SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10/A
Amendment No. 3
General Form for Registration of Securities
Pursuant to Section 12(b) or (g) of the
Securities Exchange Act of 1934
ALYDAAR SOFTWARE CORPORATION
(Name of Registrant as specified in its charter)
North Carolina 87-0399301
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2101 Rexford Road, Suite 250 West Charlotte, NC 28211
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: 704/365-2324
Securities to be registered under Section 12(b) of the Act:
Title of each class Name of exchange on which
to be so registered each class is to be registered
None None
Securities to be registered under Section 12(g) of the Act:
Common Stock, par value $0.001 per share
(Title of Class)
Page 1 of 18 sequentially numbered pages
<PAGE>
ITEM 15 - FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements
SEE INDEX OF APPENDIX A
<PAGE>
APPENDIX A
ALYDAAR SOFTWARE CORPORATION
INDEX TO FINANCIAL STATEMENTS
Page
Independent auditors' reports F-2 - F-3
Balance sheets F-4
Statements of operations F-5
Statement of stockholders' equity (deficiency) F-6
Statements of cash flows F-7
Notes to financial statements F-8 - F-13
Balance Sheet page 1
Statement of Operations page 2
Statement of Cash Flows page 3
F-1
<PAGE>
Independent Auditors' Report
Board of Directors
Alydaar Software Corporation
Charlotte, North Carolina
We have audited the balance sheets of Alydaar Software Corporation as of
December 31, 1996 and 1995, and the related statements of operations,
stockholders' equity (deficiency) and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Alydaar Software Corporation as
of December 31, 1996 and 1995 and the results of its operations and its cash
flows for the years then ended, in conformity with generally accepted accounting
principles.
HOLTZ RUBENSTEIN & CO., LLP
Melville, New York
March 27, 1997
F-2
<PAGE>
MICHAEL RACANIELLO, CPA
170 POST ROAD, SUITE 204
FAIRFIELD, CT 06430
Board of Directors
Alydaar Software Corporation
Charlotte, North Carolina
I have audited the accompanying statements of operations, stockholders' equity
(deficiency) and cash flows of Alydaar Software Corporation for the year ended
December 31, 1994. These financial statements are the responsibility of the
Company's management. My responsibility is to express an opinion on these
financial statements based on my audits.
I conducted my audit in accordance with generally accepted auditing standards.
Those standards require that I plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
I believe that my audit provides a reasonable basis of my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the results of its operations, the changes in stockholders'
equity (deficiency) and the cash flows of Alydaar Software Corporation for the
year ended December 31, 1994, in conformity with generally accepted accounting
principles.
MICHAEL RACANIELLO, CPA
Fairfield, Connecticut
May 1, 1996
July 25, 1996, as it refers to Note 6
F-3
<PAGE>
ALYDAAR SOFTWARE CORPORATION
BALANCE SHEETS
<TABLE>
<CAPTION>
December 31,
ASSETS 1996 1995
------ -------------- ----------
<S> <C> <C>
CURRENT ASSETS:
Cash $ 379,382 $ 25,435
Accounts receivable (Note 3) 187,500 -
Prepaid expenses 6,903 4,143
Other receivable (Note 4) 490,000 -
Loan to stockholder 51,256 40,893
-------------- --------------
Total current assets 1,115,041 70,471
PROPERTY AND EQUIPMENT, net (Note 5) 1,694,029 55,018
SECURITY DEPOSITS 60,222 7,706
-------------- --------------
$ 2,869,292 $ 133,195
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 2,184,435 $ 249,353
Unearned revenue 150,000 -
Note payable, stockholder (Note 6) 507,530 3,980
-------------- --------------
Total current liabilities 2,841,965 253,333
-------------- --------------
COMMITMENTS AND CONTINGENCIES (Note 11)
STOCKHOLDERS' EQUITY (DEFICIENCY):
(Notes 7 and 8)
Common stock, $0.001 par value, 20,000,000 shares
authorized; 13,983,282 and 11,187,373 shares issued 13,983 11,187
Additional paid-in capital 6,311,079 1,282,770
Deficit (6,296,940) (1,164,095)
-------------- --------------
28,122 129,862
Less treasury stock, at cost (795) (250,000)
-------------- --------------
Total stockholders' equity (deficiency) 27,327 (120,138)
-------------- --------------
$ 2,869,292 $ 133,195
============== ==============
</TABLE>
See notes to financial statements
F-4
<PAGE>
ALYDAAR SOFTWARE CORPORATION
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Years Ended
December 31,
----------------------------------------------------------
