-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SThxAOeq7C50WkI2X/wFBc8frPbxsMAKL89EkQu0+ppBlm+CIOtf4b1rA6MMcAnd PhCTZN/reRUTzTR2t+g3hA== 0000928385-99-001846.txt : 19990520 0000928385-99-001846.hdr.sgml : 19990520 ACCESSION NUMBER: 0000928385-99-001846 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19990519 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AXENT TECHNOLOGIES INC CENTRAL INDEX KEY: 0001007997 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-PREPACKAGED SOFTWARE [7372] IRS NUMBER: 870393420 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: SEC FILE NUMBER: 333-71333 FILM NUMBER: 99629978 BUSINESS ADDRESS: STREET 1: 2400 RESEARCH BLVD STREET 2: STE 200 CITY: ROCKVILLE STATE: MD ZIP: 20850 BUSINESS PHONE: 3012585403 MAIL ADDRESS: STREET 1: 2400 RESEARCH BLVD STREET 2: SUITE 200 CITY: ROCKVILLE STATE: MD ZIP: 20850 S-3/A 1 S-3 AMENDMENT #1 As filed with the Securities and Exchange Commission on May 18, 1999 Registration No. 333-71333 ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------ AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------ AXENT TECHNOLOGIES, INC. (Exact Name of Registrant as specified in its charter) 2400 Research Boulevard, Suite 200 Rockville, MD 20850 (301) 258-5043 (Address of Principal Executive Offices) Delaware 7372 87-0393420 (State or other jurisdiction of (Primary Standard Industrial (IRS Employer incorporation or organization) Classification Code Number) Identification Number)
------------ John C. Becker Chief Executive Officer AXENT Technologies, Inc. 2400 Research Boulevard, Suite 200 Rockville, Maryland 20850 (301) 258-5043 (Name, address, including zip code and telephone number, including area code of agent for service) ------------ Copies to: Edwin M. Martin, Jr., Esquire Jane K. P. Tam, Esquire Piper & Marbury L.L.P. 1200 Nineteenth Street, N.W. Washington, D.C. 20036 (202) 861-3900 Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. 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, as amended (the "Securities Act") check the following box. X If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ___________ If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. ----------- If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. CALCULATION OF REGISTRATION FEE - --------------------------------------------------------------------------------------------------------- Proposed Title of Each Class of Securities To Be Registered Maximum Aggregate Amount of Offering Price Registration Fee - --------------------------------------------------------------------------------------------------------- Common Stock, par value $.02 per share $25,490,601.25 (1) $0(2) - ---------------------------------------------------------------------------------------------------------
(1) Pursuant to Rule 457(c), the proposed maximum aggregate offering price and registration fee are based upon the closing price of $36.25 per share of AXENT's Common Stock on January 25, 1999, as reported on the Nasdaq National Market. (2) A registration fee of $7,086.40 was previously paid in connection with the initial filing of the Registration Statement. 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, or until the registration statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine. ================================================================================ SUBJECT TO COMPLETION, DATED MAY 18, 1999 PROSPECTUS May __, 1999 703,189 SHARES AXENT TECHNOLOGIES, INC. COMMON STOCK ------------ These shares of common stock are being offered by certain selling stockholders, identified in this prospectus. We issued the shares to the selling stockholders in connection with the acquisition of Internet Tools, Inc. in January 1999. The selling stockholders may sell these shares from time to time on the over-the-counter market in regular brokerage transactions, in transactions directly with market makers or in certain privately negotiated transactions. For additional information on the methods of sale, you should refer to the section entitled "Plan of Distribution" on page 10. We will not receive any portion of the proceeds from the sale of these shares. AXENT common stock is traded on the Nasdaq National Market under the symbol "AXNT." On May 7, 1999, the reported closing price of AXENT's common stock on the Nasdaq National Market was $9.3125 per share. Beginning on page 3, AXENT has listed several "Risk Factors" which you should consider. You should read this entire prospectus carefully before you make your investment decision. The information in this prospectus is not complete and may be changed. AXENT has not authorized anyone to provide you with information different from that contained in this prospectus. No one may sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Neither the SEC nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense. - 1 - The Company AXENT is a leading developer and provider of information security solutions designed to manage security policies and protect the integrity of enterprise computer networks, including Internet-based systems, internal networks, and individual servers, workstations and desktop and laptop computers. Our products address more of the information security issues facing organizations than any other single vendor and our solutions provide robust security functions and operate on a wide variety of computer operating systems. We also provide consulting services including assessments of computer system security vulnerabilities, assistance with product installation, training and specialized services regarding assessments of system security and solutions thereto. Our products assist by reducing the risks associated with the vulnerabilities inherent to today's computing environment where computer hackers, curious or disgruntled employees, contractors and competitors can gain access to, compromise or destroy sensitive information available on a company's computer systems or disrupt the normal operation of the systems. Our products permit customers to establish and modify information security policies for certain critical computer networks or all of their computer networks, assess compliance with those policies, detect suspicious activity indicating possible unauthorized users or hackers on those networks, test computer systems for security vulnerabilities and maintain and monitor data confidentiality. Other products of ours permit customers to control external access to their computer systems and