-----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, UACqiSPcvkAQHC8CsKTX3DhsYEeuJtQBer3t3UTQAg6OGRt1RMRtYhaUGAEFdxvM sE2T5vaOgEoMZYsXXzbV7g== 0000895813-97-000123.txt : 19970512 0000895813-97-000123.hdr.sgml : 19970512 ACCESSION NUMBER: 0000895813-97-000123 CONFORMED SUBMISSION TYPE: POS AM PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19970509 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: DELPHI INFORMATION SYSTEMS INC /DE/ CENTRAL INDEX KEY: 0000814549 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER INTEGRATED SYSTEMS DESIGN [7373] IRS NUMBER: 770021975 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: POS AM SEC ACT: 1933 Act SEC FILE NUMBER: 333-12781 FILM NUMBER: 97599600 BUSINESS ADDRESS: STREET 1: 3501 ALGONQUIN RD STREET 2: STE 500 CITY: ROLLING MEADOWS STATE: IL ZIP: 60008 BUSINESS PHONE: 7085063100 MAIL ADDRESS: STREET 1: 3501ALGOUQUIN ROAD CITY: ROLLING MEADOWS STATE: IL ZIP: 60008 POS AM 1 File No. 333-12781 --------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION ----------------------- POST-EFFECTIVE AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ----------------------- DELPHI INFORMATION SYSTEMS, INC. (Exact name of registrant as specified in its charter) Delaware 77-0021975 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 3501 Algonquin Road, Suite 500 Rolling Meadows, Illinois 60008 (847)506-3100 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) --------------------------------------------------------------------- 28,321,060 Shares DELPHI INFORMATION SYSTEMS, INC. Common Stock Par Value $.10 Per Share ------------------------ This prospectus relates to the resale by certain stockholders (the "Selling Stockholders") of up to 10,990,560 shares (the "Resale Shares") of Common Stock, par value $.10 per share (the "Common Stock"), which currently are outstanding, the original issuance of up to 16,330,500 shares (the "Redeemable Warrant Shares") of Common Stock issuable on exercise of Redeemable Warrants (the "Redeemable Warrants"), and the original issuance of up to 1,000,000 shares (the "Agent Warrant Shares," and together with the Resale Shares and the Warrant Shares, the "Shares") of Common Stock issuable upon exercise of warrants issued to the Company's placement agent in a private placement (the "Agent Warrant," and together with the Redeemable Warrant, the "Warrants"). Each Redeemable Warrant allows the holder to purchase one share of Common Stock at an exercise price of $1.50 per share. Each Agent Warrant allows the holder to purchase one share of Common Stock at an exercise price of $1.00 per share. The Company will not receive any of the proceeds from the sales of the Resale Shares, but will receive the entire exercise price upon exercise of the Warrants. The offering price for sales of Resale Shares will be established by the holders of those Shares as they see fit. The exercise price for the Warrants were established at the time of their issuance. The total expenses of this registration (excluding commissions, if any) are estimated at $35,000. The Company will pay all such expenses. The Common Stock is traded on the NASDAQ SmallCap Market under the symbol "DLPH." The closing market price of the Common Stock on May 7, 1997, was $1-1/16. The shares are highly speculative, involve a high degree of risk and should be purchased only by persons who can afford the loss of their entire investment. Prospective purchasers of the Shares should carefully consider the factors set forth under "Risk Factors," as set forth on pages 3 through 7. No dealer, salesman or other person has been authorized to give any information or to make any representations other than those contained in this Prospectus, and, if given or made, such information or representations must not be relied upon as having been authorized by the Company or the Selling Stockholders. This Prospectus does not constitute an offer to sell, or a solicitation of an offer to buy, any of the securities covered by this Prospectus in any state to any person to whom it is unlawful to make such offer or solicitation. Neither the delivery of this Prospectus nor any sale made hereunder shall, under any circumstances, create any implication that there has been no change in the facts herein set forth since the date hereof; however, in the event of any material adverse or fundamental change, this Prospectus will be amended or supplemented to reflect such change. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ----------------------- The date of this Prospectus is May 7, 1997. TABLE OF CONTENTS Page AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . . . 1 ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . 1 COMPANY REPORTS TO SHAREHOLDERS . . . . . . . . . . . . . . . . . 1 INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE . . . . . . . . . 1 SUMMARY INFORMATION . . . . . . . . . . . . . . . . . . . . . . . 2 THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 THE OFFERING . . . . . . . . . . . . . . . . . . . . . . . . . . 3 RISK FACTORS . . . . . . . . . . . . . . . . . . . . . . . . . . 5 THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . 11 DETERMINATION OF OFFERING PRICE . . . . . . . . . . . . . . . . . 11 DILUTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 PLAN OF DISTRIBUTION . . . . . . . . . . . . . . . . . . . . . . 13 DESCRIPTION OF CAPITAL STOCK . . . . . . . . . . . . . . . . . . 16 RECENT EVENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 19 LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . . 20 EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 TRADEMARKS . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 AVAILABLE INFORMATION The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files annual, quarterly and other reports and other information with the Commission. The reports and other information filed by the Company may be inspected and copied at the public reference facilities maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549; 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and 7 World Trade Center, Suite 1300, New York, New York 10048, and copies of this material may be obtained from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. ADDITIONAL INFORMATION The Company has filed with the Commission in Washington, D.C., a Registration Statement under the Securities Act of 1933 relating to the Shares offered hereby. This Prospectus, which is part of the Registration Statement, does not contain all the information set forth in the Registration Statement, certain items of which are contained in exhibits and schedules thereto. For further information with respect to the Company and the Shares, reference is hereby made to such Registration Statement, exhibits and schedules. Statements contained in this Prospectus as to the contents of any contract or any other document are not necessarily complete and, in each such instance, reference is made to the copy of such contract or document filed as an exhibit to the Registration Statement, each such statement being qualified by such reference. Copies of the Registration Statement, together with exhibits and schedules thereto, may be inspected without charge at the Commission's principal office in Washington, D.C., and copies of it or any part thereof may be obtained from that office upon payment of prescribed charges. COMPANY REPORTS TO SHAREHOLDERS The Company intends to provide stockholders with quarterly reports, including unaudited financial statements, regarding the status and results of operations of the Company. Annual audited financial statements and proxy statements will be provided within a reasonable time after the Company's fiscal year end. It is the Company's intent to hold annual meetings of shareholders generally within six months following the end of its fiscal year. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents heretofore filed by the Company under the Exchange Act with the Commission are incorporated herein by reference: (i) the Company's Annual Report on Form 10-K for the fiscal years ended March 31, 1996 and 1995; (ii) the Company's Quarterly Report on Form 10-Q for the fiscal quarters ended December 31, 1996, September 30, 1996, and June 30, 1996; and (iii) the description of the Common Stock contained in Company's Registration Statement filed pursuant to Section 12 of the Exchange Act and any amendments and reports filed for the purpose of updating that description. All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to the termination of the offering of the Shares made hereby shall be deemed to be incorporated in this Prospectus by reference and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document, as the case may be, which also is or is deemed to be incorporated by reference herein, modifies or supersedes such statement. Any such statements so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company will provide without charge to each person to whom this Prospectus has been delivered, on the written or oral request of such person, a copy of any or all of the documents (without exhibits) incorporated by reference into this Prospectus. Requests for such copies should be directed to Delphi Information Systems, Inc., Attention: Corporate Secretary, 3501 Algonquin Road, Suite 500, Rolling Meadows, Illinois 60008, telephone (847) 506-3100. SUMMARY INFORMATION The following summary is qualified in its entirety by the more detailed information and financial statements appearing elsewhere in this Prospectus. THE COMPANY Delphi is a leading provider of business application software and services for independent property and casualty insurance agencies, brokerages, managing general agents and insurance companies in the United States and Canada. Delphi develops, markets and supports software products that automate the operations of independent agents. The Company also has developed and markets an application system that integrates its application software products with other database products to help its customers manager their information needs. In the recent past that Company's management has focused its efforts on restructuring its organization and re-defining its product strategy. The Company's strategy is to expand its product offering from primarily agency automation software products to transaction based outsourcing services. The Company believes that this strategy will reduce the overall cost of producing and marketing insurance products. -2- The Company's customer list includes a majority of the largest 100 brokerages and top 200 agencies in the United Stated and Canada, thereby providing a base for the introduction of new products and services. The Company's software operates on approximately 75,000 workstations and terminals at more than 4,500 customer sites representing approximately two-thirds of all workstations and terminals installed in independent agencies. The Company is an IBM Industry Remarketer (IR) and markets systems that operate on the UNIX-based IBM RISC System/6000, IBM AS/400, and SCO UNIX-based microcomputer hardware platforms. The Company also supports earlier versions of its software that operate on Wang and other IBM hardware platforms. THE OFFERING Securities Offered Up to 10,990,560 Shares of Common Stock held by the Selling Shareholders and up to 17,330,500 Shares of Common Stock issuable upon exercise of Warrants. Terms of Redeemable Warrants Exercisable to purchase Common Stock until April 19, 1999, in the case of Redeemable Warrants issued in 1996, and January 16, 2000, in the case of Redeemable Warrants issued in 1997, at an exercise price of $1.50 per share. See "Description of Capital Stock-Redeemable Warrants." Redemption of Redeemable Warrants Redeemable at the option of the Company at a price of $.01 per share of Common Stock that is then purchasable at the present time (in the case of 1996 issuances) and at any time after July 16, 1997 (in the case of 1997 issuances), if the closing bid price for the Common Stock is above $2.00 per share for 20 consecutive trading days. See "Description of Securities-Redeemable Warrants." -3- Terms of Agent Warrants Exercisable to purchase Common Stock until May 1, 2000, at an exercise price of $1.00 per share. The Agent Warrants are not redeemable at the option of the Company. See "Description of Capital Stock - Other Warrants." Use of Proceeds The Company will not receive any of the proceeds from the sales of Resale Shares. The Company has not made any decision with respect to the use of the proceeds from sales of Warrant Shares. Risk Factors The Share are a highly speculative investment. See "Risk Factors." -4- RISK FACTORS THE SHARES ARE HIGHLY SPECULATIVE, INVOLVE A HIGH DEGREE OF RISK AND SHOULD BE PURCHASED ONLY BY PERSONS WHO CAN AFFORD THE LOSS OF THEIR ENTIRE INVESTMENT. PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS AS WELL AS ALL OF THE OTHER MATTERS SET FORTH ELSEWHERE IN THIS PROSPECTUS BEFORE PURCHASING ANY OF THE SHARES. The Company's operations are subject to a number of risks, some of which are summarized below. Accordingly, in addition