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U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-KSB/A
(Amendment No. 2)
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/X/ ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED] FOR THE FISCAL YEAR
ENDED: DECEMBER 31, 1999
/ / TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED] FOR THE
TRANSITION PERIOD FROM TO
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COMMISSION FILE NUMBER: 1-13611
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SOFTLOCK.COM, INC.
(Name of small business issuer in its charter)
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DELAWARE 84-1130229
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
FIVE CLOCK TOWER PLACE, SUITE 440
MAYNARD, MASSACHUSETTS 01754
(Address of principal executive offices)
(Zip Code)
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Issuer's telephone number: (978) 461-5940
Securities to be registered under Section 12(b) of the Act: NONE
Securities registered under Section 12(g) of the Act: Common Stock, $.01 per
share
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Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past
12 months (or for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements for at least
the past 90 days. Yes /X/ No / /
Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B contained herein, and will not be contained, to the best of
Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any amendment to
this Form 10-KSB. /X/
Issuer's revenues for its most recent fiscal year: $83,790
Aggregate market value of voting stock held by non-affiliates as of
March 14, 2000 was approximately: $216,000,000
Shares of Common Stock, $0.01 par value, outstanding as of March 14, 2000:
12,862,841
This report on Form 10-KSB/A (Amendment No.2) is being filed to include
additional information on i) the recent sales of unregistered securities as
required by Item 701 of Regulation S-B as referenced by Part II, Item 5, of
Form 10-KSB and ii) directors and executive officers of the Company as required
by Item 401 of Regulation S-B as referenced by Part III, Item 9, of Form 10-KSB
This amendment to the Annual Report on Form 10-KSB, which includes
additional information on i) the recent sale of unregistered securities and
ii) directors and executive officers of the Company, does not otherwise attempt
to update or modify the information included in Item 5, Item 9 or in the Annual
Report, beyond the original filing date of the report.
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PART II
ITEM 5. MARKET PRICE OF THE REGISTRANT'S COMMON STOCK AND RELATED SECURITY
HOLDER MATTERS.
MARKET INFORMATION
The Company's common stock began trading on the Over the Counter Bulletin
Board during the third quarter of 1996.
The following table sets forth the high and low closing bid prices for the
Company's common stock for the past two (2) years. The quotations reflect
inter-dealer prices, with retail mark-up, mark-down or commissions, and may not
represent actual transactions.
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HIGH BID LOW BID
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1998
First Quarter $ 0.01 $0.01
Second Quarter $ 0.04 $0.01
Third Quarter (1) $ 2.00 $1.13
Fourth Quarter $ 5.63 $1.03
1999
First Quarter $ 7.94 $4.50
Second Quarter $12.63 $6.75
Third Quarter $ 7.44 $2.63
Fourth Quarter $ 5.25 $3.13
2000
First Quarter (through February 29) $13.88 $3.63
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(1) The acquisition of SSI was consummated and announced on July 28, 1998. On
August 10, 1998, the Company effected a one for fifty reverse stock split.
On March 14, 2000, the last reported bid and asked prices for the common
stock were $21.75 and $22.125, respectively.
HOLDERS
As of March 14, 2000, the Company had approximately 257 holders of record of
the Company's common stock.
DIVIDENDS
The payment of dividends by the Company is within the discretion of its
Board of Directors and depends in part upon the Company's earnings, capital
requirements, debt covenants and financial condition. Since its inception, the
Company has not paid any dividends on its common stock and does not anticipate
paying such dividends in the foreseeable future. The Company intends to retain
earnings, if any, to finance its operations.
Preferred Series A shareholders are entitled to receive, if and when
declared by the Board, quarterly dividends of $10.20 per preferred share per
year. Unpaid dividends are cumulative but do not bear interest. There were no
unpaid dividends as of December 31, 1999. If all the Preferred Stock is
automatically converted into common stock as a result of a qualified public
offering and the Company provides the purchasers with an opportunity to register
their shares of common stock resulting from the conversion, all within two years
of the date of closing, then no dividends are payable.
