SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of earliest event reported: May 28, 1998
Saf T Lok Incorporated
(Exact name of registrant as specified in its charter)
Florida 1-11968 65-0142837
(State of (Commission (IRS Employer Iden-
Incorporation) File Number) tification No.)
18245 S.E. Federal Highway, Tequesta, Florida 33469
(Address of principal executive offices)
Registrant's telephone number, including area code: 561-743-5625
Item 5: OTHER EVENTS
(i) Possible Restatement of First Quarter Financial Statements.
On July 21, 1998 the Company announced that it is considering restating
its unaudited Financial Statements for the quarter ended March 31, 1998
(the "First Quarter"). Specifically, the Company's independent auditors
have expressed concern regarding the valuation of warrants to purchase
2,000,000 shares of the Company's common stock for $5 per share issued in
connection with the Company's February 11, 1998 distribution agreement with
United Safety Action, Inc. (the "Warrants"). On the advise of the Company's
counsel, the Company's Quarterly Report on Form 10-Q for the First Quarter
employed a valuation method devised by such counsel and which counsel
believed FAS 123 permitted as an alternative to the generally accepted Black-
Scholes model for assigning value to derivative securities. The alternative
method yielded a total value of $473,525 to be amortized over the three-year
term of the distribution agreement, which is the amount the Company reported
on Form 10-Q.
The Company has retained an independent valuation expert to consult with
the Company's auditors concerning the value of the Warrants for financial
reporting purposes and expects to have the appraiser's report prior to July 31,
1998. To the extent the appraiser's valuation of the Warrants exceeds the
amount previously reported on Form 10-Q, the Company may be required to
restate its First Quarter earnings by an amount equal to 1/36 (i.e., the
portion to be amortized during the First Quarter) of such difference.
Accordingly the Company has not yet determined whether restatement of First
Quarter earnings will be required and, if so, by what amount and whether such
amount will be material. While any required restatement will affect the
company's earnings (losses) for the First quarter, the Company's auditors
have indicated that the item in questions is a non-cash item. Consequently,
the Company does not believe that restatement of the First Quarter Financial
Statements, if required, will affect its cash position or have a material
adverse effect on its current operations.
(ii) Informal Inquiry by Enforcement Division. The Company also has
received from the division of Enforcement of the Securities and Exchange
Commission (the "SEC") an "informal inquiry" with respect to the Company
and requesting that the Company produce to the SEC, on a voluntary basis,
certain documents identified in the inquiry concerning the Company's business
and securities. The SEC indicated in its letter that the "inquiry should not
be construed as an indication by the Commission or its staff that any
violations of law have occurred, nor should it be considered a reflection
upon any person, entity or security."
The Company has provided the SEC with the requested documents and
intends to continue to respond fully to the SEC's inquiry. The company
does not believe that it has violated any applicable laws or regulations.
EXHIBITS
Exhibit Number
Exhibit Table
99.1
Press Release
SIGNATURES
Pursuant to the requirements 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.
Saf T Lok, Incorporated
Date: July 21, 1998
By:\s\Franklin W. Brooks
Franklin W. Brooks, President and
Chief Executive Officer
INDEX TO EXHIBITS
Exhibit
Description
99.1
Press Release
EXHIBIT 99.1 Press Release
SAF T LOK CONSIDERS RESTATEMENT OF UNAUDITIED
FINANCIAL STATEMENTS FOR QUARTER ENDED
MARCH 31, 1998 AND RECEIVES
"INFORMAL INQUIRY" FROM THE SEC
Tequesta, FL, July 21, 1998 - Saf T Lok Incorporated (NASDAQ:LOCK)
announced that it is considering restating its unaudited Financial
Statements for the quarter ended March 31, 1998 (the "First Quarter").
Specifically, the Company's independent auditors have expressed concern
regarding the valuation of warrants to purchase 2,000,000 shares of the
Company's common stock for $5 per share issued in connection with the
Company's February 11, 1998 distribution agreement with United Safety
Action, Inc. (the "Warrants"). On the advise of the Company's counsel,
the Company's Quarterly Report on Form 10-Q for the First Quarter employed
a valuation method devised by such counsel and which counsel believed FAS
123 permitted as an alternative to the generally accepted Black-Scholes
model for assigning value to derivative securities. The alternative method
yielded a total value of $473,525 to be amortized over the three-year term
of the distribution agreement, which is the amount the Company reported on
Form 10-Q.
The Company has retained an independent valuation expert to consult
with the Company's auditors concerning the value of the Warrants for
financial reporting purposes and expects to have the appraiser's report
prior to July 31, 1998. To the extent the appraiser's valuation of the
Warrants exceeds the amount previously reported on Form 10-Q, the Company
may be required to restate its First Quarter earnings by an amount equal to
1/36 (i.e., the portion to be amortized during the First Quarter) of such
difference. Accordingly the Company has not yet determined whether
restatement of First Quarter earnings will be required and, if so, by what
amount and whether such amount will be material. While any required
restatement will affect the company's earnings (losses) for the First
Quarter, the Company's auditors have indicated that the item in questions
is a non-cash item. Consequently, the Company does not believe that
restatement of the First quarter Financial Statements, if required, will
affect its cash position or have a material adverse effect on its current
operations.
The Company also announced that it has received from the Division of
Enforcement of the Securities and Exchange Commission (the "SEC") an
"informal inquiry" with respect to the Company and requesting that the
Company produce to the SEC, on a voluntary basis, certain documents
identified in the inquiry concerning the Company's business and securities.
The SEC indicated in its letter that the "inquiry should not be construed
as an indication by the Commission or its staff that any violations of law
have occurred, nor should it be considered a reflection upon any person,
entity or security."
The Company has provided the SEC with the requested documents and
intends to continue to respond fully to the SEC's inquiry. The company does
not believe that it has violated any applicable laws or regulations.
Saf T Lok currently produces two safety locking devices that effectively
preclude a weapon from firing by an unauthorized user, using a coded, touch
oriented mechanism that engages the safety. The unique, patented device
becomes an integral part of the firearm and does not need to be removed to
operate the gun. The lock can be unlocked in seconds by an authorized user
even in the dark and can safely be used on a loaded firearm.
The statements in this press release hat relate to future plans,
events or performance are forward-looking statements that involve risks
and uncertainties, including but not limited to risks identified in the
Company's SEC filings. Actual results, events and performance may differ
materially. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. The
Company undertakes no obligation to release publicly the result of any
revisions to these forward-looking statements that may be made to reflect
events or circumstances after the date hereof or to reflect the occurrence
of unanticipated events.
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