to the other information in this Prospectus, the following factors should be considered carefully in evaluating an investment in the Shares: Operating Losses and Declining Revenues The Company had an accumulated deficit of $40.8 million as of December 31, 1996. This deficit reflects significant operating losses by the Company over an extended period of time. There can be no assurances that the Company will regain profitability. The Company has experienced losses in each of its last three years and in the first two quarters of the current fiscal year. The Company attributes these losses primarily to a soft market, or possibly a changed market, for insurance agency automation equipment by reason of the relatively lower profitability of independent agencies during the last several years as compared with earlier periods, industry-wide consolidation and customer dissatisfaction with certain products and their concern regarding the Company's financial condition. The Company has taken steps to reduce costs, strengthen its management and improve its product offering so as to be in a position to achieve profitability as market conditions improve, but no assurances can be given that those steps will be successful and help the Company achieve profitability. The Company cannot survive continued operating losses indefinitely, and consequently, may be forced to raise additional funds or further restructure its business. Also, see "Risk Factors Potential Accounts Receivable Writedown." Dependence Upon Raising Additional Capital As of December 31, 1996, the Company had a deficiency of approximately $8.1 million in working capital. The Company recently has raised approximately $5.6 million in a private placement of Common Stock and Redeemable Warrants. The Company may need additional financing. There can be no assurances, however, that any equity or debt financing required for working capital needs or to repay indebtedness will be available or that, even if available, such financing will be on terms favorable to the Company and its stockholders or will not be dilative to existing stockholders. -5- Acquisitions The Company completed one substantial acquisition and three smaller acquisitions during fiscal 1993, completed one substantial acquisition and one smaller acquisition during fiscal 1994 and completed one smaller acquisition during fiscal 1997. These seven acquisitions have not been fully integrated with the Company's other operations and there can be no assurances as to the success of the integration process. As a result, efforts to continue to attempt to integrate these acquisitions may involve significant charges to earnings. Future Acquisitions The Company expects to make future acquisitions of complementary businesses. Acquisitions involve numerous risks, including difficulties in the integration of business operations, accounting and financial systems and product offerings of the acquired companies, the diversion of management's attention from other business concerns, risks of entering markets in which the Company has no or limited direct prior experience, and potential loss of key employees of the acquired company. There can be no assurances as to the successfulness of future acquisitions. The Company may be required to obtain new financing for any acquisitions, which could involve the issuance of substantial additional equity or debt. The issuance of additional equity, or debt or other securities convertible into equity, could result in substantial dilution to present investors. Acceptance of Superbroker Concept A critical component of the Company's strategy and future profitability is the funding and introduction of cd.superbroker, a suite of products and services tailored to large, service-oriented insurance distribution intermediaries. There can be no assurance of the funding, acceptance, and successful introduction of such products. Acceptance of Outsourcing Concept Historically, independent agencies have not outsourced their computer and other processing needs to third parties. A critical component of the Company's strategy and its future profitability is the introduction of substantial outsourcing products that do not currently exist and the acceptance of outsourcing by independent agencies. There can be no assurances that this acceptance will occur. Completion of cd.connect A critical component of the Company's strategy and future profitability is the successful release of cd.connect, Delphi's work flow and transmission product. There can be no assurances of successful completion or industry acceptance of cd.connect. -6- New Product Development and Changing Business Strategy The industry in which the Company competes is characterized by rapid technological change. The Company's success and profitability will be dependent on its ability to develop a new application system product which is compatible with its existing products as well as its ability to strategically shift its business from selling computer hardware and application software to becoming a provider of outsourced processing services. In addition, the Company continually must develop product enhancements and new products modules that keep pace with continuing changes in computer hardware and software technology and satisfy the needs of its customers. The Company is developing a new application system, Common Delphi, which is currently in beta testing. To a significant extent, the Company's future operating results will be dependent upon the success of this product. While the Company has identified several of the outsourcing services that it intends to provide, none of these service offerings has been developed or is ready for marketing. There can be no assurances that the Company will be successful in adequately addressing changing technologies, that it can introduce services and products to the marketplace on a timely basis, or that its new services and new or enhanced products will be successful in the marketplace. Any failure to successfully introduce such services and products will materially impact the Company's existing business and its future profitability. Potential Accounts Receivable Writedown Compared to historical levels, the portion of the Company's accounts receivable that have been outstanding for 120 days or more is high, and as of December 31, 1996 was approximately 22% of the Company's $5.4 million net accounts receivable balance. At least a portion of this amount is attributable to customer dissatisfaction with recently introduced software versions, and the Company's ability to collect