As filed with the Securities and Exchange Commission on September 29, 2005
Registration No. 333-127663
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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INTELLI-CHECK, INC.
(Exact name of registrant as specified in its charter)
Delaware 11-3234779
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification Number)
organization)
246 Crossways Park West
Woodbury, NY 11797
516-992-1900
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Frank Mandelbaum
Chief Executive Officer
Intelli-Check, Inc.
246 Crossways Park West
Woodbury, NY 11797
516-992-1900
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
Copies to:
Mitchell S. Nussbaum, Esq.
Loeb & Loeb LLP
345 Park Avenue
New York, NY 10154
(212) 407-4000
Approximate date of commencement of proposed sale to the public: From time to
time after the effective date of this Registration Statement, as determined by
the selling security holders.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. |_|
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. |X|
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. |_|
CALCULATION OF REGISTRATION FEE
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Proposed Maximum
Proposed Maximum Aggregate
Title of Each Class of Amount to Offering Price Offering Amount of
Securities to be Registered be Registered(1) Per Share Price Registration Fee
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Common Stock, $0.001 par value per share.. 1,250,000 $4.32(2) $5,400,000(2) $635.58(3)
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Common Stock, $0.001 par value per
share, issuable upon exercise of warrants. 625,000 $5.40(4) $3,375,000(4) $397.24(3)
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(1) Pursuant to Rule 416 of the Securities Act of 1933, as amended, the shares
of our common stock offered hereby also include such presently
indeterminate number of shares of our common stock as shall be issued by
us to the selling shareholders upon adjustment under anti-dilution
provisions covering the additional issuance of our common stock resulting
from stock splits, stock dividends or similar transactions.
(2) Estimated in accordance with Rule 457(c) of the Securities Act of 1933, as
amended, solely for the purpose of computing the amount of the
registration fee, based on the average of the high and low sales prices of
the Registrant's Common Stock on the American Stock Exchange on August 15,
2005.
(3) Previously paid.
(4) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(g) of the Securities Act based on the higher of (a)
the exercise price of the warrants or (b) the offering price of securities
of the same class included in this registration statement.
The Registrant hereby amends this Registration Statement on such date or dates
as may be necessary to delay its effective date until the Registrant shall file
a further amendment that specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act, as amended, or until this Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
The information in this prospectus is not complete and may be changed. The
securityholders identified in this prospectus may not sell these securities
until the registration statement filed with the Securities and Exchange
Commission is effective. This prospectus is not an offer to sell these
securities and it is not soliciting an offer to buy these securities in any
state where the offer or sale is not permitted.
================================================================================
Subject to completion, dated September 29, 2005
PROSPECTUS
1,875,000 Shares
INTELLI-CHECK, INC.
Common Stock
This prospectus relates to the sale by the selling security holders named
in this prospectus of up to an aggregate of 1,875,000 shares of our common
stock, which includes 625,000 shares issuable upon the exercise of warrants with
an initial exercise price of $5.40. The selling security holders acquired the
shares of our common stock and the warrants from us in a private placement on
August 8, 2005 and August 9, 2005. We will not receive any of the proceeds from
the resale of the shares of our common stock by the selling security holders. We
will, however, receive the proceeds from any exercise of warrants to purchase
shares of our common stock to be sold hereunder to the extent the selling
security holders do not perform cashless exercises (which may only be exercised
on a cashless basis under specific circumstances). See "Use of Proceeds."
Our common stock is traded on the American Stock Exchange under the symbol
"IDN." On September 28, 2005, the last closing price for our common stock was
$4.36.
See "Risk Factors" beginning on page 4 of this Prospectus for factors you
should consider before buying shares of our common stock.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this Prospectus is __________________ ___, 2005
OUR BUSINESS
Intelli-Check was formed in 1994 to address a growing need for a reliable
document and age verification system that could be used to detect fraudulent
driver licenses and other widely accepted forms of government-issued
identification documents. Since then, our technology has been further developed
for application in the commercial fraud protection, access control and
governmental security markets. Additionally, it is currently being used to
address inefficiencies and inaccuracies associated with manual data entry. The
core of Intelli-Check's product offerings is our proprietary software technology
that verifies the authenticity of driver licenses, state issued non-driver and
military identification cards used as proof of identity. Our patented
ID-Check(R) software technology instantly reads, analyzes, and verifies the
encoded data in magnetic stripes and barcodes on government-issue IDs from
approximately 60 jurisdictions in the U.S. and Canada to determine if the
content and format is valid. We have served as the national testing laboratory
for the American Association of Motor Vehicle Administrators (AAMVA) since 1999
and have access to all the currently encoded driver license formats. After the
tragic events that occurred on September 11, 2001, we believe there has been a
significant increase in awareness of our software technology to help improve
security across many industries, including airlines, rail transportation and
high profile buildings and infrastructure, which we believe should enhance
future demand for our technology. We have also begun to market to various
government and state agencies, which have long sales cycles including extended
test periods. Since inception, we have incurred significant losses and negative
cash flow from operating activities and, as of June 30, 2005, we had an
accumulated deficit of $37,620,369. We will continue to fund operating and
capital expenditures from proceeds that we received from sales of our equity
securities. In view of the rapidly evolving nature of our business and our
limited operating history, we believe that period-to-period comparisons of
revenues and operating results are not necessarily meaningful and should not be
relied upon as indications of future performance.
