AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION FEBRUARY 9, 1999
REGISTRATION NO. 333-______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------------------
DIGITAL BIOMETRICS, INC.
(Exact name of registrant as specified in charter)
DELAWARE 3571 41-1545069
(State or other jurisdiction (Primary Standard Industrial (I.R.S. employer
of incorporation or Classification Code Number) identification number)
organization)
5600 ROWLAND ROAD
MINNETONKA, MINNESOTA 55343
(612) 932-0888
(Address, including zip code, and telephone number, including area code, of
registrants' principal executive offices)
COPY TO:
MR. JOHN J. METIL PHILIP J. TILTON, ESQ.
DIGITAL BIOMETRICS, INC. MASLON EDELMAN BORMAN & BRAND, LLP
5600 ROWLAND ROAD 3300 NORWEST CENTER
MINNETONKA, MINNESOTA 55343 MINNEAPOLIS, MINNESOTA 55402-4140
(612) 932-0888 (612) 672-8200
APPROXIMATE DATE OF THE COMMENCEMENT OF PROPOSED DISTRIBUTION: From time to time
after the effective date of this Registration Statement.
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- --------------------------- ----------------- -------------------- ---------------------- --------------------
TITLE OF EACH CLASS OF PROPOSED MAXIMUM PROPOSED MAXIMUM
SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED(1) PER SHARE PRICE(2) REGISTRATION FEE
- --------------------------- ----------------- -------------------- ---------------------- --------------------
<S> <C> <C> <C> <C>
common stock, par value
$.01 per share 886,660 $1.50 $1,329,990 $392.00
- --------------------------- ----------------- -------------------- ---------------------- --------------------
</TABLE>
(1) Includes 464,441 shares of common stock issuable upon exercise of
outstanding warrants.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 of the Securities Act based upon a $1.50 per share
average of bid and asked prices of the Registrant's common stock on the Nasdaq
National Market on February 4, 1999.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED FEBRUARY 9, 1999
SELLING STOCKHOLDER OFFERING PROSPECTUS
DIGITAL BIOMETRICS, INC.
886,660 SHARES OF COMMON STOCK
-----------------------------------------
The shares of common stock of Digital Biometrics, Inc. offered by
this Prospectus include 422,219 shares sold to certain investors in a private
placement on January 8, 1999 and an equal number of shares issuable to such
investors upon exercise of warrants issued in the same transaction, and 42,222
shares issuable upon exercise of warrants issued to certain owners of an
investment banking firm in connection with the private placement. The afore-
mentioned investors and investment banking firm owners are referred to
collectively in this Prospectus as the "Selling Stockholders." The Company will
not receive any proceeds from the sale of shares by the Selling Stockholders.
The Company's common stock (the "Common Stock") is listed on the
Nasdaq National Market under the symbol "DBII." On February 8, 1999, the last
sale price for the Common Stock as reported on the Nasdaq National Market was
$1.469.
This investment involves a high degree of risk. You should purchase
shares only if you can afford a complete loss. See "Risk Factors" beginning on
page 4.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus is February 9, 1999.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission (the "SEC"). You
may read and copy any document we file 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 public reference rooms. Our SEC
filings are also available to the public from the SEC's web site at
http://www/sec/gov.
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The SEC allows us to "incorporate by reference" the information we
file with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this Prospectus, and later information that we file
with the SEC will automatically update and replace this information. We
incorporate by reference the documents listed below and any future filings made
with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange
Act of 1934 until the Selling Stockholder sells all the common stock. This
Prospectus is part of a registration statement we filed with the SEC
(Registration No. 333-_________).
* Annual Report on Form 10-K for the year ended September 30,
1998, as amended by Form 10-K/A filed with the SEC on January
28, 1999.
* The description of our Common Stock contained in our
registration statement on Form 8-A, as amended.
* Future Filings
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Digital Biometrics, Inc.
5600 Rowland Road
Minnetonka, Minnesota 55343
Attention: Chief Financial Officer
You should rely only on the information incorporated by reference or
provided in this Prospectus or any supplement. We have not authorized anyone
else to provide you with different information. The Selling Stockholders will
not make any offer of the Common Stock in any state where the offer is not
permitted. You should not assume that the information on this Prospectus or any
supplement is accurate as of any date other than the date on the front of those
documents.
