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As filed with the Securities and Exchange Commission on January 27, 1999
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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AXENT TECHNOLOGIES, INC.
(Exact Name of Registrant as specified in its charter)
2400 Research Boulevard, Suite 200
Rockville, MD 20850
(301) 258-5043
(Address of Principal Executive Offices)
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Delaware 7372 87-0393420
(State or other jurisdiction of (Primary Standard Industrial (IRS Employer
incorporation or organization) Classification Code Number) Identification Number)
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John C. Becker
Chief Executive Officer
AXENT Technologies, Inc.
2400 Research Boulevard, Suite 200
Rockville, Maryland 20850
(301) 258-5043
(Name, address, including zip code and telephone number,
including area code of agent for service)
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Copies to:
Edwin M. Martin, Jr., Esquire
Jane K. P. Tam, Esquire
Piper & Marbury L.L.P.
1200 Nineteenth Street, N.W.
Washington, D.C. 20036
(202) 861-3900
Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
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, as amended (the "Securities Act") 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, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. ___________
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering.
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If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.
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CALCULATION OF REGISTRATION FEE
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Proposed
Title of Each Class of Securities To Be Registered Amount to be Maximum Aggregate Amount of
Registered Offering Price Registration Fee
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Common Stock, par value $.02 per share 703,189 $25,490,601.25 (1) $7,086.40
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(1) Pursuant to Rule 457(c), the proposed maximum aggregate offering price and
registration fee are based upon the closing price of $36.25 per share of
AXENT's Common Stock on January 25, 1999, as reported on the Nasdaq National
Market.
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, 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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SUBJECT TO COMPLETION, DATED JANUARY 27, 1999
PROSPECTUS
January __, 1999
703,189 SHARES
AXENT TECHNOLOGIES, INC.
COMMON STOCK
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This Prospectus relates to the public offering from time to time of up
to a total of 703,189 shares of common stock of AXENT Technologies, Inc. by
Shubhangi Vaidya and Vimal Vaidya. See "Selling Stockholders" on page 10.
AXENT's common stock is traded on the Nasdaq National Market under the
symbol "AXNT." On January 25, 1999, the reported closing price of AXENT's common
stock on the Nasdaq National Market was $36.25 per share.
Beginning on page 4, AXENT has listed several "Risk Factors" which you
should consider. You should read the entire Prospectus carefully before you make
your investment decision.
The information in this Prospectus is not complete and may be changed.
AXENT has not authorized anyone to provide you with information different from
that contained in this Prospectus. No one may sell these securities until the
registration statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities and it is
not soliciting an offer to buy these securities in any state where the offer or
sale is not permitted.
Neither the SEC nor any state securities commission has approved or
disapproved of these securities or determined if this prospectus is truthful or
complete. Any representation to the contrary is a criminal offense.
Where Can You Find More Information
AXENT is subject to the informational requirements of the Securities
Exchange Act of 1934, and files reports and proxy statements with the SEC,
which you should read for additional information regarding AXENT. You may obtain
copies of those filings from the SEC's Public Reference Room at 450 Fifth
Street, N.W., Washington, D.C. 20549, or by calling the SEC at 1-800-SEC-0330,
or from the SEC's Internet web site at http:\\www.sec.gov.
This Prospectus is a part of a registration statement that AXENT filed
with the SEC. The registration statement contains more information than this
Prospectus, including certain exhibits. You can get a copy of the registration
statement from the SEC at the address listed above or from its web site.
Incorporation of Certain Documents by Reference
The SEC allows AXENT to "incorporate" into this Prospectus information
AXENT periodically files with the SEC in other documents. This means that AXENT
can disclose important information to you by referring to other documents
containing that information. The information may include documents filed after
the date of this Prospectus that update and supersede the information provided
in this Prospectus. AXENT incorporates by reference the documents listed below,
except to the extent information in those documents is different from the
information contained in this Prospectus, and also incorporates information
contained in all future documents AXENT files with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Securities Exchange Act until AXENT terminates the
offering of these securities.
(2)
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SEC File No.: 000-28100 Period/Filing Date
Annual Report on Form 10-K Year ended December 31, 1997
Quarterly Reports on Form 10-Q Quarter ended March 31, 1998, June 30, 1998, and
September 30, 1998
Definitive Proxy Statement Filed on April 29, 1998
Current Report on Form 8-K Filed February 20, 1998
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You may request a copy of these documents, at no cost, by writing to:
Gary M. Ford
Vice President and General Counsel
AXENT Technologies, Inc.
2400 Research Boulevard
Rockville, Maryland 20850
The Company
AXENT is a leading developer and provider of information security
solutions designed to manage security policies and protect the integrity of
enterprise computer networks, including Internet-based systems, internal
networks, and individual servers, workstations and desktop and laptop computers.
AXENT emphasizes its ability to address more of the information security issues
facing organizations than any other single vendor as well as the functional
robustness and multiple platform coverage of its solutions. AXENT also
emphasizes its security consulting service offerings that provide customers with
vulnerability assessments, assistance with product installation and training and
specialized consulting services regarding security assessments and solutions.
When combined together, AXENT's products provide a more comprehensive approach
to minimizing the risks associated with the inherent vulnerabilities of today's
computing environments that provide inviting opportunities for computer hackers,
curious or disgruntled employees, contractors and competitors to compromise or
destroy sensitive information within the systems or to otherwise disrupt the
normal operation of the systems.