Our ID-Check's unique technology provides the ability to verify the
validity of military ID's, driver licenses and state issued non-driver ID cards
that contain magnetic stripes, bar codes and SMART chips that in most cases
conform to AAMVA/ANSI/ISO standards, which enables us to target three distinct
markets. The original target market was focused on resellers of age-restricted
products, such as alcohol and tobacco, where the proliferation of high-tech fake
IDs expose merchants to fines and penalties for the inadvertent sale of these
products to underage purchasers. We now also target commercial fraud, which
includes identity theft, and our technology is designed to help prevent losses
from these frauds. We are also marketing our products for security applications
involving access control. As a result of its applicability in these markets, we
have sold our products to some of the largest companies in the gaming industry,
a significant retailer, Certegy, one of the largest providers of check
authorization services in the United States, a state port authority, military
establishments, airports, nuclear power plants and high profile buildings and
our technology is currently being tested by several Fortune 50 Companies. We
have entered into strategic alliances with Verifone, the largest provider of
credit card terminals in the U.S., the two largest providers of driver licenses
in North America for their compliance with the provisions of the Real ID Act,
several biometric companies; and Northrop Grumman and Anteon, integrators in the
defense industry, to utilize our systems and software as the proposed or
potential enrollment application for their technologies and to jointly market
these security applications. The recent passage of the Real ID ACT together with
the regulations arising from Homeland Security Presidential Directive 12
(HSPD-12) has additionally created opportunities for our verification technology
in the governmental market at the federal, state and local levels. In addition,
we have executed agreements with some high profile organizations to promote the
use of our technology and our products. We believe these relationships have
broadened our marketing reach through their sales efforts and we intend to
develop additional strategic alliances with additional high profile
organizations and providers of security solutions.
We have developed additional software products that utilize our patented
software technology. Our latest products include ID-Traveler and ID-Prove. ID
Traveler electronically verifies and matches two forms of government issued ID's
instantaneously while the ID Prove product offering provides "out of wallet"
questions to assist in proving a users claimed identity. Additional software
solutions include ID-Check(R) PC and ID-Check(R) PDA, which replicate the
features of ID-Check. These products are designed to be platform-independent and
compatible with both stationary and mobile hardware applications. Another new
application is an enhanced version of C-Link(R), our net workable data
management software. Additionally, ID-Check(R) PC and the most recent release of
C-Link are designed to read the smart chip contained on the military Common
Access Card (CAC). These products are all designed for use with Intelli-Check's
new DCM, a compact, self-contained two-dimensional bar code and magnetic stripe
reader. The DCM enables the new software applications to be used on a variety of
commercially available data processing devices, including PDAs, Tablets,
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Laptops, Desktops and Point-of-Sale Computers, therefore negating the need to
replace the ID-Check terminal. Our C-Link(R) software product, which runs on a
personal computer and was created to work in conjunction with the ID-Check unit
allows a user to instantly first analyze the data, then view the encoded data
for further verification and to generate various reports where permitted by law.
We recently introduced two new products, ID-Mobile, which gives the user the
additional flexibility of utilizing our software in a hand-held product and
ID-Check POS, which is a software package that can be installed on a Verifone
Omni 3750 terminal to enable the user to have the functionality of our
proprietary technology. This product began beta-testing in August 2005. To date,
we have entered into seventeen (17) licensing agreements and are in discussions
with additional companies to license our software to be utilized within other
existing systems.
Our principal executive offices are located at 246 Crossways Park West,
Woodbury, NY 11797, and our telephone number is 516-992-1900.
3
RISK FACTORS
Investment in our shares involves a degree of risk. You should consider
the following discussion of risks as well as other information in this
prospectus and the incorporated documents before purchasing any shares. Each of
these risk factors could adversely affect our business, operating results,
prospects and financial condition, as well as adversely affect the value of an
investment in our common stock.
Risks Related to Our Business and Industry
We have incurred losses since inception and losses may continue, which
could result in a decline in the value of our securities and a loss of
your investment.
We sustained net losses of $1,751,446 for the six months ended June 30,
2005 and $6,450,943 and $6,922,931 for the fiscal years ended December 31, 2003
and December 31, 2004, respectively. We expect to incur additional expenditures
in line with the sales growth of our business. We cannot assure you that we will
achieve operating profits in the near future.
We may be unable to meet our future capital requirements.
Our capital requirements have been and will continue to be significant. In
the event that we do not generate meaningful revenue, we would need to raise
additional capital. If we are unable to raise additional capital, we plan to
implement cost saving measures to sustain business activities on a reduced
level. Unplanned acquisition and development opportunities and other
contingencies may arise, which could require us to raise additional capital. If
we raise additional capital through the sale of equity, including preferred
stock, or convertible debt securities, the percentage ownership of our then
existing stockholders will be diluted.
We currently do not have a credit facility or any commitments for
additional financing. We cannot be certain that additional financing, should it
be needed, will be available when and to the extent required. If adequate funds
are not available on acceptable terms, we may be unable to fund our expansion,
develop or enhance our products, or respond to competitive pressures. Such
limitation could have a material adverse effect on our business, financial
condition and results of operations.
We may not be able to keep up with rapid technological change.
Our market is characterized by frequent new product announcements and
rapid advancements in hardware technology. Significant technological change
could render our existing technology obsolete. If we are unable to successfully
respond to these developments, or do not respond in a cost-effective way, our
business, financial condition and results of operations will be materially
adversely affected.
Our proprietary software relies on reference data provided by government
and quasi-government agencies. If these governmental and quasi-government
agencies were to stop sharing data with us, the utility of our proprietary
software would be diminished in those jurisdictions and our business would
be damaged.
