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As filed with the Securities and Exchange Commission November 3, 1999 Registration No. 333-
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
INFORMATION RESOURCE ENGINEERING, INC.
(Exact Name of Registrant as Specified in Charter)
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Delaware 52-1287752
(State of other jurisdiction of incorporation or organization) (I.R.S Employer Identification No.)
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8029 Corporate Drive
Baltimore, MD 21236
(410) 931-7500
(Address, including zip code and telephone number,
including area code of Registrant's Principal Executive Offices)
Mr. Anthony A. Caputo
Chairman, Chief Executive Officer and President
INFORMATION RESOURCE ENGINEERING, INC.
8029 Corporate Drive
Baltimore, MD 21236
(410) 931-7500
(Name, address, including zip code, and telephone number,
including area code, of Agent for service)
Copies to:
Bruce R. Thaw, Esq.
45 Banfi Plaza
Farmingdale, NY, 11735
(516) 752-1760
Approximate date of commencement of proposed sale to 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. [ ]
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, please check the following box. [x]
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If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please 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 filed to register additional securities for an offering 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
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Titles of Each Class Proposed Maximum Proposed Maximum
of Securities to be Amount to be Offering Price Per Aggregate Offering Amount of
Registered Registered Share(1) Price Registration Fee
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Common Stock, $.01 par
value 30,000 Shares(2) $17.84 $535,200 $153.60
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(1) Estimated solely for the purposes of calculating the registration fee
pursuant to Rule 457(c) based upon a price of $17.84 per share which
was the average of the high and low sale prices as reported on the
Nasdaq National Market System on October 28, 1999.
(2) Includes 23,050 shares held by Steven N. Bronson, 5,370 shares
underlying a warrant held by Bruce C. Barber and 1,580 shares
underlying a warrant held by Eric R. Elliott.
The Registrant hereby amends this Registration Statement on such date
or dates as may be necessary to delay its effective date until the Registrant
shall file a further amendment which specifically states that the Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8 (a),
may determine.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY CHANGE. THE SELLING
STOCKHOLDERS MAY NOT SELL THEIR SHARES UNTIL THE REGISTRATION STATEMENT FILED
WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT
AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
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Subject to Completion, Dated October 29, 1999
PROSPECTUS
INFORMATION RESOURCE ENGINEERING, INC.
30,000 Shares of Common Stock
($.01 Par Value)
The 30,000 shares of our common stock offered through this Prospectus
will be sold for the accounts of the selling stockholders. In some instances,
the shares offered through this Prospectus may be sold by the pledgees, donees,
transferees or other successors in interest to the selling stockholders.
The selling stockholders obtained or are entitled to obtain their
shares by the exercise of a Placement Agent's Warrant that was issued in
connection with a private placement we completed in November 1995. We are
registering the shares offered through this prospectus based upon contractual
obligations incurred by us to our Placement Agent pursuant to the 1995 private
placement. We will not receive any of the proceeds from this offering, although
as of the date of this prospectus we have received warrant exercise fees
totaling $391,850 upon the prior exercise of a Placement Agent's Warrant. We
will pay substantially all of the expenses incident to the registration,
offering and sale of the shares other than commissions or discounts of
underwriters, broker-dealers or agents and the expenses of counsel to the
selling stockholders.
Our common stock is currently listed on the Nasdaq National Market
under the symbol "IREG". On October 28, 1999, the closing sale price of our
common stock was $18.063 per share.
The selling stockholders may effect the sale of shares offered through
this Prospectus, from time to time, in transactions on the Nasdaq National
market, in privately negotiated transactions or in a combination of such methods
of sale.
Our principal executive offices are located at 8029 Corporate Drive,
Baltimore, Maryland 21236. Our telephone number is (410) 931-7500.
POTENTIAL INVESTORS SHOULD CONSIDER CAREFULLY THE RISK FACTORS BEGINNING ON PAGE
2 OF THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
_______, 1999
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SUMMARY
PROSPECTUS
This prospectus is part of a Registration Statement on Form S-3 that we
filed with the Securities and Exchange Commission utilizing a "shelf"
registration process. Under this shelf process, the selling stockholders may,
from time to time, sell shares of the common stock of described in this
prospectus in one or more offerings up to a total of 30,000 shares.
THE COMPANY
We and our European subsidiary, GRETACODER Data Systems AG, design,
manufacture and market enterprise network security technology and systems that
enable the deployment of secure Virtual Private Network (VPN) solutions over the
Internet and other shared public networks. Our technology and products are used
in VPN and electronic commerce applications. A VPN is a communications system
that creates a private "tunnel" through the Internet, assuring authentication of
users and privacy of information. This allows businesses to use the lowest cost
network without exposing their business communications. Our family of VPN
products provides a broad range of solutions for Intranet, Extranet and remote
access applications. For example, enterprises can utilize our technology and
solutions to enable (1) employees to access company-confidential information
over an intranet, or (2) allow trading partners to access a firm's extranet for
secure business-to-business electronic commerce applications. VPN technology has
been our core competency for over a decade and remains our principal focus.
We were originally incorporated in Maryland on April 7, 1983 under the
name "Industrial Resource Engineering, Inc." We reincorporated under our present
name in Delaware by merging with a subsidiary in March 1989.
RISK FACTORS
We operate in a rapidly changing environment that involves numerous
risks, some of which are beyond our control. The following discussion highlights
some of the risks we face. This prospectus may contain "forward-looking
statements." Such statements involve known and unknown risks and uncertainties
that could cause our actual performance or achievements to differ from any
future performance or achievements expressed or implied by such statements.
Readers should carefully consider the following risk factors before purchasing
our common stock. Readers are also referred to other documents we have or will
file with the SEC, specifically our 1998 Annual Report on Form 10-K and
subsequent fiscal years, which may identify important risk factors.