AXENT's products provide security assessment and policy management,
intrusion detection, data confidentiality, system and network access control,
user administration, activity monitoring, secure authentication solutions for
remote network access and virtual private networking capabilities for remote
users and remote sites. These products allow customers to create trusted
systems and networks that are protected from access, theft and damage by
unauthorized users from untested systems or networks such as the Internet and
also enable the creation of virtual private networks through the encrypted
transmission of information across untrusted networks.
AXENT expects to continue expanding its product offerings t hrough
acquisition, internal development and marketing arrangements to maintain its
leadership in the field of information security solutions for enterprise
computing environments. While its security management products have been
internally developed, AXENT completed acquisitions of AssureNet Pathways, Inc.
in March 1997, Raptor Systems, Inc. in February 1998, and Internet Tools, Inc.
in January 1999, which added secure authentication solutions for remote network
access, virtual private networking capabilities, network security solutions,
secure intranet and Web-access products and network-based intrusion detection
products and technology. In addition, AXENT completed the acquisition of Secure
Network Consulting, Inc. in July 1998, which added extensive professional
consulting expertise and technology.
AXENT's principal executive offices are located at 2400 Research
Boulevard, Suite 200, Rockville, Maryland 20850. Its telephone number is
(301) 258-5043.
(3)
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RISK FACTORS
In addition to the other information contained in this Prospectus, you
should consider carefully the following factors in e valuating AXENT and its
business before purchasing shares of AXENT's common stock offered hereby:
Potential for significant fluctuations in quarterly revenues and
operating results. AXENT has experienced significant quarterly fluctuations in
its operating results and anticipates possibly substantial fluctuations in its
future operating results. AXENT generally has experienced seasonal variations in
its operating results, with higher revenues, operating income and net income in
its fourth quarter than in its first quarter of the following year , and with
lower revenues, operating income and net income in the summer months, when
businesses often defer purchase decisions. Also, AXENT has historically
recognized a substantial portion of its license revenues in the last month of
each quarter. Because AXENT has little or no backlog, quarterly revenues and
operating results depend on the volume and timing of orders received during each
quarter, especially during the last several weeks of each quarter, which are
difficult to forecast. AXENT's consulting service revenues also tend to
fluctuate as consulting projects, which may continue over several quarters, are
undertaken or completed.
Operating results may also fluctuate significantly on a quarterly basis due to
the following factors:
* demand for AXENT's products,
* introduction of new products and product enhancements by AXENT or its
competitors,
* market acceptance of new products introduced by AXENT or its
competitors;
* the size, timing, cancellation or delay of customer orders;
* budgeting cycles of customers;
* changes in the proportion of revenues attributable to licenses and
service fees;
* changes in the percentage of products sold through AXENT's direct
sales force and its indirect distribution channels;
* competitive conditions in the industry; and
* changes in general economic conditions.
The value of individual transactions as a percentage of quarterly
revenues can be substantial, and particular transactions may generate a
substantial portion of the operating profits for the quarter in which they are
signed. The licensing of many of AXENT's products generally involves a long
sales cycle (between nine and twelve months) and is subject to a number of
significant risks over which AXENT has little or no control. Because many of
AXENT's operating expenses are based on anticipated revenue levels, a
substantial portion of which is not typically generated until the end of each
quarter, and a high percentage of AXENT's expenses are fixed, delays in the
receipt of orders can cause a significant variation in operating results from
quarter to quarter. In addition, AXENT may expend significant resources pursuing
potential sales that will not be consummated. AXENT also may choose to reduce
prices or to increase spending in response to competition or to pursue new
market opportunities, which may significantly reduce AXENT's operating results
in the short-term. For those reasons, you should not rely on AXENT's prior
operating results or projections of future operating results as an indication of
future performance.
Due to these factors, it is likely that AXENT's operating results will
be below the expectations of public market analysts and investors in some
future quarters. If so, the market price of AXENT's common stock may decline
substantially.
AXENT is Subject to Intense and Evolving Competition. Competition in
the information security market is intense. AXENT currently competes with
companies that have substantially greater financial resources, sales and
marketing organizations, market penetration and research and development
capabilities, as well as broader product offerings and greater market presence
and name recognition. AXENT expects that it will face increasing competitive
pressures from its current competitors and new market entrants.
(4)
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There has been substantial consolidation recently in the information
security industry, and AXENT expects that there will be significant additional
consolidation in the near future. As a result of that increasing consolidation,
AXENT expects that it will increasingly compete with larger firms that have
broader product offerings and greater financial resources. AXENT believes that
such competition may have a significant negative effect on AXENT's current and
developing collaborative, marketing, distribution and reselling relationships,
AXENT's product pricing and its product development budget and capabilities. Any
of those negative effects can significantly impair AXENT's financial condition
and AXENT's results of operations.
AXENT believes that significant competitive factors affecting the information
security industry are:
* depth of product functionality,
* breadth of platform,
* product quality,
* product performance,
* conformance to industry standards,
* product price and
* customer support.
There can be no assurance that AXENT can maintain or enhance its
competitive position against current and future competitors.