Currently, substantially all U.S. states and Canadian provinces and the
District of Columbia, which conform to the guidelines established by certain
organizations responsible for implementing industry standards, cooperate with us
by providing sample identification cards so that we may modify the ID-Check
System terminal and other software products to read and analyze the encoded
information found on such jurisdiction's identification cards. We cannot assure
you that each of these jurisdictions will continue to cooperate with us. In the
event that one or more of these jurisdictions do not continue to provide this
reference data, the utility of our proprietary software may be diminished in
those jurisdictions.
4
Our refocused business strategy exposes us to long sales and
implementation cycles for our products.
Our target customers in the commercial fraud protection, access control
and age verification markets include large retailers and government agencies,
which typically require longer sales and implementation cycles for our products
than do our potential customer base solely interested in age verification, such
as restaurant, bar and convenience store operators. The longer sales and
implementation cycles for larger retail companies continue to have an adverse
impact on the timing and realization of our revenues. In addition, budgetary
constraints and economic slowdowns may also continue to delay purchasing
decisions by these prospective customers. These initiatives have costs
associated with them, and we cannot assure you that they ultimately will prove
successful or result in an increase to our revenues or profitability.
In addition, the loss or significant reduction in government spending by
government entities could materially limit our ability to obtain government
contracts. These limitations, if significant, could also have a material adverse
effect on our business, financial condition and results of operations. In
addition, we will need to develop additional strategic relationships with large
government contractors in order to successfully compete for government
contracts. Our inability to develop these strategic relationships may limit our
ability to implement our business strategy.
The market for our systems and software is evolving and its growth is
uncertain.
Demand and market acceptance for recently introduced and existing systems
and software and sales from such systems and software, are subject to a high
level of uncertainty and risk. Our business may suffer if the market develops
more slowly than anticipated and does not sustain market acceptance.
Failure to manage our operations if they expand could impair our future
growth.
If we are able to expand our operations, particularly through multiple
sales to large retailers and government agencies in the document verification
market, the expansion will place significant strain on our management, financial
controls, operating systems, personnel and other resources. Our ability to
manage future growth, should it occur, will depend to a large extent upon
several factors, including our ability to do the following:
o build and train our sales force;
o establish and maintain relationships with distributors;
o develop customer support systems;
o develop expanded internal management and financial controls adequate
to keep pace with growth in personnel and sales, if they occur; and
o manage the use of third-party manufacturers and suppliers.
If we are able to grow our business but do not manage our growth
successfully, we may experience increased operating expenses, loss of customers,
distributors or suppliers and declining or slowed growth of revenues.
We are subject to risks associated with product failure and technological
flaws.
Products as complex as those offered by us may contain undetected errors
or result in failures when first introduced or when new versions are released.
Despite vigorous product testing efforts and testing by current and potential
customers, it is possible that errors will be found in a new product or
enhancement after commencement of commercial shipments. The occurrence of
product defects or errors could result in adverse publicity, delay in product
introduction, diversion of resources to remedy defects, loss of or a delay in
market acceptance or claims by customers against us, or could cause us to incur
additional costs, any of which could adversely affect our business.
5
Our failure to protect our proprietary technology may impair our
competitive position.
We continue to allocate significant resources to develop new and
innovative technologies which we utilize in our products and systems. We
consider such allocation to be fundamental to our continued success as such
success depends, to a significant degree, upon our ability to provide products
and systems that provide superior functionality and performance compared to
those of our competitors. Accordingly, we must protect our technology from
unauthorized use. This is done by processes aimed at identifying and seeking
appropriate protection for newly developed intellectual property, e.g., patents,
trade secrets, copyrights and trademarks, as well as policies aimed at
identifying unauthorized use of such property in the marketplace. These
processes include:
o contractual arrangements providing for non-disclosure of proprietary
information;
o maintaining and enforcing issued patents and filing patent
applications on innovative solutions to commercially important
problems;
o protecting our trade secrets;
o protecting our copyrights and trademarks by registration and other
appropriate means;
o establishing internal processes for identifying and appropriately
protecting new and innovative technologies; and
o establishing practices identifying unauthorized use of our
intellectual property.
While we actively protect our intellectual property, others may
intentionally or not innocently use such intellectual property. Accordingly, at
times we may be required to bring legal proceedings to preclude such
unauthorized use. We are mindful that such measures can be costly and time
consuming and undertake such measures only as a last resort.
These policies and practices with respect to our intellectual property
rights do not prevent our competitors from independently developing products
similar or superior to our products and technologies. It merely protects our
property rights created as a result of our allocating significant portions of
our technical and monetary resources. Further, an inability or failure to
protect this property could have a material adverse effect on our future
business and financial condition.
If our future products incorporate technologies that infringe the
proprietary rights of third parties, and we do not secure licenses from
them, we could be liable for substantial damages.
We are not aware that our current products infringe the intellectual
property rights of any third parties. We also are not aware of any third party
intellectual property rights that may hamper our ability to provide future
products and services. However, we recognize that the development of our
services or products may require that we acquire intellectual property licenses
from third parties so as to avoid infringement of those parties' intellectual
property rights. These licenses may not be available at all or may only be
available on terms that are not commercially reasonable. In addition, third
parties could make infringement claims against us which, whether or not they are
upheld, could have a negative impact on our business and financial condition,
by:
o consuming substantial time and financial resources;
o diverting the attention of management from growing our business and
managing operations; and
o disrupting product sales and shipments.
If any third party prevails in an action against us for infringement of
its proprietary rights, we could be required to pay damages and either enter
into costly licensing arrangements or redesign our products so as to exclude any
infringing use. As a result, we would incur substantial costs, delays in product
development, sales and shipments, our revenues may decline substantially and we
may not be able to achieve the minimum, necessary growth for our continued
success.
