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Filed Pursuant to Rule 424(b)(3)
Registration Statement No. 333-75685
DATED MAY 28, 1999
1,566,088 Shares
Alydaar Software Corporation
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Common Stock
($0.001 par value)
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This prospectus relates to the public offering of shares of our common
stock by the selling stockholder. These shares may be issued to the selling
stockholder on conversion of our debentures or exercise of our warrants owned by
the selling stockholder. We will not receive any of the proceeds from the sale
of the shares. We will pay all expenses of registration incurred in connection
with this offering, but the selling stockholder will pay all of its selling
commissions, brokerage fees and related expenses.
The selling stockholder has advised us that it will sell the shares
from time to time in the open market, on the Nasdaq Stock Market, in privately
negotiated transactions or a combination of these methods, at market prices
prevailing at the time of sale, at prices related to the prevailing market
prices, at negotiated prices, or otherwise as described under "Plan of
Distribution."
Our common stock is traded on the Nasdaq National Market (Nasdaq
Symbol: ALYD). On May 18, 1999, the closing price of the common stock was
$4.125 per share.
INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 3.
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NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
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The date of this prospectus is May 28, 1999.
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WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and current reports, proxy statements and
other information with the Securities and Exchange Commission. You may read and
copy any reports, statements or other information that we file at the Securities
and Exchange Commission's public reference room at 450 Fifth Street N.W.,
Washington, D.C. 20549 or at its regional public reference rooms in New York,
New York and Chicago, Illinois. Please call the Securities and Exchange
Commission at 1-800-SEC-0330 for further information on the operations and
locations of the public reference rooms. Our Securities and Exchange Commission
filings are also available to the public from commercial document retrieval
services and at the Internet World Wide Web site maintained by the Securities
and Exchange Commission at "http://www.sec.gov."
This prospectus is a part of a registration statement we filed with the
Securities and Exchange Commission. As allowed by the rules of the Securities
and Exchange Commission, this prospectus does not contain all of the information
that can be found in the registration statement or in the exhibits to the
registration statement. You should read the registration statement and its
exhibits for a complete understanding of all of the information included in the
registration statement.
The Securities and Exchange Commission allows us to "incorporate by
reference" information into this prospectus, which means that we can disclose
important information to you by referring you to another document filed
separately with the Securities and Exchange Commission. The information
incorporated by reference becomes part of this prospectus, and information that
we file later with the Securities and Exchange Commission will automatically
update and supercede this information. We incorporate by reference the documents
listed below that we have previously filed with the Securities and Exchange
Commission:
1. Annual Report on Form 10-K for the fiscal year ended
December 31, 1998;
2. Quarterly Report on Form 10-Q for the quarterly period ended
March 31, 1999;
3. Current Report on Form 8-K filed with the Securities and
Exchange Commission on April 8, 1999; and
4. The description of our capital stock set forth in our Form 10
filed with the Securities and Exchange Commission on March 31,
1997.
We also incorporate by reference in this prospectus additional
documents that we may file with the Securities and Exchange Commission under
Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934 after
the date of this prospectus. These include periodic reports, such as annual
reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form
8-K.
You may obtain the documents incorporated by reference as described
above. You may also request a copy of these filings, at no cost, from us by
writing or telephoning us at:
Alydaar Software Corporation
2101 Rexford Road, Suite 250 W
Charlotte, North Carolina 28211
(704) 365-2324
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RISK FACTORS
In evaluating our business, prospective investors should carefully
consider the following risks in addition to the other information in this
prospectus or in the documents referred to in this prospectus. Any of the
following risks could materially adversely impact our business, operating
results and financial condition and result in a complete loss of your
investment.
The statements made in in this prospectus, including the information
incorporated by reference, that are not historical facts contain
"forward-looking information" within the meaning of the Private Securities
Litigation Reform Act of 1995, and Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934, both as amended, which can
be identified by the use of forward-looking terminology such as "may", "will",
anticipates", "expects", "projects", "estimates", "believes" or "continue", the
negative thereof, other variations or comparable terminology. Important factors,
including certain risks and uncertainties with respect to such forward-looking
statements that could cause actual results to differ materially from those
reflected in such forward looking statements include, but are not limited to,
the risk factors discussed below.
