SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the
Securities Exchange Act of 1934
[Amendment No. _________]
Check the appropriate box:
___ Preliminary Information Statement
___ Confidential, for Use of the Commission Only (as permitted by
Rule 14c-5(d)(2))
_X_ Definitive Information Statement
DATALINK SYSTEMS CORPORATION
(Name of Registrant as Specified in Its Charter)
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DATALINK SYSTEMS CORPORATION
1735 Technology Way, Suite 790
San Jose, California 95110
(408) 367-1700
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INFORMATION STATEMENT
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ACTION TAKEN BY WRITTEN CONSENT IN LIEU OF
SPECIAL MEETING OF SHAREHOLDERS
WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE
REQUESTED NOT TO SEND US A PROXY
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This Information Statement will be first sent or given to shareholders
of Datalink Systems Corporation (the "Company") on or about January 15, 1998,
in connection with the actions which will be taken pursuant to the consent of
shareholders of approximately 52% of the voting power of the Company's
outstanding common and preferred stock by written consent in lieu of holding a
special meeting of shareholders dated January 8, 1998.
On January 8, 1998, shareholders holding 10,582,523 shares of the
Company's $.001 par value common stock (the "Common Stock"), and 141,558
shares of the Company's Series A Convertible Preferred Stock (the "Preferred
Stock"), signed written consents approving a one for ten (1 for 10) reverse
split of the Company's outstanding Common Stock and an increase in the number
of shares of Common Stock subject to options under the Company's 1996 Stock
Option Plan from 300,000 to 500,000 after the reverse split. On January 8,
1998, there were 20,182,925 shares of Common Stock issued and outstanding, and
2,740,000 shares of Preferred Stock outstanding.
Pursuant to the provisions of the Nevada General Business Corporation
Law, any action which can be taken at a meeting of shareholders may be taken
without a meeting if written consents thereto are signed by shareholders
holding at least a majority of the voting power. Such consents have been
executed by shareholders holding 52% of the voting power of the Company's
shareholders.
Rule 14c-2 promulgated by the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934, as amended, requires that the
Company prepare an Information Statement containing certain information
related to the actions approved by written consent of a majority of the voting
power, and to mail the information statement to the Company's shareholders at
least 20 calendar days prior to the date on which the corporate action is
taken.
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as of December 19, 1997, as
to the shares of the Common Stock beneficially owned by each person who is the
beneficial owner of more than five percent (5%) of the Company's Common Stock,
each of the Company's Directors and by all of the Company's Directors and
Executive Officers as a group. Except as noted, each person has sole voting
and investment power with respect to the shares shown.
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<CAPTION>
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Amount and
Name and Address Nature of Bene-
Of Beneficial Owner ficial Ownership Percent of Class<FN1>
- ------------------- ---------------- --------------------
<S> <C> <C>
Anthony LaPine 7,150,000<FN2> 25.2%
1735 Technology Way, Suite 7900 8,243,826<FN3>
San Jose, California 95125
Nicholas Miller 2,933,333<FN4> 6.2%
1590-1500 West Georgia Street
Vancouver, B.C.
Canada V6G 2Z6
Dr. Gene M. Amdahl 100,000<FN5> .2%
385 Moffet Park Drive, Suite 210
Sunnyvale, CA 94089
Marshall Geller 100,000<FN5> .2%
1875 Century Park East, Suite 2200
Los Angeles, CA 90067
Robert Wilson 100,000<FN5> .2%
Building 2, Suite 220
3000 San Hill Road
Menlo Park, CA 94025
Peter A. Allard 3,249,167<FN6> 6.7%
Seawatch, The Garden
St. James, Barbados
British West Indies
Commonwealth Associates 10,443,826<FN7> 22.0%
830 Third Avenue
New York, NY 10022
All Officers and Directors 18,627,159<FN2><FN3> 30.1%
as a Group (6 Persons) <FN4>
___________________
<FN>
<FN1>
For the purposes of this table, the Company's Common Stock and Series A
Convertible Preferred Stock are considered as a single class.
<FN2>
Includes 700,000 shares underlying currently exercisable options held by Mr.
LaPine; 250,000 shares underlying currently exercisable options held by Mr.
LaPine's wife, Pamela LaPine; 2,800,000 shares underlying 280,000 shares of
Series A Convertible Preferred Stock, and 1,400,000 shares underlying warrants
held by Mr. LaPine. Does not include 2,000,000 shares underlying warrants
which are not exercisable within 60 days.
<FN3>
Represents 8,243,826 shares which are issuable upon the exercise of warrants
owned by Commonwealth Associates for which Mr. LaPine has been given a one
year irrevocable proxy to vote if the warrants are exercised. The proxy
expires on November 13, 1998; however, the proxy will also terminate upon the
death or disability of Mr. LaPine or his no longer serving as the Chairman or
Chief Executive Officer of the Company, and it will terminate at such time as
Commonwealth Associates and its affiliates beneficially owns less than 10% of
the outstanding common stock of the Company.
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<FN4>
Includes 700,000 shares underlying currently exercisable options held by Mr.
Miller, 150,000 shares held by Arundel Holdings, a company owned by Mr. Miller
and his wife, and 937,500 shares held by Mr. Miller's wife, Linda Fraser.
Does not include 2,000,000 shares underlying warrants which are not
exercisable within 60 days.
<FN5>
Represents shares underlying options.
<FN6>
Includes 1,000,000 shares underlying warrants held by Mr. Allard, and 100,000
shares held by Euphemia Trust.
