<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
AMENDMENT NO. 1
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE YEAR ENDED DECEMBER 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ to ___________
COMMISSION FILE NUMBER: 0-10966
NATIONAL TRANSACTION NETWORK, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 75-1535237
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
117 FLANDERS ROAD
WESTBOROUGH, MASSACHUSETTS 01581
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (508) 870-3200
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
TITLE OF CLASS: COMMON STOCK, $.15 PAR VALUE
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
The aggregate market value of the registrant's voting stock held by non-
affiliates of the registrant as of April 25, 2000: approximately $130,000 based
on the average low bid and high asked prices on the over-the-counter market as
reported on that date.
Number of shares outstanding of the registrant's common stock, $.15 par value,
as of April 25, 2000: 3,325,468.
<PAGE>
PART III
Item 10. Directors and Executive Officers of the Registrant.
At April 25, 2000, three individuals were serving as directors of the Company:
Mr. L. Barry Thomson, Mr. Christopher F. Schellhorn and Mr. George Whitton. Mr.
Thomson, who is the Company's President, Chief Executive Officer and Secretary,
is the only executive officer of the Company.
Set forth below is information regarding the directors and executive officers
of the Company as of April 25, 2000:
L. Barry Thomson, age 58, has served as a director of the Company since
September 1996, as Chief Executive Officer and Secretary of the Company since
October 1996 and as President of the Company since March 2000. Additionally,
Mr. Thomson served as President of the Company from October 1996 until August
1998. Mr. Thomson also has been the President, Chief Executive Officer and a
director of IVI Checkmate Corp. since June 1998. IVI Checkmate Corp.'s wholly-
owned subsidiary, IVI Checkmate Inc., owns approximately 82% of the outstanding
Common Stock of the Company. Mr. Thomson joined International Verifact Inc.
("IVI"), which is now a wholly owned subsidiary of IVI Checkmate Corp. that is
known as IVI Checkmate Ltd., in April 1994 as President and Chief Operating
Officer. He was named a director of IVI in May 1995 and was promoted to Chief
Executive Officer in May 1996. Formerly President and CEO of Aluma Systems
Corporation, a construction technology company in Toronto, Mr. Thomson brought
to IVI extensive Canadian, U.S. and international experience in managing the
growth of a technological and market driven organization. Mr. Thomson built
Aluma over 21 years from start up to the largest company in its industry in
North America and one of the four largest in the world. He also served as
Executive Vice President, director and member of the Executive Committee of
Aluma's parent company, Tridel Enterprises, Inc., Canada's largest builder of
condominium dwellings. He graduated with a degree in mechanical engineering
from the University of Toronto in 1967 and became a member of the Ontario
Association of Professional Engineers in 1968. In 1970, Mr. Thomson received
his Chartered Accountant designation from Clarkson Gordon (now Ernst & Young
LLP).
Christopher F. Schellhorn, age 49, has been a director of the Company since
March 1997. Since August 1997, Mr. Schellhorn has served as the director of
operations, and since April 1999 has served as the Chief Operating Officer, of
Integrion Financial Network, Inc., a company that provides interactive banking
and electronic commerce services to financial institutions in North America.
Mr. Schellhorn served as President and Chief Operating Officer of Visa
Interactive, a technology services company, from August 1996 until August 1997
when Visa Interactive was acquired by Integrion. Mr. Schellhorn served as Vice
President and General Manager of International Verifact Inc. (U.S.), a
subsidiary of IVI, from August 1995 through August 1996. From January 1994
until August 1995, Mr. Schellhorn served as Executive Vice President of Market
Imaging Systems, Inc. Prior to such time, Mr. Schellhorn served as Senior Vice
President of Wegmans Food Markets Inc.
George Whitton, age 64, has served as a director of the Company since
September 1996. Mr. Whitton has served as IVI Checkmate Corp.'s Vice Chairman
of the Board since June 1998. Mr. Whitton has been Chairman of the Board of IVI
since 1986 and was the Chief Executive Officer of IVI from 1986 to 1996. After
serving in various senior operations and sales
2
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management positions with IBM Canada, Mr. Whitton joined Canada Permanent Trust,
a trust and banking institution, where he served as Vice President of
Information Services from 1973 to 1976. From 1976 to 1979, Mr. Whitton was Vice
President-Systems for the Canadian Imperial Bank of Commerce, Canada's second
largest bank. From 1979 to 1987, Mr. Whitton was President and Owner of Howarth
& Smith, a typography, printing and data management company.
Directors are elected each year by the stockholders to serve until the next
election of directors. Officers are elected by and serve at the pleasure of the
Board of Directors.
Section 16(a) Beneficial Ownership Reporting Compliance
- -------------------------------------------------------
The United States securities laws require the Company's directors and
executive officers and any persons who beneficially own more than ten percent of
the Company's common stock to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of the
Company's securities. To the Company's knowledge, during 1999 all executive
officers, directors and beneficial owners of more than ten percent of the
Company's Common Stock made all required filings.
