-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, I/Z4/cN9+4lma1j/vzGdMkrISMnrcsPG2BcBZkoAvsn/aRIWVn3V/daGdHbsFb3J XAJm+6r9UYitdNrdjg7mPA== 0000928385-02-001729.txt : 20020430 0000928385-02-001729.hdr.sgml : 20020430 ACCESSION NUMBER: 0000928385-02-001729 CONFORMED SUBMISSION TYPE: 10-K/A PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 20011231 FILED AS OF DATE: 20020430 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SAFLINK CORP CENTRAL INDEX KEY: 0000847555 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370] IRS NUMBER: 954346070 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-20270 FILM NUMBER: 02627823 BUSINESS ADDRESS: STREET 1: 11911 NE 1ST STREET STREET 2: SUITE B-304 CITY: BELLEVUE STATE: WA ZIP: 98005 BUSINESS PHONE: 4252781100 MAIL ADDRESS: STREET 1: 11911 NE 1ST STREET STREET 2: SUITE B-304 CITY: BELLEVUE STATE: WA ZIP: 98005 FORMER COMPANY: FORMER CONFORMED NAME: TOPSEARCH INC DATE OF NAME CHANGE: 19920401 FORMER COMPANY: FORMER CONFORMED NAME: NATIONAL REGISTRY INC DATE OF NAME CHANGE: 19920703 10-K/A 1 d10ka.txt FORM 10-K AMENDMENT NO.1 ================================================================================ SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________ FORM 10-K/A FOR ANNUAL AND TRANSITION REPORTS PURSUANT TO SECTIONS 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 for the fiscal year ended December 31, 2001 OR [_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 0-2027 SAFLINK CORPORATION (Exact Name of Registrant as Specified in its Charter) Delaware 95-4346070 (State or Other Jurisdiction (I.R.S. Employer of Incorporation or Organization) Identification No.) 11911 NE First Street, Suite B-304, Bellevue, WA 98005 (Address of Principal Executive Offices): (Zip Code) (425) 278-1100 (Registrant's Telephone Number, Including Area Code) Securities registered pursuant to Section 12(b) of the Act: None Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.01 par value per share ___________ Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 the past 90 days. Yes [X] No [_] Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K/A or any amendment to this Form 10-K/A.[_] The aggregate market value of the voting stock held by non-affiliates of the registrant, based on the last reported sale on the OTC Electronic Bulletin Board on April 15, 2002, was approximately $5,344,879 (1). There were 12,839,768 shares of the registrant's common stock outstanding as of April 15, 2002. ______________ (1) Excludes shares held of record on that date by directors, executive officers and greater than 10% shareholders of the registrant. Exclusion of such shares should not be construed to indicate that any such person directly or indirectly possesses the power to direct or cause the direction of the management of the policies of the registrant. ================================================================================ EXPLANATORY NOTE This Amendment to the registrant's Annual Report on Form 10-K for the fiscal year ended December 31, 2001 is being filed in order to submit the information required to be included in Part III thereof within the period required by General Instruction G(3) to Form 10-K. Part III of the registrant's Annual Report on Form 10-K is hereby amended by deleting the text thereof in its entirety and substituting the following: PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT. The following table sets forth, for our current directors, including the nominees to be elected at the 2002 Annual Meeting of Stockholders, information with respect to their ages and background.
