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SECURITIES AND EXCHANGE COMMISSION
Washington DC 20549
-------------------
SCHEDULE 13E-4
Issuer Tender Offer Statement
(Pursuant to Section 13(e) (1) of the Securities Exchange
Act of 1934)
Datalink.net, Inc.
------------------
(Name of Issuer)
Datalink.net, Inc.
------------------------------------
(Name of Person(s) filing Statement)
Agent's Warrants
------------------------------
(Title of Class of Securities)
None
------------------------------------
(CUSIP Number of Class of Securities)
Anthony N. LaPine, President
Datalink.net, Inc.
1735 Technology Drive, Suite 790, San Jose, California 95110
(408) 367-1700
---------------------------------------------------------------------------
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on behalf of the Person(s) Filing Statement)
With copies to:
James P. Beck, Esq.
Krys Boyle Freedman & Sawyer, P.C.
600 17th Street, Suite 2700 South Tower
Denver, Colorado 80202
(303) 893-2300
August 26, 1999
----------------------------------------------------------------------
(Date Tender Offer First Published, Sent or Given to Security Holders)
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CALCULATION OF FILING FEE
_____________________________________________________________________________
Transaction Valuation Amount of Filing Fee
$533,375.75 (1) $106.67
_____________________ _____________________
___ Check box if any part of the fee is offset as provided by Rule
0-11(a)(2) and identify the filing with which the offsetting fee was
previously paid. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
Amount previously paid: __________ Filing party:_____________
Form or registration no.:__________ Date filed: _____________
_____________________________________________________________________________
(1) Pursuant to Rule 0-11(a)(4), since no market exists for the Agent's
Warrants, the transaction is valued based on the 145,880 shares of
Common Stock that may be exchanged for the Agent's Warrants multiplied
by the average of the closing bid and ask prices of the Issuer's Common
Stock on August 24, 1999, as reported on the OTC Bulletin Board.
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This statement relates to an offer by Datalink.net, Inc., a Nevada
corporation (the "Company"),to exchange one (1) share of Common Stock for each
six (6) Common Stock Purchase Warrants ("Agent's Warrants") tendered effective
upon the filing of this statement until September 23, 1999, unless extended by
the Board of Directors. Each Agent's Warrant entitles the registered holder
thereof upon exercise to purchase one share of Common Stock, par value $.01,
at $3.75 per share. There are currently 875,280 Agent's Warrants outstanding.
ITEM 1. SECURITY AND ISSUER.
(a) The name of the Company is Datalink.net, Inc. The address of its
principal executive office is 1735 Technology Way, Suite 790,
San Jose, California 95110.
(b) The securities being sought are any and all of the Company's
Agent's Warrants. There are 875,280 Warrants presently outstand-
ing. No Officers, Directors or Affiliates of the Company own no
Agent's Warrants, except for Commonwealth Associates, an affiliate,
which owns 418,553 Agent's Warrants, Michael S. Falk, the chairman
and controlling equity owner of Commonwealth Associates, who owns
180,767 Agent's Warrants, and Peter Allard, an affiliate, who owns
100,000 Agent's Warrants.
(c) There is currently no established trading market for the Agent's
Warrants.
(d) Not applicable; the Company is filing this statement.
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER COMPENSATION.
No funds or other consideration are being offered by the Company in
exchange for the Agent's Warrants. Only shares of Common Stock are being
offered in exchange offer.
ITEM 3. PURPOSE OF TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
The exchange offer is being made in order to reduce the number of Agent's
Warrants outstanding and to provide the holders of such warrants the
opportunity to receive Common Stock without having to exercise such warrants
and pay cash or use the "cashless exercise" features of such warrants. The
large number of warrants outstanding may have a negative impact on potential
investors and on the market for the Company's Common Stock due to the
potential dilution of shareholders' interests. All Agent's Warrants received
will be cancelled. There are no present plans of proposals which relate to or
would result in:
(a) The acquisition by any person of additional securities of the
Company, or the disposition of securities of the Company;
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the issuer or any of its
subsidiaries;
(c) A sale or transfer of a material amount of assets of the Company
or any of its subsidiaries;
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(d) Any change in the present board of directors or management of the
issuer including, but not limited to, any plans or proposals to
change the number of the terms of directors, to fill any existing
vacancy on the board or to change any material term of the
employment contract of any executive officer;
(e) Any material change in the present dividend rate or policy, or
indebtedness or capitalization of the issuer;
(f) Any other material change in the issuer's corporate structure or
business, including, if the issuer is a registered closed-end
investment company, any plans or proposals to make, any changes
in its investment policy for which a vote would be required by
Section 13 of the Investment Company Act of 1940;
(g) Changes in the Company's charter, bylaws or instruments correspond-
ing thereto or other actions which may impede the acquisition of
control of the Company by any person;
(h) Causing a class of equity security of the issuer to be delisted
from a national securities exchange or to cease to be authorized
to be quoted in an inter-dealer quotation system of a registered
national securities association;
(i) A class of equity security of the Company becoming eligible for
termination of registration pursuant to Section 12(g) (4) of the
Act; or
(j) The suspension of the Company's obligation to file reports pursuant
to Section 15(d) of the Act.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
Neither the Company nor, to the best knowledge of the Company, any of the
Executive Officers or Directors of the Company or any associate or subsidiary
of any of the foregoing, has engaged in any transactions involving the Agent's
Warrants during the 40 business days prior to the date hereof.
ITEM 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO THE ISSUER'S SECURITIES.
None.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
None.
ITEM 7. FINANCIAL INFORMATION.
(a) Incorporated by reference are the financial statements which are
included in and are part of the Company's Annual Report on Form
10-KSB for the fiscal year ended March 31, 1999, and Quarterly
Report on Form 10-QSB for the quarter ended June 30, 1999.
(b) The effect of the issuer tender offer is not expected to have a
material effect on the Company's financial statements.
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ITEM 8. ADDITIONAL INFORMATION.
None.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
EXHIBIT NUMBER EXHIBIT NAME
(a)(1) Offering Circular dated August 26, 1999
(a)(2) Form of Letter of Transmittal
(a)(3) Form of Letter to Warrantholders
SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify that
the information set forth in this statement is true, complete and correct
DATALINK.NET, INC.
Date: August 26, 1999 By:/s/ Anthony N. LaPine
Anthony N. LaPine, President
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OFFERING CIRCULAR
DATALINK.NET, INC.
OFFER TO EXCHANGE
ONE SHARE OF ITS
COMMON STOCK, $.01 PAR VALUE
FOR EACH SIX AGENT'S
COMMON STOCK PURCHASE WARRANTS
_____________________________________________________________________________
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., MOUNTAIN TIME,
ON FRIDAY, SEPTEMBER 24, 1999, UNLESS THE EXCHANGE OFFER IS EXTENDED.
_____________________________________________________________________________
Datalink.net, Inc., a Nevada corporation ("Datalink.net"), hereby offers
to exchange one share of its Common Stock, $.01 par value (the "Common
Stock"), for each six Warrants to Purchase Common Stock issued in connection
with Datalink.net's Private Offering in November 1997 (the "Agent's
Warrants"), upon the terms and subject to the conditions set forth in this
Offering Circular and in the related Letter of Transmittal (which, together,
constitute the "Exchange Offer").
There is no active trading market for the Agent's Warrants.
Any stockholder desiring to tender all or any portion of his Agent's
Warrants should complete and sign the Letter of Transmittal (or a facsimile
thereof) in accordance with the instructions in the Letter of Transmittal and
mail or deliver it to American Securities Transfer & Trust, Inc. (the
"Exchange Agent"), together with all other required documents, including the
Warrant Certificates.
Questions and requests for assistance may be directed to the Exchange
Agent at its addresses and telephone numbers set forth herein.
______________________
The date of this Offering Circular is August 26, 1999
______________________
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This Offering Circular does not constitute an offer for exchange or a
solicitation of an offer for exchange of any securities other than the
securities covered by this Offering Circular, by Datalink.net or any other
person. The Exchange Offer is not being made to, nor will tenders be accepted
from or on behalf of, holders of Agent's Warrants in any jurisdiction in which
the making of the Exchange Offer or acceptance thereof would not be in
compliance with the laws of such jurisdiction. However, Datalink.net may, in
its discretion, take such action as it may deem necessary to make the Exchange
Offer in any such jurisdiction and extend the Exchange Offer to holders of
Agent's Warrants in such jurisdiction.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE EXCHANGE OFFER OTHER THAN THOSE
CONTAINED HEREIN OR IN THE LETTER OF TRANSMITTAL. IF GIVEN OR MADE, SUCH
RECOMMENDATION AND SUCH INFORMATION AND REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY DATALINK.NET.