6
Failure to attract and retain management and other personnel may damage
our operations and financial results and cause our stock price to decline.
We depend to a significant degree on the skills, experience and efforts of
our executive officers and other key management, technical, finance, sales and
other personnel.
Our failure to attract, integrate, motivate and retain existing or additional
personnel could disrupt or otherwise harm our operations and financial results.
Although we have employment agreements with each of Frank Mandelbaum, our
Chairman and Chief Executive Officer, and Edwin Winiarz, our Senior Vice
President - Treasurer and Chief Financial Officer, securing their employment
until December 31, 2005 and December 31, 2006, respectively, we do not carry key
man life insurance policies covering any employees. The loss of services of
certain of our key employees, an inability to attract or retain qualified
personnel in the future, or delays in hiring additional personnel could delay
the development of our business and could have a material adverse effect on our
business, financial condition, and results of operations.
Changes in accounting standards or our accounting policy relating to
stock-based compensation may negatively affect our operating results.
We currently are not required to record stock-based compensation charges
if the employee's stock option exercise price equals or exceeds the deemed fair
value of our common stock at the date of grant and the award has not been
modified. However, during December 2004, the Financial Accounting Standards
Board ("FASB") issued SFAS No. 123 (revised 2004) requiring that the
compensation cost relating to share based payment transactions be recognized in
financial statements. This will require a change in our accounting policy and
the amount of our operating expenses could increase and our operating results
could be adversely affected.
Our share price may be volatile and could decline substantially
The market price of our common stock, like the price of shares of
technology companies generally, has been and may continue to be volatile. From
January 1, 2002 to September 28, 2005, the closing bid price of our common stock
has varied from a high of $18.45 to a low of $2.10 per share, as reported on the
American Stock Exchange. Many factors may cause the market price for our common
stock to decline, including:
o shortfalls in revenues, cash flows or continued losses from
operations;
o delays in development or roll-out of any of our products;
o announcements by one or more competitors of new product acquisitions
or technological innovations; and
o unfavorable outcomes from outstanding litigation.
In addition, the stock market experiences extreme fluctuations in price
and volume that particularly affect the market price of shares of emerging
technology companies, such as ours. These price and volume fluctuations are
often unrelated or disproportionate to the operating performance of the affected
companies. Because of this volatility, we may fail to meet the expectations of
our shareholders or of securities analysts and our stock price could decline as
a result. Declines in our stock price for any reason, as well as broad-based
market fluctuations or fluctuations related to our financial results or other
developments, may adversely affect your ability to sell your shares at a price
equal to or above the price at which you purchased them. Decreases in the price
of our common stock may also lead to de-listing of our common stock.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, including the documents that we incorporate by reference,
contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of
7
the Exchange Act. Any statements about our expectations, beliefs, plans,
objectives, assumptions or future events or performance are not historical facts
and may be forward-looking. These statements are often, but not always, made
through the use of words or phrases such as "anticipate," "estimate," "plans,"
"projects," "continuing," "ongoing," "expects," "management believes," "we
believe," "we intend" and similar words or phrases. Accordingly, these
statements involve estimates, assumptions and uncertainties that could cause
actual results to differ materially from those expressed in them. Any
forward-looking statements are qualified in their entirety by reference to the
factors discussed throughout this prospectus.
Because the risk factors referred to above, could cause actual results or
outcomes to differ materially from those expressed in any forward-looking
statements made by us or on our behalf, you should not place undue reliance on
any forward-looking statements. Further, any forward-looking statement speaks
only as of the date on which it is made, and we undertake no obligation to
update any forward-looking statement to reflect events or circumstances after
the date on which the statement is made or to reflect the occurrence of
unanticipated events. New factors emerge from time to time, and it is not
possible for us to predict which factors will arise. In addition, we cannot
assess the impact of each factor on our business or the extent to which any
factor, or combination of factors, may cause actual results to differ materially
from those contained in any forward-looking statements.
8
USE OF PROCEEDS
We will not receive any of the proceeds from the resale of the shares of
our common stock by the selling security holders. All proceeds from the resale
of these shares will be solely for the accounts of the selling security holders.
However, we will receive proceeds in the form of the exercise price of the
warrants to the extent that the selling security holders do not exercise the
warrants on a cashless basis, the proceeds of which we expect to use for general
corporate purposes. The warrants may be exercised on a cashless basis if, but
only if, at any time after one year from the date of issuance of the warrant
there is no effective registration statement covering the resale of the shares
of our common stock issuable upon exercise of the warrant.
SELLING SECURITY HOLDERS
Private Placement
On August 8 and August 9, 2005, we successfully completed, to the
institutional and accredited investors named below, a private placement of an
aggregate of 1,250,000 shares of our common stock and received gross proceeds of
approximately $5,000,000. In connection with the private placement, these
investors also received an aggregate of 500,000 immediately exercisable warrants
to purchase shares of our common stock at an exercise price of $5.40 per share,
which expire five years from the date they were purchased. Other than the amount
of shares of common stock purchased, each respective selling security holder
purchased their respective securities under separate, but materially identical,
securities purchase agreements. Similarly, other than the amounts for which each
warrant is exercisable, each warrant issued to the investors was also materially
identical. JMP Securities LLC, acting as placement agent, was paid a cash
commission of approximately 7% of the gross proceeds and was also issued a
warrant to purchase 125,000 shares of our common stock at an exercise price of
$5.40 per share, which expires on August 8, 2010. The warrant issued to JMP
Securities LLC was also materially identical to the warrants issued to the
investors. In addition, pursuant to the securities purchase agreements, we
granted each of these investors registration rights with respect to (i) the
shares of common stock purchased in the private placement and (ii) the shares of
common stock issuable upon exercise of the warrants. Furthermore, we granted JMP
Securities LLC identical registration rights with respect to the shares of our
common stock issuable upon exercise of its warrant. We are registering for
resale shares of our common stock (i) sold in the private placement and (ii)
issuable upon exercise of the warrants described above. We sometimes refer to
these shares collectively as "resale shares."