these accounts receivable will be dependent upon the Company successfully solving the installation and other problems that led to the customer dissatisfaction. Should the Company be unable to satisfy these customer concerns, a portion or all of these amounts may have to be written off which would adversely affect future profitability. Variability of Quarterly Results The Company's revenues fluctuate from quarter to quarter depending upon, among other things, such factors as overall trends in the economy, new product introductions by the Company and by other software vendors, and customer buying patterns. Because the Company typically ships systems within a short period after the orders are received and therefore maintains a relatively small backlog, any weakening in customer demand can have an almost immediate adverse impact on revenues and operating results. Moreover, a substantial portion of the revenues for each quarter is attributable to a limited number of orders and tends to be realized towards the end of the -7- quarter. Thus, even short delays or deferrals of sales near the end of a quarter can cause quarterly revenues to fluctuate substantially. These factors are intrinsic to the Company's industry and business and are likely to continue in the future. As a result, quarter to quarter variations in the Company's business may or may not be suggestive of future results. Third Party Software Dispute The Company's products utilize the PFXplus software products, developed by and licensed from an Australian company, Powerflex Corporation Pty Ltd. On February 9, 1996 an Australian Federal court held that the DataFlex programming language of Data Access Corporation, a competitor of Powerflex, was both copyrightable and infringed by Powerflex's use in and development of the PFXplus products. The Company is not a party in this action. Powerflex indicates it will likely appeal the decision once the Australian court enters final orders. There is uncertainty as to the scope and extent of the orders which will be entered in Australia, and whether and to what extent the orders, decision and underlying issues may ultimately affect the Company's continued rights to use PFXplus in the U.S. or elsewhere. The Company is attempting to clarify its position through negotiations, and is reviewing an existing license with Data Access for an earlier version of DataFlex to assess what rights it may provide to the Company as to PFXplus. If the orders entered in Australia negatively impact the Company's PFXplus license rights or if Data Access is able to establish similar rights in the U.S., and if the Company's existing Data Access license does not cover its PFXplus use, the Company could be required to negotiate a new license with Data Access, or to stop using the PFXplus products. If that occurs, the Company could have to incur substantial costs, for which recovery under existing indemnification provisions may not be available, in order to redesign its line of products. Dependence on Insurance Industry Virtually all of the Company's products and services are directed to the property and casualty insurance industry, primarily to independent agencies within that industry. The property and casualty insurance industry has been subject to significant fluctuations in product demand and pricing. This industry currently is viewed as being in a soft market, and it is impossible to predict when conditions will improve. One consequence of a soft market is that the revenues of independent agencies are down and, correspondingly, their ability to purchase new or improved software products is reduced. If this soft market continues, it will most likely negatively affect the Company's revenues and operating profits. Competition The market for automation systems for independent agents is highly competitive and rapidly changing. Recently, the Company's two -8- largest competitors, Agena and AMS, merged and have aggressively increased their marketing efforts, particularly those focused on the Company and its products, and have substantially greater financial, marketing and technical resources than the Company. Counter balancing this to some extent is that the insurance companies that are not owners of Agena/AMS are increasingly interested in ensuring that an independent source for software exists. Proprietary Rights The Company regards its applications software as proprietary and attempts to protect it with copyrights, trade secret laws and restrictions on disclosure and transferring title. Despite these precautions, it may be possible for third parties to copy aspects of the Company's products or to obtain and use information the Company regards as proprietary without authorization. Computer software generally is not patented, and existing copyright laws afford only limited practical protection. Any inability to protect or enforce the Company's proprietary rights could have a materially adverse effect on the Company. Dependence on Qualified Personnel The Company's success depends on retaining the services of its current management, software and other technical, sales and other personnel and on its ability to continue to attract and retain qualified employees. Competition for such qualified personnel is intense. Although the Company provides incentives to retain its employees, most personnel are employed at will and there can be no assurances that the Company will be able to retain its employees or attract new qualified personnel if required. Several of the Company's senior managers left during the past year, including its chief financial officer and chief executive officer (see "Recent Events"), and it has had to replace most of those managers. The Company's success in the future will be dependent upon the skills of the new managers. Shares Held by Directors and Officers; Charter Provisions The directors and executive officers of the Company own or control Common Stock or Common Stock equivalents (options, warrants and convertible securities) equal to approximately 21% of Common Stock. The voting power represented by those shares might enable the holders to determine whether various proposals submitted to stockholders (including possible proposals to acquire the Company) are adopted or defeated. The views of such holders on the desirability of such proposals might not coincide with those of other stockholders. Certain charter provisions could have the effect of delaying or preventing a change in control of the Company. See "Description of Capital Stock." In addition, the Company's charter eliminates