THIS TRANSACTION HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION (THE "COMMISSION"), NOR HAS THE COMMISSION PASSED UPON
THE FAIRNESS OR MERITS OF SUCH TRANSACTION NOR UPON THE ACCURACY OR ADEQUACY
OF THIS INFORMATION CONTAINED IN THIS OFFERING CIRCULAR. ANY REPRESENTATION TO
THE CONTRARY IS UNLAWFUL.
The Exchange Offer is being made by Datalink.net in reliance on the
exemption from the registration requirements of the Securities Act of 1933, as
amended, afforded by Sections 3(a)(9) and/or 4(2) thereof and Regulation D
thereunder. Datalink.net will not pay any commission or other remuneration to
any broker, dealer, salesman or other person for soliciting tenders of Agent's
Warrants. Regular employees of Datalink.net may solicit exchanges from the
holders of the Agent's Warrants, but they will not receive additional
compensation therefor.
AVAILABLE INFORMATION
Datalink.net is subject to certain informational reporting requirements
of the Exchange Act and in accordance therewith files reports and other
information with the Securities and Exchange Commission. These reports, proxy
statements and other information can be inspected and copied at the public
reference facilities maintained by the SEC at Room 1024 of the SEC's office at
450 Fifth Street, N.W., Judiciary Plaza, Washington, DC 20549, and at its
regional offices located at 7 World Trade Center, Suite 1300, New York, NY
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, IL
60661. Copies of such reports, proxy statements and other information can be
obtained from the Public Reference Section of the SEC at 450 Fifth Street,
N.W., Judiciary Plaza, Washington, DC 20549 at prescribed rates. The SEC
maintains a Web site (http://www.sec.gov) that contains reports, proxy and
information statements and other information regarding registrants that file
electronically. Additional updating information with respect to the securities
covered herein may be provided in the future to purchasers by means of
appendices to this prospectus.
Datalink.net has filed with the Commission a Transaction Statement on
Schedule 13E-4, together with exhibits, pursuant to Rule 13e-4 of the General
Rules and Regulations under the Act, furnishing certain additional information
with respect to the Exchange Offer. The Schedule 13E-4 and any amendments
thereto, including exhibits, may be examined and copies may be obtained from
the offices of the Commission in the manner set forth above.
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TABLE OF CONTENTS
PAGE
SUMMARY .......................................................... 4
The Company ................................................. 4
Purpose of the Exchange Offer ............................... 4
The Exchange Offer .......................................... 5
RISK FACTORS ..................................................... 6
THE EXCHANGE OFFER ............................................... 10
Terms of the Exchange Offer ................................. 10
Purpose of the Exchange Offer ............................... 10
Procedure for Tendering Agent's Warrants Stock .............. 10
Withdrawal Rights ........................................... 11
Acceptance for Exchange and Exchange ........................ 12
Extension of Exchange Offer Period; Termination;
Amendments ................................................. 13
Certain Conditions of the Exchange Offer .................... 14
Fractional Shares ........................................... 15
Solicitations of Tenders; Fees .............................. 15
Interests of Certain Persons; Transactions .................. 15
CERTAIN TAX CONSEQUENCES ......................................... 16
PRICE RANGE OF COMMON STOCK ...................................... 16
DESCRIPTION OF CAPITAL STOCK AND AGENT'S WARRANTS ................ 17
Common Stock ................................................ 17
Preferred Stock ............................................. 18
Agent's Warrants ............................................ 18
EXHIBIT A - Form 10-KSB for the fiscal year ended March 31, 1999
EXHIBIT B - Form 10-QSB for the quarter ended June 30, 1999
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SUMMARY
The following is a summary of certain information contained in this
Offering Circular, including a summary of the terms of the Exchange Offer. It
is not intended to be complete and is qualified in its entirety by the more
detailed information contained in this Offering Circular.
THE COMPANY
Datalink.net is an internet-based company that provides personalized
financial and lifestyle information to customers' wireless communication
devices. We also offer wireless business solutions to companies. We have
developed technology that combines real-time data, the world wide web,
customized information from corporations and wireless communications to
provide individually tailored information services to customers' pagers and
digital cellular phones. Our web site and customer support team provide
account maintenance services that allow subscribers to customize the types of
information alerts they receive. All consumer services are marketed from our
web site as well as through direct and re-seller distribution channels. Our
re-sellers currently include broker-dealers, information service providers,
wireless network carriers, and other internet companies. In addition, our
business solutions use our wireless technology to give businesses a way to
provide personalized information to their customers.
The first of our financial information services is QuoteXpress, an
investment monitoring tool that alerts subscribers with stock quote
information they pre-specify, such as price changes and volume. Other
financial services include SplitXpress, a service that notifies subscribers of
stock splits, buy-backs, takeovers, mergers and surprise earnings
announcements. CommmodityXpress tracks futures contract prices for commodities
trading on all the major US commodities markets. CompanyNews provides the
latest news stories and press releases for specific companies selected by the
subscriber. The headlines are delivered to the wireless device and the
complete story may be delivered to their email address, and is also available
on our web site.
During 1998, we introduced two new lifestyle services. Sports2Go provides
personalized real-time sports coverage with up-to-the-minute scores and
breaking game events. InfoXtra allows subscribers to receive personalized
information from a wide range of categories that include: local weather
forecasts, horoscopes, winning lottery numbers, ski conditions, beach
forecasts, top ten video rentals, and news headlines.
We currently market two message services that link the internet with
wireless communications. MailXpress alerts subscribers when important email
arrives in their mailbox. MessageX allows anyone with internet access to send
a message to the subscriber's pager or cell phone using the subscriber's email
address.
Our corporate offices are located at 1735 Technology Drive, Suite 790,
San Jose California 95110. Our telephone number is (408) 367-1700 and our
world wide web site is www.datalink.net.
PURPOSE OF THE EXCHANGE OFFER
The Exchange Offer is being made to provide the holders of Agent's
Warrants with the opportunity to obtain shares of the Company's Common Stock
for their Warrants without having to pay cash or use the "cashless exercise"
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provisions of such warrants. The Agent's Warrants are exercisable at $3.75 per
share of Common Stock. Since August 1, 1999, the Company's Common Stock has
traded in the range of $2.81 to $4.38 per share.
The Exchange Offer also provides Datalink.net the opportunity to reduce
the number of Agent's Warrants outstanding. There are currently outstanding
875,280 Agent's Warrants exercisable to purchase an equal number of shares of
Common Stock. Some potential investors have expressed concerns over the large
number of warrants outstanding because of the potential dilution to holders of
Common Stock and possible effects on the market for the Common Stock. As a
result, management believes that the Exchange Offer may make the Company more
attractive to potential investors.
THE EXCHANGE OFFER
Exchange Ratio One share of Common Stock for each six Agent's
Warrants.
Expiration Date 5:00 p.m. (Mountain time), on Friday, September
24, 1999, unless extended.
Withdrawal Rights Tenders may be withdrawn by providing proper
written notification to the Exchange Agent at any
time before the Expiration Date. See "The Exchange
Offer -- Withdrawal Rights".
How to Tender Warrantholders desiring to tender all or any
portion of their Agent's Warrants should properly
complete, sign and mail or deliver the Letter of
Transmittal to the Exchange Agent, together with any
other required documents, such as the certificate
for such Warrants. See "The Exchange Offer --
Procedure for Tendering Agent's Warrants."
Acceptance of Tenders Subject to the terms and conditions of the Exchange
Offer, Agent's Warrants validly tendered and
not withdrawn will be accepted on the Expira-
tion Date and certificates for shares of Common
Stock will be issued in exchange for such properly
tendered Warrants and mailed by the Exchange Agent
as soon as practicable after the Expiration Date.
See "The Exchange Offer -- Acceptance for Exchange
and Exchange".
Federal Income Tax Generally, no gain or loss will be recognized for
Consequences federal income tax purposes by the holders of
Agent's Warrants upon the exchange of such
shares for Common Stock pursuant to the Exchange
Offer. See ""Certain Tax Consequences".
Trading There is no trading market for the Agent's
Warrants. Accordingly, Datalink.net is unable
to determine the current market value for these
Warrants. The Common Stock that will be issued
upon consummation of the Exchange Offer is cur-
rently traded in the over-the-counter market,
and quotations are included on the OTC Bulletin
Board under the symbol "NETD".