WE HAVE A HISTORY OF LOSSES AND MAY INCUR FUTURE LOSSES
We have experienced substantial net losses in each of the last three
years. As of September 30, 1999, we had an accumulated deficit of $17,039,000.
In addition, we intend to increase our expenditures in all areas in order to
execute our business plan. As a result, we may incur substantial additional
losses. The likelihood of our success must be considered in light of the
problems, expenses and delays frequently encountered in connection with new
technologies utilized in connection with the transition to an Internal VPN
business with an original equipment manufacturer (OEM) model and the competitive
environment in which we operate. Although our revenues have grown in recent
periods, revenues for the three months ended September 30, 1999 declined by 18%
or $848,000 from the revenues for the same period ended June 30, 1998. Sales of
products for use on legacy networks continued to decline while revenues of
Internet VPN products were stable. There can be no assurance that the decline in
revenues will not continue. Therefore, you should not consider our historical
results indicative of future revenue levels or operating results. We may never
achieve profitability. Even if we do, we may not be able to sustain it.
OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE AND OUR FUTURE REVENUES AND
PROFITABILITY ARE UNCERTAIN
We have experienced significant quarterly fluctuations in our operating
results and anticipate continued substantial fluctuations in our future
operating results. A number of factors have contributed to these quarterly
fluctuations including:
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- market acceptance and demand for our products;
- length of sales cycle including the size, timing, cancellation or delay of
customer orders;
- introduction of new products and product enhancements by
us or our competitors;
- market acceptance of new products introduced by us
or our competitors;
- budgeting cycles of customers;
- the timing and execution of individual contracts;
- the product mix sold in a given quarter;
- changes in the proportion of revenues attributable to licenses
and service fees;
- the percentage of products sold through our direct sales
force and our indirect distribution channels;
- product development expenses;
- competitive conditions in the industry; and
- changes in general economic conditions.
Revenue from our consulting and product development activities also
tend to fluctuate as such projects, which may continue over several quarters,
are undertaken or completed. Also, we have historically recognized a substantial
portion of our revenues in the last month of each quarter, and even in the last
week or last several days of each quarter. Because we have little or no backlog,
quarterly revenues and operating results depend on the volume and timing of
orders received during each quarter, especially during the last several weeks
and days of each quarter, which are difficult to forecast.
Our expenses are based, in part, on our expectations regarding future
revenues, and are largely fixed in nature, particularly in the short term. We
may be unable to predict our future revenues accurately or to adjust spending in
a timely manner to compensate for any unexpected revenue shortfall. Accordingly,
any significant shortfall of revenues in relation to our expectations could
cause significant declines in our quarterly operating results.
Due to all of the foregoing factors, our quarterly revenues and
operating results are difficult to forecast. Therefore, we believe that
period-to-period comparisons of our operating results will not necessarily be
meaningful, and you should not rely upon them as an indication of our future
performance. Also, it is likely that our operating results will fall below our
expectations and the expectations of securities analysts or investors in some
future quarter. In such event, the market price of our common stock could be
materially adversely affected.
POSSIBLE IMPAIRMENT OF INTANGIBLE ASSETS
As of September 30, 1999, we had $2,209,000 of goodwill and computer
software development costs. We amortize goodwill over ten years and computer
software development costs over three to five years beginning on product release
dates. In future periods we will experience significant charges to expense
related to the amortization of these assets. Material adverse changes in the
market acceptance of our products could result in acceleration of the
amortization period that could have a material adverse effect on our earnings.
OUR INTERNATIONAL OPERATIONS ARE SUBJECT TO CERTAIN RISKS
On October 31, 1995, we acquired our European subsidiary. Prior to that
date, we had limited experience in business operations outside the United States
and there can be no assurance that we will be able to compete successfully in
international markets. The Swiss subsidiary accounted for approximately 44% of
our revenues in 1996, 34% in 1997, 50% in 1998 and 49% in the nine months ended
September 30, 1999. Expansion into these international markets has required
and will continue to require significant management attention and resources.
Our international business is subject to a number of risks including:
- compliance with special telecommunications standards;
- export regulations and restrictions;
- currency exchange rates, tariffs and other barriers;
- difficulties in staffing and managing foreign subsidiary operations;
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- longer payment cycles;
- greater difficulty in accounts receivable collections;
- political instability;
- potentially adverse tax consequences; and
- specialized inventory requirements applicable to particular foreign
countries or markets.
There can be no assurance that these factors will not have an adverse
impact on our future international sales or operating results. We do not
currently engage in international currency hedging transactions. To the extent
that we are unable to match revenue received in foreign currencies with expenses
paid in the same currency, we may be exposed to possible losses on international
currency transactions that could harm our business.
WE MUST MANAGE OUR GROWTH AND EXPANSION
Our historical growth has placed, and any further growth is likely to
continue to place, a significant strain on our resources. We have grown from 90
employees at December 31, 1995 to 137 employees at September 30, 1999. We have
also opened additional sales, technical support and research and development
offices and have otherwise significantly expanded our operations during this
time period. To be successful, we will, at a minimum, need:
- to implement additional management information systems;
- to develop further our operating, administrative, financial and accounting
systems and controls;
- to hire and train new employees; and
- to maintain close coordination among our executive, engineering,
accounting, finance, marketing, sales and operations organizations.
Our growth is making significant demands on management, operations and
resources, including working capital. Historically the cash flow from our
operations has been insufficient to fund our growth. In the event additional
capital is required in excess of cash generated by operations, there can be no
assurance that we will be successful in obtaining such additional capital on
acceptable terms, if at all. Further, competition is intense for the qualified
technical, marketing and management personnel necessary to plan and manage the
growth of our business. Any failure to manage growth effectively could
materially harm our business.
