As filed with the Securities and Exchange Commission on September 18, 1998
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
StarBase Corporation
(Exact name of registrant as specified in its charter)
Delaware 33-0567363
(State or other jurisdiction (IRS employer
of incorporation or organization) identification number)
4 Hutton Centre Drive, Suite 800
Santa Ana, CA 92707-8713
(714) 445-4400
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
Douglas S. Norman
Director of Finance and Chief Accounting Officer
4 Hutton Centre Drive, Suite 800
Santa Ana, CA 92707-8713
(714) 445-4400
(Name, address, including zip code, telephone number, including area code, of
agent for service)
COPY TO:
Martin Eric Weisberg, Esq.
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, NY 10036-8735
(212) 704-6050
Approximate date of commencement of proposed sale to the public: From time to
time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered pursuant
to dividend 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, check the following box. [X]
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<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed
Maximum Proposed
Amount Aggregate Maximum Amount of
Title of each class of To Be Price Per Aggregate Registration
securities to be registered Registered Unit Offering Price Fee
- ------------------------------ ---------------- -------------- --------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$0.01 per share (2) 6,275,304 $ 0.8595 (1) $ 5,393,623.79 $ 1,591.12
Common Stock, par value
$0.01 per share (3) 941,305 $ 0.8595 (4) $ 809,051.65 $ 238.67
Total 7,216,609 $ 6,202,675.44 $ 1,829.79
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(1) Estimated solely for the purpose of calculating the registration fee. The
Proposed Maximum Aggregate Offering Price was calculated pursuant to Rule
457(c) under the Securities Act of 1933, as amended, on the basis of the
average of the bid and ask prices reported in the NASDAQ SmallCap Market
system on September 14, 1998.
(2) The shares of common stock offered hereby include the resale, pursuant to
Rule 416, of such presently indeterminate number of shares of Common Stock
as shall be issued in respect of all shares of Common Stock, par value
$.01, issuable upon the conversion of 3,100 shares of the Company's Series
G Preferred Stock (the "Preferred Stock") issued in a private placement in
July 1998 (the "Private Placement"). The number of shares of Common Stock
indicated to be issuable in connection with such transaction and offered
for resale hereby is an estimate and is, based on a Registration Rights
Agreement (the "Registration Rights Agreement") between the Company and
each of the Selling Stockholders, 150% of the number of shares that would
be issuable upon conversion of 3,100 shares of the Preferred Stock based on
a price of the Common Stock of $0.78 per share, and is subject to
adjustment and could be materially less than such estimated amount
depending upon factors that cannot be predicted by the Company at this
time. This presentation is not intended to constitute a prediction as to
the future market price of the Common Stock or as to the number of shares
of Common Stock into which the Series G Preferred Stock will be converted.
(3) Represents 150% of the shares issuable upon exercise of Warrants evidencing
the right to purchase shares of Common Stock, par value $0.01 per share.
(4) Estimated solely for the purpose of calculating the registration fee. In
accordance with Rule 457(g), the registration fee for these shares is
calculated based upon a price which represents the highest of: (i) the
price at which the Warrants may be exercised; (ii) the offering price of
securities of the same class included in the registration statement; or
(iii) the price of securities of the same class, as determined pursuant to
Rule 457(c).
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 SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
An Exhibit Index appears on page II-6
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. 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.
SUBJECT TO COMPLETION, DATED SEPTEMBER __, 1998
PROSPECTUS
STARBASE CORPORATION
SHARES OF COMMON STOCK*
(par value $0.01 per share)
This Prospectus relates to the sale from time to time by certain persons (the
"Selling Stockholders") of 7,216,609 shares (the "Shares") of common stock,
$0.01 par value per share (the "Common Stock"), of StarBase Corporation, a
Delaware corporation (the "Company"). See "Selling Stockholders." The Company is
not offering any shares of Common Stock hereunder and will not receive any of
the proceeds from the sale of shares by the Selling Stockholders. Included in
the number of Shares offered hereby are 627,534 shares issuable upon exercise of
warrants, exercisable through August 31, 2000, by the Selling Stockholders (the
"Warrants"). The Company will receive proceeds represented by the exercise price
of the Warrants if exercised by the holders thereof. It is anticipated that the
Selling Stockholders will offer such Shares from time to time in the
over-the-counter market at the then prevailing market prices and terms or in
negotiated transactions and without the payment of any underwriting discounts or
commissions, except for usual and customary selling commissions paid to brokers
or dealers. See "Plan of Distribution." The Selling Stockholders also may sell
such Shares from time to time pursuant to Rule 144 under the Securities Act of
1933, as amended (the "Securities Act").
The Common Stock is traded on the Nasdaq SmallCap Market under the symbol
"SBAS." On September 16, 1998, the closing bid price of the Common Stock on the
Nasdaq SmallCap Market was $0.875 per share.
*The shares of Common Stock offered hereby include the resale, pursuant
to Rule 416, of such presently indeterminate number of shares of Common Stock,
par value $.01, as shall be issued in respect of all shares of Common Stock
issuable upon (i) conversion of 3,100 shares of the Company's Series G Preferred
Stock (the "Preferred Stock"), and (ii) the exercise of the Warrants, issued in
a private placement in July 1998 (the "Private Placement"). The number of shares
of Common Stock indicated to be issuable in connection with such transactions
and offered for resale hereby is an estimate and is, based on a Registration
Rights Agreement (the "Registration Rights Agreement") between the Company and
each of the Selling Stockholders, 150% of the number of shares that would be
issuable upon (x) conversion of 3,100 shares of the Preferred stock based on a
price of the Common Stock of $0.78 per share and (y) the exercise of the
Warrants, and is subject to adjustment and could be materially less than such
estimated amount depending upon factors that cannot be predicted by the Company
at this time. This presentation is not intended to constitute a prediction as to
the future market price of the Common Stock or as to the number of shares of
Common Stock into which the Preferred Shares will be converted. See "Risk
Factors" on pages 4 - 10 of this Prospectus.