networks, authenticate users of computer systems and networks, provide and manage remote network access and provide virtual private networking capabilities for remote users and remote sites so that they have encrypted communications even when using the Internet and other insecure communications media. Still other products of ours provide user administration functions, so that an administrator can easily add, remove or change access and privileges of single users or groups of users of computer systems and networks, and permit an administrator to establish and manage rights and privileges of users of Web-based systems, such as electronic commerce sites for customers, suppliers and distributors. We also offer services to help organizations develop a framework or roadmap for assessing potential system vulnerabilities, for developing security policies and for selecting and implementing solutions and compliance efforts. We also offer training and certification courses for the installation and use of our products and for general information security topics. In order to maintain our leadership in the field of information security technology, we expect to continue expanding our product offerings through acquisition, internal development and marketing arrangements. While many of our security products have been internally developed, we have used and anticipate using acquisitions to expand our product and service offerings. Our principal executive offices are located at 2400 Research Boulevard, Suite 200, Rockville, Maryland 20850 and our telephone number is (301) 258-5043. As used in this prospectus, "we," "us," "our" and "AXENT" refer to AXENT Technologies, Inc., a Delaware corporation, and its wholly-owned subsidiaries. - 2 - Risk Factors In addition to the other information contained in this prospectus, you should consider carefully the following factors in evaluating us before purchasing shares of our common stock: Our Quarterly Revenues And Operating Results Will Fluctuate Because Sales Of Our Products Are Subject To Demand And Timing Considerations Of Our Customers. We have experienced significant quarterly fluctuations in our operating results and anticipate possibly substantial fluctuations in our future operating results. We generally have experienced seasonal variations in our operating results, with higher revenues, operating income and net income in our fourth quarter than in our first quarter of the following year, and with lower revenues, operating income and net income in the summer months, when businesses often defer purchase decisions. Also, we have historically recognized a substantial portion of our license revenues in the last month of each quarter, and even in the last week or last several days of each quarter. Because we have little or no backlog, quarterly revenues and operating results depend on the volume and timing of orders received during each quarter, especially during the last several weeks and days of each quarter, which are difficult to forecast. If our operating results fall below expectations of analysts, the trading price of our common stock may decline dramatically. Operating results may also fluctuate significantly on a quarterly basis due to the following factors: * demand for our products; * the size, timing, cancellation or delay of customer orders; * introduction of new products and product enhancements by us or our competitors; * market acceptance of new products introduced by us or our competitors; * budgeting cycles of customers; * changes in the proportion of revenues attributable to licenses and service fees; * changes in the percentage of products sold through our direct sales force and our indirect distribution channels; * competitive conditions in the industry; and * changes in general economic conditions. Our consulting service revenues also tend to fluctuate as consulting projects, which may continue over several quarters, are undertaken or completed. Our Revenues Are Significantly Based On Large Individual Contracts Failure To Obtain These Contracts Will Have Negative Effects On Our Revenues. The value of individual transactions as a percentage of our quarterly revenues can be substantial, and particular transactions may generate a significant portion of our operating profits for the quarter in which they are signed. The licensing of many of our products generally involves a long sales cycle (between six and twelve months) and is subject to a number of significant risks over which we have little or no control. Because many of our operating expenses are based on anticipated revenue levels, a substantial portion of which is not typically generated until the end of each quarter, and a high percentage of our expenses are fixed, delays in the receipt of orders can cause a significant variation in operating results from quarter to quarter. In addition, we may expend significant resources pursuing potential sales that will not be consummated. We also may choose to reduce prices or to increase spending in response to competition or to pursue new market opportunities, which may significantly reduce our operating results in the short-term. For those reasons, you should not rely on our prior operating results or projections of future operating results as an indication of our future performance. Completed Acquisitions of Business or Technologies May Not Be Successful or Possible Future Acquisitions May Not Occur. In the normal course of our business, we evaluate potential acquisitions of businesses, products and technologies that could complement or expand our business. We may not be successful in integrating the businesses and technologies of acquisitions that we have completed, such as the acquisitions of Internet Tools, Inc. in January 1999 or of PassGo Technologies Limited in March 1999. Our failure to integrate - 3 - successfully could materially adversely affect our operating results, financial condition and the trading price of our stock. If we identify a desirable acquisition in the future, we may not be able to successfully negotiate the terms of the acquisition, finance the acquisition or integrate the acquired business, products or technologies into our existing business and operations. An acquisition, whether or not completed, may materially adversely affect our financial condition and results of operations. Also, our evaluation and pursuit of possible acquisitions, and our integration of completed acquisitions, may divert our management time and resources from