SCHEDULE 14C INFORMATION
INFORMATION STATEMENT PURSUANT TO SECTION 14(c)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. ___)
Check the appropriate box:
[X] Preliminary Information Statement
[ ] Confidential, For Use of the Commission Only (as Permitted by Rule
14c-5(d)(2))
[] Definitive Information Statement
SAFLINK CORPORATION
------------------------------------------------
(Name of Registrant as Specified in its Charter)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14c-5(g) and 0-11.
(1) Title of each class of securities to which transaction
applies:
(2) Aggregate number of securities to which transaction applies
(3) Per unit price or other underlying value of transaction
computed pursuant to Exchange Act Rule 0-11 (set forth the
amount on which the filing fee is calculated and state how it
was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
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SAFLINK CORPORATION
18650 N.E. 67TH COURT
REDMOND, WA 98052
NOTICE OF TAKING CORPORATE ACTION
WITHOUT A MEETING BY WRITTEN CONSENT
TO OUR STOCKHOLDERS:
Notice is hereby given that the owners of approximately 55.6% of the
issued and outstanding shares of common stock of SAFLINK Corporation, a Delaware
corporation, have delivered to SAFLINK a written consent by which the
stockholders have consented to approving the following actions:
1. An amendment to SAFLINK's certificate of incorporation to increase the
number of its authorized shares of common stock from 50 million to 100
million shares (the "Amendment"); and
2. The issuance of up to 20 million shares of SAFLINK common stock at a
discount to market and warrants to purchase up to an additional 20 million
shares at a premium to such price (the "Financing").
The actions taken by the written consent will be effective on the 21st day
(approximately _________, 2001) after the date this Notice and the attached
Information Statement are first mailed to all stockholders of SAFLINK.
All necessary corporate approvals in connection with the matters referred to in
this Notice have been obtained. The accompanying Information Statement is
furnished to all stockholders of record of SAFLINK pursuant to Section 14(c) of
the Securities Exchange Act of 1934 and the rules and regulations promulgated
thereunder solely for the purpose of informing the stockholders of these
corporate actions before they take effect.
Pursuant to Section 228 of the Delaware General Corporation Law, stockholders of
record of SAFLINK as of December 5, 2000, are entitled to receive this
Information Statement and Notice of Taking of Corporate Action Without a Meeting
by Written Consent. We encourage you to read the Notice and Information
Statement carefully, as well as the enclosed copy SAFLINK's annual report on
Form 10-K for the year ended December 31, 1999, and its quarterly report on Form
10-Q for the three months ended September 30, 2000.
By Order of the Board of Directors,
Jeffrey P. Anthony
Chairman of the Board, Chief Executive Officer
and President
Redmond, Washington
January ___, 2001
<PAGE>
INFORMATION STATEMENT
SAFLINK CORPORATION
18650 N.E. 67TH COURT
REDMOND, WA 98052
YOUR VOTE IS NOT REQUIRED
WE ARE NOT ASKING YOU FOR A PROXY
AND YOU ARE REQUESTED NOT TO SEND US A PROXY
This Information Statement is being furnished to the holders of record
of shares of common stock, par value $0.01 per share, of SAFLINK Corporation, a
Delaware corporation. This Information Statement is being furnished in order to
notify the stockholders that on December 22, 2000, SAFLINK received the written
consent in lieu of a meeting of the stockholders of the holders of an aggregate
of approximately 14,527,844 shares of SAFLINK common stock representing
approximately 55.6% of all the issued and outstanding SAFLINK common stock as of
the record date approving the following actions:
1. An amendment to SAFLINK's certificate of incorporation to increase the
number of its authorized shares of common stock from 50 million to 100 million
shares (the "Amendment"); and
2. The issuance of up to 20 million shares of SAFLINK common stock at a
discount to market and warrants to purchase up to an additional 20 million
shares at a premium to such price (the "Financing").
The actions taken by the written consent will be effective on the 21st day
(approximately _________, 2001) after the Notice and this Information Statement
are first mailed to all stockholders of SAFLINK.