If this registration statement is not declared effective within forty-five
(45) days following August 8, 2005, or in the event of a review of the
registration statement by the U. S. Securities and Exchange Commission, within
sixty (60) days after August 8, 2005, we will be obligated to pay to each of the
selling security holders named below an amount, as liquidated damages and not as
a penalty, equal to one half of one percent (0.5%) per month (pro rata on a 30
day basis) for the first thirty (30) days and, thereafter, increased to one and
one-half percent (1.5%) per month (pro rata on a 30 day basis), of the aggregate
purchase price paid by each such selling security holder pursuant to the
purchase agreement for any shares of common stock or warrants then held by such
selling security holder until the registration statement is declared effective.
These liquidated damage payments will be payable monthly in cash.
The following table sets forth:
o the name of the security holders,
o the number and percent of shares of our common stock that the
security holders beneficially owned prior to the offering for resale
of the shares under this prospectus,
o the number of shares of our common stock that may be offered for
resale for the account of the security holders under this
prospectus, and
o the number and percent of shares of our common stock to be
beneficially owned by the security holders after the offering of the
resale shares (assuming all of the offered resale shares are sold by
the security holders).
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The number of shares in the column "Number of Shares Being Offered"
represents all of the shares that each security holder may offer under this
prospectus. We do not know how long the security holders will hold the shares
before selling them or how many shares they will sell, and we currently have no
agreements, arrangements or understandings with any of the security holders
regarding the sale of any of the resale shares. The shares offered by this
prospectus may be offered from time to time by the security holders listed
below.
This table is prepared solely based on information supplied to us by the
listed security holders, any Schedules 13D or 13G and Forms 3 and 4, and other
public documents filed with the SEC, and assumes the sale of all of the resale
shares. The applicable percentages of beneficial ownership are based on an
aggregate of 12,044,240 shares of our common stock issued and outstanding on
September 22, 2005 or subject to issuance upon exercise of the warrants issued
in connection with the private placement, adjusted as may be required by rules
promulgated by the SEC.
Other than Todd Cohen and JMP Securities LLC, none of the security holders
set forth below have had any position, office or other material relationship
with us within the past three years. Mr. Cohen beneficially owns greater than 5%
of our issued and outstanding common stock and JMP Securities LLC acted as our
placement agent in the private placement pursuant to which the other selling
security holders listed below purchased the shares of our common stock they are
offering for resale pursuant to this prospectus.
Shares Beneficially Owned Shares Beneficially Owned
Prior to Offering Number of After Offering
------------------------- Shares Being -------------------------
Security Holders Number Percent Offered Number Percent
---------------- ------ ------- ------- ------ -------
WPG Software Fund, L.P. (1) + 385,000 3.20% 385,000 - -
SRG Capital, LLC (2) + 98,000 * 98,000 - -
Enable Opportunity Partners, L.P. (3) + 35,000 * 35,000 - -
Enable Growth Partners, L.P. (4) + 105,000 * 105,000 - -
Smithfield Fiduciary LLC (5) + 175,000 1.45% 175,000 - -
Iroquois Master Fund Ltd. (6) + 175,000 1.45% 175,000 - -
Gruber & McBaine International (7) + 25,200 * 25,200 - -
Jon D. and Linda W. Gruber Trust (8) + 35,000 * 35,000 - -
RHP Master Fund, Ltd. (9) + 175,000 1.45% 175,000 - -
Nite Capital L.P. (10) + 91,000 * 91,000 - -
Lagunitas Partners L.P. (11) + 114,800 * 114,800 - -
Presidio Partners (12) + 86,625 * 86,625 - -
Geary Partners (13) + 68,075 * 68,075 - -
Brady Retirement Fund L.P. (14) + 20,300 * 20,300 - -
Robert T. Lempert (15) + 110,000 * 35,000 75,000 *
Todd Cohen (16) + 738,570 6.13% 14,000 724,570 6.01%
H. Leon Pachter, M.D. (17) + 28,000 * 28,000 - -
H. Leon Pachter, M.D., IRA Rollover (17) ++ 28,000 * 28,000 - -
Joe Giamanco (18) + 147,400 1.22% 56,000 91,400 *
JMP Securities LLC (19) + 125,000 1.03% 125,000 - -
----------------------------------------------
* Indicates beneficial ownership of less than one percent of the total
outstanding common stock referenced above.
+ Indicates securities were purchased on August 8, 2005.
++ Indicates securities were purchased on August 9, 2005.
(1) Includes 110,000 shares of our common stock issuable upon exercise of a
warrant with an initial exercise price of $5.40. Benjamin Taylor and
Daniel Vandivort have voting and investment control over the securities
held by WPG Software Fund, L.P.
(2) Includes 28,000 shares of our common stock issuable upon exercise of a
warrant with an initial exercise price of $5.40. Tai May Lee and Edwin
McCabe jointly share voting power over the selling security holder. The
selling security holder is affiliated with a registered broker-dealer. SRG
Capital, LLC acquired the common stock and warrants in the ordinary course
of business and did not have any agreement or understanding to distribute
the shares of common stock offered hereunder when they were acquired.
