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As Filed With the Securities and Exchange Commission on January 10, 1997
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
YIELDUP INTERNATIONAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 77-0341206
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
117 EASY STREET
MOUNTAIN VIEW, CALIFORNIA 94043
(415) 964-0100
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
RAJ MOHINDRA
YIELDUP INTERNATIONAL CORPORATION
117 EASY STREET
MOUNTAIN VIEW, CALIFORNIA 94043
(415) 964-0100
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
DOUGLAS J. REIN, ESQ.
SCOTT M. STANTON, ESQ.
GRAY CARY WARE & FREIDENRICH
400 HAMILTON AVENUE
PALO ALTO, CALIFORNIA 94301
(415) 833-2000
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: After the
effective date of this Registration Statement as determined by market
conditions.
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/
CALCULATION OF REGISTRATION FEE
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<CAPTION>
==============================================================================================================================
Proposed Proposed Maximum
Amount Maximum Offering Aggregate Offering
Title of Securities to be Price Per Unit * Price * Amount of
to be Registered Registered Registration Fee
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Class A Warrants 572,750 $ 2.97 $ 1,701,067.50 $ 515.48
Class B Warrants 450,000 $ 1.97 $ 886,500.00 $ 268.64
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL $ 2,587,567.50 $ 784.12
==============================================================================================================================
</TABLE>
* Estimated, pursuant to Rule 457(c), solely for the purpose of calculating
the registration fee based on the average of the high and low prices for
the securities, as reported on the Nasdaq Small Cap Market on January 6,
1997.
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 WHICH 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.
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PROSPECTUS
572,750 REDEEMABLE CLASS A WARRANTS
450,000 REDEEMABLE CLASS B WARRANTS
YIELDUP INTERNATIONAL CORPORATION
This Prospectus relates to 572,750 Redeemable Class A Warrants ("Class A
Warrants") and 450,000 Redeemable Class B Warrants ("Class B Warrants") of
YieldUP International Corporation, a Delaware corporation (the "Company"), held
by 62 holders (the "Selling Securityholders"). The Redeemable Class A Warrants
and the Redeemable Class B Warrants are referred to herein collectively as the
"Warrants." Each Class A Warrant entitles the holder to purchase, at an exercise
price of $7.00, subject to adjustment, one share of Common Stock and one Class B
Warrant, and each Class B Warrant entitles the holder to purchase, at an
exercise price of $11.00, subject to adjustment, one share of Common Stock. The
Warrants are exercisable at any time through November 21, 2000. The Warrants are
subject to redemption by the Company for $.05 per Warrant, upon at least 30
days' written notice, if (with respect to the Class A Warrants) the average
closing bid price of the Common Stock exceeds $9.80 per share and (with respect
to the Class B Warrants) if the average closing bid price of the Common Stock
exceeds $15.40 per share (subject to adjustment in each case), for 30
consecutive business days within 15 days of the date of the notice of
redemption. The Company will not receive any of the proceeds from the sale of
the Warrants by the Selling Securityholders.
The Warrants offered by this Prospectus may be sold from time to time by
the Selling Securityholders or by their transferees. The distribution of the
Warrants offered hereby by the Selling Securityholders may be effected in one or
more transactions that may take place on the over-the-counter market, including
ordinary brokers' transactions, privately negotiated transactions or through
sales to one or more dealers for resale of such securities as principals, at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. Usual and customary or
specifically negotiated brokerage fees or commissions may be paid by the Selling
Securityholders.
The Selling Securityholders, and intermediaries through whom such
securities are sold, may be deemed underwriters within the meaning of the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
securities offered, and any profits realized or commissions received may be
deemed underwriting compensation.
AN INVESTMENT IN THESE SECURITIES INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS BEGINNING ON PAGE 5."
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
The date of this Prospectus is January 10 , 1997.
No dealer, salesman or other person has been authorized to give any
information or to make any representation not contained in this Prospectus and,
if given or made, such information or representation must not be relied upon as
having been authorized by the Company or the Selling Securityholder. This
Prospectus does not constitute an offer to sell or solicitation of an offer to
buy any of these securities offered hereby in any jurisdiction to any person to
whom it is unlawful to make such offer in such jurisdiction.
AVAILABLE INFORMATION
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The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith, files periodic reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). Such
reports, proxy statements and other information may be inspected and copied at
the public reference facilities maintained by the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549 and at the Regional Offices of the
Commission at 230 South Dearborn Street, Chicago, Illinois 60604; and at 75 Park
Place, New York, New York 10007. In addition, copies of such material can also
be obtained at prescribed rates from the Public Reference Section of the
Commission at its principal office at 450 Fifth Street, N.W., Washington, D.C.
20549. The Commission maintains a World Wide Web site that contains reports,
proxy and information statements and other information regarding registrants
that file electronically with the Commission. The address of the site is
http://www.sec.gov. The Company's Common Stock, Class A Warrants and Class B
Warrants are quoted for trading on the Nasdaq SmallCap Market, and reports,
proxy statements and other information concerning the Company may be inspected
at the offices of the National Association of Securities Dealers, Inc., 9513 Key
West Avenue, Rockville, Maryland 20850.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents are incorporated by reference herein and made a
part hereof:
(1) The Company's Annual Report on Form 10-KSB for the fiscal year
ended December 31, 1995 filed with the Commission on March 28, 1996.
(2) The Company's Quarterly Report on Form 10-QSB for the quarter ended
March 31, 1996 filed with the Commission on April 30, 1996.
(3) The Company's Quarterly Report on Form 10-QSB for the quarter ended
June 30, 1996 filed with the Commission on August 7, 1996.
(4) The Company's Quarter Report on Form 10-QSB for the quarter ended
September 30, 1996 filed with the Commission on October 31, 1996.
(5) All other reports filed pursuant to Section 13(a) or 15(d) of the
Exchange Act since the end of the fiscal year ended December 31, 1995.
(6) The portions of the registration statement on Form 8-A filed by the
Company pursuant to the Securities Exchange Act of 1934 which contains a
description of the Common Stock, the Class A Warrants and the Class B Warrants.