Director Name Position With SAFLINK Age Since - ---- --------------------- --- ------ Glenn L. Argenbright Director, Chief Executive Officer and 36 2001 President Frank M. Devine Director 59 1997 Steven M. Oyer Director 46 2001 Robert M. Smibert Director 38 2001
Glenn L. Argenbright has served as a director of SAFLINK since February 2001. Mr. Argenbright was appointed Interim Chairman of the Board, President and Chief Executive Officer in June 2001, with such appointments being made permanent by our Board of Directors in December 2001. Mr. Argenbright served as the President and Chief Executive Officer of Jotter Technologies, a firm whose assets were purchased by us in 2000, since November 1999. From May 1998 to November 1999, Mr. Argenbright served as the President and Chairman of the board of Spotlight Interactive, Inc., a Web-incubator and venture capital firm. From February 1999 to August 1999, while working for Spotlight, Mr. Argenbright served as a director of and consultant to Today's Communications Inc., a provider and aggregator of Web content. From May 1998 to February 1999, Mr. Argenbright was a director and Executive Vice President of Intelligent Communications, Inc., a company providing high-speed Internet access over satellite. From April 1997 to April 1998, Mr. Argenbright was a director, President and Chief Executive Officer of Internet Extra Corporation, a Web hosting company which owned and operated certain Web properties. From September 1997 to February 1998, Mr. Argenbright served as President and director of Internet Extra Media Placement (which later changed its name to Mediaplex), an online advertising subsidiary of Internet Extra. From January 1995 to April 1997, Mr. Argenbright served as President of FTM Marketing, a Los Angeles based marketing and promotions agency. Mr. Argenbright has also served on the boards of directors of Internet Presence Providers, Internet Extra, Cardzoo!, StarInsider, ProCheer, and AIR, Inc. Mr. Argenbright received a BA from the University of California at San Diego and a JD from the University of San Diego. Frank M. Devine has served as a director of SAFLINK since June 1997. Mr. Devine also serves as a business consultant for various entities. Mr. Devine founded Bachmann-Devine, Incorporated, a venture capital firm, and co-founded Shapiro, Devine & Craparo, Inc., a manufacturers' agency serving the retail industry. Mr. Devine also serves on the board of directors of these companies. Since December 1994, Mr. Devine has served as a member of the board of directors of Salton, Inc., a publicly owned company that markets and sells electrical appliances to the retail trade under various brand names. Mr. Devine received a BS from Iowa State University. 1 Steven M. Oyer, has served as a Director of SAFLINK since December 2001. Mr. Oyer served as our Interim Chief Financial Officer from June 2001 until December 2001. Since November 2000, Mr. Oyer has been a principal and Chief Financial Officer of Spotlight Interactive, Inc., a Web-incubator and venture capital firm. Since January 2000, Mr. Oyer has also served as a director of Jotter Technologies. From October 1995 to November 2000, Mr. Oyer served as the Vice President Regional Director for Murray Johnstone International Ltd., a Scottish investment firm, where he was responsible for the sale and marketing of international investment management services and private equity in North America. Mr. Oyer serves on the board of several ventures, including Ajax Holdings and Bridge Partners, and for the past 5 years has been active in raising private equity capital. Robert M. Smibert has served as a director of SAFLINK since February 2001. Mr. Smibert served as our Chief Technology Officer from December 2000 until June 2001. Mr. Smibert, a co-founder of Jotter Technologies, served as the Chief Technology Officer of Jotter from December 1997 until we acquired that company's assets in 2000. Mr. Smibert also co-founded MindQuake Creations, a Web boutique company, and served as its Chief Technology Officer from February 1997 to October 1998. From July 1997 to October 1998, Mr. Smibert was the Information Technology Manager of RedCell Canada, a Canadian battery company. From June 1996 to July 1997, Mr. Smibert owned and served as President of Virgin Technologies, Inc., a software design, development and consulting company. Our executive officers are generally elected annually at the meeting of our Board of Directors held in conjunction with the annual meeting of stockholders. The following are our current executive officers and their ages as of April 15, 2002:
Name Age Officer Position Since - ---- --- ------- -------------- Glenn L. Argenbright..... 36 President and Chief Executive Officer/(1)/ 2001 Ann M. Alexander......... 55 Chief Operating Officer and 2001 Corporate Secretary Walter G. Hamilton....... 58 Vice President of Business Development 2000 Gregory C. Jensen........ 34 Chief Technology Officer 2000 Joshua M. Grantz......... 30 Vice President of Sales 2001