Product Development Risks in a Rapidly Changing Industry. The
information security industry changes rapidly. Changes can be attributable to
frequent new product introductions, continuing advances in technology and
changes in customer requirements and preferences. The introduction of new
technologies could render AXENT's existing products obsolete or unmarketable or
require AXENT to invest in research and development at much higher rates with no
assurance of developing competitive products. Changes in technologies or
customer requirements may also cause the development cycle for AXENT's new
products to be significantly longer than AXENT's historical product development
cycle, resulting in higher development costs or a loss in market share. There
can be no assurance that AXENT will be able to counter challenges to its current
products or that AXENT's future product offerings will keep pace with the
technological changes implemented by competitors, developers of operating
systems or networking systems or persons seeking to breach information security.
There also can be no assurance that AXENT's products will satisfy evolving
preferences of customers and prospects. Failure to develop and introduce new
products and product enhancements in a timely fashion could materially
adversely affect AXENT's financial condition and results of operations. Because
of the complexity of AXENT's software products which operate on or utilize
multiple platforms and communications protocols, AXENT has from time to time
experienced delays in introducing new products and product enhancements
primarily due to development difficulties or shortages of development personnel.
There can be no assurance that AXENT will not experience longer delays or other
difficulties that could delay or prevent the successful development,
introduction or marketing of new products or product enhancements.
Year 2000 Risks. Within the year, software and computer systems used by
many companies and organizations may need to be upgraded or replaced in order to
comply with "Year 2000" requirements. AXENT believes that the current version
version of its products are Year 2000 compliant, but there can be no assurance
that undetected errors or defects in AXENT's products will not cause Year 2000
errors or that AXENT's products will not be operated on operating systems or
with other software products that are non-compliant, which may expose AXENT
to claims from its customers.
Prior versions of certain of AXENT's products may not be Year 2000
compliant unless upgraded with maintenance releases, which may require that
customers migrate to more current versions of operating systems. AXENT believes
that disclaimers of warranties and limitations of liability in its license
agreements will adequately protect it in the event that any prior versions of
its products are not Year 2000 compliant, but there can be no assurance that
Year 2000 claims will not be made against AXENT regarding prior versions of its
products.
AXENT utilizes third-party equipment and software that may not be Year
2000 compliant. AXENT has conducted tests of many third-party software products
and items of equipment containing computer processors that AXENT uses in its
business operations to determine Year 2000 compliance. When it has purchased new
software systems for its internal use, AXENT has received confirmations from
vendors of software products critical to AXENT's operations that the software is
Year 2000 compliant. AXENT also has obtained statements from vendors of many of
the items of equipment containing computer processors that are critical to
AXENT's operations that the processors in such equipment are Year 2000
complaint. Based on its testing and those statements of vendors of its
mission-critical software and equipment, AXENT currently believes that third-
- -party software programs or equipment critical to AXENT's operations will be
Year 2000 compliant and that AXENT will not incur significant incremental costs
in making Year 2000 fixes in the foreseeable future. However, there can be no
assurance that Year 2000 errors or defects will not be discovered in those
systems and, if such errors or defects are discovered, that the costs of making
such systems Year 2000 compliant will not have a material adverse effect on
AXENT's business, operating results and financial condition.
(5)
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As AXENT derives a substantial portion of its revenues from its
indirect distribution channel, a Year 2000 error or defect that affected
AXENT's resellers, distributors, and suppliers could have a material adverse
effect on AXENT's business, financial condition and results of operations.
Also, the purchasing patterns of customers or potential customers may be
affected by Year 2000 issues as companies expend significant resources to
correct their current systems for Year 2000 compliance. These expenditures
may result in reduced funds] being available to implement the information
security solutions or to purchase products and services such as those offered
by AXENT. In addition, some companies have announced an intention to delay
installing new software products in computer environments critical to their
business operations until 2000. Those reduced expenditures or delays in
purchasing and installing software products could have a material adverse
effect on AXENT's business, financial condition and results of operations.
AXENT has not yet completed its contingency plan to address Year 2000
risks.
Risks Associated with Possible Acquisitions of Businesses or
Technologies. In the normal course of its business, AXENT evaluates potential
acquisitions of businesses, products and technologies that could complement or
expand AXENT's business. In the event AXENT identifies an appropriate
acquisition candidate, there is no assurance that AXENT would be able to
successfully negotiate the terms of any such acquisition, finance such
acquisition and integrate such acquired business, products or technologies
into AXENT's existing business and operations. Also, the negotiation of
potential acquisitions as well as the integration of an acquired business could
cause diversions of management time and resources. There can be no assurance
that a given acquisition, whether or not consummated, would not materially
adversely affect AXENT's financial condition and results of operations. If
AXENT proceeds with one or more additional significant acquisitions in which
the consideration consists of cash, a substantial portion of AXENT's available
cash could be used to consummate the acquisitions. If AXENT consummates one
or more additional significant acquisitions in which the consideration consists
of stock, AXENT's stockholders could suffer a significant dilution of their
interests in AXENT.