(7) All reports filed by the Company pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to
the termination of the offering made by this Prospectus. Such subsequently filed
reports are deemed to be incorporated herein by reference and to be a part
hereof from the date of the filing thereof.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon oral or written request, a copy of any or all of
the foregoing documents incorporated herein by reference (other than exhibits to
such documents unless such exhibits are specifically incorporated by reference
into the information that this Prospectus incorporates). Written or telephone
requests should be
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directed to Mr. Scott Gibson, Chief Financial Officer, YieldUP International
Corporation, 117 Easy Street, Mountain View, California, 94043, telephone number
(415) 964-0100.
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PROSPECTUS SUMMARY
This summary is qualified in its entirety by the information included
elsewhere in this Prospectus and the detailed information and financial
statements appearing in the documents incorporated in this Prospectus by
reference. All references to the terms "YieldUP" and the "Company" in this
Prospectus refer to YieldUP International Corporation.
The Company
YieldUp develops, manufactures and markets equipment designed to
improve semiconductor manufacturing yields by cleaning, rinsing and drying
in-process silicon wafers at several steps in the wafer fabrication process.
Based on the results of customer evaluations of its products, the Company
believes its newly-developed technology allows more thorough and efficient
cleaning, rinsing and drying of wafers than conventional approaches and that the
products based on this technology may enable manufacturers to obtain substantial
improvements in the percentage of good chips produced, or yield.
The Company's products are designed to reduce wafer particle
contamination, stains, surface roughness and other defects that reduce
integrated circuit (IC) yields with a cost-effective, integrated cleaning,
rinsing and drying system using filtration technology, optimized rinsing
options, no mechanical motion and reduced use of environmentally hazardous
materials.
The Company is marketing it products for application at several points
in the IC fabrication process, including prior to deposition, prior to
photolithography and following etching. The Company believes that there are
numerous sites within typical semiconductor manufacturing facilities where
manufacturers could reduce contamination and improve IC yields by replacing or
retrofitting existing equipment with the Company's products.
YieldUp was incorporated in California in June 1993 and reincorporated
in Delaware in September 1995. The Company's principal executive offices are
located at 117 Easy Street, Mountain View, California 94043, and its telephone
number is (415) 964-0100.
The Offering
<TABLE>
<S> <C>
Securities Offered .................................. 572,750 Class A Warrants and
450,000 Class B Warrants
The Selling Securityholders ......................... 62 existing holders of the Warrants
Capital Stock Outstanding(1) ........................ 1,495,000 shares of Common Stock.
1,912,111 shares of Class A Common Stock.
Warrants Outstanding(1) ............................. 2,215,000 Class A Warrants
1,945,000 Class B Warrants
</TABLE>
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<TABLE>
<S> <C>
Plan of Distribution ................................ The shares offered hereby may be sold from time to time
in one or more transactions, at a fixed offering price,
at varying prices reflecting those prevailing on the
Nasdaq SmallCap Market at the time of such sales or at
negotiated prices.
Risk Factors ........................................ Purchase of the Warrants involves a high degree of risk
and should not be made by investors who cannot afford
the loss of their entire investment. See "Risk Factors."
Nasdaq Symbols
Common Stock ........................................ YILD
Class A Warrants .................................... YILDW
Class B Warrants .................................... YILDZ
</TABLE>
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(1) As of January 6, 1997.
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RISK FACTORS
An investment in the Warrants offered hereby involves a high degree of
risk. In addition to the other information in this Prospectus, the following
risk factors should be considered carefully in evaluating the Company and its
Business before purchasing the Warrants offered by this Prospectus.
LIMITED OPERATING HISTORY
The Company was founded in June 1993, has a limited operating history.
In June 1994, the Company changed its focus from providing consulting services
for IC manufacturers to the development, marketing and selling of semiconductor
manufacturing equipment. The Company does not expect consulting services to
provide significant revenues in the future. There can be no assurance that the
Company will generate significant revenues, if any, in the future from the sales
of its products or services.
The Company's proposed operations are subject to numerous risks
associated with establishing any new business, including unforeseeable expenses,
delays and complications, as well as specific risks of the semiconductor
equipment industry. There can be no assurance that the Company will achieve
profitable operations.
HISTORY OF OPERATING LOSSES; NEED FOR ADDITIONAL FINANCING
The Company has experienced significant operating losses since its
inception in June 1993. As of September 30, 1996, the Company's accumulated
deficit was approximately $4.7 million. The Company expects that it may incur
operating losses over at least the next year. Such losses have been and will
continue to be principally the result of the various costs associated with the
Company's product development activities. The Company will be required to seek
additional capital to continue its operations, which may result in dilution to
holders of the Company's securities. The Company has no commitments for any
future funding, and there can be no assurance that the Company will be able to
obtain additional capital in the future. The existence of the Warrants may
complicate future capital raising activities. If the Company is unable to obtain
the necessary capital, it will be necessary to significantly curtail its
activities or cease operation.
DEPENDENCE ON PROPRIETARY TECHNOLOGY; EXPENSE AND RISK OF PATENT LITIGATION
The Company relies on patent, trade secret and copyright protection for
its products and technology. The Company has obtained two United States patents
relating to its products and technologies and has filed additional U.S. and
foreign patent applications. The process of obtaining patents can be expensive
and there can be no assurance that the patent applications will result in the
issuance of patents, that any issued patents will provide the Company with
meaningful competitive advantages, or that challenges will not be issued against
the validity or enforceability of any patent issued to the Company.
The Company also relies on trade secrets and proprietary technology
that it seeks to protect, in part, through confidentiality agreements with
employees, consultants and other parties. There can be no assurance that these
agreements will not be breached, that the Company will have adequate remedies
for any breach, or that the Company's trade secrets will not otherwise become
known to or independently developed by others.
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In the absence of significant patent or other proprietary protection,
competitors may be able to copy the Company's technology or design approaches,
replicate its processes or gain access to its trade secrets. Moreover, there can
be no assurance that competitors will not be able to develop technologies
similar to or more advanced than the Company's or design around any patented
aspects of the Company's products or technology. No assurance can be given that
the Company's current or future products will not infringe on the patents of
others.
