As filed with the Securities and Exchange Commission on September 24, 1999
Registration No. 333-72833
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-----------------
AMENDMENT NO. 3
TO
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
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: As soon as
practicable 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, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, 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 a post-effective amendment filed pursuant to Rule 462(b) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] _____________
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<PAGE>
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
Proposed
Amount Maximum Proposed
To Be Aggregate Maximum Amount of
Title of each class of Registered Price Per Aggregate Registration
Securities to be registered (1) Share Offering Price Fee (6)
- ------------------------------ ---------------- ------------- --------------------- ----------------
<S> <C> <C> <C> <C>
Common Stock, par value
$0.01 per share 155,993 $ 2.079 (4) $ 324,231.45 $ 90.14
Common Stock, par value
$0.01 per share 6,588,842 (2) $ 2.079 (4) $ 13,694,908.10 $ 3,807.18
Common Stock, par value
$0.01 per share 435,977 (3) $ 2.274 (5) $ 964,753.19 $ 268.20
- --------------------------------------------------------------------------------------------------------------------------
Total 7,180,812 $ 14,983,892.74 $ 4,165.52
- ------------------------------ ------------- --------- --------------- -----------
</TABLE>
(1) Represents the shares of common stock being registered for resale by the
selling stockholders.
(2) The shares of common stock offered hereby is our good faith estimate of the
number of shares of common stock to be issued by us upon the conversion of
the series H preferred stock issued in connection with a private placement
with the selling stockholders. Our estimate represents 200% of the number
of shares that would be issuable upon conversion of the preferred stock
based on the price of the common stock on April 14, 1999. Such number is
subject to adjustment and could be materially greater or less than the
amount of shares being registered hereby depending upon the future price of
the common stock. Pursuant to Rule 416, the shares of common stock covered
hereby include such indeterminate number of shares that may be issued as a
result of anti-dilution provisions included in the securities purchase
agreement, including, among others, stock splits, stock dividends and
similar transactions but does not include additional shares that may be
issuable upon conversion of the preferred stock as a result of fluctuations
of the price of the common stock. This presentation is not intended to
constitute a prediction of the future market price of the common stock or
the number of shares of common stock issuable upon conversion of the series
H preferred stock.
(3) Represents shares issuable upon exercise of warrants evidencing the right
to purchase shares of common stock. Pursuant to Rule 416, the shares of
common stock offered hereby also include such presently indeterminate
number of shares of common stock that may be issued as a result of
anti-dilution provisions included in the warrant agreements, including,
among others, stock splits, stock dividends and similar transactions.
(4) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) and (g) of the Securities Act of 1933, as amended,
based on the average ($2.079) of the bid ($2.063) and asked ($2.094) price
of the common stock on the Nasdaq SmallCap Market on April 14, 1999.
(5) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) and (g) of the Securities Act. The prices per share
and aggregate offering prices are based on (i) with respect to 385,977
shares of common stock issuable upon exercise of warrants, the average
($2.079) of the bid ($2.063) and asked ($2.094) price of the common stock
on the Nasdaq SmallCap Market on April 14, 1999 and (ii) with respect to
50,000 shares of common stock issuable upon exercise of warrants, the
exercise price of the warrants.
(6) An amount of $4,165.52 was previously paid in connection with the
original filing of the registration statement on February 23, 1999 and
with the amendment filing of the registration statement on April
19, 1999.
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 THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SECTION 8(A), MAY DETERMINE.
An Exhibit Index appears on page E-1
<PAGE>
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and is not seeking an offer to buy these securities in
any state where the offer or sale is not permitted.
PROSPECTUS
STARBASE CORPORATION
6,233,895 SHARES OF COMMON STOCK
o The shares of common stock offered by this prospectus are
being sold by the selling stockholders.
o We will not receive any proceeds from the exercise of these
shares. We will receive proceeds from the exercise of warrants
and those proceeds will be used for our general corporate
purposes.
o Our common stock is traded on the Nasdaq SmallCap Market under
the symbol "SBAS."
o On September 3, 1999, the closing bid price of our common
stock on the Nasdaq SmallCap Market was $2.0625.
THE SECURITIES OFFERED IN THIS PROSPECTUS INVOLVE A HIGH DEGREE OF
RISK. YOU SHOULD CAREFULLY CONSIDER THE FACTORS DESCRIBED UNDER THE
HEADING "RISK FACTORS" BEGINNING ON PAGE 3 OF THIS PROSPECTUS.
--------------------------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED
IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
--------------------------------------------------
____________ , 1999
<PAGE>
TABLE OF CONTENTS
Risk Factors................................................................3
Forward-Looking Statements..................................................7
Use of Proceeds.............................................................7
Selling Stockholders........................................................7
Description of Securities..................................................10
Plan of Distribution.......................................................12
Recent Developments........................................................13
Where You Can Find More Information........................................14
Indemnification of Directors and Officers..................................14
Legal Matters..............................................................15
Experts....................................................................15
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<PAGE>
RISK FACTORS
THIS OFFERING INVOLVES A HIGH DEGREE OF RISK, INCLUDING THOSE RISKS
DESCRIBED BELOW. YOU SHOULD CAREFULLY CONSIDER THESE RISK FACTORS, TOGETHER WITH
ALL OF THE OTHER INFORMATION IN THIS PROSPECTUS, BEFORE DECIDING TO INVEST IN
SHARES OF OUR COMMON STOCK.
RISKS ASSOCIATED WITH OUR PAST FINANCIAL RESULTS
WE COULD BE REQUIRED TO CUT BACK OR STOP OPERATIONS IF WE ARE UNABLE TO RAISE OR
OBTAIN NEEDED FUNDING
Our ability to continue operations will depend on our positive cash
flow, if any, from future operations or our ability to raise additional funds
through equity or debt financing. We do not know if we can raise additional
funding or that such funding will be available on favorable terms. On March 16,
1999, we completed a $1,000,000 private placement of shares of series I
preferred stock, which shares of preferred stock convert into common stock at
the lesser of $1.50 or 90% of the average closing bid price of the two lowest
closing bid prices of the common stock for the 30 trading days prior to the date
of conversion. See "Recent Developments." We could be required to cut back or
stop operations if we are unable to raise or obtain needed funding.