(1) Mr. Argenbright was appointed Interim President and Chief Executive Officer in June 2001, with such appointment being made permanent by our Board of Directors in December 2001. Mr. Argenbright's appointment followed the June 5, 2001 resignation of our prior President and Chief Executive Officer, Mr. Anthony. The following sets forth the business experience, principal occupations and employment of each of our current executive officers who do not serve on the board (see above for such information with respect to Mr. Argenbright): Ann M. Alexander joined SAFLINK in October 2000 as Vice President of Operations and was appointed Corporate Secretary in June 2001 and then Chief Operating Officer in August 2001. Ms. Alexander was Director of Operations at vJungle.com from November 1999 to March 2000 and Director of Operations and Support at Continuex from October 1998 to June 1999. From May 1997 to September 1998, she was Regional Human Resource Manager with Starbucks Coffee Company and Project Manager in Customer Operations at AT&T Wireless Service from May 1996 to April 1997. Ms. Alexander is also a principal in TMR, Inc., a Washington corporation providing consulting on human resources and organizational change management. From August 1987 to May 1995, she was a Senior Manager of Customer Account Services at US West NewVector Group, Inc. Ms. Alexander received a MA in Organizational Design and Effectiveness from the Fielding Institute, Santa Barbara, California. Walter G. Hamilton joined SAFLINK in December 1995 as Director of Business Development. Mr. Hamilton served as Vice President of Sales and Marketing from August 1999 through August 2000. In September, 2000, Mr. Hamilton was appointed Vice President of Business Development. Prior to joining SAFLINK, Mr. Hamilton was employed by Unisys Corporation and its successor, Loral Corporation, for 34 years. He served as Director of Business Development for the worldwide postal automation business segment, after holding various sales management and product management related assignments with both domestic and international responsibilities. Mr. Hamilton received a BS in Business Administration from the University of Southern Mississippi. 2 Gregory C. Jensen joined SAFLINK in August 1992 and has served as Chief Systems Engineer, Director of Technical Services, Vice President of Engineering, and is currently Chief Technology Officer. The board appointed him as a corporate officer of SAFLINK on March 20, 2000. Prior to joining SAFLINK, Mr. Jensen was a Member of the Technical Staff of TRW, Inc., involved in the research and development of image processing, signal processing, high volume data storage, and high bandwidth data communication technologies. Mr. Jensen received a BS in Electrical Engineering from California Institute of Technology. Joshua M. Grantz joined SAFLINK in October 2001 as Vice President of Sales. Since August 1999, Mr. Grantz had been President and Chief Executive Officer of Develos, Inc., a company that provides web-based and wireless supply chain management solutions. From May 1999 to January 2001, Mr. Grantz was also the General Manager of Grantz Interactive Solutions, an e-marketing firm. From July 1997 to February 1998 he was the Vice President of Sales and Online Marketing at Internet Extra Corporation. In August 1997, while at Internet Extra, Mr. Grantz founded Internet Extra Media Placement and changed its name to Mediaplex, Inc. and from February 1998 to July 1999 acted as their Senior Vice President of Sales and Media. From February 1997 to July 1997, he served as Senior Account Manager for WebConnect, Inc., an online media sales company. He has also served on the boards of directors of WebMunchies, Talulah G, Grantz Industries, and Develos. Mr. Grantz received two degrees in Journalism & Mass Media and in Communications from Rutgers College and the Rutgers University School of Communications, Information and Library Studies, New Brunswick, NJ. SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors and persons who beneficially own more than 10% of our common stock to file initial reports of ownership and reports of changes in ownership with the SEC. Such persons are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. Based solely on our review of such forms furnished to us and written representations from certain reporting persons, we believe that all filing requirements applicable to our executive officers, directors and greater-than-10% stockholders were complied with, except that Forum Partners, L.P. filed one late report with respect to one transaction, and Freya Fanning & Co. filed one late report with respect to one transaction. 3 ITEM 11. EXECUTIVE COMPENSATION. The following table sets forth information concerning the compensation of our chief executive officer, our three other most highly compensated executive officers, and a former chief executive officer, during the fiscal years ended December 31, 1999, 2000 and 2001. SUMMARY COMPENSATION TABLE