necessary aspects of our business and operations. Our failure to make acquisitions in the future may adversely affect our competitive position, our product offerings and our business, and the diversion of management time and resources may adversely affect our financial condition and results of operations. Also, any future acquisition in which we pay a substantial amount of cash consideration may adversely affect our liquidity and financial condition, and any future acquisition in which we issue a significant amount of our stock as consideration may cause our stockholders to suffer a significant dilution of their interests. Our Stock Price Has Historically Been Volatile, Which May Make It More Difficult For You To Resell Shares When You Want At Prices You Find Attractive. The market price of our common stock, which is traded on The Nasdaq National Market, has been subject to significant fluctuations in the past and may be subject to significant fluctuations in the future in response to operation results, announcements of technological innovations or new products by us or our competitors, patent or proprietary rights developments and market conditions for computer industry stocks in general. In addition, the stock market in recent years has experienced extreme price and volume fluctuations that often have been unrelated or disproportionate to the operating performance of individual companies. These market fluctuations, as well as general economic conditions, may adversely affect the market price of our common stock. The trading prices of many high technology companies' stocks are at or near their historical highs and reflect price/earnings ratios substantially above historical norms. The trading price of our common stock may fluctuate dramatically or go to and remain at low levels. Additionally, it is likely that in some future quarters our operating results will be below the expectations of public market analysts and investors. Regardless of the general outlook for our business, the announcement of quarterly operating results below analysts and investors' expectations could have a material and adverse effect on the price of our common stock. We Are In A Highly Competitive Market; Some Of Our Competitors May Be More Successful Than We Are In Attracting And Retaining Customers. Competition in the information security market is intense. We currently compete with companies that have substantially greater financial resources, sales and marketing organizations, market penetration and research and development capabilities, as well as broader product offerings and greater market presence and name recognition. We expect to face increasing competitive pressures from our current competitors and new market entrants. We believe that significant competitive factors affecting the information security industry are: * the number of information security functions a product performs, * the complexity of information security functions a product performs and a customer's ability to manage certain aspects of those functions, * product quality, * product performance, * number of computer systems that can be controlled simultaneously by a product, * product ease of use, * conformance to industry standards, * product price and * customer support. We may not be able to maintain or enhance its competitive position against current and future competitors. Negative competitive developments could have a material adverse effect on our business and the trading price of our stock. - 4 - Market Consolidation May Create More Formidable Competitors. There has been substantial consolidation recently in the information security industry, and we expect that there will be significant additional consolidation in the near future. As a result of that increasing consolidation, we expect that we will increasingly compete with larger firms that have broader product offerings and greater financial resources. We believe that such competition may have a significant negative effect on our current and developing collaborative, marketing, distribution and reselling relationships, our product pricing and our product development budget and capabilities. Any of those negative effects can significantly impair our financial condition and our results of operations. Information Security Products Are Subject To Rapid Technological Change And We Must Adapt Quickly To These Changes To Compete Effectively. The information security industry changes rapidly. Changes can be attributable to frequent new product introductions, continuing advances in technology and changes in customer requirements and preferences. The introduction of new technologies could render our existing products obsolete or unmarketable or require us to invest in research and development at much higher rates with no assurance of developing competitive products. Changes in technologies or customer requirements may also cause the development cycle for our new products to be significantly longer than our historical product development cycle, resulting in higher development costs or a loss in market share. We may not be able to counter challenges to our current products, and our future product offerings may not keep pace with the technological changes implemented by competitors, developers of operating systems or networking systems or persons seeking to breach information security. Our products may not satisfy evolving preferences of customers and prospects. Failure to develop and introduce new products and product enhancements in a timely fashion could materially adversely affect our financial condition and results of operations. Because of the complexity of our software products, which operate on or utilize multiple platforms and communications protocols, we have from time to time experienced delays in introducing new products and product enhancements primarily due to development difficulties or shortages of development personnel. There can be no assurance that we will not experience longer delays or other difficulties that could delay or prevent the successful development, introduction or marketing of new products or product enhancements. Year 2000 Errors Could Cause Our Products And Those Of Our Customers To Malfunction. Within the year, software and computer systems used by many companies and organizations may need to be upgraded or replaced in order to comply with "Year 2000" requirements. We believe that the current version of our products are Year 2000 compliant, but undetected errors or defects