AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 31, 2002
REGISTRATION NO. 333-_______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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VISIONICS CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 41-1545069
(State or other jurisdiction of 5600 Rowland Road (I.R.S. Employer
Incorporation or organization) Minnetonka, Minnesota 55415 Identification No.)
Telephone (952) 932-0888
Facsimile (952) 932-7181
(Address, including zip code and telephone number, including area code,
of registrant's principal executive offices)
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Robert F. Gallagher
Chief Financial Officer
Visionics Corporation
5600 Rowland Road
Minneapolis, Minnesota 55343-4315
(952) 932-0888
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
-------------------------------
WITH COPY TO:
Philip J. Tilton, Esq.
Maslon Edelman Borman & Brand, LLP
3300 Wells Fargo Center
90 South 7th Street
Minneapolis, Minnesota 55402
Telephone (612) 672-8200
Facsimile (612) 672-8397
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: From time to
time after this Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earliest effective registration statement for the
same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434
under the Securities Act, please check the following box: [ ]
--------------------------------
CALCULATION OF REGISTRATION FEE
============================================== ============== ================ =================== ====================
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PER UNIT(2) OFFERING PRICE(2) REGISTRATION FEE(2)
- ---------------------------------------------- -------------- ---------------- ------------------- --------------------
common stock, par value $.01 per share (1).... 75,000 $ 10.09 $ 756,750 $ 70
============================================== ============== ================ =================== ====================
(1) The Registrant is registering 75,000 shares on a resale basis by the
selling stockholder identified herein. There are also being registered
hereunder an indeterminate number of shares of common stock as shall be
issuable as a result of a stock split, stock dividend or other adjustment
to or change in the outstanding shares of common stock. Associated with the
common stock are common share purchase rights that will not be exercisable
or evidenced separately from the common stock prior to the occurrence of
certain events.
(2) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 of the Securities Act based upon a $10.09 per
share average of high and low prices of the Registrant's common stock on
the Nasdaq National Market on May 30, 2002.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
PROSPECTUS
75,000 SHARES
VISIONICS CORPORATION
COMMON STOCK
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The selling stockholder identified on page 19 is offering 75,000 shares
on a resale basis. You should read this prospectus and each prospectus
supplement carefully before you invest.
Our common stock is quoted on the Nasdaq National Market under the
symbol "VSNX." On May 30, 2002, the last reported sale price of our common stock
was $10.26 per share.
------------------
INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS"
BEGINNING ON PAGE 5.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THE SECURITIES OFFERED BY THIS
PROSPECTUS OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This prospectus is dated __________, 2002
TABLE OF CONTENTS
PAGE NO.
--------
Prospectus Summary ................................................... 3
Risk Factors ......................................................... 4
Cautionary Statement Regarding Forward-Looking Statements ............ 15
Our Company........................................................... 16
Proposed Merger with Identix Incorporated............................. 17
Use of Proceeds ...................................................... 17
Selling Stockholder .................................................. 18
Plan of Distribution ................................................. 19
Legal Matters ........................................................ 20
Experts .............................................................. 20
Where You Can Find More Information .................................. 20
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This prospectus is part of a registration statement that we filed with
the Securities and Exchange Commission. This prospectus, including the
information incorporated into this prospectus by reference or attached to the
registration statement that contains this prospectus, provides you with a
general description of our business and our common stock. You should read this
prospectus and the prospectus supplement together with the additional
information described under the heading "Where You Can Find More Information."
2
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PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS INFORMATION CONTAINED ELSEWHERE IN THIS
PROSPECTUS OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS. BECAUSE IT IS A
SUMMARY, IT MAY NOT CONTAIN ALL OF THE INFORMATION THAT IS IMPORTANT TO YOU.
ACCORDINGLY, YOU ARE URGED TO CAREFULLY REVIEW THIS PROSPECTUS AND THE DOCUMENTS
INCORPORATED IN THIS PROSPECTUS BY REFERENCE IN THEIR ENTIRETY. WHEN WE REFER TO
"VISIONICS," "OUR COMPANY," "WE," "OUR" AND "US" IN THIS SUMMARY AND ELSEWHERE
IN THIS PROSPECTUS UNDER THE HEADINGS "OUR COMPANY" AND "USE OF PROCEEDS," WE
MEAN VISIONICS CORPORATION AND ITS SUBSIDIARIES. WHEN WE USE THESE TERMS IN
OTHER PLACES IN THIS PROSPECTUS, WE REFER ONLY TO VISIONICS CORPORATION UNLESS
THE CONTEXT INDICATES THAT WE MEAN SOMETHING ELSE.
OUR COMPANY
Visionics is a leading provider of identification information systems
that employ "biometric" technology, which is the science of identifying
individuals by measuring distinguishing biological characteristics. Our
biometric identification systems and information technology services enable law
enforcement and other government agencies to identify and manage information
about individuals, and help commercial employers and government agencies to
conduct background checks on applicants for employment or permits. Our product
and service offerings include computer-based fingerprinting and photographic
systems, software tools, multi-media data storage and communications servers,
and the systems integration and software development services required to deploy
and use these systems.
We are co-headquartered at One Exchange Place, Jersey City, New Jersey
07302 and 5600 Rowland Road, Minnetonka, Minnesota 55343 and our telephone
number is (952) 932-0888.
PROPOSED MERGER WITH IDENTIX INCORPORATED
On February 22, 2002, Visionics entered into an Agreement and Plan of
Merger with Identix Incorporated ("Identix"), pursuant to which a wholly owned
subsidiary of Identix will be merged with and into Visionics, Visionics will
become a wholly owned subsidiary of Identix and each share of Visionics common
stock will be converted into the right to receive 1.3436 shares of Identix
common stock. The joint proxy statement/prospectus was declared effective May
21, 2002. The proposed merger is subject to approval of the stockholders of each
of Visionics and Identix. The companies stockholder meetings have been scheduled
for the last week of June 2002.
Identix is a world leader in designing, developing, manufacturing and
marketing products for the capture and/or comparison of fingerprints for
security, anti-fraud, law enforcement, physical access and other applications.
Identix designs and develops proprietary, cost-effective security products and
solutions for personal identification and verification. Identix offers an array
of Internet and wireless Web secure transaction processing services, and
provides a wide range of applications to markets that include corporate
enterprise security, intranet, extranet, and Internet, wireless Web access and
security, E-commerce, government and law enforcement agencies.
Identix has filed with the Securities and Exchange Commission a
registration statement on Form S-4 with respect to the issuance of shares of
Identix common stock pursuant to the proposed merger. Copies of the registration
statement may be obtained at any of the SEC offices listed in the WHERE YOU CAN
FIND MORE INFORMATION section of this prospectus or at the SEC web site at
http://www.sec.gov. YOU ARE ENCOURAGED TO REVIEW THE REGISTRATION STATEMENT FOR
ADDITIONAL INFORMATION CONCERNING THE PROPOSED MERGER.
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RISK FACTORS
AN INVESTMENT IN OUR COMMON STOCK INVOLVES VARIOUS RISKS. YOU MAY LOSE
ALL OR PART OF YOUR INVESTMENT. YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING
FACTORS AS WELL AS THE OTHER INFORMATION SET FORTH IN THIS PROSPECTUS AND IN THE
DOCUMENTS INCORPORATED HEREIN BY REFERENCE. IN PARTICULAR, YOU SHOULD REVIEW OUR
AUDITED CONSOLIDATED FINANCIAL STATEMENTS INCORPORATED BY REFERENCE INTO THIS
PROSPECTUS BEFORE MAKING AN INVESTMENT IN OUR COMMON STOCK OFFERED BY THIS
PROSPECTUS.