Preferred Series B shareholders are entitled to receive dividends when and
as declared by the Board.
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RECENT SALES OF UNREGISTERED SECURITIES
Beginning in November 1998, we commenced a private placement offering of up
to 1,600,000 shares of our common stock at an offering price of $1.25 per share,
in accordance with Section 4(2) of the Securities Act and Regulation D. From
January 4, 1999 to February 22, 1999, we sold 1,540,000 shares of our common
stock resulting in net proceeds of $1,882,210. We offered the shares on a "best
efforts" basis through our officers and directors and through selected members
of the National Association of Securities Dealers, Inc. A total of $40,520 in
commissions was paid to National Association of Securities Dealers members in
connection with the offering. The shares were offered for sale to accredited
investors only, in accordance with the exemptions from registration contained in
Section 4(2) of the Securities Act and Rule 506 of Regulation D, promulgated
under the Securities Act and all investors completed accredited investor
questionnaires and provided the Company with representations and warranties that
they were accredited investors. All of the certificates evidencing the shares of
our common stock received as a result of the offering were impressed with a form
of restrictive legend, and stop transfer instructions have been noted against
the transfer of those certificates.
Beginning in May 1999, we commenced a private placement offering of up to
1,200,000 shares of common stock at an offering price of $5 per share, in
accordance with Section 4(2) of the Securities Act and Regulation D. From
May 1999 to June 1999, we sold 235,000 shares of common stock resulting in net
proceeds of $1,155,136 to 13 investors. We offered the shares on a "best
efforts" basis through our officers and directors and through selected members
of the National Association of Securities Dealers, Inc. A total of $8,000 in
commissions were paid to National Association of Securities Dealers members in
connection with the offering. The shares were offered for sale to accredited
investors only, in accordance with the exemptions from registration contained in
Section 4(2) of the Securities Act and Rule 506 of Regulation D, promulgated
under the Securities Act and all investors completed accredited investor
questionnaires and provided the Company with representations and warranties that
they were accredited investors. All of the certificates evidencing the shares of
our common stock received as a result of the offering were impressed with a form
of restrictive legend, and stop transfer instructions have been noted against
the transfer of those certificates.
Beginning in October, 1999, we commenced a private placement offering of up
to 1,200,000 shares of common stock at an offering price of $1.25 per share, in
accordance with Section 4(2) of the Securities Act and Regulation D. On
November 15, 1999 the offering was increased to 1,600,000 shares. From
October 25, 1999 until November 29, 1999 we sold 1,600,000 shares of common
stock resulting in net proceeds of $1,988,557 to 60 investors. We offered the
shares on a "best efforts" basis through our officers and directors. The shares
were offered for sale to accredited investors only, in accordance with the
exemptions from registration contained in Section 4(2) of the Securities Act and
Rule 506 of Regulation D, promulgated under the Securities Act and all investors
completed accredited investor questionnaires and provided the Company with
representations and warranties that they were accredited investors. All of the
certificates evidencing the shares of our common stock received as a result of
the offering were impressed with a form of restrictive legend, and stop transfer
instructions have been noted against the transfer of those certificates.