Item 11. Executive Compensation.
Director Compensation
- ---------------------
Directors of the Company do not receive cash compensation for their services
as directors, but non-employee directors are reimbursed for expenses incurred in
connection with attendance at Board of Directors meetings. All directors are
eligible for participation in the Company's 1995 Director Stock Option Plan.
See "Stock Plans" below.
Executive Officer Compensation
- ------------------------------
The following table summarizes information regarding the compensation paid or
accrued by the Company for each of 1997, 1998 and 1999 with regard to the
Company's Chief Executive Officer. The Company did not pay or accrue salary or
bonus in excess of $100,000 for any other executive officer for 1999.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation
-----------------------------------------
Fiscal Other Annual Long-Term All Other
Name and Principal Position Year Salary ($) Bonus ($) Compensation ($) Compensation Compensation ($)
- --------------------------- ------ ---------- --------- ---------------- ------------ ----------------
<S> <C> <C> <C> <C> <C> <C>
L. Barry Thomson 1999 -0- -0- -0- -0- -0-
President, Chief Executive 1998 -0- -0- -0- -0- -0-
Officer and Secretary 1997 -0- -0- -0- -0- -0-
</TABLE>
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Stock Plans
- -----------
The Company currently has one employee stock ownership plan and one director
stock option plan, the 1988 Stock Plan and the 1995 Director Stock Option Plan,
respectively. The 1988 Stock Plan provides for the grant of incentive stock
options to officers and other employees of the Company and any present or future
subsidiaries of the Company (collectively, "Related Companies") and the grant of
(i) options which do not qualify as incentive stock options, (ii) awards of
stock in the Company and (iii) opportunities to make direct purchases of stock
in the Company (collectively, the "Stock Rights") to directors, officers,
employees and consultants of the Company and Related Companies. The 1988 Stock
Plan provides for the issuance of up to 800,000 shares of Common Stock pursuant
to the grant of Stock Rights. The terms of such Stock Rights, including the
number of shares subject to each Stock Right, when the Stock Right becomes
exercisable, the exercise or purchase price of the Stock Right, the duration of
the Stock Right and the time, manner and form of payment upon exercise of a
Stock Right, are generally determined by the Board of Directors. The Company
did not grant any Stock Rights under the 1988 Stock Plan to any of its employees
during 1999.
The 1995 Director Stock Option Plan authorizes the issuance of up to 300,000
shares of Common Stock pursuant to non-statutory options that may be granted to
directors of the Company. Each director who was a member of the Board of
Directors on October 26, 1995 was automatically granted an option to purchase
15,000 shares of the Common Stock. Each director who is first elected to the
Board after October 26, 1995 will automatically be granted, on the date such
person first becomes a member of the Board, an option to purchase 5,000 shares
of Common Stock. In addition, each director who has served continuously as a
director for at least six months prior to January 15th of each year shall be
automatically granted, on January 15th of each year, an option to purchase 5,000
shares of the Common Stock. All options vest on the date of the grant. Other
terms of such options, including exercise or purchase price of the options, the
duration of the options and the time, manner and form of payment upon exercise
of such options, are generally determined by the Board of Directors. On January
15, 1999, the Company granted options to purchase 5,000 shares of Common Stock
under the 1995 Directors Stock Option Plan to each of the five then-current
directors of the Company. On March 30, 1999, the four members of the Board of
Directors who at the time were directors or employees of IVI Checkmate Corp. or
its subsidiaries, including Messrs. Thomson and Whitton, rescinded all of those
stock options. No options were granted to the directors on January 15, 2000.
No executive officer of the Company owned or exercised any stock options
during 1999.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
The following table sets forth, to the knowledge of management, certain
information regarding the beneficial ownership of Common Stock of the Company as
of April 25, 2000 by: (a) each person who is known by the Company to be the
beneficial owner of more than five percent of the 3,325,468 shares of Common
Stock outstanding at such date; (b) each director of the Company; (c) each
executive officer named in the Summary Compensation Table set forth in Item 11
under "Executive Officer Compensation"; and (d) all current directors and
executive officers of the Company as a group:
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<TABLE>
<CAPTION>
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership (1) Percent of Class (2)
- ------------------------------ --------------------------------- ---------------------------------
<S> <C> <C>
IVI Checkmate Inc............. 2,726,440 (3) 82.0%
IVI Checkmate Corp.
1003 Mansell Road
Roswell, GA 30076
Christopher F. Schellhorn..... 15,000 (4) *
L. Barry Thomson.............. 0 (3) 0
George C. Whitton............. 0 (3) 0
All directors and executive
officers as a group (3
persons).................... 15,000 (4) *
</TABLE>
_______________
* Less than 1%
(1) Except as otherwise noted below, the Company believes that each beneficial
owner has sole voting and investment power with respect to the number of
shares of Common Stock shown as beneficially owned by such beneficial
owner. Information with respect to beneficial stock ownership is based upon
information furnished by such beneficial owner.