Risk Factors - Generally Applicable to Our Business
We Are Dependent On Our New Strategic Direction To Replace Revenues From Our
Year 2000 Business. Until the completion of our announced acquisitions, we will
derive substantially all of our revenues from our Year 2000 business. We
anticipate that the Year 2000 business will begin to decline, perhaps
dramatically, after December 31, 1999. In order for us to sustain our growth and
viability after December 31, 1999, we entered into agreements to acquire Data
Systems, Tumble and the Metaphoria software. The successful implementation of
the acquisitions of Data Systems, Tumble, Metaphoria software and other possible
acquisitions are dependent on a number of factors, including our ability to
assimilate the operations, personnel, and technology of the acquired companies
and technologies, and our ability to provide sufficient capital either from
internally generated revenues or external sources to properly fund the
integration and future growth of the combined entities. We may not be successful
in the integration of these entities. Also, if we do not complete any of these
acquisitions, we will need to seek other acquisitions or business combinations
to replace the revenues generated by our Year 2000 business. If we are unable to
complete the announced acquisitions or find other sources of revenues, it could
have a materially adverse affect on our stock trading price, prospects and
financial condition.
Our Future Results Will Depend On Our Ability To Manage Change. We have
experienced substantial growth and expansion in our business and operations
since our inception. We expect to continue to experience periods of rapid change
as we implement our new strategic direction and integrate acquisitions.
Continued expansion places significant demands on our administrative,
operational, financial, and other resources. The failure of our management team
to successfully manage the changing business could have a material adverse
impact on our business, results of operations and financial condition.
Our Quarterly Results Are Subject To Significant Fluctuations. We have
experienced significant quarterly fluctuations in revenues and operating
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results, including the fourth quarter of 1998, and expect these fluctuations to
continue in the future. These fluctuations may occur and have occurred due to a
number of factors including:
- -- the length of customer's evaluation process for our services;
- -- sales pipeline disruption caused by a major restructuring of the sales
and marketing departments during the third and early fourth quarters of
1998;
- -- changes in the mix of Y2K services from higher price remediation
services to lower price validation services;
- -- the timing and cost of new product and service introductions;
- -- the timing of any acquisitions and associated costs; and
- -- general economic conditions.
Furthermore, these fluctuations could materially and adversely affect the price
of our Common Stock in future quarters if our revenues or operating results are
below expectations.
Our Recent And Planned Acquisitions And Financing Are Dilutive To Existing
Stockholders. We will issue common stock to complete each of our recent and
planned acquisitions and in connection with our debentures issued in March 1999.
These issuances of common stock could result in dilution of a stockholder's
percentage ownership interest in our company and could adversely affect the
market price of our common stock.
Our debentures are convertible into shares of our common stock based on the
trading prices of the common stock in the future. For example, the conversion
price of the debentures on May 10, 1999 would have been $3.875 and if the
debenture holder were to have converted all of its debentures on that date,
774,194 shares of our common stock would have been issued to the debenture
holder, which would represent 4.4% of our outstanding common stock. The
conversion price of the debentures is adjusted based on the trading price of our
common stock. If the trading price of the common stock is low when the
conversion price of the debentures is determined, we would be required to issue
a higher number of shares of common stock, which could cause substantial
dilution to our stockholders. In addition, if the debenture holders convert
their debentures and sell the common stock, this could result in an imbalance of
supply and demand for our common stock and reduce its price. The further our
stock price declines, the further the adjustment of the conversion price will
fall and the greater the number of shares we will have to issue upon conversion.
We could be required to issue up to 19.9% of our outstanding common stock on
March 5, 1999 (3,504,406 shares based on 17,610,085 shares outstanding) on
conversion of our outstanding debentures and exercise of the related warrants
without stockholder approval. We have agreed to seek stockholder approval to
issue more than 19.9% of our outstanding common stock, if requested by the
debenture holder.