10
(3) Includes 10,000 shares of our common stock issuable upon exercise of a
warrant with an initial exercise price of $5.40. The controlling person of
the security stock holder is Mitchell Levine, Managing Partner. The
selling security holder is affiliated with a registered broker-dealer.
Enable Opportunity Partners, L.P. acquired the common stock and warrants
in the ordinary course of business and did not have any agreement or
understanding to distribute the shares of common stock offered hereunder
when they were acquired.
(4) Includes 30,000 shares of our common stock issuable upon exercise of a
warrant with an initial exercise price of $5.40. The controlling person of
the security stock holder is Mitchell Levine, Managing Partner. The
selling security holder is affiliated with a registered broker-dealer.
Enable Growth Partners, L.P. acquired the common stock and warrants in the
ordinary course of business and did not have any agreement or
understanding to distribute the shares of common stock offered hereunder
when they were acquired.
(5) Includes 50,000 shares of our common stock issuable upon exercise of a
warrant with an initial exercise price of $5.40. Highbridge Capital
Management, LLC is the trading manager of Smithfield Fiduciary LLC and has
voting control and investment discretion over securities held by
Smithfield Fiduciary LLC. Glen Dubin and Henry Swieca control Highbridge
Capital Management, LLC. Each of Highbridge Capital Management, LLC, Glen
Dubin and Henry Swieca disclaims beneficial ownership of the securities
held by Smithfield Fiduciary LLC.
(6) Includes 50,000 shares of our common stock issuable upon exercise of a
warrant with an initial exercise price of $5.40. Joshua Silverman has
investment and voting control over the shares of the securities owned by
the selling security holder. Mr. Silverman disclaims beneficial ownership
of such securities.
(7) Includes 7,200 shares of our common stock issuable upon exercise of a
warrant with an initial exercise price of $5.40. The managers of the
selling security holder's investment advisor, which oversees investment
and voting activity, are Jon D. Gruber and J. Patterson McBaine.
(8) Includes 10,000 shares of our common stock issuable upon exercise of a
warrant with an initial exercise price of $5.40. The trustees of the
selling security holder are Jon D. Gruber and Linda W. Gruber.
(9) Includes 50,000 shares of our common stock issuable upon exercise of a
warrant with an initial exercise price of $5.40. RHP Master Fund, Ltd. is
a party to an investment management agreement with Rock Hill Investment
Management, L.P., a limited partnership of which the general partner is
RHP General Partner, LLC. Pursuant to such agreement, Rock Hill Investment
Management directs the voting and disposition of shares owned by RHP
Master Fund. Messrs. Wayne Bloch and Peter Lockhart own all of the
interests in RHP General Partner. The aforementioned entities and
individuals disclaim beneficial ownership of our common stock owned by the
RHP Master Fund.
(10) Includes 26,000 shares of our common stock issuable upon exercise of a
warrant with an initial exercise price of $5.40. Keith Goodman, the
manager of the general partner of the selling security holder, has
investment and voting control over the shares of common stock owned by the
selling security holder.
(11) Includes 32,800 shares of our common stock issuable upon exercise of a
warrant with an initial exercise price of $5.40. The managers of the
general partner of the selling security holder are Jon D. Gruber and J.
Patterson McBaine.
(12) Includes 24,750 shares of our common stock issuable upon exercise of a
warrant with an initial exercise price of $5.40. The controlling person of
the selling security holder is William J. Brady.
(13) Includes 19,450 shares of our common stock issuable upon exercise of a
warrant with an initial exercise price of $5.40. The controlling person of
the selling security holder is William J. Brady.
(14) Includes 5,800 shares of our common stock issuable upon exercise of a
warrant with an initial exercise price of $5.40. The controlling person of
the selling security holder is William J. Brady.
(15) Includes 10,000 shares of our common stock issuable upon exercise of a
warrant with an initial exercise price of $5.40.
(16) Includes 4,000 shares of our common stock issuable upon exercise of a
warrant with an initial exercise price of $5.40 and warrants to purchase
65,870 shares of our common stock at $8.50 per share.
(17) Includes 8,000 shares of our common stock issuable upon exercise of a
warrant with an initial exercise price of $5.40.
(18) Includes 16,000 shares of our common stock issuable upon exercise of a
warrant with an initial exercise price of $5.40.
(19) Consists solely of a warrant to purchase 125,000 shares of our common
stock issuable upon exercise of the warrant with an initial exercise price
of $5.40. Investment and voting decisions with respect to the securities
owned by the selling security holder are made by a committee comprised of
Craig R. Johnson, Carter D. Mack, Gerald L. Tuttle, Jr. and Mark Lehmann.
11
PLAN OF DISTRIBUTION
The selling security holders may sell the shares being offered from time
to time in one or more transactions:
o on the American Stock Exchange or on another exchange;
o in the over-the-counter market;
o in negotiated transactions;
o through broker-dealers, who may act as agents or principals;
o through one or more underwriters on a firm commitment or best
efforts basis;
o through the writing of options on shares, whether the options are
listed on an options exchange or otherwise; or
o a combination of such methods of sale.
The selling security holders may sell the shares at market prices
prevailing at the time of sale, at prices related to those market prices or at
negotiated prices. The selling security holders also may sell the shares
pursuant to Rule 144 adopted under the Securities Act, as permitted by that
rule. The selling security holders may effect transactions by selling shares
directly to purchasers or to or through broker-dealers. The broker-dealers may
act as agents or principals. The broker-dealers may receive compensation in the
form of discounts, concessions or commissions from the selling security holders
or the purchasers of the shares. The compensation of any particular
broker-dealer may be in excess of customary commissions. Because the selling
security holders and broker-dealers that participate with the selling security
holders in the distribution of shares may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act, the selling security holders
will be subject to the prospectus delivery requirements of the Securities Act.