OUR MARKET IS NEW AND EVOLVING
We design, manufacture and market enterprise network security
technology and systems that enable the deployment of secure VPN solutions over
the Internet and other shared public networks. In order to be successful, VPN's
must be widely adopted, in a timely manner, as a means of trusted and secure
electronic commerce and communications. Because electronic commerce and
communications over the Internet are new and evolving, it is difficult to
predict the size of this market and its sustainable growth rate. Accordingly,
the demand for our network security systems is very uncertain. Even if the
market for electronic commerce and communications over VPN's grows, our product
line may not be widely accepted. Among the factors that may affect the level of
market acceptance of our VPN solutions are:
- the ability of the Internet infrastructure to accommodate increased levels
of usage;
- the development or adoption of new Internet standards and protocols;
- market acceptance of products and services based upon technologies other
than those we use;
- the public's perception of the need for security products;
- developments in the hardware and software environments in which these
products operate;
- government regulations affecting electronic commerce and
communications over the Internet and other networks; and
- general economic conditions.
Any of these factors could materially harm our business.
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RISKS OF CHANGES IN TECHNOLOGY AND INDUSTRY STANDARDS
The network security industry is characterized by rapid changes,
including evolving industry standards, frequent new product introductions,
continuing advances in technology and changes in customer requirements and
preferences. We expect technological developments to continue at a rapid pace in
the computer and communications industries, and there can be no assurance that
technological developments will not cause our technology to be rendered obsolete
or non-competitive.
Our future products may not keep pace with technological changes
implemented by competitors, developers of operating systems or networking
systems, or persons seeking to breach network security. The introduction of new
technologies could also require us to invest in research and development at much
higher rates with no assurance of developing competitive products. Changes in
technologies or customer requirements may also cause the development cycle for
our new products to be significantly longer than our historical product
development cycle, resulting in higher development costs or a loss in market
share. Our products may not satisfy evolving preferences of customers and
prospects. Failure to develop and introduce new products and improve current
products in a timely fashion could adversely effect us. Because of the
complexity of our products, which operate on or utilize multiple platforms and
communications protocols, we have from time to time experienced delays in
introducing new products and product enhancements primarily due to development
difficulties or shortages of development personnel. There can be no assurance
that we will not experience longer delays or other difficulties that could delay
or prevent the successful development, introduction or marketing of new products
or product enhancements.
RESTRICTIONS ON THE EXPORT OF SOME OF OUR PRODUCTS.
We currently sell our products internationally and intend to continue
to expand our relationships with international distributors and resellers. Our
international sales and operations could be subject to the following risks:
- the imposition of governmental controls;
- export license requirements;
- restrictions on the export of critical technology;
- trade restrictions; and
- changes in tariffs.
Some of our network security products are cryptographic devices and
are subject to the export restrictions administered by the Bureau of Export
Control, U.S. Department of Commerce. These restrictions permit the export of
encryption products based on country, algorithm and class of end user. They
prohibit the export of encryption products to a number of countries and to
business entities that are not included in a range of end-users. There is no
assurance, however, that the applicable regulations or policies concerning the
export of such technology will not become more restrictive. Our foreign
distributors may also be required to secure licenses or formal permission before
encryption products can be imported.
WE FACE INTENSE COMPETITION
Our industry is relatively new, highly competitive and subject to rapid
technological changes. Our success will depend, in large part, on our ability to
establish and maintain an advantageous market position. We currently compete
with companies that have substantially greater financial resources, sales and
marketing organizations, market penetration and research and development
capabilities, as well as broader product offerings and greater market presence
and name recognition. We expect to face increasing competitive pressures from
our current competitors and new market entrants. This competitive risk will
increase to the extent that our competitors begin to include software vendors,
network providers, and manufacturers of networking and computer equipment and
communications devices. These manufacturers and network providers may be in a
better position to develop security products in anticipation of developments in
their products and networks. Competitive factors in the network security
industry include:
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- price;
- product features and quality;
- degree of security and technical specifications;
- product ease of use;
- conformance to industry standards;
- product support;
- and the ability to deliver engineering enhancements.
There can be no assurance that we can continue to compete successfully
against new or existing competitors.
MARKET CONSOLIDATION MAY CREATE MORE FORMIDABLE COMPETITORS
There has been substantial consolidation in the information security
industry, and we expect that there will be significant additional consolidation
in the near future. As a result of that increasing consolidation, we expect that
we will increasingly compete with larger firms that have broader product
offerings and greater financial resources. We believe that such competition may
have a significant negative effect on our current and developing collaborative,
marketing, distribution and reselling relationships, our product pricing and our
product development budget and capabilities. Any of those negative effects can
significantly impair our financial condition and our results of operations.
RISK OF INADEQUATE PROTECTION FOR OUR PROPRIETARY TECHNOLOGIES
Our success and ability to compete is dependent, in part, upon our
ability to maintain the proprietary nature of our technologies. We rely on a
combination of patent, trade secret, copyright and trademark law and
nondisclosure agreements to protect our proprietary technology. Although we hold
several patents and have several pending patent applications that cover certain
aspects of our technology, such patents and patent applications do not protect
some of our security products. Our current and future patent applications may
not be granted. Additionally, our patents may not be sufficiently broad to
protect the core technology critical to our security products.
Confidentiality agreements and other methods on which we rely to
protect our trade secrets and proprietary information and rights may not be
adequate to protect our proprietary rights. Litigation to defend and enforce our
intellectual property rights could result in substantial costs and diversion of
resources and could have a material adverse effect on our financial condition
and results of operations regardless of the final outcome of such litigation.
Despite our efforts to safeguard and maintain our proprietary rights, we may not
be successful in doing so or the steps taken by us in this regard may not be
adequate to deter misappropriation or independent third-party development of our
technology or prevent an unauthorized third party from copying or otherwise
obtaining and using our products, technology or other information that we regard
as proprietary. Our trade secrets or non-disclosure agreements may not provide
meaningful protection of our proprietary information. Also, others may
independently develop similar technologies or duplicate any technology developed
by us. Our inability to protect our proprietary rights would have a material
adverse effect on our financial condition and results of operations.