RISKS RELATING TO THE BUSINESS OF VISIONICS
VISIONICS' BUSINESS WILL NOT GROW UNLESS THE MARKET FOR ITS SECURITY SOLUTIONS
EXPANDS BOTH DOMESTICALLY AND INTERNATIONALLY.
A large portion of Visionics' revenues are derived from the sale of
security products and services. Security solutions have not gained widespread
commercial acceptance. Visionics cannot accurately predict the future growth
rate, if any, or the ultimate size of the biometric technology market. The
expansion of the market for our products and services depends on a number of
factors, including:
* the cost, performance and reliability of our products and services
and the products and services of competitors;
* customers' perception of the benefit of biometric security
solutions;
* public perceptions of the intrusiveness of these solutions and the
manner in which firms are using the biometric information collected;
* public perceptions regarding the confidentiality of private
information;
* customers' satisfaction with our products and services; and
* marketing efforts and publicity regarding these products and
services.
Certain groups have publicly objected to the use of biometric products
for some applications on civil liberties grounds and legislation has been
proposed to regulate the use of biometric security products. From time to time,
facial recognition and other biometrics technologies have been the focus of
organizations and individuals seeking to curtail or eliminate the use of these
technologies on the grounds that these technologies may be used to diminish
personal privacy rights. In the event that such initiatives result in
restrictive legislation, the market for facial recognition products may be
adversely affected. Even if biometric markets develop, Visionics' products and
services may not gain wide market acceptance. Even if biometric security
solutions gain wide market acceptance, Visionics' products and services may not
adequately address the market requirements.
WE FACE INTENSE COMPETITION FROM OTHER BIOMETRIC SECURITY SOLUTION PROVIDERS AS
WELL AS IDENTIFICATION AND SECURITY SYSTEMS PROVIDERS.
A significant number of established and startup companies have
developed or are developing hardware for fingerprint biometric security
applications that currently compete or will compete directly with those products
designed, developed and sold by Visionics. Other companies have developed or are
developing and marketing biometric security applications for the recognition of
facial structure that currently compete or will compete with those products
designed, developed and sold by Visionics. Some of these companies have
developed or are developing and marketing semiconductor or optically based
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direct contact fingerprint image capture devices. Other companies have developed
or are developing and marketing other methods of biometric identification such
as retinal blood vessel or iris pattern, hand geometry, or voice recognition.
If one or more of these technologies or approaches were widely adopted,
it would significantly reduce the potential market for Visionics' products.
Visionics' products also compete with non-biometric technologies such as
certificate authorities and traditional keys, cards, surveillance systems and
passwords. Many competitors offering products that are competitive with our
products and services have significantly more cash and resources that does
Visionics. The biometric security market is a rapidly evolving and intensely
competitive market, and we believe that additional competitors may yet enter the
market and become significant long-term competitors.
Visionics' line of products also faces intense competition from a
number of competitors that are actively engaged in developing and marketing live
scan products, including Heimann Biometric Systems GmbH, Sagem Morpho, Inc.,
Printrak, a wholly-owned subsidiary of Motorola, and Cross Match Technologies,
Inc.
We expect competition to increase and intensify in the near term in the
biometrics markets. Companies competing with Visionics may introduce products
that are competitively priced, have increased performance or functionality or
incorporate technological advances not yet developed or implemented by us. Some
present and potential competitors have financial, marketing, research, and
manufacturing resources substantially greater than we have.
In order to compete effectively in this environment, Visionics must
continually develop and market new and enhanced products at competitive prices
and must have the resources available to invest in significant research and
development activities. The failure to do so could have a material adverse
effect on our business operations, financial results and stock price.
THE TERRORIST ATTACKS OF SEPTEMBER 11, 2001 HAVE INCREASED FINANCIAL
EXPECTATIONS THAT MAY NOT MATERIALIZE.
The September 11, 2001 terrorist attacks have created an uncertain
economic environment and an increased awareness of biometric security solutions.
However, it is uncertain whether the actual level of demand for Visionics'
biometric products and services will increase as a result of such heightened
awareness. Increased demand for our products and services may not result in an
actual increase in product or services revenues. Visionics cannot predict with
certainty which security solutions, if any, will be adopted in the fight against
terrorism and whether our products will be among those solutions. In addition,
it is unclear what the level of funding will be for these solutions and how
quickly funding may be made available.
These factors may create unpredictability in Visionics' revenues and
operating results.
VISIONICS MAY NEED TO RAISE ADDITIONAL EQUITY OR DEBT FINANCING IN THE FUTURE.
While the management of Visionics believes that cash flows from
operations, together with existing working capital and available lines of
credit, are adequate to fund our current cash requirements, Visionics may need
to raise additional debt or equity financing in the future. Risks relating to
our ability to maintain working capital and liquidity include the continued
availability of vendor credit as needed and payment by customers of accounts
receivable at such times and in such amounts as to enable Visionics to meet its
payment obligations. In addition, we may not be able to obtain additional debt
or equity financing. If successful in raising additional financing, Visionics
may not be able to do so on terms that are not excessively dilutive to existing
5
stockholders or less costly than existing sources of financing. Failure to
secure additional financing in a timely manner and on favorable terms if and
when needed in the future could have a material adverse effect on the financial
performance, balance sheet and stock price of Visionics and require Visionics to
implement cost reduction initiatives and curtail operations.
THE BIOMETRICS INDUSTRY IS CHARACTERIZED BY RAPID TECHNOLOGICAL CHANGE AND
EVOLVING INDUSTRY STANDARDS, WHICH COULD RENDER EXISTING PRODUCTS OBSOLETE.
The future success of Visionics will depend upon its ability to develop
and introduce a variety of new products and services and enhancements to these
new product and services in order to address the changing and sophisticated
needs of the marketplace. Frequently, technical development programs in the
biometrics industry require assessments to be made of the future directions of
technology and technology market generally, which are inherently difficult to
predict. Delays in introducing new products, services and enhancements, the
failure to choose correctly among technical alternatives or the failure to offer
innovative products and services at competitive prices may cause customers to
forego purchases of Visionics' products and services and purchase those of its
competitors.
Continued participation by Visionics in the market for biometric
products that are linked to forensic quality databases under the jurisdiction of
governmental agencies may require the investment of resources in upgrading the
products and technology of Visionics in order for it to compete and to meet
regulatory and statutory standards. We may not have adequate resources available
to it or may not adequately keep pace with appropriate requirements in order to
effectively compete in the marketplace.
VISIONICS' FINANCIAL AND OPERATING RESULTS OFTEN VARY SIGNIFICANTLY FROM QUARTER
TO QUARTER AND OUR RESULTS MAY BE NEGATIVELY AFFECTED BY A NUMBER OF FACTORS.
Visionics' financial and operating results may fluctuate from quarter
to quarter because of the following reasons:
* reduced demand for products and services caused by competitors;
* price reductions, new competitors or the introduction of enhanced
products or services from new or existing competitors;
* changes in the mix of products and services Visionics or its
distributors sell;
* cancellations, delays or contract amendments by government agency
customers;
* the lack of availability of government funds;
* unforeseen legal expenses, including litigation costs;
* expenses related to acquisitions;
* other one-time financial charges;
* the lack of availability or increase in cost of key components and
subassemblies;
* increases required in the development and marketing expenses to
address opportunities or competitive pressures in the market; and
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* the inability to successfully manufacture in volume certain products
that may contain complex designs and components.