Our cash requirements to run our business have been and will
continue to be significant. Since 1995, our negative cash flow from operations
is as follows:
Fiscal year ended: Negative Cash Flow
- ---------------------------------------------------------
o March 31, 1995 $6,179,000
o March 31, 1996 $4,949,000
o March 31, 1997 $6,506,000
o March 31, 1998 $5,662,000
o March 31, 1999 $9,430,000
- ----------------------------------------------------------
Three months ended:
o June 30, 1999 $1,177,000
WE HAVE A HISTORY OF LOSSES AND IF WE DO NOT ACHIEVE PROFITABILITY WE MAY NOT BE
ABLE TO CONTINUE OUR BUSINESS IN THE FUTURE
As of June 30, 1999 we accumulated losses of approximately $53,340,000.
We anticipate incurring additional losses until we can successfully market and
distribute our products and develop new technologies and commercially viable
products. If we are unable to do so, we will continue to have losses and might
not be able to continue our operations.
THE "GOING CONCERN" QUALIFICATION ON THE REPORT OF OUR INDEPENDENT ACCOUNTANTS
MAY HURT OUR ABILITY TO RAISE ADDITIONAL FINANCING
The report of our independent accountants on our March 31, 1999
financial statements contains an explanatory paragraph regarding our ability to
continue as an ongoing business. Our independent accountants cite recurring
losses that raise substantial doubt as to our ability to continue as an ongoing
business. This "going concern" qualification may reduce our ability to obtain
necessary financing in the future to run our business.
-3-
<PAGE>
RISKS ASSOCIATED WITH OUR BUSINESS
OUR SOFTWARE PRODUCTS MAY NOT BE SUCCESSFULLY COMPLETED OR ACCEPTED BY THE
PUBLIC WHICH COULD RESULT IN LOWER REVENUES
While we are in various stages of developing additional products, we
cannot assure you that such additional products will be completed in a timely
manner or successfully marketed. In the past we have experienced some product
release delays which resulted in lower revenues. Further, the market for our
team collaboration and software configuration management tools is evolving. This
causes the sales cycle to be longer due to the time it takes to educate
potential customers on the benefits of our products. We cannot assure you that
the products we introduce will achieve acceptance, or that other software
vendors will not develop and market products which render our products obsolete
or less competitive. Failure to obtain significant customer satisfaction or
market share for our products would significantly and negatively affect our
revenues.
WE MAY HAVE TO LOWER PRICES OR SPEND MORE MONEY TO EFFECTIVELY COMPETE AGAINST
COMPANIES WITH GREATER RESOURCES THAN US WHICH COULD RESULT IN LOWER REVENUES
AND/OR PROFITS
The success of our products in the marketplace depends on many factors,
including product performance, price, ease of use, support of industry
standards, and customer support and service. Given these factors we cannot
assure you that we will be able to compete successfully. For example, if our
competitors offer lower prices, we could be forced to lower prices which would
result in reduced margins and a decrease in revenues. If we do not lower prices
we could lose sales and market share. In either case, if we are unable to
compete against companies who can afford to cut prices, we would not be able to
generate sufficient revenues to grow the company or reverse our history of
losses.
In addition, we may have to spend more money to effectively compete for
market share, including funds to expand our infrastructure, which is a capital
and time extensive process. Further, if other companies want to aggressively
compete against us, we may have to spend more money on advertising, promotion,
trade shows, product development, marketing and overhead expenses, hiring and
retaining personnel, and developing new technologies. These higher expenses
would hurt our net income and profits.
OUR COMPUTER SYSTEMS MAY NOT RECOGNIZE THE YEAR 2000 WHICH MAY DISRUPT OUR
BUSINESS
The concerns about the upcoming year 2000 have arisen because older
computer programs that used two digits rather than four to define the applicable
year could malfunction. As a result, 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 computer system failure or in
miscalculations causing disruptions of operations, including a temporary
inability to process transactions, or engage in normal business activities.
-4-
<PAGE>
RISKS ASSOCIATED WITH OUR SECURITIES
YOUR PERCENTAGE OF OWNERSHIP, VOTING POWER AND PRICE OF STARBASE COMMON STOCK
MAY DECREASE BECAUSE WE HAVE ISSUED, AND MAY CONTINUE TO ISSUE, A SUBSTANTIAL
NUMBER OF SECURITIES CONVERTIBLE OR EXERCISABLE INTO OUR COMMON STOCK
As of September 3, 1999, we had the following capital structure:
Common stock outstanding: 32,327,843
- ---------------------------------------------------------------
Common stock issuable upon:
Conversion of series E preferred stock: 441,208
Conversion of series H preferred stock: 2,778,011
Conversion of series I preferred stock: 666,667
Exercise of warrants: 4,503,338
Exercise of options: 5,989,474
- ---------------------------------------------------------------
Total: 46,706,541
The number of shares of our common stock outstanding includes 1,418,638
shares held in escrow under a performance escrow agreement. Each share of series
E preferred stock converts into one share of common stock. The series H
preferred stock and series I preferred stock are estimates based on the number
of shares that would be issuable upon conversion of the preferred stock as of
September 3, 1999. The common stock issuable upon exercise of options must vest
and is generally issuable over a four year period. As of September 3, 1999, only
3,304,106 shares could be issued upon the exercise of options. We may conduct
additional future offerings of our common stock or other securities with rights
to convert the securities into shares of our common stock.
The series H preferred stock and series I preferred stock convert into
common stock at a discount to the market price of the common stock at the time
of conversion. In this regard, the highest the conversion price can be for the
three equal installments of series H preferred stock is $0.95, $0.73 and $1.93,
and the highest the conversion price can be for the series I preferred stock is
$1.50. Once the market price of the common stock goes below these highest
conversion prices, the conversion price then varies with and, in the case of the
series I preferred stock, is at a fixed discount to the market price of the
common stock. Therefore, although there is a limit to the number of shares that
can be issued at a discount to the market price without stockholder approval
under Nasdaq rules, there is no limit to how low the conversion price can be.
The following table sets forth the number of shares of common stock
that would be issued assuming full conversion of our outstanding preferred stock
based upon the market price of the common stock as of September 3, 1999 ($2.09)
and, assuming a market price of the common stock at $1.00 per share and at $3.00
per share. The last row of the table shows the percentage of outstanding common
stock represented by the shares issuable upon conversion at the market prices
shown.
