As filed with the Securities and Exchange Commission on April 17, 2003August 18, 2005
Registration No. 333-_________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM S-3
REGISTRATION STATEMENT
underUNDER
THE SECURITIES ACT OF 1933
-----------------------
INTELLI-CHECK, INC.
(Exact name of registrant as specified in its charter)
Delaware 11-3234779
(State or other jurisdiction of (I.R.S. Employer
Identification No.)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
Woodbury, New York 11797 Chairman and
Chief Executive Officer
(516) 992-1900
Intelli-Check, Inc.
246 Crossways Park West
(Address,Woodbury, NY 11797
516-992-1900
(Name, address, including zip code, and telephone Woodbury, New York 11797
number, including area code, of (516) 992-1900
registrant's principal executive offices) (Name address and telephone
number, including area code, of agent for service)
-------
Copies to:
David H. Lieberman,Mitchell S. Nussbaum, Esq.
Diane Phillips, Esq.
Beckman, LiebermanLoeb & Barandes,Loeb LLP
100 Jericho Quadrangle
Suite 225
Jericho,345 Park Avenue
New York, 11753
(516) 822-4820NY 10154
(212) 407-4000
Approximate date of commencement of proposed sale to the public:
As soon as
practicableFrom time to time after the effective date of this Registration Statement.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 [ ].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].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 [ ].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 [ ].offering. |_|
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box [ ].
box. |_|
CALCULATION OF REGISTRATION FEE
====================================================================================================================================- ------------------------------------------ ------------------ --------------------- ----------------------- ------------------------
Proposed Maximum
Proposed Maximum Aggregate
Title of Each Class of Amount to be Offering Price Per Aggregate Offering Amount of
Securities to be Registered be Registered(1) Registered SecurityPer Share Price Registration Fee
- ------------------------------------------------------------------------------------------------------------------------------------
Series A 8% Convertible Preferred------------------------------------------ ------------------ --------------------- ----------------------- ------------------------
Common Stock, $.01$0.001 par value 30,000 $ (4) $ (2) $ -0-per share 1,250,000 $4.32(2) $5,400,000(2) $635.58
- ------------------------------------------ ------------------ --------------------- ----------------------- ------------------------
Common stock, $.001Stock, $0.001 par value underlying series A preferred stock (3) 454,545 $ 6.49 (2) $ 2,949,997.00(2) $ 238.95
Warrants 113,636 $ 6.78 (5) $ 770,452.08(5) $ 62.41
Common stock underlying Warrants (3) 113,636 $ (5) $ (5) $ -0-
Total $ 301.36
- ------------------------------------------------------------------------------------------------------------------------------------
(1) The securities being registered hereby consist of the following securities
to be offered from time to time for resale by that certain selling
securityholder: Series A 8% Convertible Preferred Stock; Common Stock
underlying the Series A 8% Convertible Preferred Stock; Warrants; and
Common Stock underlying the Warrants. The securities may be sold by the
selling securityholder, affiliates of the selling securityholder, and other
transferees of the securities.
(2) Estimated solely for the purpose of calculating the registration fee based
upon the value of the Registrant's Common Stock into which the Series A 8%
Convertible Preferred Stock may be converted (presently 15.15 shares of
Common Stock per
share, of Series A 8% Convertible Preferred Stock for a
total of 454,545). There currently is no trading market for the Series A 8%
Convertible Preferred Stock. The Common Stock was valued pursuant to 457(c)
based upon the average of the high and low price of the Common Stock on the
American Stock Exchange on April 15, 2003 of $6.49.
(3) Includes an indeterminate number of shares of Common Stock as may be
issuable upon conversion of the Series A 8% Convertible Preferred Stock
and/or exercise of the Warrants registered hereunder pursuant to
antidilution provisions of such securities, for which no separate fee is
payable.
(4) As a registration fee is being paid on the underlying Common Stock, no
registration fee is payable on the Series A 8% Convertible Preferred Stock
pursuant to Rule 457(i).
(5) Pursuant to Rule 457(i), the registration fee for the Warrants and the
underlying common stock has been calculated based on Registrant's estimate
of the value of the Warrants, for which there currently is no trading
market, plus the exercise price.warrants 625,000 $5.40(3) $3,375,000(3) $397.24
- ------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------ ------------------ --------------------- ----------------------- ------------------------
(1) Pursuant to Rule 416 of the Securities Act of 1933, as amended, the shares
of Class A Common Stock offered hereby also include such presently
indeterminate number of shares of our Class A Common Stock as shall be
issued by us to the selling shareholders upon adjustment under
anti-dilution provisions covering the additional issuance of our Class A
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) 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 statement registration.
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 whichthat specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act, of 1933as amended, or until thethis Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
================================================================================
Subject to Completion, Dated April 17, 2003================================================================================
The information contained in this prospectus is not complete and may be changed. These securitiesThe
securityholders identified in this prospectus may not be soldsell 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 August 18, 2005
PROSPECTUS
1,875,000 Shares
INTELLI-CHECK, INC.
Series A 8% Convertible PreferredCommon Stock
Warrants
Common Stock---------------------------------------
This prospectus relates to the public resale, from time to time,sale by the selling security holders named
in this prospectus of the
following securities, up to the amounts shown.
30,000an aggregate of 1,875,000 shares of Series A 8% Convertible Preferred Stock, par value $.01
per share (the "Series A Preferred Stock").
Warrants to purchase 113,636 shares of common stock, par value $.01 per
share (the "Warrants").
568,181 shares of common stock, par value $.01 per share, (the "Common
Stock") issuable upon conversion of the Series A Preferred Stock and upon
exercise of the Warrants.
On March 27, 2003, we entered into a securities purchase agreement with the
selling securityholder. The agreement provided for the sale of 30,000 shares of
Series A Preferred Stock and the issuance of 113,636 Warrants. If the selling
securityholder converts all of its Series A Preferred Stock and exercises all of
the Warrants, we will issue up to a total of 568,181 shares of Common Stock,
subject to any adjustments.
Dividends on the Series A Preferred Stock are cumulative and payable
semi-annually beginning September 30, 2003 at the rate of $8 per share per
annum. Each share of Series A Preferred Stock is convertible at the option of
the holder, at any time, into 15.15 shares of our Common Stock, subject to
adjustment if certain events occur. We may redeem any or all of the Series A
Preferred Stock at any time after one year from the issuance date at a cash
redemption price of $100 per share, provided that the volume weighted average
price regular way of our common
stock, for any 20 outwhich includes 625,000 shares issuable upon the exercise of 30 consecutive trading
days equals or exceeds 200%warrants with
an initial exercise price of the conversion price then in effect. We are
required to redeem all outstanding Series A Preferred Stock five years from the
issuance date.$5.40. The Warrants permitselling security holders acquired the holders to purchase
shares of Common
Stock at a price equal to $6.78 per share, subject to adjustment if certain
events occur.