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Exchange Agent American Securities Transfer & Trust, Inc.
THIS OFFERING CIRCULAR AND THE RELATED LETTER OF TRANSMITTAL CONTAIN IMPORTANT
INFORMATION WHICH SHOULD BE READ BEFORE ANY DECISION IS MADE WITH RESPECT TO
THE EXCHANGE OFFER.
RISK FACTORS
An investment in the Common Stock is very risky. You should be able to
bear a complete loss of your investment. In deciding whether to exchange your
Agent's Warrants for shares of Common Stock, you should carefully consider the
following risk factors, among others, as well as information contained in this
Offering Circular, our most recent annual reports on Form 10-KSB and Form 10-
QSB, which are attached hereto.
Common Stock issued in The shares of Common Stock to be issued in
Exchange Offer will be exchange for Agent's Warrants will be
restricted "restricted securities" as that term is
defined under SEC Rule 144. However, under
interpretations of the holding period
requirements of Rule 144, persons who exchange
their Agent's Warrants for Common Stock
in the Exchange Offer may "tack" their
holding period for the Common Stock with the
period they have held their warrants. Since
the Agent's Warrants were issued in
November 1997, persons who have held such
warrants since that time could immediately
resell their Common Stock. In addition, we
have filed a registration statement on Form S-3
with the SEC which is not yet effective which
would register the resale of the Common Stock.
However, we can give no such assurance as to
when such registration statement will become
effective. It is possible that the registration
statement will never become effective.
We have a history of losses We have recorded a net loss for each year since
and we may not be able to our current business started in 1996 through
achieve profitability. our fiscal year ended March 31, 1999. As of
June 30, 1999, we had an accumulated deficit of
$26,717,306. Our ability to operate
profitably depends on increasing our sales
through increased market acceptance of our
products and services and successfully competing
with other companies. We are also subject to
other risks associated with new business
enterprises. Therefore, we cannot assure you
that Datalink.net will achieve profitability.
Our revenue may not grow We plan to use any cash flow we generate to
enough to pay for our research and develop improvements and upgrades
research and development to our current products and services and adapt
costs. them to new technologies. Our industry is
subject to rapid technological changes. We
cannot assure you that our revenues will grow
enough to pay for the research and development
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needed to improve our products and services so
that they compete in this rapidly changing
marketplace. If we are unable to adequately
research and develop our products and services,
they could become obsolete and we will not
achieve profitability.
We have several competi- Our market is very competitive. There are a
tors, some of them are number of competitors who are larger and have
larger and have greater much greater resources than we do. Our
resources than we do. competitors have more experienced people and
larger facilities and budgets than we do. These
competitors could use their resources to conduct
greater amounts of research and development and
to offer services at lower prices than we can.
These factors may adversely affect our ability
to compete by decreasing the demand for our
products and services.
We may need to raise We have met capital needs with private sales of
additional funds. These securities. However, we cannot assure you that
funds may not be avail- we will not need additional funds, that any
able to us. Alternative- needed funds will be available to us at all, or
ly, raising additional that any available funds will be given on ac-
funds may dilute your ceptable terms. If we need additional funds,
share ownership. and are unable to raise them, we will not be
able to continue our business operations. If
we raise funds by selling equity securities,
those sales may dilute your share ownership.
If we raise funds by forming joint ventures
with other companies, we may have to give up
some of our rights to certain technologies,
products or marketing territories.
We depend on quality Our business is largely dependent on our
managers. However, we ability to hire and retain quality managers.
only have a written Currently, we have a written employment agree-
employment agreement ment and key-man life insurance in the face
with and insurance on amount of $3 million with Anthony N. LaPine,
one key officer. the Company's chairman, CEO and president. We
do not have employment agreements or key-man
life insurance with any other officer. The loss
of Mr. LaPine or any other officer may have an
adverse effect on our business and prospects by
depriving us of the management services
necessary to operate Datalink.net and achieve
profitability.
Our patents may not pro- We currently own a number of patents related to
tect us from competitors. our products, and have applied for additional
Costs of prosecuting and patents. We are not certain whether any new
defending patent infringe- patents will be granted in the future. Even if
ment claims can be signifi- we receive additional patents, they may not
cant. provide us with protection from competitors.
Our failure to obtain patent protection, or
illegal use by others of any patents we have
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or may obtain could adversely effect our
business, financial condition and operating
results. In addition, the laws of certain
foreign countries do not protect proprietary
rights to the same extent as the laws of the
United States.
Claims for damages resulting from any such
infringement may be asserted or prosecuted
against us. The validity of any patents we have
or obtain could also be challenged. Any such
claims could be time consuming and costly to
defend, diverting management's attention and our
resources.
The limited market may Our shares are not listed on Nasdaq or any
make it difficult to exchange. Trading is conducted in the over-
resell our shares. the-counter market on the OTC Bulletin Board,
which was established for securities that do
not meet the Nasdaq or exchange listing
requirements. Consequently, selling Datalink.
net shares is more difficult because smaller
quantities of shares are bought and sold and
security analysts' and news media's coverage
of Datalink.net is limited. These factors
could result in lower prices and larger spreads
in the bid and ask prices for our shares.
Because our shares are not currently listed on
Nasdaq or an exchange, they are subject to Rule
15g-9 under the Exchange Act. That rule imposes
additional sales practice requirements on
broker-dealers that sell low-priced securities
to persons other than established customers and
institutional accredited investors. For
transactions covered by this rule, a broker-
dealer must make a special suitability
determination for the purchaser and have
received the purchaser's written consent to
the transaction prior to sale. Consequently,
the rule affects the ability of broker-dealers
to sell our shares and may affect the ability
of holders to sell Datalink.net shares in the
market.
We do not plan to pay We intend to retain any future earnings to fund
any dividends. the operation and expansion of our business.
We do not anticipate paying cash dividends on
our shares in the future.
Resales of outstanding Of the 3,316,716 shares issued and outstanding
restricted shares could as of July 31, 1999, 619,459 shares were
have a depressive effect "restricted securities," as defined under
on the market price of Rule 144, all of which are currently eligible
our shares. for sale under Rule 144. In addition, 4,497,070
shares which may be issued on the conversion of
the preferred stock and exercise of warrants
8
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are being registered for resale. We are unable
to predict the effect that sales of these shares
may have on the then prevailing market price
of our shares. It is likely that market sales
of large amounts of Datalink.net shares (or the
potential for those sales even if they do not
actually occur) will have the effect of
depressing the market price of our shares.
Securities held by our As part of our private offering which was
CEO and Chairman for which completed in November 1997, Anthony N. LaPine,
he gave a promissory note our CEO and chairman, bought 280,000 shares of
are being registered for preferred stock and 140,000 Private Placement
resale. Warrants which he paid for with a collateralized
non-recourse promissory note for $1,050,000 due
on November 5, 2003. The common stock
underlying these securities and the warrants are
being registered for resale by Mr. LaPine.
Since Mr. LaPine paid for these securities with
a collateralized non-recourse promissory note
these securities would not be eligible for
resale under Rule 144 until one year after the
promissory note was paid. As a result, this
registration will allow Mr. LaPine the
opportunity to resell his securities prior
to paying off the related promissory note, and
realize a profit prior to the time he would if
these securities were not registered for resale.
It also could potentially make it more difficult
for Datalink.net to obtain payment of the
promissory note.
Year 2000 issues could Although we anticipate that there will be little
have an impact on our or no Year 2000 issues and therefore little or
business. no cost will be incurred therefrom, our business
may still be impacted. Our internal systems
meet Year 2000 compliance standards. However,
although compliance confirmation has been
provided by seventy-five percent of our vendors,
and the remaining twenty-five percent have
indicated that they are currently Year 2000
compliant, there can be no assurance that these
vendors will not experience some level of Year
2000 issues that may have an adverse effect on
our systems. We have assessed our risk related
to this occurrence as very low. Our contingency
plan in the event that an unforeseen Year 2000
issue should occur will be to change to another
vendor that is Year 2000 compliant. For this
reason, we are developing an inventory of back-
up vendors that may be called upon to provide
services in accordance with Year 2000 compliance
standards.