The Data Systems acquisition is structured with a minimum price per share of
$6.00. If the average price per share for the ten trading days immediately prior
to closing of this acquisition is less than $6.00 per share, then we are
required to issue the number of shares equivalent to 9,666,282. These
transactions and any future acquisitions or financing requiring additional
issuances of our common stock could be dilutive.
Our Debenture Financing Limits Our Ability To Enter Future Transactions And The
Debenture Holders Can Require Us To Redeem The Debentures At A Premium If
Certain Events Happen. In March 1999, we raised $3 million by issuing
debentures, which are convertible into shares of our common stock. The
debentures and related agreements contain significant covenants. These covenants
may limit our ability to enter into future transactions, including financing
transactions and transactions involving a change in control or acquisition of
us. The debenture holders can require us to redeem the debentures at a premium
if certain events happen, including:
- -- If we breach the representations, warranties and covenants contained in
the debentures and related agreements;
- -- If the Securities and Exchange Commission does not declare the
registration statement covering the common stock issuable upon
conversion of the debentures effective by the 120th day after the
registration statement is filed; or
- -- If we are acquired by a third party.
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The redemption price will be 125% of the outstanding principal amount if certain
events within our control occur and also after certain change of control
transactions. The redemption price will be 110% if certain events not within our
control occur and following certain other change of control transactions. If the
debentures become redeemable, we may not be able to pay the redemption price.
Even if we are able to redeem the Debentures, the redemption payments could be
substantial and this could have a material adverse effect on our business and
financial condition.
We May Need To Raise Additional Capital. If we decide to expand more rapidly
than currently anticipated or we do not materially meet our revenue projections,
we may need to raise additional capital. Any additional equity financing will be
dilutive to stockholders, and debt financing will involve restrictive covenants,
which may limit our operating flexibility. If financing is not available on
acceptable terms, we may be unable to develop or enhance our products, take
advantage of future opportunities, or respond to competitive pressures, or
unanticipated requirements. The occurrence of any of these factors could have a
material adverse effect on our business, financial condition, and operating
results.
If We Are Unable To Adequately Protect Our Intellectual Property Rights Or If
Our Intellectual Property Rights Are Challenged, Our Business Could Suffer. Our
success depends significantly upon our proprietary technology. We currently
protect our proprietary rights through a combination of patent, copyright,
trademark, trade secret law, confidentiality agreements and contractual
provisions. Certain provisions of our client agreements, including provisions
protecting against unauthorized use, copying, transfer and disclosure, may be
unenforceable under the laws of certain jurisdictions. We are also required to
negotiate limits on these provisions from time to time. We may not be able to
adequately deter misappropriation of proprietary information or to detect
unauthorized use and take appropriate steps to enforce our intellectual property
rights.
In recent years, litigation involving patents and other intellectual property
rights has increased. Certain patents may cover solutions to the Y2K Problem. We
believe that we are either not using these patented solutions or have utilized
such solutions prior to the patent filing date. Regardless, we may be a party to
litigation in the future to protect our intellectual property or for allegedly
infringing other intellectual property rights. Such litigation may force us to
do one or more of the following:
- -- Cease selling, incorporating or using products or services that
incorporate the challenged intellectual property;
- -- Obtain from the holder of the infringed intellectual property a license
to sell or use the relevant technology, which license may not be
available on reasonable terms; and
- -- Redesign our affected products or services.
The occurrence of any of these factors could materially and adversely impact our
operations and results.
We Face Potential Liability To Clients From Our Year 2000 Business. There is
increasing litigation arising out of failures or potential failures in computer
systems arising out of the Y2K Problem. To date, we are not a party to any
litigation arising out of a Y2K failure. We have attempted to limit our
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liability for Y2K claims through provisions in our contracts with customers,
limiting our damages, generally providing no warranties on our services through
the Year 2000, and disclaiming all other warranties. These contractual
protections may not be enforceable in all instances, and may not otherwise
protect us from the substantial costs involved in defending a Y2K claim. We
currently self-insure against the possibility of these costs. In the event we
become a party to any such litigation, the cost of defending such litigation or
adverse outcome could materially adversely affect our business, results of
operations and financial condition.