1996 1995 1994
--------------- ------------ ------------
<S> <C> <C> <C>
REVENUES (Note 10) $ 37,500 $ 229,400 $ 160,400
--------------- ------------ ------------
EXPENSES: (Notes 8 and 11)
Payroll and related costs 3,598,307 443,741 235,593
Rent and occupancy 320,707 33,421 32,265
Advertising 215,453 87,716 16,363
Depreciation 349,655 23,203 8,301
Other operating expense 714,648 215,367 159,876
--------------- ------------ ------------
5,198,770 803,448 452,398
--------------- ------------ ------------
Loss from operations (5,161,270) (574,048) (291,998)
--------------- ------------ ------------
OTHER INCOME (EXPENSES):
Interest expense (3,550) (7,700) (12,968)
Interest income 6,812 1,600 -
Other income 25,163 - -
--------------- ------------ -----------
28,425 (6,100) (12,968)
--------------- ------------ ------------
NET LOSS $ (5,132,845) $ (580,148) $ (304,966)
============ =============== ============
NET LOSS PER SHARE $(.41) $(.05) $(.03)
===== ===== =====
WEIGHTED AVERAGE COMMON
AND COMMON EQUIVALENT
SHARES OUTSTANDING 12,394,056 10,894,254 10,233,161
=============== ========== ==========
</TABLE>
See notes to financial statements
F-5
<PAGE>
ALYDAAR SOFTWARE CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIENCY)
(Notes 7 and 8)
<TABLE>
<CAPTION>
Total
Common Stock Additional Stockholders'
Shares Paid-in Subscribed Treasury Stock (Deficiency)
Outstanding Amount Capital Deficit Stock Shares Amount Equity
----------- ------ --------- ---------- -------- ------- ----------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
January 1, 1994 9,282,613 $ 9,283 $ 109,530 $ (278,981) - - $ - $ (160,168)
Issuance of additional shares 1,650,000 1,650 818,210 - - - - 819,860
Additional paid-in capital
arising from debt forgiveness - - 201,904 - - - - 201,904
Net loss - - - (304,966) - - - (304,966)
Less stock subscription receivable - - - - (450,000) - - (450,000)
------------ -------- ----------- ----------- -------- -------- ----------- ---------
Balance, December 31, 1994 10,932,613 10,933 1,129,644 (583,947) (450,000) - - 106,630
Issuance of common shares 654,760 654 352,726 - - - - 353,380
Conversion of subscribed stock
to treasury stock - - - - 450,000 (900,000) (450,000) -
Retirement of treasury stock (400,000) (400) (199,600) - 400,000 200,000 -
Net loss - - - (580,148) - - - (580,148)
------------- ---------- -------- --------- -------- --------- --------- ---------
Balance, December 31, 1995 11,187,373 11,187 1,282,770 (1,164,095) - (500,000) (250,000) (120,138)
Issuance of common shares 2,385,909 2,386 5,076,014 - - - - 5,078,400
Issuance of common shares
as treasury stock 900,000 900 (900) - - (900,000) (900) (900)
Shares issued to employees from
exercise of stock options 10,000 10 202,695 - - 105,000 105 202,810
Retirement of treasury stock (500,000) (500) (249,500) - - 500,000 250,000 -
Net loss - - - (5,132,845) - - - (5,132,845)
-------------- --------- -------- --------- --------- --------- ----------- --------
Balance, December 31, 1996 13,983,282 $ 13,983 $ 6,311,079 $(6,296,940) - (795,000) $ (795) $ 27,327
============ ======== =========== =========== ======== ======== =========== =========
</TABLE>
See notes to financial statements
F-6
<PAGE>
ALYDAAR SOFTWARE CORPORATION
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Years Ended
December 31,
-------------------------------------------------
1996 1995 1994
--------------- ------------ -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (5,132,845) $ (580,148) $ (304,966)
-------------- -------------- ---------------
Adjustments to reconcile net loss to net cash
used in operating activities:
Stock based compensation 252,810 - -
Depreciation 349,655 23,203 8,301
(Increase) decrease in assets:
Accounts receivable (37,500) 91,650 (91,650)
Prepaid expense (2,760) (4,143) -
Increase in accounts payable and accrued expenses 1,935,082 199,972 3,755
--------------- ------------ ------------
Total adjustments 2,497,287 310,682 (79,594)
--------------- ------------ ------------
Net cash used in operating activities (2,635,558) (269,466) (384,560)
--------------- ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment (1,988,666) (33,821) (52,700)
Increase in security deposits (52,516) (4,896) (2,810)
--------------- ------------ ------------
Net cash used in investing activities (2,041,182) (38,717) (55,510)
--------------- ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of stock 4,537,500 353,380 369,860
Advances to shareholder (10,183) (40,893) -