2
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TABLE OF CONTENTS
NAME OF ITEM OR CAPTION PAGE
- ---------------------------------------------------------------------- ------
WHERE YOU CAN FIND MORE INFORMATION................................... 1
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE....................... 2
RISK FACTORS.......................................................... 4
Continuing losses and general business risks............... 4
Working capital and liquidity.............................. 4
Local government credit considerations..................... 4
Law enforcement agency characteristics..................... 5
Reliance on a limited number of customers.................. 5
Need to upgrade products and develop new technologies...... 6
New business ventures...................................... 6
Effect of Year 2000 on computer systems.................... 6
Limited protection of proprietary technology............... 7
Dependence on suppliers.................................... 7
Reliance on key personnel.................................. 7
Competition................................................ 8
Dependence on OEM relationships............................ 8
No cash dividends.......................................... 8
Shares eligible for future sale............................ 8
Volatility of market price of common stock................. 9
Delaware anti-takeover laws and stockholders' rights plan.. 9
FORWARD-LOOKING STATEMENTS............................................ 9
THE COMPANY........................................................... 10
USE OF PROCEEDS....................................................... 10
SELLING STOCKHOLDERS.................................................. 10
PLAN OF DISTRIBUTION.................................................. 12
LEGAL MATTERS......................................................... 13
EXPERTS............................................................... 13
3
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RISK FACTORS
An investment in the Common Stock is very risky. You may lose the
entire amount of your investment. Prior to making an investment decision, you
should carefully read this entire Prospectus and consider the following risk
factors:
CONTINUING LOSSES AND GENERAL BUSINESS
RISKS
We have not yet recorded a profit for We have incurred a loss in each quarter
any quarter, and we may not be since the Company was founded. As of
profitable for the foreseeable future September 30, 1998, we had generated a
cumulative net loss of $40,211,231. We
incurred a net loss of $4,888,432 for
the year ended September 30, 1998.
Although we expect to break even or earn
a profit for the year ending September
30, 1999, it is possible that the
Company will continue to lose money for
such period and for the foreseeable
future. Our future operating results
will depend on many factors, including,
without limitation, the demand for our
products and services, our ability to
control costs, our ability to develop
and market new products and service, our
ability to create and maintain
satisfactory distribution and other
relationships with appropriate third
parties, and our success in attracting
and retaining key personnel.
WORKING CAPITAL AND LIQUIDITY
The Company may have to raise As a result of our continued operating
additional working capital to losses, we have relied on outside
continue its operations. capital to fund our business. We believe
our existing resources will be sufficient
to satisfy our foreseeable working
capital needs. However, our belief is
subject to a number of uncertainties
beyond our control. Such uncertainties
include, among others, the continued
availability of bank and vendor credit,
and our ability to satisfy our customer
requirements to insure payment of our
accounts receivable. The Company has
previously experienced difficulties in
meeting certain customer requirements,
particularly with respect to orders
involving the connectivity of new
products with legacy systems. If the
Company requires additional financing, it
may not be available on acceptable terms
or at all.
LOCAL GOVERNMENT CREDIT CONSIDERATIONS
Collection of accounts receivable A substantial majority of our sales and
from government agencies may be accounts receivable are attributable to
problematic. government agencies. The Company's
contracts with these agencies often
include technical requirements which may
not be fully known at the time of
4
<PAGE>
the order. Such contracts may also
specify performance criteria which must
be satisfied before the customer accepts
our products or services. Collection of
our accounts receivable may, in some
instances, require the investment of
additional resources which may be
uncompensated by our customers.
LAW ENFORCEMENT AGENCY CHARACTERISTICS
Revenues from our primary customers Our primary customers, law enforcement
may be erratic and are subject to agencies, are subject to both political
various contingencies. and budgetary constraints. These
factors, coupled with the nature of
government procurement processes, result
in irregular and unpredictable revenue
cycles for the Company. In addition,
many of our customers' procurements are
dependent upon the availability of
government grants and general tax
funding. To the extent these funding
sources are unavailable to our
customers, the Company's revenues will
suffer accordingly. Finally, future
revenues from law enforcement agencies
will depend on our ability to satisfy
public contract requirements, certain of
which may be uneconomical to meet.