Further, as the number of network security products in the industry
increases and the functionality of these products further overlaps, we may
become subject to claims of infringement or misappropriation of the intellectual
property or proprietary rights of others. Third parties could assert
infringement or misappropriation claims against us in the future with respect to
current or future products. We may also be subject to additional risks as we
enter into transactions in countries where intellectual property laws are not
well developed or are poorly enforced. Legal protections of our rights may be
ineffective in such countries, and technology developed in such countries may
not be protectable in jurisdictions where protection is ordinarily available.
Any claims or litigation, with or without merit, could be costly and could
result in a diversion of management's attention, which could have a material
adverse effect on our financial condition and results of operations. Adverse
determinations in such claims or litigation could also have a material adverse
effect on our financial condition and results of operations.
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RISKS RELATING TO EVOLVING DISTRIBUTION CHANNELS
We rely on both our direct sales force and an indirect channel
distribution strategy for the sale and marketing of our products. Our sales and
marketing organization may be unable to successfully compete against the more
extensive and well-funded sales and marketing operations of certain of our
current and future competitors. We may also be unable to continue to attract
integrators and resellers that can market our products effectively and provide
timely and cost-effective customer support and service. Additionally, our
distributors, integrators and resellers may carry competing lines of network
security solutions. The loss of important sales personnel, distributors,
integrators or resellers could adversely effect us.
RISK OF PRODUCT DEVELOPMENT DELAYS
We may experience schedule overruns in product development triggered by
factors such as insufficient staffing or the unavailability of
development-related software, hardware or technologies. Further, when developing
new network security products, our development schedules may be altered as a
result of the discovery of software bugs, performance problems or changes to the
product specification in response to customer requirements, technology market
developments or self-initiated changes. All of these factors can cause a product
to enter the market behind schedule, which may adversely effect market
acceptance of the product or place it at a disadvantage to a competitor's
product that has already gained market share or market acceptance during the
delay.
PRODUCT LIABILITY RISK
The sale and installation of our network security systems and products
within the computer networks of our customers and the operation of our
SafeNet(TM) facility entails a risk of product failure, product liability or
other claims. An actual or perceived breach of network or computer security,
regardless of whether such breach is attributable to our products, could
adversely affect our reputation, our financial condition or results of
operations. The complex nature of our products can make the detection of errors
or failures difficult when products are introduced. If errors or failures are
subsequently discovered, this may result in delays and lost revenues during the
correction process. A malfunction or the inadequate design of our products could
result in product liability claims. We attempt to reduce the risk of such losses
through warranty disclaimers and liability limitation clauses. However, we may
not have obtained adequate contractual protection in all instances or where
otherwise required under agreements we have entered into with others.
We currently maintain product liability insurance. However, our
insurance coverage may not be adequate and any product liability claim for
damages resulting from security breaches could be substantial. In the event of
product liability litigation, insufficient insurance coverage could have a
material adverse effect on our financial condition and results of operations.
Further, certain customers and potential customers may require minimum product
liability insurance coverage as a condition precedent to purchasing our
products. Failure to satisfy such insurance requirements could impede our
ability to achieve product sales, which would have a material adverse effect on
our financial condition and results of operations. There is no assurance that
such insurance will be available at a reasonable cost or will be sufficient to
cover all possible liabilities.
DEPENDENCE UPON THIRD PARTY SUPPLIERS AND CONTRACTORS
We rely upon third party contractors for the manufacture of components
and sub-assemblies for our products. There is no assurance that we will be able
to obtain and/or maintain satisfactory contractual relations with qualified
vendors or suppliers. The unavailability of such third parties may substantially
decrease our control of the cost, quality and timeliness of the manufacturing
process. At present, we are not a party to any exclusive supply contracts with
third party contractors. All purchases of components or parts for our products
are accomplished by the use of purchase orders issued in the ordinary course of
business. While we have not experienced any significant supply problems in the
past, and there have been no materially late deliveries of components or parts,
it is possible that in the future we may encounter shortages in parts,
components, or other elements vital to the manufacture, production and sale of
our products. Our business would suffer if the supply of such components was
interrupted.
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WE DEPEND UPON KEY PERSONNEL AND DIFFICULTIES ATTRACTING OF QUALIFIED PERSONNEL
The network security industry is highly specialized and the competition
for qualified employees is intense. We expect this to remain so for the
foreseeable future. We believe our success depends significantly upon a number
of key technical and management employees, and upon our ability to retain and
hire additional key personnel. The loss of the services of key personnel or the
inability to attract additional qualified personnel could materially and
adversely effect our results of operations and product development efforts. We
may be unable to achieve our revenue and operating performance objectives unless
we can attract and retain technically qualified and highly skilled engineers,
sales, technical, marketing and management personnel. Such personnel are
particularly important to our research and development efforts, and to our
growing OEM business, where we employ a large number of technical personnel
holding advanced degrees. Further, additions of new and departures of existing
personnel, particularly in key positions, can be disruptive and can result in
further departures of our personnel, which could in turn harm our business and
results of operation.
In 1997, we entered into a five-year employment agreement with
Anthony A. Caputo, our Chairman, Chief Executive Officer and President. We also
have a renewable one-year employment agreement with Douglas E. Kozlay, a
co-founder and director. However, we have not historically provided such types
of employment agreements to our other employees. This may adversely impact our
ability to attract and retain the necessary technical, management and other key
personnel.
YEAR 2000 ISSUES COULD AFFECT OUR BUSINESS
We believe that our products have been made Year 2000 compliant. We
have completed the process of assessing and remediating any Year 2000 issues
with our information systems and non-information systems. Despite our testing
and remediating, our systems may contain undetected errors or faults with
respect to the Year 2000. For a more detailed discussion of Year 2000 issues,
please see "Item 2: Management's Discussion and Analysis of Financial Condition
and Results of Operations - Year 2000" in our Form 10-Q for the quarterly period
ended September 30, 1999. If our systems do not operate properly with regard to
the Year 2000 and thereafter we could incur unanticipated expenses to remedy any
problems, which could adversely affect our business.
