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424(b)(3) PROSPECTUS
PROSPECTUS
SAF-T-LOK
1,071,000 Shares of Common Stock
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This is a public offering of shares of Common Stock of Saf T Lok
Incorporated. The selling securityholders named in this Prospectus are offering
all of the shares to be sold in this offering. SAF T LOK will not receive any of
the proceeds from this offering.
The selling securityholders may sell the shares in this offering from time
to time in transactions in the open market (including any securities exchange or
through any inter-dealer quotation system), in negotiated transactions, or by a
combination of these methods, at fixed prices related to market prices or at
negotiated prices.
Our Common Stock is quoted on the Nasdaq SmallCap Market under the symbol
"LOCK." On September 21, 1999, the closing sale price of a share of our Common
Stock, as reported by Nasdaq, was $1.875.
This Investment Involves a High Degree of Risk. You Should Purchase Shares
Only if You Can Afford a Complete Loss of Your Investment. See "Risk Factors"
Beginning on Page 7.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed upon the
adequacy or accuracy of this Prospectus. Any representation to the contrary is
a criminal offense.
This Prospectus is dated September 24, 1999
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AVAILABLE INFORMATION
We are subject to the informational requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") under which we file reports, proxy
statements and other information with the Securities and Exchange Commission
(the "Commission"). You can inspect and copy these reports, proxy statements
and other information filed by us at the public reference facilities maintained
by the Commission at 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549,
and at its regional offices located at Seven World Trade Center, Suite 1300, New
York, New York 10048, and Northwestern Atrium Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60661-2511. You can obtain copies of these
materials from the Public Reference Section of the Commission in Washington,
D.C., at prescribed rates and the Commission's EDGAR database which is on the
internet at http://www.sec.gov. You can obtain information about the
Commission's public reference room by calling 1-800-SEC-0330.
We filed a Registration Statement with the Commission pursuant to the
Securities Act of 1933, as amended (the "Securities Act"), regarding the
securities offered by this Prospectus. This Prospectus does not contain all of
the information included in the Registration Statement. For further information
with respect to us and the securities offered by this Prospectus, please see the
Registration Statement. This Prospectus is a part of the Registration
Statement.
Statements contained in this Prospectus regarding any contract or other
document referred to are not necessarily complete, and in each instance you
should see the copy of such contract or statement filed as an exhibit to the
Registration Statement. A copy of the Registration Statement may be inspected
without charge at the Commission's principal office.
We will provide, without charge, to each person to whom a copy of this
Prospectus is delivered, upon written or oral request, a copy of any document
incorporated by reference in this Prospectus. To request this information,
please contact Frank W. Brooks, President, SAF T LOK INCORPORATED, 1101
Northpoint Parkway, West Palm Beach, Florida 33407 (561) 478-5625.
INFORMATION INCORPORATED BY REFERENCE
This Prospectus incorporates by reference the following documents and
information we previously filed with the Commission under the Exchange Act:
(a) Our Annual Report on Form 10-KSB for the fiscal year ended December 31,
1998 (File No. 001-11968);
(b) Our Quarterly Report on Form 10-QSB for the fiscal quarter ended March
31, 1999;
(c) Our Quarterly Report on Form 10-QSB for the fiscal quarter ended June
30, 1999;
(d) Our Current Report on Form 8-K (filed on June 4, 1999); and
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(e) The description of our Common Stock included in our Registration
Statement on Form 8-A dated May 4, 1993.
All documents filed with the Commission by us pursuant to Sections 13(a),
13(c), 14 and 15(d) of the Exchange Act after the date of this Registration
Statement and prior to the filing of a post-effective amendment which indicates
that all securities offered have been sold or which deregisters all securities
then remaining unsold, shall be deemed to be incorporated by reference in this
Registration Statement and to be part of it from the date of filing of those
documents.
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PROSPECTUS SUMMARY
This summary highlights some information from this Prospectus. It may not
contain all of the information that is important to you. To understand this
offer fully, you should read the entire Prospectus carefully, including the risk
factors. This Prospectus contains "forward looking statements" within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. All statements other than statements of historical fact included in this
document regarding our strategies, plans, objectives, expectations, and future
operating results are forward-looking statements. Although we believe that the
expectations reflected in these forward-looking statements are reasonable at
this time, we can give no assurance that these expectations will prove to have
been correct. Actual results could differ materially based upon a number of
factors, including but not limited to the risk factors included in this
Prospectus and other factors described in the Company's filings with the
Commission.