RELIANCE ON A LIMITED NUMBER OF CUSTOMERS
The Company's sales are A majority of our sales have been
concentrated in a attributable to a relatively small
relatively small number of customers. Sales to two
number of customers customers accounted for 16 percent and
12 percent of total sales for the fiscal
year ended September 30, 1998. Sales to
three customers accounted for 17
percent, 14 percent and 12 percent of
total sales for the year ended September
30, 1997. This concentration of sales
among a few customers is expected to
continue for the foreseeable future. If
one or more of our large-volume
customers were to discontinue doing
business with us, our results of
operations would be materially and
adversely affected. In addition, the
irregular timing of large orders and
their materiality to our total revenues
for any given reporting period has
caused, and is expected to cause,
substantial volatility in the Company's
operating results.
5
<PAGE>
NEED TO UPGRADE PRODUCTS AND DEVELOP
NEW TECHNOLOGIES
Our success requires continuous Our ability to compete successfully
investment in new technologies. depends, in part, on our ability to
develop and market new products and
services. The continuous upgrading of
the Company's technology requires the
investment of resources that may not be
available to the Company. Even if a
reasonable amount of resources are
available for investment, we may not be
successful in keeping pace with
technological developments in our
industry.
NEW BUSINESS VENTURES
The Company's new During 1998, we joined with Grand
business ventures may Casinos, Inc. to form a joint venture
not be profitable. called TRAK 21 Development, LLC ("TRAK
21"). The purpose of TRAK 21 is to
develop and market a blackjack wagering
data capture and player tracking system.
Also during 1998, we started a systems
integration business currently operated
through a wholly owned subsidiary called
"Integral Partners, Inc." The ultimate
success of each of these ventures is
subject to the same uncertainties faced
by any new business, including the
viability of the products and services
offered within their target markets. It
is possible that either or both of TRAK
21 and Integral Partners, Inc. will not
be profitable for the Company.
EFFECT OF YEAR 2000 ON COMPUTER SYSTEMS
We are subject to unforeseen We have dedicated a portion of our
difficulties and costs associated resources to address so-called "Year
with the Year 2000 phenomenon. 2000" issues in our products, internal
management systems and among our
vendors. The actual costs to be incurred
by the Company in connection with these
efforts may differ significantly from
our estimates. Unforeseen implementation
problems may arise, and problems
experienced by our suppliers might
adversely affect our own systems. Such
problems may cause the Company to expend
substantially more than the current
budget for Year 2000 issues.
6
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LIMITED PROTECTION OF PROPRIETARY
TECHNOLOGY
Our efforts to protect the Company's The Company is dependent upon
proprietary technology may not be proprietary technology. We rely upon a
sufficient. We may also be compelled combination of patents, copyrights,
to defend against infringement claims trademarks and trade secrets to
brought by others. establish and protect the proprietary
technology used in our products and
services. The steps taken by the Company
to protect its technology may not be
sufficient to prevent misappropriation
by others. Moreover, the laws of some
foreign countries do not protect our
proprietary rights on a level
commensurate with that of the United
States. The Company's competitors may
seek to challenge, invalidate or
circumvent our patents and trade
secrets. Alternatively, our competitors
may independently develop technology
that is equivalent to, or better than,
our own technology. It is also possible
that the Company's competitors may
obtain patent protection covering
technology currently incorporated in our
products. The Company has incurred
substantial costs in attempts to enforce
its patents and could incur substantial
costs in defending against patent
infringement claims brought by others.
If we lose or decline to defend
ourselves against any such claims, we
may be required to license technology
from others (which may not be made
available to us on reasonable or any
terms) in order to continue to offer our
products and services.
DEPENDENCE ON SUPPLIERS
We are dependent upon a single Certain key components used in our
supplier for many components of our products are sourced from a single
products. supplier. The loss of any of these
suppliers or a significant increase in
the prices charged by these suppliers
would likely have a negative effect on
our profitability. Moreover, the loss of
these suppliers may result in our
incurring substantial costs to identify
and obtain replacement suppliers.
RELIANCE ON KEY PERSONNEL
We rely heavily on the services of Digital Biometrics, Inc. is highly
our employees dependent on the continued services of
its President and Chief Executive
Officer, other executive officers and
many of its technical, sales,
administrative and operations personnel.
The Company does not have employment
agreements with any of these
individuals. The loss of one or more of
these employees may have a negative
effect on our business and future
prospects.
7
<PAGE>
COMPETITION
The markets in which we operate are There is significant and increasing
highly competitive. competition in the market for biometric
identification devices, and the market
for live-scan systems in particular.