MARKET PRICE OF COMMON STOCK: $1.00 $2.09 $3.00
CONVERSION PRICE FOR SERIES H: $1.00 $1.91 $1.93
CONVERSION PRICE FOR SERIES I: $0.90 $1.50 $1.50
SERIES H PREFERRED STOCK: 2,992,409 2,778,011 2,775,569
SERIES I PREFERRED STOCK: 1,111,111 666,667 666,667
PERCENTAGE OF OUTSTANDING
COMMON STOCK: 13% 11% 11%
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<PAGE>
Conversion or exercise of our outstanding convertible securities,
options and warrants into common stock would result in a significant number of
additional shares of common stock in the market. This may significantly and
negatively affect the prevailing market price for the common stock and will
decrease your percentage of ownership and voting power.
THE CONVERSION OF OUTSTANDING PREFERRED STOCK MAY HAVE A SIGNIFICANT NEGATIVE
EFFECT ON THE PRICE OF THE COMMON STOCK AND CAUSE THE SELLING STOCKHOLDERS TO
RECEIVE A GREATER NUMBER OF SHARES UPON SUBSEQUENT CONVERSIONS OF THE PREFERRED
STOCK
The series H preferred stock and series I preferred stock are
convertible at a floating rate that may be below the market price of the common
stock. As a result, the lower the stock price at the time the holder converts,
the more common stock the holder will get upon conversion. To the extent the
selling stockholders convert and then sell their common stock, the common stock
price may decrease due to the additional shares in the market. This could allow
the selling stockholders to convert their convertible preferred stock into
greater amounts of common stock, the sales of which could further depress the
stock price. The significant downward pressure on the price of the common stock
as the selling stockholders convert and sell material amounts of common stock
could encourage short sales by the selling stockholders and others in which the
short-sellers borrow common stock at the current market price in hope to buy it
in the future at a lower price.
This could place further downward pressure on the price of the common stock.
In addition, the conversion of the convertible preferred stock may
result in substantial dilution to the interests of other holders of common stock
since each holder of convertible preferred stock may ultimately convert and sell
the full amount issuable on conversion. Although each selling stockholder may
not convert their preferred stock if, as a result, they would own more than
4.99% of the then outstanding common stock, this restriction does not prevent a
selling stockholder from converting and selling some of its holdings and then
converting the rest of its holdings. In this way, an individual selling
stockholder could sell more than 4.99% of the outstanding common stock while
never holding more than 4.99% at one time.
YOUR INTEREST IN STARBASE MAY BE DILUTED BY THE ISSUANCE OF PREFERRED STOCK WITH
GREATER RIGHTS THAN THE COMMON STOCK WHICH WE CAN SELL OR ISSUE AT ANY TIME
The sale or 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. The issuance of preferred stock could have the
effect of delaying, deferring or preventing a change of ownership without
further vote or action by the stockholders and may adversely affect the voting
and other rights of the holders of common stock.
Our board of directors is authorized to issue up to 10,000,000 shares
of preferred stock. The board has the power to establish the dividend rates,
preferential payments on our liquidation, voting rights, redemption and
conversion terms and privileges for any series of preferred stock.
IF WE CANNOT MEET THE NASDAQ SMALLCAP MARKET MAINTENANCE REQUIREMENTS AND NASDAQ
RULES, NASDAQ MAY DELIST THE COMMON STOCK WHICH COULD NEGATIVELY AFFECT THE
PRICE OF THE COMMON STOCK AND YOUR ABILITY TO SELL THE COMMON STOCK
In the future, we may not be able to meet the listing maintenance
requirements of the Nasdaq SmallCap Market and Nasdaq rules, which require,
among other things, minimum net tangible assets of $2 million, a minimum bid
price for our common stock of $1.00, and shareholder approval prior to the
issuance of securities in connection with a transaction involving the sale or
issuance of common stock equal to 20 percent or more of a company's outstanding
common stock before the issuance for less than the greater of book or market
value of the stock. Although we currently comply with Nasdaq's listing
maintenance requirements, in the past there have been times when we have not
been in compliance and it is possible we
-6-
<PAGE>
may not meet the requirements in the future. For example, the dilution resulting
from the issuance of the convertible preferred stock discussed above and the
subsequent conversion and sale of common stock could have a substantial
depressive effect on the common stock bid price, causing it to decrease below
$1.00. If we were no longer in compliance with Nasdaq rules and were unable to
receive a waiver of the rules or achieve compliance, and if our common stock
were to be delisted from the SmallCap market, an investor in our company may
find it more difficult to sell our common stock. This lack of liquidity also may
make it more difficult for us to raise capital in the future.
FORWARD - LOOKING STATEMENTS
In this prospectus, we make statements about our future financial
condition, results of operations and business. These are based on estimates and
assumptions made from information currently available to us. Although we believe
these estimates and assumptions are reasonable, they are uncertain. These
forward- looking statements can generally be identified because the context of
the statement includes words such as may, will, except, anticipate, intend,
estimate, continue, believe or other similar words. Similarly, statements that
describe our future expectations, objectives and goals or contain projections of
our future results of operations or financial condition are also forward-looking
statements. Our future results, performance or achievements could differ
materially from those expressed or implied in these forward-looking statements,
including those listed under the heading "Risk Factors" and other cautionary
statements in this prospectus.
USE OF PROCEEDS
The selling stockholders are selling all of the shares covered by this
prospectus for their own accounts. Accordingly, we will not receive any proceeds
from the resale of the shares. We will receive proceeds from the exercise of the
warrants. If all the warrants were exercised, we would receive approximately
$583,000. We will use the net proceeds for general corporate purposes. We will
bear all expenses relating to this registration except for brokerage or
underwriting commissions and expenses, if any, which the selling stockholders
will pay.
SELLING STOCKHOLDERS
This prospectus covers the resale by the selling stockholders of
564,502 shares of common stock issued upon conversion of series H preferred
stock and up to 5,095,995 shares of our common stock to be issued upon the
conversion of the series H preferred stock, which amount of shares is an
estimate and is not a prediction of the actual number of shares of common stock
we will issue upon conversion of the series H preferred stock. This prospectus
also covers the resale by the selling stockholders of up to 417,405 shares of
our common stock issuable upon exercise of warrants issued in connection with a
private placement, consulting agreements and an accounts receivable purchase
agreement. This prospectus also covers the resale by the selling stockholders of
155,993 shares of our common stock issued for consulting services.
SERIES H PREFERRED STOCK
The holders of the series H preferred stock and warrants issued in
connection with the private placement have the material rights and obligations
discussed below and under the section entitled "Description of Securities". The
agreements relating to these rights and obligations have been previously filed
by us with the SEC and you are urged to read them in their entirety.