1
These securities may be offeredour common stock and sold by the entity listedwarrants from us in two private placements
completed on page 14 of
this prospectus under the section entitled "Selling Securityholder", or by its
transferees. We refer to such persons as the selling securityholder.
We are registering the offered securities as required under the terms of a
registration rights agreement between the selling securityholderAugust 8, 2005 and us.August 9, 2005. We will not receive any of the
proceeds from any salesthe resale of the offered securities by the selling
securityholder, but will incur expenses in connection with the offering. To the
extent that any Warrants are exercised, we will receive an amount equal to the
number of shares of Common Stock purchased times the exercise price.
Neither our Series A Preferred Stock nor the Warrants are listed on any
securities exchange and there is no public market for these securities. The
Series A Preferred Stock have priority over our Common Stock in the payment of
dividends and in the event of liquidation. Holders of Series A Preferred Stock
are entitled to vote with the holders of our common stock as a single class on
all matters submittedby the selling
security holders. We will, however, receive the proceeds from any exercise of
warrants to a votepurchase shares of the Registrant on an "as converted" basis
subjectour common stock to be sold hereunder to the
applicable rulesextent the selling security holders do not perform cashless exercises (which may
only be exercised on a cashless basis under specific circumstances). See "Use of
the American Stock Exchange.
We will bear the expenses in connection with the offering, including filing
fees and our legal and accounting fees, estimated at $30,000.Proceeds."
Our common stock is quotedtraded on the American Stock Exchange under the symbol
IDN."IDN." On April __, 2003,August 15, 2005, the last reported salesclosing price of thefor our common stock was
$4.33.
---------------------------------------
See "Risk Factors" beginning on page 4 of this Prospectus for factors you
should consider before buying shares of our common stock.
---------------------------------------
Neither the American StockSecurities and Exchange was $.___.
INVESTING IN OUR COMMON STOCK, SERIES A PREFERRED STOCK AND WARRANTS
INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON PAGE 4.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.Commission nor any state securities
commission has approved or disapproved of these securities, or passed upon the
adequacy or accuracy of this prospectus. Any representation to the contrary is a
criminal offense.
The date of this prospectusProspectus is ___________, 2003.________________, 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
2
TABLE OF CONTENTS
RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . 10
USE OF PROCEEDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
PRICE RANGE OF COMMON STOCK. . . . . . . . . . . . . . . . . . . . . . . . 11
DIVIDEND POLICY. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ABOUT INTELLI-CHECK, INC.. . . . . . . . . . . . . . . . . . . . . . . . . 12
SELLING SECURITYHOLDER . . . . . . . . . . . . . . . . . . . . . . . . . . 14
PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
LEGAL MATTERS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
EXPERTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
WHERE YOU CAN FIND MORE INFORMATION ABOUT US . . . . . . . . . . . . . . . 17
You should rely onlycommercially available data processing devices, including PDAs, Tablets,
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 information containedID-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 this document ora hand-held product and
ID-Check POS, which is a software package that can be installed on a Verifone
Omni 3750 terminal to whichenable the user to have the functionality of our
proprietary technology. This product began beta-testing in August 2005. To date,
we have referred you. We have not authorized anyoneentered into seventeen (17) licensing agreements and are in discussions
with additional companies to provide you with
information that is different. This document maylicense our software to be used only where it is legal
to sell these securities. The information in this document may only be accurate
on the date of this document.
3
As used in this prospectus, the terms "we," "us," "our," and "Intelli-Check"
mean Intelli-Check, Inc., unless we specify otherwise. We are incorporated under
the laws of the state of Delaware.utilized within other
existing systems.
Our principal executive offices are located at 246 Crossways Park West,
Woodbury, New YorkNY 11797, and our telephone number is (516)
922-1900.516-992-1900.
3
RISK FACTORS
Investment in our shares involves a degree of risk. You should carefully consider
the factors described below andfollowing discussion of risks as well as other information contained in this
prospectus and the incorporated documents before making a decision to buypurchasing any securities registered hereunder. The risks and uncertainties described below are
not the only ones we face. Additional risks and uncertainties not presently
known to us, may also impairshares. Each of
these risk factors could adversely affect our business, operations. If any of the following
risks actually occurs, our business,operating results,
prospects and financial condition, or resultsas well as adversely affect the value of operations could be materially and adversely affected. In such case, the trading
price ofan
investment in our common stock could decline,stock.
Risks Related to Our Business and you may lose all or part of your
investment. This prospectus also contains forward-looking statements that
involve risks and uncertainties. Please refer to "Forward-Looking Statements" on
page 10.
Financial RisksIndustry
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 $5,550,234$1,751,446 for the six months ended June 30,
2005 and $6,450,943 and $6,922,931 for the fiscal yearyears ended December 31, 2002.2003
and December 31, 2004, respectively. We expect to incur additional expenditures
in line with the sales growth of our business. Consequently, if sales were to be below our sales
expectations,We cannot assure you that we would incur additionalwill
achieve operating losses.
Should weprofits in the near future.
We may be unable to obtain additional financing if needed, we would be
required to curtailmeet our marketing and development plans and possibly cease
operations.future capital requirements.
Our capital requirements have been and will continue to be significant. We
anticipateIn
the event that our currently available cash including approximately $2,800,000
we received from the net sale of our Series A Preferred Stock, expected revenues
anddo not generate meaningful revenue, we would need to raise
additional capital. If we are unable to raise additional capital, we expectplan to
receive fromimplement 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 exercisesale of inequity, including preferred
stock, or convertible debt securities, the money
optionspercentage ownership of our then
existing stockholders will be sufficientdiluted.
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 meetthe extent required. If adequate funds
are not available on acceptable terms, we may be unable to fund our anticipated working capital and capital
expenditure requirements of approximately $5,000,000, as well as the potential
payment of approximately $920,000 awardedexpansion,
develop or enhance our products, or respond to Early Bird Capital through December
31, 2003. See "The finding against us in the Early Bird lawsuitcompetitive pressures. Such
limitation could have a material adverse effect on our ability to continue to fund our operations". If
we fail to attain significant sales or a positive cash flow, or options are not
exercised, we may be required to reduce certain costs or seek additional equity
or debt financing to fund the costsbusiness, financial
condition and results of our operations.
We cannot assure you that
additional financing will be available to us when needed, on commercially
reasonable terms, or at all.
Issuance of equity securities, should we be required to raise additional
capital, may be on terms that are detrimental to existing shareholders.
Should we be required to raise additional working capital to meet our
capital requirements, we may continue to offer equity securities for sale, and
shareholders would then experience additional dilution. Any new equity
securities we issue may have rights, preferences or privileges senior to those
of existing holders of common stock. See "Future sales of a large number of
shares of our common stock may cause our stock price to decline."