Some of the companies presently
providing AFIS systems may develop a
live-scan product or source a live-scan
product for distribution by them from
one of our competitors. Our competitors
may have greater financial, technical,
marketing and other resources than we.
We may not be able to compete
successfully against these other
companies. Our operating results and
financial condition will likely
deteriorate in response to competitors'
development of new technologies, new
products or price reductions imposed to
gain or retain market share.
DEPENDENCE ON OEM RELATIONSHIPS
We depend on existing and potential We have established marketing and other
strategic relationships for much of strategic relationships with numerous
our sales volume. other businesses. A significant amount
of our revenues to date have been
achieved through these relationships. We
continue to pursue other strategic
partnerships as a means of generating
new sales opportunities. We may not be
successful in this regard, and it is
possible that the Company will lose one
or more of its existing strategic
relationships. Either of these
occurrences may have a negative effect
on our future operating results and
financial position.
NO CASH DIVIDENDS
We do not intend to pay dividends on We have not yet paid any dividends on
the Common Stock for the foreseeable our common stock, and we do not intend
future. to do so in the foreseeable future. To
date, the Company has not generated a
profit. Future earnings, if any, will be
used to fund the Company's operations
and growth.
SHARES ELIGIBLE FOR FUTURE SALE
Large quantities of additional shares Approximately 3,816,458 shares of Common
of Common Stock may be issued and Stock are issuable upon conversion or
offered in the market at the same exercise of currently outstanding
time, causing the market price debentures, options and warrants.
of the Common Stock to decline. Substantially all of these shares will
be freely tradable upon issuance. If
large quantities of these shares are
offered in the market at the same time,
the market price of our stock may be
depressed.
8
<PAGE>
VOLATILITY OF MARKET PRICE OF COMMON
STOCK
The market price of our Common During the fiscal year ended September
Stock is highly volatile and subject 30, 1998, the closing market price of
to many factors beyond our control. our common stock has varied
substantially, from $2.66 to $0.97 per
share. Fluctuations in the market price
of the Common stock may result from many
factors, such as widely varying
operating results, general market
conditions, significant events in the
Company's industry and the activities of
various governmental agencies. These
factors are generally beyond the control
of the Company.
DELAWARE ANTI-TAKEOVER LAWS AND
STOCKHOLDERS' RIGHTS PLAN
Delaware law and our stockholder Section 203 of the Delaware General
rights plan may each have the effect Corporation Law has the effect of
of delaying, impeding or preventing restricting combinations between the
transactions which could be Company and certain of its stockholders
beneficial to stockholders. without the approval of the Company's
Board of Directors. In addition, the
Company has in place a stockholder
rights plan, adopted in 1996, under
which our stockholders are entitled to
purchase additional shares of Common
Stock at a discount from the market
price under certain circumstances. These
circumstances include the purchase of 15
percent or more of the outstanding
shares of Common Stock by a person or
group, or the announcement of a tender
or exchange offer to acquire 15 percent
or more of the outstanding Common Stock.
The stockholder rights plan may have the
effect of impeding or preventing certain
types of transactions involving a change
in control of the Company which could be
beneficial to the stockholders.
FORWARD-LOOKING STATEMENTS
This Prospectus includes and incorporates by reference forward-looking
statements within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"), and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). These statements relate to analyses and other information which
are based on forecasts of future results and estimates of amounts not yet
determinable. These statements also relate to our future prospects, developments
and business strategies.
These forward-looking statements are identified by their use of
terms and phrases such as "anticipate," "believe," "could," "estimate,"
"expect," "intend," "may," "plan," "predict," "project," "will," and similar
terms and phrases, including references to assumptions. These statements are
contained in sections entitled "Risk Factors," "The Company" and other sections
of this Prospectus and in the documents incorporated by reference in this
Prospectus.
These forward-looking statements involve risks and uncertainties
that may cause our actual future activities and results of operations to be
materially different from those suggested or described in this
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<PAGE>
Prospectus. These risks include competition; industry conditions; operating
risks; our structure as a holding company; our dependence on key personnel; the
geographic concentration of our operations; and governmental regulations.
Our risks are more specifically described in "Risk Factors" and in
our Annual Report on Form 10-K (as amended by Form 10-K/A and Quarterly Reports
on Form 10-Q, which are incorporated by reference in this Prospectus. If one or
more of these risks or uncertainties materialize, or if underlying assumptions
prove incorrect, our actual results may vary materially from those expected,
estimated or projected.
