8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): October 5, 2007

ALLIN CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Delaware	000-21395	25-1795265
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification Number)

381 Mansfield Avenue, Suite 400, Pittsburgh, Pennsylvania	15220
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (412) 928-8800

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

Item 3.02 Unregistered Sales of Equity Securities.

On October 5, 2007, Allin Corporation (the “Company”) executed a Promissory Note in the principal amount of $700,000 payable to David Ritchie, the chief executive officer of the Company’s wholly-owned subsidiary, CodeLab Technology Group, Inc. (“CodeLab”), and a beneficial owner of more than five percent of the outstanding common stock of the Company. The maturity date of the Promissory Note between the Company and Mr. Ritchie is July 31, 2008. The Company may pre-pay the outstanding principal balance of the Promissory Note at any time in whole or in part prior to maturity. The Promissory Note bears interest at a rate of 12% per annum, with interest due and payable quarterly on December 31, 2007, March 31, 2008, June 30, 2008 and at maturity. The interest rate will increase by 2% in the event any scheduled payment of interest is not made, with the increased rate remaining in effect until the scheduled interest payment is made. The Promissory Note is subordinated to and junior in right of payment to all currently existing or future obligations, indebtedness or other liabilities of the Company to any commercial banks or other financial institutions providing financing to the Company. With regard to the Promissory Note, S&T Bank waived the terms prohibiting the Company from incurring additional debt included in the Loan and Security Agreement (Asset Based), as amended, between the Company and S&T Bank. The Promissory Note is included as Exhibit 10.1 to this Report on Form 8-K.

The principal balance of the Promissory Note represents a portion of the accrued purchase consideration due to Mr. Ritchie pursuant to the terms of the Stock Purchase Agreement (the “Purchase Agreement”) entered into on July 26, 2005 by and among the Company, CodeLab, and the holders of equity interests in CodeLab. The Purchase Agreement provided for annual payments of contingent consideration based on a negotiated formula to the former holders of equity interest in CodeLab for each of the three annual periods ending July 31, 2006, 2007 and 2008. The Company’s accrued purchase consideration balance related to the period ended July 31, 2007. On October 5, 2007, the Company also made a cash payment of $180,000 to Mr. Ritchie and issued shares of common stock of the Company, as described below, to discharge accrued purchase consideration due to Mr. Ritchie.

On or about October 5, 2007, the Company issued an aggregate of 442,838 shares of common stock to Mr. Ritchie, John Francis and Mark Bramhall in payment of a portion of the accrued purchase consideration due to them under the Purchase Agreement for the annual period ended July 31, 2007. The Company undertook the offer and sale of the common stock issued in connection with Purchase Agreement in reliance upon Rule 506 of Regulation D and Section 18(b)(4)(D) of the Securities Act of 1933, as amended. The Company paid no commissions on such sales.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

10.1 Promissory Note between Allin Corporation and David Ritchie

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	ALLIN CORPORATION
Dated: October 10, 2007	By:	/s/ Dean C. Praskach
		Dean C. Praskach
		Chief Financial Officer (principal financial officer)

EXHIBIT INDEX

Exhibit Number	Exhibit
10.1	Promissory Note between Allin Corporation and David Ritchie

EX-10.1

Exhibit 10.1

PROMISSORY NOTE

$700,000.00	October 5, 2007
	Pittsburgh, Pennsylvania

FOR VALUE RECEIVED, ALLIN CORPORATION, a Delaware corporation (“Debtor”), hereby promises to pay to the order of DAVID RITCHIE, an individual (“Holder”) residing at 33 Lincoln Circle, Swampscott, Massachusetts 01907, subject to the terms and conditions set forth herein, the principal sum of SEVEN HUNDRED THOUSAND AND 00/100 DOLLARS] ($700,000.00), together with interest accruing on the outstanding principal balance from the date hereof, as provided below.