(2) Pursuant to the rules of the Securities and Exchange Commission, shares of
Common Stock which an individual or group has a right to acquire within 60
days of April 25, 2000 pursuant to the exercise of outstanding options are
deemed to be outstanding for the purpose of computing the percentage
ownership of such individual or group but are not deemed to be outstanding
for the purpose of computing the percentage ownership of any other person
or group shown in the table.
(3) IVI Checkmate Inc., which is the record owner of the shares shown, is a
wholly-owned subsidiary of IVI Checkmate Corp. Consequently, IVI Checkmate
Corp. is considered to beneficially own the shares held by IVI Checkmate
Inc. Messrs. Thomson and Whitton are directors and/or executive officers of
IVI Checkmate Corp. and/or IVI Checkmate Inc.
(4) Represents shares subject to currently exercisable options.
Item 13. Certain Relationships and Related Transactions.
On August 18, 1997, the Company and IVI entered into a Convertible
Subordinated Note Purchase Agreement, as amended on October 31, 1997 and
December 31, 1998 (the "Note Agreement"), whereby the Company may from time to
time issue and sell to IVI (now known as IVI Checkmate Ltd.), and IVI agreed to
purchase, up to $2,500,000 aggregate principal amount
5
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of the Company's Convertible Subordinated Notes (the "Notes"). The Notes have a
five-year term, bear interest at a rate per annum equal to the prime rate plus
2% (9.75% at December 31, 1999), are secured by the Company's assets and are
subordinate to the Company's working capital line of credit. The Notes are
convertible into shares of the Company's Common Stock at any time in accordance
with the terms of the Note Agreement; however, the conversion price per share
shall be equal to no less than the fair market value of the Company's Common
Stock as determined in the Note Agreement. Additionally, the Notes are subject
to certain registration rights if the Company determines to register additional
shares of Common Stock under the Securities Act of 1933, as amended. Interest
payments on the Notes are deferred until maturity.
In 1997, the Company issued Notes to IVI in the aggregate principal
amount of $1,500,000 and in 1998 issued an additional Note to IVI in the
principal amount of $650,000. All Notes mature in 2002. In July 1999, IVI
Checkmate Ltd. transferred the Notes to IVI Checkmate Inc. in exchange for
preferred stock of IVI Checkmate Inc. Neither IVI Checkmate Ltd. nor IVI
Checkmate Inc. advanced any funding to the Company under the Note Agreement in
1999. Unpaid interest under the Notes totaled $118,525 at December 31, 1999.
In 1999, IVI Checkmate Corp. provided NTN with cash advances totaling
$850,000 to fund the Company's working capital requirements. The interest rate
payable on these cash advances is prime plus 2% per year, and the advances are
repayable on demand. At December 31, 1999, the full $850,000 of cash advances
plus minimal interest remained outstanding.
Pursuant to an Agreement and Plan of Merger dated July 20, 1999 among
the Company, IVI Checkmate Corp., IVI Checkmate Inc. and NTN Merger Corp., IVI
Checkmate Corp. will, if approved by the Company's stockholders, acquire all of
the outstanding shares of the Company's Common Stock that are not currently
owned by IVI Checkmate Inc. through the merger of NTN Merger Corp., a wholly
owned subsidiary of IVI Checkmate Inc., into the Company. As a result, the
Company, which is currently an 82.0% owned subsidiary of IVI Checkmate Inc.,
would become a wholly owned subsidiary of IVI Checkmate Inc. If the merger is
completed, IVI Checkmate Corp. will issue to the Company's stockholders (other
than IVI Checkmate Inc.) a number of shares of IVI Checkmate Corp. Common Stock
having a value equal to $.30 multiplied by the number of shares of Company
Common Stock owned by each such stockholder (i.e., $.30 worth of IVI Checkmate
Corp. Common Stock for each such share of Company Common Stock). It is
anticipated that the transaction will be completed no later than June 2000.
6
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
NATIONAL TRANSACTION NETWORK, INC.
(Registrant)
April 25, 2000 By: /s/ L. Barry Thomson
--------------------
L. Barry Thomson, President, Chief Executive
Officer and Secretary
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, this report has been signed below by the following persons on
behalf of the registrant and in the capacities indicated on April 25, 2000.
<TABLE>
<CAPTION>
Signature Title
----------- -------
<S> <C>
/s/ L. Barry Thomson President, Chief Executive Officer,
- ------------------------------------------- Secretary and Director
L. Barry Thomson (Principal Executive Officer and
Principal Financial and Accounting
Officer)
/s/ Christopher F. Schellhorn Director
- -------------------------------------------
Christopher F. Schellhorn
/s/ George Whitton Director
- -------------------------------------------
George Whitton
</TABLE>
7