On January 10, 2000, we announced that as a result of closings on
December 30, 1999 and January 7, 2000, we issued 36,765 shares of Series A
Preferred Stock to a group of four investors: SI Venture Fund II, L.P., Apex
Investment Fund IV, L.P., Apex Strategic Partners IV, LLC and RSA
Security, Inc. for a purchase price of $102 per share for an aggregate purchase
price of $3,750,030. The shares were offered for sale to accredited investors
only, pursuant to the exemptions from registration contained in Section 4(2) of
the Securities Act and the Company did not pay any commissions on the sale of
the Series A Preferred Stock. All of the investors provided the Company with
representations and warranties that they were accredited investors and
information sufficient for the Company, upon reasonable investigation, to
determine that the investors were accredited investors. All of the certificates
evidencing the shares of our
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common stock received as a result of the offering were impressed with a form of
restrictive legend, and stop transfer instructions have been noted against the
transfer of those certificates. Each share of the Series A Preferred is
convertible into 100 shares of our common stock. In connection with the
placement of the Series A Preferred, we issued 1,964 warrants convertible into
the Series A Preferred Stock. In February 2000, all of those warrants were
exercised. In connection with the Series A Preferred transaction, we entered
into a Shareholders' and Rights Agreement with the purchasers and our president
and chief executive officer and our chief technology officer. We also filed a
certificate of designation with the Delaware Secretary of State that states the
powers, preferences and rights of the Series A Preferred Stock.
On February 14, 2000, we announced that as a result of closings on
February 10, 2000, we had issued 46,875 shares of Series B Preferred Stock to a
group of 10 investors, including affiliates of Tudor Investment Corporation and
Ritchie Capital Management, LLC as well as investors in an earlier round of
financing, SI Venture Fund II, L.P. and Apex Investment Fund IV, L.P., for a
purchase price of $160 per share for an aggregate purchase price of $7,500,000.
The shares were offered for sale to accredited investors only, in accordance
with the exemptions from registration contained in Section 4(2) of the
Securities Act and the Company did not pay any commissions on the sale of the
Series B Preferred Stock. All of the investors provided the Company with
representations and warranties that they were accredited investors and
information sufficient for the Company, after reasonable investigation, to
determine that the investors were accredited investors. Each share of the
Series B Preferred Stock is convertible into 100 shares of common stock. These
investors were also issued two warrants, one of which becomes exercisable for an
aggregate of 312,500 shares of common stock if as of August 15, 2000 our
registration statement for the shares of common stock issuable upon conversion
of the Series B Preferred Stock is not declared effective and the Company's
Nasdaq listing application for the common stock, filed on April 6, 2000, is not
accepted and the second of which would become exercisable for an aggregate of an
additional 312,500 shares of common stock if as of November 15, 2000 these two
conditions are not met. In connection with the Series B Preferred Stock
transaction, we entered into an Amended and Restated Shareholders' and Rights
Agreement with the investors, the holders of the Series A Preferred Stock and
our president and chief executive officer and our chief technology officer. We
also filed a certificate of designation with the Delaware Secretary of State
that states the powers, preferences and rights of the Series B Preferred.
We also announced on February 14, 2000 that Ascent Venture Partners III,
L.P. had purchased 14,706 shares of our Series A Preferred Stock for $102 per
share for an aggregate purchase price of $1,500,000. The shares were offered for
sale to accredited investors only, in accordance with the exemptions from
registration contained in Section 4(2) of the Securities Act and the Company did
not pay any commissions on the sale of the Series A Preferred Stock. Ascent
Venture Partners III, L.P. provided the Company with representations and
warranties that it was an accredited investor and sufficient information to,
upon reasonable investigation, determine that it was an accredited investor.
Each share of the Series A Preferred Stock issued to Ascent Venture Partners
III, L.P. is convertible into 100 shares of our common stock. In connection with
the investment by Ascent, we agreed to appoint an Ascent representative to our
board of directors.
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PART III
ITEM 9. DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
DIRECTORS OF THE COMPANY
The following table sets forth the directors' name, age, term of office as
director and present positions of directors with the Company.
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DIRECTOR TERM
DIRECTORS AGE SINCE EXPIRES POSITION
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Keith Loris........................ 41 1998 * *
Francis J. Knott................... 53 1998 2002 Director, Chairman of the Board
Geoffrey de Lesseps................ 36 1999 2001 Director
Jonathan Schull.................... 47 1998 2001 Director
Leigh E. Michl..................... 38 2000 2001 Director
N. Adam Rin........................ 50 1999 2002 Director
Scott W. Griffith.................. 41 1999 2000 Director, Chief Executive Officer
and President
Richard N. Gold.................... 55 1999 2000 Director
Ronald Dunn........................ 54 2000 2002 Director
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* Resigned as a director of the Company effective June 16, 2000.