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THE EXCHANGE OFFER
TERMS OF THE EXCHANGE OFFER
Datalink.net hereby offers, upon the terms and subject to the conditions
set forth in this Offering Circular and in the related Letter of Transmittal,
to exchange one share of Common Stock for each eight Agent's Warrants
outstanding of its Common Stock validly tendered by the Expiration Date and
not withdrawn as provided in this Offering Circular. The term "Expiration
Date" means 5:00 p.m., Mountain time, on Thursday, September 23, 1999, unless
Datalink.net shall have extended the period of time for which the Exchange
Offer is open, in which event the term "Expiration Date" shall mean the latest
time and date at which the Exchange Offer, as so extended by Datalink.net,
shall expire. Any extension, delay, termination, waiver or amendment will be
followed as promptly as practicable by notification thereof.
As of August 20, 1999, there were 875,280 Agent's Warrants outstanding
held of record by 35 Warrantholders.
If Datalink.net makes a material change in the terms of the Exchange
Offer, or if it waives a material condition to the Exchange Offer,
Datalink.net will extend the Exchange Offer and disseminate additional
exchange offer materials to the extent required by applicable law. The minimum
period during which an offer must remain open following material changes in
the terms of the offer, other than a change in the consideration offered, will
depend upon the facts and circumstances, including the materiality, of the
changes. With respect to a change in the consideration offered, a minimum
period of 10 business days from the date of such change is generally required
to allow for adequate dissemination to Warrantholders. For purposes of the
Exchange Offer, a "business day" means any day other than a Saturday, Sunday
or a federal holiday and consists of the time period from 12:01 a.m. through
12:00 midnight, Mountain time.
This Offering Circular and the related Letter of Transmittal will be
mailed to record holders of the Agent's Warrants.
PURPOSE OF THE EXCHANGE OFFER
The Exchange Offer is being made to provide the holders of Agent's
Warrants with the opportunity to obtain shares of the Company's Common Stock
for their Warrants without having to pay cash. The Agent's Warrants are
exercisable at $3.75 per share of Common Stock. Since August 1, 1999, the
Company's Common Stock has traded in the range of $2.81 to $4.38 per share.
The Exchange Offer also provides Datalink.net the opportunity to reduce
the number of Agent's Warrants outstanding. There are currently outstanding
872,280 Agent's Warrants exercisable to purchase an equal number of shares of
Common Stock. Some potential investors have expressed concerns over the large
number of warrants outstanding because of the potential dilution to holders of
Common Stock and possible effects on the market for the Common Stock. As a
result, management believes that the Exchange Offer may make the Company more
attractive to potential investors.
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PROCEDURE FOR TENDERING AGENT'S WARRANTS
To tender Agent's Warrants pursuant to the Exchange Offer a properly
completed and duly executed Letter of Transmittal (or facsimile thereof) and
any other documents required by the Letter of Transmittal, including, the
Warrant certificates, must be received by the Exchange Agent on or prior to
the Expiration Date.
Except as otherwise provided below, all signatures on a Letter of
Transmittal must be guaranteed by a bank, broker, dealer, credit union,
savings association or other entity which is a member of a recognized
Medallion Program approved by the Securities Transfer Association, Inc. (an
"Eligible Institution"). Signatures on a Letter of Transmittal need not be
guaranteed if the Letter of Transmittal is signed by the registered holder of
the Agent's Warrants tendered therewith and such holder has not completed the
box entitled "Special Issuance Instructions" or the box entitled "Special
Delivery Instructions" on the Letter of Transmittal.
If any warrant certificates are forwarded separately to the Exchange
Agent, a properly completed and duly executed Letter of Transmittal (or
facsimile thereof) must accompany each such delivery.
THE METHOD OF DELIVERY OF THE LETTER OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING WARRANTHOLDER.
IF THE LETTER OF TRANSMITTAL, WARRANT CERTIFICATES OR ANY OTHER DOCUMENTS ARE
SENT BY MAIL, REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, AND PROPERLY
INSURED, IS RECOMMENDED. IN ALL CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO
ENSURE TIMELY DELIVERY.
Notwithstanding any other provision hereof, exchange of Agent's Warrants
accepted for exchange pursuant to the Exchange Offer will in all cases be made
only after timely receipt by the Exchange Agent of a properly completed and
duly executed Letter of Transmittal (or facsimile thereof), together with any
required signature guarantees, and any other documents required by the Letter
of Transmittal.
All questions as to the form of documents and the validity, eligibility
(including time of receipt) and acceptance for exchange of any tender of
Agent's Warrants will be determined by Datalink.net, in its sole discretion,
whose determination shall be final and binding on all parties. Datalink.net
reserves the absolute right to reject any or all tenders of Agent's Warrants
determined by it not to be in proper form or the acceptance for exchange of or
exchange for which may, in the opinion of Datalink.net's counsel, be unlawful.
Datalink.net also reserves the absolute right to waive any defect or
irregularity in any tender of Agent's Warrants. None of Datalink.net or any
of its affiliates or assigns, the Exchange Agent or any other person will be
under any duty to give any notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification.
The tender of Agent's Warrants pursuant to any one of the procedures
described above will constitute an agreement between the tendering Stockholder
and Datalink.net upon the terms and subject to the conditions of the Offer.
WITHDRAWAL RIGHTS
Tenders of Agent's Warrants made pursuant to the Exchange Offer may be
withdrawn at any time prior to the Expiration Date. Thereafter, such tenders
are irrevocable, except that they may be withdrawn after October 22, 1999,
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unless theretofore accepted for exchange as provided in this Offering
Circular. If Datalink.net is delayed in accepting for exchange or in
exchanging Agent's Warrants or is unable to accept for exchange or exchange
Agent's Warrants pursuant to the Exchange Offer for any reason, then, without
prejudice to Datalink.net's rights under the Exchange Offer, the Exchange
Agent may, on behalf of Datalink.net, retain all Agent's Warrants tendered,
and such Agent's Warrants may not be withdrawn except as otherwise provided.
For a withdrawal to be effective, a written or facsimile transmission
notice of withdrawal must be timely received by the Exchange Agent at its
address set forth herein and must specify the name of the person who tendered
the Agent's Warrants to be withdrawn and the number of Agent's Warrants to be
withdrawn. If the Agent's Warrants to be withdrawn have been delivered to the
Exchange Agent, a signed notice of withdrawal with signatures guaranteed by an
Eligible Institution must be submitted prior to the release of such Agent's
Warrants. In addition, such notice must specify, in the case of any Agent's
Warrants tendered by the delivery of certificates, the name of the registered
holder (if different from that of the tendering Warrantholder) and the serial
numbers shown on the particular certificates evidencing such Warrants to be
withdrawn. Withdrawals may not be rescinded, and Agent's Warrants withdrawn
will thereafter be deemed not validly tendered for purposes of the Exchange
Offer. However, properly withdrawn Agent's Warrants may be retendered by
again following one of the procedures described under "The Exchange Offer --
Procedure for Tendering Agent's Warrants" at any time prior to the Expiration
Date.
All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by Datalink.net, in its sole
discretion, which determination shall be final and binding. None of
Datalink.net, the Exchange Agent or any other person will be under any duty to
give notification of any defect or irregularity in any notice of withdrawal or
incur any liability for failure to give any such notification.
ACCEPTANCE FOR EXCHANGE AND EXCHANGE
Upon the terms and subject to the conditions of the Exchange Offer
(including if the Exchange Offer is extended or amended, the terms and
conditions of the Exchange Offer as so extended or amended), Datalink.net will
accept for exchange and exchange all Agent's Warrants validly tendered by the
Expiration Date and not withdrawn as soon as practicable after the later of
(i) the Expiration Date and (ii) the satisfaction or waiver of the conditions
set forth under "The Exchange Offer -- Conditions to Exchange Offer". In
addition, Datalink.net reserves the right, in its sole discretion and subject
to applicable law, to delay the acceptance for exchange or exchange of Agent's
Warrants in order to comply in whole or in part with any applicable law or
regulatory or government approval as discussed under "The Exchange Offer --
Conditions to Exchange Offer". For a description of Datalink.net's right to
terminate the Exchange Offer and not accept for exchange or exchange Agent's
Warrants or to delay acceptance for exchange or delay exchange of Agent's
Warrants, see "The Exchange Offer -- Extension of the Exchange Offer Period;
Termination; Amendments".
For purposes of the Exchange Offer, Datalink.net shall be deemed to have
accepted for exchange Agent's Warrants validly tendered and not withdrawn if,
as and when Datalink.net gives oral or written notice to the Exchange Agent of
its acceptance of the tenders of such Agent's Warrants. In all cases, upon the
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terms and subject to the conditions of the Exchange Offer, the exchange of
Agent's Warrants accepted for exchange pursuant to the Exchange Offer will be
made by Datalink.net's submission of certificates for Common Stock with the
Exchange Agent, which will act as agent for the tendering Warrantholders for
the purpose of receiving certificates for Common Stock from Datalink.net and
transmitting such consideration to tendering Warrantholders.