All necessary corporate approvals in connection with the matters referred to in
this Information Statement have been obtained. This Information Statement is
furnished to all stockholders of record of SAFLINK pursuant to Section 14(c) of
the Securities Exchange Act of 1934 and the rules and regulations promulgated
thereunder solely for the purpose of informing the stockholders of these
corporate actions before they take effect.
This Information Statement describing the Amendment and the Financing is being
mailed on or about ___________, 2001 to all stockholders of record at the close
of business on December 5, 2000. As of that date there were 26,106,695 shares of
SAFLINK common stock outstanding, each entitled to one vote on each matter
presented to the stockholders.
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TABLE OF CONTENTS
GENERAL INFORMATION
Approval of the Board of Directors................................. 3
Approval of Audit Committee........................................ 3
Expenses of Information Statement.................................. 3
Dissenters' Rights................................................. 3
Interest of Certain Persons in or Opposition to Matters to be
Acted Upon....................................................... 3
THE AMENDMENT
Purpose of the Amendment........................................... 4
Principal Effects of the Amendment................................. 4
THE FINANCING
Summary............................................................ 5
Use of Proceeds.................................................... 5
Restrictions on Resale............................................. 6
Effects on Rights of Existing Stockholders......................... 6
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT............. 7
DOCUMENTS INCORPORATED BY REFERENCE........................................ 8
WHERE YOU CAN FIND MORE INFORMATION........................................ 9
Exhibit A Amendment to Certificate of Incorporation
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GENERAL INFORMATION
APPROVAL OF BOARD OF DIRECTORS
On or about December 5, 2000, SAFLINK's board of directors approved the
Amendment and the actions contemplated by the Financing. In addition, the audit
committee of the board of directors separately considered and approved the
Financing and the use of the written consent process in lieu of a stockholders'
meeting given SAFLINK's need for capital.
APPROVAL OF AUDIT COMMITTEE
Under Rule 4310(c)(25)(G)(i)(d)(ii) of the National Association of
Securities Dealers ("NASD") SAFLINK is required to seek stockholder approval (in
person or by proxy) prior to the Financing, since such Financing would be
considered a private issuance of securities equal to 20% or more of the common
stock, unless an exception applies. Rule 4310(c)(25)(G)(ii) sets forth
exceptions to this requirement and provides that exceptions may be made upon
application to Nasdaq when (i) the delay in securing stockholder approval would
seriously jeopardize the financial viability of the enterprise, and (ii)
reliance by the issuer on this exception is expressly approved by the audit
committee of the issuer.
On December 22, 2000, SAFLINK's audit committee expressly approved the
Financing and SAFLINK's reliance on the exception that seeking stockholder
approval (in person or by proxy) would seriously jeopardize the financial
viability of SAFLINK, largely because of the delay associated with obtaining
such stockholder approval. Therefore, the audit committee recommended that
written consents of the majority stockholders be solicited for purposes of
approving the Financing in accordance with the NASD rules.
EXPENSES OF INFORMATION STATEMENT
We will pay all costs associated with the distribution of this
Information Statement, including the costs of printing and mailing. We will
reimburse brokerage firms and other custodians, nominees and fiduciaries for
reasonable expenses incurred by them in sending this Information Statement to
the beneficial owners of SAFLINK's common stock.
DISSENTERS' RIGHTS
The Delaware General Corporation Law does not provide for dissenters
rights in connection with the Amendment or the Financing.
INTEREST OF CERTAIN PERSONS IN OR OPPOSITION TO MATTERS TO BE ACTED UPON
On November 13, 2000, each of Jeffery Anthony, James Shepperd, and RMS
Limited Partnership entered into loan agreements with SAFLINK for an aggregate
principal amount of $1,050,000 (the "Bridge Financing"). Under the terms of the
Bridge Financing, each of these lenders may participate in the Financing by
electing to receive shares or warrants in payment of their respective loans on
the same terms and conditions offered to other prospective investors in the
Financing.