BIOGRAPHICAL INFORMATION
EXECUTIVE OFFICERS
Following are the persons who are the executive officers of Company, their
age, their current title and their positions held during the last five
(5) years:
SCOTT W. GRIFFITH, 41, has been Chairman of the Board since June 16, 2000,
the President of the Company since May 5, 2000, the Chief Executive Officer of
the Company since April 17, 2000 and a director of the Company since
December 1999. Previous to his employment with the Company, Mr. Griffith was the
President and CEO of Information America from June 1998 to September 1999, a
leading provider of on-line information. Under his leadership, the company
experienced a dramatic turnaround of its core online public records business and
launched the leading Internet directory KnowX.com. From January 1996 to
June 1998, Mr. Griffith was a founding partner at Treacy & Company, a boutique
business strategy and investment firm. Previously, from February 1992 to
December 1995, he was also a Principal at The Parthenon Group where he was
actively involved in principal investing and senior advisory services to Fortune
1000 companies and institutional investors. Mr. Griffith has held operating
positions at The Boeing Company and Hughes Electronics.
FRANCIS J. KNOTT, 53, has been a Director of the Company since July, 1998.
He served as Chairman of the Board from July 1998 to September 1998 and from
July 19, 1999 to June 16, 2000. Previously, Mr. Knott was a director of SoftLock
Services, Inc. from November 1996 to July 1998 and served as Chairman of the
Board from October 1997 to July 1998. In 1992, he founded and has since served
as president of ViTAL Resources, Inc., an information age strategy advisor to
multimedia communication firms, regulatory bodies, and municipal, state,
provincial, and national governments in the United States and Canada. Mr. Knott
was the founding CEO of VSI Enterprises, Inc. (NASDAQ), a developer and marketer
of videoconferencing systems. He was a founding trustee and Board Member for
fourteen (14) years of the Manufacturers Series Fund, Inc. Mr. Knott served from
1993-96 as the first Chairman of the Information Technology Board for the State
of Maryland.
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KEITH LORIS, 40, was a director of the Company from September 1998 through
June 16, 2000, serving as chairman of the board from September 1998 through
July 1999, and served as Chief Executive Officer until April 17, 2000 and
President from July 1999 until May 5, 2000. From 1995 until he joined the
Company, Mr. Loris was vice president of marketing and new business development
at ServiceSoft Corporation of Boston, Massachusetts. Previously, Mr. Loris was
vice president of technology for the Desktop Document Systems Division of Xerox
Corporation from 1991 to 1995, and vice president of technology for NYNEX Image
Recognition Systems, Corp. from 1986 to 1991.
JONATHAN SCHULL, PH.D., 46, founded SoftLock Services in 1992, and has
served as its president from July 1998 to July 1999 and as a director.
Dr. Schull has been a director of the Company since July 1998. Prior to founding
SoftLock Services, Dr. Schull was a tenured professor of Biological Psychology
at Haverford College in Haverford, Pennsylvania.
DOUGLAS R. JOHNSON, 46, the Executive Vice President, Chief Financial
Officer, Secretary and Treasurer, has been with the Company since May 1999. From
March 1998 to April 1999, he was the Executive Vice President and Chief
Financial Officer of Aztec Technology Partners, Inc., a publicly traded
information technology service provider. During 1997, Mr. Johnson held the
position of Vice President and Chief Financial Officer of Clam Associates
Incorporated, an information technology service provider. Mr. Johnson was
Executive Vice President and Chief Financial Officer of Discreet Logic
Incorporated, a computer software development and marketing company in the
interactive media area from 1995 to 1996. He also held the position of Vice
President of Finance and Administration and Chief Financial Officer of Fusion
Systems Corporation, a semiconductor equipment manufacturing company, from 1993
to 1995.