(cover page continued on next page)
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THE SECURITIES OFFERED HEREBY ARE SPECULATIVE AND INVOLVE A HIGH DEGREE OF RISK
AND SHOULD NOT BE PURCHASED BY ANYONE WHO CANNOT AFFORD THE LOSS OF HIS ENTIRE
INVESTMENT. SEE "RISK FACTORS" ON PAGES 4 - 10 OF THIS PROSPECTUS FOR A
DESCRIPTION OF RISK FACTORS.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS SEPTEMBER __, 1998
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AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities of the Commission located at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at the New York Regional
Office of the Commission, Seven World Trade Center, Suite 1300, New York, New
York 10048, and at the Chicago Regional Office of the Commission, Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60621. Copies of
such material can also be obtained at prescribed rates from the Public Reference
Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549.
Such materials may also be accessed electronically on the Internet at
http://www.sec.gov. The Common Stock is listed on the Nasdaq SmallCap Market
under the symbol "SBAS." Reports, proxy materials and other information
concerning the Company can also be inspected at the offices of the Nasdaq Stock
Market, Inc., 1735 K Street, NW, Washington, DC 20006-1500.
The Company has filed with the Commission a registration statement on Form S-3
(File No. ______, together with any and all amendments, the "Registration
Statement") under the Securities Act of 1933, as amended, with respect to the
registration of the Shares. This Prospectus does not contain all of the
information set forth in the Registration Statement and the exhibits thereto,
certain portions of which have been omitted as permitted by the rules and
regulations of the Commission. In addition, certain documents filed by the
Company with the Commission have been incorporated herein by reference. See
"Incorporation of Certain Documents by Reference." For further information
regarding the Company and the Common Stock reference is made to the Registration
Statement, including the exhibits and schedules thereto and the documents
incorporated herein by reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission, are incorporated herein by reference: (i) the Company's Quarterly
Report on Form 10-QSB/A for the quarter ended June 30, 1998; (ii) the Company's
Report on Form 10-KSB/A for the fiscal year ended March 31, 1998, (iii) Current
Report on Form 8-K filed on August 17, 1998; and (iv) the description of Common
Stock contained in "Description of Securities" in the Company's Registration
Statement on Form 10, as amended, dated April 27, 1995, filed pursuant to
Section 12(g) of the Exchange Act. In addition, each document filed by the
Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to termination of the
offering of Shares shall be deemed to be incorporated by reference into this
Prospectus and to be a part hereof from the date such document is filed with the
Commission.
Any statement contained herein, or any document, all or a portion of which is
incorporated or deemed to be incorporated by reference herein, shall be deemed
to be modified or superseded for purposes of the Registration Statement and this
Prospectus to the extent that a statement contained herein, or in any
subsequently filed document that also is or is deemed to be incorporated by
reference herein, or in any subsequently filed document that 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 part of the Registration
Statement or this Prospectus.
The Company will provide without charge to each person, including any beneficial
owner, to whom a copy of this Prospectus has been delivered, upon written or
oral request of any such person, a copy of any or all of the information that
has been incorporated by reference herein, other than exhibits to such
documents, unless such exhibits are specifically incorporated by reference into
the information that this Prospectus incorporates. Written or oral requests for
such copies should be directed to: Investor Relations, StarBase Corporation, 4
Hutton Centre Drive, Suite 800, Santa Ana, CA 92707-8713; (714) 445-4400.
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THE COMPANY
The following summary is qualified in its entirety by, and should be read in
conjunction with, the more detailed information and financial statements and
notes thereto appearing elsewhere or incorporated by reference in the
Prospectus.
To inform investors of the Company's future plans and objectives, this
Prospectus (and other reports and statements issued by the Company and its
officers from time to time) contain certain statements concerning the Company's
future results, future performance, intentions, objectives, plans and
expectations that are or may be deemed to be "forward-looking statements." The
Company's ability to do this has been fostered by the Private Securities
Litigation Reform Act of 1995 (the "Reform Act"), which provides a "safe harbor"
for forward-looking statements to encourage companies to provide prospective
information so long as those statements are accompanied by meaningful cautionary
statements identifying important factors that could cause actual results to
differ materially from those discussed in the statement. The Company believes it
is in the best interest of investors to take advantage of the "safe harbor"
provisions of the Reform Act. Such forward-looking statements are subject to a
number of known and unknown risks and uncertainties that, in addition to general
economic and business conditions and those described in "Risk Factors" could
cause the Company's actual results, performance and achievements to differ
materially from those described or implied in the forward-looking statements.
StarBase Corporation is a leading provider of advanced Internet and intranet
based technical collaboration and software configuration management (SCM) tools.
The Company develops, markets and supports team-oriented development software
that targets the evolving needs of corporate info-structures which support
projects requiring technical collaboration on an enterprise level. The Company's
current product line consists of the recently launched products StarTeam(R) 3.0
and StarTeam(R) 2000, as well as RoundTable (R) and Versions(R). StarTeam 3.0
has been recognized in the industry as the only product to effectively integrate
the essential components of SCM tools in one easy-to-use and intuitive interface
built on top of a collaborative framework. The Company has chosen to focus on
technical collaboration and team productivity since the wide usage of the
Internet has created a tremendous potential market for distributed project teams
needing secure, remote access to projects. Additionally, StarTeam(R) 2000 is
specifically designed to address the complex and mission critical issues
involved with the management, asset tracking and reporting issues surrounding
Year 2000 compliance projects. The Company has also practically eliminated the
barriers to entry for current users of other SCM tools by inter-operating with
the leading Windows based SCM products. Furthermore, the Company's products
utilize and are tightly integrated with various Microsoft technologies, a market
leader in technology software.
PRINCIPAL EXECUTIVE OFFICES
The principal executive offices of the Company are located at 4 Hutton Centre
Drive, Suite 800, Santa Ana, CA 92707-8713; its telephone number is (714)
445-4400 and its fax number is (714) 445-4404.