Risk of Liability Due to Errors or Failures of Product Security
Features. Products as complex as those offered by AXENT may contain undetected
errors, failures or bugs when first ntroduced or when new versions are
released. AXENT has in the past discovered software errors, failures and bugs
in certain of its product offerings after their introduction and has experienced
delays or lost revenues during the period required to correct these errors. In
particular, the computer environment is characterized by a wide variety of
standard and non-standard configurations that make pre-release testing for
programming or compatibility errors very difficult and time-consuming. There
can be no assurance that, despite testing by AXENT and by others, errors,
failures or bugs will not be found in new products or releases after
commencement of commercial shipments by AXENT. Errors, failures or bugs in
AXENT's products could result in adverse publicity, in product returns, in loss
of or delay in market acceptance of AXENT's products or in claims by the
customer or others against AXENT although AXENT has not experienced any material
losses or claims by customers with respect to errors, failures or bugs in its
products. Alleviating such problems could require significant expenditures
of capital and resources by AXENT and could cause interruptions, delays or
cessation of service to AXENT's customers.
(6)
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AXENT attempts to limit its liability to customers, including liability
arising from a failure of the security features contained in AXENT's products,
through contractual limitations of warranties and remedies. AXENT's consulting
agreements with its customers generally contain provisions designed to limit
AXENT's exposure to claims related to negligence or errors or omissions by
AXENT's employees and agents. However, some courts have held similar contractual
limitations of liability, or the "shrink wrap licenses" in which they sometimes
are embodied, to be unenforceable. Accordingly, there can be no assurance that
such limitations will be enforced. AXENT also has insurance providing coverage
up to $2,000,000 annually and per occurrence with respect to claims arising from
product failure and related loss or damage to data. Notwithstanding that
insurance coverage, the consequences of errors, failures or bugs in AXENT's
products could have a material adverse effect on AXENT's financial condition and
results of operations.
Dependence on Key Personnel. AXENT's success depends to a significant
degree upon the continuing contributions of its key management, sales,
marketing, professional services, customer support and product development
personnel. The loss of the services of any key employee could adversely affect
AXENT's financial condition and results of operations. AXENT believes that its
future success will depend in large part upon its ability to attract and retain
highly-skilled managerial, sales, marketing, professional services, customer
support and product development personnel. AXENT requires consulting services
personnel and sales consultants who are highly technically trained in the field
of information security, and the competition for such individuals is intense.
AXENT has at times experienced, and continues to experience, difficulty in
recruiting qualified personnel. Competition for qualified personnel in the
software industry is intense, and there can be no assurance that AXENT will be
successful in retaining its key employees or that it can attract or retain
additional skilled personnel as required.
Risks Associated with International Sales. Sales outside the United
States accounted for a significant portion of AXENT's net revenues from its
information security products in the year ended December 31, 1997 and for the
nine months ended September 30, 1998. AXENT's international business may be
subject to a variety of risks, including:
* costs and risks relating to the establishment and expansion of indirect
distribution channels in certain countries or regions,
* delays in expanding its international distribution channels,
* difficulties in collecting international accounts receivable from
distributors or resellers,
* increased costs associated with maintaining international marketing
efforts,
* increase in duty rates,
* introduction of non-tariff barriers, and
* difficulties in enforcing intellectual property rights abroad.
AXENT's international sales may be denominated in the local currency
of the country in which the sale was made, and AXENT is subject to the risks
associated with fluctuations in currency exchange rates. As AXENT does not
currently hedge foreign currency risk, a decrease in the value of any of
these foreign currencies relative to the U.S. dollar will affect the
profitability in U.S. dollars of AXENT's products sold in these markets.
Effect of Government Regulation of Technology Exports. AXENT's
international sales and operations may be subject to the following risks:
* imposition of governmental controls,
* new or changed export license requirements,
* restrictions on the export of critical technology,
* trade restrictions, and
* changes in tariffs.
(7)
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While AXENT believes its products are designed to meet the regulatory
standards of foreign markets, any inability to obtain foreign regulatory
approvals on a timely basis could have a material adverse effect on AXENT's
financial condition or results of operations. Certain of AXENT's products are
subject to export controls under U.S. law, and AXENT believes it has obtained
all necessary export approvals w hen required. There c an be no assurance,
however, that the list of products and countries for which export approval is
required, and the regulatory policies with respect thereto, will not be revised
from time to time. Failure to obtain required approvals under these regulations
could adversely affect AXENT's ability to make international sales.
For example, because of U.S. governmental controls on the exportation
of encryption technology, AXENT has been unable to export some of its products
with the most robust information security encryption technology and will be
required to provide for recovery of encryption keys for access by governmental
authorities in order to export products containing Digital Encryption Standard
(DES) encryption algorithms. As a result, foreign competitors facing less
stringent controls on their products may be able to compete more effectively
than AXENT in the global information security market. There can be no assurance
that these factors will not have a material adverse effect on AXENT's financial
condition or results of operations.
Limited Protection of Intellectual Property and Proprietary Rights.
AXENT regards its software as proprietary, and its success and ability to
compete depends in part upon its proprietary technology and rights. AXENT
relies on copyright and trade secret laws, trademarks, confidentiality
procedures and contractual provisions to protect its proprietary software,
documentation and other proprietary information. Although AXENT holds several
patents and has several pending patent applications which cover certain aspects
of its ,technology, such patents and patent applications do not protect many
of its security products, and there can be no assurance that any such patents
will issue or that any such patents will be sufficiently broad to protect
AXENT's technology critical to its security products.