-7-
<PAGE>
SECURITIES PURCHASE AGREEMENT
The investors listed in the table below agreed to buy 3,000 shares of
our series H preferred stock in increments of 1,000 shares on November 24, 1998,
December 30, 1998 and February 8, 1999. The price for each share was $1,000 for
an aggregate purchase price of $3,000,000.
REGISTRATION RIGHTS AGREEMENT
In connection with our sale of series H preferred stock, we agreed to
file a registration statement covering the resale of the common stock issuable
upon conversion of the series H preferred stock and exercise of the warrants by
February 23, 1999 and cause the registration statement to be declared effective
by the SEC by April 23, 1999. If the registration statement is not effective by
April 23, 1999, we will have to pay to the holders liquidated damages equal to
2% of the value of outstanding series H preferred stock for each 30 day period
until the registration statement has been declared effective.
WARRANTS
The holders of series H preferred stock also received 300,000 warrants
to purchase 300,000 shares of common stock. One-third of the warrants are
exercisable at $0.95 and expire on November 24, 2003, one-third are exercisable
at $0.73 and expire on December 31, 2003 and the final one-third are exercisable
at $1.93 and expire on February 8, 2004. All of the warrants have adjustment
provisions for standard dilution events including stock splits, stock dividends
and similar transactions.
INVESTORS
This prospectus covers the resale of common stock issuable upon
conversion of the series H preferred stock and the exercise of warrants
purchased by investors in the private placement. Balmore Fund S.A. is selling
1,456,460 shares of common stock issuable upon conversion of 750 shares of
series H preferred stock and exercise of 75,000 warrants purchased in the
private placement. Austost Anstalt Schann is selling 1,456,460 shares of common
stock issuable upon conversion of 750 shares of series H preferred stock and
exercise of 75,000 warrants purchased in the private placement. Yeoman Ventures
Limited is selling 1,390,782 shares of common stock issuable upon conversion of
675 shares of series H preferred stock and exercise of 67,500 warrants purchased
in the private placement. Amro International is selling 582,583 shares of common
stock issuable upon conversion of 300 shares of series H preferred stock and
exercise of 30,000 warrants purchased in the private placement. Gundyco is
selling 1,081,722 shares of common stock issuable upon conversion of 525 shares
of series H preferred stock and exercise of 52,500 warrants purchased in the
private placement.
ACCOUNTS RECEIVABLE PURCHASE AGREEMENT
This prospectus also covers the resale by Silicon Valley Bank of 55,555
shares of common stock issuable upon exercise of warrants issued to Silicon
Valley Bank for establishing an accounts receivable facility with us. These
warrants are exercisable at $1.08 and expire on January 19, 2004.
CONSULTING AGREEMENTS
This prospectus also covers the resale by the selling stockholders of
common stock and warrants issued for consulting services. Included are 75,993
shares of common stock and 50,000 shares of common stock issuable upon exercise
of warrants issued for consulting fees to Continental Capital & Equity
Corporation, a financial public relations firm. The warrants are immediately
exercisable at $3.25 and expire on February 17, 2000. In addition, 80,000 shares
of common stock were issued to Mr. Kurt Motamedi who provided management and
team development consulting services.
-8-
<PAGE>
We are registering the shares of common stock offered in this
prospectus with the SEC to permit public secondary trading. As a result, the
selling stockholders may offer all or part of the shares for resale to the
public from time to time.
The table below lists information regarding the selling stockholders'
ownership of shares of our common stock, assuming the conversion of preferred
stock at the then conversion ratio as of September 3, 1999, and as adjusted to
reflect the sale of the shares and the exercise of warrants on September 3,
1999. Information concerning the selling stockholders may change from time to
time. To the extent that the selling stockholders or any of its representatives
advise us of such changes and if required, we will report those changes in a
supplement to this document. Except as set forth in this prospectus, to our
knowledge, no selling stockholder has held any position or office, or has had
any material relationship, with us or any parties related to us within the past
three years.
The number of shares of common stock indicated in the Amount
Beneficially Owned Prior to Offering column is an estimate based on the number
of shares actually issued as well as 200% of the number of shares that would be
issuable upon conversion of 2,400 shares of the preferred stock based on the
price of the common stock on September 3, 1999 plus 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 we cannot predict at this
time.
The Amount Offered column assumes no sales are effected by the selling
stockholders during the offering period other than under the registration
statement.
<TABLE>
<CAPTION>
Amount Percentage
Amount Percentage Beneficially Beneficially
Beneficially Beneficially Owned Owned
Owned Prior Owned Prior Amount Following Following
Name to Offering to Offering Offered Offering Offering
- ------------------------------------- -------------- -------------- ------------ ------------- ---------------
<S> <C> <C> <C> <C> <C>
Balmore Fund S.A. (1) 1,516,460 3.9 1,456,460 60,000 *
Austost Anstalt Schann (2) 1,516,460 3.9 1,456,460 60,000 *
Yeoman Ventures Limited (3) 1,408,224 3.6 1,393,224 15,000 *
Amro International (4) 597,783 1.5 582,583 15,200 *
Gundyco in Trust for 2,298,307 5.8 1,083,620 1,214,687 3.0
RRSP 550-98866-19 (5)
Kurt Motamedi (6) 80,000 * 80,000 0 *
Continental Capital &
Equity Corp. (7) 125,993 * 125,993 0 *
Silicon Valley Bank (8) 57,949 * 55,555 2,394 *
- ------------------------------
</TABLE>
* Represents less than one percent.
(1) Includes 170,212 shares of common stock issued upon conversion of
series H preferred stock. The number of shares issuable pursuant to
conversion of series H preferred stock is 1,211,248. Includes 135,000
shares of common stock issuable upon the exercise of warrants owned
prior to offering of which 75,000 are offered in this prospectus. The
natural person who exercises control over these shares is Mr. Francois
Morax.
(2) Includes 170,212 shares of common stock issued upon conversion of
series H preferred stock. The number of shares issuable pursuant to
conversion of series H preferred stock is 1,211,248. Includes 135,000
shares of common stock issuable upon the exercise of warrants owned
prior to offering of which 75,000 are offered in this prospectus. The
natural person who exercises control over these shares is Mr. Thomas
Hackl.
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<PAGE>
(3) Includes 232,828 shares of common stock issuable upon conversion of
series H preferred stock. The number of shares issuable pursuant to
conversion of series H preferred stock and exercise of warrants
purchased by the investor is 1,325,724. Includes 82,500 shares of
common stock issuable upon the exercise of warrants owned prior to
offering, of which 67,500 are offered in this prospectus. The natural
person who exercises control over these shares is Mr. Giora Lavie.