Any commissions received by them and any profit on the resale of shares may be
deemed to be underwriting compensation. JMP Securities LLC acted as placement
agent and received a warrant to purchase 125,000 shares of our common stock and
a cash payment of $350,000.
The selling security holders have advised us that they have not entered
into any agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their securities. There is no underwriter
or coordinating broker acting in connection with the proposed sale of shares by
the selling security holders.
The shares will be sold through registered or licensed brokers or dealers
if required under applicable state securities laws. In addition, in certain
states the shares may not be sold unless they have been registered or qualified
for sale in the applicable state or an exemption from the registration or
qualification requirement is available and is complied with.
Under applicable rules and regulations under the Exchange Act, any person
engaged in the distribution of the shares may not simultaneously engage in
market making activities with respect to our common stock for a period of two
business days prior to the commencement of such distribution. In addition, each
selling shareholder will be subject to applicable provisions of the Exchange Act
and the associated rules and regulations under the Exchange Act, including
Regulation M, which provisions may limit the timing of purchases and sales of
shares of our common stock by the selling security holders. We will make copies
of this prospectus available to the selling security holders and have informed
them of the need to deliver copies of this prospectus to purchasers at or prior
to the time of any sale of the shares.
We will bear all costs, expenses and fees in connection with the
registration of the shares. The selling security holders will bear all
commissions and discounts, if any, attributable to the sales of the shares. The
12
selling security holders may agree to indemnify any broker-dealer or agent that
participates in transactions involving sales of the shares against certain
liabilities, including liabilities arising under the Securities Act. The selling
security holders have agreed to indemnify certain persons, including
broker-dealers and agents, against certain liabilities in connection with the
offering of the shares, including liabilities arising under the Securities Act.
Upon notification to us by a selling shareholder that any material
arrangement has been entered into with broker-dealers for the sale or purchase
of shares, we will file a supplement to this prospectus, if required,
disclosing:
o the name of the participating broker-dealers;
o the number of shares involved;
o the price at which such shares were sold;
o the commissions paid or discounts or concessions allowed to such
broker-dealers, where applicable;
o that such broker-dealers did not conduct any investigation to verify
the information set out or incorporated by reference in this
prospectus; and
o other facts material to the transaction.
In addition, upon being notified by a selling shareholder that a donee or
pledgee intends to sell more than 500 shares, we will file a supplement to this
prospectus.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
We incorporate by reference the filed documents listed below, except as
superseded, supplemented or modified by this prospectus, and any future filings
we will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"):
o our Annual Report on Form 10-K for the fiscal year ended December
31, 2004;
o our Quarterly Reports on Form 10-Q for the quarters ended March 31,
2005 and June 30, 2005;
o our Current Reports on Form 8-K dated May 13, 2005, June 8, 2005,
July, 21, 2005 and September 6, 2005 and filed with the SEC on May
19, 2005, June 9, 2005, September 27, 2005 and September 12, 2005,
respectively;
o our definitive Proxy Statement for our Annual Meeting of
Stockholders held on June 8, 2005; and
o our description of Common Stock contained in our Registration
Statement on Form 8-A (001-15465) filed with the SEC under Section
12 of the Exchange Act on November 15, 1999.
The reports and other documents that we file after the date of this
prospectus will update, supplement and supersede the information in this
prospectus. You may request and obtain a copy of these filings, at no cost, by
writing or telephoning us at the following address or phone number:
Intelli-Check, Inc.
246 Crossways Park West
New York, NY 11797
516-992-1900
Attn: Ed Winiarz, Chief Financial Officer
13
WHERE YOU CAN FIND MORE INFORMATION
This prospectus is part of a registration statement we filed with the SEC.
You should rely only on the information contained in this prospectus or
incorporated by reference. We have not authorized anyone else to provide you
with different information. We are not making an offer of these securities in
any state where the offer is not permitted. You should not assume that the
information in this prospectus is accurate as of any date other than the date on
the front page of this prospectus, regardless of the time of delivery of this
prospectus or any sale of common stock.
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read, without charge, and copy the documents
we file with the SEC at the SEC's public reference room at 100 F Street, N.E. in
Washington, D.C. You can request copies of these documents by writing to the SEC
and paying a fee for the copying cost. Please call the SEC at 1-800-SEC-0330 for
further information on the public reference room. Our SEC filings are also
available to the public at no cost from the SEC's website at http://www.sec.gov.
LEGAL MATTERS
The validity of the issuance of the shares of common stock offered hereby
will be passed upon for us by Loeb & Loeb LLP, 345 Park Avenue, New York, New
York 10154.
EXPERTS
The financial statements of Intelli-Check, Inc. for the fiscal year ended
December 31, 2004, incorporated by reference in this prospectus and registration
statement have been audited by Amper, Politziner & Mattia, P.C., independent
registered public accounting firm, as set forth in their report, incorporated by
reference, and are incorporated by reference in reliance upon that report given
on the authority of Amper, Politziner & Mattia, P.C., as experts in accounting
and auditing. The financial statements of Intelli-Check, Inc. for the fiscal
years ended December 31, 2003 and 2002, incorporated by reference in this
prospectus and registration statement have been audited by Grant Thornton LLP,
independent registered public accounting firm, as set forth in their report,
incorporated by reference, and are incorporated by reference in reliance upon
that report given on the authority of Grant Thornton LLP, as experts in
accounting and auditing.
