April 5, 2001
Infotopia is at it again. On March 27th, the Company filed to register 245 million shares on behalf of a group of selling shareholders that included officers, directors, offshore investors, corporations from parts unknown and yet another group of consultants whose services remain a mystery. (See UPDATE: INFOTOPIA, INC. – FRIDAY NIGHT SPECIAL and UPDATE: INFOTOPIA, INC. – CLARIFICATIONS, CONTRADICTIONS, OR MORE CONFUSION?) As it turns out, however, Infotopia was not finished. On April 3rd, the Company amended the SB-2 (for the second time in less than a week) in order to register an additional 27.7 million shares for two more corporate shareholders – Classic Art Forms, Ltd. (19.2 million shares) and J Group Holdings LLC (8.5 million shares).
Who are Classic Art Forms, Ltd. and J Group Holdings LLC? Infotopia does not indicate who controls those companies; where they are incorporated; where (or if) they maintain offices; or any details about the nature of their businesses. Why, for example, would J Group Holdings receive 8.5 million shares, presently valued at about $800,000? The Registration Statement states that Infotopia issued the shares in return for “a license to acquire rights to a line of cosmetics.” Investors seeking details in the Amended SB-2 about that “line of cosmetics” are likely to be disappointed. The Company provides no information about the products involved or the terms of the license. Nor does it indicate whether this “line of cosmetics” is presently on the market.
Why did the Company issue 19.2 million shares to Classic Art Forms Ltd? Consider this. The Amended SB-2 indicates that Infotopia issued an aggregate of $600,000 in Convertible Debentures to an unnamed party in March 2001. It says that they were immediately convertible into shares of Infotopia common stock at a price of 5 cents per share. That comes to a total of 12 million shares. Even at today’s depressed prices for Infotopia stock, those shares have a value of approximately $960,000 – 60% more than their cost.
And the debenture holder stands to profit even more. According to the Amended SB-2 the debenture holder also received warrants to buy an additional 7.2 million shares of Infotopia common stock, at one tenth of a cent per share. In other words, for an extra $7200, the debenture holder received 7.2 million common shares currently worth approximately $600,000.
Is Classic Art Forms Ltd. the new debenture holder? It would certainly seem so. The debenture holder was slated to receive a total of 19.2 million shares – precisely the number now being registered for Classic Art Forms Ltd.
What is Classic Art Forms Ltd.? Why was it given the opportunity to reap profits in the $1 million range on such a short-term basis? Infotopia does not say. Although we have been unable to locate any detailed information on the business of Classic Art Forms Ltd. we did locate a web page for a company bearing that name. That web page, which bears the name “Classic Art Forms, Ltd.” and the inscription “Coming Soon,” also provides an address for that Company at 1208 West Broadway, Hewlett, New York 11557.
Is this the same Classic Art Forms Ltd. listed in Infotopia’s Amended SB-2? Without more information, that is impossible to determine. But if it is, its principals (whoever they may be) may wish to discuss their Infotopia investment with their neighbors at the law firm of Jacobson & Colfin. As it turns out, Jacobson & Colfin maintains an office nearby at 1208 Broadway, Hewlett, New York. As Stock Patrol readers will recall, two partners in that law firm, Jeffrey Jacobson and Bruce Colfin, received millions of shares of S-8 stock from Infotopia for consulting and legal services. (See, INFOTOPIA, INC. PART III – BYE BYE SHARES).
Hard as it may be to believe, Infotopia has almost run out of authorized common stock once again. On March 23rd, the Company disclosed that it was increasing its authorized common shares from 190 million to 500 million. With this latest filing, Infotopia has now issued 463 million common shares, leaving a meager 37 million more to be distributed. At the current pace, it certainly seems likely that the common share cupboard will soon be bare once more.
But fear not. Infotopia also increased its authorized preferred shares from 10 million (all of which had been issued) to 30 million. Given Infotopia’s penchant for granting super-voting rights to preferred shareholders, investors should not be surprised if each of the remaining 20 million preferred shares is given the “right” to 31 or more votes on all shareholder matters. That way, the preferred shares will continue to have more votes than all 500 million common shares combined, and the preferred shareholders can again authorize Infotopia to issue more stock.
Unless, of course, something, or someone, breaks this cycle.
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