There has been substantial litigation regarding patent and other
intellectual property rights in semiconductor-related industries. Further
commercialization of the Company's products could provoke additional claims of
infringement from third parties. In the future, litigation may be necessary to
enforce patents issued to the Company, if any, to protect trade secrets or
know-how owned by the Company or to defend the Company against claimed
infringement of the rights of others and to determine the scope and validity of
the proprietary rights of others. Any such litigation would likely result in
substantial cost and diversion of effort by the Company, which by itself could
have a material adverse effect on the Company's business, financial condition
and operating results. Further, adverse determinations in such litigation could
result in the Company's loss of proprietary rights, subject the Company to
significant liabilities to third parties, require the Company to seek licenses
from third parties or prevent the Company from manufacturing or selling its
products, any of which could have a material adverse effect on the Company's
business, financial condition and results of operations.
CFM Technologies, Inc. and CFMT, Inc. (collectively "CFM") filed a
complaint against the Company in the United States District Court for the
District of Delaware in September 1995. The complaint alleges that the drying
process incorporated in certain of the Company's products infringes a patent
held by CFM. The Company is investigating the CFM patent in issue and, after
consultation with patent counsel and on the basis of its review to date,
believes that its drying process does not infringe that patent. However,
litigation is inherently uncertain, and there can be no assurance that the
Company will not, as a result of this litigation, suffer a material adverse
effect on its business or financial condition. The Company expects that the CFM
litigation will result in substantial additional costs and diversion of effort
by the Company which could continue to materially adversely affect the Company.
The CFM litigation and any other such litigation could also continue to delay or
impede market acceptance of the Company's products. A decision adverse to the
Company in such litigation could result in substantial damages payable by the
Company and could support the issuance of an injunction prohibiting further
sales by the Company or some or all of its products. Because the Company relies
on a single product family for the substantial majority of its revenues, any
successful challenge by other parties to the Company's right to use its designs
could potentially render the Company insolvent and jeopardize its ability to
continue as a viable concern.
INTENSE INDUSTRY COMPETITION; UNPROVEN TECHNOLOGY
There is intense competition in the semiconductor equipment market. The
Company's lack of resources and proven products makes it extremely vulnerable to
competition from larger companies, many of which have significantly greater
financial, employee, product development and marketing resources. Leading
competitors have proven products which can provide them a significant advantage
over the Company because the Company's technology has not been widely deployed
and therefore presents potential customers with uncertainty not associated with
existing equipment. In addition, many semiconductor manufacturers are reluctant
to choose small companies as key suppliers due to concerns about long term
viability and product support. There can be no assurance that the Company will
overcome these disadvantages.
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Competition for the Company's products currently comes from makers of
traditional and new cleaning, rinsing and drying equipment. There can be no
assurance that these competitors will not develop new products or improve their
existing products which, when combined with their existing market presence,
would make the Company's products obsolete or unmarketable. Any such development
would have a material adverse effect on the Company. There also can be no
assurance that the Company will be able to penetrate the wet processing
equipment market and convince semiconductor manufacturers to install the
Company's systems either directly or through retrofitting in place of existing
equipment. Additional competition for the Company's products also currently
comes from a large number of small companies making cleaning, rinsing and drying
equipment which is less expensive than the Company's products. Because the
Company's products sell for significantly higher prices than such products, the
Company may not be able to compete effectively against them without lowering its
prices.
The Company also expects that competition may arise from new
competitors and from new technological approaches adopted by new and existing
competitors. Because of the increasing focus on yield management in the
semiconductor manufacturing industry, equipment manufacturers are likely to put
an increased emphasis on contaminant reduction. Thus, competitive technologies
or new manufacturing techniques may be developed which could make the Company's
products obsolete, thereby materially adversely affecting the Company. If the
Company is unable to respond to the challenges of competition, including changes
in cleaning, rinsing and drying or semiconductor manufacturing processes, there
can be no assurance that the Company would be able to achieve or maintain
profitability at a level required to support its survival or growth.
RELIANCE ON SINGLE PRODUCT FAMILY
The Company anticipates that the substantial majority of its future
revenues will come from sales of its cleaning, rinsing and drying systems.
Should the demand for, or pricing of, the Company's products decline due to
increased competitive pressure, the introduction of superior systems or
processes, changes in the semiconductor industry or other factors, the Company's
business, financial condition and results of operations would be materially
adversely affected. The ability of the Company to diversify its operations
through the introduction and sale of new products and broader acceptance of its
cleaning, rinsing and drying systems is dependent on the success of the
Company's continuing research, product development and engineering activities,
as well as its marketing efforts. No assurance can be given that the Company
will be able to develop, acquire, introduce or market new products in a timely
or cost-effective manner or that any new products or improvements will achieve
market acceptance or result in acceptable margins. Accordingly, the Company will
be dependent on overall market acceptance of its products.
FLUCTUATIONS IN QUARTERLY OPERATING RESULTS; CHARGE TO EARNINGS
The Company expects to derive a substantial portion of its revenues
from the sale of a relatively small number of systems, which typically range in
purchase price from approximately $50,000 to $500,000. As a result, a small
reduction in the number of systems shipped in a quarter could have a material
adverse effect on the Company's revenues and results of operations for that
quarter. A delay in shipment near the end of a particular quarter, due to, for
example, unanticipated shipment rescheduling or cancellation, supplier delays in
delivery of component parts or unexpected manufacturing difficulties experienced
by the Company, may cause financial results in a particular quarter to fall
significantly below the Company's expectations and may materially adversely
affect the Company's results of operations for such quarter.
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In addition, the Company's need for continued investment in research,
development, engineering, marketing, customer service and support capabilities
will limit the Company's ability to reduce expenses in response to any such
decrease in sales. Moreover, because customer purchase orders are subject to
cancellation or rescheduling by the customer, backlog at any particular date is
not necessarily representative of actual sales for any succeeding period. If the
Company's anticipated level of revenues is not achieved for a particular period,
the Company's operating results could be adversely affected by its inability to
reduce costs. Because the Company builds certain subassemblies according to
forecast, a reduction in customer orders would also result in excessive
inventories which could adversely affect the Company's results of operations and
liquidity. The impact of these and other factors on the Company's operating
results in any future period cannot be accurately forecast.