THE COMPANY
Overview
Saf T Lok Incorporated (the "Company")
. designs,
. develops,
. manufactures, and
. distributes
safety locks for guns through its subsidiary, Saf T Lok Corporation ("STL"). The
Company and STL are jointly referred to as the "Company" in this Prospectus.
Our gunlocks are intended to reduce the possibility of unauthorized or
accidental use of firearms, including unintentional discharge by children and
assailants. Our target markets include:
. newly manufactured handguns in the U.S.; and
. previously manufactured (used) handguns in the U.S.
(the "Retrofit Market").
Our gunlocks are used by federal, state and local law enforcement agencies
and other consumers in the U.S.
When consumers purchase handguns in the U.S., they must do so from
federally licensed dealers. As a result, we market to consumers through the
approximately 12,000 licensed firearms dealers in the U.S.
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We identified our target market as the "self protection" gun market, which
consists almost exclusively of handguns. These guns are used primarily for
household protection or personal protection, including law enforcement. We
exclude from this market category large caliber hunting guns and small caliber
target guns that, due to their large size, or lack of adequate power, are not
usually used for self-protection. We also exclude the cheaper small caliber
categories of handguns because our locks will generally cost more than those
types of guns.
Competition
Our products compete with lock boxes, trigger locks, cable locks, magnetic
locks and other types of locks. Many of those products are more widely known and
less expensive than our products. Our competitors are existing companies that
are larger and better capitalized than we are, and which generally have more
substantial distribution channels.
Products
We have been engaged in product and market research and development since
February 1996. The Saf T Lok(R), our initial product, is a mechanical
combination lock that attaches to the grip of a handgun. When unlocked, it does
not hamper or interfere with the use of the gun. When the Saf T Lok(R) is
engaged, it locks the safety mechanism in the "no fire" position, which blocks
the normal operation of the gun and prevents the gun from being fired. (Guns
without safeties are locked using the basic Saf T Lok(R) to block operation of
other internal gun components.) There are no keys, batteries or other gadgets.
The lock's body is positioned under and concealed by the gun grip. The lock's
combination mechanism is located at the top of the grip, where it is easily
accessed. With three small levers, each capable of 9 clicks, the Saf T Lok(R)
yields 1,000 combinations.
There are approximately two dozen variations of the Saf T Lok(R), which
together with the magazine lock, discussed below, are designed to fit
approximately 40% of the handguns produced annually in the U.S. The various
models of the Saf T Lok(R) and the magazine lock are also designed to fit a
significant portion of the handguns existing in the U.S. retrofit market.
In 1996, we conceived, developed, and produced a prototype of our second
product (the "Magazine Lock"). The Magazine Lock is a precision, miniaturized,
all-mechanical combination lock that functions the same as the Saf T Lok(R) in
handguns with magazines. It has two buttons that move in both directions,
yielding 10,000 combinations. The Magazine Lock is housed in the bottom of the
magazine, occupying the space of two to four cartridges, depending on the
caliber of the gun. The Magazine Lock is installed in the gun merely by
inserting the Saf T Lok(R) magazine. A lever runs from the lock, up the side of
the magazine. When the lock is in the locked position, the lever will engage the
trigger bar or another part of the firing mechanism, and either pull it away
from the sear mechanism or block the rearward movement, as necessary and
appropriate. A sear mechanism is the catch or bar within the firing mechanism of
a gun that holds
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the firing pin on full or half cock. The lever also locks over the frame of the
gun, preventing the magazine from being removed.
History
We were incorporated in Florida in July 1989 under the name of RGB Sales
and Marketing, Inc. ("RGB"). In September 1989, the assets of RGB Video
Creations, Inc., a Company engaged in the video editing business ("RGB Video"),
were purchased and contributed to RGB as its initial capitalization. In October
1989, RGB commenced the business of operating a retail store that sold Amiga
computers and produced a series of tutorial programs used with software written
for the Amiga platform.