14
-------------
You should rely only on the information
contained in this prospectus. We have
not authorized anyone to provide you with
information different from that contained 1,875,000 Shares
in this prospectus or any prospectus
supplement. This prospectus is not an
offer of these securities in any Common Stock
jurisdiction where an offer and sale is
not permitted. The information contained
in this prospectus is accurate only as of
the date of this prospectus, regardless INTELLI-CHECK, INC.
of the time of delivery of this
prospectus or any sale of our common
stock.
-------------
Prospectus
TABLE OF CONTENTS
Page
-------------
Our Business..........................2
Risk Factors .........................4
Disclosure Regarding Forward-
Looking Statements................7 ________________ ____, 2005
Use of Proceeds.......................9
Selling Security Holders..............9
Plan of Distribution.................12
Incorporation of Certain Documents
by Reference.........................13
Where You Can Find More Information..14
Legal Matters........................14
Experts .............................14
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth an estimate of the fees and expenses
relating to the issuance and distribution of the securities being registered
hereby, other than underwriting discounts and commissions, all of which shall be
borne by Intelli-Check, Inc. (the "Registrant" or the "Company"). All of such
fees and expenses, except for the SEC Registration Fee, are estimated:
SEC registration fee ............. $ 1,032.82
Transfer agent's fees and expenses 0.00
Legal fees and expenses .......... 20,000.00
Printing fees and expenses ....... 1,000.00
Accounting fees and expenses ..... 15,000.00
Miscellaneous fees and expenses .. 967.18
-------------
Total ............................ $ 38,000.00
Item 15. Indemnification of Officers and Directors
Intelli-Check's Certificate of Incorporation limits the liability of
directors to the maximum extent permitted by Section 145 of the Delaware General
Corporation Law. Delaware law provides that the directors of a corporation will
not be personally liable to such corporation or its stockholders for monetary
damages for breach of their fiduciary duties as directors, except for liability
(i) for any breach of their duty of loyalty to the corporation or its
stockholders; (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (iii) for unlawful
payments of dividends or unlawful stock repurchases or redemptions as provided
in Section 174 of the Delaware General Corporation Law; or (iv) for any
transaction from which the director derives an improper personal benefit.
Intelli-Check's By-laws provide that the Company shall indemnify its directors
and officers under certain circumstances, including those circumstances in which
indemnification would otherwise be discretionary, and the Company is required to
advance expenses to its officers and directors as incurred in connection with
proceedings against them for which they may be indemnified.
The Company provides officers' and directors' liability insurance for its
officers and directors.
The Company and the security holders have agreed to indemnify each other
and each other's controlling persons, as applicable, against certain liabilities
under the Securities Act in connection with this registration statement.
II-1
Item 16. Exhibits
Exhibit
Number Description of Document
------ -----------------------
4.1 Form of Warrant.
5.1 Opinion of Loeb & Loeb LLP as to the legality
of the securities being registered. *
10.1 Form of Purchase Agreement by and among
Intelli-Check, Inc. and the purchasers.
23.1 Consent of Loeb & Loeb LLP (included in
Exhibit 5.1).*
23.2 Consent Amper, Politziner & Mattia, P.C.,
independent registered public accounting firm.
23.3 Consent Grant Thornton LLP, independent
registered public accounting firm.
24 Power of Attorney.*
* Previously filed.
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price
represent no more than 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement; and
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
provided, however, that subparagraphs (i) and (ii) above do not apply if
the information required to be included in a post-effective amendment by
these subparagraphs is contained in periodic reports filed with or
furnished to the Commission by the Registrant pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in this registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
II-2
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended, each
filing of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934 that is incorporated by reference
in this registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, may be permitted to directors, officers, and
controlling persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Registration Statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Woodbury, State of New York, on the 29th day of
September, 2005.
INTELLI-CHECK, INC.
By: /s/ Frank Mandelbaum
------------------------
Frank Mandelbaum
Chairman and Chief Executive Officer
Pursuant to the requirements of the Securities Act of 1933, the following
persons in the capacities and on the dates indicated have signed this AMENDMENT
Number 1 to the Registration Statement below.
/s/ Frank Mandelbaum Chairman, Chief Executive Officer and September 29, 2005
----------------------------------------- Director (Principal Executive Officer)
Frank Mandelbaum
* Senior Executive Vice President, September 29, 2005
----------------------------------------- Treasurer, Chief Financial Officer and
Edwin Winiarz Director (Principal Accounting Officer)
* Vice Chairman and Director September 29, 2005
-----------------------------------------
Ashok Rao
* Director September 29, 2005
-----------------------------------------
John N. Hatsopoulos
* Director September 29, 2005
-----------------------------------------
Arthur L. Money
* Director September 29, 2005
-----------------------------------------
Charles McQuinn
* Director September 29, 2005
-----------------------------------------
Jeffrey Levy
* Director September 29, 2005
-----------------------------------------
Guy L. Smith
Director September 29, 2005
-----------------------------------------
John E. Maxwell
*By: /s/ Frank Mandelbaum
--------------------
Name: Frank Mandelbaum
Title: Attorney-in-Fact
II-4
INDEX TO EXHIBITS
Exhibit
Number Description of Document
------ -----------------------
4.1 Form of Warrant.
5.1 Opinion of Loeb & Loeb LLP as to the legality
of the securities being registered.*
10.1 Form of Purchase Agreement by and among
Intelli-Check, Inc. and the purchasers.
23.1 Consent of Loeb & Loeb LLP (included in
Exhibit 5.1).*
23.2 Consent Amper, Politziner & Mattia, P.C.,
independent registered public accounting firm.
23.3 Consent Grant Thornton LLP, independent
registered public accounting firm.
24 Power of Attorney.*
-------------
* Previously filed.