Loans from shareholder 503,370 - 142,014
Repayments of shareholder loan - (20) (75,376)
--------------- ------------ ------------
Net cash provided by financing activities 5,030,687 312,467 436,498
--------------- ------------ ------------
NET INCREASE IN CASH 353,947 4,284 (3,572)
CASH AND CASH EQUIVALENTS, beginning of year 25,435 21,151 24,723
--------------- ------------ ------------
CASH AND CASH EQUIVALENTS, end of year $ 379,382 $ 25,435 $ 21,151
=============== ============ ============
</TABLE>
See notes to financial statements
F-7
<PAGE>
ALYDAAR SOFTWARE CORPORATION
NOTES TO FINANCIAL STATEMENTS
YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
1. DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION:
Alydaar Software Corporation (the "Company") was originally incorporated
in the state of Utah in 1982, and it is currently incorporated in the state of
North Carolina. The Company designs and markets software language translation
and systems migration services.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
a. Cash and cash equivalents
For purposes of the cash flow statement, the Company considers all
highly liquid debt instruments purchased with a maturity of three months or less
to be cash and/or cash equivalents.
b. Depreciation and amortization expense
Depreciation is computed using the straight-line method over the
asset's estimated useful life (3 years).
c. Revenue recognition
The Company generally uses the accrual method of accounting. However,
the Company recognizes revenue when billable. The typical contract for services
specifies progress billings which reflect recognizable portions of completion of
each job, although the job is not fully complete until tested and accepted by
the customer.
d. Income taxes
Deferred tax assets and liabilities are determined based on
differences between financial reporting and tax bases of assets and liabilities,
and are measured using the enacted tax rates and laws that will be in effect
when the differences are expected to reverse. A valuation allowance has been
provided for the deferred tax asset resulting from the net operating loss
carryforward and accelerated tax depreciation for fixed assets.
As of December 31, 1996, a net operating loss carryforward of
$5,700,000, is available through December 31, 2011 to offset future taxable
income.
e. Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
f. Advertising costs
Advertising costs are expensed as incurred and were approximately
$215,000, $88,000 and $16,000 for the years ended December 31, 1996, 1995 and
1994, respectively.
F-8
<PAGE>
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (Cont'd)
g. Loss per share
Loss per common share was computed by dividing the net loss by the
weighted average number of shares of common stock outstanding during the period.
Common stock equivalents were not considered in the computations as their effect
would be anti-dilutive.
h. Reclassifications
Certain items in the 1994 and 1995 financial statements have been
reclassified to conform to the 1996 classifications.
3. ACCOUNTS RECEIVABLE:
Included in accounts receivable as of December 31, 1996 is $150,000 which
relates to unearned revenue.
4. OTHER RECEIVABLES:
Other receivables consist of amounts owed the Company for shares of
common stock issued in connection with warrant exercises which were collected in
February 1997.
5. PROPERTY AND EQUIPMENT:
Property and equipment, at cost, consists of the following:
December 31,
1996 1995
Equipment $ 1,813,377 $ 86,522
Software 251,105 -
Leasehold improvements 10,706 -
------------- --------
2,075,188 86,522
Less accumulated depreciation 381,159 31,504
------------- ---------
$ 1,694,029 $ 55,018
============= =========
6. NOTE PAYABLE, STOCKHOLDER:
During 1996, a stockholder loaned the Company $500,000 which is payable
on demand with interest at 4 1/2% per annum. As of December 31, 1995, the
Company had an 8 1/4% note payable to a shareholder. During 1994, the Company
had accumulated borrowings from its major shareholder and president in the
amount of $201,904. The shareholder forgave this debt in 1994. This transaction
was treated as a credit to additional paid in capital.
7. NON-CASH TRANSACTIONS:
During 1994, the Company accepted non-recourse notes totaling $450,000
for 900,000 shares of subscribed stock. In 1995, the notes expired without
repayment. The Company reclaimed the shares from escrow, retired 400,000 of
those shares in 1995 and retired the balance during 1996.