On June 23, 1993, RGB completed an initial public offering of its Common
Stock and on February 13, 1996, RGB acquired Saf T Lok Corporation, a Florida
corporation, through a merger with a newly-formed special purpose subsidiary.
The acquisition marked the end of RGB's involvement in the video editing
business. RGB changed its name to Saf T Lok Incorporated (the "Company") in
connection with the merger in February 1996, and became involved in the gun lock
business at that time.
Our executive offices are located at 1101 Northpoint Parkway, West Palm
Beach, Florida 33407. Our telephone number at that location is (561) 478-5625.
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THE OFFERING
Securities Registered....................1,071,000 shares of Common Stock
Common Stock outstanding
prior to this offering.................13,586,354 shares of Common Stock(1)
Common Stock outstanding
after this offering...................14,657,354 shares of Common Stock (2)
Common stock trading symbol
on NASDAQ..............................LOCK
_____________________
(1) Does not include 3,532,362 shares issuable upon the exercise of outstanding
warrants and options.
(2) Assumes the conversion of all of our issued and outstanding 6% Convertible
Debentures (the "Debentures") at a conversion price of $.50 per share. The
conversion price of the Debentures per share will be equal to 75% of the
market price of a share of our Common Stock on the date the conversion
notice is received by us. In any event, however, the conversion price will
not be less than $.50 per share nor greater than $2.00 per share, subject
to adjustment as provided by the terms of the Debenture. Also assumes
(i) issuance of 96,000 shares of Common Stock in lieu of cash interest on
the Debentures, and (ii) exercise of a Stock Option and by one of the
selling securityholders listed in this Prospectus to purchase 110,000
shares of our Common Stock and issuance of those shares. Does not include
the shares issuable upon the exercise of any other warrants or options
issued by us.
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RISK FACTORS
You should carefully consider the following factors and other information
in this Prospectus before deciding to invest in shares of our Common Stock. You
should be able to bear the loss of your entire investment.
Unproven Market; Competition
The market for the Saf T Lok(R) and the Magazine Lock gun locking devices
is unproven even though there are millions of handguns in the United States.
Our gun locking devices retail for approximately $70 to $90 each while simple,
key operated trigger locks retail for less than $20. Our belief in the
existence of a large market for our gun locking devices is based solely on
anecdotal evidence, without the benefit of any broad-based market study. There
is no assurance that a market will develop that will provide sufficient revenues
for us to make a profit. If a market for our products does develop, we may have
to compete against larger entities with substantially more resources. There is
no assurance that we could compete successfully against those competitors.
Accumulated Deficit
Although we are no longer considered a development stage company, our
operations are still subject to all of the risks inherent in the establishment
of a new business, including the need to obtain financing, lack of significant
revenues and the uncertainty of market acceptance of our products. At December
31, 1998, we had an accumulated deficit of $19,427,067. We anticipate that we
will continue to incur losses for the immediate future until we are able to
achieve profitable operations or generate sales sufficient to support our
operations. There is no assurance that we will operate profitably.
Need For Additional Capital; Going Concern Qualification
We may need to raise additional capital to continue our operations. We
believe we have sufficient capital as of the date of this Prospectus to continue
our operations for a period of approximately three months. It is unlikely that
we will be in a position for at least one year to borrow money from financial
institutions for working capital or to support continuing losses. We may be
unable to raise capital in the future on favorable or even acceptable terms. The
report of the independent certified public accountants covering our certified
financial statements for the year ended December 31, 1998, states that the
following factors raise substantial doubt about our ability to continue as a
going concern:
. ability to raise additional capital; and
. ability to achieve a successful level of sales.
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If we continue to have net losses and low levels of sales, and if we are
unable to obtain additional financing on acceptable terms, we could experience a
material adverse effect on our business or financial results.
Outstanding Debt
We have an outstanding debt from the sale of the Debentures issued in July
1999 in the amount of $400,000 plus 6% annual interest that is due in July 2000
and July 2001. We may not be able to generate enough capital to meet these
obligations. Although the debt is unsecured, a default would materially and
adversely affect our ability to raise capital in the future on acceptable terms.
Lack Of Profitable Operating History
We have not earned a profit since our inception and currently are operating
at a loss. We believe we must achieve revenues through the sale of our gun
locking devices of more than $300,000 per month in order to earn a profit. Our
monthly revenues since January 1, 1999 have averaged approximately $21,700. We
can give no assurance that we will be able to achieve sufficient revenues to
enable us to operate at a profit.