the personal monetary liability of its directors for breach of their duty of care. -9- Market for Common Stock and Listing Requirements The Common Stock is traded on the Nasdaq SmallCap Market. Trading volume is relatively small, averaging about 1,000,000 shares per month during fiscal 1996. The lack of a more liquid market may prevent holders of Common Stock from disposing of their shares without depressing the price offered in the market. There are various requirements for the maintenance of a Nasdaq SmallCap Market listing, including a minimum capital and surplus of $1 million ($2 million in the event that the shares trade at less than $1.00 per share). The Company's capital and surplus was approximately $2.7 million as of December 31, 1996, although it recently has increased as a result of a private placement of securities. Nasdaq recently has announced its intent to increase these listing requirements by 50%. It is unclear whether or when this change will be implemented. Shares Eligible for Future Sale The Common Stock that potentially may be offered in the market is substantial in relation to the Company's historical trading volume. In addition to the 28,321,060 shares offered hereby, 5,630,500 shares recently were issued in a private placement. Finally, there were outstanding at April 30, 1997, options and warrants, other than the Warrants, then exercisable to purchase approximately 1.0 million shares of Common Stock at prices below the market price of the Common Stock on the date of this Prospectus. The Company's optionees historically have sold all or a part of their optioned shares promptly after exercise. Dilution Purchasers of the Warrant Shares offered hereby will experience immediate and substantial dilution in net tangible book value of the Common Stock. Additional dilution could result from future financings or the issuance of stock options. See "Dilution." No Dividends No dividends have been paid on the Common Stock of the Company. The Company does not intend to pay cash dividends on its Common Stock in the foreseeable future, and anticipates that profits, if any, received from operations will be devoted to the Company's future operations. In addition the payment of dividends by the Company is prohibited by the terms of its credit facility. Any decision to pay dividends will depend upon the Company's profitability at the time, cash available therefor, and other relevant factors. Investors who anticipate a need for immediate income from their investment should not purchase the Shares offered hereby. -10- THE COMPANY Delphi is a leading provider of business application software and services for independent property and casualty insurance agencies, brokerages, managing general agents and insurance companies in North America. Delphi develops, markets and supports software products that automate the operations of independent agents. The Company also has developed and markets an application system that integrates its application software products with other database products to help its customers manage their information needs. For fifteen years Delphi has provided application software solutions to large property and casualty agencies. In 1990, to meet the changing industry dynamics, Delphi began pursuing a strategy of obtaining market share through the acquisition of other application software businesses. As a result of these acquisitions Delphi believes that it has a preeminent market position in the independent property and casualty insurance agency/broker market. Delphi's customer list includes a majority of the largest 100 brokerages and top 200 agencies in the United States and Canada, and provides a base for the introduction of new products and services. Delphi's software operates on approximately 75,000 workstations and terminals at more than 4,500 customer sites representing approximately two-thirds of all workstations and terminals installed in independent agencies. Delphi Systems, Inc., a California corporation, was founded in 1976. In 1983, the Company was formed and acquired all of the outstanding shares of Delphi Systems, Inc. in an exchange offer. In June 1987, Delphi Systems, Inc. was merged with and into the Company. The Company's executive offices are located at 3501 Algonquin Road, Suite 500, Rolling Meadows, Illinois 60008. Its telephone number is (847) 506-3100. USE OF PROCEEDS The Company will not receive any of the proceeds from the sales of Resale Shares. The Company has not made any decision with respect to the use of the proceeds from the sales of Warrant Shares (approximately $28.2 million (net of expenses of $35,000) if all Warrants are exercised). In all likelihood, the Company will use the proceeds to fund research and development and investments in complementary businesses and to improve the Company's liquidity. Pending utilization of the net proceeds as specified below, the Company may invest such proceeds in short-term investment grade interest-bearing investments. DETERMINATION OF OFFERING PRICE The offering price for sales of Resale Shares will be established by the holders of those shares as they see fit. The exercise price of -11- the Warrants was negotiated between the Company and the placement agent for the original Redeemable Warrants on an arms' length basis. DILUTION The Company had negative tangible net book value of approximately $5,867,000 at December 31, 1996, although it subsequently raised approximately $5.6 million in a private placement. Purchasers of Warrant Shares and in all likelihood purchasers of Resale Shares will suffer immediate and substantial dilution. -12- PLAN OF DISTRIBUTION The Resale Shares may be offered for sale at such times, in such manner and at such prices as the Selling Stockholders see fit. The Selling Stockholders currently consist of the individuals listed with respect to the indicated number of shares (which, except as noted, are believed to be all of the shares owned by such individuals). Substantially all of the Selling Stockholders have Redeemable Warrants for approximately the same number of Shares as are being offered hereby, except for Coral Partners II, which holds Redeemable Warrants for only 1,000,000 Shares. Except as noted, no Selling Shareholder is believed to own in excess of 1% of the Company's outstanding Common Stock.