Year 2000 issues could affect our customers' purchasing plans, as they
may need to expend significant resources to correct their existing systems. This
situation may result in reduced funds available to implement VPN security or to
purchase our network security products and services. These factors could
materially harm our business.
FUTURE SALES OF SHARES COULD AFFECT OUR STOCK PRICE
If our existing stockholders sell substantial amounts of our stock in
the public market following this offering, the market price of our stock could
fall. We have approximately 5,536,151 shares outstanding (assuming no exercise
of outstanding stock options). Of these shares 4,498,695 are currently eligible
for sale in the public market. The remaining 1,037,456 shares are also eligible
for public sale, subject to the volume limitations and other conditions of Rule
144. No prediction can be made as to the effect, if any, that market sales of
shares of our stock or the availability of such shares for sale will have on the
market prices prevailing from time to time. Nevertheless, the possibility that
substantial amounts of shares of our stock may be sold in the public market may
not only adversely affect prevailing market prices of our stock but could also
impair our ability to raise capital through the sale of our equity securities.
These share numbers exclude 1,245,223 shares subject to outstanding
stock options and 395,050 shares reserved for future issuance under our stock
option plans.
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AUTHORIZED BUT UNISSUED COMMON STOCK AND "BLANK CHECK" PREFERRED STOCK COULD
MAKE IT MORE DIFFICULT FOR A THIRD PARTY TO ACQUIRE US
We are currently authorized to issue 15,000,000 shares of common stock
and 500,000 shares of "blank check" preferred stock. Some of these shares have
not been issued or reserved. We could use the authorized and available shares
(within the limits imposed by applicable law and the rules of the Nasdaq
National Market System) to discourage a change in control of the Company. For
example, we could privately place shares with purchasers who might side with us
in opposing a hostile takeover bid. We could, without stockholder approval,
issue preferred stock with dividend, liquidation, conversion, voting or other
rights that could adversely affect the voting power or other rights of the
holders of our common stock.
WE DO NOT PAY DIVIDENDS
We have never paid nor declared any cash or other dividends on our
common stock since our inception and we do not presently anticipate that
dividends will be paid on our common stock in the foreseeable future.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-3 relating to the
securities offered by this prospectus with the SEC in Washington, D.C. This
prospectus does not contain all of the information set forth in that statement
and its exhibits and schedules. Certain of our financial and other information
is contained in the documents indicated below under "Incorporation of Certain
Documents by Reference." This information is not presented in this prospectus or
delivered with it. For further information with respect to us and the securities
offered by this prospectus, please refer to the registration statement, exhibits
and schedules.
Statements contained in this prospectus as to the contents of any
contract or other document are not necessarily complete. In each instance
reference is made to the copy of such contract or other document filed as
exhibits to the Registration Statement, each such statement being qualified in
all respects by such reference.
We are subject to the information requirements of the Securities
Exchange Act of 1934. We file periodic reports and proxy statements with the
SEC. You can inspect and copy the registration statement as well as periodic
reports, proxy statements and other information we have filed with the SEC at
the public reference facilities maintained by the SEC at 450 Fifth Street, NW,
Washington, D.C. 20549 You can obtain copies of these documents from the public
reference room upon payment of certain fees. Information on the operation of the
Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330.
Copies of these documents can also be obtained from the SEC's Worldwide Web page
(http://www.sec.gov).
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed with the SEC are incorporated by
reference in this Prospectus:
- Annual Report on Form 10-K for the fiscal year ended December 31, 1998;
- Quarterly Report on Form 10-Q for the quarterly period ended March 31,
1999;
- Quarterly Report on Form 10-Q for the quarterly period ended June 30,
1999;
- Quarterly Report on Form 10-Q for the quarterly period ended September 30,
1999; and
- The description of our common stock contained in the Form 8-A Registration
Statement filed with the SEC on September 16, 1992 and any amendment or
report filed for the purpose of updating those descriptions.
9
<PAGE> 12
All reports and other documents subsequently filed pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the termination of this
offering shall be deemed to be incorporated by reference in this Prospectus and
to be a part of this Prospectus from the date of filing thereof. Any statement
contained in a document incorporated by reference herein shall be deemed to be
modified or superseded for purposes of this Prospectus to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
We will furnish without charge to you, upon the written or oral
request, a copy of any or all of the documents incorporated by reference, other
than exhibits to such documents. You should direct any requests for documents to
Information Resource Engineering, Inc., 8029 Corporate Drive, Baltimore,
Maryland 21236, Attention: Secretary, Telephone (410) 931-7500.
SELLING STOCKHOLDERS
The selling stockholders obtained or are entitled to obtain their
shares by the exercise of a Placement Agent's Warrant that was issued in
connection with a private placement we completed in November 1995. We are
registering the shares offered through this prospectus based upon contractual
obligations incurred by us to our Placement Agent pursuant to the 1995 private
placement. We will not receive any of the proceeds from this offering, although
as of the date of this prospectus we have received warrant exercise fees
totaling $391,850 upon the prior exercise of a Placement Agent's Warrant. We
will pay substantially all of the expenses incident to the registration,
offering and sale of the shares other than commissions or discounts of
underwriters, broker-dealers or agents and the expenses of counsel to the
selling stockholders.
The following table sets forth certain information known to us with
respect to beneficial ownership of our stock as of October 28, 1999 by each
selling stockholder. None of the selling stockholders has held any position,
office or other material relationship with us within the past three years other
than as a result of the transaction that resulted in the ownership of the
shares.