Securities and Exchange Commission Investigation
We have been responding to informal requests for information from the
Securities and Exchange Commission since receiving notice of an "informal
inquiry" from the Commission's Division of Enforcement on May 29, 1998. On
September 22, 1998, the Commission issued its formal Order Directing Private
Investigation and Designating Officers to Take Testimony which revealed that
members of the SEC's Staff have reported information to the Commission that, in
the Staff's view, tends to show that during the period from at least January 1,
1996 and continuing thereafter, the Company, its present or former officers,
directors or employees or others, may have violated federal securities laws.
Pursuant to this formal order of investigation, the Company and certain of our
current and former officers and directors have produced documents pursuant to
requests and subpoenas from the Commission. The investigation is continuing and
we are not able to speculate as to its specific subject matter. There can be no
assurance as to the timing of the completion of the investigation or as to the
final result thereof, and no assurance can be given that the final result of the
investigation will not have a material adverse effect on the Company. We are
cooperating with the Commission, and have responded and will continue to respond
to requests for information in connection with the investigation.
Class Action Law Suits and Other Litigation
We are defendants in a number of class action law suits, which allege
violations of federal securities laws, and other law suits that have been
initiated against us. We are currently involved in settlement negotiations with
respect to a number of these actions. Settlement of the class action suits has
been reached but is subject to court approval. No assurance can be provided,
however, that these
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actions will be resolved in a manner favorable to us. Unfavorable judgments
rendered against us in these actions, or a portion of these actions, may have a
material adverse effect on our business and financial condition.
Political Climate Or Events May Have A Material Adverse Effect On The Market For
Gunlocking Devices
The issue of gun control is a highly political issue in the United States.
We believe that the National Rifle Association will oppose any legislation that
touches on gun control, including any gun lock legislation. Other groups are
promoting gun lock legislation at the federal and state levels. However, we
cannot rely on, and no assurance can be given regarding, the passage of any type
of gun control or gun safety legislation to create a market for our gun locking
devices.
State And Federal Regulation
While gun locking devices are currently not regulated under state or
federal regulations, it is likely in the future that such devices will be
regulated. There can be no assurance that our locks will meet the requirements
of such future regulations, in which case, sales of our products may be
materially adversely affected.
Dependence on Key Personnel
We believe that our ability to successfully implement our business strategy
and to operate profitably depends on the continued employment of our senior
management team led by Mr. Frank W. Brooks. If Mr. Brooks or other members of
the management team become unable or unwilling to continue in their present
positions, our business and financial results could be materially adversely
affected.
Protection Of Patent Rights
We hold ten U. S. patents that pertain to the Saf T Lok(R) combination gun
locks. Two U.S. patents are pending. Patent applications have also been filed
for protection in Canada and other countries. We expect these applications to
be approved. However, there can be no assurance that any of these patents will
adequately protect us from competitors offering similar devices or that we will
have adequate resources to protect ourselves from infringers. We believe our
trademarks and other proprietary rights are important to our success and our
competitive position. The actions we take to establish and protect our
trademarks and other proprietary rights, however, may be inadequate to prevent
imitation of our products by others or to prevent others from claiming
violations of their trademarks and proprietary rights by us. In addition,
others may assert rights in our trademarks and other proprietary rights.
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Volatile And Thin Market For Our Stock
Our Common Stock is currently traded on the Nasdaq SmallCap Market. The
price of our Common Stock has been highly volatile and may continue to be
volatile based on events beyond our control. While trading volume has recently
averaged more than 100,000 shares per day, trading volume could become
substantially lower. Low trading volume can contribute to greater volatility of
the market price of our Common Stock, and make it more difficult for a
shareholder to sell our stock.
Dilution If Stock Purchase Warrants And Stock Options Are Exercised and
Debentures are Converted
We have
. outstanding stock purchase warrants covering 214,725 shares of
Common Stock exercisable at $0.396 per share;
. Debentures that may be converted into 800,000 shares of Common
Stock exercisable at a 25% discount from the market price at the
time of conversion assuming a conversion price of $0.50 per share;
and
. outstanding stock options to purchase 3,317,637 shares of Common
Stock exercisable at prices ranging from $0.10 to $7.00 per share.