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LENGTHY SALES CYCLE
Sales of the Company's products have been, and are expected to continue
to be, characterized by a relatively long sales cycle due to such factors as the
substantial time required by potential customers for technical evaluation of the
Company's products prior to purchase, high cost and the critical roles they will
play in the semiconductor device fabrication process. Sales of the Company's
systems may also depend upon the decision of a prospective customer to upgrade
the equipment in its existing fabrication facilities or to open new facilities,
which typically involves a significant capital commitment. The Company believes
that the sales cycle will continue to be lengthy as certain of its anticipated
customers centralize purchasing decisions, which is expected to intensify the
evaluation process and require additional sales and marketing expenditures by
the Company.
CYCLICALITY OF SEMICONDUCTOR MANUFACTURING INDUSTRY
The semiconductor industry generally, and the semiconductor equipment
industry in particular, is highly cyclical and has historically experienced
periodic and often prolonged downturns. Downturns in the semiconductor industry
as well as changes in or uncertainty regarding technology, have frequently had a
severe and adverse effect on the semiconductor industry's demand for wafer
processing equipment. The Company's success will be dependent upon the ability
and willingness of manufacturers of semiconductor devices to make substantial
capital expenditures, which in turn will be largely dependent upon the market
demand for ICs and products using ICs produced by such manufacturers. No
assurance can be given that the Company will be able to develop or market any
products to meet the needs of such manufacturers or that such manufacturers will
be willing to make the capital expenditures necessary to acquire the Company's
products.
NEED TO DEVELOP NEW PRODUCTS AND TECHNOLOGIES
Semiconductor manufacturing equipment and processes are subject to
rapid technological changes and product obsolescence. The Company believes that
its future success will depend in part upon its ability to develop and enhance
its current products and develop new products to meet such anticipated
technological changes. To the extent products developed by the Company are based
upon anticipated changes, sale of such products may be adversely effected if
other technology becomes accepted in the industry. As a result of declining
orders for their existing products, manufacturers in the semiconductor equipment
industry experience significant quarterly fluctuations in operating results and
must replace such orders with orders for new products to achieve or maintain
profitability. If the Company does not successfully introduce new products or
enhanced versions of its current products in a timely manner, any competitive
position the Company may develop could be lost and the Company's sales, if any,
would be reduced. There can be no assurance that the Company will be able to
develop and introduce enhanced or new products which satisfy customer needs and
achieve market acceptance. The failure of the Company to implement a successful
research and development program would have a material adverse effect upon its
business and prospects.
DEPENDENCE ON KEY PERSONNEL; MANAGEMENT OF EXPANDING OPERATIONS
The Company's success will, to a large extent, depend upon the
continued services of Raj Mohindra, President and Chief Executive Officer, and
Suraj Puri, Vice President and Chief Technical Officer. The loss of services of
any of these executive officers would materially and adversely affect the
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Company. The Company does not have employment agreements with any of its key
personnel, but it does maintain key man life insurance in the amount of $2
million on Mr. Mohindra and $1 million on Mr. Puri.
The success of the Company will also depend, in part, upon its ability
to retain the personnel who have assisted in the development of the Company's
products, and to attract and retain additional qualified operating, marketing,
technical and financial personnel. The competition in the semiconductor
equipment industry for such qualified personnel is often intense, and there can
be no assurance that the Company will be able to hire or retain necessary
personnel.
LIMITATION OF LIABILITY
Due to limitations on the liability of officers and directors contained
in the Company's charter documents and agreements between the Company's officers
and directors and the Company, stockholders may have limited or no recourse
against such officers and directors for their negligent actions.
CONCENTRATION OF SHARE OWNERSHIP AND VOTING POWER
Holders of the Company's Class A Common Stock are entitled to five
votes for each share owned by them on all matters submitted to a vote of
stockholders, while holders of Common Stock are entitled to one vote per share.
The directors and officers of the Company control approximately 66.9% of the
voting power and will be able to elect all of the Company's directors and,
hence, will be able to control the affairs of the Company. In addition, the
directors and officers of the Company will, subject to certain limitations
imposed by applicable law, be able to, among other things, amend the Company's
Certificate of Incorporation and Bylaws and effect or preclude fundamental
corporate transactions involving the Company, including the acceptance or
rejection of any proposals relating to a merger of the Company or an acquisition
of the Company by another entity, in each case without the approval of any of
the Company's other stockholders.
POTENTIAL ADVERSE EFFECT OF AUTHORIZED BUT UNISSUED PREFERRED STOCK ON HOLDERS
OF COMMON STOCK; ANTI-TAKEOVER EFFECTS
The Board of Directors have authority to issue up to 5,000,000 shares
of Preferred Stock and to fix the rights, preferences, privileges and
restrictions, including voting rights, of those shares without any further vote
or action by the shareholders. The rights of the holders of the Common Stock
will be subject to, and may be adversely affected by, the rights of the holders
of any Preferred Stock that may be issued in the future. The issuance of
Preferred Stock, while providing desirable flexibility in connection with
possible acquisitions and other corporate purposes, could have the effect of
making it more difficult for a third party to acquire a majority of the
outstanding voting stock of the Company, thereby delaying, deferring or
preventing a change in control of the Company. Furthermore, such Preferred Stock
may have other rights, including economic rights senior to the Common Stock,
and, as a result, the issuance thereof could have a material adverse effect on
the market value of the Common Stock.
POTENTIAL PRICE VOLATILITY
The Company believes factors such as quarterly fluctuations in results
of operations, announcements of new orders by the Company, developments
affecting competitors and changes in either earnings estimates of the Company or
investment recommendations by stock market analysts may cause the market price
of the Company's securities to fluctuate, perhaps substantially. In addition, in
recent years the
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stock market in general, and the shares of technology companies in particular,
have experienced extreme price fluctuations which are likely to continue. These
broad market and industry fluctuations may adversely affect the market price of
the Company's securities.
INVESTIGATION OF THE PRINCIPAL MARKET MAKER BY THE SECURITIES AND EXCHANGE
COMMISSION
The Securities and Exchange Commission is conducting an investigation
concerning various business activities of the principal market maker of the
Company's securities. The investigation appears to be broad in scope, involving
nearly all aspects of D.H. Blair & Co.'s compliance with the Federal securities
laws in offerings of securities, purchases and sales of securities,
market-making activities and securities sales practices during the period from
January 1, 1985 to the present. The company has been advised by D.H. Blair & Co.
that the investigation has been ongoing since at least 1989 and that it is
cooperating with the investigation. An unfavorable resolution of the Securities
and Exchange Commission's investigation could have the effect of limiting such
firm's ability to make a market in the Company's securities, which could affect
the liquidity and price of such securities.
