holman (1) 470,398 6.84 127,598 342,800 4.99
Asia Equity 52,083 * 52,083 -0-
Offshore Nominees
Limited 468,750 6.82 468,750 -0-
Parkway Financial Group 56,000 * 56,000 -0-
Wolf Pack Holdings 2,000 * 2,000 -0-
--------- ----- --------- --------- -----
Total 3,983,779 57.94% 2,904,199 1,079,580 15.70%
========= ===== ========= ========= =====
</TABLE>
(1) Each is an officer and director of the Company
* 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.
ITEMS TO BE VOTED UPON AT THE NEXT ANNUAL MEETING OF SHAREHOLDERS
At the next annual meeting of shareholders of LottoWorld, Inc., to be held
on approximately June 30, 1997, the shareholders will be asked to vote on
various items. These items include, but are not limited to:
10
<PAGE>
1. Amendments to the Articles of Incorporation to enhance the
continuity and stability of the Company's management, namely; (I) classification
of directors into three classes, (ii) Directors may be removed only for cause,
(iii) provide for the filling of vancancies or new positions on the Board of
Directors, (iv) require all shareholder action be taken at a shareholder meeting
and not by written consent, (v) only certain persons may call special meetings
of shareholders, (vi) notice requirements to present proposals at an annual
meeting of shareholders, (vii) notice requirements for nominations of directors,
and (viiii) increase in the authorized number of shares from 15,000 to 25,000.
2. To authorize the Board of Directors to consider, in voting upon a
proposed tender offer or business combination, the economic and social
consequences of such transaction to the interest of the Company, shareholders,
employees, customers, suppliers and the community.
3. Amendments to the Articles of Incorporation requiring certasin
minimum price and procedural requirements for the protection of the Company and
its shareholders.
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 holder of Common Stock and options to purchase Common Stock of the
Company.
EXPERTS
The financial statements of the Company incorporated in this Prospectus by
reference to the Annual Report on Form 10-KSB of LottoWorld, Inc. for the year
ended December 31, 1996 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.
11
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14: OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
SEC registration fee $ 2,072
Accounting fees and expenses 1,500
Legal fees and expenses 5,000
Miscellaneous 6,428
-------------
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 reasonably 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 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.
12
<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) (i) and (a) (1) (ii) do
not apply if the Registration Statement is on Form S-3 or Form S-8,
and the information required 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
13
<PAGE>
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
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.
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
2. Since January 1, 1994, the following securities of the Registrant have
been issued without registration under the Securities Act of 1933, as amended
(the "Act"):
A.) On March 23, 1994, a total of 77,000 shares of the Company's common
stock were sold to ten individuals, one partnership, and one trust for an
aggregate of $115,500. The Company sold these securities without registration
pursuant to Regulation D, Rule 504, as promulgated by the Securities and
Exchange Commission.
B.) On April 15, 1994, a total of 100,000 shares of the Company's common
stock were sold to a limited partnership, an individual, and two trusts for an
aggregate of $350,000. The Company sold these securities without registration
pursuant to Regulation D, Rule 504, as promulgated by the Securities and
Exchange Commission.
C.) In August 1994 two individuals holding options to purchase 3,332
shares of the Company's common stock for $1.00 per share exercised such options
and received 3,332 shares. The Company sold these securities without
registration pursuant to Regulation D, Rule 504, as promulgated by the
Securities and Exchange Commission.
D.) In an offering with closings on August 2, August 26, August 31,
September 9, November 11, 1994, 29 individuals and entities, all of whom were
"accredited investors" under Regulation D promulgated by the Securities and
Exchange Commission, purchased a total of 275,000 Units for a total purchase
price of $1,306,250. Each Unit consisted of one share of common stock of the
Company and a warrant to purchase a share of common stock of the Company for
$4.75. The Company sold these securities without registration pursuant to
Regulation D, Rule 505, as promulgated by the Securities and Exchange
Commission.
E.) As compensation for acting as Selling Agent for the offering set forth
in Paragraph D above, a registered broker-dealer received warrants entitling it
to purchase an aggregate of 27,500 shares of the Company's common stock at an
exercise price of $4.75 per share. The warrants are exercisable until five years
after the date of the grant.