In addition, SAFLINK may elect to allow Jotter Technologies Inc. to
convert some or all of its unsecured promissory note received as partial
consideration in the asset purchase transaction into shares or warrants to be
issued in the Financing, but there is no commitment or understanding on the part
of SAFLINK or Jotter to do so.
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<PAGE>
THE AMENDMENT
The proposed amendment to SAFLINK's Certificate of Incorporation would
increase the number of SAFLINK's authorized shares of common stock from 50
million to 100 million shares. The full text of the Amendment is set forth in
Exhibit A to this Information Statement.
PURPOSE OF THE AMENDMENT
The board of directors of SAFLINK believes the increase in the
authorized shares is necessary to insure that, after issuance of 5.1 million
shares of SAFLINK common stock to Jotter pursuant to the terms of the Asset
Purchase Agreement entered into by SAFLINK and Jotter on December 15, 2000,
SAFLINK will have adequate authorized but unissued shares of common stock for:
o the Financing described on page 5; and
o any subsequent financings or future acquisitions so that SAFLINK will not
have the delay and expense associated with obtaining stockholder approval
each time an opportunity requiring the issuance of shares arises.
SAFLINK does not currently have sufficient common stock authorized for
these requirements.
PRINCIPAL EFFECTS OF THE AMENDMENT
OUTSTANDING SHARES. On December 20, 2000 SAFLINK had 26,106,695 shares
of common stock issued and outstanding. Also on that date, SAFLINK had 3,988,499
shares of common stock subject to outstanding warrants and options. As partial
consideration in the asset purchase transaction with Jotter, SAFLINK has agreed
to issue an additional 5.1 million shares of its common stock to Jotter not
later than January 30, 2001.
RIGHTS OF HOLDERS. The additional shares of common stock to be
authorized by adoption of the Amendment would have rights identical to those of
the currently outstanding shares of common stock of SAFLINK. Adoption of the
Amendment would not affect the rights of holders of currently outstanding shares
of common stock.
ANTI-TAKEOVER EFFECT. The availability of authorized but unissued
shares of common stock might be deemed to have the effect of preventing or
discouraging an attempt by a third party to obtain control of SAFLINK because
the additional shares could be issued by the board of directors which could
dilute the stock ownership of such third party. SAFLINK has no plans for such
issuances and this Amendment is not being proposed in response to a known effort
to acquire control of SAFLINK.
DILUTIVE EFFECT. The authorization of additional shares of common stock
will have no dilutive effect upon the proportionate voting power of the present
stockholders of SAFLINK. However, to the extent that shares are subsequently
issued to persons other than the present stockholders and/or in proportions
other than the proportion that presently exists, this issuance could have a
substantial dilutive effect on present stockholders. Once this Amendment becomes
effective, the board of directors would be free to issue common stock without
further action on the part of the stockholders, unless approval is otherwise
required by applicable law or the Nasdaq Stock Market or stock exchange rules.
REQUIRED VOTE. Adoption of this Amendment requires the vote of a
majority of the shares of common stock outstanding as of the record date. The
holders of a majority of SAFLINK's outstanding common stock have voted to adopt
this Amendment on December 22, 2000. The Amendment will become effective on
approximately ________________ 2001 when we file the Amendment with the
Secretary of State of Delaware. Under federal securities laws, SAFLINK cannot
file the Amendment until at least 20 days after the mailing of this Information
Statement.
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FINANCING
SUMMARY
NASD Rule 4310(c)(25)(G)(i)(d)(1) provides that an issuer shall seek
stockholder approval prior to the issuance of securities in connection with a
transaction, other than a public offering, involving the sale or issuance by the
company of common stock (or securities convertible into common stock) equal to
20% or more of the common stock or 20% or more of the voting power outstanding
before the issuance for less than the greater of book or market value of the
stock. We are required to comply with this rule since our common stock is listed
on The Nasdaq SmallCap Market.