Particularly important is the need to invest in planned technical
development programs to maintain and enhance the competitiveness of Visionics,
and to develop and launch new products and services. Improving the manageability
and likelihood of success of such programs requires the development of budgets,
plans and schedules for the execution of these programs and the adherence to
such budgets, plans and schedules. The majority of such program costs are
payroll and related staff expenses, and secondarily materials, subcontractors
and promotional expenses. These costs are very difficult to adjust in response
to short-term fluctuations in our revenues, compounding the difficulty of
achieving profitability in the event of a revenue downturn.
VISIONICS' LENGTHY AND VARIABLE SALES CYCLE WILL MAKE IT DIFFICULT TO
PREDICT OPERATING RESULTS.
Certain of Visionics' products often have a lengthy sales cycle while
the customer evaluates and receives approvals for purchase. If, after expending
significant funds and effort, we fail to receive an order, our financial results
and stock price could be adversely affected. It is difficult to predict
accurately the sales cycle of any large order for any of Visionics' products. If
Visionics does not ship and install one or more large orders as forecast for a
fiscal quarter, our total revenues and operating results for that quarter could
be materially and adversely affected.
THE SUBSTANTIAL LEAD-TIME REQUIRED FOR ORDERING PARTS AND MATERIALS MAY LEAD TO
EXCESS OR INSUFFICIENT INVENTORY.
The lead-time for ordering parts and materials and building Visionics'
products can be many months. As a result, we will need to order parts and
materials and build our products based on forecasted demand. If demand for the
products lags significantly behind forecasts, Visionics may produce more
products than it can sell, which can result in cash flow problems and write-offs
or write-downs of obsolete inventory.
VISIONICS DERIVES A LARGE PORTION OF ITS REVENUE FROM GOVERNMENT CONTRACTS,
WHICH ARE OFTEN NON-STANDARD, INVOLVE COMPETITIVE BIDDING, AND MAY BE SUBJECT TO
CANCELLATION WITHOUT PENALTY AND MAY PRODUCE VOLATILITY IN EARNINGS AND REVENUE.
The performance of Visionics in any one reporting period is not
necessarily indicative of sales trends or future operating or earnings
performance because of the reliance by Visionics on a small number of large
customers, the majority of which are government agencies. Government contracts
frequently include provisions that are not standard in private commercial
transactions. For example, government contracts may include bonding requirements
and provisions permitting the purchasing agency to cancel the contract without
penalty in certain circumstances. As public agencies, Visionics' prospective
customers are also subject to public agency contract requirements that vary from
jurisdiction to jurisdiction. Some of these requirements may be onerous or
impossible to satisfy.
In addition, public agency contracts are frequently awarded only after
formal competitive bidding processes, which have been and may continue to be
protracted, and typically impose provisions that permit cancellation in the
event that funds are unavailable to the public agency. Furthermore, unsuccessful
bidders for public agency contracts are provided the opportunity to formally
protest certain contract awards through various agency, administrative and
judicial channels. The protest process may delay a successful bidder's contract
performance for a number of weeks, months or more, or cancel the contract award
entirely. Although, Visionics has not previously experienced a substantial
number of contract delays or cancellations due to protests initiated by losing
bidders. There is a risk that Visionics may not be awarded any of the contracts
7
for which it bids or, if awarded, that substantial delays or cancellations of
purchases may follow as a result of protests initiated by losing bidders. In
addition, local government agency contracts may be contingent upon availability
of matching funds from federal or state entities. Also, law enforcement and
other government agencies are subject to political, budgetary, purchasing and
delivery constraints which we expect may continue to result in quarterly and
annual revenues and operating results which may be irregular and difficult to
predict. Such revenue volatility makes management of inventory levels, cash flow
and profitability inherently difficult. In addition, in the event Visionics is
successful in winning such procurements, there may be planned unevenness in
shipping schedules, as well as potential delays and schedule changes in the
timing of deliveries and recognition of revenue, or cancellation of such
procurements.
For the fiscal year ended September 30, 2001, Visionics derived 10.4
percent of its revenues from contracts with the Immigration and Naturalization
Services and 24 percent of its revenue from its top twenty customers, mostly
U.S. governmental and state and local agencies. The loss of a material
government contract due to budget cuts or otherwise could have a severe negative
impact on our financial results, balance sheet and stock price.
RESULTS OF OPERATIONS OF VISIONICS ARE SUBJECT TO GOVERNMENTAL CREDIT, FUNDING,
AND OTHER RELATED FACTORS.
Visionics extends substantial credit to federal, state and local
governments in connection with sales of its products and services. Sales to
sizeable customers requiring large and sophisticated networks of fingerprint
recognition and live scan systems and peripheral equipment often include
technical requirements which may not be fully known at the time requirements are
specified by the customer. In addition, contracts may specify performance
criteria that must be satisfied before the customer accepts the products and
services. Collection of accounts receivable may be dependent on completion of
customer requirements, which may be unpredictable, subject to change by the
customer, and not fully understood at the time of acceptance of the order, and
may involve investment of additional resources. These investments of additional
resources are accrued when amounts can be estimated but may be uncompensated and
negatively affect profit margins and our liquidity.
Furthermore, in many instances, customer procurements are dependent on
the availability or continued availability of state or federal government grants
and general tax funding. Such funding may be subject to termination at any time
at the sole discretion of the government body providing or receiving such funds.
Additionally, without regard to termination of funding, government
agencies both domestically and internationally may successfully assert the right
the terminate business or funding relationships with us at their sole discretion
without adequate or any compensation or recourse for us.
VISIONICS RELIES IN PART UPON ORIGINAL EQUIPMENT MANUFACTURERS (OEM) AND
DISTRIBUTION PARTNERS TO DISTRIBUTE ITS PRODUCTS, AND WE MAY BE ADVERSELY
AFFECTED IF THOSE PARTIES DO NOT ACTIVELY PROMOTE VISIONICS' PRODUCTS OR PURSUE
INSTALLATIONS THAT USE ITS EQUIPMENT.
A significant portion of our product revenues comes from sales to
partners including OEMs, automated fingerprint identification system suppliers,
systems integrators, distributors and resellers. Some, but not all, of these
relationships are formalized in written agreements. Even where these
relationships are formalized in written agreements, the agreements are often
terminable with little or no notice and subject to periodic amendment. Visionics
cannot control the amount and timing of resources that our partners devote to
activities on our behalf. At times, these third-party distributors may offer
products of competitors as well.
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Visionics intends to continue to seek strategic relationships to
distribute, license and sell certain of its products. However, we may not be
able to negotiate acceptable relationships in the future and cannot predict
whether current or future relationships will be successful.
LOSS OF SOLE OR LIMITED SOURCE SUPPLIERS MAY RESULT IN DELAYS OR ADDITIONAL
EXPENSES.
Visionics obtains certain components, subassemblies and complete
products from a single source or a limited group of suppliers. Visionics does
not have long-term agreements with any of its suppliers. We will experience
significant delays in manufacturing and shipping of products to customers if we
lose these sources or if supplies from these sources are delayed.
As a result, Visionics may be required to incur additional development,
manufacturing and other costs to establish alternative sources of supply. It may
take several months to locate alternative suppliers, if required, or to re-tool
our products to accommodate components from different suppliers. Visionics
cannot predict if it will be able to obtain replacement components within the
time frames it will require at an affordable cost, or at all. Any delays
resulting from suppliers failing to deliver components or products on a timely
basis in sufficient quantities and of sufficient quality or any significant
increase in the price of components from existing or alternative suppliers could
have a severe negative effect on Visionics' financial results, balance sheet and
stock price.
VISIONICS MAY BE SUBJECT TO LOSS IN MARKET SHARE AND MARKET ACCEPTANCE AS A
RESULT OF MANUFACTURING ERRORS, DELAYS OR SHORTAGES.
