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As filed with the Securities and Exchange Commission on May 17, 1999
Registration No. 333-_______________
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ALYDAAR SOFTWARE CORPORATION
(Exact name of Registrant as specified in its charter)
NORTH CAROLINA 7372 87-0399301
- ------------------------------ --------------------------- ---------------
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation organization) Classification Code Number) Identification
Number)
2101 Rexford Road, Suite 250W
Charlotte, North Carolina 28211
(704) 365-2324
(Address, including zip code and telephone number, including
area code, of Registrant's principal executive offices)
----------------------
J. Dain Dulaney
ALYDAAR SOFTWARE CORPORATION
2101 Rexford Road, Suite 250 W
Charlotte, North Carolina 28211
(704) 365-2324
(Name, address, including zip code and telephone number, including area code,
of agent for service)
----------------------
COPY TO:
Richard J. Blumberg
MCLAUGHLIN & STERN, LLP
260 Madison Avenue
New York, New York 10016
----------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
From time to time after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. [ ]
<PAGE> 2
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, 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. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=========================================================================================================================
PROPOSED PROPOSED
TITLE OF EACH MAXIMUM MAXIMUM
CLASS OF SECURITIES AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
TO BE REGISTERED REGISTERED PER SHARE(1) PRICE REGISTRATION FEE
- -------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
COMMON STOCK OF ALYDAAR SOFTWARE CORPORATION
(PAR VALUE $.001 PER SHARE) 60,000 $4.125 $247,500 $69
=========================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of computing the registration fee,
based on the average of the high and low sales prices of the
Registrant's Common Stock, par value $.001 per share (the "Common
Stock"), as reported on the Nasdaq National Market on May 12, 1999 in
accordance with Rule 457 under the Securities Act of 1933.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
<PAGE> 3
The information in this prospectus is not complete and may be changed.
We may not 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.
60,000 Shares
Alydaar Software Corporation
--------------------
Common Stock
($0.001 par value)
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This prospectus relates to the public offering of 60,000 shares of our
common stock 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.
Our common stock is traded on the Nasdaq National Market (Nasdaq
Symbol: ALYD). On May 12, 1999, the closing price of the common stock was
$4 1/8 per share.
INVESTING IN THE COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" BEGINNING ON PAGE 3.
-------------------------------------------
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.
-------------------------------------------
The date of this Prospectus is May __, 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 supersede 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; and
2. 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, current reports on Form 8-K and proxy
statements.
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 substantial, if not total, loss
of your investment.
The statements made 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 Business (see "Selling Stockholder"). The
successful implementation of the acquisitions of Data Systems, Tumble,
Metaphoria Business 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.
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Our Quarterly Results Are Subject To Significant Fluctuations. We have
experienced significant quarterly fluctuations in revenues and operating
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.
Alydaar's Recent and Planned Acquisitions and Financing Are Dilutive to Existing
Stockholders. Alydaar will issue common stock to complete each of its recent and
planned acquisitions and in connection with the debentures issued in March 1999.
These issuances of common stock could result in dilution of a stockholder's
percentage ownership interest in Alydaar and could adversely affect the market
price of Alydaar's common stock.
Alydaar's debentures are convertible into shares of its common stock based on
the trading prices of the common stock in the future. For example, the
conversion price of the debentures on May 11, 1999 would have been $4.1340 and
if the debenture holder were to have converted all of its debentures on that
date, 736,575 shares of Alydaar common stock would have been issued to the
debenture holder, which would represent 4.2% of Alydaar's outstanding common
stock. The conversion price of the debentures is adjusted monthly based on the
trading price of Alydaar's common stock. If the trading price of the common
stock is low when the conversion price of the debentures is determined, Alydaar
would be required to issue a higher number of shares of common stock, which
could cause substantial dilution to Alydaar 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 Alydaar common stock and reduce
its price. The further Alydaar's stock price declines, the further the monthly
adjustment of the conversion price will fall and the greater the number of
shares Alydaar will have to issue upon conversion. Alydaar could be required to
issue up to 19.9% of its outstanding common stock on March 5, 1999 (3,504,406
shares based on 17,610,085 shares outstanding) on conversion of its outstanding
debentures and exercise of the related warrants without stockholder approval.
Alydaar has agreed to seek stockholder approval to issue more than 19.9% of its
outstanding common stock, if requested by the debenture holder.
These transactions and any future acquisition or financing requiring additional
issuances of Alydaar's 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
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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.
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
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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
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.
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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;
- - 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 (See
"Recent Developments"), 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.
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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
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
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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.