Floyd & Andrea Adelman Trust 25,000 Larry A. Katz. 100,000 Auer & Co. FBO The Perkins 1,400,000 Paul Kelly 50,000 Opportunity Fund (owns 150,000 additional shares)(3.9%) Craig C. Avery 320,000 Irvin Kessler 200,000 Robert Ayres 25,000 David D. Koentopf 25,000 Amy Baratz Rev. Trust DTD 25,000 Daniel Koorbusch 50,000 9/7/94 Stanford Barantz or Amy Baratz Trustees Bay Area Micro-Cap Fund, L.P. 700,000 George S. Lalich 12,500 Bear Stearns 165,000 Steven Z. Lange 12,500 Douglas A. Becker 50,000 Robert Levine 25,000 Fred Boos 30,000 Mark T. Lindee 75,000 Michael Brandt 25,000 Paul S. Listol 75,000 Brinson Relationship Funds on 520,000 Kim J. Loftsqaarden 25,000 behalf of the Brinson Post Venture Fund series (owns 50,000 additional shares) (1.4%) Leland T. Lynch 50,000 Steve Bruggeman 25,000 Timothy McDonald, IRA 25,000 Tom McLean 25,000 Paul S. and Irene M. Burke 25,000 McLean Profit Sharing Plan, 50,000 Charitable Remainder Unitrust Tom, Richfield Bank & Trust under agreement dated September 3, 1992 (the "Unitrust") -13- C&F Investment Club 12,000 Susan M. Michaletz 25,000 Randal S. Carlock 100,000 John C. Miller 50,000 Carousel Investments Inc. 160,000 Jon L. Miller 50,000 Joseph Carty, IRA, US Clearing 10,000 Nicolle Mills Trust 20,000 Corp Trustee B.J. Cassin Conservator for 49,990 Wayne W. Mills 125,000 Robert Cassin Brendan Joseph and Isabel B. 70,000 Wayne W. Mills, IRA, First 50,000 Cassin, Trustees of the Cassin Trust Natl FBO Family Trust U/D/T dated 1/31/96 B.J. Cassin, Trustee Paul Cervoni 5,000 Michael T. Mulligan 25,000 Robert A. Cervoni. US Clearing 15,000 Okabena Partnership K (3.3%) 1,200,000 Corp. Trustee IRA Christianson Investment Company 200,000 Jann L. Olsten 50,000 Chris Chrysanthis, IRA 25,000 William J. O'Neill 25,000 Circle F Ventures, LLC (1.9%) * 700,000 Daniel S. Perkins TTE U/A DTD 100,000 5/12/88 FBO Daniel S. Perkins Clarion Capital Corporation 350,000 Daniel S. and Patrice M. 100,000 Perkins JT WROS Clearwater Ventures 26,000 Patrice M. Perkins TR U/A DTD 50,000 5/12/88 FBO Patrice M. Perkins Coral Partners II (14.9%)** 5,413,115 James Pfleider 50,000 Cove Investments, L.P. 176,000 Pyramid Partners, L.P. 250,000 Audrey E. Cox 100,000 Dale Ragan 200,000 Barbara M. Daly 50,000 Ernest C. Roberg 50,000 Robert J. Dondelinger 60,000 Roy & Ruth Rogers Unit Trust 150,000 Robert J. Dworsky 60,000 Rogers Family Trust 300,000 Joseph J. Eibensteiner 25,000 Joseph J. Eibensteiner 25,000 Gerardo Rosenkranz 50,000 Ellis Family Limited 50,000 Raymond D. Rossini (owns 10,000 75,000 Partnership additional shares) Robert and Dolores Engelstad 25,000 Douglas E. Schmidt 25,000 -14- Richard H. Enrico 90,000 Kenneth A. and Margaet M. 100,000 Schweiger Trustees under a Trust dated March 24, 1981 Robert A. Epstein 250,000 Seaport Partners 15,000 FFS 109 Partnership (Family 496,750 Mark W., Sheila E. Siewert 25,000 Financial Strategies, Inc.)(1.4%) Claudio Fabrizi,IRA 10,000 Barry Small IRA 25,000 Rita Fabrizi, IRA 10,000 Gerard Smith IRA 20,000 Hayden R. and LaDonna M. 50,000 George W. and Joan A. Snow 25,000 Fleming Revocable Trust* Efi Gildor 250,000 John Tsatsos 25,000 Paul Ginther 15,000 Norris Thune 25,000 Glenbrook Partners, LP 24,000 Twin City Carpenters Pension 150,000 Fund Jacob Goldfield 200,000 Dean Verdocs 20,000 Randall A. Green 25,000 David Voxland 50,000 Patricia M. Haage 50,000 Frederick O. Watson Trust 25,000 Brennan Hayek 150,000 John D. Weeden, TTEE UA 9/7/93 50,000 FBO John D. Weeden Kenneth B. Heithoff 50,000 John D. Weeden, TR UA 9/7/93 50,000 FBO John D Weeden Kenneth Alan Hilgenberg 12,500 Richard F. Wulff, Trust 25,000 Bradley C. Hort 30,000 Wyncrest Capital, Inc. 100,000 Industricorp & Co. 150,000 David C. Johnston 25,500
* The Flemings and Circle F Ventures, LLC are associates of each other. **Mr. Yuval Almog, a director of the Company, is a general partner of Coral Partners II. -15- The Warrant Shares may be purchased from the Company (a) for $1.50 per share by the holders of the Redeemable Warrants at their election at any time until April 19, 1999, in the case of Redeemable Warrants issued in 1996, and January 16, 2000, in the case of Redeemable Warrants issued in 1997, and until that time are subject to redemption, and (b) for $1.00 per share by holders of the Agent Warrants at their election at any time until May 1, 2001. See "Description of Capital Stock." DESCRIPTION OF CAPITAL STOCK The Company's authorized capital stock consists of 75,000,000 shares of Common Stock and 2,000,000 shares of Preferred Stock, par value $.10 per share ("Preferred Stock"). As of September 30, 1996, the Company had 221 shares of Preferred Stock issued and outstanding. Common Stock Holders of Common Stock of the Company are entitled to one vote for each share held of record. The holders of Common Stock are entitled to receive such dividends, if any, as may be declared from time to time by the Board of Directors in its discretion from funds legally available therefor and subject to any prior dividend rights of the holders of Preferred Stock. Holders of Common Stock do not have cumulative voting rights in connection with the election of directors. In the event of liquidation, dissolution, or winding up, holders of the Company's Common Stock are entitled to share ratably among themselves in all assets of the Company legally available for distribution. The Common Stock has no preemptive or subscription rights, and there are no conversion or redemption rights with respect to such shares. Each share of Common Stock is fully paid and nonassessable. As of April 30, 1997, there were 36,351,168 shares of Common Stock issued and outstanding. Redeemable Warrants As of April 30, 1997, the Company had Redeemable Warrants outstanding to purchase an aggregate of 16,330,500 shares of Common Stock. Exercise Price and Terms. Each Redeemable Warrant entitles the registered holder to purchase one share of Common Stock at a price equal to $1.50 per share subject to adjustment in accordance with the anti-dilution and other provisions described below. The registered holder of any Redeemable Warrant may exercise such Redeemable Warrant by surrendering the certificate representing the Redeemable Warrant to the Company at its principal executive offices, with the subscription form attached to the Redeemable Warrant properly completed and executed, together with payment of the exercise price. Each registered holder's Redeemable Warrants may be exercised at any time or from time to time in whole or in part at the applicable exercise price until expiration of the Redeemable Warrants on April 19, 1999, -16- in the case of Redeemable Warrants issued in 1996, and January 16, 2000, in the case of Redeemable Warrants issued in 1997. Redemption. The Company can redeem the Redeemable Warrants at a redemption price of $.01 per share