THE COMPANY
We are located in Minnetonka, Minnesota. We develop, manufacture and
market computer-based equipment (and provide related services) used for the
identification of individuals. We also participate in a joint venture called
TRAK21 Development, LLC through which we intend to develop and market an
automated wagering tracking system based on our existing technology.
We are a leading provider of products employing "biometric"
technology, the science of identifying individuals by measuring distinguishing
biological characteristics. Our primary products are computer-based systems for
"live-scan" fingerprint capture. Historically, these systems have been purchased
primarily by law enforcement agencies. We also offer high-resolution,
single-fingerprint capture products for commercial and governmental
identification applications.
Our strategy is to continue to market live-scan systems to law
enforcement agencies, and to expand our product and service offerings, as well
as the markets we serve. We believe there is increasing interest from other
governmental and commercial markets to employ biometric identification
technologies.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of the
Common Stock by the Selling Stockholders.
SELLING STOCKHOLDERS
The following table sets forth the number of shares of Common Stock
owned by each Selling Stockholder as of the date of this Prospectus, and on a
basis assuming the shares included in this offering have been sold. The Company
will not receive any proceeds from the sale of Common Stock by the Selling
Stockholders. Except where otherwise noted, each person in the following table
has, to our knowledge, sole voting and investment power with respect to the
shares beneficially owned.
<TABLE>
<CAPTION>
Shares Shares
Beneficially Owned Shares to Beneficially Owned
Prior to the Offering be Sold After the Offering(1)
--------------------- in the --------------------
Name of Selling Stockholder Number Percentage Offering Number Percentage
- --------------------------- ------ ---------- -------- ------ ----------
<S> <C> <C> <C> <C> <C>
KA Investments LDC 739,583(2) 4.999 361,904 -- --
Pyramid Partners, L.P. 270,634(4) 1.82 120,634 -- --
Industricorp & Co., Inc. FBO Twin City 120,634(3) * 120,634 -- --
Carpenters Pension Fund
Piper Jaffray as Custodian FBO Richard C. 94,722(5) * 42,222 -- --
Perkins IRA
Robert G. Allison 67,222(5) * 42,222 -- --
</TABLE>
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<TABLE>
<CAPTION>
Shares Shares
Beneficially Owned Shares to Beneficially Owned
Prior to the Offering be Sold After the Offering(1)
--------------------- in the ------------------
Name of Selling Stockholder Number Percentage Offering Number Percentage
- --------------------------- ------ ---------- -------- ------ ----------
<S> <C> <C> <C> <C> <C>
David M. Westrum, TTEE FBO David M. 48,690(6) * 36,190 -- --
Westrum Revocable Living Trust U/A
DTD 6-1-97
Piper Jaffray as Custodian FBO David H. 30,158(3) * 30,158 -- --
Potter IRA
Piper Jaffray as Custodian FBO James G. 30,158(3) * 30,158 -- --
Peters IRA
Piper Jaffray as Custodian FBO Patrice M. 30,158(3) * 30,158 -- --
Perkins IRA
Piper Jaffray as Custodian FBO Daniel S. 30,158(3) * 30,158 -- --
Perkins IRA
Paul R. Kuehn 62,708(7) * 15,833 -- --
David B. Johnson 62,708(7) * 15,833 -- --
Eldon C. Miller 20,903(8) * 5,278 -- --
Stanley D. Rohm 20,903(8) * 5,278 -- --
--------- -------
1,629,339 886,660
</TABLE>
- -------------------------
(1) Assumes that all shares of Common Stock beneficially owned by the
Selling Stockholders are sold.
(2) Includes (i) 180,952 shares of Common Stock issued in a private
placement on January 8, 1999, and an equal number of shares of
Common Stock issuable upon exercise of warrants issued in the same
transaction, (ii) shares of Common Stock issuable upon conversion of
$750,000 in aggregate principal amount of 8% Convertible
Subordinated Debentures of the Company that are held by the Selling
Stockholder (the "Debentures") and the payment of interest thereon
in the form of shares of Common Stock, assuming conversion at the
price in effect on February 5, 1999, and (iii) shares of Common
Stock issuable upon exercise of warrants that are held by the
Selling Stockholder and issued in previous private placements.