LONG TERM COMPENSATION --------------- ANNUAL COMPENSATION AWARDS ------------------------------------------------------ --------------- SHARES NAME AND PRINCIPAL OTHER ANNUAL UNDERLYING ALL OTHER POSITION YEAR SALARY BONUS COMPENSATION OPTIONS COMPENSATION - ------------------- ------ -------- -------- ------------- ---------------- ------------ Glenn L. Argenbright/(1)/ 2001 $ 58,846 $5,000/(2)/ $ __ 44,287 $ __ President and Chief 2000 __ __ __ __ __ Executive Officer 1999 __ __ __ __ __ Ann M. Alexander 2001 145,000 __ __ 38,572 __ Chief Operating Officer 2000 27,885 __ __ 14,286 11,400/(3)/ and Secretary 1999 __ __ __ __ __ Walter G. Hamilton 2001 145,000 __ __ 38,572 __ Vice President of 2000 145,000 __ __ 7,207 25,261/(4)/ Business Development 1999 131,006 __ __ 12,858 __ Gregory C. Jensen 2001 150,000 __ __ 38,572 __ Vice President of 2000 135,808 __ __ 7,112 312,461/(5)/ Engineering 1999 87,289 __ __ 6,429 __ Former Officer: Jeffrey P. Anthony/(6)/ 2001 124,810 __ __ 78,096 81,715 Former President and 2000 200,000 __ __ __ __ Chief Executive Officer 1999 165,001 __ __ 25,715 __
_____________________ (1) Mr. Argenbright was appointed Interim President and Chief Executive Officer in June 2001, with such appointment being made permanent by our Board of Directors in December 2001. See "Employment Contracts and Termination of Employment and Change-in-Control Arrangements." (2) Mr. Argenbright received this bonus pursuant to signing of his Employment Agreement. See "Employment Contracts and Termination of Employment and Change-in-Control Arrangements." (3) Represents compensation for consulting services prior to October 2000 when Ms. Alexander was appointed as Vice President of Operations. (4) Represents reimbursement of relocation expenses paid to Mr. Hamilton. (5) Represents proceeds in the amount of $302,525 received from the exercise and sale of stock options, and reimbursement of relocation expenses in the amount of $9,936. 4 (6) Mr. Anthony resigned as President and Chief Executive Officer effective June 5, 2001. He received a severance payment of $100,000, along with his $15,048 in accrued vacation. Of Mr. Anthony's severance payment, $33,333 is reported as "Salary" attributable to his original severance agreement, and $66,667 is reported as "All Other Compensation" attributable to modification of his original severance agreement at the time of termination. Mr. Anthony was also granted an option to purchase 78,096 shares of SAFLINK common stock for $1.89 per share on May 21, 2001. Such option became fully vested upon his termination of employment pursuant to a severance agreement between Mr. Anthony and SAFLINK. STOCK OPTIONS GRANTED IN FISCAL 2001 The following table provides the specified information concerning grants of options to purchase our Common Stock made during the fiscal year ended December 31, 2001, to the persons named in the Summary Compensation Table: OPTION GRANTS IN LAST FISCAL YEAR
INDIVIDUAL GRANTS ---------------------------------------------------------- POTENTIAL REALIZED VALUE AT ASSUMED ANNUAL RATES NUMBER OF % OF TOTAL OF STOCK PRICE SHARES OPTIONS EXERCISE APPRECIATION FOR OPTION UNDERLYING GRANTED TO PRICE TERM/(1)/ OPTIONS EMPLOYEES IN PER EXPIRATION ------------------------------ NAME GRANTED/(2)/ FISCAL YEAR SHARE/(3)/ DATE 5% 10% - -------------------------- ---------------- -------------- ------------- ----------- ------------ -------------- Glenn L. Argenbright 35,715 4.3% $ 1.68 6/29/11 $ 97,736 $ 155,628 8,572/(4)/ 1.0% 7.21 2/15/11 100,672 160,304 Ann M. Alexander 38,572 4.7% 1.68 6/29/11 105,554 168,077 Walter G. Hamilton 38,572 4.7% 1.68 6/29/11 105,554 168,077 Gregory C. Jensen 38,572 4.7% 1.68 6/29/11 105,554 168,077 Former Officers: Jeffrey P. Anthony 78,096/(4)/ 9.4% 1.89 5/21/02/(5)/ 154,982 162,362
____________________ (1) Potential gains are net of exercise price, but before taxes associated with exercise. These amounts represent certain assumed rates of appreciation only, based on SEC rules, and therefore are not intended to forecast possible future appreciation, if any, in SAFLINK's stock price. Actual gains, if any, on stock option exercises are dependent on the future performance of the Common Stock, overall market conditions and the option holders' continued employment through the vesting period. The amounts reflected in this table may not necessarily be achieved. (2) Except as described in footnotes below, all options were granted pursuant to the 2000 Stock Incentive Plan. Options granted under the 2000 Stock Incentive Plan generally become vested on a monthly basis over a 36-month period , but are not exercisable until optionee has been employed with us for nine months, and they remain exercisable subject to the optionee's continuous employment with us. Under the 2000 Stock Incentive Plan, the Board retains discretion to modify the terms, including the prices, of outstanding options. (3) All options were granted at market value on the date of grant. (4) Options granted pursuant to the 1992 Stock Incentive Plan. Options granted under the 1992 Stock Incentive Plan generally become exercisable in three equal installments beginning on the first anniversary of the date of grant, subject to 5 the optionee's continuous employment with us. Under the 1992 Stock Incentive Plan, the Board retains discretion to modify the terms, including the prices, of outstanding options. (5) Pursuant to the terms of Mr. Anthony's severance agreement, all of his vested but unexercised options will lapse on 5/21/02. See "Employment Contracts and Termination of Employment and Change-in-Control Arrangements." 