In all cases, delivery of certificates of shares of Common Stock to be
issued in exchange for properly tendered Agent's Warrants pursuant to the
Exchange Offer will be made only after timely receipt by the Exchange Agent of
(i) the Letter of Transmittal (or a facsimile thereof), properly completed and
duly executed, (ii) the certificates for such Warrants and (iii) any other
documents required by the Letter of Transmittal.
If Datalink.net increases the consideration to be given for Agent's
Warrants pursuant to the Exchange Offer, Datalink.net will provide such
increased consideration for all Agent's Warrants acquired pursuant to the
Exchange Offer whether or not such Agent's Warrants was tendered prior to or
after such increase in consideration.
If any tendered Agent's Warrants are not exchanged pursuant to the
Exchange Offer for any reason, certificates for such unexchanged or untendered
warrants will be returned without expense to the tendering Warrantholder, as
promptly as practicable following the expiration or termination or withdrawal
of the Exchange Offer.
EXTENSION OF EXCHANGE OFFER PERIOD; TERMINATION; AMENDMENTS
Datalink.net expressly reserves the right, in its sole discretion, at any
time or from time to time, to extend the period of time during which the
Exchange Offer is open by giving written notice of such extension to the
Exchange Agent and to the holders of the Agent's Warrants. There can be no
assurance that Datalink.net will exercise its right to extend the Exchange
Offer. Datalink.net also expressly reserves the right, at any time or from
time to time, in its sole discretion and regardless of whether or not any of
the conditions specified in "The Exchange Offer -- Conditions of Exchange
Offer" shall have been satisfied, to amend the Exchange Offer in any respect
by making a written notice of such amendment.
If Datalink.net shall decide to decrease or increase the consideration
offered pursuant to the Exchange Offer, and the Exchange Offer is scheduled to
expire at any time before the expiration of a period of 10 business days from
and including the date that notice of such increase or decrease is first sent
or given to Warrantholders, the Exchange Offer will be extended at least until
the expiration of such period of 10 business days.
In addition, if Datalink.net makes a material change in the terms of the
Exchange Offer or in the information concerning the Exchange Offer, or waives
a material condition of the Exchange Offer, Datalink.net will extend the
Exchange Offer if and to the extent required by Rules 13e-4(d)(2) and
13e-4(e)(2) promulgated under the Act or other applicable law. These rules
provide that a period sufficient to allow Warrantholders to consider the
amended terms of the Exchange Offer must be provided following material
changes in the terms of the offer or information concerning the offer. In a
published release, the Commission has stated that in its view an offer must
remain open for a minimum period of time following a material change in the
terms of such offer and that the waiver of a condition is a material change in
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<PAGE>
the terms of an offer. The release states that an offer should remain open for
a minimum of five business days from the date the material change is first
published, sent or given to security holders, and that if material changes are
made with respect to the information contained herein, a minimum of 10
business days may be required to allow adequate dissemination and investor
response.
Datalink.net also expressly reserves the right, in the event any of the
conditions specified under "The Exchange Offer -- Conditions of Exchange
Offer" shall not have been satisfied and so long as Agent's Warrants have not
theretofore been exchanged, to delay (except as otherwise required by
applicable law) acceptance for exchange or delay exchange of Agent's Warrants
or to terminate the Exchange Offer and not accept for exchange or not exchange
Agent's Warrants.
If Datalink.net extends the period of time during which the Exchange
Offer is open, is delayed in accepting for exchange or exchanging Agent's
Warrants or is unable to accept for exchange or exchange Agent's Warrants
pursuant to the Exchange Offer for any reason, then, without prejudice to
Datalink.net's rights under the Exchange Offer, the Exchange Agent may, on
behalf of Datalink.net, retain all Agent's Warrants tendered, and such Agent's
Warrants may not be withdrawn except as otherwise provided in "The Exchange
Offer -- Withdrawal Rights". The reservation by Datalink.net of the right to
delay acceptance for exchange or exchange Agent's Warrants is limited by Rule
13e- 4(f)(5) promulgated under the Act, which requires that Datalink.net pay
the consideration offered or return the Agent's Warrants deposited by or on
behalf of Stockholders promptly after the termination or withdrawal of the
Exchange Offer.
Any extension, termination or amendment of the Exchange Offer will be
followed as promptly as practicable by a written notice mailed no later than
the next business day after the previously scheduled Expiration Date.
CERTAIN CONDITIONS OF THE EXCHANGE OFFER
Notwithstanding any other provisions of the Exchange Offer, Datalink.net
shall not be required to accept for exchange or to exchange any Agent's
Warrants tendered and may terminate or amend the Exchange Offer or may
postpone (subject to the requirements of the Act for prompt exchange or return
of Agent's Warrants) the acceptance for exchange of, and exchange of, Agent's
Warrants tendered if any material change occurs which is likely to affect the
Exchange Offer or the value or market price of the Agent's Warrants or the
Common Stock, including, but not limited to, the following:
(a) there shall have been threatened, instituted or pending any action
or proceeding before any court, authority, agency or tribunal which challenges
the making of the Exchange Offer, the acquisition of some or all of the
Agent's Warrants pursuant to the Exchange Offer or otherwise relates in any
manner to the Exchange Offer;
(b) there shall have been any action threatened, pending or taken, or
any approval withheld, or any statute, rule, regulation, judgment, order or
injunction threatened, proposed, sought, promulgated, enacted, entered,
enforced or deemed to be applicable to the Exchange Offer or which, in
Datalink.net's sole judgment, would or might directly or indirectly (1) make
the acceptance for exchange or exchange of some or all of the Agent's Warrants
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illegal or otherwise restrict, prohibit or delay materially the consummation
of the Exchange Offer, (2) materially impair the contemplated benefits of the
Exchange Offer to Datalink.net, or (3) materially affect the business,
condition (financial or other), income, operations or prospects of
Datalink.net, or otherwise materially impair in any way the contemplated
future conduct of the business of Datalink.net; or
(c) there shall have occurred any general suspension of, or limitation
on prices for, trading in securities on any national securities exchange or in
the over-the-counter market or any other change in the general political,
market, economic or financial conditions in the United States or abroad that
could, in the sole judgment of Datalink.net, have a material adverse effect on
the business, condition (financial or other), income, operations or prospects
of Datalink.net or the trading in the Common Stock.
The conditions referred to above are for the sole benefit of Datalink.net
and may be asserted by Datalink.net in its sole discretion regardless of the
circumstances (including any action or omission by Datalink.net) giving rise
to any such conditions or may be waived by Datalink.net in its sole discretion
in whole at any time or in part from time to time. The failure by Datalink.net
or any other affiliate of Datalink.net at any time to exercise its rights
under any of the foregoing conditions shall not be deemed a waiver of any such
right. The waiver of any such right with respect to particular facts and
circumstances shall not be deemed a waiver with respect to any other facts and
circumstances, and each such right shall be deemed an ongoing right which may
be asserted at any time or from time to time.
FRACTIONAL SHARES
No fractional shares of Common Stock will be issued in the Exchange
Offer. A Warrantholder who would be entitled to receive a fraction of a share
of Common Stock as part of the consideration to be received for the Agent's
Warrants held by him shall, if he tenders all of the Agent's Warrants held by
him, in lieu of such fraction, receive one full share of Common Stock. In the
event that a holder of Agent's Warrants makes only a partial tender of his
Warrants, no fractional share shall be issued, and any Agent's Warrants which
would be exchanged for such fraction of a share shall be returned to the
Warrantholder.
SOLICITATIONS OF TENDERS; FEES
Datalink.net has not retained any dealer-manager or similar agent in
connection with the Exchange Offer and will not make any payments to brokers,
dealers or others for soliciting acceptances of the Exchange Offer.
Datalink.net has retained American Securities Transfer & Trust, Inc. as
Exchange Agent in connection with the Exchange Offer. The Exchange Agent will
receive reasonable and customary compensation for its services in connection
with the Exchange Offer, will be reimbursed for its reasonable out-of-pocket
expenses and will be indemnified against certain liabilities and expenses in
connection therewith.