of Common Stock that is then purchasable at the present time (in the case of the 1996 issuances) and at any time after July 16, 1997 (in the case of the 1997 issuances), if the closing bid price for the Common Stock is above $2.00 per share for 20 consecutive trading days subsequent to when the Redeemable Warrants first are redeemable. Adjustments. The exercise price and the number of shares of Common Stock issuable upon the exercise of Redeemable Warrants are subject to adjustment upon the occurrence of certain events, including stock dividends, stock splits, combinations or similar capital events affecting the Common Stock. Adjustment would also be made in the event of a merger or statutory stock exchange in order to enable holders of Redeemable Warrants to acquire, upon subsequent exercise, the same securities or property that would have been acquired had the Redeemable Warrants been exercised immediately prior to any such capital event. In the event of any capital event or series of capital events that otherwise would require an increase or change in the kind of securities or property issuable upon exercise of a Redeemable Warrant or a decrease in the exercise price of a Redeemable Warrant, no adjustment shall be made unless and until such increase or decrease, respectively, exceeds 5%. No adjustment shall be made for dividends, other than stock dividends, payable on the Common Stock. Transfer, Exchange and Exercise. The Redeemable Warrants are in registered form and may be presented to the Company for transfer, exchange or exercise at any time on or prior to their expiration dates. After the expiration date, all Redeemable Warrants shall become wholly void and of no value. If the Company is unable to qualify the Warrant Stock for sale in particular states, holders of Redeemable Warrants residing in such states will not be able to exercise their Redeemable Warrants, and will have no choice but to sell their Warrants or allow them to expire. The Company currently does not intend to register the Redeemable Warrants under the Act or any state securities laws. It is unlikely that a market for the Redeemable Warrants will develop or continue. Other Warrants In connection with a 1996 private placement, the Company issued to the placement agent a warrant to purchase at an exercise price of $1.00 per share, 1,000,000 shares of Common Stock. The Agent Warrant expires May 1, 2001. The Agent Warrant is not subject to redemption but otherwise is subject to substantially the same terms and conditions as the Redeemable Warrants. -17- The Company has other warrants that currently are outstanding. See footnote 12 to the Company's financial statements for its fiscal year ended March 31, 1996. Shares Eligible for Future Sale As of April 30, 1997, the Company had outstanding 36,351,168 shares of Common Stock, not including shares of Common Stock issuable upon exercise of the Redeemable Warrants, the Agent Warrant, outstanding options, or other warrants. Of these outstanding shares, approximately 13.9 million shares of Common Stock are believed to be freely tradable without restriction or registration under the Act. In addition, approximately 4.7 million shares are believed to be held by "affiliates" of the Company (as that term is defined in the rules and regulations under the Act). These may be sold only pursuant to a registration under the Act or pursuant to an exemption from registration under the Act, including the exemption provided by Rule 144 adopted under the Act. Approximately 26.5 million (including the 4.7. million) shares of Common Stock are believed to be "restricted securities" as that term is defined in Rule 144 under the Act ("Restricted Securities") and may not be sold unless such sale is registered under the Act (e.g., pursuant to this Prospectus), or is made pursuant to an exemption from registration under the Act, including the exemption provided by Rule 144. A substantial portion of the restricted securities are being registered for resale pursuant to the registration statement of which this Prospectus is a part. In general, under Rule 144 as currently in effect, a stockholder (or stockholders whose shares are aggregated) who has beneficially owned any Restricted Securities for at least two years (including a stockholder who may be deemed to be an affiliate of the Company), will be entitled to sell, within any three-month period, that number of shares that does not exceed the greater of (i) 1% of the then outstanding shares of Common stock or (ii) the average weekly trading volume of the Common Stock during the four calendar weeks preceding the date on which notice of such sale is given to the Securities and Exchange Commission, provided certain public information, manner of sale and notice requirements are satisfied. A stockholder who is deemed to be an affiliate of the Company, including members of the Board of Directors and senior management of the Company, will still need to comply with the restrictions and requirements of Rule 144, other than the two-year holding period requirement, in order to sell shares of Common Stock that are not Restricted Securities, unless such sale is registered under the Act. A stockholder (or stockholders whose shares are aggregated) who is deemed not to have been an affiliate of the Company at any time during the 90 days preceding a sale by such stockholder, and who has beneficially owned Restricted Securities for at least three years, will be entitled to sell such shares under Rule 144 without regard to the volume limitations described above. -18- Delaware Anti-Takeover Laws The Company is subject to Section 203 of the Delaware General Corporation Law ("DGCL"), which prevents an "interested stockholder" (defined in Section 203, generally, as a person owning 15% or more of a corporation's outstanding voting stock) from engaging in a "business combination" with a publicly-held Delaware corporation for three years following the date such person became an interested stockholder, unless: (i) before such person became an interested stockholder, the board of directors of the corporation approved the transaction in which the interested stockholder became an interested stockholder or approved the business combination; (ii) upon consummation of the transaction that resulted in the interested stockholder's becoming an interested stockholder, the interested stockholder owns at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced (subject to certain exceptions); or (iii) following the transaction in which such person became an interested