Performance failure in our products or certain of our services may
cause loss of market share, delay in or loss of market acceptance, additional
warranty expense or product recall, or other contractual liabilities. The
complexity of certain of the fingerprint and face recognition systems make the
manufacturing and assembly process of such products, especially in volume,
complex. This may in turn lead to delays or shortages in the availability of
certain products, or, in some cases, the unavailability of certain products. The
negative effects of any delay or failure could be exacerbated if the delay or
failure occurs in products or services that provide personal security, secure
sensitive computer data, authorize significant financial transactions or perform
other functions where a security breach could have significant consequences.
If a product or service launch is delayed or is the subject of an
availability shortage because of problems with the ability of Visionics to
manufacture or assemble the product or service successfully on a timely basis,
or if a product or service otherwise fails to meet performance criteria,
Visionics may lose revenue opportunities entirely and/or experience delays in
revenue recognition associated with a product or service in addition to
incurring higher operating expenses during the period required to correct the
defects.
VISIONICS MAY BE SUBJECT TO REPAIR, REPLACEMENT, REIMBURSEMENT AND LIABILITY
CLAIMS FOR PRODUCTS THAT FAIL TO WORK OR TO MEET APPLICABLE PERFORMANCE
CRITERIA.
There is a risk that for unforeseen reasons we may be required to
repair or replace a substantial number of products in use or to reimburse
customers for products that fail to work or meet strict performance criteria.
Visionics attempts to limit remedies for product or service failure to the
repair or replacement of malfunctioning or noncompliant products or services,
and also attempts to exclude or minimize exposure to product and related
liabilities by including in its standard agreements warranty disclaimers and
disclaimers for consequential and related damages as well as limitations on its
aggregate liability. From time to time, in certain complex sale or licensing
transactions, each entity may negotiate liability provisions that vary from such
standard forms. There is a risk that the combined company's contractual
9
provisions may not adequately minimize its product and related liabilities or
that such provisions may be unenforceable. Visionics carries product liability
insurance, but existing coverage may not be adequate to cover potential claims.
FAILURE BY VISIONICS TO MAINTAIN THE PROPRIETARY NATURE OF ITS TECHNOLOGY,
INTELLECTUAL PROPERTY AND MANUFACTURING PROCESSES COULD HAVE A MATERIAL ADVERSE
EFFECT ON ITS BUSINESS, OPERATING RESULTS AND FINANCIAL CONDITION OF VISIONICS
AND ON ITS ABILITY TO COMPETE EFFECTIVELY.
Visionics principally relies upon patent, trademark, copyright, trade
secret and contract law to establish and protect its proprietary rights. There
is a risk that claims allowed on any patents or trademarks that Visionics holds
may not be broad enough to protect its technology. In addition, Visionics'
patents or trademarks may be challenged, invalidated or circumvented and
management cannot be certain that the rights granted thereunder will provide
Visionics with competitive advantages. Moreover, any current or future issued or
licensed patents, or trademarks, or currently existing or future developed trade
secrets or know-how may not afford sufficient protection against competitors
with similar technologies or processes, and the possibility exists that certain
of Visionics' already issued patents or trademarks may infringe upon third party
patents or trademarks or be designed around by others.
In addition, there is a risk that others may independently develop
proprietary technologies and processes, which are the same as, substantially
equivalent or superior to those possessed by Visionics or become available tin
the market at a lower price.
There is a risk that Visionics has infringed or in the future will
infringe patents or trademarks owned by owners, that Visionics will need to
acquire licenses under patents or trademarks belonging to others for technology
potentially useful or necessary to Visionics, and that licenses will not be
available on acceptable terms, if at all.
Visionics may have to litigate to enforce its patents or trademarks or
to determine the scope and validity of other parties' proprietary rights.
Litigation could be very costly and divert management's attention. An adverse
outcome in any litigation may have a severe negative effect on Visionics'
financial results and stock price. To determine the priority of inventions,
Visionics may have to participate in interference proceedings declared by the
United States Patent and Trademark Office or oppositions in foreign patent and
trademark offices, which could result in substantial cost to Visionics and
limitations on the scope or validity of its patents or trademarks.
Visionics also relies on trade secrets and proprietary know-how, which
it seeks to protect by confidentiality agreements with their employees,
consultants, service providers and third parties. There is a risk that these
agreements may be breached, and that the remedies available to Visionics may not
be adequate. In addition, Visionics' trade secrets and proprietary know-how may
otherwise become known to or be independently discovered by others.
AS PART OF ITS BUSINESS STRATEGY, VISIONICS (OR IF VISIONICS IS
ACQUIRED, ITS SUCCESSOR) MAY ACQUIRE COMPANIES OR TECHNOLOGIES MAY RESULT IN
DISRUPTIONS TO THE COMPANY'S BUSINESS.
As part of its business strategy, Visionics (or if Visionics is
acquired, its successor) may acquire assets and businesses principally relating
to or complementary to Visionics' current operations. Digital Biometrics, Inc.
merged with Visionics Technology in February 2001 and changed its name from
Digital Biometrics to Visionics. Other acquisitions and/or mergers by Visionics
will be accompanied by the risks commonly encountered in acquisitions of
companies. These risks include, among other things:
10
* exposure to unknown liabilities of acquired companies;
* higher than anticipated acquisition costs and expenses;
* effects of costs and expenses of acquiring and integrating new
businesses on the operating results and financial condition of the
combined company;
* the difficulty and expense of assimilating the operations and
personnel of the companies;
* disruption of the combined company's ongoing business;
* diversion of management time and attention;
* failure to maximize the combined company's financial and strategic
position by the successful incorporation of acquired technology;
* the inability to implement uniform standards, controls, procedures
and policies;
* loss of key employees and customers as a result of changes in
management;
* the incurrence of amortization expenses; and
* possible dilution to the stockholders of the company.
In addition, geographic distances may make integration of businesses
more difficult. Visionics may not be successful in overcoming these risks or any
other problems encountered in connection with any acquisitions.
IF VISIONICS FAILS TO ATTRACT AND RETAIN QUALIFIED SENIOR EXECUTIVES AND KEY
TECHNICAL PERSONNEL, ITS BUSINESS.
Visionics is dependent in its operations on the continued availability
of the services of its employees, many of whom are individually key to the
future success of the company, and the availability of new employees to
implement Visionics' growth plans. The market for skilled employees is highly
competitive, especially for employees in technical fields. Although Identix'
compensation program is intended to attract and retain the employees required
for Visionics to be successful, there can be no assurance that Visionics will be
able to retain the services of all of the key employees or a sufficient number
to execute its plans, nor can there be any assurances that Visionics will be
able to continue to attract new employees as required.
Visionics personnel may voluntarily terminate their relationship with
Visionics at any time. The process of locating additional personnel with the
combination of skills and attributes required to carry out Visionics' strategy
could be lengthy, costly and disruptive.
If Visionics loses the services of key personnel, or fails to replace
the services of key personnel who depart, the financial results and stock price
of Visionics could be adversely affected. The loss of the services of any key
engineering or other personnel or the failure of Visionics to attract,
integrate, motivate and retain additional key employees could have a material
adverse effect on its business, operating and financial results and stock price.
11
THE SUCCESS OF VISIONICS' STRATEGIC PLAN TO PURSUE SALES IN INTERNATIONAL
MARKETS MAY BE LIMITED BY RISKS RELATED TO CONDITIONS IN THOSE MARKETS.
For the year ended September 30, 2001, Visionics derived approximately
six percent of its products and services revenues from international sales. For
both the three- and six-month periods ended March 31, 2002, Visionics derived
approximately four percent and of its products and services revenues from
international sales. Visionics currently has a subsidiary in the United Kingdom.