We May Not Be Able To Respond To Rapid Technological Change. Rapid technological
change characterizes the markets for Internet professional services and Y2K
services. Our future success will depend significantly on our ability to improve
our existing services and products, offer new services, enhance our recently
acquired products and develop, acquire and market new products and services. Our
failure to adequately and timely respond to changing technology could result in
material adverse effects to our business and operations.
Our Stock Price Has Been Volatile And We Have Not Paid, And Do Not Plan To Pay,
Cash Dividends. Since our inception we have not paid, and do not intend to pay,
any cash dividends on our common stock in the foreseeable future. Historically,
our common stock's price and trading volume has fluctuated widely. We expect
this fluctuation to continue in the future for a number of reasons, including
the following:
- -- Our success or failure in meeting market expectations of our quarterly
or annual revenues, net income or earnings per share;
- -- Our or competitor's announcements regarding new services and products
or technological innovations;
- -- Stock prices for many technology companies fluctuate widely for reasons
that may be unrelated to operating results;
- -- Changing market conditions in the industry; and
- -- Announcements of unusual events such as acquisitions.
Fluctuations in the market price of our stock may, in turn, adversely affect our
ability to complete any planned acquisitions, our access to capital and
financing and our ability to attract and retain qualified personnel, all of
which could have a material adverse effect on our business.
We May Be Adversely Affected If We Lose Key Personnel. Our success depends
largely on the skills, experience and performance of some key members of our
senior management and technical personnel. The loss of one or more of these key
personnel could have a materially adverse effect on the business.
Our Results May Be Adversely Affected By Our International Operations. Our
international sales, primarily in France, England and the rest of Europe
attributed approximately 18% of our total consolidated revenues for the year
ended December 31, 1998. We anticipate that international business will account
for a significant portion of our revenues in 1999. The risks inherent in
international markets, include:
- -- unexpected changes in regulatory requirements;
- -- difficulties in staffing and managing foreign operations;
- -- political instability;
- -- potentially adverse tax consequences;
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- -- potentially adverse differences in business customs, practices and
norms;
- -- differences in accounting practices;
- -- longer payment cycles;
- -- problems in collecting accounts receivable;
- -- fluctuations in currency exchange rates; and
- -- seasonal reductions in business activity during the summer months in
Europe.
Any of these could adversely impact the success of our international operations.
The factors described above may have an adverse effect on our future
international revenues and, consequently, on our business, results of operations
and financial condition.
Mr. Gruder Exercises Significant Control Over Us. Mr. Gruder, our Chief
Executive Officer and Chairman of the Board, is presently the beneficial owner
of approximately 40% of our outstanding common stock. Although Mr. Gruder's
ownership will be diluted as a result of planned acquisitions and financing, Mr.
Gruder will continue to be in a position to influence the election of directors
and generally to direct our affairs including certain significant corporate
actions such as acquisitions, the sale or purchase of assets and the issuance
and sale of our securities.
We Face Intense Competition For Year 2000 Services. Our Y2K services have
intense competition from two different sources: Remediation performed in-house
and Remediation and Validation software and services offered by direct
competitors. Many of our competitors are better established, have existing
relationships with customers and have far greater resources than us. As a result
of this competition, our revenues for Y2K services could decrease which would
have a materially adverse effect on our business, financial conditions, results
of operations and prospects.
Risk Factors - New Strategic Direction
We May Be Adversely Affected If We Are Not Able To Attract And Retain Qualified
Professionals. The future success of our new strategic direction will depend on
our ability to attract, train, motivate and retain personnel who provide the
Internet strategy, technology, marketing, and creative skills required by
clients. We believe that there is a shortage of, and significant competition
for, professionals with the advanced technological skills necessary to perform
the services offered by our new Internet services. We also intend to transfer
current employees from our Y2K business to our new Internet business. The
transition will require training in new technology and new skills sets
applicable to Internet technology. Once trained, such individuals will be in
higher demand because of their new skill set. Additionally, not all of our
current personnel will be able to acquire the skills necessary to transition to
our new business. We cannot be certain that we will be successful in attracting,
assimilating, transitioning or retaining qualified technological personnel in
the future. Our failure to do so could have a materially adverse affect on our
ability to deliver and enhance our services.