POSSIBLE DELISTING FROM NASDAQ SMALLCAP MARKET AND MARKET ILLIQUIDITY
While the Company's Common Stock, Class A Warrants and Class B Warrants
met the Nasdaq SmallCap Market initial listing requirements, there can be no
assurance that such securities will meet the continued listing requirements.
Under current criteria for continued inclusion on the Nasdaq SmallCap Market,
(i) the Company will have to maintain at least $4,000,000 in total assets and
$2,000,000 in total stockholders' equity, (ii) the minimum bid price of the
Common Stock will have to be $3.00 per share, (iii) there must be at least
100,000 shares in the public float valued at $1,000,000 or more, (iv) the Common
Stock must have at least two active market makers, and (v) the Common Stock must
be held by at least 300 holders. Nasdaq has proposed increases to such listing
standards that would result in the delisting of the Common Stock and Warrants.
If the Company is unable to satisfy the Nasdaq SmallCap Market's
maintenance requirements, its securities may be delisted from the Nasdaq
SmallCap Market. In such event, trading, if any, in the Units, Common Stock and
Warrants would thereafter be conducted in the over-the-counter market in the
so-called "pink sheets" or the NASD's "Electronic Bulletin Board." Consequently,
the liquidity of the Company's securities could be impaired, not only in the
number of securities which could be bought and sold, but also through delays in
the timing of transactions, reduction in security analysts' and the news media's
coverage of the Company, and lower prices for the Company's securities than
might otherwise be attained.
The Warrants and underlying securities have not been qualified or
registered in all states and will not be eligible for trading unless an
exemption from the qualification or registration requirements is available.
There can be no assurance that any such exemption will become available in any
jurisdiction.
POSSIBLE RESTRICTIONS ON MARKET MAKING ACTIVITIES IN COMPANY'S SECURITIES
Rule 10b-6 of the Securities and Exchange Commission (the "Commission")
under the Securities Exchange Act of 1934, as amended (the "1934 Act") may
prohibit Blair & Co. from engaging in any market making activities will regard
to the Company's securities for the period from nine business days (or such
other applicable period as Rule 10b-6 may provide) prior to any solicitation by
Blair & Co. (or related parties) of the exercise of Warrants until the later of
the termination of such solicitation activity or the termination (by waiver or
otherwise) of any right that those parties may have to receive a fee for the
12
<PAGE> 14
exercise of Warrants following such solicitations. As a result, Blair & Co. may
be unable to provide a market for the Company's securities during certain
periods while the Warrants are exercisable. Any temporary cessation of such
market-making activities could have an adverse effect on the market price of the
Company's securities.
RISK OF LOW-PRICED STOCKS
The Commission has adopted regulations which define a "penny stock" to
be any equity security that has a market price (as therein defined) less than
$5.00 per share or with an exercise price of less than $5.00 per share, subject
to certain exceptions. For any transaction involving a penny stock, unless
exempt, the rules require delivery, prior to any transaction in a penny stock,
of a disclosure schedule prepared by the Commission relating to the penny stock
market. Disclosure is also required to be made about current quotations for the
securities and about commissions payable to both the broker-dealer and the
registered representative. Finally, broker-dealers must send monthly statements
to purchasers of penny stocks disclosing recent price information for the penny
stock held in the account and information on the limited market in penny stocks.
The foregoing penny stock restrictions will not apply to the Company's
securities if (i) they are listed on the Nasdaq SmallCap Market, (ii) certain
price and volume information is publicly available on a current and continuing
basis, and (iii) the Company meets certain minimum net tangible assets or
average revenue criteria. There can be no assurance that the Company's
securities will qualify for exemption from the penny stock restrictions. If the
Company's securities were subject to the rules on penny stocks, the market
liquidity for the Company's securities could be severely adversely affected.
POTENTIAL ADVERSE EFFECT OF REDEMPTION OF WARRANTS
The Class A Warrants may be redeemed by the Company at a redemption
price of $.05 per Warrant upon not less than 30 days' notice if the average bid
price of the Common Stock exceeds $9.80 per share for 30 consecutive trading
days ending within 15 days of the notice of redemption. The Class B Warrants may
be redeemed by the Company at a redemption price of $.05 per Warrant upon not
less than 30 days' notice if the average bid price of the Common Stock exceeds
$15.40 per share, for 30 consecutive trading days ending within 15 days of the
notice of redemption. Redemption of the Warrants could force the holders to
exercise the Warrants and pay the exercise price therefor at a time when it may
be disadvantageous for the holders to do so, to sell the Warrants at the then
current market price when they might otherwise wish to hold the Warrants, or to
accept the redemption price, which, at the time the Warrants are called for
redemption, is likely to be substantially less than the market value of the
Warrants. The Company will not call the Warrants for redemption unless there is
a currently effective prospectus and registration statement covering the
issuance of underlying securities. However, lack of qualification or
registration under applicable state securities laws may mean that the Company
would be unable to issue securities upon exercise of the Warrants to holders in
certain states, including at the time when the Warrants are called for
redemption.
CURRENT PROSPECTUS AND STATE REGISTRATION REQUIRED TO EXERCISE WARRANTS
Purchasers of the Warrants will only be able to exercise the Warrants
if (i) a current prospectus under the Securities Act of 1934, as amended (the
"Securities Act") relating to the securities underlying the Warrants is then in
effect and (ii) such securities are qualified for sale or exempt from
qualification under the applicable securities laws of the states in which the
various holders of Warrants reside. Although the
13
<PAGE> 15
Company has undertaken to use its best efforts to maintain the effectiveness of
a current prospectus covering the securities underlying the Warrants, there can
be no assurance that the Company will be able to do so. There also can be no
assurance that exemptions from the registration on qualification requirements of
those states in which the Company's securities are not currently registered or
qualified will be available at the time a Warrant holder wishes to exercise his
or her Warrant. The value of the Warrants my be greatly reduced if a current
prospectus, covering the securities issuable upon the exercise of the Warrants,
is not kept effective or if such securities are not qualified, or exempt from
qualification, in the states in which the holders of Warrants reside.