RISK FACTORS
THIS OFFERING INVOLVES SUBSTANTIAL INVESTMENT RISK AND SHARES SHOULD BE
PURCHASED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. IN
EVALUATING AN INVESTMENT IN THE COMPANY AND ITS BUSINESS, PROSPECTIVE INVESTORS
SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS AS WELL AS OTHER
INFORMATION SET FORTH ELSEWHERE IN THIS PROSPECTUS OR INCORPORATED HEREIN BY
REFERENCE.
Significant Cash Requirements. The Company's cash requirements have been and
will continue to be significant. The Company's negative cash flow from
operations for the years ended March 31, 1995, 1996, 1997, 1998 and the
three months ended June 30, 1998 was $6,179,000; $4,949,000; $6,506,000;
$5,662,000; and $2,333,000, respectively. Continued operations will depend
on its cash flow, if any, from operations or its ability to raise
additional funds through equity or debt financing. There can be no
assurance that the Company will be able to obtain additional funding when
needed, or that such funding, if available, will be obtainable on terms
favorable to the Company. If the Company cannot obtain needed funds, it may
be forced to cut back or curtail its activities, in which case the business
prospects of the Company would be materially and adversely affected.
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History of Losses. There can be no assurance that the Company's product
development efforts will result in a commercially viable business or that
the Company will be able to generate significant revenues or operate
profitably. Since its inception, the Company has had a history of losses
and as of June 30, 1998, the Company had an accumulated deficit of
approximately $44,515,000. The Company anticipates incurring additional
losses until it can successfully market and distribute its existing
integrated team environment ("ITE") products and successfully develop,
market, and distribute its planned future products. The development of
software products is difficult and time consuming, requiring the
coordinated participation of various technical and marketing personnel and,
at times, independent third-party suppliers. This development process often
encounters unanticipated delays and expenses, and unanticipated changes in
features and functionality extend projected time schedules and increase
estimated expenses. The likelihood of the success of the Company's business
must be considered in light of the problems, expenses, and unforeseen
delays frequently encountered in connection with the development of new
technologies. There can be no assurance that the Company will ever achieve
profitability.
Product Lines Under Development; Developing Market. The Company's success will
be dependent in large part upon its ability to market its StarTeam products
and to quickly introduce and market additional products. While the Company
is in various stages of developing additional products, there can be no
assurance that such additional products will be completed or successfully
marketed. User preferences for software products are difficult to predict
and, historically, only a limited number of software products have achieved
sustained market acceptance. Demand for software products is subject to a
number of variables, including user preferences and the size of the
installed base of personal computers capable of running the products.
Further, the market for ITE software products is evolving. There can be no
assurance that the products introduced by the Company will achieve
acceptance, or that other software vendors will not develop and market
products which render the Company's products obsolete or less competitive.
Failure to obtain significant customer satisfaction or market share for the
Company's products would have a material adverse effect on the Company.
Fluctuations in Quarterly Results. The Company's results of operations have
historically varied substantially from quarter to quarter and the Company
expects they will continue to do so. In the past, the operating results
varied significantly as a result of a number of factors, including the size
and timing of customer orders or consulting agreements, product mix,
seasonality, the timing of the introduction and customer acceptance of new
products or product enhancements by the Company's competitors, new products
or version releases by the Company, changes in pricing policies by the
Company or its competitors, marketing and promotional expenditures,
research and development expenditures, and changes in general economic
conditions.
The Company's operating expenses are relatively fixed in the short term.
For example, the Company intends to make significant expenditures to
enhance its sales and marketing and research and development activities.
Once such expenditures are incurred, the Company may be unable to reduce
them quickly if revenue is less than expected. As a result, fluctuations in
revenues can cause significant variations in quarterly results of
operations. The Company does not operate with an order backlog and a
substantial portion of its revenue in any quarter is derived from orders
booked in that quarter. Accordingly, the Company's sales expectations are
based almost entirely on its internal estimates of future demand and not on
firm customer orders. Due to the foregoing factors, the Company believes
that quarter to quarter comparisons of its results of operations are not
necessarily meaningful and should not be relied upon as indications of
future performance. In addition, there can be no assurance that the Company
will be profitable on a quarter to quarter or any other basis in the
future.
Intense Competition. The software industry is highly competitive, and user
demand for particular software may be adversely affected by the number of
competitive products from which to choose. The Company's competitors
include a broad range of companies that develop and market tools for
software application development. Many of the Company's current and
prospective competitors have significantly greater financial, technical,
manufacturing, sales, and marketing resources than the Company. There can
also be no assurance that the Company's competitors have not developed or
will be unable to develop products comparable or superior to those
developed by the Company or to adapt more quickly than the Company to new
technologies, evolving industry trends or customer requirements.
The Company believes that its ability to compete depends on factors both
within and outside its control, including the timing and success of new
products developed by it and its competitors, product performance and
price, ease of use, support of industry standards, and customer support and
service. There can be no assurance that the Company will be able to compete
successfully with respect to these factors. In particular, competitive
pressures from existing and new
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competitors who offer lower prices could result in loss of sales, cause the
Company to institute price reductions, or result in reduced margins and
loss of market share, all of which would adversely affect the Company's
results of operations.
Dependence on and Intense Competition for Key Personnel. The Company's success
depends in large part on the continued service and performance of certain
key technical, marketing, sales, and management personnel. None of the
Company's management is covered by an employment contract or key person
life insurance. In addition, competition for such personnel in the software
industry is intense and the process of locating highly qualified technical
and management personnel with the combination of skills and attributes
required to execute the Company's strategy is often lengthy. There can be
no assurance that the Company will be successful in hiring or retaining
qualified personnel. Loss of key personnel or the inability to hire and
retain qualified personnel could have a material adverse effect upon the
Company's business, results of operations, and research and development
efforts.
Strategic Alliances. The development of alliances with selected software
companies that complement the Company's market and sales direction is an
element in the Company's marketing strategy. These alliances typically
involve joint marketing agreements and the inclusion of the Company's
products in the product line of the strategic partner. To date, the Company
has entered into bundling agreements with companies including, among
others, Oracle, Aonix, Penumbra, SoftQuad and Visix. There can be no
assurance, however, of increased revenues as a result of these bundling
agreements or any other such alliance.