Because the number of shares of Common Stock issuable upon
conversion of the Debentures and as payment of interest thereon is
dependent in part upon the market price of the Common Stock prior to
a conversion, the actual number of shares of Common Stock that will
be issued in respect of such conversions or interest payments, and
consequently the number of shares of Common Stock that will be
beneficially owned by the Selling Shareholder, will fluctuate daily
and cannot be determined at this time. The Selling Shareholder has,
however, contractually agreed to restrict its ability to convert the
Debentures (and receive shares of Common Stock in payment of
interest thereon) and exercise the warrants held by it to the extent
that the number of shares of Common Stock held by it and its
affiliates after such conversion or exercise exceeds 4.999% of the
then issued and outstanding shares of Common Stock following such
conversion or exercise.
(3) Includes (i) shares of Common Stock issued in a private placement on
January 8, 1999 and (ii) an equal number of shares of Common Stock
issuable upon exercise of warrants issued in the same transaction.
(4) Includes 60,317 shares of Common Stock issued in a private placement
on January 8, 1999 and an equal number of shares of Common Stock
issuable upon exercise of warrants issued in the same transaction.
(5) Includes 21,111 shares of Common Stock issued in a private placement
on January 8, 1999 and an equal number of shares of Common Stock
issuable upon exercise of warrants issued in the same transaction.
(6) Includes 18,095 shares of Common Stock issued in a private placement
on January 8, 1999 and an equal number of shares of Common Stock
issuable upon exercise warrants issued in the same transaction.
(7) Includes 15,833 shares of Common Stock issuable upon exercise of
warrants issued to an investment banking firm as compensation for
services rendered in connection with the January 8, 1999 private
placement. The remaining 46,875 shares listed are issuable upon
exercise of warrants issued as compensation in connection with a
prior private placement transaction.
(8) Includes 5,278 shares of Common Stock issuable upon exercise of
warrants issued to an investment banking firm as compensation for
services rendered in connection with the January 8, 1999 private
placement. The remaining 15,625 shares listed are issuable upon
exercise of warrants issued as compensation in connection with a
prior private placement transaction.
* Less than one percent.
From time to time, the Company may issue Prospectus Supplements to
reflect certain additional information pertaining to the Selling Stockholders.
Such information may include additional shares of Common Stock beneficially
owned by them, the public offering price of shares to be sold, the names of any
agent, dealer or underwriter employed by Selling Stockholders, or any applicable
commission or discount relative to a particular offer.
11
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PLAN OF DISTRIBUTION
The Selling Stockholders and any of their pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of Common Stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The Selling Stockholders may use any one or more of the
following methods when selling shares:
o ordinary brokerage transactions and transactions in
which the broker-dealer solicits purchasers;
o block trades in which the broker-dealer will attempt
to sell the shares as agent but may position and
resell a portion of the block as principal to
facilitate the transaction;
o purchases by a broker-dealer as principal and resale
by the broker-dealer for its account;
o an exchange distribution in accordance with the rules
of the applicable exchange;
o privately negotiated transactions;
o short sales;
o broker-dealers may agree with the Selling Stockholders
to sell a specified number of such shares at a
stipulated price per share;
o a combination of any such methods of sale; and
o any other method permitted pursuant to applicable law.
The Selling Stockholders may also sell shares under Rule 144 under
the Securities Act, if available, rather than under this prospectus.
The Selling Stockholders may also engage in short sales against the
box, puts and calls and other transactions in securities of the Company or
derivatives of Company securities and may sell or deliver shares in connection
with these trades. The Selling Stockholders may pledge their shares to their
brokers under the margin provisions of customer agreements. If a Selling
Stockholder defaults on a margin loan, the broker may, from time to time, offer
and sell the pledged shares.
Broker-dealers engaged by the Selling Stockholders may arrange for
other brokers-dealers to participate in sales. Broker-dealers may receive
commissions or discounts from the Selling Stockholders (or, if any broker-dealer
acts as agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The Selling Stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
The Selling Stockholders and any broker-dealers or agents that are
involved in selling the shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
The Company is required to pay all fees and expenses incident to the
registration of the shares, including fees and disbursements of counsel to the
Selling Stockholders. The Company has agreed to indemnify the Selling
Stockholders against certain losses, claims, damages and liabilities, including
liabilities under the Securities Act.