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Datalink.net may contact holders of Agent's Warrants by mail, telephone,
telecopy, telegraph and personal interview and may request brokers, dealers
and other nominee shareholders to forward materials relating to the Exchange
Offer to beneficial owners. Datalink.net also will reimburse brokers, dealers,
commercial banks and trust companies for customary handling and mailing
expenses incurred in forwarding the Exchange Offer to their customers.
INTERESTS OF CERTAIN PERSONS; TRANSACTIONS
Commonwealth Associates, an affiliate of the Company, currently holds
418,553 Agent's Warrants, and Michael S. Falk, the Chairman and controlling
equity owner of Commonwealth Associates, owns 180,767 Agent's Warrants. In
addition, Peter Allard, an affiliate of the Company, owns 100,000 Agent's
Warrants. Datalink.net has no information as to whether these persons will
accept the Exchange Offer.
During the 40 days preceding the date of this Offering Circular, neither
Datalink.net nor, to its knowledge, any of its subsidiaries, executive
officers or directors or any associate of any such officer or director has
engaged in any transactions involving the Agent's Warrants.
CERTAIN TAX CONSEQUENCES
This summary sets forth the principal anticipated federal income tax
consequences to Warrantholders of their exchange of Agent's Warrants for
Common Stock pursuant to the Exchange Offer. The summary is based on the
provisions of the Internal Revenue Code of 1986, as amended (the "Code"), the
Treasury regulations promulgated thereunder, and administrative and judicial
interpretations thereof, all as in effect as of the date hereof, and, in
particular, is based on the assumption that the Agent's Warrants have been
held as "capital assets" within the meaning of Section 1221 of the Code. Such
laws or interpretations may differ on the date of the consummation of the
Exchange Offer, and relevant facts may also differ. This summary does not
address any foreign or local tax consequences, does not address state tax
consequences and does not address estate or gift tax considerations. The
consummation of the Exchange Offer is not conditioned upon the receipt of any
ruling from the Internal Revenue Service (the "IRS") or any opinion of counsel
as to tax matters.
This summary is for general information only. The tax treatment of each
Warrantholder will depend in part upon his particular situation. Special tax
consequences not described below may be applicable to particular classes of
taxpayers, including financial institutions, pension funds, mutual funds,
broker-dealers, persons who are not citizens or residents of the United States
or who are foreign corporations, foreign partnerships or foreign estates or
trusts, Warrantholders who own actually or constructively (under certain
attribution rules contained in the Code) 5% or more of the Agent's Warrants,
Stockholders who acquired their Agent's Warrants and persons who received
Agent's Warrants as compensation.
ALL WARRANTHOLDERS SHOULD CONSULT WITH THEIR OWN TAX ADVISERS AS TO THE
PARTICULAR TAX CONSEQUENCES OF THE EXCHANGE OFFER TO THEM, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY FEDERAL, STATE, LOCAL AND FOREIGN TAX LAWS.
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No gain or loss will be recognized by a holder (an "Exchanging Holder")
of Agent's Warrants as a result of the exchange of Agent's Warrants for shares
of Common Stock. The tax basis of an Exchanging Holder in its shares of Common
Stock will be determined by allocating the holder's tax basis in the Agent's
Warrants exchanged therefor pro rata among the shares of Common Stock. For tax
purposes, the holding period of an Exchanging Holder in shares of Common Stock
received pursuant to the Exchange Offer will include the period during which
such holder held the Agent's Warrants exchanged therefor.
PRICE RANGE OF COMMON STOCK
The Company's Common Stock trades in the over-the-counter market, under
the symbol "NETD". The following table sets forth the high and low bid
quotations for the Company's Common Stock for the periods indicated as
reported by the OTC Bulletin Board since April 1, 1997. These prices are
believed to be inter-dealer quotations and do not include retail mark-ups,
mark-downs, or other fees or commissions, and may not necessarily represent
actual transactions.
QUARTER ENDED HIGH BID LOW BID
------------------ -------- -------
June 30, 1997 $25.62 $ 3.12
September 30, 1997 $ 5.80 $ 2.60
December 31, 1997 $ 9.40 $ 3.45
March 31, 1998 $ 6.13 $ 2.50
June 30, 1998 $ 7.94 $ 4.00
September 30, 1998 $ 4.94 $ 1.00
December 31, 1998 $ 1.31 $ 0.63
March 31, 1999 $ 4.00 $ 1.06
June 30, 1999 $ 5.12 $ 2.41
July 1, 1999 through
August 24, 1999 $ 4.97 $ 2.81
A 1 for 10 reverse stock split became effective February 9, 1998. Share bid
prices have been adjusted to reflect this split.
DESCRIPTION OF CAPITAL STOCK
AND AGENT'S WARRANTS
Datalink.net has 55,000,000 authorized shares of stock, consisting of
50,000,000 shares of common stock, having a par value of $.01 per share, and
5,000,000 shares of preferred stock, having a par value of $.001 per share.
COMMON STOCK
As of July 31, 1999, there were 3,316,716 shares of common stock
outstanding. All such outstanding shares of common stock are fully paid and
nonassessable. Each share of common stock has an equal and ratable right to
receive dividends when declared by the Board of Directors of Datalink.net out
of assets legally available for that purpose and subject to the dividend
obligations of Datalink.net to holders of any preferred stock then
outstanding.
In the event of a liquidation, dissolution or winding up of Datalink.net,
the holders of common stock are entitled to share equally and ratably in the
assets available for distribution after payment of all liabilities, and
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subject to any prior rights of any holders of preferred stock outstanding at
that time.
The holders of common stock have no preemptive, subscription, conversion
or redemption rights, and are not subject to further calls or assessments of
Datalink.net. Each share of common stock is entitled to one vote in the
election of directors and on all other matters, submitted to a vote of
stockholders.
Datalink.net's Articles of Incorporation provide that a holder of any
class or series of stock entitled to vote in the election of directors shall
be entitled to cumulate his votes, and may cast votes equal to the number of
votes which (except for cumulative voting) he would be entitled to cast for
the election of directors with respect to his shares of stock multiplied by
the number of directors to be elected. Such shareholders may cast all such
votes for a single director or allocate such votes to two or more directors as
such shareholder sees fit. Under Nevada law, to exercise the right to
cumulative voting, a shareholder must give Datalink.net written notice of his
intent to do so at least 48 hours before the time fixed for the annual
meeting. Such written notice must be given to the president or secretary of
Datalink.net.
PREFERRED STOCK
Preferred stock may be issued from time to time in one or more series,
and the board of directors, without further approval of the stockholders, is
authorized to fix the dividend rates and terms, conversion rights, voting
rights, redemption rights and terms, liquidation preferences and any other
rights, preferences, privileges and restrictions applicable to each series of
preferred stock. The purpose of authorizing the board of directors to
determine such rights, preferences, privileges and restrictions is to
eliminate delays associated with a stockholder vote on specific issuances.
The issuance of preferred stock, while providing flexibility in connection
with possible acquisitions and other corporate purposes, could, among other
things, adversely affect the voting power of the holders of common stock and,
under some circumstances, make it more difficult for a third party to gain
control of Datalink.net.
As of June 21, 1999, Datalink.net had 2,022,465 shares of preferred stock
outstanding, which shares have been designated series A convertible preferred
stock. The preferred stock is convertible into common stock on a 1 for 1
basis. Holders of preferred stock are entitled to receive dividends equal to
any dividends paid on the common stock. In the event of a liquidation of
Datalink.net, holders of preferred stock are entitled to receive $3.75 per
share prior to any distributions to be made to holders of common stock. The
preferred stock is not redeemable. Holders of preferred stock are entitled to
vote together with the holders of common stock on an "as-converted" basis.
The preferred stock will be automatically converted into an equal number
of shares of common stock in the event that the closing market price of the
common stock equals or exceeds $10.00 per share for 30 consecutive trading
days and a registration statement covering the resale of the common stock is
then effective.
No other series of preferred stock has been designated by Datalink.net.
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AGENT'S WARRANTS
In connection with a private placement that was completed in November
1997, Datalink.net issued to Commonwealth Associates, the placement agent, and
its designees warrants to purchase 824,383 shares of common stock. At that
time, Datalink.net also issued warrants to purchase 100,000 shares of common
stock to Peter Allard, an investor who had provided Datalink.net with $2
million in debt financing. These warrants are exercisable at $3.75 per share
and are exercisable at any time until November 5, 2002. At the election of a
holder of these warrants, the holder may exchange all or a portion of the
warrants held for shares of common stock in a "cashless exercise" transaction.