in our products may cause Year 2000 errors or our products may be operated on operating systems or with other software products that are non-compliant, which may expose us to claims from our customers. Prior versions of some our products may not be Year 2000 compliant unless upgraded with maintenance releases, which may require that customers obtain, install and use more current versions of operating systems. We believe that disclaimers of warranties and limitations of liability in our license agreements will adequately protect us in the event that any prior versions of our products are not Year 2000 compliant, but Year 2000 claims may be made against us regarding prior versions of our products. We utilize third-party equipment and software that may not be Year 2000 compliant. We have conducted tests of many third-party software products and items of equipment containing computer processors that we use in our business operations to determine Year 2000 compliance. When we have purchased new software systems for our internal use, we have received confirmations from vendors of software products critical to our operations that the software is Year 2000 compliant. We also have obtained statements from vendors of many of the items of equipment containing computer processors that are critical to complaint. Based on our testing and those statements of vendors of software and equipment critical to our operations, we currently believe that those third- party software programs or equipment will be Year 2000 compliant and that we will not incur significant incremental costs in making Year 2000 fixes in the foreseeable future. However, despite our efforts to assess these error risks, Year 2000 errors or defects may be discovered in those systems and, if such errors or defects are discovered, the costs of making such systems Year 2000 compliant - 5 - could have a material adverse effect on our business, operating results and financial condition. As we derive a substantial portion of our revenues from the distributors and resellers of our products, a Year 2000 error or defect that affected our resellers or distributors could have a material adverse effect on our business, financial condition and results of operations. Year 2000 Concerns of Customers and Prospective Customers Could Limit Our Business in 1999. The purchasing patterns of our customers or potential customers may be affected by Year 2000 issues as companies expend significant resources to correct their current systems for Year 2000 compliance. These expenditures may result in reduced funds being available to implement the information security solutions or to purchase products and services such as those we offer. In addition, some companies have announced an intention to delay installing new software products in computer environments critical to their business operations until 2000. Those reduced expenditures or delays in purchasing and installing software products could have a material adverse effect on our business, financial condition and results of operations. Our Products Are Complex And Are Operated in a Wide Variety of Computer Configurations, Which Could Result In Errors Or Products Failures. Because we offer very complex products, undetected errors, failures or bugs may occur when they are first introduced or when new versions are released. Our product often are installed and used in large-scale computing environments with different operating systems, system management software and equipment and networking configurations, which may cause errors or failures in our products or may disclose undetected errors, failures or bugs in our products. We have in the past discovered software errors, failures and bugs in certain of our product offerings after their introduction and have experienced delays or lost revenues during the period required to correct these errors. Our customers' computer environments are often characterized by a wide variety of standard and non- standard configurations that make pre-release testing for programming or compatibility errors very difficult and time-consuming. Despite testing by us and by others, errors, failures or bugs may not be found in new products or releases after commencement of commercial shipments by us. Errors, failures or bugs in our products could result in adverse publicity, product returns, loss of or delay in market acceptance of our products or claims by the customer or others. Alleviating such problems could require significant expenditures of our capital and resources and could cause interruptions, delays or cessation of our product licensing, which would adversely affect the results of our operations. We attempt to limit our liability to customers, including liability arising from a failure of the security features contained in our products, through contractual limitations of warranties and remedies. Our consulting agreements with our customers generally contain provisions designed to limit our exposure to claims related to negligence or errors or omissions by our employees and agents. However, some courts have held similar contractual limitations of liability, or the "shrink wrap licenses" in which they sometimes are embodied, to be unenforceable. Accordingly, such limitations may not be enforced. We have insurance providing coverage up to $2,000,000 annually and per occurrence to defray costs associated with claims arising from product failure and related loss or damage to data. Notwithstanding that insurance coverage, the consequences of errors, failures or bugs in our products could have a material adverse effect on our financial condition and results of operations. We Depend On Our Key Personnel, Who May Not Continue To Work For Us; There Is Intense Competition In Recruiting New Qualified Personnel. Our success depends to a significant degree upon the continuing contributions of our key management, sales, product development, marketing, professional services, and customer support personnel. The loss of the services of any of those key employees could adversely affect our financial condition and results of operations. We believe that our future success will depend in large part upon our ability to attract and retain highly-skilled managerial, sales, product development, marketing, professional services and customer support personnel. We require product development, consulting services and sales personnel who are highly technically trained in the field of information security, and the competition for