6 OPTION EXERCISES AND FISCAL 2001 YEAR-END VALUES The following table provides the specified information concerning exercises of options to purchase our Common Stock in the fiscal year ended December 31, 2001, and unexercised options held as of December 31, 2001, by the persons named in the Summary Compensation Table above. AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END VALUES
NUMBER OF SHARES VALUE OF UNEXERCISED UNDERLYING UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS AT FISCAL AT FISCAL YEAR END YEAR END/(1)/ -------------------------------- -------------------------------- NAME EXERCISABLE/(2)/ UNEXERCISABLE EXERCISABLE UNEXERCISABLE - --------------------------- ---------------- ------------- ------------- --------------- Glenn L. Argenbright....... __ 35,715/(4)/ $ __ $ __ 2,857/(3)/ 5,715 __ __ Ann M. Alexander........... 6,428 32,144 __ __ 4,762/(3)/ 9,524 __ __ Walter G. Hamilton......... 6,428 32,144 __ __ 18,072/(3)/ 9,090 __ __ Gregory C. Jensen.......... 6,428 32,144 __ __ 9,040/(3)/ 6,884 __ __ Former Officers: Jeffrey P. Anthony......... 155,599/(3)/ __ __ __
_______________ (1) Based on a market value of $1.25, last reported sale of our common stock on the OTC Electronic Bulletin Board on December 31, 2001. (2) Except as described in footnotes below, all options were granted pursuant to the 2000 Stock Incentive Plan. Options granted under the 2000 Stock Incentive Plan generally become vested on a monthly basis over a 36-month period, but are not exercisable until optionee has been employed with us for nine months, and they remain exercisable subject to the optionee's continuous employment with us. Under the 2000 Stock Incentive Plan, the Board retains discretion to modify the terms, including the prices, of outstanding options. (3) Options granted pursuant to the 1992 Stock Incentive Plan. Options granted under the 1992 Stock Incentive Plan generally become exercisable in three equal installments beginning on the first anniversary of the date of grant, subject to the optionee's continuous employment with us. Under the 1992 Stock Incentive Plan, the Board retains discretion to modify the terms, including the prices, of outstanding options. (4) Mr. Argenbright had not satisfied the 9-month employment requirement, pursuant to the 2000 Stock Incentive Plan prior to December 31, 2001, therefore 5,952 vested options, of the total grant of 35,715, were not yet exercisable. EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND CHANGE-IN-CONTROL ARRANGEMENTS In June 2001, we entered into an Employment Agreement with Mr. Argenbright, our President and Chief Executive Officer effective as of June 6, 2001. The agreement provides for the payment to Mr. Argenbright of an initial $100,000 minimum base annual salary, a $5,000 signing bonus, and a $100,000 bonus based on the achievement of certain objectives. Pursuant to the agreement, Mr. Argenbright was granted an option under the 2000 Stock Incentive Plan to purchase 35,715 shares of our common stock, vesting in equal increments on annual basis. In the event of a sale of the company, change of control, merger or termination 7 of Mr. Argenbright's employment with us, his options will fully vest and become immediately exercisable. Under the agreement, Mr. Argenbright is also entitled to receive the equivalent of three months base salary if his employment with us is terminated for any reason other than cause or if the Board of Directors appoints someone else to the position of Chief Executive Officer. On February 11, 2002, the Board of Directors approved certain modifications to Mr. Argenbright's compensation under the agreement, which include: an increase in his base salary to $175,000, effective as of January 1, 2002; an option under the 2000 Stock Incentive Plan to purchase 217,665 shares of our common stock, at $1.07 per share; a salary advance of $20,000; and certain potential cash bonuses tied to Mr. Argenbright's ability to achieve targeted revenue objectives. Jeffrey P. Anthony resigned as our President and Chief Executive Officer effective June 5, 2001 and resigned as a director on June 8, 2001. Pursuant to his severance agreement, dated December 10, 1998, and amended on May 15, 2001, Mr. Anthony received $100,000 in