Dependence on New Products and Adaptation to Technological Change. The market
for the Company's products is characterized by rapidly changing technology,
evolving industry standards, changes in customer needs, and frequent new
product introductions. The Company's future success will depend on its
ability to enhance its current products, to develop new products on a
timely and cost-effective basis to meet changing customer needs and to
respond to emerging industry standards and other technological changes. Any
failure by the Company to anticipate or respond adequately to changes in
technology and customer preferences, or any significant delays in product
development or introduction, could have a material adverse effect on the
Company's results of operations.
Software products as complex as those offered by the Company may contain
undetected errors when first introduced or as new versions are released.
There can be no assurance that, despite extensive testing by the Company
and by current and potential customers, errors will not be found in new
products after commencement of commercial shipments, resulting in loss of
or delay in market acceptance.
Reliance on Microsoft. Microsoft Windows has gained widespread market acceptance
as the dominant computer operating system. Accordingly, the Company has
developed and is developing software products that function in the
Microsoft Windows, Windows 95, Windows 98 or Windows NT environments, and
anticipates that future products will also be designed for use in these
Microsoft environments. Because the Company expects that its
Microsoft-based applications will account for a significant portion of new
revenue for the foreseeable future, sales of the Company's new products
would be materially and adversely affected by market developments adverse
to Microsoft Windows, Windows 95, Windows 98 and Windows NT. The Company's
ability to develop products using the Microsoft Windows, Windows 95,
Windows 98 and Windows NT environments is substantially dependent on its
ability to gain timely access to, and to develop expertise in, current and
future developments by Microsoft, of which there can be no assurance.
Moreover, the abandonment by Microsoft of its current operating system,
product line or strategy, or the decision by Microsoft to develop and
market products that directly or indirectly compete with the Company's
products would have a material adverse effect on the Company's business,
financial condition, and results of operations.
Year 2000. The Year 2000 Issue is the result of computer programs being written
using two digits rather than four to define the applicable year. Any
computer programs that have date-sensitive software may recognize a date
using "00" as the calendar year 1900 rather than the year 2000. This could
result in a system failure or miscalculations causing disruptions of
operations, including, among other things, a temporary inability to process
transactions, send invoices, or engage in similar normal business
activities.
The Company believes it has no exposure to Year 2000 issues for the
products it has sold, as the products were designed with four digit year
recognition.
The Company has begun its assessment of its internal systems affected by
the Year 2000 Issue and anticipates that it
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will not be required to modify or replace significant portions of its
software so that its computer systems will properly utilize dates past
December 31, 1999.
The Company has initiated communications with its significant suppliers and
customers to determine the extent to which the Company is vulnerable to
those third parties' failure to remediate their own Year 2000 Issue. There
can be no guarantee that the systems of other companies on which the
Company's systems rely will be timely converted, or that a failure to
convert by another company, or a conversion that is incompatible with the
Company's systems, would not have a material adverse effect on the Company.
Research and Development Costs. The development of sophisticated software
products is a lengthy and capital intensive process and is subject to
unforeseen risks, delays, problems and costs. There can be no assurance
that the Company will be able to successfully develop any additional
products or enhance existing products, or that unanticipated technical or
other problems will not occur which would result in delays in the Company's
development program. Failure to complete development of a product could
result in the complete loss of the funds committed by the Company to that
product, which could be substantial.
Risk of Expansion Strategy. The expansion of the Company's product line has
extended its resources, and is expected to continue to extend the Company's
management and operations, including its sales, marketing, customer
support, research and development, and finance and administrative
operations. The Company's future performance will depend in part on its
ability to manage growth, should that occur, and to adapt its operational
and financial control systems, if necessary, to respond to changes
resulting from such growth. The failure of the Company's management to
respond to and manage growth effectively could have a material adverse
effect on the Company's business, financial condition, and results of
operations.
Protection of Proprietary Rights. The Company's success depends heavily upon its
proprietary technology. It relies on a combination of copyright, trademark,
and trade secret laws, confidentiality procedures, and licensing
arrangements to establish and protect its proprietary rights. As part of
its confidentiality procedures, the Company generally enters into
non-disclosure agreements with its employees and distributors, and limits
access to and distribution of its software, documentation, and other
proprietary information. Despite these precautions, it may be possible for
a third party to copy or otherwise obtain and use the Company's products or
technology without authorization, or to develop similar technology
independently. In addition, effective protection of intellectual property
rights may fluctuate depending on judicial interpretation of applicable law
and may be unavailable or limited in certain foreign countries.
The Company provides its products to end-users primarily under
"shrink-wrap" license agreements included within the packaged software.
These agreements are not negotiated with or signed by the licensee, and
thus these agreements may not be enforceable in certain jurisdictions where
enforcement is either expensive or limited for other reasons. Protection of
intellectual property can be extremely costly.
The Company is not aware of any instances where any of its products
infringe the proprietary rights of third parties. There can be no
assurance, however, that third parties will not claim such infringement by
the Company with respect to current or future products or that management
of the Company is aware of all potential claims of infringements. Any such
claims, with or without merit, could result in costly litigation or might
require the Company to enter into royalty or licensing agreements.
Possible Dilution Due to Issuance of Additional Common Stock; Market Overhang.
As of August 31, 1998, the Company had issued 19,944,355 shares of Common
Stock; approximately 210,000 shares of Common Stock were issuable upon the
conversion of the Series D Preferred Stock; 2,228,003 shares of Common
Stock were issuable upon the conversion of the Series E Preferred Stock;
2,177,722 shares of Common Stock were issuable upon the exercise of
outstanding warrants issued by the Company, and 4,342,672 shares of Common
Stock were issuable upon the exercise of outstanding options issued by the
Company. In addition, on or after November 28, 1998, an estimated 4,183,537
shares of Common Stock may be issuable upon conversion of the Preferred
Stock and 627,534 shares of Common Stock may be issuable upon the exercise
of the Warrants. Furthermore, the Company may conduct additional offerings
of its Common Stock or securities convertible into Common Stock.