<FN7>
Includes 1,000,000 shares of Common Stock and 8,243,826 shares underlying
currently exercisable warrants held by Commonwealth Associates, and 1,200,000
shares held by affiliates of Commonwealth Associates. Commonwealth Associates
has granted a one year irrevocable proxy to Mr. LaPine to vote the shares
which are issuable upon the exercise of the warrants. See footnote (3) above.
</FN>
</TABLE>
REVERSE STOCK SPLIT
The Board of Directors has proposed, subject to Shareholder approval, a
reverse split of the outstanding shares of the Company's Common Stock of one
for ten (1 for 10). In connection with the reverse split, the Company's
Articles of Incorporation will be amended by reducing the number of shares of
authorized Common Stock from 80,000,000 to 8,000,000, and the par value of the
Common Stock will be increased from $.001 per share to $.01 per share. The
number of authorized shares of Preferred Stock will remain at 5,000,000
shares.
There are presently 20,182,925 shares of Common Stock outstanding, and
the reverse split will therefore reduce this number to approximately 2,019,000
shares. No fractional shares will be issued and instead a whole share will be
issued to any shareholder entitled to a fraction of a share.
On January 8, 1998, shareholders holding 10,582,523 shares of the
Company's Common Stock and 141,558 shares of the Company's Preferred Stock, or
52% of the voting power, signed shareholder consent minutes which approved the
one for ten reverse stock split.
The reverse split is being proposed because the Board of Directors
believes that the current per share price level adversely affects the
marketability of the Company's Common Stock. With the recently enacted
regulations dealing with "designated securities" it is very difficult to find
any brokerage firm which will trade or make a market in a stock which is not
listed on NASDAQ or one of the exchanges and which trades below $5.00 per
share. (The Company's stock has traded recently in the $.35 to $.70 range.)
The Company intends to apply for a listing on NASDAQ (or one of the
exchanges), and in order to apply for a NASDAQ listing, the stock must trade
over $4.00 per share. There can be no assurance that the price will remain
over $4.00 after the reverse split.
A reverse stock split has no federal income tax consequences in that it
is a non-taxable distribution of the Company's Common Stock under Section 305
of the Internal Revenue Code. A shareholder's basis in each ten shares before
the reverse split will become the basis in one share after the reverse split.
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AMENDMENT TO THE 1996 STOCK OPTION PLAN
DESCRIPTION OF THE PLAN
On June 10, 1996, the Company's Board of Directors approved the
establishment of a Stock Option Plan (the "1996 Plan") and the Company's
shareholders approved the 1996 Plan on June 14, 1996. The Board of Directors
believes that the 1996 Plan advances the interests of the Company by
encouraging and providing for the acquisition of an equity interest in the
success of the Company by employees, officers, directors and consultants, and
by providing additional incentives and motivation toward superior Company
performance. The Board believes the 1996 Plan enables the Company to attract
and retain the services of key employees, officers, directors and consultants
upon whose judgment, interest and special effort the successful conduct of its
operations is largely dependent.
The 1996 Plan allows the Board to grant stock options from time to time
to employees, officers and directors of the Company and consultants to the
Company. The Board has the power to determine at the time the option is
granted whether the option will be an Incentive Stock Option (an option which
qualifies under Section 422 of the Internal Revenue Code of 1986) or an option
which is not an Incentive Stock Option. However, Incentive Stock Options may
only be granted to persons who are employees of the Company. Vesting
provisions are determined by the Board at the time options are granted. Prior
to the proposed amendment, the total number of shares of Common Stock subject
to options under the 1996 Plan may not exceed 3,000,000, subject to adjustment
in the event of certain recapitalization, reorganization and similar
transactions.
The Board of Directors may amend the 1996 Plan at any time, provided
that the Board of Directors may not amend the 1996 Plan to materially increase
the number of shares available under the 1996 Plan, materially increase the
benefits accruing to Participants under the 1996 Plan, or materially change
the eligible class of employees without shareholder approval.
AMENDMENT
On January 8, 1998, the Board of Directors voted, subject to shareholder
approval, to increase the number of shares of Common Stock subject to options
under the 1996 Plan from 3,000,000 to 5,000,000 (or from 300,000 to 500,000
after adjusting for the 1 for 10 reverse split). The Board of Directors
believes that the proposed increase is necessary in order for the Company to
have sufficient flexibility to provide the amounts and types of incentives to
its officers, employees, directors and consultants which are deemed necessary
to encourage the Company's success.
As of January 8, 1998, stock options to purchase up to 3,504,426 shares
of Common Stock are outstanding under the 1996 Plan, and options to purchase
127,200 shares of Common Stock have been exercised. Of these options, options
to purchase 631,626 shares of Common Stock are contingent on the approval of
the amendment to the 1996 Plan.
On January 8, 1998, shareholders holding 10,582,523 shares of the
Company's Common Stock and 141,558 shares of the Company's Preferred Stock, or
52% of the total voting power, signed shareholder consent minutes which
approved the increase in the number of shares of Common Stock subject to
options under the 1996 Plan.
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DEADLINE FOR RECEIPT OF SHAREHOLDER PROPOSALS
FOR THE ANNUAL MEETING TO BE HELD IN SEPTEMBER 1998
Any proposal by a shareholder intended to be presented at the Company's
Annual Meeting of Shareholders to be held in September 1998 must be received
at the offices of the Company, Datalink Systems Corporation, 1735 Technology
Way, Suite 790, San Jose, California 95110, on or before April 8, 1998, in
order to be included in the Company's proxy statement and proxy relating to
that meeting.
ANTHONY N. LAPINE, PRESIDENT
San Jose, California
January 9, 1998
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