12
<PAGE>
LEGAL MATTERS
Certain legal matters in connection with the Common Stock offered
hereby will be passed upon for the Company by Maslon Edelman Borman & Brand,
LLP, Minneapolis, Minnesota.
EXPERTS
The financial statements and schedule of Digital Biometrics, Inc. as
of September 30, 1998 and for each of the years in the three-year period ended
September 30, 1998 have been incorporated by reference herein and in the
registration statement in reliance upon the reports of KPMG Peat Marwick LLP,
independent certified public accountants, incorporated by reference herein, and
upon the authority of said firm as experts in accounting and auditing.
13
<PAGE>
-----------------------------------
NO DEALER, SALESPERSON OR OTHER INDIVIDUAL HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS IN CONNECTION WITH THE OFFERING MADE HEREBY, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL,
OR SOLICITATION OF AN OFFER TO BUY, ANY SECURITIES OFFERED HEREBY TO ANY PERSON
IN ANY JURISDICTION WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN
IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF.
-----------------------------------
TABLE OF CONTENTS
Additional information 1
Incorporation of certain documents
by reference 2
Risk factors 4
Use of proceeds 9
Selling Stockholders 9
Plan of distribution 10
Legal matters 11
Experts 11
DIGITAL BIOMETRICS, INC.
886,660
SHARES
OF
COMMON STOCK
---------------------
PROSPECTUS
---------------------
FEBRUARY 9, 1999
14
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the estimated expenses, all of which
are being paid by the Company, in connection with this offering
Registration Fee......................... $ 392
---------
Accounting Fees.......................... 4,000
---------
Nasdaq Listing Fee....................... 17,500
---------
Legal Fees and Expenses.................. 10,000
---------
Miscellaneous............................ 2,000
=========
Total.................................... $ 33,892
=========
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of Delaware allows a
corporation to indemnify any person who was or is, or is threatened to be made a
party to any threatened, pending or completed suit or proceeding. This applies
whether the matter is civil, criminal, administrative or investigative because
he or she is or was a director, officer, employee or agent of the corporation.
A corporation may indemnify against expenses (including attorney's
fees) and, except for an action by or in the name of the corporation, against
judgments, fines and amounts paid in settlement as part of such suit or
proceeding. This applies only if the person indemnified acted in good faith and
in a manner he or she reasonably believed to be in the best interest of the
corporation. In addition, with respect to any criminal action or proceeding, the
person had no reasonable cause to believe his or her conduct was unlawful.
In the case of an action by or in the name of the corporation, no
indemnification of expenses may be made for any claim, as to which the person
has been found to be liable to the corporation. The exception is if the court in
which such action was brought determines that the person is reasonably entitled
to indemnity for expenses.
Section 145 of the General Corporation Law of Delaware further
provides that if a director, officer, employee or agent of the corporation has
been successful in the defense of any suit, claim or proceeding described above,
he or she will be indemnified for expenses (including attorneys' fees) actually
and reasonably incurred by him or her.
Insofar as indemnification for liabilities arising under the Act is
permitted as to directors, officers and controlling persons of the Company, in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy and is, therefore, unenforceable. In the event that a
claim for
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<PAGE>
indemnification against such liabilities (other than the payment by the Company
in the successful defense of any action, suit or proceeding) is asserted, the
Company will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy. The
Company will be governed by the final adjudication of such issue.
ITEM 16. EXHIBITS.
NUMBER DESCRIPTION
- ------ -----------
5 Opinion of Maslon Edelman Borman & Brand, LLP
23(1) Consent of KPMG Peat Marwick LLP
23(2) Consent of Maslon Edelman Borman & Brand, LLP (included in Exhibit 5)
24 Power of Attorney (included on Page II-3)
- ----------------
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement: (i) to include
any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii)
to reflect in the Prospectus any facts or events arising after the effective
date of the Registration Statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement; and (iii) to include
any material information with respect to the plan of distribution not previously
disclosed in the Registration Statement or any material change to such
information in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Minnetonka, State of
Minnesota, on February 5, 1999.
DIGITAL BIOMETRICS, INC.