The exercise of all of these stock purchase warrants, Debentures and
options would result in an increase in the outstanding shares of Common Stock by
approximately 32% and may result in substantial dilution to purchasers of
shares offered by this Prospectus.
No Dividends Are Presently Intended
We presently intend to retain any earnings and pay no dividends. Future
dividends, if any, will depend on our profitability, financial condition,
capital requirements and other considerations determined by our Board of
Directors.
Shares Eligible For Future Resale
As of September 20, 1999, we had approximately 13,586,354 shares of Common
Stock outstanding. In addition, we are obligated to issue an additional
3,317,637 shares of Common Stock upon the exercise of outstanding options,
2,536,332 of which are currently exercisable, and an additional 214,725 shares
upon the exercise of outstanding warrants. Approximately 238,827 shares of
currently outstanding Common Stock are not freely tradable of which 198,827
shares of Common Stock may be sold pursuant to the Commission's Rule 144.
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With respect to the shares of Common Stock to be issued upon the exercise
of outstanding options or warrants, we previously registered the resale of
3,203,000 of such shares by the holders. When issued, the remaining 329,362
shares of Common Stock issuable upon the exercise of outstanding options and
warrants will be subject to transfer restrictions for purposes of the Act.
Sales under Rule 144 are subject to certain provisions regarding volume
limitations, the manner of sale, notice requirements and the availability of
current public information about the Company. A securityholder who is not an
affiliate of ours at the time of the sale and for at least 90 days prior to a
proposed transaction and who has beneficially owned "restricted securities" for
two years is entitled to sell those shares under Rule 144 without regard to the
limitations described above.
If Shareholders sell substantial amounts of Common Stock in the public
market, or if there is a perception that such sales may occur, the market price
of our Common Stock could be materially adversely affected.
Risk of Low-priced Shares
In the event our shares are de-listed from the Nasdaq SmallCap Market,
they may become subject to Rule 15g-9 under the Exchange Act. That rule imposes
additional sales practice requirements on broker-dealers that sell low-priced
securities ("penny stock") to persons other than established customers and
institutional accredited investors. The SEC's regulations define a "penny
stock" to be an equity security that has a market price less than $5.00 per
share or with an exercise price of less than $5.00 per share, subject to certain
exceptions. For transactions covered by this rule, a broker-dealer must make a
special suitability determination for the purchaser and have received the
purchaser's written consent to the transaction prior to sale. Consequently, the
rule may affect the ability of broker-dealers to sell our shares and may affect
the ability of holders to sell our shares in the secondary market.
The penny stock restrictions will not apply to our shares if they are
listed on the Nasdaq Small Cap Market or the Boston Stock Exchange and we
provide certain price and volume information on a current and continuing basis,
or meet required minimum net tangible assets or average revenue criteria. We
cannot assure you that our shares will continue to qualify for exemption from
these restrictions. If our shares were subject to the penny stock rules, a
holder's ability to sell the shares could be materially adversely affected.
USE OF PROCEEDS
We will not receive any proceeds from the sale of shares offered by the
selling securityholders.
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DESCRIPTION OF COMMON STOCK
We have authorized capital stock consisting of 20,000,000 shares of Common
Stock, par value of $0.01 per share. As of September 20, 1999, there were
13,586,354 shares of Common Stock outstanding. Holders of Common Stock are
entitled to one vote for each share held on all matters submitted to a vote of
shareholders and do not have cumulative voting. Accordingly, holders of a
majority of the shares of Common Stock entitled to vote in any election of
directors may elect all of the directors standing for election. Holders of
Common Stock are entitled ratably to receive dividends, if any, as may be
declared by the Board of Directors out of legally available funds. If we
liquidate, dissolve or wind-up, the assets legally available for distribution to
shareholders would be distributed ratably among the holders of our Common Stock
subject to the payments of claims of creditors. A holder of Common Stock has no
preemptive, subscription or redemption rights.