USE OF PROCEEDS
Except as set forth below, we will not receive any proceeds from the
sale of the shares offered by the selling stockholder. The selling stockholder
also holds warrants to purchase up to 30,000 of the shares being registered. As
of the date of this filing, the selling stockholder has not exercised any of
these warrants to purchase shares. If the shareholder exercises its warrants to
purchase shares at $6.375 per share, we will receive up to $191,250 from such
exercise which will be used for working capital purposes.
SELLING STOCKHOLDER
The following table sets forth:
- the number of shares of common stock beneficially owned by the
selling stockholder as of the date of this prospectus;
- the number of shares being offered by the selling stockholder
under this prospectus;
- the number of shares of common stock that will be beneficially
owned by the selling stockholder assuming all of the shares
being offered under this prospectus are sold; and
- the percentage of shares of common stock that will be
beneficially owned by the selling stockholder assuming all of
the shares being offered under this prospectus are sold.
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The information included in the table [and footnote] below is based on
information provided by the selling stockholder.
<TABLE>
<CAPTION>
Number of Shares Shares Beneficially Percentage of Shares
Beneficially Owned Owned After Owned After
as of May 12, 1999 Shares Offered the Offering the Offering
- ------------------ -------------- ------------ ------------
<S> <C> <C> <C>
30,000(1) 60,000 -0- 0%(2)
</TABLE>
(1) From July 2, 1996 through March 27, 1997, we entered into various
Private Placement Distribution Agreements and a Financial Advisory and
Investment Banking Agreement with Global Financial Services SA ("Global"),
investment bankers. Under the agreements, as amended, and as final consideration
for the services rendered by Global under the agreements, we agreed to give
Global 30,000 shares of our common stock and 30,000 warrants entitling Global to
purchase one share of our common stock at $6.375 a share for each warrant held
by Global. We also agreed to register the 30,000 shares of our common stock and
the 30,000 shares which may be purchased from us under the terms of the
warrants. The warrants expire January 19, 2000.
(2) Does not include 30,000 warrants to purchase the common stock at $6.375
a share.
PLAN OF DISTRIBUTION
The shares are being registered in order to facilitate their sale from
time to time by the selling stockholder, as market conditions permit in one or
more transactions. No underwriting arrangements have been entered into by the
selling stockholder.
The selling stockholder may sell the common stock by selling:
- directly to purchasers;
- through broker-dealers acting as agents for them;
- to broker-dealers who may purchase common stock as principals
and then sell the common stock from time to time in
transactions which may include block transactions on the
Nasdaq National Market;
- in negotiated transactions; or
- through a combination of the foregoing methods of sale, or
otherwise.
Broker-dealers engaged by the selling stockholder may arrange for other
broker-dealers to participate in the sales. Broker-dealers may receive
compensation in the form of discounts, concessions or commissions from the
selling stockholder. The broker-dealers may act as agents for the selling
stockholder or they may sell as principals, or both. Particular broker-dealers
may receive, as compensation, commissions in excess of customary commissions.
We have agreed to pay all expenses incident to the offer and sale of
the common stock offered by the selling stockholder under this prospectus other
than selling commissions, brokerage fees and related expenses of the selling
stockholder.
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The selling stockholder has advised us that to comply with the
securities laws of some jurisdictions, if applicable, the common stock offered
under this prospectus will be offered or sold in such jurisdictions only through
registered or licensed brokers or dealers.
Under applicable rules and regulations under the Securities Exchange
Act of 1934, any person engaged in a distribution of the common stock may be
limited in its ability to engage in market activities with respect to the common
stock. In addition, the selling stockholder will be subject to applicable
provisions of the Securities Exchange Act and the rules and regulations under
the Securities Exchange Act, which may limit the timing of purchases and sales
of any of the common stock by the selling stockholder.
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 McLaughlin &
Stern, LLP, New York, New York.
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.
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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.
================================================================================
-----------------
TABLE OF CONTENTS
-----------------
<TABLE>
<CAPTION>
Page
----
<S> <C>
Where You Can Find More Information.....................................2
Risk Factors............................................................3
The Company.............................................................9
Use of Proceeds.........................................................9
Selling Stockholder.....................................................9
Plan of Distribution...................................................10
Legal Matters..........................................................11
Experts................................................................11
</TABLE>
================================================================================
60,000 SHARES
[ALYDAAR SOFTWARE
CORPORATION]
COMMON STOCK
--------------
PROSPECTUS
--------------
MAY ___, 1999
================================================================================
<PAGE> 15
ALYDAAR SOFTWARE CORPORATION
REGISTRATION STATEMENT ON FORM S-3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item
Number
- --------
Item 14 Other Expenses of Issuance and Distribution.
The following table sets forth costs and expenses of the sale and
distribution of the securities being registered. All amounts except Securities
and Exchange Commission and Nasdaq Stock Market Listing fees are estimates.