4
The finding against us in the Early Bird lawsuit could force us to raise
additional capital which may not be available on satisfactory termsable 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 have a material adverse effect onrender our abilityexisting technology obsolete. If we are unable to continuesuccessfully
respond to fund our
operations.
This lawsuit was brought as a demand for arbitration by Early Bird Capital
Inc. in January 2002, seeking monetary damages of $968,000 from an alleged
failure to issue warrants with registration rights pursuant to the terms of a
Financial Advisory and Investment Banking Agreement dated as of August 20, 2000.
We had not issued the warrants because registration rights were not in the
agreement. The arbitration took place in December 2002 and January 2003.
$920,000 was awarded by the arbitrators to Early Bird Capital on April 10, 2003.
We are evaluating our options with respect to this award, however, payment of
the award would diminish the funds we have for working capital potentially
requiring us to raise additional capital, which may not be available on
satisfactory terms and could have a material adverse affect on our ability to
continue to fund our operations.
Risks Related to Our Business
Any delay in the selection of and securing a source for the new platform to run
our patented technology before we deplete our inventory could have a material
adverse effect on our ability to fulfill orders for our products.
Hand Held Products Inc., formerly known as Welch Allyn, Inc. (HHP),
supplies us with our hardware terminals, which run our patented software. HHP
has informed us that as of July 9, 2003, they will discontinue manufacturing
this model. We are in discussions with HHP and other manufacturers as to which
platform we will select as the replacement for our current model. Any delay in
securing a new source on satisfactory termsthese developments, or within the time frame to meet our
sales goals could have a material adverse effect on our sales and marketing
plans. Additionally, since we do not have direct control over the manufacturing
process, the possibility of delaysrespond in a cost-effective way, our
business, financial condition and inconsistencies in quality could result
in the failure to fulfill sales orders and the cancellation of potential orders,
which could damage our reputation and cause us to lose sales orders.
Technological obsolescence due to changes in hardware technology before we sell
our existing inventory could cause us to take an adjustment against inventory,
which could have a material adverse effect on our results of operations.operations will be materially
adversely affected.
Our inventory consists primarily of ID-Check terminals that run our
patented software. The inventory was originally received in December 1999.
Shortly thereafter, it was returned to the manufacturer for upgradeproprietary software relies on reference data provided by government
and became
available for sale in the fourth quarter of 2000. We periodically evaluate the
current market value of our inventory, taking into account any technological
obsolescence that may occur due to changes in hardware technologyquasi-government agencies. If these governmental and the
acceptance of the product in the marketplace. We believe that a sufficient
market exists to sell with margin the current inventory as well as the remaining
units required to be purchased from our manufacturer for which we have paid a
5
deposit of $600,000 for which we took a reserve during the fourth quarter of
2002. The current terminal, for which this deposit was paid, is fully capable of
running our patented software since it utilizes a state-of- the art
imager/scanner and magnetic stripe reader. Since our policy is to periodically
evaluate the market value of the inventory, should we determine in a future
period that an adjustment is necessary, we would record such adjustment at that
time, which could have a material effect on our results of operations.
If governmentalquasi-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, a number ofsubstantially all U.S. states and Canadian provinces and the
District of Columbia, which conform to the guidelines established by standardization bodiescertain
organizations responsible for implementing industry standards, cooperate with us
by providing sample driver licenses and identification cards so that we may programmodify the ID-Check
System terminal and other software products to read and analyze the encoded
information found on the
driver licences andsuch jurisdiction's identification cards. We cannot assure
you that each of these jurisdictions will continue to cooperate with us. Future government regulation restricting accessIn the
event that one or more of these jurisdictions do not continue to information electronically
stored on driver licenses could adversely affect our business.
Our products can be used to capture information from driver licenses.
Currently, only a small numberprovide this
reference data, the utility of our customers are legally restricted from
using this information for their own use without customer consent. Because
issues of personal privacy are currently a major topic of public policy debate,
it is possible that in the future additional customersproprietary software may be restricted from
capturing this information. In that event, we could anticipate an adverse effect
on our business.
The refocusing of our marketing efforts has exposeddiminished in
those jurisdictions.
4
Our refocused business strategy exposes us to long sales and
implementation cycles for our products.
Since we have refocused our marketing efforts for Intelli-Check's ID-Check
technology fromOur target customers in the commercial fraud protection, access control
and age verification market to the document verification and
access control markets which consist ofinclude large retailers and government agencies,
we have exposed ourselves towhich typically require longer sales and implementation cycles for our products.products
than do our potential customer base solely interested in age verification, such
as restaurant, bar and convenience store operators. The longer sales cycleand
implementation cycles for these prospective customers is lengthy requiring
multiple meetings, presentationslarger retail companies continue to have an adverse
impact on the timing and a test period, which continues to impactrealization of our sales.revenues. In addition, budgetary
constraints and the slowing of the economyeconomic slowdowns may also continue to delay purchasing
decisions by these prospective customers. As a
result, the time between initial contactThese initiatives have costs
associated with a potential customerthem, and conclusion of a sale of these products typically comprises a period of months
and is subject to delays, many of which are beyond our control. Wewe cannot assure you that they ultimately will prove
successful or result in an increase to our revenues or profitability.
In addition, the refocusing ofloss or significant reduction in government spending by
government entities could materially limit our marketing efforts will produce sales that will be
substantial enoughability to obtain government
contracts. These limitations, if significant, could also have a material impactadverse
effect on our revenues orbusiness, 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;
6
--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.
5
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.
Our ability to compete may be damaged and our revenues may be reduced if we are
unablefailure 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, rights adequately.
Our success depends upon maintaininge.g., patents,
trade secrets, copyrights and trademarks, as well as policies aimed at
identifying unauthorized use of such property in the confidentiality and proprietary
nature of our software and other intellectual property rights. To protect these
rights, we rely principally on a combination of:
--marketplace. These
processes include:
o contractual arrangements providing for non-disclosure of proprietary
information;
o maintaining and prohibitions
on use;
--enforcing issued patents and pending patent applications;
-- trade secret, copyright and trademark laws; and
-- certain technical measures.
Patent, trade secret, copyright and trademark laws provide limited
protection. Becausefiling patent
applications in the United States are not publicly
disclosed until the relevant patent is issued, applications may have been filed,
which, if issued as patents, could relateon innovative solutions to commercially important
problems;
o protecting our servicestrade secrets;
o protecting our copyrights and products as
currently designed or astrademarks 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 may modify them in the future to meet the market's
requirements. Trade secret, copyright and trademark laws, in combination with
the steps we take toactively protect our proprietary rights,intellectual property, it does not follow
that others may not adequately prevent
misappropriation of those rights. Weunintentionally or innocently use such intellectual property.
Accordingly, at times we may be required to bring legal proceedings in the
United States Patent and Trademark office or other legal action to enforce our
patents, trademarks or copyrights.preclude
such unauthorized use. We may find it necessary to litigate to
protect our trade secrets and know-how. Any legal actions wouldare mindful that such measures can be costly timingand time
consuming and would divert the attention of managementundertake such measures only as a last resort.