There is a risk that Visionics may not be able to successfully market,
sell and deliver Visionics' products in foreign countries, or successfully rely
on supplemental offshore research and development resources.
Risks inherent in marketing, selling and delivering products in foreign
and international markets, include those associated with:
* regional economic conditions;
* delays in or prohibitions on exporting products resulting from
export restrictions for certain products and technologies, including
"crime control" products and encryption technology;
* loss of, or delays in importing products, services and intellectual
property developed abroad, resulting from unstable or fluctuating
social, political or governmental conditions;
* fluctuations in foreign currencies and the U.S. dollar;
* loss of revenue, property (including intellectual property) and
equipment from expropriation, nationalization, war, insurrection,
terrorism, criminal acts and other political and social risks;
* the overlap of different tax structures;
* seasonal reductions in business activity;
* risks of increases in taxes and other government fees; and
* involuntary renegotiations of contracts with foreign governments.
In addition, foreign laws treat the protection of proprietary rights
differently from laws in the Untied States and may not protect Visionics'
proprietary rights to the same extent as U.S. laws. The failure of foreign laws
or judicial systems to adequately protect our proprietary rights or intellectual
property, including intellectual property developed on our behalf by foreign
contractors or subcontractors may have a material adverse effect on our
business, operations, financial results and stock price.
RISKS RELATING TO THIS OFFERING
WE MAY NEVER PAY DIVIDENDS ON OUR COMMON STOCK, IN WHICH EVENT THE ONLY RETURN
ON YOUR INVESTMENT, IF ANY, WILL OCCUR ON THE SALE OF OUR SHARES.
We have not yet paid any dividends on our common stock, and we do not
intend to do so in the foreseeable future. Future earnings, if any, will be used
to fund our operations and growth.
12
LARGE QUANTITIES OF OUR COMMON STOCK MAY BE OFFERED TOGETHER FOR SALE ON THE
MARKET AT THE SAME TIME, WHICH WOULD LIKELY CAUSE OUR STOCK PRICE TO FALL.
As of March 31, 2002, 3,178,350 shares of our common stock were
issuable upon conversion or exercise of outstanding options and warrants.
Substantially all of these shares will be freely tradable upon issuance. If
large quantities of these shares are offered in the market at the same time, the
market price of our stock may be depressed. As of March 31, 2002, there were
28,998,656 shares of our common stock outstanding.
DELAWARE CORPORATE LAW AND OUR STOCKHOLDER RIGHTS PLAN EACH HAVE THE EFFECT OF
DISCOURAGING OR PREVENTING CERTAIN TRANSACTIONS WHICH MIGHT BE BENEFICIAL TO OUR
STOCKHOLDERS.
Section 203 of the Delaware General Corporation Law has the effect of
restricting combinations between our company and certain of our stockholders
without the approval of our Board of Directors. In addition, we have in place a
stockholder rights plan, adopted in 1996, under which our stockholders are
entitled to purchase additional shares of our common stock at a discount from
the market price under certain circumstances. These circumstances include the
purchase of 15 percent or more of the outstanding shares of common stock by a
person or group, or the announcement of tender or exchange offer to acquire 15
percent or more of the outstanding common stock. Section 203 of the Delaware
General Corporation Law and our stockholder rights plan may have the effect of
impeding or preventing certain types of transactions involving a change in
control of our company which could result in our stockholders receiving a
premium for their shares.
RISKS RELATED TO PROPOSED MERGER
WITH IDENTIX INCORPORATED
THE EXCHANGE RATIO IS FIXED, SO THE MARKET VALUE OF THE CONSIDERATION RECEIVED
BY VISIONICS STOCKHOLDERS WILL CHANGE AS THE MARKET PRICE OF IDENTIX COMMON
STOCK GOES UP OR DOWN.
The exchange ratio for the proposed merger with Identix is fixed at
1.3436 shares of Identix common stock for each share of Visionics common stock
and will not be adjusted in the event of changes in the market prices or either
the Identix common stock or the Visionics common stock. If the market price of
Identix common stock changes, the value of the consideration to be received by
the Visionics stockholders in the proposed merger will also change. For
instance, if the market price of Identix common stock decreases, the value of
the consideration to be received by the Visionics stockholders will also
decrease. On the other hand, if the market price of Identix common stock
increases, the value of the consideration to be received by the Visionics
stockholders will increase correspondingly.
The number of shares of Identix common stock to be paid by Identix in
connection with the proposed merger will remain the same whether or not the
market price of Visionics common stock goes up or down. Even if the market price
of Visionics common stock decreases or increases substantially, the number of
shares of Identix common stock issuable for each share of Visionics common stock
will not be adjusted. Neither company may terminate the merger agreement or
elect not to complete the merger because of changes in their stock prices.
INTEGRATION OF VISIONICS AND IDENTIX MAY BE DIFFICULT TO ACHIEVE, WHICH MAY
ADVERSELY AFFECT OPERATIONS.
The proposed merger involves risks related to the integration and
management of technology, operations and personnel of two companies. The
integration of the businesses of Identix and Visionics would be a complex,
time-consuming and expensive process and may disrupt their business if not
13
completed in a timely and efficient manner. Following a merger, Identix and
Visionics must operate as a combined organization utilizing common information
and communications systems, operating procedures, financial controls and human
resources practices.
Identix and Visionics may encounter substantial difficulties, costs and
delays involved in integrating their operations, including:
* potential conflicts between business cultures;
* adverse changes in business focus perceived by third-party
constituencies;
* potential conflicts in distribution, marketing or other important
relationships;
* inability to implement uniform standards, controls, procedures and
policies;
* integration of the research and development and product development
efforts; and
* loss of key employees and/or the diversion of management's attention
from other ongoing business concerns.
In addition, Visionics is co-headquartered in New Jersey and Minnesota,
with offices in five locations, and Identix is headquartered in Northern
California, with offices in nine locations. The geographic distances between the
companies and their respective offices and operations increases the risk that
the integration will not be completed successfully or in a timely and
cost-effective manner. The combined company may not be successful in overcoming
these risks or any other problems encountered in connection with the integration
of the companies.
THE COSTS TO COMPLETE THE PROPOSED MERGER WILL BE SUBSTANTIAL. THESE COSTS AND
THE MANNER OF ACCOUNTING FOR THE MERGER MAY AFFECT THE COMBINED COMPANY'S
REPORTED RESULTS OF OPERATIONS.
It is anticipated that Identix and Visionics will incur approximately
$16 million to $20 million of costs in connection with the proposed merger. Such
amount includes costs associated with combining the businesses of the two
companies, including integration and restructuring costs, and the fees of
financial advisors, attorneys and accountants. A significant portion of these
costs will be charged to expense in the period incurred, reducing the combined
company's earnings or increasing its loss for such period. The remaining costs,
consisting primarily of fees and expenses paid to financial advisors, attorneys
and accountants, will be accounted for as a component of the purchase price and
capitalized as an element of goodwill. Goodwill is required to be tested for
impairment at least annually and the combined company will be required to record
a charge to earnings in the period any impairment of goodwill is determined.
There is a risk that the management of the combined company will not be able to
effectively control the costs associated with the integration of the two
companies or that such costs may be higher than anticipated. The failure to
manage such integration costs effectively could have a material adverse effect
on the business operations, financial results and stock price of the combined
company.
THE MARKET PRICE OF IDENTIX COMMON STOCK COULD DECLINE.