(4) Includes 68,085 shares of common stock issued upon conversion of series
H preferred stock. The number of shares issuable pursuant to conversion
of series H preferred stock is 484,498. Includes 45,200 shares of
common stock issuable upon the exercise of warrants owned prior to
offering of which 30,000 are offered in this prospectus. The natural
person who exercises control over these shares is Mr. H.V. Bachofen.
(5) The number of shares issuable pursuant to conversion of series H
preferred stock is 1,031,120. Includes 928,060 shares of common stock
issuable upon the exercise of warrants owned prior to offering of which
52,500 are offered in this prospectus. The natural person who exercises
control over these shares is Mr. Mark Shoom.
(6) Represents shares of common stock.
(7) Includes 50,000 shares of common stock issuable upon the exercise of
warrants. The natural person who exercises control over these shares is
Ms. Dodi Zirkle.
(8) 2,394 shares of common stock owned prior to offering are not included
in this offering. The offering includes 55,555 shares of common stock
issuable upon the exercise of warrants. The natural person who
exercises control over these shares is Mr. David Jaques.
DESCRIPTION OF SECURITIES
SERIES H PREFERRED STOCK
In November 1998, we entered into security purchase agreements to sell
3,000 shares of series H preferred stock and 185 shares of series H preferred
stock were issued as finder's fees. Each share of preferred stock has a stated
value, or "liquidation preference", of up to $1,000, which means that, in the
event of a liquidation, dissolution or winding up of our company, for example,
if we go bankrupt and all of our assets are sold, the holders of each share
would be entitled to a preferential payment of up to $1,000 before holders of
our common stock would receive any of the proceeds from the sale. A certificate
of designation filed with the secretary of state of Delaware governs the terms
and conditions of the preferred stock. The following is a brief description of
key terms of the preferred stock.
DIVIDENDS
The holders of the preferred stock are not entitled to receive any
dividends.
CONVERSION RIGHTS
The holders of preferred stock shall have the right to convert their
shares into common stock as follows:
(1) prior to March 23, 1999, a holder may not convert
preferred stock;
(2) beginning March 24, 1999, holders may convert one-third of
the preferred stock;
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<PAGE>
(3) beginning April 23, 1999, holders may convert an
additional one-third of the preferred stock; and
(4) beginning May 23, 1999, holders may convert the final
one-third of the preferred stock.
The number of shares of common stock into which each share of the
preferred stock may be converted shall be determined by dividing the liquidation
preference, or $1,000, by an amount equal to the lesser of:
(a) the "fixed conversion price", which was 110% of the
average of the closing bid prices of the common stock for the five-day
trading period on the trading date immediately preceding the date of
issuance of the preferred stock or
(b) the "market price", which means the average of the two
lowest closing bid prices of the common stock over the thirty trading
days immediately preceding the date of conversion.
The preferred stock was issued in three equal installments, therefore,
there are three different fixed conversion prices: $0.95, $0.73 and $1.93.
For example, if on September 3, 1999 an investor who purchased shares
of preferred stock in the first tranche converted one share of preferred stock,
it would receive 1,052 shares of common stock, calculated by dividing $1,000 by
$.95, since $.95 is less than the market price. In the event we declare a common
stock dividend or distribution, or other equity distribution, to our
stockholders, the conversion price of the preferred stock shall be
proportionately decreased in order to maintain the preferred stockholder's
proportionate percentage ownership of our common stock.
Nasdaq rules limit the amount of shares that we may issue upon the
conversion of preferred stock if, at the time of conversion, the conversion
price is below the market price of the common stock. Under these rules we must
obtain shareholder approval before we can issue an amount of shares representing
20% or more of the outstanding shares of our common stock. For example, assume
we have previously issued 19.9% of the outstanding shares of our common stock
and an investor wishes to convert its preferred stock into shares of common
stock. Further assume that the conversion price is less than the current market
price and this investor's conversion, when added together with all of the
previous conversions of preferred stock below the market price, would exceed the
20% maximum number of shares allowed to be issued by Nasdaq. In this case, the
investor would not be permitted to convert its preferred stock into common stock
without prior shareholder approval.
Even if we do not obtain shareholder approval to exceed the 20% maximum
shares allowed to be issued at a conversion price below the market price of the
common stock, we may still issue shares of common stock to an investor who wants
to convert its shares of preferred stock. However, the conversion price would be
equal to, and not below, the market price of our common stock. If, as a result
of these Nasdaq rules, we do not issue shares to an investor at the proper
conversion price, we will compensate the investor by issuing to it an additional
200,000 shares underlying warrants to purchase common stock exercisable at the
market price of the common stock for each $1,000,000 principal amount of
preferred stock which could not be converted at the proper conversion price.
The preferred stock is convertible up to two years from the date the
registration statement is declared effective by the SEC. In the event that any
shares of preferred stock remain outstanding on the second anniversary of the
effective date, all remaining shares of preferred stock must be converted on
that date. If the registration statement is effective, all other conversion
restrictions have lapsed for at least 30 calendar days, and the closing bid
price of our common stock averages at least $5.00 for 20 consecutive trading
days we may elect in writing to convert the preferred stock.
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<PAGE>
If we do not convert preferred shares into common shares within five
days of receipt of a notice of conversion, then the holders will be entitled to
penalties in the amount of 1/2% per day of the value of the preferred stock
being converted for the first 10 calendar days without conversion and 1% per day
thereafter until the conversion is completed.
We will reserve and keep available a sufficient number of authorized
shares of common stock to enable the conversion of all outstanding shares of the
preferred stock.
OPTIONAL REDEMPTION
We may redeem all or a portion of the preferred stock upon five
business days prior written notice to the holders at a price per share equal to
the greater of:
(1) $1,200 per share; or
(2) the difference between (a) the conversion price and
(b) the closing bid price of the common stock on the
trading date immediately preceding the date of the
notice of redemption.
Until converted, we will be entitled to redeem shares of the preferred stock in
accordance with the terms and conditions set forth in the certificate of
designation.
NO VOTING RIGHTS
Except as otherwise provided by law, preferred stockholders shall not
be entitled to vote upon any matter relating to our business affairs or for any
other purpose.