These policies and technical
personnel.
The protections provided by laws protectingpractices with respect to our intellectual property
rights do not prevent our competitors from independently developing independently, products
similar or superior to our products and technologies. In addition, effective protectionIt merely protects our
property rights created as a result of copyrights, trade secrets, trademarks,our allocating significant portions of
our technical and other proprietary rights may be
unavailable or limited in certain foreign countries.
Ourmonetary resources. Further, an inability or failure to
protect this property could have a material adverse effect on our proprietary technology could damage
our ability to compete, reduce our revenuesfuture
business and damage our prospects for
achieving growth and profitability.financial condition.
If our future products incorporate technologytechnologies that infringesinfringe the
proprietary rights of third parties, and we do not secure licenses from
them, we could be 7
liable for substantial damages that would cause a material reduction in revenues
and impair our prospects for achieving growth and profitability.damages.
We are not aware ofthat our current products infringing oninfringe the proprietaryintellectual
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, in furtherance ofwe recognize that the development of our
services or products may require that we may need to acquire licenses for intellectual property licenses
from third parties so as to avoid infringement of third party rights or claims of infringement.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 terms, if at all.
Claims forreasonable. In addition, third
parties could make infringement if made,claims against us which, whether or not they are
upheld, could damagehave a negative impact on our business prospects, our
results of operations and financial condition,
whether or not the claims have
merit, by:
--6
o consuming substantial time and financial resources required to defend
against them;
--resources;
o diverting the attention of management from growing our business and
managing operations; -- resulting in costly litigation; 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 theany
infringing technology.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 required for us to achieve
profitability.our continued
success.
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, and W. Robert Holloway,
our Senior Executive Vice President - Sales, securing their
employment for
varying terms,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 negative impactmaterial 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 financial condition.
8
Risks Related to the Offering
Continued volatility in our stock price could adversely affect your investment.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 March 31, 2003,August 15, 2005, the closing bid price of our common stock
has varied from a high of $19.45$18.45 to a low of $2.10 per share, as reported on the
American Stock Exchange. If our future operating results are below the
expectations of stock market analysts and investors, our stock priceMany factors may decline. Public announcement of our financial results and business developments
may have a significant impact oncause the market price offor our common
stock. For
example, each of the following could have the effect of temporarily or
permanently driving down the market price of our common stock:
--stock to decline, including:
o shortfalls in revenues, or cash flows or continued losses from
operations;
-- conversions of preferred stock into common stock;
--o delays in development or roll-out of any of our product; and
--products;
o announcements by one or more competitors of new product introductions,
acquisitions
or technological innovations.innovations; and
o unfavorable outcomes from outstanding litigation.
7
In addition, the stock market experiences extreme fluctuations in price
and volume that particularly affect the market pricesprice 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.
Future salesDISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, including the documents that we incorporate by reference,
contains forward-looking statements within the meaning of a large numberSection 27A of shares of our common stock may cause our stock
price to decline.
At March 31, 2003, 8,875,302 shares of our common stock were issued and
outstanding. Assuming conversion of all of the shares of Series A Preferred
Stock and exercise of all the Warrants there would be 9,443,483 shares issued
and outstanding as of the effective date of this prospectus. Of these shares,
7,522,702 shares are presently eligible for resale without restriction, and
568,181 shares being registered for resale under this prospectus will be
transferable without restriction under the Securities Act of 1933 after the
effective date of this prospectus. Another 1,352,600 shares are eligible for
resale subject to the restrictions on volume, manner of sale and other
conditions of Rule 144 promulgated under the Securities Act. Sales of large
amounts of these shares in the public market could depress the market price of
our common stock and impair our ability to raise capital through offerings of
our equity securities. Resale of shares of common stock that may be received by
holders of outstanding warrants or convertible preferred stock may also dilute
substantially the net tangible book value of shares of common stock, which would
further impair its liquidity.
9
We will not receive any proceeds of the offering of securities covered by this
prospectus from which to recoup the expenses we incurred.
Intelli-Check will not receive any proceeds from the offering of securities
covered by this prospectus. We have incurred expenses of approximately
$30,000.00 in connection with the offering, including expenses of preparation of
this prospectus and the related registration statement and fees payable to the
SEC, which we cannot recoup from offering proceeds. See "Use of Proceeds." There
is no market for our Series A Preferred Stock or the Warrants and holders of
these securities may have difficulty selling them in the future.
There has been no market for either our Series A Preferred Stock or the
Warrants and we cannot assure you that a market will develop and that if such a
market develops, there will be sufficient liquidity to permit purchases of these
securities in this offering to sell them in the future at or near the offering
price.
The absence of Arthur Andersen's consent to the use of its opinion may limit the
remedies available to purchasers of securities pursuant to this prospectus.
Our inability to obtain Arthur Andersen's consent to the use of its opinion
for our financial statements for the 2001 year and the absence of a signed
opinion may limit the remedies available to you since your claims against Arthur
Andersen LLP under the
Securities Act of 1933, as amended (the "Securities Act") based on these financial, and Section 21E of
the Exchange Act. Any statements about our expectations, beliefs, plans,
objectives, assumptions or future events or performance are not historical facts
and may be limited. Moreover, even if
claims against Arthur Andersen LLPforward-looking. These statements are permitted, Arthur Andersen LLP mayoften, but not havealways, made
through the financial resources to satisfy any judgment. In addition,
notwithstandinguse 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 we have not filed the written consent of Arthur Andersen,
LLP, our directors and officers may still be able to establish a due diligence
defense to any claim relating to those financial statements on the basis that
they were made on the authority of our expert which could limit your ability to
asset a claim against them.
FORWARD-LOOKING STATEMENTS
This prospectus and the documents we have filed with the Securities and
Exchange Commission (SEC) which we have referenced under "Where You Can Find
More Information About Us" on page 10 contains forward-looking statements made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements represent our judgment regarding
future events. Although we would not make forward-looking statements unless we
believe we have a reasonable basis for doing so, we cannot guarantee their
accuracy andcause
actual results mayto differ materially from those we anticipated dueexpressed in them. Any
forward-looking statements are qualified in their entirety by reference to a number of uncertainties, many of which we arethe
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 aware. We urge you to
consider the risks and uncertainties discussed under "Risk Factors" and
elsewhere in this prospectus and in the other documents filed with the SEC in
evaluating ourplace undue reliance on
any forward-looking statements. We haveFurther, any forward-looking statement speaks
only as of the date on which it is made, and we undertake no plansobligation to
update ourany forward-looking statementsstatement to reflect events or circumstances after
the date on which the statement is made or to reflect the occurrence of
this prospectus. We generally identifyunanticipated 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 with the words
"believe", "intend," "plan," "expect," "anticipate," "estimate," "will,"
"should" and similar expressions.