SAFLINK intends to offer securities with an aggregate purchase price of
up to $20 million. The securities to be offered will be a maximum of 20 million
shares of common stock. SAFLINK anticipates that warrants to purchase up to 20
million additional shares of common stock will also be issued in connection with
the Financing. The offering price of each share is anticipated to be no less
than 95% of the market price for SAFLINK common stock (as calculated upon the
basis of the average closing prices for the 5 trading days prior to the closing
of the offering) (the "Share Price"). The exercise price for each share of
common stock issuable upon exercise of warrants granted in connection with the
Financing is anticipated to be no less than 150% of the Share Price. Any
additional material terms relating to this Financing will be determined by
SAFLINK's board of directors.
These 20 million shares of common stock represent 76.6% of the SAFLINK
common stock outstanding as of the record date and the warrants, if exercised,
represent 43.4% after giving effect to the issuance of such common stock or
76.6% of the common stock outstanding as of the record date. Assuming the
issuance of 5.1 million shares of SAFLINK common stock to Jotter, the 20 million
shares of SAFLINK common stock will represent 64.1% of the outstanding stock and
the warrants will represent 64.1% (without giving effect to the issuance of the
common stock). SAFLINK does not intend to sell these shares in a block and
therefore does not anticipate that the Financing will result in a change in
control. However, SAFLINK anticipates that it will be required to register the
shares issued in the Financing for resale which could result in a large number
of shares in the public market.
Based on the average book price and the average market price of the
common stock on the dates of issuance, the shares may be issued for less than
the greater of book or market value of SAFLINK common stock. Consequently, the
issuance of the shares is subject to the NASD Rule 4310(c)(25)(G)(i)(d)(1), and
such issuance is required to be approved by the holders of the majority of
SAFLINK's common stock, not including those shares to be issued. The necessary
stockholder approval has been obtained pursuant to the written consent.
USE OF PROCEEDS
SAFLINK intends to use the net proceeds available from this Financing
to fund the launch of SAFLINK's new consumer product JotterSAF, marketing and
sales of SAFLINK's existing enterprise and Internet server products, development
of new features and enhancements to SAFLINK's product line, and for working
capital and other purposes.
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<PAGE>
In particular, the estimated use of proceeds (assuming the maximum of $20
million is raised) will be as follows:
(Dollars in thousands)
Advertising and promotion for new product launch * $ 4,140
Product development * 1,818
Sales and marketing * 1,470
Capital expenditures * 746
Payoff of bridge loan 2,500
Reduction in accounts payable 850
Jotter tax liability + 1,640
Working capital 4,586
-----------
Net Proceeds 17,750
Costs associated with this offering 2,250
-----------
Gross Proceeds $ 20,000
===========
* One year estimated expenses
+ Jotter is obligated to obtain a certificate from the Canadian taxing
authorities in order to avoid the need for SAFLINK to withhold and remit
one-third of the purchase price to the Canadian taxing authorities. In the event
that Jotter is unable to obtain such a certificate, SAFLINK will be required to
make such payment, and will be entitled to offset such amount against the number
of shares to be issued to Jotter and the principal balance of the note issued to
Jotter.
Although SAFLINK intends to use the proceeds of the Financing as
described above, SAFLINK's board of directors will have complete discretion as
to the use of proceeds from the Financing.
RESTRICTIONS ON RESALE
All shares and warrants issued in connection with the Financing will be
considered restricted securities and cannot be sold to the public for a period
of one year from the date of purchase or until the securities are qualified
under a registration statement registering the resale of securities. SAFLINK
intends to provide registration rights for the resale of the common stock and
common stock underlying the warrants issued in the Financing.
EFFECT ON RIGHTS OF EXISTING STOCKHOLDERS
This Financing may result in substantial dilution to the equity
ownership of SAFLINK's existing stockholders and to Jotter once it becomes a
stockholder. In addition, subsequent resales of the shares issued in the
Financing could impact the market for these shares by driving down the price of
the SAFLINK common stock and make it difficult for SAFLINK to raise additional
capital.