PLAN OF DISTRIBUTION
The selling stockholders may offer their shares of common stock at
various times in one or more of the following transactions:
o On any U.S. securities exchange on which our common stock may be
listed at the time of such sale;
o In the over-the-counter market;
o In transactions other than on such exchanges or in the over-the-
counter market;
o In connection with short sales; or
o In a combination of any of the above transactions.
The selling stockholders may offer their shares of common stock at
prevailing market prices, at prices related to such prevailing market prices, at
negotiated prices or at fixed prices.
The selling stockholders may use broker-dealers to sell their shares of
common stock. If this occurs, broker-dealers will either receive discounts or
commission from the selling stockholder, or they will receive commissions from
the purchasers of shares of common stock for whom they acted as agents. Such
brokers may act as dealers by purchasing any and all of the shares covered by
this prospectus either as agents for others or as principals for their own
accounts and reselling such securities under the prospectus.
-12-
<PAGE>
The selling stockholders and any broker-dealers or other persons acting
on the behalf of parties that participate in the distribution of the shares may
be considered underwriters under the Securities Act. As such, any commissions or
profits they receive on the resale of the shares may be considered underwriting
discounts and commissions under the Securities Act.
As of the date of this prospectus, we are not aware of any agreement,
arrangement or understanding between any broker or dealer and the selling
stockholders with respect to the offer to sale of the shares under this
prospectus. If we become aware of any agreement, arrangement or understanding,
to the extent required under the Securities Act, we will file a supplemental
prospectus to disclose:
(1) the name of any such broker-dealers;
(2) the number of shares involved;
(3) the price at which such shares are to be sold;
(4) the commissions paid or discounts or concessions
allowed to such broker-dealers, where applicable;
(5) that such broker-dealers did not conduct any
investigation to verify the information set out in
this prospectus, as supplemented; and
(6) other facts material to the transaction.
The stock purchase agreements have reciprocal indemnification
provisions between us and each selling stockholder to indemnify each other
against liabilities under the Securities Act, which may be based upon, among
other things, any untrue statement or alleged untrue statement of a material
fact or any omission or alleged omission of a material fact. We have agreed to
bear customary expenses incident to the registration of the shares for the
benefit of the selling stockholders in accordance with such agreements, other
than underwriting discounts and commissions directly attributable to the sale of
such securities by or on behalf of the investor.
RECENT DEVELOPMENTS
Effective March 16, 1999, we completed a private placement of 1,000
shares of series I preferred stock for $1,000,000 with Talisman Capital
Opportunity Fund, Ltd. The series I preferred stock is not redeemable and has a
liquidation preference of $1,000 per share. The holder of series I preferred
stock is not entitled to receive any dividends nor, except as provided by law,
vote upon any matter relating to the business or affairs of the Company or for
any other purpose. Each share of series I preferred stock is convertible, after
July 14, 1999, into our common stock, at a conversion rate which is determined
by dividing $1,000 by the conversion price. The conversion price shall be the
lesser of:
(a) $1.50 or
(b) 90% of the average closing bid price of the two
lowest closing bid prices of common stock as reported
by Bloomberg, L.P. for shares traded in the United
States during the 30 consecutive trading days
preceding the conversion date.
In addition, the Company issued 253,333 warrants to purchase common
stock in connection with the series I preferred stock. Each warrant is
exercisable for one share of common stock at $1.50 through March 16, 2004, after
which the warrants will expire. In connection with our sale of series I
preferred stock, we agreed to file a registration statement covering the resale
of the common stock issuable upon conversion of
-13-
<PAGE>
the series I preferred stock and exercise of the warrants by June 14, 1999 and
cause the registration statement to be declared effective by the SEC by August
13, 1999. If the registration statement is not effective by August 13, 1999, we
will have to pay to the holders liquidated damages equal to 2% of the value of
outstanding series I preferred stock each 30 day period for the first two months
and 3% for each 30 day period after that until the registration statement has
been declared effective.
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms in Washington, DC, New York, NY, and Chicago,
IL. Please call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. Our SEC filings are also available to the public from the SEC's
website at http://www.sec.gov.
We have filed a registration statement on Form S-3 with the SEC to
register shares of our common stock. This prospectus is part of that
registration statement and, as permitted by the SEC's rules, does not contain
all of the information included in the registration statement. For further
information about us and this offering, you may refer to the registration
statement and its exhibits. You can review and copy the registration statement
and its exhibits at the public reference facilities maintained by the SEC or on
the SEC's website described above.
This prospectus may contain summaries of contracts or other documents.
Because they are summaries, they will not contain all of the information that
may be important to you. If you would like complete information about a contract
or other document, you should read the copy filed as an exhibit to the
registration statement.
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information we incorporate by reference is
considered to be a part of this prospectus, and information that we file with
the SEC at a later date will automatically update or supersede this information.
We incorporate by reference the following documents as well as any future filing
we will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934:
1. Annual Report on Form 10-KSB for the fiscal year ended March 31, 1999;
2. Quarterly Report on Form 10-QSB for the period ended June 30, 1999;
3. Current Reports on Form 8-K filed on August 17, 1998 and March 23,
1999; and
4. Registration Statement on Form 10, as amended, containing the
description of our common stock, dated April 27, 1995.
You may request a copy of these filings, at no cost, by writing to us
at 4 Hutton Centre Drive, Suite 800, Santa Ana, CA 92707-8713, Attention:
Investor Relations.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 145 of the Delaware General Corporation Law allows companies to
indemnify their directors and officers against expenses, judgments, fines and
amounts paid in settlement under the conditions and limitations described in the
law.
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<PAGE>
Our certificate of incorporation provides that a director is not
personally liable for monetary damages to us or our stockholders for breach of
his or her fiduciary duties as a director. A director will be held liable for a
breach of his or her duty of loyalty to us or our stockholders, his or her
intentional misconduct or willful violation of law, actions or in actions not in
good faith, an unlawful stock purchase or payment of a dividend under Delaware
law, or transactions from which the director derives an improper personal
benefit. This limitation of liability does not affect the availability of
equitable remedies against the director including injunctive relief or
rescission. Our certificate of incorporation authorizes us to indemnify our
officers, directors and other agent to the fullest extent permitted under
Delaware law.
We have entered into an indemnification agreement with each of our
directors and officers. In some cases, the provisions of the indemnification
agreement may be broader than the specific indemnification provisions contained
in our certificate of incorporation or otherwise permitted under Delaware law.