10statements.
8
USE OF PROCEEDS
We will not receive any of the proceeds from the resale of this offering. Tothe 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 Warrantsselling 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.
SECURITY HOLDERS
We are exercised,registering for resale shares of our common stock (i) held by the
selling security holders identified below and (ii) issuable to the selling
security holder upon the exercise of warrants. We sometimes refer to these
shares collectively as the "resale shares." The security holders acquired the
resale shares from us in a private placement that closed on August 8 and August
9, 2005. JMP Securities LLC acted as placement agent in connection with the
private placement. We are registering the shares to permit the security holders
and their pledgees, donees, transferees and other successors-in-interest that
receive their shares from a stockholder as a gift, partnership distribution or
other non-sale related transfer after the date of this prospectus to resell the
shares when and as they deem appropriate.
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 receivebe 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 common stock purchased times the exercise price. We cannot predict
when or how much we will receive from the exercise, if any, of the Warrants.
PRICE RANGE OF COMMON STOCK
Our common stock has been traded on the American Stock Exchange under the
symbol "IDN." since November 1999. The following table sets forth, for the
calendar periods indicated, the high and low closing sales prices of our common stock as reported by the American Stock Exchange.
Low High
--- ----
2001
----
First Quarter $3.70 $11.625
Second Quarter $4.50 $10.60
Third Quarter $7.40 $14.75
Fourth Quarter $10.20 $19.45
2002
----
First Quarter $11.30 $18.19
Second Quarter $4.85 $15.75
Third Quarter $2.10 $5.90
Fourth Quarter $2.90 $9.87
2003
----
January $6.35 $8.44
February $5.80 $7.66
March $6.01 $7.70
As of March 26, 2003, there were approximately 67 holders of record of the
Common Stock which does not include individual participants in security position
listings. On April ___, 2003, the closing sales price of our common stock was
$______ per share.
There is no market for the Series A Preferred Stock or the Warrants.
11
DIVIDEND POLICY
We have never declared or paid any cash dividends on our Common Stock and
do not presently intend to do so. Future dividend policy will be determined by
our Board of Directors on the basis of our earnings, capital requirements,
financial condition and other factors deemed relevant.
Dividends on the Series A Preferred Stock are cumulative and payable
semi-annually beginning September 30, 2003 at the rate of $8.00 per share per
annum.
ABOUT INTELLI-CHECK, INC.
Overview
Our company was formed to develop, manufacture and market an advanced
document verification system to enable a user to detect altered, tampered or
fake IDs to:
(i) reduce check cashing, credit card and other types of fraud such as
identity theft, the fastest growing crime in America, which principally
utilizes fake driver licenses as proof of identity;
(ii) increase security and deter terrorism at airports, shipping ports,
rail and bus terminals, military installations, high profile buildings and
other sites where security is a concern; and
(iii) determine the customer's age and validity of the ID to detect and
prevent the use of fraudulent identification for the purchase of alcohol,
tobacco and other age-restricted products and to reduce the risk to the
retailer of substantial monetary fines, criminal penalties and license
revocation for the sale of age-restricted products to minors.
Our advanced document verification software, which we have licensed to
third parties and is contained in our ID-Check unit (terminal) reads in one
swipe or scan the encoded data contained on U.S. and Canadian driver licenses,
state issued identification cards and military IDs that comply with the
standards of the American Association of Motor Vehicle Administrators (AAMVA),
the American National Standards Institute (ANSI) and the International Standards
Organization (ISO).
Our terminal or licensed software helps merchants prevent economic loss
resulting from identity theft. The availability of high-tech fake ID's exposes
retailers to many forms of fraud utilizing fake ID's, which our unit has the
capability of helping to detect.
The terminal or the licensed software are effective tools to enhance
security and deter terrorism at airports and other sites where security is
increasing. The terminals have been installed in over a dozen major airports to
verify the identity of employees and prevent access to secure areas. One major
airport recently reordered terminals. Since the tragic events of September 11,
2001, there has been increased interest in our technology to control access and
to help deter the threat of terrorism.
Additionally, in an effort to combat the problems of underage drinking and
smoking, the federal government and many states and Canadian provinces have
enacted laws requiring businesses that sell age-restricted products to verify
12
the ID of potential customers to determine that they are of legal age to
purchase these products. These laws impose stringent penalties for violations.
In addition, many states and local governments have set up undercover "sting"
operations to detect violations.
The product we have designed and developed, the IDC-1400 is based on our
patented ID-Check technology. ID-Check provides businesses with a reliable,
simple and cost-effective way to reduce economic loss supported by fake or
altered driver licenses and to verify age and reduce the risk of severe
penalties for non-compliance with laws pertaining to age restricted products.
Effective July 9, 2003, our manufacturer will discontinue manufacturing the
IDC-1400 terminal and has introduced a new model to replace the existing
IDC-1400. We are in discussions with our manufacturer as well as other
manufacturers to select a new platform to run our patented software.
On December 18, 2001, we acquired substantially all the assets of The
IDentiScan Company, LLC, a provider of age verification terminals. The
IDentiScan products are targeted to the age verification market and they have
broadened our product line to better penetrate that market. IDentiScan has been
selected to be the exclusive provider of age verification terminals to Sunoco,
Inc.
Our new product, IDN-DLL, is a software application designed to supplement
our existing products by replicating the features of ID-Check using a customer's
existing hardware (or with minimal additional hardware components) included in
Point-Of-Sale (POS) terminals for multi-lane retailers such as grocery and
mass-retail stores. Currently, we have five (5) license agreements executed with
third parties for integration and sub-licensing of this application.
We believe the ID-Check solution is the most advanced, reliable and
effective technology, which provides users with an easy, reliable, and
cost-effective method of document and age verification. We have received
encoding formats from most jurisdictions that conform to AAMVA standards. This
information, combined with our patented technology, enables the ID-Check
software to read, decode and process the information electronically stored on
driver licenses. As jurisdictions and AAMVA change their documents and
guidelines, we believe our software, together with our programmable terminal,
can be adapted to these changes.
ID-Check terminals do not require a connection to a central database to
operate thus negating privacy concerns. Our terminals have the ability to
operate add-on peripherals such as printers, bar code scanners, fingerprint
readers and other devices. Additionally, our terminals can communicate with
personal computers, which could enhance the functionality of the terminals and
potentially create the opportunity for sales of other software products by us.
The ID-Check process is quick, simple and easy to use. After matching the
(driver license) photograph to the person presenting the document for
identification, the user simply swipes the driver license through the ID-Check
terminal if the card has a magnetic stripe or scans it if it has a bar code. The
terminal quickly determines if the document:
(i) is valid;
(ii) has been altered or tampered with;
(iii) has expired; and
(iv) has a date of birth equal to or greater than the legal age to purchase
age restricted products, such as alcohol and tobacco, in the
retailer's location.