We May Not Be Able to Develop Successful Products. We recently acquired and plan
to develop new software products designed to facilitate communication and
commerce over the Internet. This software is in a development stage and will
require significant expenditures of resources to complete the development
effort. These products will involve a new approach to the conduct of online
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business and as a result, intensive marketing and sales efforts may be necessary
to educate prospective customers regarding the uses and benefits of our
products. We cannot be certain that we will successfully develop and market new
products, new product enhancements or new products compliant with present or
emerging Internet technology standards. Any delays in developing and releasing
enhanced or new products could have a materially adverse effect on our business,
operating results and financial condition.
We Will Face Intense Competition In The Internet Market. The market for Internet
professional services and products is relatively new, intensely competitive and
subject to rapid technological change. There is competition on two distinct
levels: (i) from in-house development efforts by potential customers and (ii)
third party competitors. Our third party competitors include service vendors,
advertising and media agencies, large information technology consulting service
providers, telecommunications companies, Internet and online service providers
and software vendors. Many of our current and potential competitors have longer
operating histories, established name recognition, longer relationships with
clients and significantly greater financial, technical, marketing and public
relations resources. In addition, current and potential competitors have
established or may establish cooperative relationships among themselves or with
third parties to enhance their products or services. Also, businesses may not
elect to outsource the design, development and maintenance of their Websites or
utilize Internet professional services firms. All of these factors could have a
material adverse effect on our business, financial condition, results of
operations and prospects.
Future Regulations Could Be Enacted That Either Directly Restrict Our Business
Or Indirectly Impact Our Business By Limiting The Growth of Internet Commerce.
We are not aware of any legislation or regulatory requirements currently in
effect in the United States that regulate Internet commerce. Certain other
countries and political entities, however, such as the European Economic
Community, have adopted legislation and regulatory requirements that regulate
Internet commerce. As Internet commerce evolves, we expect that federal, state,
local or foreign agencies will adopt regulations covering issues such as user
privacy, pricing, content and quality of products and services, freedom of
expression, taxation, advertising, intellectual property rights, information
security or the convergence of traditional communications services with Internet
communications. If enacted, such laws, rules or regulations could restrict the
market or increase the costs for our products and services, which could
materially adversely affect our business, financial condition and operating
results.
THE COMPANY
We are presently engaged in the business of providing
software-reengineering services. These services include (i) the correction and
validation of existing mainframe computer software systems' ability to manage
the Year 2000 problem and (ii) software conversion services, such as language
translations and migrations. In October 1998, we also announced a new strategic
direction, establishing an Internet services business providing management
consulting, design, development and deployment for enterprise information
portals. Through this new strategic direction, we plan to assist organizations
in transforming their existing information systems architecture to support
scalable and flexible architecture for Internet, Intranet and Extranet
applications. Our executive offices are located at 2101 Rexford Road, Charlotte,
North Carolina 28211. Our telephone number at that address is (704) 365-2324.
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USE OF PROCEEDS
We will not receive any proceeds from the sale of the shares offered by
the selling stockholder.
SELLING STOCKHOLDER
The selling stockholder received or will receive the shares offered by
this prospectus upon conversion of our 6% Convertible Exchangeable Debentures
(the "Debentures") or exercise of warrants (the "Warrants") to purchase common
stock. The selling stockholder holds no shares of common stock other than those
offered pursuant to this prospectus.
On March 5, 1999, we entered into an agreement with the selling
stockholder pursuant to which it invested $3 million in our company. Pursuant to
such agreement, we issued the selling stockholder $3,000,000 in principal amount
of Debentures and Warrants to purchase 30,000 shares of our common stock.