The market price of Identix common stock could decline if:
* the combined company is unable to successfully market Identix'
products and services to Visionics' customers or Visionics' products
and services to Identix customers;
14
* the combined company does not achieve the perceived benefits of the
merger as rapidly as, or to the extent, anticipated by financial or
industry analysts, or such analysts do not perceive the same
benefits to the merger as to Identix and Visionics; or
* the effect of the merger on Identix' financial results is not
consistent with the expectations of financial or industry analysts.
FAILURE TO COMPLETE THE MERGER COULD NEGATIVELY AFFECT IDENTIX AND/OR VISIONICS
STOCK PRICES, FUTURE BUSINESS AND OPERATIONS.
If the merger is not completed for any reason, Identix and Visionics
may be subject to a number of material risks, including the following:
* either Identix or Visionics could be required to pay the other a
termination fee of $12.3 million plus the other's merger-related
expenses if the merger agreement is terminated under certain
circumstances; and
* the parties' costs and expenses related to the merger, which are
substantial, must be paid even if the merger is not completed; in
some cases, either Identix or Visionics could be required to pay the
other's merger-related expenses even if the $12.3 million
termination fee is not payable.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
The matters discussed in this prospectus include or incorporate
forward-looking statements made within the meaning of Section 27A of the U.S.
Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of
1934. You can identify these forward-looking statements by our use of words such
as "intend," "plan," "may," "will," "project," "estimate," "anticipate,"
"believe," "expect," "continue," "potential," "opportunity," and similar
expressions, whether in the negative or affirmative.
As provided for under the Private Securities Litigation Reform Act, we
caution investors that actual results of future operations may differ from those
anticipated in forward-looking statements due to a number of factors, including
our ability to maintain profitability, introduce new products and services,
build profitable revenue streams around new product and service offerings,
maintain loyalty and continued purchasing of our products by existing customers,
execute on customer delivery and installation schedules, collect outstanding
accounts receivable and manage the concentration of accounts receivable and
other credit risks associated with selling products and services to governmental
entities and other large customers, create and maintain satisfactory
distribution and operations relationships with automated fingerprint
identification system vendors, attract and retain key employees, secure timely
and cost-effective availability of product components, meet increased
competition, maintain adequate working capital and liquidity, including the
availability of financing as may be required, and upgrade products and develop
new technologies.
For a more complete description of such factors, see the discussions
under the sections entitled "Risk Factors" in this prospectus and under Item 7
of our Current Report on Form 8-K filed on June 29, 2001 and Item 7 of our
Annual Report on Form 10-K filed with the Securities and Exchange Commission on
December 27, 2001 (and amended by Form 10-K/A filed with the Securities and
Exchange Commission on January 28, 2002).
15
OUR COMPANY
We are a leading provider of identification information systems that
employ "biometric" technology, which is the science of identifying individuals
by measuring distinguishing biological characteristics. Our biometric
identification systems and information technology services enable law
enforcement and other government agencies to identify and manage information
about individuals, and help commercial employers and government agencies to
conduct background checks on applicants for employment or permits. Our product
and service offerings include computer-based fingerprinting and photographic
systems, software tools, multi-media data storage and communications servers,
and the systems integration and software development services required to deploy
and use these systems.
We have evolved from essentially a single-product live scan hardware
supplier to an identification information systems company. We have two
established product lines and two new in various stages of development.
Fingerprint Live Scan - These systems combine patented, high-resolution
optics and specialized hardware and software with industry-standard computers.
They create highly optimized, special-purpose systems which capture, digitize,
print and transmit forensic-grade fingerprints and related data to large-scale
databases, sold by other vendors, and receive return messages on the identity
and background of the individual being checked. Our TENPRINTER(R) and
FingerPrinter CMS live scan systems are used by government agencies, law
enforcement, airports, banks and other commercial institutions in the U.S. to
identify suspects and manage information on individuals, and help commercial
employers and government agencies to conduct background checks on applicants for
employment or permits. Typical customers include: U.S. government agencies, such
as the Immigration and Naturalization Service ("INS") and U.S. Postal Service;
local and state police; United States armed forces; school districts; financial
institutions; utilities and casinos.
FaceIt(R) Face Recognition - FaceIt(R) is an award-winning facial
recognition software engine that allows computers to rapidly and accurately
detect and recognize faces. FaceIt is an enabling technology that enables abroad
range of products and applications built by developers and partners (original
equipment manufacturers (known as "OEMs"), value-added resellers (known as
"VARs") and system integrators).These include enhanced CCTV systems, identity
fraud applications and authentication systems for information security, access
control, travel, banking and e-commerce. Our FaceIt(R) technology product
offerings include software development toolkits, run-time licenses and
application software. FaceIt(R) technology partners include IBM and EDS.
Identification Based Information System ("IBIS") - IBIS is a patented
wireless, real-time mobile identification system that combines expertise in
biometric capture and connectivity. The system is capable of capturing
photographs and forensic quality fingerprints for transmission to law
enforcement and other legacy databases. IBIS is comprised of software tools,
multi-media data storage and communications servers, and the systems integration
and software development services that are required to implement identification
management systems. The IBIS system has been undergoing testing in Hennepin
County, Minnesota and in the cities of Redlands and Ontario in California.
Biometric Network Platform ("BNP") -The BNP is a development stage
technology framework for building scalable biometric solutions. It consists of
network ready elements: hardware components, called Biometric Network Appliances
("BNAs"); programming logic for connecting the BNAs to each other or to standard
security and information systems; and an enabling biometric technology whose
functionality's are encapsulated in the BNA components. The core enabling
biometric technology for the BNP is Visionics' FaceIt(R) engine; however,
eventually we intend the platform to support other biometrics including
16
fingerprint. By combining the different BNAs with application-specific business
logic, a wide range of scalable solutions - such as large database searching,
surveillance and enterprise security - can be easily built.
Visionics Corporation was incorporated in Minnesota in 1985 under the
name C.F.A. Technologies, Inc., and was reincorporated in Delaware in 1986. We
changed our name to Digital Biometrics, Inc. in 1990 and to Visionics
Corporation in February 2001. We are co-headquartered at One Exchange Place,
Jersey City, New Jersey 07302 and 5600 Rowland Road, Minnetonka, Minnesota
55343, and our telephone number is (952) 932-0888.
PROPOSED MERGER WITH IDENTIX INCORPORATED
Visionics has entered into an Agreement and Plan of Merger with Identix
Incorporated. Under the terms of the proposed merger, a subsidiary of Identix
will be merged with and into Visionics, Visionics will become a wholly owned
subsidiary of Identix and each share of Visionics common stock will be converted
into the right to receive 1.3436 shares of Identix common stock. The proposed
merger is subject to approval of the stockholders of each of Visionics and
Identix, regulatory approvals and certain other closing conditions.
Identix is a world leader in designing, developing, manufacturing and
marketing products for the capture and/or comparison of fingerprints for
security, anti-fraud, law enforcement, physical access and other applications.
Identix designs and develops proprietary, cost-effective security products and
solutions for personal identification and verification. Identix offers an array
of Internet and wireless Web secure transaction processing services, and
provides a wide range of applications to markets that include corporate
enterprise security, intranet, extranet, and Internet, wireless Web access and
security, E-commerce, government and law enforcement agencies.
Identix' products and services are classified into three groups: (i)
biometric security ("Security") solutions that verify the identity of an
individual through the unique physical biological characteristics of a
fingerprint including ITRUST, Identix Security software solution that integrates
authentication, access rights and administration as a managed network security
service to safeguard information sharing and data transfer on open wired and
wireless networks; (ii) biometric imaging ("Imaging") solutions that
electronically capture forensic quality fingerprint images that can be
transmitted to Automated Fingerprint Identification Systems; and (iii)
information technology, engineering and consulting services, including the
installation and integration of Identix products primarily to public sector
agencies.