The shares may be offered from time to time by the selling stockholders
named below. However, the selling stockholders are under no obligation to sell
all or any portion of the shares, nor are the selling stockholders obligated to
sell any such shares immediately pursuant to the registration statement. Because
the selling stockholders may sell all or part of their shares, no estimate can
be given as to the number of shares that will be held by any selling stockholder
upon termination of any offering made by this prospectus.
<TABLE>
<CAPTION>
Shares
Shares Beneficially Owned
Beneficially Owned Shares After Offering if
Name of Selling Stockholder Prior to Offering Offered Hereby Maximum is Sold (1)
- --------------------------- ----------------- -------------- -------------------
<S> <C> <C> <C>
Steven N. Bronson 23,050 23,050 0
Bruce C. Barber (2) 6,370 5,370 1,000
Eric R. Elliott (2) 12,080 1,580 10,500
------ ----- ------
Total 41,500 30,000 11,500
- ----------
</TABLE>
(1) The percentage of our outstanding shares owned individually by each of the
Selling Stockholders after the offering is complete is less than one
percent.
(2) Includes shares issuable upon exercise of the underlying warrant as
follows: 5,370 shares for Mr. Barber and 1,580 shares for Mr. Elliott.
The Warrants issued to the assignees of Barber & Bronson, Incorporated
on December 28, 1995, requires us, upon the request of a majority of the selling
stockholders, to register the stock underlying the warrants on one occasion. We
agreed to pay all expenses in connection with this registration statement,
except the selling stockholders will pay any fees and expenses of their legal
counsel and any underwriting discounts, commissions and
10
<PAGE> 13
fees relating to the sale of the shares. We have agreed to indemnify the selling
stockholders against certain liabilities in respect of this offering, including
liabilities under the Act.
USE OF PROCEEDS
We will not receive any of the proceeds from the sale of the shares
offered by this Prospectus. All proceeds from the sale of the shares will be for
the account of the selling stockholders.
PLAN OF DISTRIBUTION
The shares are being offered on behalf of the selling stockholders. The
shares may be sold or distributed from time to time by the selling stockholders,
or by pledgees, donees or transferees of, or other successors in interest to the
selling stockholders, directly to one or more purchasers (including pledgees) or
through brokers, dealers or underwriters who may act solely as agents or may
acquire shares 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 distribution of the shares may be effected in one or more of the
following methods:
- ordinary brokers' transactions, which may include long or short sales
- transactions involving cross or block trades or otherwise on the Nasdaq
National Market or on any other stock exchange or trading facility on
which the common stock may be trading
- purchases by brokers, dealers or underwriters as principal and resale by
such purchasers for their own accounts pursuant to this prospectus
- "at the market" to or through market makers or into an existing market
for the common stock
- in other ways not involving market makers or established trading markets,
including direct sales to purchasers or sales effected through agents
- through transactions in options, swaps or other derivatives (whether
exchange-listed or otherwise) or
- any combination of the foregoing or by any other legally available means.
In addition, the selling stockholders or their successors in interest
may enter into hedging transactions with broker-dealers who may engage in short
sales of shares in the course of hedging the positions they assume with the
selling stockholders. The selling stockholders or their successors in interest
may also enter into option or other transactions with broker-dealers that
require the delivery by such broker-dealers of the shares, which shares may be
resold thereafter pursuant to this prospectus.
In addition, the selling stockholders may, from time to time, short
sell shares. Then this prospectus may be delivered in connection with such short
sales and the shares may be used to cover such short sales. Any or all of the
sales or other transactions involving the shares described above, whether
effected by the selling stockholders, any broker-dealer or others, may be made
pursuant to this prospectus. In addition, any shares that qualify for sale
pursuant to Rule 144 under the Securities Act of 1933 may be sold under Rule144
rather than pursuant to this prospectus. The shares may also be offered in one
or more underwritten offerings, on a firm commitment or best efforts basis.
Brokers, dealers, underwriters or agents participating in the
distribution of the shares as agents may receive compensation in the form of
commissions, discounts or concessions from the selling stockholders and/or
purchasers of the shares for whom such broker-dealers may act as agent, or to
whom they may sell as principal, or both (which
11
<PAGE> 14
compensation as to a particular broker-dealer may be less than or in excess of
customary commissions). The selling stockholders and any broker-dealers who act
in connection with the sale of shares hereunder may be deemed to be
"underwriters" within the meaning of the Securities Act of 1933, and any
commissions they receive and proceeds of any sale of shares may be deemed to be
underwriting discounts and commissions under the Securities Act of 1933.
Neither we nor the selling stockholders can presently estimate the
amount of such compensation. We know of no existing arrangements between any
selling stockholder and any other stockholder, broker, dealer, underwriter or
agent relating to the sale or distribution of the shares.
Under applicable rules and regulations under the Securities Exchange
Act of 1934, any person engaged in the distribution of the shares may not
simultaneously engage in market making activities with respect to our stock for
a period of one business day prior to the commencement of the distribution and
ending upon such person's completion of participation in the distribution,
subject to certain exceptions for passive market making transactions. In
addition and without limiting the foregoing, the selling stockholders will be
subject to applicable provisions of the Securities Exchange Act of 1934 and the
rules and regulations thereunder, including, without limitation, Regulation M,
which provisions may limit the timing of purchases and sales of shares of common
stock by the selling stockholders.
At the time a particular offer of shares is made, to the extent
required, a supplemental prospectus will be distributed that will set forth the
number of shares being offered and the terms of the offering including the name
or names of the selling stockholders and any underwriters, dealers or agents,
the purchase price paid by an underwriter for the shares purchased from the
selling stockholders and any discounts, concessions or commissions allowed or
reallowed or paid to dealers.
In order to comply with the securities laws of certain states, if
applicable, the shares may be sold in such jurisdictions only through registered
or licensed brokers or dealers.
LEGAL MATTERS
The Law Offices of Bruce R. Thaw, 45 Banfi Plaza, Farmingdale, NY 11735
will pass upon the validity of the issuance of the shares offered hereby for
us. Mr. Thaw is a director and serves as our general counsel for which he has
been paid customary legal fees. Mr. Thaw also owns 220,000 shares of our Common
Stock.