<TABLE>
<S> <C>
Registration Statement--Securities and Exchange Commission.. $ 35
Accounting fees............................................. $ 2,500
Legal fees ................................................. $10,000
Miscellaneous............................................... $ 1,000
-------
Total....................................................... $13,535
</TABLE>
Item 15 Indemnification of Directors and Officers.
Reference is made to the North Carolina Business Corporation Act, G.S.
55- 8-52 and 55-8-56, which provides that unless limited by its articles of
incorporation, a North Carolina corporation must indemnify a director or officer
who has been wholly successful, on the merits or otherwise, in the defense of
any actual or threatened proceeding to which he was, or was threatened to be
made, a party because he is or was a director or officer of the corporation.
This statutory right of indemnification covers all reasonable expenses incurred
by the officer or director in connection with the proceeding, including counsel
fees.
A North Carolina corporation can eliminate an individual's statutory
right to indemnification. However, the Registrant's Bylaws provide that
directors and officers shall have the right to be indemnified "to the fullest
permitted by law" and further provide that expenses incurred by an officer or
director shall be paid in advance of the final disposition of any investigation,
action, suit or proceeding upon receipt of an undertaking by or on behalf of the
director or officer to repay such amount unless it shall ultimately be
determined that he is entitled to be indemnified by the Registrant.
In addition, a North Carolina corporation may, but is not required to,
indemnify a director or officer against liability who has been named or
threatened to be named a party to a proceeding because he is or was acting in
that capacity if the officer or director (i) conducted himself in good faith,
(ii) had the reasonable belief that his conduct was in the corporation's best
interests if he was acting in his official capacity, or if not acting in an
official capacity, a reasonable belief that his conduct was not opposed to the
corporation's best interests, and (iii) in the case of a criminal proceeding,
II - 1
<PAGE> 16
had no reasonable cause to believe his conduct was unlawful. A North Carolina
corporation may also purchase and maintain insurance on behalf of an officer or
director against liability incurred by him in that capacity, whether or not the
corporation would have the power to indemnify him under the statutory provisions
of North Carolina.
Item 16 Exhibits.
<TABLE>
<CAPTION>
Exhibit
Number
------
<S> <C>
5.1 Opinion of McLaughlin & Stern, LLP.
23.1 Consent of Holtz Rubenstein & Co., LLP, independent auditors.
23.2 Consent of McLaughlin & Stern, LLP (included in Exhibit 5.1).
24.1 Power of Attorney (contained on page II-5 hereof).
</TABLE>
Item 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:
(a) to include any prospectus required by Section
10(a)(3) of the Securities Act;
(b) to reflect in the prospectus any facts or events
arising after the effective date of this registration statement (or the most
recent post-effective amendment hereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this 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 a 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement.
(c) to include any material information with respect to
the plan of distribution not previously disclosed in this registration statement
or any material change to such information in this registration statement;
provided, however, that the undertakings set forth in paragraphs (a) and (b)
above shall not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic reports
filed by the Registrant pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 (the "Exchange Act") that are incorporated by reference in
this registration statement.
II - 2
<PAGE> 17
(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.
Insofar as indemnification for liabilities arising under the Securities Act of
1933 may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Exchange Act 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.
For purposes of determining any liability under the Securities Act of
1933, the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act of 1933 shall be deemed to be part of this registration
statement as of the time it was declared effective. For the purpose of
determining any liability under the Securities Act of 1933, each post-effective
amendment that contains a form of prospectus 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.
The undersigned registrant hereby undertakes to deliver or cause to be
delivered with the prospectus, to each person to whom the prospectus is sent or
given, the latest annual report to security holders that is incorporated by
reference in the prospectus and furnished pursuant to and meeting the
requirements of Rule 14a-3 or Rule 14c-3 under the Exchange Act; and, where
interim financial information required to be presented by Article 3 of
Regulation S-X is not set forth in the prospectus, to deliver, or cause to be
delivered to each person to whom the prospectus is sent or given, the latest
quarterly report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
II - 3
<PAGE> 18
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant, Alydaar Software Corporation, a corporation organized and existing
under the laws of the State of North Carolina, certifies that it has reasonable
cause 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 Charlotte, State of
North Carolina, on the 14th day of May, 1999.
ALYDAAR SOFTWARE CORPORATION
By: /s/ ROBERT F. GRUDER
------------------------------------
Robert F. Gruder
Chief Executive Officer and Chairman
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS that each person whose signature
appears below constitutes and appoints Robert F. Gruder and Frank G. Milligan,
jointly and severally, his attorneys-in-fact, each with the power of
substitution, for him in any and all capacities, to sign any amendment to this
Registration Statement on Form S-3, and to file the same, with exhibits thereto
and other documents in connection therewith, with the Securities and Exchange
Commission, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his substitute or substitutes, may do or cause to be done
by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below on May 14, 1999 by the following
persons on behalf of the Registrant and in the capacities indicated.