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As a result of the above transactions, the voting power of each holder of
Common Stock may be diluted by the issuance of additional shares of Common
Stock. Also, the book value per share of Common Stock may be reduced upon
the exercise of outstanding options or warrants or the conversion of
Preferred Stock, depending upon the exercise price of the options or
warrants and the conversion ratio of the Preferred Stock, and the book
value per share of Common Stock, at the time of such exercise or
conversion.
Furthermore, the prevailing market price for the Common Stock may be
materially and adversely affected by the addition of a substantial number
of shares of Common Stock, including the shares offered hereby, into the
market or by the registration under the Securities Act of such additional
shares. In addition, the prospect of future sales of shares of Common Stock
issuable upon the exercise of outstanding warrants and options may have a
depressive effect upon the market price of the Common Stock, as such
warrants and options would be more likely to be exercised at a time when
the price of the Common Stock is in excess of the applicable exercise
price.
Concentration of Share Ownership. Based upon the shares outstanding as of August
31, 1998, the Company's Chairman of the Board of Directors and the
Company's officers, directors and their affiliates as a group, beneficially
own approximately 3.8% and 8.0%, respectively, of the Company's outstanding
Common Stock. These amounts include Common Stock issuable upon the exercise
of warrants and/or options as well as indirect ownership of Common Stock.
As a result, these stockholders will be able to exercise significant
influence over matters requiring stockholder approval, including the
election of directors and approval of significant corporate transactions.
No Dividends. The Company has not paid any dividends on its Common Stock since
inception. Under the corporate law of Delaware, the Company is prohibited
from paying dividends except in certain defined circumstances. Included in
these restrictions is the requirement that dividends be paid out of the
Company's surplus (retained earnings) or, if there is no surplus, out of
the Company's net profits for the fiscal year in which the dividend is
declared and/or the preceding fiscal year. At June 30, 1998, the Company
had an accumulated deficit of approximately $44,515,000, which prevents it
from paying dividends in the foreseeable future.
Fluctuations in the Company's Stock Price. The trading price of the Company's
Common Stock has historically been subject to wide fluctuation in response
to variations in the actual or anticipated operating results of the
Company, announcements of new products or technological innovations by the
Company or its competitors, and general conditions in the industry. In
addition, stock markets have experienced extreme price and volume trading
volatility in recent years. This volatility has had a substantial effect on
the market prices of securities of many high-technology companies for
reasons frequently unrelated to the operating performance of the specific
companies. These broad market fluctuations may adversely affect the market
price of the Company's Common Stock.
Shares Eligible for Sale. As of August 31, 1998, the Company had outstanding
19,944,355 shares of Common Stock of which 18,525,717 shares are freely
transferable without restriction or further registration under the
Securities Act. Of the 18,525,717 shares which are freely transferable,
255,858 are owned by affiliates and are subject to the volume limitations
of Rule 144. Under Rule 144, as amended, if certain conditions are met,
persons who are affiliates of the Company and persons who satisfy a one
year "holding period" may sell within any three month period a number of
shares which does not exceed the greater of one percent of the total number
of shares outstanding or the average weekly trading volume of such shares
during the four calendar weeks prior to such sale. After a two year holding
period is satisfied, persons who are not "Affiliates" of the Company are
permitted to sell such shares without regard to these volume restrictions.
"Affiliates" of the Company consist of all officers and directors of the
Company and all holders of ten percent (10%) or more of the outstanding
shares of Common Stock.
An additional 7,147,928 shares of Common Stock which are not issued and
outstanding but which are issuable upon the exercise of warrants and
options are or may be included in currently effective registration
statements (of which 627,534 are covered by this Prospectus) and upon
issuance will be freely transferable during the effectiveness of such
registration statements. The shares of Common Stock issuable upon the
exercise of options are subject to various vesting periods.
Approximately 2,438,003 shares of Common Stock which are not issued and
outstanding but which are issuable upon conversion of Series D and Series E
Preferred Stock are included in currently effective registration statements
and upon issuance will be freely transferable during the effectiveness of
such registration statements.
8
<PAGE>
Also included on this registration statement are a presently indeterminate
number of shares of Common Stock issuable upon conversion of Preferred
Stock. If, however, all of the Preferred Stock currently outstanding were
converted on September 14, 1998, the Company would be obligated to issue a
total of 4,183,537 shares of the Common Stock.
Outstanding Rights to Acquire Common Stock. To the extent that outstanding
options and warrants are exercised prior to their expiration dates,
additional equity investment funds will be paid into the Company at the
expense of dilution to the interests of the Company's stockholders.
Moreover, the terms upon which the Company will be able to obtain
additional equity capital may be adversely affected since the holders of
outstanding options and warrants and other securities can be expected to
exercise or convert them at a time when the Company would, in all
likelihood, be able to obtain any needed capital on terms more favorable to
the Company than those provided in such securities.
Authorization and Issuance of Preferred Stock. The Company's Board of Directors
is authorized to issue up to 10,000,000 shares of Preferred Stock. The
Board of Directors has the power to establish the dividend rates,
liquidation preferences, voting rights, redemption and conversion terms and
privileges with respect to any series of Preferred Stock. The issuance of
any shares of Preferred Stock having rights superior to those of the Common
Stock may result in a decrease in the value or market price of the Common
Stock. Holders of Preferred Stock may have the right to receive dividends,
certain preferences in liquidation and conversion rights. The issuance of
Preferred Stock could, under certain circumstances, have the effect of
delaying, deferring or preventing a change in control of the Company
without further vote or action by the stockholders and may adversely affect
the voting and other rights of the holders of Common Stock.