SELLING SECURITYHOLDERS
The table below sets forth the number of shares of Common Stock (i) owned
beneficially by each of the selling securityholders, assuming that all the
Debentures have been converted at a conversion price equal to 75% of the current
market price of our stock ($1.406 as of September 21, 1999); and (ii) being
offered by each selling securityholder pursuant to this Prospectus; and (iii) to
be owned beneficially by each selling securityholder after completion of the
offering. For purposes of this table each selling securityholder is deemed to
own beneficially (i) the shares of Common Stock underlying the Debentures held
by them, if any, assuming they converted the Debentures at the conversion price
stated above and assuming that all interest payable on the Debentures was paid
in Stock; (ii) the issued and outstanding shares of Common Stock owned by the
selling securityholder as of June 30, 1999, and (iii) the shares of Common Stock
underlying any other options or warrants owned by the selling securityholder
which are currently exercisable. Except as otherwise noted, none of these
persons or entities has had any material relationship with us during the past
three years.
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<TABLE>
<CAPTION>
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Number of Shares to be
Owned Beneficially
Number of Shares Number of After Completion
Selling Securityholders Beneficially Owned Shares Offered of Offering
---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Sage Capital Investments Ltd. 79,659(1) 79,659 0
--------------------------------------------------------------------------------------------------------
Arab Commerce Bank Ltd 79,659(1) 79,659 0
--------------------------------------------------------------------------------------------------------
Michelle McDonough 19,915(1) 19,915 0
--------------------------------------------------------------------------------------------------------
Gary Kaplowitz 19,915(1) 19,915 0
--------------------------------------------------------------------------------------------------------
Phil Lifschitz 19,915(1) 19,915 0
--------------------------------------------------------------------------------------------------------
Allan P. Rothstein 19,915(1) 19,915 0
--------------------------------------------------------------------------------------------------------
BarAub Corp. 19,915(1) 19,915 0
--------------------------------------------------------------------------------------------------------
Lufeng Investments Ltd. 19,915(1) 19,915 0
--------------------------------------------------------------------------------------------------------
Philip Siranni, TTEE 39,829(1) 39,829 0
--------------------------------------------------------------------------------------------------------
Alexander, Wescott & Co., Inc. 40,000(2) 40,000 0
--------------------------------------------------------------------------------------------------------
Lisa Broderick Fogel 110,000(3) 110,000 0
--------------------------------------------------------------------------------------------------------
Mark Sapperstein 12,500(4) 12,500 0
--------------------------------------------------------------------------------------------------------
West Marketing 12,500(4) 12,500 0
--------------------------------------------------------------------------------------------------------
</TABLE>
________________________
(1) Includes shares issuable upon conversion of Debentures by the selling
securityholder assuming a conversion price of $1.406 per share and payment
of interest to the selling securityholder in shares (calculated on the
basis of a price of $1.406 per share and assuming payment of interest in
shares for the full 2-year maturity period). The assumed conversion price
of $1.406 per share is 75% of the closing price per share of our Common
Stock on September 21, 1999 (which was $1.875 per share). Numbers of shares
are rounded up to the closest share. See "The Offering."
(2) Includes 40,000 shares currently issued and outstanding issued pursuant to
an agreement dated April 20, 1999, as amended. Alexander, Wescott & Co.,
Inc. was the placement agent with respect to the sale of the Debentures
which occurred in July 1999.
(3) Includes 110,000 shares of Common Stock issuable upon the exercise of an
option granted by us with respect to a release dated May 21, 1999, of a
claim by Ms. Broderick against us. Ms. Broderick was employed by us in
November 1996 as our President.
(4) Includes 12,500 shares currently issued and outstanding which were issued
for creating a business plan and seeking funding for us pursuant to an
agreement dated January 4, 1999.
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PLAN OF DISTRIBUTION
The selling securityholders may sell shares from time to time in public
transactions, on or off The Nasdaq SmallCap Market, or private transactions, at
prevailing market prices or at privately negotiated prices. They may sell their
shares in the following types of transactions:
. ordinary brokerage transactions and transactions in which
the broker solicits purchasers;
. a block trade 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;
. purchases by a broker or dealer as principal and resale by
that broker or dealer for its account pursuant to this Prospectus; and
. face-to-face transactions between seller and purchasers
without a broker-dealer.