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information as to the number of shares
of SAFLINK common stock beneficially owned as of December 20, 2000 by:
o each person expected to be a director of SAFLINK;
o the chief executive officer and the five other most highly compensated
executive officers of SAFLINK;
o all persons expected to be SAFLINK's directors and executive officers
as a group; and
o each person, entity, or group of affiliated persons expected to
beneficially own more than 5% of SAFLINK's common stock, based on that
person's or entity's ownership of SAFLINK common stock and the number
of outstanding shares of SAFLINK common stock as of December 20, 2000.
For purposes of this table, beneficial ownership of securities is defined
according to the rules of the Securities and Exchange Commission ("SEC") and
means generally the power to vote or exercise investment discretion with respect
to securities, regardless of any economic interests therein. Except as otherwise
indicated, SAFLINK believes that the beneficial owners of shares of SAFLINK
common stock listed below will have sole investment and voting power with
respect to such shares, subject to community property laws where applicable. In
addition, for purposes of this table, a person or group is deemed to have
beneficial ownership of any shares which such person has the right to acquire
within 60 days after the date as of which this data is presented. For purposes
of calculating the percentage of outstanding shares held by each person named
above, any shares which this person has the right to acquire within 60 days
after the date as of which this data is presented are deemed to be outstanding,
but these shares are not deemed to be outstanding for the purpose of calculating
the percentage ownership of any other person.
The percentages were calculated based on the ratio of the number of shares of
SAFLINK common stock beneficially owned by such beneficial owner as of December
20, 2000, (which includes the number of shares of common stock issuable upon
exercise of options and warrants of such owner which are exercisable within 60
days of December 20, 2000) to the sum of:
o 26,106,695, the total number of outstanding shares of common stock as
of December 20, 2000, which includes the 6,506,539 shares of common
stock outstanding as a result of the conversion of SAFLINK's Series A
Preferred Stock and Series D Preferred Stock; plus
o 5.1 million, the number of shares to be issued to Jotter as partial
consideration in the asset purchase transaction; plus
o the number of shares of common stock issuable upon exercise of options
or warrants held by the applicable beneficial owner exercisable within
60 days of December 20, 2000.
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The table does not reflect ownership of the Series A Preferred Stock and the
Series D Preferred Stock. None of this stock is currently outstanding.
<TABLE>
<CAPTION>
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SHARES BENEFICIALLY OWNED
-------------------------
NAME OF BENEFICIAL OWNER OPTIONS AND WARRANTS
------------------------ -------------------- TOTAL
BENEFICIAL
5% STOCKHOLDERS COMMON STOCK TOTAL EXERCISABLE(1) OWNERSHIP PERCENT
--------------- ------------ ----- -------------- --------- -------
<S> <C> <C> <C> <C> <C>
RMS Limited Partnership 11,927,312 -- -- 11,927,312 38.3%
Home Shopping Network, Inc. 2,600,532 -- -- 2,600,532 8.4%
Jotter Technologies Inc. 5,100,000 -- -- 5,100,000 16.4%
DIRECTORS:
----------
Jeffrey P. Anthony -- 546,667 426,667 426,667 1.4%
Hector J. Alcalde -- 110,000 90,000 90,000 0.3%
Frank M. Devine 15,583 331,666 331,666 347,249 1.1%
Robert J. Rosenblatt -- -- -- -- --
Francis M. Santangelo 908,377 83,333 83,333 991,710 3.2%
Glenn Argenbright (2) -- -- -- -- 0.0%
Robert M. Smibert (2) -- -- -- -- 0.0%
EXECUTIVE OFFICERS:
------------------
Ann M. Alexander -- 100,000 -- -- 0.0%
Walter G. Hamilton -- 201,777 108,148 108,148 0.3%
C. David Hayden -- 150,000 -- -- 0.0%
Gregory G. Jensen 25,000 113,111 49,926 49,926 0.2%
James W. Shepperd -- 175,000 115,000 140,000 0.4%
---------- --------- --------- ---------- -----
20,576,804 1,811,554 1,204,740 21,781,544 67.4%
========== ========= ========= ========== =====
Directors and officers
as a group (11 persons) 948,960 1,811,554 1,204,740 2,153,700 6.7%
----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Within 60 days of December 20, 2000
(2) Mr. Smibert and Mr. Argenbright will be offered 60,000 options as new board
members. Mr. Smibert and Mr. Argenbright are also officers and directors of
Jotter Technologies Inc., but disclaim beneficial ownership of shares held
by Jotter.