severance payments as well as accrued vacation pay and the portable computer used by Mr. Anthony. Mr. Anthony terminated his employment within 90 days of an event that constituted "good reason" and, as a consequence, received full benefits under his severance agreement. Mr. Anthony would not have been eligible to receive severance benefits in the event his employment was terminated for cause. As part of his severance benefits, all of Mr. Anthony's outstanding options became fully vested on the date of termination and exercisable for a period of one year from his date of termination. In addition, Mr. Anthony also received as part of his severance benefits a fully-vested, immediately exercisable option to purchase 78,096 shares of our common stock, with such option remaining exercisable for a period of one year from his date of termination. Mr. Anthony entered into a consultancy agreement with us on June 5, 2001, whereby he agreed to provide up to 100 hours of consulting services to us for no more than 60 days, however he did not perform any consulting services under this arrangement. COMPENSATION OF DIRECTORS Our directors are reimbursed for reasonable out-of-pocket expenses incurred in attending meetings of the Board of Directors and committee meetings. Upon election to the Board of Directors, each new director receives an option to purchase 8,572 shares of our common stock at the fair market value on the date of grant. One-third of the initial grant becomes exercisable on the date of grant and an additional one-third on each of the first two anniversaries of the grant date, if such person is still serving as a director at such times. Mr. Smibert, who jointly with his spouse owns approximately 25% of the common stock of Jotter, declined the options granted to him. Mr. Devine was granted a fully vested option to purchase 11,429 shares of our common stock on May 21, 2001, as an incentive to continue as a member of the Board of Directors following completion of a financing and the subsequent management changes. Mr. Devine's option grant was made under our 2000 Stock Incentive Plan. In addition, on February 11, 2002, Mr. Devine was granted a fully vested option under the 2000 Stock Incentive Plan to purchase 65,412 shares of our common stock at $1.07 per share. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth, as of April 15, 2002, certain information with respect to the beneficial ownership of our Common Stock by (i) each stockholder known by us to be the beneficial owner of more than 5% of our Common Stock, (ii) each director and director-nominee, (iii) each executive officer named in the Summary Compensation Table below, and (iv) all of our directors and executive officers as a group.
Number of Shares of Number of Shares Total Number of Shares Percent of Common Stock Underlying Beneficially Common Name of Beneficial Owner/(1)/ Owned Convertible Securities/(2)/ Owned/(3)/ Stock/(4)/ - ------------------------------------------------------------------------------------------------------------------------------------ SDS Merchant Fund, L.P./(5)/.......... 1,264,800 2,318,800 3,583,600 23.6% One Sound Shore Drive Greenwich, CT 06830 RMS Limited Partnership/(6)/.......... 2,561,634 11,905 2,573,539 20.3% 50 West Liberty Street, Ste 650 Reno, NV 89501 S.A.C. Capital Associates, LLC/(7)/... 857,144 1,571,430 2,428,574 16.9% 777 Long Ridge Road
8
Number of Shares of Number of Shares Total Number of Shares Percent of Common Stock Underlying Beneficially Common Name of Beneficial Owner/(1)/ Owned Convertible Securities/(2)/ Owned/(3)/ Stock/(4)/ - ------------------------------------------------------------------------------------------------------------------------------------ Stamford, CT 06902 Palo Alto Investors, LLC/(8)/ ....... 500,000 1,928,575 2,428,575 16.4% 470 University Avenue Palo Alto, CA 94301 Freya Fanning & Co./(9)/ ............ 1,146,858 584,145 1,731,003 12.9% 400 Essex Street Beverly Farms, MA 01915 Forum Partners, LP/(10)/ ............ 1,114,572 563,314 1,677,886 12.5% 1601 Forum Place, Ste 905 West Palm Beach, FL 33401 DMG Advisors LLC/(11)/ .............. 1,514,011 __ 1,514,011 11.8% One Sound Shore Drive, Ste 202 Greenwich, CT 06830 Micro Cap Partners, L.P./(12)/ ...... 332,872 1,215,730 1,548,602 11.0% 470 University Avenue Palo Alto, CA 94301 Jotter Technologies, Inc./(13)/ ..... 800,660 __ 800,660 6.2% 9595 Harbour Bay Place Elk Grove, CA 95758 Ann M. Alexander .................... __ 43,880 43,880 * Glenn L. Argenbright ................ __ 52,903 52,903 * Frank M. Devine ..................... __ 83,746 83,746 * Joshua M. Grantz .................... 1,600 __ 1,600 * Walter G. Hamilton .................. __ 57,925 57,925 * Steven M. Oyer ...................... __ 12,858 12,858 * Robert M. Smibert ................... __ __ __ * Directors and executive officers .... 1,600 251,312 252,912 * as a group (7 persons)