Each indemnification agreement may require us to indemnify an officer or
director against liabilities that may arise by reason of his status or service
as an officer or director, or against liabilities arising from the director's
willful misconduct of a culpable nature. The indemnification agreement may also
require us to obtain directors' and officers' liability insurance, if available
on reasonable terms. We maintain a directors and officers liability policy with
Lloyds of London and General Star Indemnity Corporation that contains an
aggregate limit of liability of $5,000,000 through 2001.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to our directors, officers and controlling persons
pursuant to these provisions, or otherwise, we have been advised that, in the
opinion of the SEC, such indemnification is against public policy as expressed
in the Securities Act and is, therefore, unenforceable.
LEGAL MATTERS
Parker Chapin Flattau & Klimpl, LLP, New York, New York will pass upon
the validity of the securities offered hereby. Martin Eric Weisberg, Esq., a
member of the firm, is our Secretary.
EXPERTS
The financial statements as of March 31, 1998 and for the year then
ended included in this Prospectus have been so included in reliance on the
report (which contains an explanatory paragraph relating to the ability of
StarBase to continue as a going concern as described in Note 2 to the financial
statements) of PricewaterhouseCoopers LLP, independent accountants, given on the
authority of said firm as experts in auditing and accounting.
The financial statements for the year ended March 31, 1999 incorporated
by reference in this Prospectus have been so incorporated in reliance on the
report (which contains an explanatory paragraph relating to the ability of
StarBase to continue as a going concern, as described in Note 2 to the financial
statements) of Deloitte & Touche LLP, independent accountants, given on the
authority of said firm as experts in accounting and auditing.
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<PAGE>
WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR ANY OTHER PERSON TO GIVE ANY
INFORMATION OR TO REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST
NOT RELY ON ANY UNAUTHORIZED INFORMATION. THIS PROSPECTUS DOES NOT OFFER TO SELL
OR BUY ANY SHARES IN ANY JURISDICTION WHERE IT IS UNLAWFUL. THE INFORMATION IN
THIS PROSPECTUS IS CURRENT AS OF _______________.
----------------
TABLE OF CONTENTS PAGE
- --------------------------------------------------------------------------------
Risk Factors 3
Forward-Looking Statements 7
Use of Proceeds 7
Selling Stockholders 7
Description of Securities 10
Plan of Distribution 12
Recent Developments 13
Where You Can Find More Information 14
Indemnification of Directors and Officers 14
Legal Matters 15
Experts 15
- --------------------------------------------------------------------------------
6,233,895 SHARES OF COMMON STOCK
STARBASE CORPORATION
-------------
PROSPECTUS
-------------
_______________ , 1999
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the various expenses which will be paid
by StarBase in connection with the issuance and distribution of the securities
being registered on this registration statement. The selling stockholders will
not incur any of the expenses set forth below. All amounts shown are estimates.
SEC Registration Fee $ 4,165.52
Legal Fees and Expenses 6,000.00
Accounting Fees and Expenses 10,000.00
Miscellaneous Expenses 1,000.00
Total $ 21,165.52
====================
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware
(the "DGCL") provides, in general, that a corporation incorporated under the
laws of the State of Delaware, such as the registrant, 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 (other than a derivative action
by or in the right of the corporation) by reason of the fact that such person 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 enterprise, against expenses (including attorney's fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit or proceeding if such person
acted in good faith and in a manner such person 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 such person's
conduct was unlawful. In the case of a derivative action, a Delaware corporation
may indemnify any such person against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection with the defense
or settlement of such action or suit if such person acted in good faith and in a
manner such person reasonably believed to be in or not opposed to the best
interests of the corporation, 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 of the State of Delaware or any other court in which such
action was brought determines such person is fairly and reasonable entitled to
indemnity for such expenses.
The Certificate of Incorporation of StarBase provides that directors
shall not be personally liable for monetary damages to StarBase or its
stockholders for breach of fiduciary duty as a director, except for liability
resulting from a breach of the director's duty of loyalty to StarBase or its
stockholders, intentional misconduct or willful violation of law, actions or in
actions not in good faith, an unlawful stock purchase or payment of a dividend
under Delaware law, or transactions from which the director derives improper
personal benefit. Such limitation of liability does not affect the availability
of equitable remedies such as injunctive relief or rescission. The Certificate
of Incorporation of StarBase also authorizes StarBase to indemnify its officers,
directors and other agents, by bylaws, agreements or otherwise, to the fullest
extent permitted under Delaware law. StarBase has entered into an
Indemnification Agreement (the "Indemnification Agreement") with each of its
directors and officers which may, in some cases, be broader than the specific
indemnification provisions contained in the Certificate of Incorporation of
StarBase or as otherwise permitted under Delaware law. Each Indemnification
Agreement may require StarBase, among other things, to indemnify officers and
directors against liabilities that may arise by reason of their status or
service as a director or officer, against liabilities arising from willful
II-1
<PAGE>
misconduct of a culpable nature, and to obtain directors' and officers'
liability insurance if available on reasonable terms.
StarBase maintains a directors and officers liability policy with
Lloyds of London and General Star Indemnity Corporation that contains an
aggregate limit of liability of $5,000,000 through 2001.
ITEM 16. EXHIBITS.
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- --------------- ----------------------------------------------------------------
4.1 Form of Securities Purchase Agreement (Series H Preferred
Stock). Incorporated by reference to exhibit 4.1 to amendment
no. 2 of this registration statement, file number 333-72833.
4.2 Certificate of Designation (Series H Preferred Stock).
Incorporated by reference to Exhibit 10.2 to the Company's
Report on Form 10-QSB for the period ended December 31, 1998.
4.3 Form of Registration Rights Agreement (Series H Preferred
Stock). Incorporated by reference to Exhibit 10.3 to the
Company's Report on Form 10-QSB for the period ended December
31, 1998.
4.4 Form of Warrant (Series H Preferred Stock and other warrants).
Incorporated by reference to Exhibit 10.4 to the Company's
Report on Form 10-QSB for the period ended December 31, 1998.
4.5 Form of Warrant (Accounts Receivable Purchase Agreement with
Silicon Valley Bank). Incorporated by reference to Exhibit 4.5
to the original filing of this registration statement, file
number 333-72833.
4.6 Accounts Receivable Purchase Agreement with Silicon Valley Bank.
Incorporated by reference to Exhibit 4.6 to amendment no. 1 of
this registration statement, file number 333-72833.
4.7 Intellectual Property Security Agreement with Silicon Valley
Bank. Incorporated by reference to Exhibit 4.7 to amendment no.