13
Then, the terminal will automatically:
(i) respond to the user by displaying the results in words on the
terminal's screen;
(ii) save information that is permissible by law to the terminal's own
memory;
(iii)print a record of the transaction including the results on a roll of
paper similar to that used in cash registers, if an optional printer
has been installed; and
(iv) send the results to a personal computer ("PC") which has Microsoft
Windows 95/98/ME/NT/2000/XP for permanent storage when used in
conjunction with our Q-Link or C-Link software, which simplifies
record keeping by downloading comprehensive ID- Check due diligence
data into a PC. This provides a merchant with secure back-up files
that include individual and cumulative transaction records, where
permitted by law.
Our initial marketing focus was targeted towards retailers of
age-restricted products such as alcohol and tobacco. Because of our technology's
enhanced ability to verify the validity of military ID's, driver licenses and
state issued ID cards, containing either magnetic stripes or bar codes that
conform to AAMVA/ANSI/ISO standards, we have refocused our marketing efforts to
address the markets being affected by the cost to industry of "Identity Theft"
and the need for enhanced security. As a result of our ID-Check product having
the ability to verify the encoded formats of the documents described above, we
have already sold our ID-Check unit to some of the largest companies in the
gaming industry, a state Port Authority, military establishments, airports,
nuclear power plants, high profile buildings and have completed successful tests
of our technology in one of the largest mass merchandisers in the United States
and a large quasi-government department. We are currently in the test phase with
some major public companies. In addition, we have recently signed agreements
with some high profile organizations which will promote our technology, such as
Northrup Grumman, Mothers Against Drunk Driving (MADD) and the American
Association of Airport Executives (AAAE).
SELLING SECURITYHOLDER
The selling securityholder may resell the offered securities from time to
time as provided under the section entitled "Plan of Distribution" in this
prospectus or as described in a prospectus supplement. We are registering the
offered securities as required under the terms of a registration rights
agreement between us and the selling securityholder dated as of March 27, 2003.
We have agreed, among other things, to bear certain expenses in connection with
the registration and sale of the securities being offered by the selling
securityholder. See "Plan of Distribution".
The following table sets forth the ownership of the selling securityholder,
the number of shares of Series A Preferred Stock, Common Stock and Warrants
beneficially owned by the selling securityholder, and the number of shares which may be offered for
resale pursuantfor 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).
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 selling
securityholder has notshares 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 12,059,240 shares of our common stock issued and outstanding on
August 9, 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.
9
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 or our predecessors or affiliates within the past three years. The
information included below is based upon information provided by the selling
securityholder. Because the selling securityholder may offer all, some or none
of its shares, the "After Offering" column of the table assumes the sale of all
of its securities; however, we do not know that this will actually occur.
14
The selling securityholder has obtained the shares of Series A Preferred
Stock and Common Stock underlying the Series A Preferred Stock, the Warrants and
the Common Stock underlying the Warrants covered in this prospectus through
private transactions. Gryphon Master Fund, L.P. is an accredited investor which
acquired 30,000 sharesMr. Cohen beneficially owns greater than 5%
of our Series A Preferred Stockissued and Warrants to purchase
113,636 shares ofoutstanding common stock and JMP Securities LLC acted as our
Common Stockplacement agent in the private placement pursuant to a private placement by us solely
to Gryphon Master Fund, L.P. in March 2003 for an aggregate purchase price of $3
million. The Series A Preferred Stock is convertible into 454,545which the other selling
security holders listed below purchased the shares of our common stock subjectthey are
offering for resale pursuant to adjustment if certain events occur. The issuancethis 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 3.07% 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 Fund L.P. (14) 20,300 * 20,300 - -
Robert T. Lempert (15) 110,000 * 35,000 75,000 *
Todd Cohen (16) 738,570 6.09% 14,000 724,570 5.98%
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 Series A Preferred Stocktotal
outstanding common stock referenced above.
(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
the Warrants in the March 2003 private placement is
deemed to be exempt from the registration requirements of the Securities Act,
pursuant to Section 4(2) thereof, and was made, in each case, without general
solicitation or advertising. We agreed to register for resale the securities
being offered by this prospectus under the terms of the registration rights
agreement executed in connection with these transactions.
Gryphon Master Fund, L.P. is the only selling securityholder and has soleDaniel 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 allthe selling security holder. SRG
Capital, LLC has members who have controlling interests in NASD broker
dealers. 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 securities set forth below:
Security Number of Securities Owned
-------- --------------------------
Before Offering After Offering
--------------- --------------
Series A 8% Convertible Preferred Stock 30,000 -0-
Common Stock underlying Series A
8% Convertible Preferred Stock 454,545 -0-
Warrants 113,636 -0-
Common Stock underlying Warrants 113,636 -0-
PLAN OF DISTRIBUTION
Our shares of common stock are traded onoffered hereunder
when they were acquired.
(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 American Stock Exchange undersecurity stock holder is Mitchell Levine, Managing Partner. The
selling security holder is affiliated with a member firm of the symbol IDN. We are registeringNASD.
(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 Warrantssecurity stock holder is Mitchell Levine, Managing Partner. The
selling security holder is affiliated with a member firm of the NASD.
(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 Series A
Preferred Stock and the Common Stock on behalfsecurities 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 securityholder.security holder's investment advisor, which oversees investment
and voting activity, are Jon D. Gruber and J. Patterson McBaine.
10
(8) Includes 10,000 shares of our common stock issuable upon exercise of a
warrant with an initial exercise price of $5.40. The Warrantstrustees 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 Series A Preferred Stockcommon 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 Common Stockselling 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 125,000 shares of our common stock issuable upon
exercise of a 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 of four senior officers.
11
PLAN OF DISTRIBUTION
The selling security holders may be soldsell the shares being offered from time
to time in one or more transactions at fixed prices, at prevailing market prices
at the time of sale, at prices related to the prevailing market prices, at
varying prices determined at the time of sale, or at negotiated prices. These
sales may be effected at various times in one or more of the following
transactions, or in other kinds of transactions:
-- transactionso on the American Stock Exchange or on any national
securities exchange or U.S. inter- dealer system of a registered
national securities association on which the Warrants and the Series A
Preferred Stock and the Common Stock may be listed or quoted at the
time of sale;
--another exchange;
o in the over-the-counter market;
--o in private transactions and transactions otherwise thannegotiated transactions;
o through broker-dealers, who may act as agents or principals;
o through one or more underwriters on these
exchangesa firm commitment or systems or in the over- the-counter market;
-- in connection with short sales of the shares;
-- by pledge to secure or in payment of debt and other obligations;
15
--best
efforts basis;
o through the writing of options on shares, whether the options are
listed on an options exchange or otherwise; -- in connection with the writing of non-traded and exchange-traded call
options, in hedge transactions and in settlement of other transactions
in standardized or
over-the-counter options; or
-- througho a combination of anysuch methods of the above transactions.sale.