EXPERTS
The consolidated financial statements and schedule of Information
Resource Engineering, Inc. and subsidiaries as of December 31, 1997 and 1998,
and for each of the years in the three-year period ended December 31, 1998,
have been incorporated by reference herein and in the registration statement
in reliance upon the report of KPMG LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
12
<PAGE> 15
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION
NOT CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS
PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY, NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH
SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE. THE DELIVERY OF THIS
PROSPECTUS AT ANY TIME DOES NOT IMPLY THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO ITS DATE.
--------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Summary............................... 2
Risk Factors.......................... 2
Additional Information................ 9
Incorporation of Certain
Documents By Reference............... 10
Selling Stockholders.................. 10
Use of Proceeds....................... 11
Plan of Distribution.................. 11
Legal Matters......................... 12
Experts............................... 12
--------------------
</TABLE>
INFORMATION RESOURCE
ENGINEERING, INC.
30,000 Shares
-----------------
PROSPECTUS
-----------------
, 1999
<PAGE> 16
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the expenses relative to this offering,
all of which are to be borne by the Registrant. Expenses other than filing fees
are estimated.
<TABLE>
<S> <C>
Registration Fee $ 154
Accounting Fees and Expenses $ 12,500
Legal Fees and Expenses $ 10,000
Printing Fees $ 2,000
Miscellaneous $ 1,846
---------
Total Expenses $ 26,500
</TABLE>
ITEM 15. INDEMNIFICATION OF OFFICERS AND DIRECTORS
The Delaware General Corporation Law, as amended, provides for the
indemnification of the Company's officers, directors and corporate employees and
agents under certain circumstances as follows:
DEL. CODE ANN. TITLE 8
Sec. 145. Indemnification of officers, directors, employees and agents;
insurance
a) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the corporation) by reason of the
fact that he is or was a director, officer, employee or agent of the corporation
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses (including attorney's fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with such action, suit or proceeding if he acted in good faith and in
a manner he reasonably believed to be in or not opposed to the best interests of
the corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe his conduct was unlawful. The termination of any
action, suit or proceeding by judgment, order, settlement, conviction, or upon a
plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that the person did not act in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had
reasonable cause to believe that his conduct was unlawful.
b) A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action or
suit by or in the right of the corporation to procure a judgment in its favor by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees),
actually and reasonably incurred by him in connection with the defense or
settlement of such action or suit if he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and except that no indemnification shall be made in respect of any
claim, issue or matter as to which such person shall have been adjudged to be
liable to the corporation unless and only to the extent that the Court of
Chancery or the court in which such action or suit was brought shall determine
upon application that, despite the adjudication of liability but in view of all
the circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses which the Court of Chancery or such other court
shall deem proper.
1
<PAGE> 17
c) To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action suit or proceeding referred to in subsections (a) and (b) of this
section, or in defense of any claim, issue or matter therein, he shall be
indemnified against expenses (including attorneys' fees) actually and reasonably
incurred by him in connection therewith.
d) Any indemnification under subsection (a) and (b) of this section (unless
ordered by a court) shall be made by the corporation only as authorized in the
specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met
the applicable standard of conduct set forth in subsections (a) and (b) of this
section. Such determination shall be made (1) by the board of directors by a
majority vote of a quorum consisting of directors who were not parties to such
action, suit or proceedings, or (2) if such a quorum is not obtainable, or,
even, if obtainable a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, or (3) by the stockholders.
e) Expenses incurred by an officer or director in defending a civil or
criminal action, suit or proceeding may be paid by the corporation in advance of
the final disposition of such action, suit or proceeding upon receipt of an
undertaking by or on behalf of such director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the corporation as authorized in this section. Such expenses incurred by other
employees and agents may be so paid upon such terms and conditions, if any, as
the board of directors deems appropriate.
f) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other subsections of this section shall not be deemed
exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, both as to action in his
official capacity and as to action in another capacity while holding such
office.
g) A corporation shall have power to purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him
and incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liability under this section.
h) For purposes of this section, references to "the corporation" shall
include, in addition to the resulting corporation, any constituent corporation
(including any constituent of a constituent) absorbed in a consolidation or
merger which, if its separate existence had continued, would have had power and
authority to indemnify its directors, officers, and employees or agents, so that
any person who is or was a director, officer, employee or agent of such
constituent corporation, or is or was serving at the request of such constituent
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, shall stand in the same
position under this section with respect to the resulting or surviving
corporation as he would have with respect to such constituent corporation if its
separate existence had continued.
i) For purposes of this section, references to "other enterprises"
shall include employee benefit plans; references to "fines" shall include any
excise taxes assessed on a person with respect to any employee benefit plan; and
references to "serving at the request of the corporation" shall include any
service as a director, officer, employee or agent of the corporation which
imposes duties on, or involves services by, such director, officer, employee or
agent with respect to an employee benefit plan, its participants or
beneficiaries; and a person who acted in good faith and in a manner he
reasonably believed to be in the interest of the participants and beneficiaries
of an employee benefit plan shall be deemed to have acted in a manner "not
opposed to the best interests of the corporation" as referred to in this
section.
j) The indemnification and advancement of expenses provided by, or
granted pursuant to, this section shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
2
<PAGE> 18
The Certificate of Incorporation of the Company provides that the
indemnification provisions of Sections 102(b)(7) and 145 of the Delaware
Corporation Law shall be utilized to the fullest extent possible. Further, the
Certificate of Incorporation contains provisions to eliminate the liability of
the Company's directors to the Company or its stockholders to the fullest extent
permitted by Section 102(b)(7) of the Delaware General Corporation Law, as
amended from time to time.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933, as amended, is permitted to directors, officers or controlling
persons of the Registrant, pursuant to the above mentioned statutes or
otherwise, the Registrant understands that the Securities and Exchange
Commission is of the opinion that such indemnification may contravene federal
public policy, as expressed in said Act, and therefore, may be unenforceable.