Identix' solutions employ industry leading optical fingerprint capture
technologies, proprietary algorithms and customizable application software
suites. Identix' technologies and intellectual property enable it to produce
Security and Imaging solutions for commercial, and government customers
worldwide. Identix provides information technology, engineering and consulting
services through Identix Public Sector, Inc., Identix' wholly owned subsidiary.
Identix also formed a joint venture, Sylvan/Identix Fingerprinting Centers, LLC,
in October 1997 with Sylvan Learning Systems, Inc. for the purpose of providing
fingerprinting services for a variety of commercial applications.
USE OF PROCEEDS
Although we will receive the exercise price of the warrants held by the
selling stockholder, we will not receive any proceeds from the sale of our
common stock by the selling stockholder.
17
SELLING STOCKHOLDER
The following table sets forth the number of shares of common stock
beneficially owned by the selling stockholder as of May 30, 2002, and after
giving effect to this offering.
Percentage
Shares Percentage Number of Beneficial
Beneficially Beneficial Shares Offered Ownership
Owned Before Ownership by Selling After
Name Offering Before Offering Stockholder Offering
- ---- -------- --------------- ----------- --------
KA Investments, LDC ............ 75,000(1) * 75,000 *
- ----------------
* Indicates an amount less than 1 percent.
(1) Represents an aggregate of 75,000 shares issuable upon the exercise
(at a price of $2.50 per share) of warrants issued on December 1,
1997; March 11, 1998; June 12, 1998; August 14, 1998; and November
23, 1998 in connection with offerings of 8% Convertible
Subordinated Debentures. The selling stockholder's resale of these
shares is being registered pursuant to registration rights granted
to the selling stockholder in connection with the convertible
subordinated debenture offering.
18
PLAN OF DISTRIBUTION
The selling stockholder will act independently of us in making
decisions with respect to the timing, manner and size of each sale.
The selling stockholder and any of its pledgees, assignees and
successors-in-interest may, from time to time, sell any or all of its shares of
common stock on any stock exchange, market or trading facility on which the
shares are traded or in private transactions. These sales may be at fixed or
negotiated prices. The selling stockholder may use one or more of the following
methods when selling shares:
* ordinary brokerage transactions and transaction in which the
broker-dealer solicits purchasers;
* block trades in which the broker-dealer will attempt to sell the
shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction;
* purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
* an exchange distribution in accordance with the rules of the
applicable exchange;
* privately-negotiated transactions;
* broker-dealers may agree with the selling stockholders to sell a
specified number of such shares at a stipulated price per share;
* a combination of any of the foregoing methods of sale; and
* any other method permitted pursuant to applicable law.
The selling stockholder may also sell shares under Rule 144 under the
Securities Act, if available, rather than under this prospectus.
The selling stockholder may also pledge its shares to its brokers under
the margin provisions of customer agreements. If the selling stockholder
defaults on a margin loan, the broker may, from time to time, offer and sell the
pledged shares.
Broker-dealers engaged by the selling stockholder may arrange for other
broker-dealers to participate in sales. Broker-dealers may receive commissions
or discounts from the selling stockholder, or, if any broker-dealer acts as
agent for the purchase of shares, from the purchaser, in amounts to be
negotiated. The selling stockholder does not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
The selling stockholder and any broker-dealers or agents that are
involved in selling its shares may be deemed to be "underwriters" within the
meaning of the Securities Act in connection with such sales. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
Because the selling stockholder may be deemed to be an "underwriter"
within the meaning of Section 2(11) of the U.S. Securities Act of 1933, the
selling stockholder will be subject to the prospectus delivery requirements of
the U.S. Securities Act of 1933. We have informed the selling stockholder that
the anti-manipulative provisions of Regulation M under the U.S. Securities
Exchange Act of 1934 may apply to its sales in the market.
19
We are required to pay all fees and expenses incident to the
registration of the shares owned by the selling stockholder, including the
selling stockholder's reasonable expenses in connection with the registration,
but excluding discounts, commissions, fees of underwriters, selling brokers,
dealer managers or similar securities industry professionals. We have agreed to
indemnify the selling stockholder against certain losses, claims, damages and
liabilities, including liabilities under the Securities Act.
LEGAL OPINIONS
The validity of our common stock will be passed upon for us by Maslon
Edelman Borman & Brand, LLP, Minneapolis, Minnesota. Any underwriters will be
represented by their own legal counsel.
EXPERTS
The consolidated financial statements and schedules of Visionics
Corporation as of September 30, 2001 and 2000 and for each of the years in the
three-year period ended September 30, 2001 have been incorporated by reference
herein, in reliance upon the reports of KPMG LLP, independent auditors,
incorporated by reference herein, and upon the authority of said firm as experts
in accounting and auditing.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. Our SEC filings are available to the public over
the Internet at the SEC's web site at http://www.sec.gov. You may also read and
copy any document we file with the SEC at its public reference facilities at 450
Fifth Street, N.W., Washington, D.C. 20549; 233 Broadway, New York, New York
10239; and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. You can also obtain copies of the documents at prescribed
rates by writing to the Public Reference Section of the SEC at 450 Fifth Street,
N.W., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of the public reference facilities.
We "incorporate by reference" into this prospectus the information we
file with the SEC, which means that we can disclose important information to you
by referring you to those documents. The information incorporated by reference
is an important part of this prospectus. We incorporate by reference the
documents listed below and any filings we make with the SEC under Sections
13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 while this
registration statement is effective:
* Annual Report on Form 10-K for the year ended September 30, 2001,
filed with the SEC on December 27, 2001 and amended on Form 10-K/A
filed with the SEC on January 28, 2002;
* Quarterly Report on Form 10-Q for the three months ended December
31, 2001, filed with the SEC on February 14, 2002;
* Current Report on Form 8-K dated February 22, 2002 filed with the
SEC on March 7, 2002;
* Quarterly Report on Form 10-Q for the three months ended March 31,
2002, filed with the SEC on May 14, 2002;
20
* The description of our common stock contained in our Form 8-A filed
on September 29, 1990; and
* The description of our common share purchase rights contained in our
Form 8-A filed on May 10, 1996.
The information in this prospectus about Visionics is not comprehensive
and you should also read the information in the documents incorporated by
reference into this prospectus. Information that we file later with the SEC and
that is incorporated by reference into this prospectus will automatically update
and supersede information in this prospectus.
You may request a copy of any or all of the documents incorporated by
reference in this prospectus at no cost, by writing to or telephoning us at the
following address:
Visionics Corporation
5600 Rowland Road
Minnetonka, Minnesota 55343-4315
Attention: Chief Financial Officer
(952) 932-0888
The registration statement that contains this prospectus (including the
exhibits to the registration statement) contains additional information about
our company and the securities offered under this prospectus. That registration
statement can be read at the SEC web site or at the SEC offices mentioned above.
You should rely only on the information included or incorporated by
reference in this prospectus or any prospectus supplement. We have not
authorized anyone else to provide you with different information. We may only
use this prospectus to sell securities if we also deliver a prospectus
supplement. We are only offering these securities in states where the offer is
permitted. You should not assume that the information in this prospectus or the
prospectus supplement is accurate as of any date other than the dates on the
front of those documents. Information on our Web site is not a part of this
prospectus or a prospectus supplement.