DOCUMENTS INCORPORATED BY REFERENCE
This document includes information relating to SAFLINK that has not
been delivered or presented to you, but is "incorporated by reference" which
means that we disclose information to you by referring you to other documents
filed separately with the SEC. The information incorporated by reference is
considered a part of this Information Statement, except for any information
superseded by information provided to you in this Information Statement. SAFLINK
is incorporating the following documents by reference, which contain important
information about SAFLINK and its finances:
o SAFLINK's Annual Report on Form 10-K for the year ended December
31, 1999, filed with the SEC on March 22, 2000, which is
delivered to you with this Information Statement;
o SAFLINK's Quarterly Report on Form 10-Q for the quarterly period
ended March 31, 2000, filed with the SEC on May 15, 2000;
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o SAFLINK's Quarterly Report on Form 10-Q for the quarterly period
ended June 30, 2000, filed with the SEC on August 14, 2000;
o SAFLINK's Quarterly Report on Form 10-Q for the quarterly period
ended September 30, 2000, filed with the SEC on November 14,
2000, which is delivered to you with this Information Statement;
o SAFLINK's Current Report on Form 8-K, filed with the SEC on April
27, 2000; and
o SAFLINK's Current Report on Form 8-K, filed with the SEC on
September 26, 2000.
We will provide any of the documents incorporated into this
Information Statement by reference without change to each person to whom this is
delivered upon the request of such person to: Chief Financial Officer, SAFLINK
Corporation, 18650 N.E. 67th Court, Suite 210, Redmond, WA 98052, (425)
881-6766.
WHERE YOU CAN FIND MORE INFORMATION
SAFLINK files annual, quarterly and special reports, proxy statements
and other information with the SEC. You may read and copy any reports,
statements or other information filed by SAFLINK at the SEC's public reference
rooms in Washington, D.C., New York, New York and Chicago, Illinois. Please call
the SEC at 1-800-SEC-0330 for further information on the public reference rooms.
All of SAFLINK's SEC filings are also available to the public from commercial
document retrieval services and, for filings filed electronically since 1996, at
the Website maintained by the SEC at "http://www.sec.gov."
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<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
SAFLINK Corporation, a Delaware corporation, pursuant to Section 242 of
the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That the Board of Directors of said corporation adopts the
following resolution proposing and declaring advisable the following amendment
to the Certificate of Incorporation of said corporation:
RESOLVED, that the Certificate of Incorporation of SAFLINK
Corporation. be amended by changing the Article thereof
numbered "FOURTH" so that, as amended, said Article shall be
and read as follows:
"FOURTH: The total number of shares of all classes of
stock which the Corporation shall have authority to
issue is 101,000,000 shares, consisting of (i)
1,000,000 shares of Preferred Stock, $.01 par value
per shares (the "Preferred Stock"), and (ii)
100,000,000 shares of Common Stock, $.01 par value
per share (the "Common Stock")."
SECOND: The amendment of the Certificate of Incorporation of the
corporation herein certified was duly adopted, pursuant to the provisions of
Section 242 of the General Corporation Law of the State of Delaware.
<PAGE>
IN WITNESS WHEREOF, said SAFLINK Corporation has caused this
certificate to be signed by Jeffrey P. Anthony its authorized officer.
----------------------------
By Jeffrey P. Anthony
Its President and Chief
Executive Officer