Although the effectiveness of AXENT's products does not depend upon the
secrecy of its proprietary technology or licensed technology, the public
disclosure of its technology could result in a perception of breached security
and reduced effectiveness of AXENT's products, which could have an adverse
effect on AXENT's financial condition or results of operations. There also can
be no assurance that the confidentiality agreements and other methods on which
AXENT relies to protect its trade secrets and proprietary information and
rights will be adequate. Litigation to defend and enforce AXENT's intellectual
property rights could result in substantial costs and diversion of resources and
could have a material adverse effect on AXENT's financial condition and results
of operations regardless of the final outcome of such litigation. Despite
AXENT's efforts to safeguard and maintain its proprietary rights, there can be
no assurance that AXENT will be successful in doing so or that the steps taken
by AXENT in this regard will be adequate to deter misappropriation or
independent third-party development of its technology or to prevent an
unauthorized third party from copying or otherwise obtaining and using AXENT's
products, technology or other information that AXENT regards as proprietary.
There can also be no assurance that AXENT's trade secrets or non-disclosure
agreements will provide meaningful protection of AXENT's proprietary
information. Also, there can be no assurance that others will not independently
develop similar technologies or duplicate any technology developed by AXENT or
that AXENT's technology will not infringe upon patents or other rights owned
by others. AXENT's inability to protect its proprietary rights would have a
material adverse effect on AXENT's financial condition and results of
operations.
As the number of information security products in the industry
increases and the functionality of these products further overlaps, software
developers and publishers may increasingly become subject to claims of
infringement or misappropriation of the intellectual property or proprietary
rights of others. There can be no assurance that third parties will not assert
infringement or misappropriation claims against AXENT in the future with respect
to current or future products. Further, AXENT may be subject to additional risk
as it enters into transactions in countries where intellectual property laws
are not well developed or are poorly enforced. Legal protections of AXENT's
rights may be mineffective in such countries, and technology developed in such
countries may not be protectable in jurisdictions where protection is ordinarily
available. Any claims or litigation, with or without merit, could be costly
and could result in a diversion of management's attention, which could have a
material adverse effect on AXENT's financial condition and results of
operations. Adverse determinations in such claims or litigation could also have
a material adverse effect on AXENT's financial condition and results of
operations.
(8)
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Volatility of Share Prices of AXENT Common Stock. The market price of
AXENT's common stock, which is traded on The Nasdaq National Market, has been
subject to significant fluctuations in the past and may be subject to
significant fluctuations in the future in response to operating results,
announcements of technological innovations or new products by AXENT or its
competitors, patent or proprietary rights developments and market conditions
for computer industry stocks in general. In addition, the stock market in
recent years has experienced extreme price and volume fluctuations that often
have been unrelated or disproportionate to the operating performance of
individual companies. These market fluctuations, as well as general economic
conditions, may adversely affect the market price of AXENT common stock. The
trading prices of many high technology companies' stocks are at or near their
historical highs and reflect price/earnings ratios substantially above
historical norms. There can be no assurance that the trading price of AXENT
common stock will remain at or near its current level. Additionally, it is
likely that in some future quarters AXENT's operating results will be below
the expectations of public market analysts and investors. Regardless of the
general outlook for AXENT's business, the announcement of quarterly operating
results below analyst and investor expectations could have a material and
adverse effect on the price of AXENT common stock.
Possible Dilution. Although AXENT and Internet Tools, Inc. believe
that beneficial synergies will result from AXENT's acquisition of Internet Tools
in January 1999, there can be no assurance that the combining of the two
companies' businesses, even if achieved in an efficient and effective manner,
will result in increased earnings per AXENT share (taking into consideration
the greater number of AXENT shares outstanding as a result of the merger) or
a financial condition superior to that which would have been achieved by
AXENT. While neither AXENT nor Internet Tools anticipates that AXENT's
acquisition of Internet Tools will be dilutive for the stockholders of AXENT
over the long term, there can be no assurance that, if the acquisition fails to
produce the anticipated benefits, it will not have the dilutive effect of
causing the per share earnings of the combined company to be lower than they
would have been for AXENT if it had not acquired Internet Tools.
Lack of Dividend Payments. No dividends have been paid on AXENT common
stock to date and AXENT does not anticipate paying dividends in the foreseeable
future.
Anti-takeover Provisions. AXENT's Certificate of Incorporation requires
that any action required or permitted to be taken by stockholders of AXENT
must be effected at a duly called annual or special meeting of stockholders and
may not be effected by any consent in writing, and requires reasonable advance
notice by a stockholder of a proposal or director nomination which such
stockholder desires to present at any annual or special meeting of stockholders.
Special meetings of stockholders may be called only by the Chairman of the
Board, the Chief Executive Officer or, if none, the President of AXENT or by the
Board of Directors. The AXENT Certificate provides for a classified Board of
Directors, and members of the Board of Directors may be removed only for
cause upon the affirmative vote of holders of at least two-thirds of the
shares of capital stock of AXENT entitled to vote. These provisions, and other
provisions of the AXENT Certificate, may have the effect of deterring hostile
takeovers or delaying or preventing changes in control o management of AXENT,
including transactions in which stockholders might otherwise receive a premium
for their shares over then current market prices. In addition, these provisions
may limit the ability of stockholders to approve transactions that they may deem
to be in their best interests.