F-9
<PAGE>
8. STOCKHOLDERS' EQUITY (DEFICIENCY):
a. Capital stock
In January 1996 the Company retired all of the outstanding treasury
shares, that were obtained when a stock subscriber defaulted on his obligation.
Subsequently the Company issued 900,000 shares into treasury at par value to
fulfill obligations under employee stock grants and stock options. During the
year 105,000 shares were distributed from treasury to employees in connection
with the exercise of stock options.
In February 1996 the Company granted an employee 20,000 shares of
common stock and recorded compensation of $40,000.
In July 1996 the Company issued 150,000 shares of common stock for net
proceeds of $1,048,800. The underwriter received warrants to purchase 10,000
shares of common stock as compensation which are exercisable at the market value
of the stock on the date of issuance. In August 1996 the Company issued 25,000
shares to the purchaser of 150,000 shares, thereby reducing the proceeds to the
Company by $1 per share as a penalty for failing to comply with a condition of
the stock placement agreement.
In October 1996 the Company issued 1,000,000 shares in exchange for
$850,000, 565,000 of Class A Warrants and 935,000 of Class B Warrants and the
forgiveness of certain demand registration rights previously granted to this
warrantholder.
In December 1996 the Company issued 109,909 shares of common stock in
exchange for 65,000 Class A Warrants and 65,000 Class B Warrants.
In December 1996 the Company issued 370,000 shares of common stock for
net proceeds of $65,000 and a receivable of $490,000 in connection with the
exercise of 370,000 Class A Warrants.
In December 1996 the Company placed 500,000 shares for anticipated net
proceeds of $3,500,000, but the transaction was not completed by December 31,
1996. In December 1996 the Company issued 155,000 of the 500,000 shares of
common stock for net proceeds of $1,041,445. The net proceeds reflect a fee of
4% and other fees charged by the underwriter. In connection with this offering,
the Company has agreed to file Form 10-SB, to register its class of common stock
and to file an application for listing with NASDAQ on or before March 31, 1997.
If the Company is unable to comply, the offering price of the December placement
will be reduced, retroactively, by $1 per share. The maximum estimated penalty
would be $500,000 if the Company is unable to register its shares.
b. Stock option plan
During 1994, the Company's Board of Directors approved an omnibus
stock option plan to benefit certain key employees. Under this plan (as
amended), the Company may issue up to 1,000,000 shares of stock and/or stock
options through the year 2004. The options become exerciseable at various
periods of time from 30 days to two years from the date of grant.
During 1996 and 1995, the Company granted its employees options to
purchase 295,000 and 390,000 shares of stock, respectively at various exercise
prices that reflected the fair value of stock on the date of grant. The Company
has elected to follow Accounting Principles Board Opinion No. 25, "Accounting
for Stock Issued to Employees," and related Interpretations in accounting for
its employee stock options. Therefore, no compensation cost has been recognized.
If the Company accounted for its stock options under the fair value method of
SFAS No. 123, "Accounting for Stock-Based Compensation", the Company's net loss
and loss per share would have been increased to the pro forma amounts indicated
below:
F-10
<PAGE>
8. STOCKHOLDERS' EQUITY (DEFICIENCY):
b. Stock option plan (Cont'd)
Year Ended
December 31,
1996 1995
Net loss:
As reported $ (5,132,845) $ (580,148)
Proforma (5,482,845) (880,148)
Loss per share:
As reported $(.41) $(.05)
Proforma $(.44) $(.08)
The fair value of each option is estimated on the date of the grant
using the Black-Scholes option pricing model with the following assumptions used
for grants in 1996: dividend yield 0%; expected volatility of .71%; risk-free
interest rate of 6.875%; and expected lives of 10 years.
The following table summarizes the status of stock options outstanding
under the Company's option plan:
<TABLE>
<CAPTION>
Number of Exercise
Options Price
<S> <C> <C>
Granted, 1995 390,000 1.37-1.50
Granted, 1996 255,000 1.19
Granted, 1996 10,000 7.63
Granted, 1996 10,000 9.75
Granted, 1996 20,000 9.06
Exercised, 1996 (105,000) 1.19
Exercised, 1996 (10,000) 7.63
----------
Outstanding and exercisable, December 31, 1996 570,000 1.19-9.75
==========
</TABLE>
The Company contributed the capital for the exercise of the 115,000
options and recorded approximately $212,800 as compensation expense.
c. Warrants
During 1996, 435,000 Class A warrants and 65,000 Class B warrants were
exercised, 565,000 of Class A warrants and 935,000 of Class B warrants were
retired. The Company granted its underwriter 10,000 Class C warrants at 110% of
the fair market value on the date of grant. At December 31, 1996, there were
outstanding 425,000 Class A warrants, 300,000 Class B warrants and 10,000 Class
C warrants.