The number of shares issued in exchange for the warrants is determined by
determining the value of the warrants by subtracting the $3.75 exercise price
from the current market price and multiplying this by the number of shares
that the holder could purchase with the surrendered warrants. This total
value is then divided by the current market price to determine the number of
shares to be received. For example, if a holder surrenders warrants to
purchase 1,000 shares and the current market price is $5.00 per share, the
holder would receive 250 shares of common stock in exchange for the warrants.
These warrants are not redeemable.
19
THE EXCHANGE OFFER IS BEING MADE PURSUANT TO THE EXEMPTIONS FROM REGISTRATION
AFFORDED BY SECTIONS 3(A) AND/OR 4(2) OF THE SECURITIES ACT OF 1933 AND
REGULATION D THEREUNDER. NO COMMISSION OR OTHER REMUNERATION WILL BE PAID OR
GIVEN DIRECTLY OR INDIRECTLY FOR SOLICITING THE EXCHANGE OF AGENT'S WARRANTS
PURSUANT TO THE EXCHANGE OFFER.
LETTER OF TRANSMITTAL
TO EXCHANGE AGENT'S WARRANTS
OF
DATALINK.NET, INC.
FOR
SHARES OF ITS COMMON STOCK, $.01 PAR VALUE
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS EXPIRE AT 5:00 P.M., MOUNTAIN TIME,
ON FRIDAY, SEPTEMBER 24, 1999, UNLESS THE EXCHANGE OFFER IS EXTENDED.
The Exchange Agent
for the Offer is: AMERICAN SECURITIES TRANSFER & TRUST, INC.
Attn: Trust Department, (303) 986-5400
Mail to: P.O. Box 1596
Denver, Colorado 80201
Overnight or
Hand Deliveries: 12039 W. Alameda Parkway, Suite Z-2
Lakewood, Colorado 80228
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE
WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS IN THIS LETTER OF TRANSMITTAL SHOULD BE READ CAREFULLY
BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
This Letter of Transmittal is to be used in connection with the delivery
of any and all Agent's Warrants.
Questions or requests for assistance may be directed to the Exchange
Agent at its address and telephone number set forth above. Warrantholders may
also contact their broker, dealer, commercial bank or trust company for
assistance concerning the Exchange Offer.
<PAGE>
DESCRIPTION OF AGENT'S WARRANTS TENDERED
NAME(S) AND ADDRESS OF REGISTERED HOLDER(S)
(PLEASE FILL IN EXACTLY AS NAME(S) APPEAR(S) ON CERTIFICATE):
Name(s) .................................................................
(Please Print)
Address .................................................................
..........................................................................
(Include Zip Code)
NUMBER OF WARRANTS TENDERED* (PLEASE FILL IN):
..........................................................................
*Unless otherwise indicated, it will be assumed that all Agent's Warrants
delivered to the Exchange Agent are being tendered. See Instruction 3.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to Datalink.net, Inc., a Nevada
corporation ("Datalink.net"), the above described Agent's Warrants
(collectively, except where the context otherwise requires, the "Warrants"),
of Datalink.net pursuant to Datalink.net's offer to exchange one (1) share of
its Common Stock, $.01 par value (the "Common Stock"), for each six (6)
Warrants, upon the terms and subject to the conditions set forth in the
Offering Circular, dated August 25, 1999 (the "Offering Circular"), receipt
of which is hereby acknowledged, and in this Letter of Transmittal (which,
together with any amendments or supplements thereto or hereto, collectively
constitute the "Exchange Offer").
Upon the terms and subject to the conditions of the Exchange Offer and
effective upon acceptance for exchange of the Warrants tendered herewith, the
undersigned hereby tenders, exchanges, sells, assigns and transfers to or upon
the order of Datalink.net, and instructs Datalink.net to register such tender,
exchange, sale, assignment and transfer of, all right, title and interest in
and to all the Warrants that are being tendered hereby and irrevocably
constitutes and appoints the Exchange Agent the true and lawful agent and
attorney-in-fact of the undersigned with respect to such Warrants, with full
power of substitution (such power of attorney being deemed to be an
irrevocable power coupled with an interest), to (a) present the Warrants for
transfer on the books of Datalink.net, including by delivery of certificates
for such Warrants, together, in any such case, with all accompanying evidences
of transfer and authenticity, to or upon the order of Datalink.net and (b)
receive all benefits and otherwise exercise all rights of beneficial ownership
of the Warrants, all in accordance with the terms of the Exchange Offer.
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The undersigned hereby represents and warrants that the undersigned and
has been given an opportunity to review complete information concerning the
Company and ask questions of the Company's management in making a decision as
to whether to accept the Exchange Offer.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to tender, exchange, sell, assign and transfer the
Warrants tendered hereby and to give the instruction set forth herein and that
when such Warrants are accepted for exchange by Datalink.net, Datalink.net
will acquire good and unencumbered title thereto, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claims.
The undersigned will, upon request, execute and deliver, or cause to be
executed and delivered, any additional documents deemed by the Exchange Agent
of Datalink.net to be necessary or desirable to complete the tender, exchange,
sale, assignment and transfer of the Warrants tendered hereby.
All authority herein conferred or agreed to be conferred shall survive
the death or incapacity of the undersigned, and any obligation of the
undersigned hereunder shall be binding upon the heirs, personal
representatives, successors and assigns of the undersigned. Except as stated
in the Exchange Offer, this tender is irrevocable.
The undersigned understands that tenders of the Warrants pursuant to any
one of the procedures described in the Offering Circular and in the
instructions hereto will constitute a binding agreement between the
undersigned and Datalink.net upon the terms and subject to the conditions of
the Exchange Offer.
Unless otherwise indicated under "Special Issuance Instructions," please
issue the certificate for the shares of Common Stock issuable upon exchange of
the Warrants being exchanged in the name(s) of the registered holder(s)
appearing under "Description of Agent's Warrants Tendered" and return any
Warrants not tendered or not exchanged to such registered holder(s).
Similarly, unless otherwise indicated under "Special Delivery Instructions,"
please mail the certificate for the shares of Common Stock issuable upon
exchange of the Warrants being exchanged, and return any Warrants not tendered
or not exchanged (and accompanying documents, as appropriate), to the
address(es) of the registered holder(s) appearing under "Description of
Agent's Warrants Tendered" shown below the undersigned's signature(s). In the
event that both "Special Issuance Instructions" and "Special Delivery
Instructions" are completed, please issue the certificate and return any
Warrants not tendered or not exchanged (and accompanying documents, as
appropriate) in the name(s) of, and mail said certificate (and accompanying
documents, as appropriate) to, the person(s) so indicated. The undersigned
recognizes that Datalink.net has no obligation, pursuant to the "Special
Issuance Instructions," to transfer any Shares from the name of the registered
holder(s) thereof if Datalink.net does not accept for exchange any of the
Warrants so tendered.
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SPECIAL ISSUANCE INSTRUCTIONS
(See Instructions 1, 4 and 5)
To be completed ONLY if the certificates for the Common Stock are to be
issued in the name of someone other than the undersigned.
Issue certificates to:
Name ....................................................................
(Please Print)
Address .................................................................
..........................................................................
(Include Zip Code)
..........................................................................
(Taxpayer Identification or Social Security No.)
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 4 and 5)
To be completed ONLY if the certificates for the Common Stock are to be
mailed to someone other than the undersigned or to the undersigned at an
address other than that shown below the undersigned's signature(s).
Mail certificates to:
Name ....................................................................
(Please Print)
Address .................................................................
..........................................................................
(Include Zip Code)
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SIGN HERE
...........................................................................
...........................................................................
Signature(s) of Owner(s)
Dated: ............................................................., 1999
(Must be signed by registered holder(s) exactly as name(s) appear(s) on the
certificate or by person(s) authorized to become registered holder(s) by
certificates and documents transmitted herewith. If signature is by a trustee,
executor, administrator, guardian, attorney-in-fact, officer of a corporation
or other person acting in a fiduciary or representative capacity, please set
forth full title and see Instruction 4.)
Name(s): ........................................................
(Please Print)
.................................................................
Capacity (full title) (See Instruction 5): ......................
Address: ........................................................
.................................................................
(Include Zip Code)
Area Code and
Telephone Number: ...............................................
Tax Identification or
Social Security No.: ............................................
GUARANTEE OF SIGNATURE(S)
(If Required -- See Instructions 1 and 4)
Authorized Signature: ...........................................
Name(s): ........................................................