Use of Proceeds
AXENT will not receive any proceeds from the sale of the shares
hereunder.
(9)
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Selling Stockholders
Each of the Selling Stockholders was a holder of stock or debt of
Internet Tools, Inc. On January 12, 1999, AXENT and a wholly-owned subsidiary of
AXENT entered into an Agreement and Plan of Merger with Internet Tools providing
for the acquisition of Internet Tools by AXENT pursuant to a merger between
Internet Tools and AXENT's subsidiary. In that merger, which was consummated on
January 12, 1999, the outstanding debt of Internet Tools was converted into
shares of AXENT common stock, shares of capital stock of Internet Tools owned by
the Selling Stockholders were converted into shares of AXENT common stock, and
Internet Tools became a wholly owned subsidiary of AXENT. The Selling
Stockholders have the right to receive a total of 703,189 shares of AXENT common
stock, all of which may be offered for sale from time to time by the Selling
Stockholders after AXENT publishes, within the meaning of Accounting Standards
Release No. 135 and Staff Accounting Bulletins Nos. 65 and 76, financial results
covering at least 30 days of the combined operations of Internet Tools and AXENT
pursuant to the registration statement of which this Prospectus is a part.
Each of the Selling Stockholders has entered into an Affiliate Agreement dated
January 12, 1999 that, among other things, restricts the ability of the
Selling Stockholder to sell, exchange, transfer, pledge, dispose of or otherwise
reduce his risk relative to any shares of AXENT common stock until those
financial results are published, and the shares issued by AXENT to each
Selling Stockholder in the merger are subject to "stop tranfer" instructions.
The name and address of each of the Selling Stockholders, the
positions, offices and other material relationships, if any, of such Selling
Stockholders with Internet Tools prior to merger, the number of shares of AXENT
common stock held by such Selling Stockholder following the merger and the
percentage ownership of such Selling Stockholder of the issued and outstanding
shares of AXENT common stock as of January 12, 1999 is set forth below:
<TABLE>
<S> <C> <C> <C> <C>
POSITION,
OFFICE AND
OTHER MATERIAL NUMBER PERCENTAGE
RELATIONSHIPS OF OF
NAME ADDRESS WITH AXENT SHARES OWNERSHIP
Shubhangi Vaidya 720, Vista Cerro Terrace (1) 658,102 2.6%
Fremont, CA 94539
Vimal Vaidya 720, Vista Cerro Terrace Vice President (2) 45,087 *
Fremont, CA 94539
</TABLE>
* Indicates less than 1% of the total number of shares of AXENT common
stock outstanding.
(1) Prior to the acquisition, Shubhangi Vaidya was the sole principal
stockholder of Internet Tools.
(2) Prior to the acquisition, Vimal Vaidya was the Chief Executive Officer
and sole director of Internet Tools. He is now an employee and Vice
President of AXENT.
Plan of Distribution
A total of 703,189 shares of AXENT common stock are being registered to
permit public secondary sales of the shares of AXENT common stock by the Selling
Stockholders, or any of them, from time to time after the date of this
Prospectus and the date that AXENT publishes, within the meaning of
Accounting Standards Release No. 135 and Staff Accounting Bulletins Nos. 65 and
76, financial results covering at least 30 days of the combined operations of
Internet Tools and AXENT. AXENT anticipates that the Selling Stockholders may
sell all or a portion of the AXENT common stock owned by them from time to time
through the Nasdaq National Market and may sell shares of AXENT common stock to
or through one or more broker-dealers at prices prevailing on such Nasdaq
National Market at the times of such sales. The Selling Stockholders may also
make private sales directly or through one or more broker-dealers. Broker-
dealers participating in such transactions may receive compensation in the form
of discounts, concessions or commissions (including, without limitation,
customary brokerage commissions) from the Selling Stockholders effecting such
sales. The Selling Stockholders and any broker-dealers who act in connection
with sales of AXENT common stock may be deemed to be "underwriters" as that term
is defined in the Securities Act of 1933, and any commissions received by them
and profit on any resale of the those shares of AXENT common stock might be
deemed to be underwriting discounts and commissions under the Securities Act
of 1933. In effecting sales, broker-dealers engaged by a Selling Stockholder
may arrange for other broker-dealers to participate.
(10)
<PAGE>
The Selling Stockholders will pay all discounts and selling commissions
(if any), fees and expenses of counsel and other advisors to the Selling
Stockholders, or any of them, and any other expenses incurred in connection with
the registration and sale of the AXENT common stock, other than the registration
fee payable to the SEC hereunder, the listing fee to be paid for listing the
shares of AXENT common stock on the Nasdaq National Market, fees and expenses
relating to the registration or qualification of the shares of AXENT common
stock pursuant to any applicable state securities or "blue sky" laws and the
fees and expenses of AXENT's counsel and independent accountants, which will be
paid by AXENT.
Legal Matters
Counsel for AXENT, Piper & Marbury L.L.P., Washington, D.C., has
rendered an opinion to the effect that the shares of AXENT common stock offered
hereby are duly and validly issued, fully paid and nonassessable.