Registrant
By: /s/ James C. Granger
------------------------------------------
Name: James C. Granger
Title: President and Chief Executive Officer
By: /s/ John J. Metil
------------------------------------------
Name: John J. Metil
Title: Chief Operating Officer and Chief Financial
Officer
POWER OF ATTORNEY
KNOW ALL BY THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints James C. Granger and John J. Metil, each
or either of them, his true and lawful attorneys-in-fact and agents, with full
power of substitution and resubstitution for him and in his name, place and
stead, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement and to file the same
with all exhibits thereto, and other documents in connection therewith with the
Securities and Exchange Commission, granting unto said attorneys-in-fact and
agents, and each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and about the premises,
as fully to all intents and purposes as he might or could do in person, hereby
ratifying and confirming all that said attorneys-in-fact and agents or any of
them, or their or his substitutes, may lawfully do or cause to be done by virtue
thereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on the 5th day of February, 1999
by the following persons in the capacities indicated:
SIGNATURE TITLE
/s/ James C. Granger Chief Executive Officer and Director
- -------------------------------
James C. Granger
/s/ C. McKenzie Lewis III Chairman of the Board and Director
- -------------------------------
C. McKenzie Lewis III
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<PAGE>
/s/ Stephen M. Slavin Director
- -------------------------------
Stephen M. Slavin
/s/ George Latimer Director
- -------------------------------
George Latimer
/s/ John E. Haugo Director
- -------------------------------
John E. Haugo
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<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION OF DOCUMENT PAGE NO.
5 Opinion of Maslon Edelman Borman & Brand, LLP.
23(1) Consent of KPMG Peat Marwick LLP.
23(2) Consent of Maslon Edelman Borman & Brand, LLP (included
in Exhibit 5).
24 Power of Attorney (included on Page II-3).
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EXHIBIT 5
February 8, 1999
Digital Biometrics, Inc.
5600 Rowland Road
Minnetonka, MN 55343
RE: REGISTRATION STATEMENT ON FORM S-3
Gentlemen:
We have acted as counsel to Digital Biometrics, Inc., a Delaware
corporation (the "Company") in connection with the preparation of a registration
statement on Form S-3 (the "Registration Statement") to be filed by the Company
with the Securities and Exchange Commission on February 8, 1999 relating to
the registration under the Securities Act of 1933, as amended (the "1933 Act",
of 886,660 shares of the Company's common stock, $.01 par value (the "Shares").
This opinion is being furnished in accordance with the requirements
of Item 601(b)(5) of Regulation S-K under the 1933 Act.
In connection with the rendering of this opinion, we have examined
and are familiar with originals or copies, certified or otherwise identified to
our satisfaction, of (i) the Registration Statement; (ii) the Certificate of
Incorporation and the Bylaws of the Company, as amended, each as currently in
effect; (iii) certain resolutions adopted by the Board of Directors of the
Company relating to the issuance of the Shares, the preparation and filing of
the Registration Statement and certain related matters; (iv) certain agreements,
certificates of public officials, certificates of other officers or
representatives of the Company or others; and (v) such other documents,
certificates and records as we deemed necessary or appropriate as a basis for
the opinions expressed herein.
In our examination, we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents of
all documents submitted to me as certified, conformed or photostatic copies and
the authenticity of the originals of such copies. As to any facts material to
the opinions expressed herein which we have not independently established or
verified, we have relied upon statements and representations of officers and
other representatives of the Company and others.
We are attorneys licensed to practice in the State of Minnesota and
the opinions expressed herein are limited to the laws of the State of Minnesota
and the Delaware General Corporation Law.
Based upon and subject to the limitations, qualifications,
exceptions and assumptions set forth herein, it is our opinion that:
1. The Company is a validly existing corporation in good standing
under the laws of the State of Delaware.
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<PAGE>
2. The Shares have been duly authorized and are validly issued,
fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. We also consent to the reference to our name under the
caption "Legal Matters" in the prospectus filed as part of the Registration
Statement.
This opinion is furnished to you in connection with the filing of
the Registration Statement and, except as provided in the immediately preceding
paragraph, is not to be used, circulated, quoted for any other purpose or
otherwise referred to or relied upon by any other person without the express
written permission of this firm.
Very truly yours,
/s/ MASLON EDELMAN BORMAN & BRAND, LLP
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EXHIBIT 23(1)
Independent Certified Public Accountant's Consent
The Board of Directors and Stockholders
Digital Biometrics, Inc.
We consent to the use of our report incorporated herein by reference
and to the reference to our firm under the heading "Experts" in the prospectus.
/s/ KPMG Peat Marwick LLP
Minneapolis, Minnesota
February 8, 1999
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