The selling securityholders also may sell shares that qualify under
Section 4(1) of the Securities Act or Rule 144. As used in this Prospectus,
selling securityholders include donees, pledgees, distributees, transferees and
other successors-in-interest of the selling securityholders named in this
Prospectus.
In effecting sales, brokers or dealers engaged by the selling
securityholders may arrange for other brokers or dealers to participate in the
resales. The selling securityholders may enter into hedging transactions with
broker-dealers, and in connection with those transactions, broker-dealers may
engage in short sales of the shares. The selling securityholders also may sell
shares short and deliver the shares to close out such short positions, except
that the selling securityholders holding Debentures have agreed that they will
not enter into any put option or short position with respect to the Common Stock
prior to the date which is 30 days following the delivery of a conversion
notice. The selling securityholders also may enter into option or other
transactions with broker-dealers which require the delivery to the broker-dealer
of the shares, which the broker-dealer may resell under this Prospectus. The
selling securityholders also may pledge the shares to a broker or dealer and
upon a default, the broker or dealer may effect sales of the pledged shares
under this Prospectus.
Brokers, dealers or agents may receive compensation in the form of
commissions, discounts or concessions from selling securityholders in amounts to
be negotiated in connection with the sale. The selling securityholders and any
participating brokers or dealers may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales and any such
commission, discount or concession may be deemed to be underwriting
compensation.
Information as to whether underwriters who may be selected by the selling
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securityholders, or any other broker-dealer, are acting as principals or agents
for the selling securityholders, the compensation to be received by them, and
the compensation to be received by other broker-dealers, in the event that
compensation is in excess of usual and customary commissions, will, to the
extent required, be set forth in a supplement to this Prospectus. Any dealer or
broker participating in any distribution of the shares may be required to
deliver a copy of this Prospectus, including a prospectus supplement, if any, to
any person who purchases any of the shares from or through that dealer or
broker.
We have advised the selling securityholders that during the time they may
be engaged in a distribution of the shares they are required to comply with
Regulation M promulgated under the Exchange Act. With certain exceptions,
Regulation M precludes any selling securityholder, any affiliated purchasers and
any broker-dealer or other person who participates in such distribution from
bidding for or purchasing, or attempting to induce any person to bid for or
purchase any security which is the subject of the distribution until the entire
distribution is complete. Regulation M also prohibits any bids or purchase made
in order to stabilize the price of a security in connection with the
distribution of that security.
LEGAL MATTERS
The validity of the shares of Common Stock offered by this Prospectus will
be passed upon for us by Ruben & Aronson, LLP, Washington, D.C. Ruben &
Aronson, LLP received 87,093 shares of our Common Stock for legal services
rendered to us.
EXPERTS
Our consolidated financial statements appearing in our Annual Report (Form
10-KSB) for the fiscal year ended December 31, 1998, have been audited by
Goldberg & Company, P.A., independent certified public accountants, as set forth
in their March 29, 1999 report included with our financial statements. The
accountant's report contains an explanatory paragraph describing conditions that
raise substantial doubt about our ability to continue as a going concern as
described in Note 2 in the financial statements for the year ended December 31,
1998. The financial statements referred to above have been incorporated in this
Prospectus by reference in reliance upon the accountant's report given upon its
authority as experts in accounting and auditing.
15
<PAGE>
You should rely only on the information contained in this Prospectus, in any
accompanying Prospectus Supplement and in material we file with the Commission.
The Selling Securityholders are offering to sell, and seeking offers to buy, the
securities described in this Prospectus only where offers and sales are
permitted. The information contained in this Prospectus, any Prospectus
Supplement and our filings with the SEC is accurate only as of its date,
regardless of the time of delivery of this Prospectus and any Prospectus
Supplement or the time of any sale of the Securities.
_______________
TABLE OF CONTENTS
Available Information........................................... 1
Information Incorporated by
Reference..................................................... 1
Prospectus Summary.............................................. 3
The Company..................................................... 3
The Offering.................................................... 6
Risk Factors.................................................... 7
Use of Proceeds................................................. 11
Description of Securities....................................... 12
Selling Securityholders......................................... 12
Plan of Distribution............................................ 14
Legal Matters................................................... 15
Experts......................................................... 15
1,071,000 Shares of
Common Stock
SAF T LOK INCORPORATED
PROSPECTUS
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September 24, 1999