SHARES ELIGIBLE FOR FUTURE SALE; REGISTRATION RIGHTS
On December 21, 1996, approximately 1,645,000 shares became eligible
for resale in compliance with the terms of Rule 144 under the Securities Act.
All remaining shares currently outstanding will become eligible for sale at
various times over less than one year from the date of this Prospectus. The
sale, or availability for sale, of substantial amounts of Common Stock in the
public market could adversely affect the prevailing market price of the Common
Stock and could impair the Company's ability to raise additional capital through
the sale of its equity securities.
NO DIVIDENDS ANTICIPATED
The Company has never paid any cash dividends on its Common Stock or
Class A Common Stock. The Company anticipates that in the future, earnings, if
any, will be retained for use in the business or for other corporate purposes,
and it is not anticipated that cash dividends in respect of the Common Stock or
Class A Common Stock will be paid.
SELLING SECURITYHOLDERS
An aggregate of up to 572,750 Class A Warrants and 450,000 Class B
Warrants may be offered for resale by existing stockholders of the Company and
by investors who received their Warrants in exchange for warrants received in
the Bridge Financing. The securities underlying those Warrants have been
registered, pursuant to a separate registration statement, for sale by the
Company upon exercise by the holder thereof.
The following table sets forth the number of Class A and Class B
Warrants held by each Selling Securityholder for whom the Company is registering
the Warrants for resale to the public. The Company will not receive any of the
proceeds from the sale of such securities. The table does not reflect Class B
Warrants issuable upon exercise of Class A Warrants.
<TABLE>
<CAPTION>
SELLING SECURITYHOLDER CLASS A WARRANTS CLASS B WARRANTS
- ---------------------- ---------------- ----------------
<S> <C> <C>
Bruce M. Ampolsky ........................................... 18,750 --
John and Joan Anderson ...................................... 775 1,586
John Anderson, Jr. .......................................... 71 146
Tad Arias ................................................... 71 146
Pramod P. Bansal ............................................ 1,431 2,927
Ashish Bansal ............................................... 286 585
</TABLE>
14
<PAGE> 16
<TABLE>
<CAPTION>
SELLING SECURITYHOLDER CLASS A WARRANTS CLASS B WARRANTS
- ---------------------- ---------------- ----------------
<S> <C> <C>
Manju Bansal ................................................ 572 1,171
Rishi Bansal ................................................ 286 585
Gary O. Benson .............................................. 75,000 --
Abhay Bhushan* .............................................. 46,605 44,193
Gitanja Bhushan ............................................. 1,430 2,926
Monika K. Bhushan ........................................... 1,430 2,926
Rajiv Bhushan ............................................... 7,154 14,633
Sasha Bhushan ............................................... 1,430 2,926
Adolph Bohn ................................................. 4,006 8,195
Arthur D. Boren ............................................. 4,292 8,780
William E. Brooks ........................................... 358 732
Charles W. & Roberta S. Chambers, JTWROS .................... 12,500 --
K.T. Cherian ................................................ 199 406
Sanjeev Chitre .............................................. 1,789 3,658
Perry Coe ................................................... 143 292
Aaron Cohn .................................................. 716 1,463
David Cohn .................................................. 286 585
Craig R. Crawley ............................................ 86 175
Kevin Culkin ................................................ 1,073 2,195
Raymond and Marie Cunningham ................................ 358 732
Robert M. Freeman ........................................... 50,000 --
Marie Dixon ................................................. 716 1,463
Ruth Epstein ................................................ 536 1,097
Gerald and Gloria Frolich ................................... 716 1,463
Craig Frolich ............................................... 751 1,536
Stanley N. Gaines ........................................... 12,500 --
GCW&F Partners II(1) ........................................ 497 1,016
Scott M. Gibson* ............................................ 4,292 8,780
Dan Gill .................................................... 7 15
Ram Paul Gupta* ............................................. 4,316 8,828
Jerry Hymowitz .............................................. 25,000 --
JKR & Co., Inc.(2) .......................................... 358 732
John J. Jubin ............................................... 447 914
Masaharu Shinya ............................................. 1,002 2,049
Pyare Lal Khanna ............................................ 994 2,032
John and Cathy Konop ........................................ 429 878
</TABLE>
15
<PAGE> 17
<TABLE>
<CAPTION>
SELLING SECURITYHOLDER CLASS A WARRANTS CLASS B WARRANTS
- ---------------------- ---------------- ----------------
<S> <C> <C>
Charles Leithauser .......................................... 10,500 --
Timothy P. Marshall ......................................... 536 1,097
Michael Masciorini .......................................... 1,574 3,219
Walter and Ann S. Masciorini ................................ 894 1,829
Raj Mashruwala .............................................. 2,447 5,004
Raj Mohindra* ............................................... 117,503 189,212
Dev Mohindra ................................................ 2,146 4,390
Pran Vati Mohindra .......................................... 71 146
Sanjay S. Mohindra .......................................... 2,146 4,390
Jeffrey Nowell .............................................. 3,756 7,683
Richard Ogawa ............................................... 199 406
Steven N. Ostrovsky ......................................... 12,500 --
George Plaut ................................................ 1,431 2,927
Richard Posey ............................................... 1,431 2,927
Suraj Puri* ................................................. 42,544 35,888
Jaideep Puri ................................................ 215 439
Vedica Puri ................................................. 716 1,463
Raj Rajaratnam .............................................. 993 2,029
Irwin Rosenthal ............................................. 358 732
Margaret and Stanly Shatsky Trust(3) ........................ 179 366
Thomas Singer ............................................... 715 1,463
Bernard Slade, Sr.* ......................................... 27,586 19,609
Eric J. Slade ............................................... 1,041 2,129
Steven P. Slade ............................................. 716 1,464
Eric J. and Joy M. Slade, JTWROS ............................ 716 1,463
David Slone ................................................. 199 406
John Smith .................................................. 447 914
Michael L. Snow ............................................. 12,500 --
R. Srivastava ............................................... 179 366
Rudolph Svejkovsky .......................................... 1,431 2,927
Debora Tedeschi ............................................. 358 732
Teltec Semiconductor Technic GmbH(4) ........................ 2,003 4,097
Teltec Semiconductor Technic SA(5) .......................... 2,003 4,097
Douglas M. Trabilcy ......................................... 17,500 --
Joel Urdang ................................................. 25,000 --
Sandrine F. Weinbender ...................................... 484 991
</TABLE>
16
<PAGE> 18
<TABLE>
<CAPTION>
SELLING SECURITYHOLDER CLASS A WARRANTS CLASS B WARRANTS
- ---------------------- ---------------- ----------------
<S> <C> <C>
Carol Whitfield ............................................. 1,430 2,926
Wolfe/Axelrod Associates(6) ................................. 497 1,016
David Wong .................................................. 2,146 4,390
Henri Zimmerli .............................................. 2,003 4,097
</TABLE>
- ----------------
* Officer or director of the Company.