such individuals is intense. We have at times experienced, and continue to experience, difficulty in recruiting qualified personnel. Competition for qualified personnel in the software industry is intense, and there can be no assurance that we will be successful in retaining our key employees or that we can attract or retain additional skilled personnel as required. If we do not - 6 - succeed in attracting new personnel, or retaining and motivating existing personnel, our business will be adversely affected. International Sales Accounts For A Significant Portion of Our Revenue And Are Subject To Certain Inherent Risks. Sales outside the United States accounted for a significant portion of our net revenues from our information security products in the year ended December 31, 1998. Our international business may be subject to a variety of risks, including: * costs and risks relating to establishing and expanding our relationships with resellers and distributors in certain countries or regions, * delays in expanding those international distribution channels, * difficulties in collecting international accounts receivable from distributors or resellers, * increased costs associated with maintaining international marketing efforts, * any increase in duty rates, * introduction of non-tariff barriers, and * difficulties in enforcing intellectual property rights abroad. Our international sales may be denominated in certain non-US Dollar currencies, and we may be subject to risks associated with fluctuations in currency exchange rates. As we do not currently hedge foreign currency risk, a decrease in the value of any of those currencies relative to the U.S. dollar will affect the profitability in U.S. dollars of our products sold in these markets. Government Regulation Of Technology Exports Could Limit Our Ability To Market Our Products Abroad And To Compete Effectively. Our international sales and operations may be subject to the following risks: * imposition of governmental controls, * new or changed export license requirements, * restrictions on the export of critical technology, * import or trade restrictions, and * changes in tariffs. While we believe our products are designed to meet the regulatory standards of many foreign markets, any inability to obtain foreign regulatory approvals on a timely basis could have a material adverse effect on our financial condition or results of operations. Certain of our products are subject to export controls under U.S. law, and we believe that we have obtained all necessary export approvals when required. However, the list of products and countries for which export approval is required, and the regulatory policies with respect thereto, may be revised from time to time. Our failure to obtain required approvals under these regulations could adversely affect our ability to make international sales. For example, because of U.S. governmental controls on the exportation of encryption technology, we have been unable to export some of our products with the most robust information security encryption technology and will be required to provide for recovery of encryption keys for access by governmental authorities in order to export products containing those robust encryption algorithms. As a result, foreign competitors facing less stringent controls on their products may be able to compete more effectively than us in the global information security market. These factors may have a material adverse effect on our financial condition or results of operations. Our Intellectual Property And Proprietary Rights Are Costly To Defend And Difficult To Protect. We regard our software as proprietary, and our success and ability to compete depends in part upon our proprietary technology and rights. We rely on copyright and trade secret laws, trademarks, confidentiality procedures and contractual provisions to protect our proprietary software, documentation and other proprietary information. Although we hold several patents and have several pending patent applications which cover certain aspects of our - 7 - technology, such patents and patent applications do not protect some of our security products. Our current and future patent applications may not be granted. Additionally, our patents may not be sufficiently broad to protect our technology critical to our security products. Although the effectiveness of our products does not depend upon the secrecy of our proprietary technology or licensed technology, the public disclosure of our technology could result in a perception of breached security and could reduce the level of our product licensing, which could have an adverse effect on our financial condition or results of operations. Confidentiality agreements and other methods on which we rely to protect our trade secrets and proprietary information and rights may not be adequate to protect our proprietary rights. Litigation to defend and enforce our intellectual property rights could result in substantial costs and diversion of resources and could have a material adverse effect on our financial condition and results of operations regardless of the final outcome of such litigation. Despite our efforts to safeguard and maintain our proprietary rights, we may not be successful in doing so or the steps taken by us in this regard may not be adequate to deter misappropriation or independent third-party development of our technology or to prevent an unauthorized third party from copying or otherwise obtaining and using our products, technology or other information that we regard as proprietary. Our trade secrets or non-disclosure agreements may not provide meaningful protection of our proprietary information. Also, others may independently develop similar technologies or duplicate any technology developed by us. Our inability to protect our proprietary rights would have a material adverse effect on our financial condition and results of operations. We May Be Subject To Intellectual Property Claims, Which Are Costly To Defend And Could Limit Our Ability To Use Certain Technologies In The Future. As the number of information security products in the industry increases and the functionality of these products further overlaps, we may become subject to claims of infringement or misappropriation of the intellectual property or proprietary rights of others. Third parties could assert infringement or misappropriation claims against us in the future with respect to current or future products. Further, we may