During 1995, the Company sold 654,760 shares of common stock and
425,000 Class A warrants and 300,000 Class B warrants. Certain shares were
subscribed in units that contained Class A and Class B warrants.
In 1994, the Company issued 1,000,000 Class A warrants and 1,000,000
Class B warrants in connection with the sale of 600,000 shares of common stock.
The Class A warrants can be exercised at a price of $1.50 per share
while the Class B warrants can be exercised at a price of $2.00 per share. Class
C warrants are exerciseable at $11.25 per share. Both classes of warrants will
expire five years from the date of issue or two years from the listing of the
common stock on a national trading exchange whichever is earlier.
F-11
<PAGE>
9. SUPPLEMENTARY CASH FLOW INFORMATION:
Cash paid for interest expense for the year ended December 31, 1995 was
$2,000.
10. CONCENTRATION OF CREDIT RISK:
The Company maintained bank balances, which at times exceeded the
federally insured limit of $100,000.
During 1996 and 1995, one customer accounted for 100% and 75% of the
Company's sales, respectively.
11. COMMITMENTS AND CONTINGENCY:
The Company leases office space under various operating leases. Rent
expense under these leases totaled approximately $257,000 in 1996 and $35,000 in
1995. In April 1996, the Company moved its offices and entered into a 2 1/2 year
lease for this new office space. Future minimum lease payments under these
operating leases are:
Year Ending
December 31, Amount
1997 $779,000
1998 800,000
1999 425,000
2000 365,000
During 1995, the Company allowed its general liability coverage to
expire. In April 1996, the Company reinstated its insurance coverage.
The Company is a defendant in two lawsuits, both of which relate to Gem
Technologies, Inc. (GEM) a former affiliated company of Alydaar Software
Corporation. Twenty purported noteholders or shareholders of GEM filed a
complaint against certain officers, GEM and the Company alleging that the
defendants fraudulently induced the plaintiffs into entering a note purchase
agreement with GEM and fraudulently transferred the property of GEM to the
Company. The plaintiffs have sought actual damages, punitive damages, attorney
fees and injunctive relief relative to the property allegedly transferred to the
Company.
A purported shareholder of GEM filed a complaint against the Company's
president, GEM, and the Company alleging a breach of contract and fraudulent
misrepresentation in that the plaintiff purportedly was to receive shares of
common stock of the Company in exchange for his investment in GEM, but has
purportedly not received any shares. The plaintiff has sought monetary damages,
punitive damages, interest and attorneys' fees.
In the opinion of management, the Company will not incur a significant
loss as a result of these actions and the Company intends to vigorously defend
the allegations made in these complaints. In addition, the Company's President
has agreed to indemnify the Company against any liability resulting from a final
and unappealable judgment or settlement in these actions.
12. JOINT VENTURE:
In December 1996, the Company entered into a joint venture agreement that
formed Alydaar Software Europe, plc. (ASE) which is headquartered in London,
England. This joint venture will market the Company's services internationally.
The Company has contributed licensing authority for the use of its proprietary
software to obtain its 45 percent ownership in the joint venture. As of December
31, 1996, the joint venture had no activity.
F-12
<PAGE>
13. FAIR VALUE OF FINANCIAL INSTRUMENTS:
The methods and assumptions used to estimate the fair value of the
following classes of financial instruments were:
CURRENT ASSETS AND CURRENT LIABILITIES: The carrying amount of cash,
current receivables and payables and certain other short-term financial
instruments approximate their fair value.
The carrying amount and the fair value of the Company's financial
instruments at December 31, 1996 are as follows:
Carrying Fair
Amount Value
Cash $ 379,382 $ 379,382
Accounts receivable and other receivable 677,500 677,500
Loan to stockholder 51,256 51,256
Accounts payable and accrued expenses 2,184,435 2,184,435
Note payable, stockholder 507,530 507,530
14. INCOME TAXES:
Due to the losses incurred by the Company, no provision for taxes,
current or deferred have been recorded.