F.) On November 15, 1994, 17 holders of the Company's outstanding One Year
Convertible 8% Notes in the principal and accrued interest amount of $189,000
converted their Notes and paid $50,400 for a total of 159,600 shares of the
Company's common stock.
G.) On December 29, 1994, ten individuals, two partnerships and two
trusts, all of whom were "accredited investors" under Regulation D promulgated
by the Securities and Exchange Commission, purchased 166,670 shares of the
Company's Series A Convertible Preferred Stock for a total of $1,000,020 in
cash. The Company sold these securities without registration pursuant to
Regulation D, Rule 505, as promulgated by the Securities and Exchange
Commission.
H.) As compensation for acting as Selling Agent for the offering set forth
in Paragraph G above, a registered broker-dealer received warrants entitling it
14
<PAGE>
to purchase 16,666 shares of the Company's common stock for $6.00 per share. The
warrant is exercisable for a period of five years from the date of the grant.
I.) In November 1995, the Company's Chief Executive Officer and the
Company's President converted $1,000,020 of the Company'S 12% secured
subordinated promissory notes into 333,340 shares of common stock. The Company
sold these securities without registration pursuant to Regulation D, Rule 506,
as promulgated by the Securities and Exchange Commission.
J.) In November 1995 and February 1996, the Company sold 387,5000 shares
of its common stock to three entities, pursuant to Regulation S of the
Securities and Exchange Commission, for an aggregate amount of $697,500 in cash.
K.) On March 15, 1996 the Company sold 180,000 shares of its common stock
to an entity pursuant to Regulation S of the Securities and Exchange Commission
for an aggregate of $675,000. As a result of a pricing adjustment, the Company
issued another 120,000 shares in August 1996.
L.) As compensation for acting as a finder for the offering set forth in
Paragraph K above, an entity received warrants entitling it to purchase 48,375
shares of the Company's common stock for $2.00 per share. The warrant is
exercisable for a period of three years from the date of the grant.
M.) On March 31, 1996, the Company exchanged 666,667 shares of its common
stock to four entities in exchange for services which are to be performed over
the twelve months beginning July 1, 1996. These securities were subsequently
registered with the filing of Form S-8 dated May 17, 1996.
N.) In an offering with a closing on June 28, 1996, 35 individuals and
entities, all of whom were "accredited investors" under Regulation D promulgated
by the Securities and Exchange Commission, purchased an aggregate of 1,188,164
shares of the Company's common stock for an aggregate of $1,718,382. The Company
sold these securities without registration pursuant to Regulation D, Rule 506,
as promulgated by the Securities and Exchange Commission.
O.) In an offering with a closing on September 12, 1996, 18 individuals
and entities, all of whom were "accredited investors" under Regulation D
promulgated by the Securities and Exchange Commission, purchased an aggregate of
371,500 shares of the Company's common stock for an aggregate of $552,218. The
Company sold these securities without registration pursuant to Regulation D,
Rule 506, as promulgated by the Securities and Exchange Commission.
P.) As compensation for acting as Selling Agent for the offering set forth
in Paragraphs N and O above, a registered broker-dealer received warrants
entitling it to purchase 155,966 shares of the Company's common stock for $1.625
per share. The warrant is exercisable for a period of five years from the date
of the grant.
Q.) As payment for services rendered, on August 31, 1996, the Company
issued 20,000 shares of its common stock in lieu of a cash payment of $36,480.
The Company sold these securities without registration pursuant to Regulation D,
Rule 506, as promulgated by the Securities and Exchange Commission.
R.) As an inducement to enter into a consulting contract with the Company,
the Company issued 25,000 shares of its common stock to an individual. The
Company sold these securities without registration pursuant to Regulation D,
Rule 506, as promulgated by the Securities and Exchange Commission.
S.) As payment for services rendered, on December 31, 1996, the Company
issued 200,000 shares of its common stock in lieu of a cash payment of $200,000.
These shares were subsequently registered with the filing of a Form S-8
T.) In January 1997 the Company exchanged 56,000 shares of its common
stock in payment of rent on its executive offices for a period of four months.