(1) Gregory M. Gallo is an executive officer of the corporate general partner
of this partnership with certain limited voting and investment control over
these securities and may therefore be deemed to be the beneficial owner
thereof. Mr. Gallo disclaims beneficial ownership of all such warrants
except to the extent of any pecuniary interest therein which he may have.
(2) Jack Kemp is the president of this corporation with voting and investment
control over these securities and may therefore be deemed to be the
beneficial owner thereof. Mr. Kemp disclaims beneficial ownership of all
such warrants except to the extent of any pecuniary interest therein which
he may have.
(3) Stanly Shatsky is the trustee of this trust with certain investment and
voting control over these securities and may therefore be deemed to be the
beneficial owner thereof. Mr. Shatsky disclaims beneficial ownership of
these warrants except to the extent of any pecuniary interest therein which
he may have.
(4) Adolph Bohn is an executive officer of this corporation with certain
investment and voting control over these securities and may therefore be
deemed to be the beneficial owner thereof. Mr. Bohn disclaims beneficial
ownership of these warrants except to the extent of any pecuniary interest
therein which he may have.
(5) Henri Zimmerli is an executive officer of this corporation with certain
investment and voting control over these securities and may therefore be
deemed to be the beneficial owner thereof. Mr. Zimmerli disclaims
beneficial ownership of these warrants except to the extent of any
pecuniary interest therein which he may have.
(6) Steven Axelrod is general partner of this partnership with certain
investment and voting control over these securities and may therefore be
deemed to be the beneficial owner thereof. Mr. Axelrod disclaims beneficial
ownership of these warrants except to the extent of any pecuniary interest
therein which he may have.
PLAN OF DISTRIBUTION
The sale of the Warrants by the Selling Securityholders may be effected
from time to time in transactions (which may include block transactions by or
for the account of the Selling Securityholders) in the over-the-counter market
or in negotiated transactions, through the writing of options on the securities,
a combination of such methods of sale or otherwise. Sales may be made at fixed
prices which may be changed, at market prices prevailing at the time of sale or
at negotiated prices.
The Selling Securityholders may effect such transactions by selling their
Warrants directly to purchasers, through broker-dealers acting as agents for the
Selling Security holders or to broker-dealers who
17
<PAGE> 19
may purchase shares as principals and thereafter sell the securities from time
to time in the over-the-counter market in negotiated transactions or otherwise.
Such broker-dealers, if any, may receive compensation in the form of discounts,
concessions or commissions from the Selling Securityholders or the purchasers
for whom such broker-dealers may act as agents or to whom they may sell as
principals or otherwise (which compensation as to a particular broker-dealer may
exceed customary commissions).
Under applicable rules and regulations under the Securities Exchange Act of
1934, as amended ("Exchange Act"), any person engaged in the distribution of the
Warrants may not simultaneously engage in market making activities with respect
to any securities of the Company during the applicable "cooling-off" period (at
least two, and possibly nine, business days) prior to the commencement of such
distribution. Accordingly, in the event the Underwriter of the Company's initial
public offering or D.H. Blair & Co., Inc. ("Blair & Co.") is engaged in a
distribution of the Warrants, neither of such firms will be able to make a
market in the Company's securities during the applicable restrictive period.
However, neither the Underwriter nor Blair have agreed to, nor are either of
them obliged to, act as broker-dealer in the sale of the Warrants and the
Selling Securityholders may be required, and in the event Blair is a market
maker will likely be required, to sell such securities through another
broker-dealer. In addition, each Selling Securityholder desiring to sell
Warrants will be subject to the applicable provisions of the Exchange Act and
the rules and regulations thereunder, including without limitation, Rules 10b-2,
10b-6 and 10b-7, which provisions may limit the timing of the purchases and
sales of the Company's securities by such Selling Securityholders.
The Selling Securityholders and broker-dealers, if any, acting in
connection with such sale might be deemed to be underwriters within the meaning
of Section 2(11) of the Securities Act and any commission received by them and
any profit on the resale of the securities might be deemed to be underwriting
discounts and commission under the Securities Act.
There is no assurance that the Selling Securityholders will sell any or all
of the Warrants offered hereby. The Company will pay all expenses incident to
the offering and sale of the Warrants offered hereby with the exception of (i)
any discounts, commissions or concessions payable to underwriters, dealers or
brokers, and (ii) the fees and expenses of counsel for the Selling
Securityholders.
EXPERTS
The financial statements of YieldUP International Corporation as of December 31,
1995 and 1994, and for each of the years ended, have been incorporated by
reference herein and in the registration statement in reliance upon the report
of KPMG Peat Marwick LLP, independent certified public accountants, incorporated
by reference herein, and upon the authority of said firm as experts in
accounting and auditing.
18
<PAGE> 20
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Other expenses in connection with the registration of the Warrants
hereunder will be substantially as follows:
<TABLE>
<CAPTION>
Company
Item Expense
---- -------
<S> <C>
SEC Registration Fee.......................$ 784.12
Legal fees and expenses....................$ 2,000*
Accounting Fees............................$ 2,000*
Miscellaneous..............................$ 1,215.88*
---------
Total. . . . . .$ 6,000*
</TABLE>
- ---------------------
* Estimated for purposes of this filing.