Nasdaq SmallCap Market Maintenance Requirements; Possible Delisting of
Securities from Nasdaq SmallCap Market. The Board of Governors of the
National Association of Securities Dealers, Inc. has established certain
standards for the continued listing of a security on the Nasdaq SmallCap
Market ("SmallCap"). The maintenance standards for continued listing of the
Company's Common Stock on the SmallCap require, among other things, that
(i) an issuer have net tangible assets of at least $2 million or market
capitalization of at least $35 million or net income (2 of last 3 years) of
at least $500,000; (ii) the public float be at least 500,000 shares; (iii)
the market value of its public float is at least $1million; (iv) the
minimum bid price of its Common stock is at least $1.00; and (v) the issuer
has at least 300 round lot shareholders (holding at least 100 shares) and
(vi) at least two market makers. As of June 30, 1998, the Company's net
tangible assets were approximately $2,172,000. Although the Company is
currently in compliance with the listing requirements, there can be no
assurance that the Company will satisfy the requirements for maintaining a
SmallCap listing in the future. If the Company's securities were excluded
from SmallCap, it may adversely affect the prices of such securities and
the ability of holders to sell them. If the Company's securities were
excluded from SmallCap, the Company would seek to re-list its securities on
the Nasdaq Electronic Bulletin Board system.
PennyStock Regulation. In the event that the Company's securities are not
listed on the SmallCap, trading would be conducted in the "pink sheets" or
through the NASD's Electronic Bulletin Board. In the absence of the Common
Stock being quoted on Nasdaq, trading in the Common Stock would be covered
by Rule 15g-9 promulgated under the Securities Exchange Act of 1934 for
non-Nasdaq and non-exchange listed securities. Under such rule,
broker/dealers who recommend such securities to persons other than
established customers and accredited investors must make a special written
suitability determination for the purchaser and receive the purchaser's
written agreement to a transaction prior to sale. Securities are exempt
from this rule if the market price is at least $5.00 per share.
The Commission adopted regulations that generally define a penny stock to
be any equity security that has a market price of less than $5.00 per
share, subject to certain exceptions. Such exceptions include an equity
security listed on NASDAQ and an equity security issued by an issuer that
has (i) net tangible assets of at least $2,000,000, if such issuer has been
in continuous operation for three years, (ii) net tangible assets of at
least $5,000,000, if such issuer has been in continuous operation for less
than three years, or (iii) average revenue of at least $6,000,000 for the
preceding three years. Unless an exception is available, the regulations
require the delivery, prior to any transaction involving a penny stock, of
a disclosure schedule explaining the penny stock market and the risks
associated therewith. If the Company's Common Stock were subject to the
regulations on penny stocks, the market liquidity for the Common Stock
would be severely affected by limiting the ability of broker/dealers to
sell the Common Stock and the ability of purchasers in this offering to
sell their securities in the secondary market. There is no assurance that
trading in the Company's securities will not be subject to these or other
regulations in the future which would adversely affect the market for such
securities.
9
<PAGE>
USE OF PROCEEDS
The proceeds from the sale of the shares of Common Stock offered hereby are
solely for the account of the Selling Stockholders. Accordingly, the Company
will receive none of the proceeds from sales thereof. Certain of the Shares
offered hereby, however, are issuable upon exercise of the Selling Stockholder's
Warrants. Included in this Prospectus are 627,534 shares of Common Stock
issuable upon exercise of the Warrants exercisable at $0.75 per share. If all
issued Warrants representing shares of Common Stock in the Private Placement are
exercised, the Company will receive aggregate proceeds therefrom of
approximately $471,000. The proceeds from any and all Warrants exercised will be
used for working capital and general corporate purposes.
SELLING STOCKHOLDERS
The Shares being offered for resale by the Selling Stockholders were acquired in
connection with the Private Placement and consist of the Common Stock issuable
upon conversion of the Preferred Stock and upon exercise of the Warrants.
In connection with the issuance of the Preferred Stock to the Selling
Stockholders, the Company agreed to file and use its best efforts to cause to be
declared effective the Registration Statement of which this Prospectus is a
part. The Company has also agreed to use its best efforts to keep the
Registration Statement effective until the earlier of (i) such date as all of
the shares may be sold under Rule 144(k) or (ii) the date on which the Selling
Stockholders shall have sold all of their shares and none of the Preferred Stock
or Warrants is outstanding. The Company has agreed to indemnify the Selling
Stockholders and each of their officers, directors, employees, partners, legal
counsel and accountants, and each underwriter, if any, and each person who
controls any such underwriter, against certain expenses, claims, losses, damages
and liabilities (or action in respect thereof). The Company has agreed to pay
its expenses of registering the shares under the Securities Act, including
registration and filing fees, blue sky expenses, printing expenses, accounting
fees, administrative expenses and its own counsel fees.
The following table sets forth the name of each Selling Stockholder and the
number of shares of Common Stock being offered by each Selling Stockholder. The
shares of Common Stock being offered hereby are being registered to permit
public secondary trading, and the Selling Stockholders may offer all or part of
the shares for resale from time to time. See "Plan of Distribution."
10
<PAGE>
<TABLE>
<CAPTION>
Amount Percentage
Amount Beneficially Beneficially
Beneficially Owned Owned
Owned Prior to Amount Following Following
Name Offering (1) Offered (1) Offering (2) Offering
- ------------------------------------ ------------------ --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Balmore Fund S.A. 1,745,953 (3) 1,745,953(3) 0 *
Austost Anstalt Schann. 1,745,953 (3) 1,745,953(3) 0 *
Amro International 1,163,968 (4) 1,163,968(4) 0 *
Manchester Asset Management. 698,381 (5) 698,381(5) 0 *
Gundyco in Trust for RRSP 1,163,968 (4) 1,163,968(4) 0 *
550-98866-19
Hewlett Fund 232,794 (6) 232,794(6) 0 *
Investcor LLC 232,794 (6) 232,794(6) 0 *
Avalon Capital Limited 181,580 (7) 181,580(7) 0 *
Libra Finance S.A. 51,214 (8) 51,214(8) 0 *
</TABLE>
The number of shares of Common Stock indicated is an estimate and is, based on
a Registration Rights Agreement between the Company and each of the Selling
Stockholders, 150% of the number of shares that would be issuable upon
conversion of 3,100 shares of the Preferred Stock based on a price of the
Common Stock of $0.78 per shares plus 150% of the shares issuable upon
exercise of Warrants evidencing the right to purchase shares of Common
Stock and is subject to adjustment. The actual amount could be materially
more or less than such estimated amount depending upon factors that cannot
be predicted by the Company at this time.