The selling securityholder and its successors, including its transferees,
pledgees or donees or their successors,security holders may sell the Warrants, Series A
Preferred Stock andshares at market prices
prevailing at the Common Stocktime 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 underwriters,broker-dealers. The broker-dealers may
act as agents or agents, whoprincipals. The broker-dealers may receive compensation in the
form of discounts, concessions or commissions from the selling securityholdersecurity holders
or the purchasers. These discounts, concessions or commissions as topurchasers of the shares. The compensation of any particular
underwriter, broker-dealer or agent may be in excess of those customary commissions. Because the selling
security holders and broker-dealers that participate with the selling security
holders in the typesdistribution of transactions involved.
In addition, any securities covered by this prospectus which qualify for
sale pursuantshares may be deemed to Rule 144be "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
sold under Rule 144
rather than pursuantdeemed to this prospectus.
Webe 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 a registration rights agreement forany agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the benefitsale of their securities. There is no underwriter
or coordinating broker acting in connection with the proposed sale of shares by
the selling securityholder to register the Warrants and our Series A Preferred Stock
and the Common Stocksecurity holders.
The shares will be sold through registered or licensed brokers or dealers
if required under applicable federal and state securities laws. TheIn 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 rights agreement provides for cross-indemnificationor
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 securityholdershareholder will be subject to applicable provisions of the Exchange Act
and usthe 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 respective directors, officerscommon stock by the selling security holders. We will make copies
of this prospectus available to the selling security holders and controllinghave 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.
12
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
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 specificcertain liabilities in connection with the
offer and saleoffering of the Warrants, Series A Preferred Stock and the Common Stock,shares, including liabilities arising under the Securities Act.
We will pay substantially all of the
expenses incurred by the selling securityholder incidentUpon notification to the offering and
sale of the Warrants, Series A Preferred Stock and the Common Stock.
LEGAL MATTERS
The validity of the issuance of the securities offered hereby will be passed
upon for us by the law firm of Beckman, Lieberman & Barandes, LLP, in Jericho,
New York.
EXPERTS
The consolidated financial statements of Intelli-Check, Inc. and subsidiaries at
December 31, 2002, anda selling shareholder that any material
arrangement has been entered into with broker-dealers for the year then ended, incorporated by reference herein
and in the Registration Statement have been audited by Grant Thornton LLP,
independent auditors, and at December 31, 2001 and December 31, 2000, by Arthur
Andersen LLP, independent auditors, incorporated by reference herein and in the
Registration Statement, and are included in reliance upon such reports given on
the authoritysale or purchase
of such firms as experts in accounting and auditing. After
reasonable efforts,shares, we have been unable to obtain the consent of Arthur Andersen
LLP ("Andersen") to the incorporation by reference in the Registration Statement
of which this prospectus iswill file a part of Andersen's reports of its audits of our
financial statements at December 31, 2001 and for the two years in the period
ended December 31, 2001. Under these circumstances, under Rule 437(a) under the
Securities Act of 1933 (the "Act") we may file the Registration Statement
without Andersen's consent. In the absence of Andersen's consent, persons
acquiring shares of the Company's common stock pursuantsupplement to this prospectus, will
be unable to assert a claim against Andersen under Section 11(a)if required,
disclosing:
o the name of the Act inparticipating broker-dealers;
o the eventnumber 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 untrue statement of material fact or any material omission in
the financial statements audited by Andersen or in its reports with respect
thereto.
16
WHERE YOU CAN FIND MORE INFORMATION ABOUT US
We file annual, quarterly and current reports, proxy statements and other
information with the SEC. You may read and copy any document we file with the
SEC at the SEC's Public Reference Room at 450 Fifth Street, NW, Washington,
D.C., 20549. Please call the SEC at 1-800-SEC-0330 for further information on
the operation of the Public Reference Rooms. Our SEC filings are also availableinvestigation to the public on the SEC's Website at "http://www.sec.gov."
We have filed with the SEC a registration statement on Form S-3 under the
Securities Act with respect to the securities to be sold in this offering. This
prospectus does not contain all ofverify the
information set forth in the registration
statement. We have omitted certain parts of the registration statement in
accordance with the rules and regulations of the SEC. For further information
about us and the securities, you should refer to the registration statement.
Statements contained in this prospectus as to the contents of any contract or
other document are not necessarily complete and, in each instance, you should
refer to the copy of such contract or document filed as an exhibit toout or incorporated by reference in the registration statement. Each statement asthis prospectus; and
o other facts material to the contents of such contracttransaction.
In addition, upon being notified by a selling shareholder that a donee or
document is qualified in all respects by such
reference. You may obtainpledgee intends to sell more than 500 shares, we will file a copy of the registration statement, or any of our
other filings with the SEC, from the SEC's principal office in Washington, D.C.
upon payment of the fees prescribed by the SEC.
The SEC allows ussupplement to "incorporate by reference" the information we file with
them, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this
prospectus, and information that we file later with the SEC
will automatically update and supersede this information.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 documents we are incorporating by reference are:
- -- Our annual report1934 (the "Exchange Act"):
o our Annual Report on Form 10-K for ourthe fiscal year ended December
31, 2002;
- -- Our reports2004;
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 and June 12, 20028, 2005
and October 4, 2002;
- -- Thefiled with the SEC on May 19, 2005 and June 9, 2005,
respectively;
o our definitive Proxy Statement for our Annual Meeting of
Stockholders held on June 8, 2005; and
o our description of our securitiesCommon Stock contained in our registration statementRegistration
Statement on Form SB-2, File No. 333-87797, dated November 21, 1999;
- -- The description8-A (001-15465) filed with the SEC under Section
12 of the rights distributed to our shareholdersExchange 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 October
2001 contained in our registration statement on Form S-3, File No.
333-59595, dated October 5, 2001; and
- -- The descriptions of our Series A 8% Convertible Preferred Stock and the
Warrants issued therewith contained in our current report on Form 8-K dated
April 8, 2003.this
prospectus. You may request and obtain a copy of these filings, at no cost, by
writing or telephoning our secretaryus at the following address:address or phone number:
Intelli-Check, Inc.
246 Crossways Park West
Woodbury, New York, NY 11797
(516) 992-1900
17516-992-1900
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, NE 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 in this prospectus or any prospectus
supplement. This prospectus is not an offer of these 1,875,000 Shares
securities in any 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 of the time of delivery of this Common Stock
prospectus or any sale of our common stock.
INTELLI-CHECK, INC.