21
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following sets forth expenses, other than underwriting fees and
commissions, expected to be borne by the Registrant in connection with the
distribution of the securities being registered:
Securities and Exchange Commission registration fee.............$ 70
Accounting fees and expenses ................................... 2,000
Nasdaq Listing Fee.............................................. 2,000
Legal fees and expenses ........................................ 2,000
Miscellaneous expenses ......................................... 1,000
-------
Total .................................................$ 7,070
=======
All amounts listed above, except for the SEC registration fee and the
Nasdaq Listing Fee, are estimates. All expenses of the distribution, other than
selling discounts, commissions and legal fees and expenses incurred separately
by the selling stockholders, will be paid by the Registrant.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant's Certificate of Incorporation, as amended, provides
that directors of the Registrant shall not be liable to the Registrant or its
stockholders for monetary damages for breach of fiduciary duties as a director.
The Registrant's bylaws provide that the Registrant shall indemnify to the
fullest extent permitted by law any person made or threatened to be made a party
to any action, suit or proceeding, whether criminal, civil, administrative or
investigative (a "Legal Action"), whether such Legal Action be by or in the
right of the corporation or otherwise, by reason of the fact that such person is
or was a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or any other enterprise. In addition, the
Registrant's Bylaws provide for indemnification of any person made or threatened
to be made a party to any Legal Action by reason of the fact that such person is
or was a director, officer, employee or agent of the Registrant and is or was
serving as a fiduciary of, or otherwise rendering services to, any employee
benefit plan of or relating to the Registrant.
Section 145 of the Delaware General Corporation Law generally provides
that a corporation is in certain circumstances permitted, and in other
circumstances may be required, to indemnify its directors, officers and
controlling persons against certain expenses (including attorneys' fees) and
other amounts paid in connection with certain threatened, pending or completed
civil, criminal, administrative or investigative actions, suits or proceedings
(including certain civil actions and suits that may be instituted by or in the
right of the Registrant) in which such persons were or are parties, or are
threatened to be made parties, by reason of the fact that such persons were or
are directors of the Registrant. Section 145 also permits the Registrant to
purchase and maintain insurance on behalf of its directors and officers against,
or incurred by, such persons in their capacities as directors or officers of the
Registrant or which may arise out of their status as directors or officers of
the Registrant, whether or not the Registrant would have the power to indemnify
such persons against such liability under the provisions of such Section. To
date, the Registrant has purchased such insurance.
The Registrant has entered into an indemnification agreement with each
of its directors pursuant to which the Registrant has agreed to indemnify and
hold harmless such individuals to the full extent permitted by law against all
costs, charges, and expenses (including attorney fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by them.
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ITEM 16. EXHIBITS
Exhibit Number Description
- -------------- -----------
4.1 Certificate of Incorporation, as amended through February 15,
2001, incorporated by reference to Exhibit 3.1 to the
Registrant's Registration Statement on Form S-1, File No.
33-58650, effective March 11, 1993, Exhibit 3.1 to the
Registrant's Report on Form 10-Q for the quarter ended March
31, 1998, Exhibit 3.2 to the Registrant's Registration
Statement on Form S-4, File No. 333-51526, filed December 8,
2000 and Exhibit 3.4 to the Current Report on Form 8-K filed
February 27, 2001 File No. 18856).
4.2 Bylaws, as amended (incorporated by reference to Exhibit 3.2
to the Registrant's Annual Report on Form 10-K for the year
ended September 30, 1999).
4.3 Specimen Common Stock Certificate (incorporated by reference
to the Registrant's Registration Statement on Form S-1,
effective August 14, 1991, file No. 33-41080).
4.4 Rights Agreement, dated May 2, 1996, between the Registrant
and Norwest Bank, Minnesota, National Association, as Rights
Agent (incorporated by reference to Exhibit 4.3 to the
Registrant's Registration Statement on Form 8-A filed on May
10, 1996, File No. 0-18856).
5.1 Opinion of Maslon Edelman Borman & Brand, LLP regarding the
legality of the securities.
23.1 Consent of KPMG LLP.
23.2 Consent of Maslon Edelman Borman & Brand, LLP (contained in
Exhibit 5.1).
24.1 Powers of Attorney (included in the signature pages hereto).
ITEM 17. UNDERTAKINGS
The Registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made,
a post-effective amendment to this Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of the Registration Statement (or the most
recent post-effective amendment thereof) which, individually
or in the aggregate, represent a fundamental change in the
information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered)
and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of a
prospectus filed with the Commission pursuant to Rule 424(b)
if, in the aggregate, the changes in volume and price
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represent no more than a 20 percent change in the maximum
aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration
statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in this Registration
Statement or any material change to such information in this
Registration Statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in this Registration Statement;
2. That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof;
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;
4. That, for purposes of determining any liability under the Securities
Act of 1933, each filing of the Registrant's annual report pursuant to Section
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 this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof;
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions or otherwise, the Registrant
has been informed that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer nor controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of their counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by them is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
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SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Minnetonka and the State of Minnesota, on the 31st
day of May, 2002.
VISIONICS CORPORATION
By: /s/ Robert F. Gallagher
--------------------------------------------
Robert F. Gallagher
Chief Financial Officer
(Principal Accounting and Financial Officer)
POWER OF ATTORNEY
Each of the undersigned officers and directors of Visionics Corporation
constitutes and appoints Robert F. Gallagher and Philip J. Tilton and each or
any of them, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this registration statement and any subsequent registration
statement for the same offering which may be filed under Rule 462(b) increasing
the number of securities for which registration is sought, and to file the same,
with all exhibits thereto and other documents in connection therewith, with the
United States Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to enable the
registrant to comply with the Securities Act and all requirements of the United
States Securities and Exchange Commission, as fully to all intents and purposes
as he might or could do in person, thereby ratifying and confirming all that
said attorneys-in-fact and agents or any of them, or their or his substitutes or
substitute, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed on the 31st day of May, 2002, by the
following persons in the capacities indicated.
NAME TITLE
---- -----
/s/ Joseph J. Atick Chairman of the Board, President and Chief
- ----------------------------- Executive Officer (Principal Executive Officer)
Joseph J. Atick
/s/ C. McKenzie Lewis III Director
- -----------------------------
C. McKenzie Lewis III
/s/ George Latimer Director
- -----------------------------
George Latimer
/s/ John E. Haugo Director
- -----------------------------
John E. Haugo
/s/ John E. Lawler Director
- -----------------------------
John E. Lawler
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EXHIBIT INDEX
Exhibit Number Description
- -------------- -----------
4.1 Certificate of Incorporation, as amended through February 15,
2001, incorporated by reference to Exhibit 3.1 to the
Registrant's Registration Statement on Form S-1, File No.
33-58650, effective March 11, 1993, Exhibit 3.1 to the
Registrant's Report on Form 10-Q for the quarter ended March
31, 1998, Exhibit 3.2 to the Registrant's Registration
Statement on Form S-4, File No. 333-51526, filed December 8,
2000 and Exhibit 3.4 to the Current Report on Form 8-K filed
February 27, 2001 File No. 18856).
4.2 By-laws, as amended (incorporated by reference to Exhibit 3.2
to the Registrant's Annual Report on Form 10-K for the year
ended September 30, 1999).
4.3 Specimen Common Stock Certificate (incorporated by reference
to the Registrant's Registration Statement on Form S-1,
effective August 14, 1991, file No. 33-41080).
4.4 Rights Agreement, dated May 2, 1996, between the Registrant
and Norwest Bank, Minnesota, National Association, as Rights
Agent (incorporated by reference to Exhibit 4.3 to the
Registrant's Registration Statement on Form 8-A filed on May
10, 1996, File No. 0-18856).
5.1 Opinion of Maslon Edelman Borman & Brand, LLP regarding the
legality of the securities.
23.1 Consent of KPMG LLP.
23.2 Consent of Maslon Edelman Borman & Brand, LLP (contained in
Exhibit 5.1).
24.1 Powers of Attorney (included in the signature pages hereto).
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