- ------------------------- * Less than 1% (1) Except as otherwise indicated, the persons named in this table have sole voting and investment power with respect to all shares of Common Stock shown as beneficially owned by them, subject to community property laws where applicable and to the information contained in the footnotes to this table. (2) Under the rules of the Securities and Exchange Commission, a person is deemed to be the beneficial owner of shares that can be acquired by such person within 60 days upon the exercise of options or warrants or upon conversion of securities convertible into common stock. (3) Represents the aggregate number of shares beneficially owned by each stockholder. (4) Calculated on the basis of 12,839,768 shares of Common Stock outstanding as of April 15, 2002, provided that any additional shares of Common Stock that a stockholder has the right to acquire within 60 days after April 15, 2002 are deemed to be outstanding for the purpose of calculating that stockholder's percentage beneficial ownership. (5) Based on a Schedule 13G filed by SDS Merchant Fund, L.P. with the SEC on April 5, 2002. Includes 2,318,800 shares issuable upon exercise of immediately exercisable warrants and conversion of preferred stock owned by SDS Merchant Fund. SDS Capital Partners, L.L.C. is the sole general partner of SDS Merchant Fund and has shared power to vote and dispositive power with respect to all of the shares reported. Steven Derby is the sole managing member of SDS Capital Partners and has shared power to vote and dispositive power with respect to all of the shares reported. SDS Management, LLC, an affiliate of SDS Merchant Fund, L.P., has acted as an adviser to S.A.C. Capital Associates, LLC. Each of SDS Merchant Fund, L.P. and S.A.C. Capital Associates, LLC disclaims beneficial ownership of the shares of our common stock owned by the other. 9 (6) Based on a Schedule 13D/A filed by RMS Limited Partnership with the SEC on June 15, 2001. Includes 48,572 shares and 11,905 shares subject to options immediately exercisable or exercisable within 60 days after April 15, 2002, owned by Francis R. Santangelo. Mr. Santangelo's shares are subject to a voting agreement between RMS and Mr. Santangelo whereby Mr. Santangelo agrees to vote such shares as directed by RMS. Also includes 800,660 shares beneficially owned by Jotter Technologies which are subject to a voting agreement between RMS and Jotter Technologies whereby Jotter Technologies agrees to vote such shares as directed by RMS. RMS is a Nevada limited partnership controlled by Roy M Speer. Crystal Diamond, Inc. is a Nevada corporation controlled by Mr. Speer. RMS shares the power to vote and to dispose of the shares owned directly by RMS with Crystal Diamond and Mr. Speer. RMS has the power to direct the voting and has no power to dispose of the shares owned by Mr. Santangelo and Jotter Technologies. (7) Based on a Schedule 13G filed by S.A.C. Capital Advisors, LLC; S.A.C. Capital Management, LLC; and Steven A. Cohen with the SEC on January 22, 2002. The shares are held by S.A.C. Capital Associates, LLC, an Anguillan limited liability company. Pursuant to invest agreements, each of SAC Capital Advisors and SAC Capital Management share all investment and voting power with respect to the securities held by SAC Capital Associates. Mr. Cohen is the President and Chief Executive Officer of SAC Capital Advisors, the Managing Member of which is a corporation wholly owned by Mr. Cohen. Mr. Cohen is also the owner, directly and through a wholly-owned subsidiary, of all of the membership interests of SAC Capital Management. Mr. Cohen disclaims beneficial ownership of the securities held by SAC Capital Associates. SDS Management, LLC, an affiliate of SDS Merchant Fund, L.P., has acted as an adviser to S.A.C. Capital Associates, LLC. Each of SDS Merchant Fund, L.P. and S.A.C. Capital Associates, LLC disclaims beneficial ownership of the shares of our common stock owned by the other. (8) Based on a Schedule 13D filed by Palo Alto Investors, LLC with the SEC on February 14, 2002. Includes 332,872 shares and 1,215,730 shares issuable upon exercise of immediately exercisable warrants and conversion of preferred stock owned by Micro Cap Partners, L.P. Palo Alto Investors is an investment advisor registered with the SEC and is the general partner of and investment advisor to Micro Cap Partners and other investment limited partnerships. The sole manager of Palo Alto Investors, LLC is Palo Alto Investors corporation. William Leland Edwards is the President and controlling shareholder of Palo Alto Investors corporation and the principal member of Palo Alto Investors. Palo Alto Investors has shared power to vote and shared dispositive power with respect to all of the shares reported. (9) Includes 584,145 shares issuable upon exercise of immediately exercisable warrants owned by Freya Fanning & Company. Thomas B. Hallowell is the sole general partner of Freya Fanning & Company and shares the power to vote and dispositive power with respect