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Lot78 Corporate Update - 4:1 Forward Split Announcement

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LONDON, May 17, 2013 /PRNewswire/ -- In the first quarter of 2013, Lot78, Inc. (LOTE) has continued to build and develop its brand awareness, and we are anticipating continued growth over the coming months. We are continuing to devote our efforts into expanding our brand and product lines. We have received positive feedback from customers, retailers and the fashion press.

10-QT

We shall be filing the Form 10-QT for the period ended March 31, 2013, on or before May 20, 2013.

Volatility

It is appropriate to note that the Company is aware of the recent volatility in the pricing and trading of our shares.

The Company is advised that certain market participants are actively shorting the company's shares and the Company had been advised that much of this activity may be in violation of applicable federal securities laws.

As reported by the SEC, in their bi-monthly publication of significant FTD's (Failure to Deliver) – shares of the company began to experience significant fails on settlement date from April 24, 2013 to April 30, 2013 (the last date reported by the SEC) rising from 31,918 and reaching as high as 1,129,254 shares. The table below outlines the reported number of fails on each day in that period.

Date

Number of Shares Failing

4/30/2013

1,129,254

4/29/2013

1,178,227

4/26/2013

303,129

4/25/2013

347,379

4/24/2013

312,175

4/23/2013

197,806

4/22/2013

136,099

4/19/2013

31,918

Source:  http://www.sec.gov/foia/docs/failsdata.htm

In addition to the FTD information two additional data points raise cause for concern that the shares failing amount to a naked short position initiated by certain market makers:

  1. The entire short interest as reported bi-monthly amounts to 1,088,000 as of April 30 2013. The rise of FTD's to 1,129,254 on April 30 2013 indicates that this is not attributable to legally borrowed short position.
  2. The Company continues to remain on the REG SHO list indicating that there were at least 285,000 shares failing (based on the minimum threshold formula for being added to the list) at the close yesterday. This marks the 13th consecutive day that the Company has been on the REG SHO list.

The Company is advised that some or all of this short interest may be in violation of Rule 10b-21 and Regulation SHO, this trading practice is known as "naked short selling." Short selling is a trading practice whereby investors borrow stock from a broker to sell in the hope that the stock price will decline before they have to return the share to the broker to cover their position. Simply stated, "naked short selling" involves groups of people working in concert to manipulate the market in order to force a company's share price lower.

The Company has been advised that there are the relevant indications of a significant naked shorting attack directed at the Company. The Company is concerned that such activities continue in apparent violation of applicable regulations.

Forward Stock Split (4:1)

Having regard to these concerns and in order to seek to stabilize the market for our common stock and for our shareholders as a whole, the Company is announcing a four-for-one (4:1) forward split of our common stock, with a record date of May 15, 2013 (the "Record Date").

The forward split will take effect upon approval of the same by FINRA (the "Payable Date").  On the Payable Date, every one (1) share of the Company's pre-split common shares held by a shareholder as of the Record Date, will automatically be split into four (4) shares of the Company's post-split common shares.

In addition, the Company will increase the number of authorized common shares from 75,000,000 to 350,000,000.

The forward split will affect all shareholders uniformly and will not affect any shareholder's ownership percentage.

About Lot78, Inc.


Lot78, Inc. is a trend-setting leader in the design, marketing, distribution and sale of urban apparel – retailing under the brand name "Lot78" in five continents, including: North America, Europe, Asia, Australia, and South America.  Lot78 has been featured in US Weekly, Elle Magazine, Financial Times, Harrods Magazine, The London Evening Standard, and Grazia Magazine as an emerging global brand. 

Lot78, Inc. is quoted on the OTC in the United States of America under the symbol LOTE.OB.  For more information, please visit www.lot78.com.

Forward-Looking Statements 
This news release contains "forward-looking statements," as that term is defined in Section 27A of the United States Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.  Statements in this press release that are not purely historical are forward-looking statements and include any statements regarding beliefs, plans, expectations or intentions regarding the future.  Actual results could differ from those projected in any forward-looking statements due to numerous factors.  Such factors include, among others, Lot78's products to gain market acceptance, and the difficulties faced by an early stage retail fashion company in the competitive retail fashion industry.  These forward-looking statements are made as of the date of this news release, and the Company assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those projected in the forward-looking statements.  Although the Company believes that the beliefs, plans, expectations and intentions contained in this press release are reasonable, there can be no assurance that such beliefs, plans, expectations or intentions will prove to be accurate.  Investors should consult all of the information set forth herein and should also refer to the risk factors disclosure outlined in the Company's recent current reports on Form 8-K, our annual report on Form 10-K, our quarterly reports on Form 10-Q, and other periodic and current reports filed from time to time with the Securities and Exchange Commission.

SOURCE Lot78, Inc.



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