Experts
The consolidated balance sheets of AXENT appearing in AXENT's Annual
Report (Form 10-K) for the year ended December 31, 1997, have been audited by
PricewaterhouseCoopers LLP, independent auditors, as set forth in their report
thereon included therein and incorporated by reference. Such consolidated
financial statements have been incorporated herein by reference in reliance upon
such report given upon the authority of such firm as experts in accounting and
auditing.
Disclosure of Commission Position on
Indemnification for Securities Act Liabilities
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or persons controlling AXENT
pursuant to the foregoing provisions, AXENT has been informed that in the
opinion of the SEC, such indemnification is against public policy as expressed
in the Securities Act and is therefore unenforceable.
(11)
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
14. Other Expenses of Issuance and Distribution
The following table sets forth the various expenses and costs expected
to be incurred in connection with the sale and distribution of the securities
offered hereby, other than underwriting discounts and commissions. All of the
amounts shown are estimated except the SEC registration fee.
<TABLE>
<S> <C>
SEC filing fee $ 7,086.40
Nasdaq listing fees 2,000
Printing expenses -0-
Legal fees and expenses 5,000
Accounting fees and expenses 500
Transfer agent and registrar fees -0-
Miscellaneous expenses -0-
-----------
Total $ 14,586.40
</TABLE>
All expenses will be borne by AXENT Technologies, Inc.
15. Indemnification of Officers and Directors
Section 145 of the Delaware General Corporation Law ("Section 145")
permits indemnification of directors, officers, agents and controlling persons
of a corporation under certain conditions and subject to certain limitations.
The Registrant's Bylaws include provisions to require the Registrant to
indemnify its directors and officers to the fullest extent permitted by Section
145, including circumstances in which indemnification is otherwise
discretionary. Section 145 also empowers the Registrant to purchase and maintain
insurance that protects its officers, directors, employees and agents against
any liabilities incurred in connection with their service in such positions.
At present, there is no pending litigation or proceeding involving a
director or officer of the Registrant as to which indemnification is being
sought nor is the Registrant aware of any threatened litigation that may result
in claims for indemnification by any officer or director.
16. Exhibits
The following exhibits are filed or incorporated by reference, as
stated below:
<TABLE>
<CAPTION>
<S> <C> <C>
Exhibit Number Description
3.1 (1) Amended and Restated Certificate of Incorporation of AXENT.
3.2 (2) Amended and Restated Bylaws of AXENT.
4.1 (1) Specimen stock certificate for shares of Common Stock of AXENT.
5.1* Opinion of Piper & Marbury L.L.P.
10.1 (1) AXENT's 1991 Amended and Restated Stock Option Plan.
10.2 (3) AXENT's 1996 Amended and Restated Stock Option Plan.
10.3 (3) AXENT's 1996 Amended and Restated Directors' Stock Option Plan.
10.8 (1) Settlement Agreement effective as of September 13, 1991, by and among AXENT and the
parties thereto.
10.9 (1) Form of Indemnification Agreement between AXENT and its directors and executive
officers.
10.11 (1) Lease Agreement dated as of September 6, 1995, by and
between Research Grove Associates and AXENT.
10.11A(7) Second Amendment dated September 18, 1998 to Lease Agreement by and between Research Grove Associates and
AXENT
</TABLE>
(12)
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
10.12 (1) Lease of Real Property dated as of March 7, 1995, by and between TNK Associates and AXENT.
10.14 (1) Agreement dated as of December 30, 1987, by and between AXENT and William R. Davy.
10.15 (1) Agreement dated as of September 20, 1990, by and between AXENT and William R. Davy.
10.16 (1) Agreement dated as of November 7, 1991, by and between AXENT and William R. Davy.
10.17 (4) Memorandum of Understanding regarding certain compensation and severance matters relating to
Richard A. Lefebvre, dated July 22, 1997.
10.21 (1) Exclusive Distributor License Agreement, effective as of
December 31, 1995, between AXENT and Raxco Software,Inc.
10.22 (1) Administrative Services Agreement, effective as of December 31, 1995, between AXENT and Raxco
Software, Inc.
10.24 (1) Agreement and Plan of Separation, effective as of December 31, 1995, between AXENT and Raxco
Software,Inc.
10.29 (3) Amended Agreement and Plan of Merger among AXENT Axquisition, Inc., and AssureNet Pathways, Inc,
dated as of January 6, 1997 and amended February 26, 1997.
10.30 (5) AXENT's 1998 Employee Stock Purchase Plan.
10.31 (5) AXENT's 1998 Incentive Stock Plan.
10.32 (5) AXENT's Exchange Option Plan for Optionees of Raptor Systems, Inc.
10.33 (5) Agreement and Plan of Merger among AXENT, Axquisition Two, Inc. and Raptor Systems, Inc.
dated as of December 1, 1997.
10.34 (7) AXENT's Executive Severance General Guidelines.
10.35 (7) Lease Agreement dated as of April 23, 1998 by and between Pracvest and AXENT.
10.36 (7) Lease Agreement dated as of May 6, 1997 by and between CC&F Second Avenue Trust and Raptor
Systems, Inc.
10.36A(7) First Amendment to Lease dated as of December 15, 1997 by and between CC&F Second Avenue
Trust and Raptor Systems, Inc.
21.1 (6) Subsidiaries of the Registrant.
23.1* Consent of PricewaterhouseCoopers LLP, Independent Auditors.