be subject to additional risk as we enter into transactions in countries where intellectual property laws are not well developed or are poorly enforced. Legal protections of our rights may be ineffective in such countries, and technology developed in such countries may not be protectable in jurisdictions where protection is ordinarily available. Any claims or litigation, with or without merit, could be costly and could result in a diversion of management's attention, which could have a material adverse effect on our financial condition and results of operations. Adverse determinations in such claims or litigation could also have a material adverse effect on our financial condition and results of operations. The Issuance Of New Shares in the Internet Tools and CKS Limited Acquisitions May Cause Dilution Of Our Per Share Earnings. Although we believe that beneficial synergies will result from our acquisition of Internet Tools, Inc. in January 1999 and of CKS Limited (the parent of PassGo Technologies) in March 1999, there can be no assurance that the combining of those companies' businesses with ours, even if achieved in an efficient and effective manner, will result in increased earnings per share (taking into consideration the greater number of shares outstanding as a result of the acquisitions) or a financial condition superior to that which would have been achieved by us alone. While we do not anticipate that our acquisition of either company will be dilutive for our stockholders over the long term, there can be no assurance that, if either of those acquisitions fails to produce the anticipated benefits, it will not have the dilutive effect of causing our per share earnings be lower than they would have been for us if we had not made that acquisition. We Do Not Pay Dividends. We have not paid dividends on our common stock and we do anticipate paying dividends in the foreseeable future. Anti-Takeover Provisions Could Make It More Difficult For A Third Party To Acquire Us. Our Certificate of Incorporation requires that any action required or permitted to be taken by our stockholders must be effected at a duly called annual or special meeting of stockholders and may not be effected by any consent in writing, and requires reasonable advance notice by a stockholder of a proposal or director nomination which such stockholder desires to present at any annual or special meeting of stockholders. Special meetings of stockholders may be called only by the Chairman of the Board, the Chief Executive Officer or, if none, the President or by the - 8 - Board of Directors. Our Certificate provides for a classified Board of Directors, and members of the Board of Directors may be removed only for cause upon the affirmative vote of holders of at least two-thirds of the shares of our capital stock entitled to vote. These provisions, and other provisions of our Certificate, may have the effect of deterring hostile takeovers or delaying or preventing changes in control or management, including transactions in which stockholders might otherwise receive a premium for their shares over then current market prices. In addition, these provisions may limit the ability of stockholders to approve transactions that they may deem to be in their best interests. - 9 - Use of Proceeds The proceeds from the sale of the common stock offered pursuant to this prospectus are solely for the account of the selling stockholders. Accordingly, we will not receive any proceeds from the sale of the shares being sold by the selling stockholders hereunder. Selling Stockholders Each of the Selling Stockholders was a holder of stock or debt of Internet Tools, Inc. On January 12, 1999, we entered into an Agreement and Plan of Merger with Internet Tools providing for our acquisition of Internet Tools. In that merger, which was consummated on January 12, 1999, the outstanding debt of Internet Tools was converted into shares of AXENT common stock, shares of capital stock of Internet Tools owned by the selling stockholders were converted into shares of AXENT common stock, and Internet Tools became a wholly owned subsidiary of AXENT. The selling stockholders have the right to receive a total of 703,189 shares of AXENT common stock, all of which may be offered for sale from time to time by the selling stockholders pursuant to the registration statement of which this prospectus is a part. All of the common stock registered for sale pursuant to this prospectus will be owned immediately after registration by the selling stockholders and all of the shares offered by the selling stockholders were acquired in connection with our acquisition of Internet Tools, Inc. None of the selling stockholders has a material relationship with us, except that Vimal Vaidya has served as a Vice President of AXENT since January 12, 1999. The following table sets forth certain information known to us with respect to beneficial ownership of AXENT common stock as of April 9, 1999 by each selling stockholder. The following table assumes that the selling stockholders sell all of the shares shown as beneficially owned by them. We are unstable to determine the exact number of shares that actually will be sold. The number and percentage of shares beneficially owned is based on 27,839,563 shares outstanding at April 9, 1999 determined in accordance with Rule 13d-3 of the Exchange Act, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rule, beneficial ownership includes any shares as to which the individual has sole or shared voting power or involvement power and also any shares which the individual has the right to acquire within 60 days of April 9, 1999 through the exercise of any stock option or other rights. As the two selling stockholders are husband and wife, each of them may be deemed to share voting and investment power with respect to the shares shown as beneficially owned by the other.
NUMBER OF PERCENTAGE NAME ADDRESS SHARES OWNERSHIP - ---- ------- ------ --------- Shubhangi Vaidya 720, Vista Cerro Terrace 658,102 2.4% Fremont, CA 94539 Vimal Vaidya 720, Vista Cerro Terrace 45,087 0.2% Fremont, CA 94539