-------------------------
TABLE OF CONTENTS
Page
----
Our Business.....................................2
Risk Factors ....................................4 Prospectus
Disclosure Regarding Forward-
Looking Statements.............................7
Use of Proceeds..................................8 -------------------------
Security Holders.................................8
Plan of Distribution............................10
Incorporation of Certain Documents
by Reference....................................11 2005
Where You Can Find More Information.............12 -------------------,
Legal Matters...................................12
Experts.........................................12
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution
SEC Registration Fee. . . . . . . . . . . . . . . . . $ 167
Accounting Fees and Expenses. . . . . . . . . . . . . 5,000
Legal Fees and Expenses . . . . . . . . . . . . . . . 20,000
Miscellaneous . . . . . . . . . . . . . . . . . . . . 4,833
-------
Total . . . . . . . . . . . . . . . . . . . . . . . . $30,000
=======
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 DirectorsOfficers and OfficersDirectors
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
3.1 CertificateExhibit
Number Description of Incorporation,Document
------ -----------------------
4.1 Form of Warrant.
5.1 Opinion of Loeb & Loeb LLP as amended (Incorporated by reference to
Exhibit 3.1 to Registrant's Registration Statement on Form SB-2, File No.
333-87797
3.2 Certificate of Designation of Preferred Stock of Intelli-Check, Inc.
(Incorporated by reference to Exhibit 3.3 to Registrant's Annual Report on
Form 10-K filed March 31, 2003).
4.1 Specimen Common Stock Certificate (Incorporated by reference to Exhibit 4.1 to the Registrant's Registration Statement onlegality of the
securities being registered.
10.1 Form SB-2, File No.
333-87797)
4.2 Warrant to Gryphon Master Fund, L.P. (Incorporated by reference to Exhibit
4.3 to Registrant's Annual Report on Form 10-K filed March 31, 2003).
5 Opinion of Beckman, Lieberman & Barandes, LLP *
10.1 Securities Purchase Agreement betweenby and among Intelli-Check,
Inc. and Gryphon
Master Fund, L.P. dated March 27, 2003 (Incorporated by reference to
Exhibit 10.16 to Registrant's Annual Reportthe purchasers set forth on Form 10-K filed March 31,
2003).
10.2 Registration Rights Agreement between Intelli-Check, Inc. and Gryphon
Master Fund, L.P. dated March 27, 2003 (Incorporated by reference to
Exhibit 10.17 to Registrant's Annual Report on Form 10-K filed March 31,
2003).the signature
pages thereto.
23.1 Consent of Grant Thornton LLP
23.2 Consent of Arthur Andersen, LLP **
23.4 Consent of Beckman, LiebermanLoeb & Barandes,Loeb LLP (included in Exhibit 5
hereof)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 PowersPower of Attorney (included in the signature pages hereof)
- --------
* To be filed by amendment
** PursuantAttorney. Reference is made to Rule 437a promulgated under the Securities Act, no consent is
filed herewith.page II-4.
------------------
Item 17. Undertakings
(a)Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made,
a post- effectivepost-effective amendment to this Registration Statement:registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;1933, as amended;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the Registration Statementregistration 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 Statement;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 Statementregistration
statement or any material change to such information in the
Registration Statement;registration statement;
provided, however, that paragraphs (a)(l)subparagraphs (i) and (a)(l)(ii) above do not apply if
the information required to be included in a post-effective II-2
amendment by
those paragraphsthese subparagraphs is contained in periodic reports filed with or
furnished to the Commission by the Registrant pursuant to Section 13 or Section
15(d) of the Securities Exchange Act of 1934 that are incorporated by
reference in the Registration Statement.this registration statement.
(2) That, for the purposespurpose 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 Statementregistration 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.
(b) The undersigned Registrantregistrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended, (the
"Act"), each
filing of the Registrant's annual report pursuant to Section 13 (a)13(a) or Section
15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in thethis 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.
(c) The undersigned Registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to securityholders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be presented by
Article 3 of Regulation S-X is not set forth in the prospectus, to deliver or
cause to be delivered to each person to whom the prospectus is sent or given,
the latest quarterly report to securityholders that is specifically incorporated
by reference in the prospectus and to provide such interim financial
information.
(d) 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 registrantRegistrant 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
registrantRegistrant 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 Bohemia,the City of Woodbury, State of New York, on the 17th day of
April, 2003.
Intelli-Check, Inc.August 2005
INTELLI-CHECK, INC.
By:/s/ /s/ Frank Mandelbaum
--------------------------------------------------------------------
Frank Mandelbaum
Chairman of the Board and Chief Executive Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on April 17, 2003 by the following
persons in the capacities indicated. EachKNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature
appears below
also constitutes and appoints Frank Mandelbaum and EdwinEd Winiarz and each
of them, as his true and lawful attorney-in-factattorneys-in-fact and agent,agents, with full power of
substitution and resubstitution, for himthe undersigned and in his or her name,
place and stead, in any and all capacities, to sign any andor all amendments
(including post-effective amendments) to thisthe Registration Statement and to file
the same, with all exhibits thereto, and all other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorney-in-factattorneys-in-fact and agentagents, full power and authority to do and perform each
and every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as he or she might or could do
in person, hereby ratifying and confirming all that said attorney-in-factattorneys-in-fact and
agentagents, or any of them or their or his substitute or substitutes, may lawfully
do or cause to be done by virtue hereof.
Signature Title
--------- -----
/s/ Frank Mandelbaum
- ---------------------
Frank Mandelbaum ChairmanPursuant to the requirements of the BoardSecurities Act of 1933, the following
persons in the capacities and on the dates indicated have signed this
Registration Statement below.
/s/ Frank Mandelbaum Chairman, Chief Executive Officer and August 17, 2005
- ----------------------------------------- Director
Frank Mandelbaum
/s/ Edwin Winiarz Senior Executive Vice President, August 17, 2005
- ----------------------------------------- Treasurer, Chief Financial Officer and
Edwin Winiarz Director
/s/ Ashok Rao Vice Chairman and Director August 17, 2005
- -----------------------------------------
Ashok Rao
/s/ John N. Hatsopoulos Director August 17, 2005
- -----------------------------------------
John N. Hatsopoulos
/s/ Edwin Winiarz
- ---------------------
Edwin Winiarz Senior Executive Vice President, Treasurer,
Chief Financial Officer
/s/ Evelyn Berezin
- ---------------------
Evelyn Berezin Director
/s/ Howard Davis
- ---------------------
Howard Davis Director
/s/ Jeffrey Levy
- ---------------------
Jeffrey Levy Director
/s/ Charles McQuinn
- ---------------------
Charles McQuinn Director
- --------------------- Arthur L. Money Director August 17, 2005
- -----------------------------------------
Arthur L. Money
/s/ Charles McQuinn Director August 17, 2005
- -----------------------------------------
Charles McQuinn
/s/ Jeffrey Levy Director August 17, 2005
- -----------------------------------------
Jeffrey Levy
/s/ Guy L. Smith Director August 17, 2005
- -----------------------------------------
Guy L. Smith
II-4
SSL-DOCS2 70049063v2
NY2-490847
Form S-3 81805.doc
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 set forth on the signature
pages thereto.
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. Reference is made to page II-4.
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