The rent for this period would be $56,000. In a series of transactions with
individuals, the Company sold 178,188 shares of the Company's common stock for
15
<PAGE>
an aggregate amount of $163,000. In March 1997, the Company exchanged 200,000
shares of its common stock for printing services worth an estimated $101,000.
The Company sold these securities without registration pursuant to Regulation D,
Rule 506, as promulgated by the Securities and Exchange Commission.
U.) On April 9, 1997, the Company acquired 4,000,000 shares of the common
stock of Sound Money Investors, Inc. ("SMI")with a market value of $500,000 in
exchange for 516,129 shares of common stock of the Company. The Company sold
these securities without registration pursuant to Regulation D, Rule 506, as
promulgated by the Securities and Exchange Commission.
The foregoing sales were made without registration pursuant to the
exemption available under Section 4(2) of the Act applicable to transactions not
involving a public offering or pursuant to the terms and provisions of
Regulation D promulgated by the Securities and Exchange Commission. The
following factors were relied upon by the Company to establish the availability
of this exemption for the sales of securities described above: (1) Each
purchaser was an accredited investor or was sophisticated in relation to his or
her investment; (2) Each purchaser gave written assurance of investment intent;
(3) Share certificate or warrants included legends referring to restrictions on
transfer; (4) Sales were made to a limited number of persons; and (5) Each
person was given, or had full access to, all material information regarding the
Company and the security necessary to make an informed decision.
No underwriting commissions or discounts were paid with respect to any of
the sales of unregistered securities described above, except that a registered
broker-dealer received a commission of 10% of the offering price for acting as
sales agent for the offerings set forth in Paragraphs D, G, N and O, and also
received as compensation the warrants set forth in Paragraphs E, H and P,
respectively.
16
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all 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 21st day of May,
1997.
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 May 23, 1997
- -------------------------- Chief Executive Officer
Dennis B. Schroeder (principal executive officer)
s/A. Richard Holman Director and President May 23, 1997
- --------------------------
A. Richard Holman
s/ James D. Cullen Director May 23, 1997
- --------------------------
James D. Cullen
s/ Stuart Dubow Senior Vice President and May 23, 1997
- --------------------------- Chief Financial Officer
Stuart Dubow (principal accounting officer)
17
Exhibit 23.3
- ------------
McGladrey & Pullen, LLP
--------------------------------------------
Certified Public Accountants and Consultants
CONSENT OF INDEPENDENT AUDITOR
We hereby consent to the incorporation by reference in the May 27, 1997
Amendment No. 4 to Registration Statement on Form S-3 of our report dated March
21, 1997, except for Note 10 as to which date is April 8, 1997, which appears on
Page F-2 of the Annual Report on Form 10-KSB of LottoWorld, Inc. for the year
ended December 31, 1996. We also consent to the reference to us under the
heading "Experts" in such Prospectus.
S/ McGladrey & Pullen, LLP
Naples, Florida
May 27, 1997
18
Exhibit 23.4
- ------------
James D. Cullen, P.A.
Legal Professional Association
Business Law
James D. Cullen, J 2150 Goodlette Road, Suite 200
Admitted in Florida Naples, Florida 34102 Corporations
And Missouri
Securities
Telephone: 941-434-8405
Facsimile: 941-643-6670
Email: [email protected]
21 May 1997
Dennis B. Schroeder
LottoWorld, Inc.
2150 Goodlette Road
Suite 200
Naples, Florida 34102
Re: LottoWorld, Inc. ("LWI") Amendment No. 4 to Form S-3 Registration Form
Dear Mr. Schroeder:
As counsel for LWI, I have reviewed Amendment No.4 to Form S-3
Registration Statement (the "Registration Statement") dated as of the date of
this opinion to be filed with the Securities and Exchange Commission. As General
Counsel, I have examined such documents, corporate records and instruments as I
have deemed necessary or appropriate for the purpose of this opinion.
Based on the foregoing, I am of the opinion that any shares of LWI common
stock issued pursuant to this Registration Statement 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.
19