stockholder, the business combination is approved by the board of directors of the corporation and authorized at a meeting of stockholders by the affirmative vote of the holders of 66% of the outstanding voting stock of the corporation not owned by the interested stockholder. A "business combination" includes mergers, stock or asset sales and other transactions resulting in a financial benefit to the interested stockholder. The provisions of Section 203 of the DGCL could have the effect of delaying, deferring or preventing a change in control of the Company. Transfer Agent and Registrar The transfer agent and registrar for the Common Stock is ChaseMellon Shareholder Services. RECENT EVENTS Private Placement Offering In May 1996, the Company completed a private placement offering providing gross proceeds of $10,700,000 to the Company. Under the terms of the private placement, the Company issued 10,700,000 units (each, a "Unit") at a price of $1.00 per Unit, each Unit consisting of one share of common stock and a redeemable warrant to purchase one share of common stock at an exercise price of $1.50 per share, subject to certain anti-dilution adjustments. The shares and redeemable warrants comprising the Units are immediately detachable and separately transferable. In January 1997, the Company completed a private placement offering providing gross proceeds of $5,630,500 in exchange for 5,630,500 Units. -19- Preferred Stock and Note Conversion In conjunction with the 1996 private placement, the Company converted all outstanding shares of Series C Preferred Stock, 16,135 of the 16,356 outstanding shares of Series D Preferred Stock, and all of the outstanding shares of Series E Preferred Stock into 8,697,594 shares of common stock, and all outstanding Subordinated Convertible Notes into 1,500,000 Units. President and Chief Executive Officer On August 26, 1996, the Company announced the resignation of M. Denis Connaghan, the President and Chief Executive Officer of the Company. He will remain as a Director of the Company and may provide consulting services to the Company in the future. The Company has instituted a search process to fill the position of Chief Executive Officer. Restructuring On August 29, 1996, the Company implemented a significant downsizing program. As a part of the downsizing, the Company reduced its work force by one-third. The Company believes that this downsizing will effect a substantial reduction in costs and will assist it in its attempt to achieve profitability. LEGAL MATTERS Certain legal matters in connection with the Common Stock being registered hereby are being passed upon for the Company by Schiff Hardin & Waite, Chicago, Illinois. EXPERTS The financial statements of the Company incorporated by reference in this Prospectus to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1996, have been audited by Arthur Andersen LLP, independent public accountants, as indicated in their report with respect thereto, and are incorporated by reference herein in reliance upon the authority of said firm as experts in accounting and auditing in giving said report. -20- TRADEMARKS Certain product names mentioned in this Prospectus are trademarks of other corporations. UNIX is a registered trademark of Unix System Laboratories, Inc. RISC System/6000 and AS/400 are registered trademarks of International Business Machines Corporation. Wang is a registered trademark of Wang Laboratories, Inc. SCO is a registered trademark of The Santa Cruz Operation, Inc. -21- PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution. Set forth below is an estimate of the amount of fees and expenses to be incurred in connection with the secondary offering of the Common Stock registered hereby, other than brokerage fees. The Company will bear all of such costs. Registration fee under Securities Act of 1993 . . . . . . . . . . . . . . . $9,155.52 Blue sky legal fees and expenses . . 4,000.00 Legal fees and expenses . . . . . . . 15,000.00 Accounting fees . . . . . . . . . . . 3,000.00 Miscellaneous . . . . . . . . . . . . 3,844.48 Total . . . . . . . . . . . . . . . . $ 35,000.00 Item 16. Exhibits. 4.1 Certificate of Incorporation, as amended (incorporated by reference to Exhibit 3.1 to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1991). 4.2 Bylaws of the Company, as amended (incorporated by reference to Exhibit 3.2 to the Company's Registration Statement on Form S-1 (No. 33-14501) effective July 1, 1987). 4.3 Form of Redeemable Warrant (incorporated by reference to 4.12 of the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 1996). 5 Opinion of Schiff Hardin & Waite regarding legality. 23.1 Consent of Schiff Hardin & Waite (included in its opinion filed as Exhibit 5 hereto). 23.2 Consent of Arthur Andersen LLP.* 24 Power of Attorney. See page II-4 of the original Registration Statement. ------------------------ *Filed herewith. II-1 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 to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Rolling Meadows, State of Illinois, on May 7, 1997. DELPHI INFORMATION SYSTEMS, INC. By /s/ James A. Harsch --------------------------------- James A. Harsch Vice President - Administration and Chief Financial Officer Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons on behalf of the registrant in the capacities and on the dates indicated. Signature Title Date --------- ----- ----- /s/ Yuval Almog* Director, Chairman of May 7, 1997 ----------------------- the Board (Yuval Almog) (Principal Executive Officer) /s/ James A. Harsch Vice President - May 7, 1997 ----------------------- Administration, Chief (James A. Harsch) Financial Officer (Principal Accounting Officer) /s/ William Baumel* Director May 7, 1997 ----------------------- (William Baumel) /s/ Larry G. Gerdes* Director May 7, 1997 ----------------------- (Larry G. Gerdes) /s/ Joseph Oddo* Director May 7, 1997 ----------------------- (Joseph Oddo) ----------------------- Director May 7, 1997 (M. Denis Connaghan) ______________________________ * /s/ James A. Harsch ------------------------ (James A. Harsch) II-2 EX-23 2 EXHIBIT 23.2 ARTHUR ANDERSEN LLP CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS RE: Delphi Information Systems, Inc. Form S-3 for Registration of 28,321,060 Shares of Common Stock As independent public accountants, we hereby consent to the use of our reports (and all references to our Firm) included in or made a part of this registration statement. ARTHUR ANDERSEN LLP Chicago, Illinois May 7, 1997 II-3 -----END PRIVACY-ENHANCED MESSAGE-----