</TABLE>
<TABLE>
<S> <C>
- ---------------------------------------------------------------------------------------------------------------------------
(1) Previously filed as an exhibit to AXENT's Registration Statement on
Form S-1 (File No. 333-01368) and incorporated herein by reference.
(2) Previously filed as an exhibit to AXENT's Quarterly Report on Form 10-Q for the Quarter Ended September
30, 1996.
(3) Previously filed as an exhibit to AXENT's Registration Statement on
Form S-4 (File No. 333-20207) and incorporated herein by reference.
(4) Previously filed as an exhibit to AXENT's Quarterly Report on Form 10-Q for the Quarter Ended June 30,
1997.
(5) Previously filed as an exhibit to AXENT's Registration Statement on
Form S-4 (File No. 444-43265) and incorporated herein by reference.
(6) Previously filed as an exhibit to AXENT's Annual Report on Form 10-K
for the year ended December 31, 1997 (File No. 0-28100) and
incorporated herein by reference.
(7) Previously filed as an exhibit to AXENT's Quarterly Report on Form 10-Q for the Quarter Ended September 30, 1998.
* Filed herewith.
</TABLE>
17. Undertakings
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(13)
<PAGE>
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or decrease
in volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than 20 percent
change in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
(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 (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 with or furnished to the
Commission by the registrant pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 that are incorporated by reference in the
registration statement.
(2) 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.
(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 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 the 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.
(14)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Rockville, State of Maryland, on January 26,
1999.
AXENT TECHNOLOGIES, INC.
/s/ John C. Becker
By:________________________
John C. Becker
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENT, that each person whose signature appears
below constitutes and appoints John C. Becker, Gary M. Ford and Edwin M. Martin,
Jr., his or her true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, from such person and in each person's name,
place and stead, in any and all capacities, to sign any and all amendments
(including post-effective amendments) to this registration statement, any
registration statement relating to this registration statement under Rule 462
and to file the same, with all exhibits thereto and other documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agent, full power and authority to do and perform each
and every act and thing requisite and necessary to be done as fully to all
intents and purposes as he or she might or could do in person, hereby ratifying
and confirming all that said attorney-in-fact and agent may lawfully do or cause
to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed below by the following persons in
the capacities and on the date indicated.
<TABLE>
<S> <C> <C>
Signature Title Date
/s/ John C. Becker Chairman of the Board, Chief January 26, 1999
_____________________________ Executive Officer and Director
John C. Becker
/s/ Robert B. Edwards, Jr. Vice President, January 26, 1999
______________________________ Chief Financial Officer and
Robert B. Edwards, Jr. Treasurer
/s/ Richard A. Lefebvre Director January 26, 1999
_______________________________
Richard A. Lefebvre
</TABLE>
(15)
<PAGE>
<TABLE>
<S> <C> <C>
/s/ Gabriel A. Battista Director January 26, 1999
_______________________________
Gabriel A. Battista
/s/ John F. Burton Director January 26, 1999
______________________________
John F. Burton
/s/ Timothy A. Davenport Director January 26, 1999
______________________________
Timothy A. Davenport
</TABLE>
(16)
<PAGE>
EXHIBIT 5.1
PIPER & MARBURY
L.L.P.
1200 NINETEENTH STREET, N.W.
WASHINGTON, D.C. 20036-2430
202-861-3900
FAX: 202-223-2085
BALTIMORE
NEW YORK
PHILADELPHIA
EASTON
January 27, 1999
AXENT Technologies, Inc.
2400 Research Boulevard, Suite 200
Rockville, Maryland 20850
Ladies and Gentlemen:
We have acted as counsel to AXENT Technologies, Inc., a Delaware
corporation (the "Company"), in connection with the Company's Registration
Statement on Form S-3 (the "Registration Statement") filed on the date hereof
with the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act"). The Registration Statement
relates to 703,189 shares of the Company's Common Stock, par value $.02 per
share (the "Shares"), which were previously issued by the Company and are being
registered for resale by the holders thereof.
In this capacity, we have examined the Company's Certificate of
Incorporation and By-laws, the proceedings of the Board of Directors of the
Company relating to the issuance of the Shares and such other documents,
instruments and matters of law as we have deemed necessary to the rendering of
this opinion. In such examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, and
the conformity with originals of all documents submitted to us as copies.
Based upon the foregoing, we are of the opinion and advise you that
each of the Shares described in the Registration Statement has been duly
authorized and validly issued and is fully paid and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving our consent, we do not hereby admit that we
are in the category of persons whose consent is required under Section 7 of the
Act or the Rules and Regulations of the Commission thereunder.
Very truly yours,
/s/ Piper & Marbury L.L.P.
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the registration
statement of AXENT Technologies, Inc. on Form S-3 of our report dated January
27, 1998, on our audits of the consolidated financial statements of AXENT
Technologies, Inc. as of December 31, 1997 and 1996, and for the years ended
December 31, 1997, 1996 and 1995, as included in AXENT Technologies, Inc.'s
Annual Report on Form 10-K for the fiscal year ended December 31, 1997, which
report is incorporated by reference in this registration statement on Form S-3.
We also consent to the reference to our firm under the caption "Experts."
/s/ PricewaterhouseCoopers LLP
McLean, Virginia
January 27, 1999