Assumes no sales are effected by the Selling Stock Holder during the offering
period other than pursuant to this Registration Statement.
Includes 227,735 shares of Common Stock issuable upon the exercise of Warrants.
Includes 151,823 shares of Common Stock issuable upon the exercise of Warrants.
Includes 91,094 shares of Common Stock issuable upon the exercise of Warrants.
Includes 30,365 shares of Common Stock issuable upon the exercise of Warrants.
Includes 23,685 shares of Common Stock issuable upon the exercise of Warrants.
Includes 6,680 shares of Common Stock issuable upon the exercise of Warrants.
* Represents less than one percent.
Except as set forth in the Notes above, no Selling Stockholder has held any
position or office, or has had any material relationship, with the Company or
any of its affiliates within the past three years.
11
<PAGE>
PLAN OF DISTRIBUTION
The Selling Stockholders may sell Shares in any of the following transactions:
(i) through dealers; (ii) through agents; or (iii) directly to one or more
purchasers. The distribution of the Shares by the Selling Stockholders may be
effected from time to time in one or more transactions in the over-the-counter
market, in the Nasdaq SmallCap Market or in privately negotiated transactions at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The Selling Stockholders and
any underwriters, dealers or agents that participate in the distribution of the
Shares may be deemed to be underwriters within the meaning of Section 2(11) of
the Securities Act, and any profit on the sale of the Shares by them and any
discounts, concessions or commissions received by any such underwriters, dealers
or agents might be deemed to be underwriting discounts and commissions under the
Securities Act. At the time a particular offer of shares is made, to the extent
required, a Prospectus Supplement will be distributed which will set forth the
aggregate number of Shares being offered and the terms of the offering,
including the name or names of any underwriters, dealers or agents, any
discounts, concessions or commissions and other items constituting compensation
from the Selling Stockholders and any discounts, commissions or concessions
allowed or re-allowed or paid to dealers.
Certain of the underwriters, dealers or agents may have other business
relationships with the Company and its affiliates in the ordinary course of
business.
TRANSFER AGENT
The Transfer Agent and Registrar for the Common Stock is American Stock Transfer
& Trust Company, 40 Wall Street, New York, New York 10005; its telephone number
is (212) 936-5100.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby has been passed upon
for the Company by Parker Chapin Flattau & Klimpl, LLP, 1211 Avenue of the
Americas, New York, New York 10036-8735; its telephone number is (212) 704-6000.
EXPERTS
The financial statements incorporated in this Prospectus by reference to the
Annual Report on Form 10-KSB/A for the year ended March 31, 1998 have been so
incorporated in reliance on the report (which contains an explanatory paragraph
relating to the Company's ability to continue as a going concern, as described
in Note 2 to the financial statements, and an explanatory paragraph relating to
the Company's restated loss per common share calculation, as described in Note 3
to the financial statements) of PricewaterhouseCoopers LLP, independent
accountants, given on the authority of said firm as experts in accounting and
auditing.
12
<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS IN
CONNECTION WITH THIS OFFERING MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR BY THE SELLING STOCKHOLDERS. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE OF THIS PROSPECTUS.
----------------
TABLE OF CONTENTS PAGE
- ------------------------------------------------------- --------------------
Available Information 3
Incorporation of Certain Documents by Reference 3
Risk Factors 4
Use of Proceeds 10
Selling Stockholders 10
Plan of Distribution 12
Legal Matters 12
Experts 12
- --------------------------------------------------------------------------------
SHARES OF COMMON STOCK
(Par Value $0.01 per Share)
STARBASE CORPORATION
-------------
PROSPECTUS
--------------
September __, 1998
13
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the fees and expenses payable by the Company in
connection with the issuance and distribution of the securities being registered
hereunder, other than underwriting discounts and commissions. Except for the SEC
registration fee, all amounts are estimates.
SEC Registration Fee $ 1,830
Printing and Engraving Expenses 500
Legal Fees and Expenses 2,000
Accounting Fees and Expenses 6,000
Registrar and Transfer Agent Fees and Expenses 500
Blue Sky Fees and Expenses 2,000
Miscellaneous Expenses 1,000
Total $ 13,830
=================
All of the costs identified above will be paid by the Company.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 102(b)(7) of the General Corporation Law of Delaware ("Delaware Law")
enables a corporation in its original certificate of incorporation or an
amendment thereto to eliminate or limit the personal liability of a director to
a corporation or its stockholders for violations of the director's fiduciary
duty, except (i) for any breach of a director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
pursuant to Section 174 of the Delaware Law (providing for liability of
directors for unlawful payment of dividends or unlawful stock purchases or
redemptions), or (iv) for any transaction from which a director derived an
improper personal benefit. The Certificate of Incorporation of the Company, as
amended, provides in effect for the elimination of the liability of directors to
the extent permitted by Delaware Law.
Section 145 of the Delaware Law provides, in summary, that directors and
officers of Delaware corporations are entitled, under certain circumstances, to
be indemnified against all expenses and liabilities (including attorney's fees)
incurred by them as a result of suits brought against them in their capacity as
a director or officer, if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, if they had
no reasonable cause to believe their conduct was unlawful; provided, that no
indemnification may be made against expenses in respect of any claim, issue or
matter as to which they shall have been adjudged to be liable to the
corporation, unless and only to the extent that 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, they
are fairly and reasonably entitled to indemnity for such expenses which the
court shall deem proper. Any such indemnification may be made by the corporation
only as authorized in each specific case upon a determination by the
stockholders or disinterested directors that indemnification is proper because
the indemnitee has met the applicable standard of conduct. The Company's By-laws
entitle officers and directors of the Company to indemnification to the fullest
extent permitted by Delaware Law.
The Company has entered into an agreement with each of its directors and certain
officers which provide for indemnification by the Company against certain
liabilities, including liabilities under the Securities Act. In addition, the
Company maintains an insurance policy with respect to potential liabilities of
its directors and officers, including potential liabilities under the Securities
Act.
II-1
<PAGE>
See Item 17 of this Registration Statement regarding the opinion of the
Securities and Exchange Commission with respect to indemnification for
liabilities arising under the Securities Act.