Accordingly, in the event that a claim for such indemnification is asserted by
any director, officer or a controlling person of the Company, and the Commission
is still of the same opinion, the Registrant (except insofar as such claim seeks
reimbursement by the Registrant of expenses paid or incurred by a director,
officer of controlling person in successful defense of any action, suit or
proceeding) will, unless the matter has theretofore been adjudicated by
precedent deemed by counsel for the Registrant to be controlling, submit to a
court of appropriate jurisdiction the question whether or not indemnification by
it is against public policy as expressed in the Act and will be governed by the
final adjudication of such issue. The Placement Agent's Warrants provide for
reciprocal indemnification and such provisions are incorporated by reference
herein.
<TABLE>
<CAPTION>
ITEM 16. EXHIBITS
<C> <S>
1 None
2 None
4 Specimen of Common Stock Certificate of Registrant (1)
5 Opinion of Counsel as to the legality of securities being registered
8 None
15 None
23A Consent of Bruce R. Thaw, Counsel to the Company
23B Consent of KPMG LLP, Independent Accountants.
24 Power of Attorney - See signature page
25 None
26 None
27 None
28 None
</TABLE>
(1) Filed as an exhibit to the Registration Statement on Form S-1 (File No.
33-52066) of the Registrant and incorporated herein by reference.
3
<PAGE> 19
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 to include any
additional or changed material information with respect to the plan of
distribution.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
(4) 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 any charge provision, by-law contract,
arrangements statute, 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 Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by 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 against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
(5) That, for the purpose 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 shall be deemed to be part
of this registration statement as of the time it was declared effective.
4
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements 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 at Baltimore, Maryland on the 29th day of October, 1999.
INFORMATION RESOURCE ENGINEERING, INC.
By:/s/Anthony A. Caputo
-----------------------------
ANTHONY A. CAPUTO, Chairman,
President and Chief Executive Officer
KNOW ALL MEN BY THESE PRESENT, that each of the undersigned whose signature
appears below constitutes and appoints Anthony A. Caputo and David A. Skalitzky,
and each of them (with full power of each of them to act alone), his true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution for him and on his behalf, and in his name, place and stead, in
any and all capacities to execute and sign any and all amendments or
post-effective amendments to this registration statement, or subsequent
registration statements related to the shares registered hereby and to file the
same, with all exhibits thereto, and all other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agents or any of them or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof and the
Registrant hereby confers like authority on its behalf.
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated:
<TABLE>
<CAPTION>
Signature Title Date
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
/s/ Anthony A. Caputo Chairman, President and Chief Executive October 29, 1999
-------------------- Officer (Principal Executive Officer)
ANTHONY A. CAPUTO
/s/ Carole D. Argo Senior Vice President and Chief October 29, 1999
----------------------- Financial Officer
CAROLE D. ARGO (Principal Financial and Accounting Officer)
/s/ Thomas A. Brooks Director October 29, 1999
-----------------------
THOMAS A. BROOKS
/s/ Douglas E. Kozlay Director October 29, 1999
-----------------------
DOUGLAS E. KOZLAY
/s/ Shelley A. Harrison Director October 29, 1999
-----------------------
SHELLEY A. HARRISON
/s/ Ira A Hunt, Jr. Director October 29, 1999
-----------------------
IRA A. HUNT, JR.
/s/ Bruce R. Thaw Director October 29, 1999
-----------------------
BRUCE R. THAW
</TABLE>
5
<PAGE> 1
Law Offices of
BRUCE R.THAW
45 Banfi Plaza
Farmingdale, New York 11735
(516) 752-1760
October 29, 1999
Information Resource Engineering, Inc.
8029 Corporate Drive
Baltimore, MD 21236
To whom it may concern:
We have acted as counsel for Information Resource Engineering, Inc., a
Delaware corporation (the "Company") in connection with the proposed issue and
sale by certain Selling Stockholders of 30,000 Shares of Common Stock, $.01 par
value.
As counsel to the Company, we have examined the minute books of the
Company, together with copies of its certificate of incorporation, as amended,
and by-laws. We have also examined the proposed Registration Statement on Form
S-3 (Securities and Exchange Commission File No. 333- ), and the exhibits to
said Registration Statement. Based upon the foregoing, and our examination of
such other documents as we deemed pertinent, we are of the opinion that:
1. The Company is a corporation duly organized and validly existing
and in good standing under and by virtue of the laws of the State
of Delaware.
2. The authorized capital of the Company consists of (i) 500,000
shares of Preferred Stock, par value $.01 per share, and (ii)
15,000,000 shares of Common Stock, par value $.01 per share, of
which 5,536,151 shares are issued and outstanding, fully paid and
non-assessable shares of Common Stock of the Company as of this
date.
3. The 30,000 Shares being offered by the Selling Stockholders and
which are the subject of the Registration have been duly
authorized and the shares when sold and transferred by the Selling
Stockholders and delivered against payment therefor will be
legally issued and outstanding, fully paid and non-assessable.
Very truly yours,
/s/ Bruce R. Thaw
BRUCE R. THAW
7
<PAGE> 1
CONSENT OF COUNSEL
We hereby consent to be named in the Registration Statement filed by
Information Resource Engineering, as attorneys, who will pass upon the legal
matters for the Registration in connection with the sale of the Shares of the
Registrant.
Farmingdale, New York Law Offices of BRUCE R. THAW
October 29, 1999
/s/ Bruce R. Thaw
9
<PAGE> 1
CONSENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors
Information Resource Engineering, Inc.:
We consent to the use of our reports incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the prospectus.
Baltimore, Maryland /s/ KPMG LLP
October 29, 1999
11