SIGNATURE TITLE DATE
- -------------------------- -------------------------- ---------------
/s/ROBERT F. GRUDER Chief Executive Officer May 14, 1999
- ---------------------- and Chairman of the Board
(Robert F. Gruder) (Principal Executive Officer)
/s/FRANK G. MILLIGAN President and Director May 14, 1999
- ----------------------
(Frank G. Milligan)
/s/WAYNE THOMAS Principal Financial and May 14, 1999
- ---------------------- Accounting Officer
(Michael Racaniello)
/s/THOMAS J. DUDCHIK Senior Vice President and May 14, 1999
- ---------------------- Director
(Thomas J. Dudchik)
/s/RICHARD J. BLUMBERG Director May 14, 1999
- ----------------------
(Richard J. Blumberg)
II - 4
<PAGE> 19
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
Exhibit
Number
------
<S> <C>
5.1 Opinion of McLaughlin & Stern, LLP.*
23.1 Consent of Holtz Rubenstein & Co., LLP, independent auditors.*
23.2 Consent of McLaughlin & Stern, LLP (included in
Exhibit 5.1).*
24.1 Power of Attorney (contained on page II-5 hereof).*
</TABLE>
- ------------------------------
*Filed herewith.
II - 5
<PAGE> 1
EXHIBIT 5.1
MCLAUGHLIN & STERN, LLP
260 MADISON AVENUE
NEW YORK, NEW YORK 10016
(212) 448-1100
FAX (212) 448-0066
RICHARD J. BLUMBERG MILLBROOK OFFICE
Direct Phone: (212) 448-6205 Franklin Avenue
P.O. Box 1369
Millbrook, New York 12545
(914) 677-5700
Fax (914) 677-0097
May 14, 1999
Board of Directors
Alydaar Software Corporation
2101 W. Rexford Road
Charlotte, NC 28211
Ladies and Gentlemen:
We are acting as counsel to Alydaar Software Corporation, a North
Carolina corporation (the "Company"), in connection with the preparation,
execution and filing with the Securities and Exchange Commission (the
"Commission"), under the Securities Act of 1933, as amended (the "Act"), of a
Registration Statement on Form S-3 (the "Registration Statement") and the offer
and sale pursuant to the Registration Statement, by the Selling Stockholder
identified in the Registration Statement, of up to 60,000 shares (the "Shares")
of Common Stock, par value $0.001 per share, of Alydaar. This opinion letter is
furnished to you for filing with the Commission pursuant to Item 601 of
Regulation S-K promulgated under the Act.
In reaching the opinion stated in this letter, we have reviewed
originals of copies of the Registration Statement, the Articles of Incorporation
and Bylaws of Alydaar, both as amended to date, and such other documents as we
have considered relevant. We have assumed that (i) all information contained in
all documents reviewed by us is correct, (ii) all signatures on all documents
reviewed by us are genuine, (iii) all documents submitted to us as originals are
true and complete, (iv) all documents submitted to us as copies are true and
complete copies of the originals thereof, (v) each natural person signing any
document reviewed by us had the legal capacity to do so and (vi) each natural
person signing in a representative capacity any document reviewed by us had
authority to sign in such capacity.
Based upon the foregoing, it is our opinion that the Shares have been
duly and validly issued and are fully paid and nonassessable.
We express no opinion herein about the effect of federal or state
securities laws or the laws of any other jurisdiction.
<PAGE> 2
We hereby consent to the use of this opinion letter as Exhibit 5.1 to
the Registration Statement and to the use of our name under the heading "Legal
Matters" therein. In giving this consent, we do not 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 promulgated thereunder.
Very truly yours,
/s/ McLaughlin & Stern, LLP
<PAGE> 1
EXHIBIT 23.1
Holtz Rubenstein & Co.
125 Baylis Road
Melville, New York 11747-3823
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in the Prospectus
constituting a part of this Registration Statement on Form S-3 of our report
dated February 23, 1999 (except for Note 15b, as to which the date is March 5,
1999), with respect to the consolidated financial statements of Alydaar Software
Corporation and Subsidiary (the "Company") included in the Company's Annual
Report on Form 10-K for the year ended December 31, 1998, and to the reference
to us under the heading "Experts" in the Prospectus which is part of such
Registration Statement.
/s/ HOLTZ RUBENSTEIN & CO., LLP
HOLTZ RUBENSTEIN & CO., LLP
Melville, New York
May 14, 1999