The following table sets forth the aggregate number of shares of common
stock held by the selling stockholder and offered by the selling stockholder
hereunder and the percentage of all shares of common stock held by the selling
stockholder after giving effect to the offering (based on 17,610,085 shares of
common stock outstanding as of February 24, 1999). The share numbers set forth
in the table below include an aggregate of 30,000 shares of common stock
issuable upon the exercise of the Warrants held by the selling stockholder, and
an estimated 785,807 shares issuable upon conversion of the Debentures held by
the selling stockholder. The estimated number of shares issuable upon conversion
of the Debentures is based on an estimated conversion price of $3.875 per share
of common stock. The actual number of shares of common stock issuable upon
conversion of the Debentures currently is indeterminable, is subject to
adjustment and could be materially less or more than such estimated number
depending on factors which cannot be predicted by us at this time, including,
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among other factors, the future market price of the common stock. However, the
number of shares issuable upon exercise of the Warrants and conversion of the
Debentures is initially limited to 19.99% of the outstanding shares of common
stock on the date of issuance of the Debentures, or 3,520,256 shares, unless we
obtain shareholder approval of the issuance of additional shares of common stock
upon exercise of the Warrants and conversion of the Debentures. Because of the
possibility of antidilution adjustments to the conversion price of the
Debentures (which is based on the market price of the common stock), or that the
number of shares of common stock outstanding increases due to a stock split or
dividend, the number of shares of common stock issuable upon such conversion or
exercise and subject to this prospectus is indeterminate and this prospectus
relates to the resale of such entire indeterminate number of shares of common
stock. Other than the ownership of our securities, the selling stockholder has
had no material relationship with us within the past three years.
<TABLE>
<CAPTION>
Number of Shares Percent of Outstanding
Name of Selling Beneficially Owned Number of Shares Common Stock Owned After
Stockholder Before Offering (1) Offered Offering (2)
- --------------- ------------------- ---------------- ------------------------
<S> <C> <C>
Marshall Capital
Management, Inc. 815,807 (3) 1,566,088 (4)
</TABLE>
- ------------------------
(*) Less than 1%.
1. No holder of Debentures or Warrants is entitled to convert or exercise
such securities or to receive dividends thereon in shares of common
stock to the extent that such conversion, exercise or payment of
dividends would cause such holder to own beneficially more than 4.99%
of the common stock then outstanding. Accordingly, the number of shares
of common stock set forth herein and which the selling stockholder may
sell pursuant to this prospectus may exceed the number of shares of
common stock the selling stockholder beneficially owns as determined
pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
2. Because the selling stockholder may offer all or some of the common
stock pursuant to the offering contemplated by this prospectus, no
estimate can be given as to the amount of shares of common stock that
will be held by the selling stockholder after completion of this
offering. See "Plan of Distribution."
3. Includes 785,807 shares of common stock issuable upon the conversion of
the Debentures held by the selling stockholder and 30,000 shares of
common stock issuable upon the exercise of Warrants held by the selling
stockholder.
4. The number of shares of common stock registered pursuant to the
registration statement and the number of shares of common stock offered
hereby by the selling stockholder have been determined by agreement
between us and the selling stockholder.
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PLAN OF DISTRIBUTION
The selling stockholder has advised us that the common stock may be
sold or distributed from time to time by the selling stockholder, directly to
one or more purchasers (including pledgees) or through brokers, dealers or
underwriters who may act solely as agents or may acquire common stock as
principals, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices, at negotiated prices, or at fixed prices,
which may be changed. The common stock may be sold by one or more of the
following distribution methods: (i) ordinary brokers' transactions, which may
include long or short sales; (ii) transactions involving cross or block trades,
or otherwise on the Nasdaq National Market; (iii) purchases by brokers, dealers
or underwriters as principal and resale by such purchasers for their own
accounts pursuant to this prospectus; (iv) "at the market" to or through market
makers or into an existing market for the common stock; (v) in other ways not
involving market makers or established trading markets, including direct sales
to purchasers or sales effected through agents; (vi) through transactions in
options, swaps or other derivatives (whether exchange-listed or otherwise);
(vii) pursuant to Rule 144 under the Securities Act of 1933, as amended (the
"Securities Act"); or (viii) any combination of the foregoing, or by any other
legally available means. In addition, the selling stockholder may enter into
hedging transactions with broker-dealers who may engage in short sales of common
stock in the course of hedging the positions they assume with the selling
stockholder. The selling stockholder may also enter into option or other
transactions with broker-dealers that require the delivery by such
broker-dealers of the common stock, which common stock may be resold thereafter
pursuant to this prospectus. In connection with any sales, the selling
stockholder and any brokers or dealers participating in such sales may be deemed
to be underwriters within the meaning of the Securities Act. We will receive no
part of the proceeds of sales made hereunder.