to all of the shares reported. Mr. Hallowell disclaims beneficial ownership of all of the shares reported. (10) Includes 563,314 shares issuable upon exercise of immediately exercisable warrants owned by Forum Partners. Arnold Mullen is the sole general partner of Forum Partners and shares the power to vote and dispositive power with respect to all of the shares reported. Mr. Mullen disclaims beneficial ownership of all of the shares reported. (11) Based on a Schedule 13G filed by DMB Advisors LLC, DMG Legacy International Ltd., and DMG Legacy Institutional Fund LLC with the SEC on February 12, 2002. DMG Advisors is the managing member of each of the following, and has shared power to vote and shared dispositive power with respect to 832,348 shares held by DMB Legacy International, 585,376 shares held by DMG Legacy Institutional Fund and 96,287 shares held by DMG Legacy Fund LLC. (12) Based on a Schedule 13D filed by Micro Cap Partners, L.P. with the SEC on February 14, 2002. Includes 1,215,730 shares issuable upon exercise of immediately exercisable warrants and conversion of preferred stock owned by Micro Cap Partners, L.P. Palo Alto Investors is an investment advisor registered with the SEC and is the general partner of and investment advisor to Micro Cap Partners and other investment limited partnerships. The sole manager of Palo Alto Investors, LLC is Palo Alto Investors corporation. William Leland Edwards is the President and controlling shareholder of Palo Alto Investors corporation and the principal member of Palo Alto Investors. Palo Alto Investors has shared power to vote and shared dispositive power with respect to all of the shares reported. (13) Based on a Schedule 13D/A filed by Jotter Technologies, Inc. with the SEC on June 15, 2001. Jotter Technologies shares are subject to a voting agreement between RMS Limited Partnership and Jotter Technologies whereby Jotter Technologies agrees to vote such shares as directed by RMS. Jotter Technologies has sole power to dispose of its shares. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS. On November 13, 2000, Jeffrey P. Anthony, our former President and Chief Executive Officer and a former director, James W. Shepperd, our Chief Financial Officer and RMS Limited Partnership, a beneficial owner of more than 10% of our common stock, entered into loan agreements with us for an aggregate principal amount of $1,050,000. Both Messrs. Anthony and Shepperd agreed to loan $25,000 to us, and RMS agreed to loan $1,000,000 to us. Mr. Anthony advanced an additional $5,000 to us in April 2001. Under the terms of the bridge financing, each of these lenders could elect to participate in the financing by 10 electing to receive Series E preferred stock and warrants in payment of their respective loans on the same terms and conditions offered to other purchasers in the financing. Messrs. Anthony and Shepperd and RMS did not elect to participate in the financing. Proceeds from the financing were used in part to repay the bridge loans. In addition, in connection with the financing, RMS agreed to extend its $1,000,000 bridge note and accrued interest for an additional twelve months and we agreed to apply 50% of any proceeds received from the exercise of Series A and Series B warrants issued in the financing towards principal and interest payments of the RMS note during the extension period. Glenn L. Argenbright, our Chief Executive Officer, President and Chairman of the Board, served as President and Chief Executive Officer of Jotter from December 1999 until June 2001. Steven M. Oyer, a director, is currently a director of Jotter. Robert Smibert, a director, jointly with his spouse owns approximately 25% of Jotter's common stock. Mr. Argenbright purchased 32 shares of Series E preferred stock and a Series A warrant to purchase 4,572 shares of our common stock in the financing for an aggregate purchase price of $6,400. Margaret Argenbright, Mr. Argenbright's mother, purchased 50 shares of our Series E preferred stock and a Series A warrant to purchase 7,143 shares of common stock in the financing for an aggregate purchase price of $10,000. Messrs. Argenbright and Oyer are both directors of Spotlight Interactive, Inc., which purchased 375 shares of our Series E preferred stock and a Series A warrant to purchase 53,572 shares of our common stock in the financing for an aggregate purchase price of $75,000. In addition, Ken Wilton, Chairman of the Board of Jotter, purchased 135 shares of our Series E preferred stock and a Series A warrant to purchase 19,286 shares of our common stock for an aggregate purchase price of $27,000. 11 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this amendment to be signed on its behalf by the undersigned, thereunto duly authorized. SAFLINK CORPORATION Date: April 30, 2002 By: /s/ Glenn L. Argenbright -------------------------- Glenn L. Argenbright President, Chief Executive Officer and Director 12 -----END PRIVACY-ENHANCED MESSAGE-----