1. Principal. The entire outstanding principal amount of this Promissory Note (“Note”) plus accrued and unpaid interest shall be due and payable on July 31, 2008 (the “Maturity Date”), subjected to Optional Prepayment (as defined herein). All payments to be made in respect of amounts outstanding under this Note shall be made in lawful money of the United States of America in immediately available funds, without setoff, counterclaim or other deductions of any nature and shall be applied first to interest, then to principal and then to the costs of collection, if any. After the payment of all sums due hereunder, this Note shall be marked “Paid in Full” and returned to Debtor.

2. Interest Rate. Subject to paragraph 3 herein, the outstanding principal balance under this Note shall bear interest at a rate per annum equal to twelve percent (12%) (the “Interest Rate”), with such interest to be due and payable quarterly on each December 31, March 31 and June 30, commencing December 31, 2007. Interest shall be computed on the basis of a 365-day or 366-day year as may be applicable, and actual days lapsed.

3. Late Interest Payments; Increased Interest Rate. If any interest payment due and payable under this Note at any time prior to maturity is not made when due, Debtor shall not be deemed to be in default and Holder may not accelerate the maturity of this Note solely by reason of such failure to pay interest. However, in such event, the outstanding principal balance, together with all unpaid interest which has become due and payable, shall bear interest at a rate of two percent per annum more than the Interest Rate for so long as there remains outstanding any unpaid interest which has become due and payable.

4. Optional Prepayment. The amounts outstanding under this Note may be prepaid at any time and from time to time in whole or in part without penalty or premium.

5. Subordination. All obligations, indebtedness and other liabilities of Debtor under or in respect of this Note shall be subordinated and junior in right of payment to all currently existing and future obligations, indebtedness and other liabilities of Debtor to any commercial banks, thrift institutions, finance companies or other financial institutions providing financing to Debtor. Debtor shall not remit any payments of principal or interest to Payee in respect of the obligations hereunder if immediately prior to such payment, or after giving effect to such payment, an event of default would exist under any senior indebtedness.

6. Effect of Debtor Default. The principal amount of this note represents the cash portion of Debtor’s obligation to Payee for the Contingent Payment for the Fiscal Year ending July 31, 2007 pursuant to the terms of that certain Stock Purchase Agreement entered into by and among Debtor, Payee, CodeLab Technology Group, Inc. (“CodeLab”), John Francis, Mark Bramhall and certain other equity holders of CodeLab, dated as of July 26, 2005 (the “Agreement”). In the event that Debtor fails to pay the entire outstanding principal amount of this Note, plus any accrued but unpaid interest, that is due and payable on the Maturity Date, and such default remains uncured for a period of 30 days after the Maturity Date, the restrictive covenants contained in Sections 7.3.1 and 7.4 of the Agreement shall terminate immediately, without the requirement of any further action of the parties to the Agreement, in accordance with the terms thereof.

7. Miscellaneous. Debtor shall pay any and all expenses, including reasonable attorney’s fees, incurred or paid by Holder with or without suit or action in attempting to collect funds due under this Note. Debtor hereby waives

presentment, demand, notice, protest and all other demands and notices in connection with the delivery, acceptance, performance, default or enforcement of this Note. This Note is made under and shall be governed by and construed in accordance with the internal laws, and not the laws of conflicts, of the Commonwealth of Pennsylvania. Debtor hereby consents to the exercise over it of personal jurisdiction by any federal or state court located in the Commonwealth of Pennsylvania for purposes of enforcement by Holder of any rights or remedies relating to this Note. This Note may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall be construed as one and the same document.

IN WITNESS WHEREOF, and intending to be legally bound, Debtor has executed and delivered this Note as of the date first above written.

ALLIN CORPORATION
BY:	/s/ Richard Talarico
	Richard Talarico
	Chief Executive Officer

Accepted and Agreed to

as of the date of this Note:

/s/ David Ritchie

David Ritchie