(Please Print)
Name of Firm: ...................................................
Address: ........................................................
.................................................................
(Include Zip Code)
Area Code and
Telephone Number: ...............................................
Dated: ..................................................., 1999
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INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE EXCHANGE OFFER
1. Guarantee of Signatures. Except as otherwise provided below, all
signatures on this Letter of Transmittal must be guaranteed by a bank, broker,
dealer, credit union, savings association or other entity that is a member of
a recognized Medallion Program approved by The Securities Transfer
Association, Inc.(an "Eligible Institution"). Signatures on this Letter of
Transmittal need not be guaranteed if this Letter of Transmittal is signed by
the registered holder(s) of the Warrants tendered herewith and such holder(s)
have not completed the instruction entitled "Special Issuance Instructions" on
this Letter of Transmittal.
2. Delivery of Letter of Transmittal and Warrants. This Letter of
Transmittal is to be used for the tender of all Agent's Warrants. A properly
completed and duly executed Letter of Transmittal (or facsimile thereof) and
any other documents required by this Letter of Transmittal must be received by
the Exchange Agent at its address set forth on the front page of this Letter
of Transmittal by the Expiration Date. In addition, the Warrant certificate
is to be delivered by physical delivery of such certificate, together with any
other documents required by this Letter of Transmittal, and must be received
by the Exchange Agent by the Expiration Date.
THE METHOD OF DELIVERY OF WARRANTS, THIS LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS IS AT THE OPTION AND RISK OF THE TENDERING
WARRANTHOLDER. IF CERTIFICATES FOR WARRANTS ARE SENT BY MAIL, REGISTERED MAIL
WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS RECOMMENDED. IN ALL
CASES, SUFFICIENT TIME SHOULD BE ALLOWED TO ENSURE TIMELY DELIVERY TO THE
EXCHANGE AGENT BY THE EXPIRATION DATE.
No alternative, conditional or contingent tenders will be accepted, and
no fractional shares of Common Stock will be issued. By executing this Letter
of Transmittal (or facsimile thereof), the tendering warrantholder waives any
right to receive any notice of the acceptance for exchange of the Warrants.
3. Partial Tenders. If fewer than all the Agent's Warrants delivered to
the Exchange Agent are to be tendered, fill in the number of Warrants which
are to be tendered in the box entitled "Number of Warrants Tendered". In such
case, a new certificate, for the remainder of the Warrants not tendered will
be sent to the person(s) signing this Letter of Transmittal, unless otherwise
provided in the appropriate box on this Letter of Transmittal, as promptly as
practicable following the expiration or termination of the Exchange Offer.
All Agent's Warrants delivered to the Exchange Agent will be deemed to have
been tendered unless otherwise indicated.
4. Signatures on Letter of Transmittal; Stock Powers and Endorsements.
If this Letter of Transmittal is signed by the registered holder(s) of the
Warrants tendered hereby, the signature(s) must correspond with the name(s) as
written on the face of the certificates, without alteration, enlargement or
any change whatsoever.
If any of the Agent's Warrants tendered hereby are held of record by two
or more joint owners, all such owners must sign this Letter of Transmittal.
If any of the Agent's Warrants tendered hereby are registered in
different names, it will be necessary to complete, sign and submit as many
separate Letters of Transmittal as there are different registrations.
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If this Letter of Transmittal is signed by the registered holder(s) of
the Agent's Warrants tendered hereby, no endorsement of the certificate or
separate stock power is required unless issuance of the certificate
representing the Common Stock is to be made in the name of any person other
than the registered holder(s). Signatures on any such certificate or stock
power must be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Agent's Warrants tendered hereby, this Letter of
Transmittal must be accompanied by an appropriate stock power, or such
certificate must be endorsed, in either case signed exactly as the name(s) of
the registered holder(s) appear(s) on the certificates for such Agent's
Warrants. Signature(s) on any such stock power or certificate must be
guaranteed by an Eligible Institution.
If this Letter of Transmittal or any stock power or certificate is signed
by a trustee, executor, administrator, guardian, attorney-in-fact, officer of
a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to Datalink.net and/or the Exchange Agent of the authority of
such person so to act must be submitted.
5. Special Issuance and Delivery Instructions. If the certificate for
the Common Stock issuable upon exchange of the Agent's Warrants tendered
hereby is to be issued in the name of a person other than the person(s)
signing this Letter of Transmittal or if the certificate for the Common Stock
or certificate for Agent's Warrants not tendered or not exchanged are to be
mailed to someone other than the person(s) signing this Letter of Transmittal
or to the person(s) signing this Letter of Transmittal at an address other
than that shown above, the appropriate boxes on this Letter of Transmittal
should be completed.
6. Waiver of Conditions. Subject to the terms of the Exchange Offer,
Datalink.net reserves the absolute right in its sole discretion to waive any
of the specified conditions of the Exchange Offer, in whole or in part, in the
case of any Warrants tendered.
7. Requests for Assistance or Additional Copies. Requests for
assistance or additional copies of the Offering Circular and this Letter of
Transmittal may be obtained from the Exchange Agent at its address or
telephone number set forth above. Questions or requests for assistance may be
directed to the Exchange Agent.
8. Lost, Destroyed or Stolen Certificates. In the case of Agent's
Warrants for which the certificate has been lost, destroyed or stolen, the
Warrantholder should promptly notify the Exchange Agent. The Warrantholder
will then be instructed as to the steps that must be taken in order to replace
the certificate. This Letter of Transmittal and related documents cannot be
processed until the procedures for replacing lost or destroyed certificates
have been followed.
9. Acceptance of Tendered Warrants. Upon the terms and subject to the
conditions of the Exchange Offer, Datalink.net will have accepted for exchange
(and thereby exchanged) Agent's Warrants validly tendered and not withdrawn
as, if and when Datalink.net gives oral or written notice to the Exchange
Agent of its acceptance of the tenders of such Agent's Warrants pursuant to
the Exchange Offer.
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10. Withdrawal Rights. Tendered Agent's Warrants may be withdrawn only
pursuant to the procedures set forth under the heading "The Exchange Offer --
Withdrawal Rights" in the Offering Circular.
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Datalink.net, Inc.
1735 Technology Way, Suite 790
San Jose, California 95110
August 26, 1999
To the Holders of
Agent's Warrants of
Datalink.net, Inc.
As you know, in connection with the private offering of Datalink.net's
Series A Preferred Stock which was completed in November 1997, you received
warrants to purchase shares of Common Stock at $3.75 per share. These
warrants are referred to as "Agent's Warrants" because most of them were
issued to Commonwealth Associates, the Placement Agent for the offering. The
Board of Directors has now decided to give the holders of those warrants the
opportunity to exchange those warrants for common stock. This offer will also
help to reduce the number of warrants that are outstanding. Datalink.net is
offering the holders of the Agent's Warrants one share of Common Stock for
each six Warrants exchanged. The terms of this Exchange Offer are explained
in the enclosed Offering Circular. Also enclosed is a Letter of Transmittal
for your use in submitting your warrant certificates for exchange, and a copy
of our Schedule 13E-4 as filed with the SEC.
The shares of Common Stock that will be issued in the Exchange Offer will
be "restricted." However, because of the SEC's tacking rules, if you have
held your warrants for at least one year, the shares will be immediately
eligible for resale under Rule 144.
As you also may be aware, on February 9, 1998, Datalink.net effected a 1
for 10 reverse split of our outstanding Common Stock. At the same time, the
Warrants were also reverse split on a 1 for 10 basis. As a result, if your
certificate was issued before February 9, 1998, the number of Warrants shown
is ten times greater than the number you actually own. You may still
exchange your old certificate in the Exchange Offer, but keep in mind that you
will only receive shares of Common Stock based on the number of Warrants you
hold after the reverse split.
The Exchange Offer materials are fairly lengthy and have been written to
satisfy a number of legal requirements. We suspect that many of you may have
questions about the materials or the exchange offer. If you have questions,
we ask that you call Tali Durant at Datalink.net at (408) 367-1714. Questions
of a technical nature should be directed to representatives of American
Securities Transfer & Trust, Inc., which is acting as the exchange agent. The
telephone number for American Securities Transfer & Trust, Inc. is (303) 986-
5400. Ask for the Trust Department.
Please take the time to review the enclosed materials and consider
accepting the Exchange Offer. We believe that this will benefit both you and
the Company. We look forward to your response. This Exchange Offer will be
held open until September 24, 1999, unless extended.
Sincerely,
Anthony N. LaPine, President