- 10 - Plan of Distribution A total of 703,189 shares of AXENT common stock may be offered and sold from time to time by the selling stockholders. The selling stockholders will act independently from us in making decisions with respect to the timing, manner and size of each sale. The selling stockholders may sell all or a portion of such shares owned by them from time to time through the Nasdaq National Market and may sell shares of AXENT common stock to or through one or more broker-dealers at prices prevailing on such Nasdaq National Market at the times of such sales. The selling stockholders make private sales directly or through one or more broker-dealers. Broker-dealers participating in such transactions may receive compensation in the form of discounts, concessions or commissions from the selling stockholders effecting such sales. The selling stockholders and any broker-dealers who act in connection with sales of AXENT common stock may be deemed to be "underwriters" as that term is defined in the Securities Act of 1933, and any commissions received by them and profit on any resale of the shares of AXENT common stock might be deemed to be underwriting discounts and commissions under the Securities Act of 1933. In effecting sales, broker-dealers engaged by a selling stockholder may arrange for other broker-dealers to participate. The selling stockholders will pay all discounts and selling commissions (if any), fees and expenses of counsel and other advisors to the selling stockholders, or any of them, and any other expenses incurred in connection with the registration and sale of the AXENT common stock, other than the registration fee payable to the SEC hereunder, the listing fee to be paid for listing the shares of AXENT common stock on the Nasdaq National Market, fees and expenses relating to the registration or qualification of the shares of AXENT common stock pursuant to any applicable state securities or "blue sky" laws and the fees and expenses of AXENT's counsel and independent accountants, which will be paid by AXENT. Legal Matters Counsel for AXENT, Piper & Marbury L.L.P., Washington, D.C., has rendered an opinion to the effect that the shares of AXENT common stock offered hereby are duly and validly issued, fully paid and nonassessable. Experts The consolidated financial statements of AXENT as of December 31, 1998 and 1997 and for each of the three years in the period ended December 31, 1998 appearing in AXENT's Annual Report on Form 10-K for the year ended December 31, 1998 are incorporated herein by reference in reliance upon the report thereon of PricewaterhouseCoopers LLP, independent accountants, given upon the authority of such firm as experts in accounting and auditing. Where Can You Find More Information AXENT is subject to the informational requirements of the Securities Exchange Act of 1934, and files reports and proxy statements with the SEC, which you should read for additional information regarding AXENT. You may obtain copies of those filings from the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, D.C. 20549, or by calling the SEC at 1-800-SEC-0330, or from the SEC's Internet web site at http:\\www.sec.gov. This Prospectus is a part of a registration statement that AXENT filed with the SEC. The registration statement contains more information than this Prospectus, including certain exhibits. You can get a copy of the registration statement from the SEC at the address listed above or from its web site. Information Incorporated By Reference The SEC allows us to "incorporate by reference" certain of our publicly-filed documents into this - 11 - prospectus, which means that information included in these documents is considered part of this prospectus. Information that we file with the SEC subsequent to the date of this prospectus will automatically update and supersede this information. We incorporate by reference the documents listed below and any future filings made with the SEC under Sections 13(a), 12(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended, until the selling stockholders have sold all the shares. The following documents filed with the SEC are incorporated by reference in this prospectus: SEC File No.: 000-28100 Period/Filing Date Quarterly Report on Form 10-Q............. Quarter ended March 31, 1999 Current Report on Form 8-K................ Filed April 13, 1999 Annual Report on Form 10-K................ Year ended December 31, 1998 Definitive Proxy Statement................ Filed on April 30, 1999 Description of common stock in Registration Statement on Form 8-A....... Filed March 29, 1996 We will furnish without charge to you, on written or oral request, a copy of any or all of the documents incorporate by reference, other than the exhibits to those documents. You should direct any requests for documents to Gary M. Ford, Vice President and General Counsel. AXENT Technologies, Inc., 2400 Research Boulevard, Rockville, Maryland 20850, telephone: (301) 670-3523. Disclosure of Commission Position on Indemnification for Securities Act Liabilities Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers or persons controlling AXENT pursuant to the foregoing provisions, AXENT has been informed that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. - 12 - PART II INFORMATION NOT REQUIRED IN PROSPECTUS 14. Other Expenses of Issuance and Distribution The following table sets forth the various expenses and costs expected to be incurred in connection with the sale and distribution of the securities offered hereby, other than underwriting discounts and commissions. All of the amounts shown are estimated except the SEC registration fee. SEC filing fee $ 7,086.40 Nasdaq listing fees 2,000 Printing expenses -0- Legal fees and expenses 5,000 Accounting fees and expenses 500 Transfer agent and registrar fees -0- Miscellaneous expenses -0- ----------- Total $ 14,586.40
All expenses will be borne by AXENT Technologies, Inc. 15. Indemnification of Officers and Directors Section 145 of the Delaware General Corporation Law ("Section 145") permits indemnification of directors, officers, agents and controlling persons of a corporation under certain conditions and subject to certain limitations. The Registrant's Bylaws include provisions to require the Registrant to indemnify its directors and officers to the fullest extent permitted by Section 145, including circumstances in which indemnification is otherwise discretionary. Section 145 also empowers the Registrant to purchase and maintain insurance that protects its officers, directors, employees and agents against any liabilities incurred in connection with their service in such positions. At present, there is no pending litigation or proceeding involving a director or officer of the Registrant as to which indemnification is being sought nor is the Registrant aware of any threatened litigation that may result in claims for indemnification by any officer or director. 16. Exhibits The following exhibits are filed or incorporated by reference, as stated below:
Exhibit Number Description 3.1 (1) Amended and Restated Certificate of Incorporation of AXENT. 3.2 (2) Amended and Restated Bylaws of AXENT. 4.1 (1) Specimen stock certificate for shares of Common Stock of AXENT. 5.1* Opinion of Piper & Marbury L.L.P. 10.1 (1) AXENT's 1991 Amended and Restated Stock Option Plan. 10.2 (3) AXENT's 1996 Amended and Restated Stock Option Plan. 10.3 (3) AXENT's 1996 Amended and Restated Directors' Stock Option Plan. 10.9 (1) Form of Indemnification Agreement between AXENT and its directors and executive officers. 10.11 (1) Lease Agreement dated as of September 6, 1995, by and between Research Grove Associates and AXENT. 10.11A Second Amendment dated September 18, 1998 to Lease Agreement by and between Research Grove Associates and AXENT
10.12 (1) Lease of Real Property dated as of March 7, 1995, by and between TNK Associates and AXENT. 10.17 (4) Memorandum of Understanding regarding certain compensation and severance matters relating to Richard A. Lefebvre, dated July 22, 1997. 10.17A (9) First Amendment to Memorandum of Understanding relating to Richard Lefebvre. 10.21 (1) Exclusive Distributor License Agreement, effective as of December 31, 1995, between AXENT and Raxco Software,Inc. 10.22 (1) Administrative Services Agreement, effective as of December 31, 1995, between AXENT and Raxco Software, Inc. 10.24 (1) Agreement and Plan of Separation, effective as of December 31, 1995, between AXENT and Raxco Software,Inc. 10.29 (3) Amended Agreement and Plan of Merger among AXENT Axquisition, Inc., and AssureNet Pathways, Inc, dated as of January 6, 1997 and amended February 26, 1997. 10.30 (5) AXENT's 1998 Employee Stock Purchase Plan. 10.31 (5) AXENT's 1998 Incentive Stock Plan. 10.32 (5) AXENT's Exchange Option Plan for Optionees of Raptor Systems, Inc. 10.33 (5) Agreement and Plan of Merger among AXENT, Axquisition Two, Inc. and Raptor Systems, Inc. dated as of December 1, 1997. 10.34 (6) AXENT's Executive Severance General Guidelines. 10.35 (6) Lease Agreement dated as of April 23, 1998 by and between Pracvest and AXENT. 10.36 (6) Lease Agreement dated as of May 6, 1997 by and between CC&F Second Avenue Trust and Raptor Systems, Inc. 10.36A(6) First Amendment to Lease dated as of December 15, 1997 by and between CC&F Second Avenue Trust and Raptor Systems, Inc. 10.37 (7) Share Exchange Agreement dated as of March 29, 1999 by and during AXENT and the holders of all of the shares of capital stock, share capital and warranty of CKS Limited. 10.38 (9) Software Product Purchase and License Agreement dated as of March 31, 1999 by and between AXENT and Raxco Software, Inc. 21.1 (8) Subsidiaries of the Registrant. 23.1* Consent of PricewaterhouseCoopers LLP, Independent Auditors. 23.2+ Consent of PricewaterhouseCoopers LLP, Independent Auditors.
- --------------------------------------------------------------------------------------------------------------------------- (1) Previously filed as an exhibit to AXENT's Registration Statement on Form S-1 (File No. 333-01368) and incorporated herein by reference. (2) Previously filed as an exhibit to AXENT's Quarterly Report on Form 10-Q for the Quarter Ended September 30, 1996. (3) Previously filed as an exhibit to AXENT's Registration Statement on Form S-4 (File No. 333-20207) and incorporated herein by reference. (4) Previously filed as an exhibit to AXENT's Quarterly Report on Form 10-Q for the Quarter Ended June 30, 1997. (5) Previously filed as an exhibit to AXENT's Registration Statement on Form S-4 (File No. 444-43265) and incorporated herein by reference. (6) Previously filed as an exhibit to AXENT's Quarterly Report on Form 10-Q for the Quarter Ended September 30, 1998. (7) Previously filed as an exhibit to AXENT's current Report on Form 8-K filed in April 1999 and incorporated herein by reference. (8) Previously filed as an exhibit to AXENT's Annual Report on Form 10-K for the Year Ended December 31, 1998 (File No. 0- 28100) and incorporated herein by reference. (9) Filed previously as an exhibit to AXENT's Quarterly Report on Form 10-Q for the Quarter Ended March 31, 1999. * Filed previously with the initial filing of the Registration Statement. + Filed herewith.
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 of 1933; SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the registrant has duly caused this Amendment No. 1 to the registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Rockville, State of Maryland, on May 18, 1999. AXENT TECHNOLOGIES, INC. * By:________________________ John C. Becker Chief Executive Officer POWER OF ATTORNEY Pursuant to the requirements of the Securities Act of 1933, as amended, this Amendment No. 1 to the registration statement has been signed below by the following persons in the capacities and on the date indicated. Signature Title Date * Chairman of the Board, Chief May 18, 1999 _____________________________ Executive Officer and Director John C. Becker * Vice President, May 18, 1999 ______________________________ Chief Financial Officer and Robert B. Edwards, Jr. Treasurer * Director May 18, 1999 _______________________________ Richard A. Lefebvre
* Director May 18, 1999 _______________________________ Gabriel A. Battista * Director May 18, 1999 ______________________________ John F. Burton * Director May 18, 1999 ______________________________ Timothy A. Davenport *By: /s/ Gary M. Ford ______________________________ Gary M. Ford Attorney-In-Fact
EX-23.2 2 CONSENT OF INDEP ACCOUNTANTS EXHIBIT 23.2 CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in this registration statement of AXENT Technologies, Inc. on Form S-3 of our report, dated January 26, 1999, on our audits of the balance sheets of AXENT Technologies, Inc. as of December 31, 1997 and December 31, 1998, and the related statements of operations, stockholders' equity and cash flows for each of the three years in the period ended December 31, 1998, as included in the Annual Report on Form 10-K of AXENT Technologies, Inc. for the year ended December 31, 1998, which report is incorporated by reference in this registration statement on Form S-3. We also consent to the reference to our firm under the caption "Experts" in this registration statement on Form S-3. PricewaterhouseCoopers LLP Washington, D.C. May 18, 1999 -----END PRIVACY-ENHANCED MESSAGE-----