Any broker-dealer participating in such transactions as agent may
receive commissions from the selling stockholder and/or purchasers of the shares
offered hereby (and, if it acts as agent for the purchaser of such shares, from
such purchaser). Usual and customary brokerage fees will be paid by the selling
stockholder. Broker-dealers may agree with the selling stockholder to sell a
specified number of shares at a stipulated price per share, and, to the extent
such a broker-dealer is unable to do so acting as agent for the selling
stockholder, to purchase as principal any unsold shares at the price required to
fulfill the broker-dealer commitment to the selling stockholder. Broker-dealers
who acquire shares as principal may thereafter resell such shares from time to
time in transactions (which may involve cross and block transactions and which
may involve sales to and through other broker-dealers, including transactions of
the nature described above) in the over-the-counter market, in negotiated
transactions or otherwise at market prices prevailing at the time of sale or at
negotiated prices, and in connection with such resales may pay to or receive
from the purchasers of such shares commissions computed as described above.
We have advised the selling stockholder that Regulation M promulgated
under the Exchange Act may apply to its sales in the market, have furnished the
selling stockholder with a copy of this regulation and have informed it of the
need for delivery of copies of this prospectus. The selling stockholder may
indemnify any broker-dealer that participates in transactions involving the sale
of the shares against certain liabilities, including liabilities arising under
the Securities Act. Any commissions paid or any discounts or concessions allowed
to any such broker-dealers, and any profits received on the resale of such
shares, may be deemed to be underwriting discounts and commissions under the
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Securities Act if any such broker-dealers purchase shares as principal. We have
agreed to indemnify the selling stockholder against certain liabilities,
including liabilities under the Securities Act.
Any shares of common stock which qualify for sale pursuant to Rule 144
under the Securities Act may be sold under that Rule rather than pursuant to
this prospectus.
There can be no assurance that the selling stockholder will sell any or
all of the shares of common stock offered by them hereunder.
LEGAL MATTERS
The validity of the common stock offered pursuant to this prospectus
and certain other legal matters will be passed upon for us by McGuire, Woods,
Battle & Boothe LLP, Charlotte, North Carolina.
EXPERTS
The financial statements appearing in our Annual Report (Form 10-K) for
the year ended December 31, 1998, have been audited by Holtz Rubenstein & Co.,
LLP, independent auditors, as set forth in their report thereon included therein
and incorporated herein by reference. Such financial statements are incorporated
herein by reference in reliance upon such report given upon the authority of
such firm as experts in accounting and auditing.
12
<PAGE> 13
We have authorized no one to give any information or to make any representations
that are not contained in this prospectus. You should rely only on the
information incorporated by reference or provided in this prospectus. You must
not rely on any unauthorized information.
This prospectus does not offer to sell or buy any shares in any jurisdiction
where it is unlawful. You should not assume that the information in this
prospectus is accurate as of any date other than the date on the front of this
document.
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TABLE OF CONTENTS
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Page
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Where You Can Find More Information....................................... 2
Risk Factors.............................................................. 3
The Company............................................................... 8
Use of Proceeds........................................................... 9
Selling Stockholder....................................................... 9
Plan of Distribution...................................................... 11
Legal Matters............................................................. 12
Experts................................................................... 12
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1,566,088 SHARES
[ALYDAAR SOFTWARE
CORPORATION]
COMMON STOCK
--------------
PROSPECTUS
--------------
MAY 28, 1999
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