JOHN F. MACHONIS, 38, the Vice President of Sales, has been with the Company
since May 1999. From November 1996 to March 1999, he was with UNIFI
Communications, Inc., most recently as Vice President of Sales. Previously, Mr.
Machonis was Director of National Account Sales at Standard Microsystems
Corporation from 1991 to 1996, and Director of LAN Sales at Western Digital
Corporation from 1987 to 1991.
OTHER DIRECTORS
RICHARD N. GOLD, has been a director of the Company since September 1999.
From 1981 to the present, Mr. Gold has served as President of R.N. Gold &
Company, Inc., a strategic planning and marketing management consulting firm.
From 1977 to 1981, Mr. Gold held the position of Executive Vice President and
Director of Glendinning Associates, also a management consulting firm. Mr. Gold
worked for Procter and Gamble, Inc. as a Brand Manager from 1971 to 1976, and
previously was employed as a teacher with the New York City Public Schools from
1968 to 1971.
LEIGH MICHL, 38, is a Managing Director of Ascent Venture Partners, a
Boston-based venture capital firm. Ascent manages over $250 million in committed
capital and specializes in early stage information technology investments. Prior
to co-founding Ascent, Leigh spent eleven (11) years with Pioneer Capital
Corporation, where he was a Vice President and General Partner. Prior to joining
Pioneer Capital, Mr. Michl held business analysis and audit positions in the
Corporate Finance department of The Pioneer Group, Inc. Previously, he held a
variety of positions in finance, auditing, and accounting at the General
Electric Company, where he also completed that firm's Financial Management
Program. Mr. Michl holds a BA in Economics from Bates College and an MS in
Finance from Boston College. He currently also serves as a director of ClinCare,
Synchronicity, and Visualization Technology. Prior Directorships include
Catamount Manufacturing, Nabnasset Corporation, Network Engines, Pharmco
Products, and SDC Software Partners Corporation, and VST Technologies.
GEOFFREY A. DE LESSEPS, 36, has been a director of the company since March
of 1999. From 1994 to the present Mr. De Lesseps has been a management
consultant with Computer Sciences Corporation (CSC). He is a Partner at CSC and
currently runs the Financial Services management consulting practice for the
Consulting Group, focused on eBusiness strategy. Prior to joining CSC's Index
Group, Mr. de Lesseps was
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a tunaround management consultant specializing advising distressed companies on
reorganization and recapitalization issues, and held the title of Director of
Finance and Acquisitions for Kaiser Ventures from 1991 to 1993.
N. ADAM RIN, 50, has been a director of the Company in December 1999. Dr. N.
Adam Rin is currently Managing Director, SI Ventures, a venture capital spin-off
of GartnerGroup, focusing on investments in early- to mid-stage companies in B2B
eCommerce or enabling technologies for eBusiness. Prior to SI Ventures, he was
an executive vice president of GartnerGroup, Inc. where he served for over a
decade, the last five years of which he directed the Gartner Research
organization which encompassed the worldwide analysts for its Research and
Advisory Services (RAS), Datapro, and Dataquest services.
RONALD DUNN, 54, has been a director of the Company since June 2000. In July
1998, Mr. Dunn became the Chief Executive Officer, Academic & International
Group of Thomson Learning (formerly International Thomson Publishing).
Previously, Mr. Dunn was President of the Information Industry Association (IIA)
from June 1995 - June 1998. IIA is widely recognized as a leader in addressing
public policy, business and technology issues that shape the information
marketplace. Prior to IIA, Mr. Dunn was a business development consultant for
McGraw-Hill's Educational and Professional Publishing Group and President of the
McGraw-Hill College Division.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
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Date: July 6, 2000 SOFTLOCK.COM, INC.
By: /s/ DOUGLAS R. JOHNSON
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Douglas R. Johnson,
EXECUTIVE VICE PRESIDENT AND
CHIEF FINANCIAL OFFICER
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