The components of the net deferred taxes are as follows:
<TABLE>
<CAPTION>
December 31,
-------------------------------------------------
1996 1995 1994
-------------- ------------ ------------
<S> <C> <C> <C>
Deferred tax assets:
Net operating loss carryforward $ 2,280,000 $ 229,000 $ 126,000
Deferred tax liabilities:
Depreciation method of
property and equipment (128,000) - -
Allowance for realization of assets (2,152,000) (229,000) (126,000)
-------------- ------------ ------------
$ - $ - $ -
============== ============ ===========
</TABLE>
A reconciliation between the actual income tax expense and income
taxes computed by applying the statutory federal income tax rate to income
before taxes is as follows:
<TABLE>
<CAPTION>
Years Ended
December 31,
-------------------------------------------------
1996 1995 1994
-------------- ------------ ------------
<S> <C> <C> <C>
Computed income tax credit at 34% $ (1,745,167) $ (197,250) $ (103,688)
Addition to allowance for realization
of deferred tax asset net operating
loss carryforward 1,745,167 197,250 103,688
-------------- ------------ ------------
$ - $ - $ -
============== ============ ===========
</TABLE>
F-13
<PAGE>
Alydaar Software Corporation
Balance Sheet
(Unaudited)
March 31, 1997 and 1996
<TABLE>
<CAPTION>
1997 1996
<S> <C> <C>
Assets
Current Assets
Cash $50,794 $1,328,811
Loan to shareholder 51,256 53,893
--------- ----------
102,050 1,382,704
Property and Equipment, net 1,961,025 64,343
Security Deposits 126,975 7,706
---------- ----------
$2,190,050 $1,454,753
========== ==========
Liabilities and Stockholders' (Deficiency) Equity
Current Liabilities
Accounts payable and accrued expenses $2,905,981 $297,306
Notes payable, shareholders 800,000 3,980
---------- ---------
3,705,981 301,286
---------- ---------
Commitments and Contingencies
Stockholders' (Deficiency) Equity
Common stock, $0.001 par value, 20,000,000 shares
authorized, 15,113,280 and 11,772,890 shares issued
and outstanding 15,113 11,773
Additional paid-in capital 7,884,848 2,925,083
Deficit (9,415,097) (1,533,389)
---------- ----------
(1,515,136) 1,403,467
Less: treasury stock @ cost (795) (250,000)
---------- ----------
(1,515,931) 1,153,467
---------- ----------
$2,190,050 $1,454,753
========== ==========
</TABLE>
1
<PAGE>
Alydaar Software Corporation
Statement of Operations
(Unaudited)
Three Month Period Ended March 31, 1997 and 1996
1997 1996
--------- --------
REVENUES $187,500 $0
EXPENSES
Payroll and related costs 2,764,104 196,047
Rent and occupancy 146,341 19,000
Advertising 43,011 28,837
Depreciation 134,437 17,218
Other operating expense 219,254 112,526
--------- --------
3,307,147 371,628
--------- --------
OPERATING LOSS (3,119,647) (371,628)
--------- --------
OTHER INCOME (EXPENSE)
Interest expense (16,582) 0
Other income 18,072 2,334
--------- --------
1,490 2,334
--------- --------
Net Loss ($3,118,187) ($369,294)
========= ========
Loss Per Share ($0.21) ($0.03)
========= ========
Weighted Average
No. of Shares 14,531,614 11,469,196
========== ==========
2
<PAGE>
ALYDAAR SOFTWARE CORPORATION
STATEMENTS OF CASH FLOWS
For Three Months Ending
December 31,
1997 1996
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss $(3,118,157) (369,294)
--------- -------
Adjustments to reconcile net loss
to net cash used in operating
activities:
Stock based compensation 100,000 51,900
Depreciation 134,437 17,218
(Increase) decrease in assets:
Accounts receivable 187,500 -0-
Other receivables 490,000 -0-
Prepaid expense 6,903 4,143
Increase in accounts payable and
accrued expenses 571,546 47,953
Total adjustments 1,490,386 121,214
--------- -------
Net cash used in operating
activities (1,627,771) (248,080)
--------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment (401,434) (26,544)
Increase in security deposits (66,753) -0-
--------- ---------
Net cash used in investing
activities (468,187) (26,544)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of stock 1,474,899 1,591,000
Advances to shareholder -0- (13,000)
Loans from shareholder 292,470 -0-
Repayments of shareholder loan -0- -0-
--------- ---------
Net cash provided by financing
activities 1,767,369 1,578,000
--------- ---------
NET INCREASE (DECREASE) IN CASH (328,589) 1,303,376
CASH AND CASH EQUIVALENTS, beginning of year 379,382 25,435
CASH AND CASH EQUIVALENTS, end of period 50,793 1,328,811
--------- ---------
3