1 of this registration statement, file number 333-72833.
4.8 Consulting Agreement with Kurt Motamedi. Incorporated by
reference to Exhibit 4.8 to amendment no. 1 of this registration
statement, file number 333-72833.
4.9 Consulting Agreement with Continental Capital & Equity Corp.
Incorporated by reference to Exhibit 4.9 to amendment no. 1 of
this registration statement, file number 333-72833.
5.1* Opinion of Parker Chapin Flattau & Klimpl, LLP.
23.1 Consent of Parker Chapin Flattau & Klimpl, LLP (included in
Exhibit 5.1 filed herewith).
23.2* Consent of PricewaterhouseCoopers, LLP.
23.3* Consent of Deloitte & Touche LLP.
24.1 Powers of Attorney of certain directors and officers of
StarBase. Incorporated by reference to page II-5 of the original
filing of the registration statement, file number 333-72833.
- -----------------------
* Filed herewith.
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:
(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
II-2
<PAGE>
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.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 (the "Act") may be permitted to directors, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the 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.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1923 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1923) that is incorporated by reference 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 bonafide offering thereof.
II-3
<PAGE>
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 Amendment
No. 3 to its Registration Statement on Form S-3 to be signed on its behalf by
the undersigned, thereunto duly authorized, in the City of Santa Ana, State of
California, on September 24, 1999.
STARBASE CORPORATION
By: /s/ Douglas S. Norman
-----------------------------------
Douglas S. Norman
Director of Finance and
Chief Accounting Officer
II-4
<PAGE>
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>
* President, Chief Executive
- --------------------------------------- Officer and Chairman of the Board September 24, 1999
William R. Stow III
* Vice Chairman September 24, 1999
- --------------------------------------- and Director
Donald R. Farrow
* Director September 24, 1999
- ---------------------------------------
Frank R. Caccamo
* Director September 24, 1999
- ---------------------------------------
John R. Snedegar
* Director September 24, 1999
- ---------------------------------------
Phillip E. Pearce
* Director September 24, 1999
- ---------------------------------------
Daniel P. Ginns
* Director September 24, 1999
- ---------------------------------------
Barry W. Sullivan
* Director September 24, 1999
- ---------------------------------------
Anders B. Vinberg
/s/ Douglas S. Norman Director of Finance and September 24, 1999
- --------------------------------------- Chief Accounting Officer
Douglas S. Norman
* By: /s/ Douglas S. Norman
- ---------------------------------------
Douglas S. Norman
Attorney-in-fact
</TABLE>
II-5
<PAGE>
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- -------------- --------------------------------------------------------
4.1 Form of Securities Purchase Agreement (Series H Preferred
Stock). Incorporated by reference to Exhibit 4.1 to amendment
no. 2 of this registration statement, file number 333-72833.
4.2 Certificate of Designation (Series H Preferred Stock).
Incorporated by reference to Exhibit 10.2 to the Company's
Report on Form 10-QSB for the period ended December 31,
1998.
4.3 Form of Registration Rights Agreement (Series H Preferred
Stock). Incorporated by reference to Exhibit 10.3 to the
Company's Report on Form 10-QSB for the period ended
December 31, 1998.
4.4 Form of Warrant (Series H Preferred Stock and other warrants).
Incorporated by reference to Exhibit 10.4 to the Company's
Report on Form 10-QSB for the period ended December 31,
1998.
4.5 Form of Warrant (Silicon Valley Bank). Incorporated by
reference to Exhibit 5.1 to the original filing of this
registration statement, file number 333-72833.
4.6 Accounts Receivable Purchase Agreement with Silicon Valley
Bank. Incorporated by reference to Exhibit 4.6 to amendment no.
1 of this registration statement, file number 333-72833.
4.7 Intellectual Property Security Agreement with Silicon Valley
Bank. Incorporated by reference to Exhibit 4.7 to amendment no.
1 of this registration statement, file number 333-72833.
4.8 Consulting Agreement with Kurt Motamedi. Incorporated by
reference to Exhibit 4.8 to amendment no. 1 of this registration
statement, file number 333-72833.
4.9 Consulting Agreement with Continental Capital & Equity Corp.
Incorporated by reference to Exhibit 4.9 to amendment no. 1 of
this registration statement, file number 333-72833.
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.
E-1
<PAGE>
23.3* Consent of Deloitte & Touche LLP.
24.1 Powers of Attorney of certain directors and officers of StarBase.
Incorporated by reference to page II-5 of the original filing of the
registration statement, file number 333-72833.
- -------------------------
* Filed herewith.
E-2
PARKER CHAPIN FLATTAU & KLIMPL, LLP
1211 Avenue of the Americas
New York, NY 10036
(212) 704-6000
September 24, 1999
StarBase Corporation
4 Hutton Centre Drive, Suite 800
Santa Ana, CA 92707-87130
Ladies and Gentlemen:
We have acted as counsel to StarBase Corporation (the "Company") in
connection with a Registration Statement on Form S-3 filed by the Company with
the Securities and Exchange Commission (the "Registration Statement") relating
to up to 6,233,895 shares (the "Shares") of the Company's common stock, par
value $0.01 per share (the "Common Stock"). Of such Shares, 5,660,497 may be
issued upon conversion of the Series H Preferred Stock, 417,405 may be issued
upon the exercise of warrants issuable to the holders of the Shares (the
"Warrants") and 155,993 shares of common stock have been issued by the Company
(the "Other Shares").
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 Series H Preferred Stock (when such shares are
paid for and issued in accordance with the terms of the Series H Preferred
Stock) will be legally issued, fully paid and non-assessable; (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; and (iii) the Other Shares are 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
Consent of Independent Accountants
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated June 26, 1998 relating to the
financial statements, which appears in StarBase Corporation's Annual Report on
Form 10-KSB for the year ended March 31, 1999. We also consent to the reference
to us under the heading "Experts" in such Registration Statement.
PricewaterhouseCoopers LLP
Costa Mesa, California
September 23, 1999
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in Amendment No. 3 to Registration
Statement No. 333-72833 of Starbase Corporation (the Company) on Form S-3 of our
report dated June 18, 1999 (which report expresses an unqualified opinion and
includes an explanatory paragraph related to substantial doubt about the
Company's ability to continue as a going concern) appearing in the Form 10-KSB
of Starbase Corporation for the year ended March 31, 1999, and to the reference
to us under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.
DELOITTE & TOUCHE LLP
Costa Mesa, California
September 23, 1999