ITEM 16. EXHIBITS.
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- ------------- --------------------------------------------------------------
4.1 Form of Stock Purchase Agreement (Series G Preferred Stock)
4.2 Certificate of Designation (Series G Preferred Stock)
4.3 Form of Registration Rights Agreement (Series G Preferred Stock)
4.4 Form of Warrant
5.1 Opinion of Parker Chapin Flattau & Klimpl, LLP
23.1 Consent of Parker Chapin Flattau & Klimpl, LLP ( included in
Exhibit 5.1)
23.2 Consent of PricewaterhouseCoopers, LLP
24.1 Powers of Attorney of certain directors and officers of the
Company (included on page II-5)
ITEM 17. UNDERTAKINGS.
The undersigned registrant hereby undertakes:
To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in the 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 and of
the estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate the
changes in volume and price represent no more than 20 percent change in the
maximum aggregate offering price set forth in the "Calculation of Registration
Fee" table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the Securities Act,
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.
The undersigned registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act, each filing of the registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to 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.
II-2
<PAGE>
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended, may be permitted to directors, officers and controlling
persons of the registrant pursuant to the provisions described under Item 15
above, 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 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 of 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 and will be governed by the final adjudication of such issue.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended, the
Registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-3 and has duly caused this registration
statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Santa Ana, State of California, on September 18,
1998.
STARBASE CORPORATION
By: /s/ Douglas S. Norman
-----------------------------
Douglas S. Norman
Director of Finance and
Chief Accounting Officer
II-4
<PAGE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints William R. Stow III or Douglas S. Norman, each acting
alone, his true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for him and in his name, place and stead, in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this registration statement (or any other registration statement
for the same offering that is to be effective upon filing pursuant to Rule
462(b) under the Securities Act of 1933), and to file the same, with all
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
requisite 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 agent or either of them or their
or his substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons in the
capacities indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ William R. Stow III President, Chief Executive Officer September 15, 1998
- ----------------------------------------
William R. Stow III and Chairman of the Board
/s/ Donald R. Farrow Vice Chairman September 15, 1998
- ----------------------------------------
Donald R. Farrow and Director
/s/ John R. Snedegar Director September 15, 1998
- ----------------------------------------
John R. Snedegar
/s/ Phillip E. Pearce Director September 15, 1998
- ----------------------------------------
Phillip E. Pearce
/s/ Daniel P. Ginns Director September 15, 1998
- ----------------------------------------
Daniel P. Ginns
/s/ Douglas S. Norman Director of Finance and September 15, 1998
- ----------------------------------------
Douglas S. Norman Chief Accounting Officer
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NO. DESCRIPTION OF EXHIBIT PAGE NO./REF.
- ----------- ------------------------------------------------------------------- ----------------
<S> <C> <C>
4.1 Form of Stock Purchase Agreement (Series G Preferred Stock) (A)
4.2 Certificate of Designation (Series G Preferred Stock) (A)
4.3 Form of Registration Rights Agreement (Series G Preferred Stock) (A)
4.4 Form of Warrant (A)
5.1 Opinion of Parker Chapin Flattau & Klimpl, LLP II-7
23.1 Consent of Parker Chapin Flattau & Klimpl, LLP (included in Exhibit
5.1) II-7
23.2 Consent of PricewaterhouseCoopers, LLP II-8
24.1 Powers of Attorney of certain directors and officers of the Company (B)
</TABLE>
Incorporated herein by reference to the Company's Form 8-K (file number 0-25612)
filed with the Commission on August 17, 1998.
Included as part of the signature page on page II-5 of this filing.
EXHIBIT 5.1
PARKER CHAPIN FLATTAU & KLIMPL LLP.
1211 Avenue of the Americas
New York, NY 10036
(212) 704-6000
September 15, 1998
StarBase Corporation
4 Hutton Centre Drive, Suite 800
Santa Ana, CA 92707-8713
Ladies and Gentlemen:
We have acted as counsel to StarBase Corporation (the "Company") in connection
with a Registration Statement of Form S-3 filed by the Company with the
Securities and Exchange Commission (the "Registration Statement") relating to up
to 7,216,609 shares (the "Shares") of the Company's Common Stock, par value
$0.01 per share (the "Common Stock"). Of such Shares, 6,275,304 may be issued
upon conversion of the Series G Preferred Shares and 941,305 may be issued upon
the exercise of warrants issuable to the holders of the Shares (the "Warrants").
In connection with the foregoing, we have examined, among other things, the
Registration Statement, the Warrants and originals or copies, satisfactory to
us, of all such corporate records and of all such agreements, certificates and
other documents as we have deemed relevant and necessary as a basis for the
opinion hereinafter expressed. In such examination, we have assumed the
genuineness of all signatures, the authenticity of all documents submitted to us
as originals and the conformity with the original documents submitted to us as
copies. As to any facts material to such opinion, we have, to the extent that
relevant facts were not independently established by us, relied on certificates
of public officials and certificates, oaths and declarations of officers or
other representatives of the Company.
Based upon the foregoing, we are of the opinion that (i) the Shares issuable
upon conversion of the Preferred Stock (when such shares are paid for and issued
in accordance with the terms of the Preferred Stock) will be legally issued,
fully paid and non-assessable; and (ii) the Shares issuable upon the exercise of
the Warrants (when such Shares are paid for and issued in accordance with the
terms of the Warrants) will be legally issued, fully paid and non-assessable.
We hereby consent to the use of our name under the caption "Legal Matters" in
the Prospectus constituting a part of the Registration Statement and to the
filing of a copy of this opinion as an exhibit.
Very truly yours,
/s/ Parker Chapin Flattau & Klimpl, LLP
PARKER CHAPIN FLATTAU & KLIMPL, LLP
Exhibit 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-3 of our report dated
June 26, 1998, appearing on page 28 of StarBase Corporation's Annual Report on
Form 10-KSB/A for the year ended March 31, 1998. We also consent to the
reference to us under the heading "Experts" in such Prospectus.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Costa Mesa, California
September 16, 1998