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law permits indemnification
of officers, directors, and other corporate agents under certain circumstances
and subject to certain limitations. The Registrant's Certificate of
Incorporation and Bylaws provide that the Registrant shall indemnify its
directors, officers, employees and agents to the full extent permitted by
Delaware General Corporation Law, including in circumstances in which
indemnification is otherwise discretionary under Delaware law. In addition, the
Registrant has entered into separate indemnification agreements with its
directors and officers which would require the Registrant, among other things,
to indemnify them against certain liabilities which may arise by reason of their
status or service (other than liabilities arising from willful misconduct of a
culpable nature) and to maintain directors' and officers' liability insurance,
if available on reasonable terms.
These indemnification provisions and the indemnification agreement entered
into between the Registrant and its officers and directors may be sufficiently
broad to permit indemnification of the Registrant's officers and directors for
liabilities (including reimbursement of expenses incurred) arising under the
Securities Act.
Item 16. Exhibits.
5 Opinion and Consent of Gray Cary Ware & Freidenrich.
II-1
<PAGE> 21
24.1 Consent of Gray Cary Ware & Freidenrich (included in Exhibit 5).
24.2 Consent of KPMG Peat Marwick LLP.
25 Powers of Attorney for each person executing this Registration
Statement (contained on page II-4).
Item 17. Undertakings.
(1) Rule 415 Offering.
The Company hereby undertakes:
A. 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;
(iii) to include any material information with respect to
the plan of distribution not previously disclosed in the registration statement
or any material change to such information in the registration statement;
provided, however, that paragraphs (i) and (ii) do not apply to this
registration statement if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the Company pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 and incorporated by reference in this registration
statement;
B. that, for the purpose of determining any liability under
the Securities Act of 1933, 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; and
C. 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.
(2) Filings Incorporating Subsequent Exchange Act Documents by
Reference.
The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of 1933, each
filing of the Company's annual report pursuant to Section 13(a) or Section 15(d)
of the Securities Exchange Act of 1934 that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(3) Acceleration of Effectiveness.
II-2
<PAGE> 22
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Company pursuant to the provisions described in Item 15 above, or
otherwise, the Company 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
Company of expenses incurred or paid by a director, officer or controlling
person of the Company 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 Company 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 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
<PAGE> 23
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 of filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, in the County of Santa
Clara, City of Mountain View, California, on January 10, 1997.
YIELDUP INTERNATIONAL CORPORATION
By:_____________________________________
Raj Mohindra
President and Chief Executive Officer
(Principal Executive Officer)
POWER OF ATTORNEY
We, the undersigned officers and directors of YieldUP International
Corporation, hereby severally constitute Raj Mohindra and Scott Gibson our true
and lawful attorneys with full power to sign for us and in our names, in the
capacities indicated below, the registration statement filed herewith and any
and all amendments to said registration statement, and generally to do all such
things in our names and behalf in our capacities as officers and directors to
enable YieldUP International Corporation to comply with the provisions of the
Securities Act of 1933, and all requirements of the Securities and Exchange
Commission, hereby ratifying and confirming our signatures as they may be signed
by our said attorney to said registration statement and any and all amendments
thereto.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
_____________________________ President, Chief Executive January 10, 1997
Raj Mohindra Officer and Director (Principal
Executive Officer)
_____________________________ Chief Financial Officer January 10, 1997
Scott M. Gibson (Principal Financial and
Accounting Officer)
_____________________________ Vice President, Chief Technical January 10, 1997
Suraj Puri Officer and Director
_____________________________
Abhay K. Bhushan Director January 10, 1997
_____________________________
William W. R. Elder Director January 10, 1997
_____________________________
Ram Paul Gupta Director January 10, 1997
</TABLE>
II-4
<PAGE> 24
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit Page
Number Description No.
------ ----------- ---
<S> <C> <C>
5 Opinion and Consent of Gray Cary Ware & Freidenrich.
24.1 Consent of Gray Cary Ware & Freidenrich (included in Exhibit 5).
24.2 Consent of KPMG Peat Marwick LLP
25 Powers of Attorney for each person executing this Registration
Statement are contained on page II-4.
</TABLE>
II-5
<PAGE> 1
Exhibit 5
YieldUP International Corporation
117 Easy Street
Mountain View, CA 94043
RE: REGISTRATION STATEMENT ON FORM S-3
Ladies and Gentlemen:
We are rendering this opinion in connection with the
registration under the Securities Act of 1933, as amended, of 572,750 Class A
Warrants and 450,000 Class B Warrants (collectively, the "Warrants") of YieldUP
International Corporation, a Delaware Corporation (the "Company") which are held
by the Selling Securityholders named in such registration statement.
We have examined all instruments, documents and records which
we deemed relevant and necessary for the basis of our opinion hereinafter
expressed. In such examination, we have assumed the genuineness of all
signatures and the authenticity of all documents submitted to us as originals
and the conformity to the originals of all documents submitted to us as copies.
We are admitted to practice only in the State of California
and we express no opinion concerning any law other than the law of the State of
California, the corporation laws of the State of Delaware and the federal law of
the United States.
As to matters of Delaware corporation law, we have based our
opinion solely upon our examination of such laws and the rules and regulations
of the authorities administering such laws, all as reported in standard,
unofficial compilations. We have not obtained opinions of counsel licensed to
practice in jurisdictions other than the State of California.
Based on such examination, we are of the opinion that
Warrants, when sold pursuant to the registration statement to which this opinion
is an exhibit will be validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion as an exhibit
to the Registration Statement referred to above and the use of our name wherever
it appears in said Registration Statement.
Respectfully submitted,
/s/ Gray Cary Ware & Freidenrich
GRAY CARY WARE & FREIDENRICH
A Professional Corporation
<PAGE> 1
Exhibit 24.2
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
YieldUP International Corporation:
We consent to incorporation by reference in the registration statement dated
January 10, 1997 on Form S-3 of YieldUP International Corporation of our report
dated February 14, 1996, relating to the balance sheets of YieldUP International
Corporation as of December 31, 1995 and 1994, and the related statements of
operations, stockholders' equity (deficiency), and cash flows for the years then
ended, which report appears in the December 31, 1995, annual report on Form
10-KSB of YieldUP International Corporation and to the reference to our firm
under the heading "Experts" in the prospectus.
Our report dated February 14, 1996, contains an explanatory paragraph that
states that the Company's recurring losses from operations raise substantial
doubt about its ability to continue as a going concern. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
KPMG Peat Marwick LLP
San Jose, California
January 10, 1997
