-----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, AqiJG0tbDFjG2AGGOTqcmohHvEe17UESj8Ge+IFm134sT054fxPeWNkIOYvVhybX U7ZGqWpjd5POL2VTD613Lg== /in/edgar/work/0001047469-00-000822/0001047469-00-000822.txt : 20001110 0001047469-00-000822.hdr.sgml : 20001110 ACCESSION NUMBER: 0001047469-00-000822 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 20000930 FILED AS OF DATE: 20001109 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EBIX COM INC CENTRAL INDEX KEY: 0000814549 STANDARD INDUSTRIAL CLASSIFICATION: [7373 ] IRS NUMBER: 770021975 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-15946 FILM NUMBER: 756206 BUSINESS ADDRESS: STREET 1: 3501 ALGONQUIN RD STREET 2: STE 500 CITY: ROLLING MEADOWS STATE: IL ZIP: 60008 BUSINESS PHONE: 8475063100 MAIL ADDRESS: STREET 1: 3501 ALGONQUIN ROAD CITY: ROLLING MEADOWS STATE: IL ZIP: 60008 FORMER COMPANY: FORMER CONFORMED NAME: DELPHI INFORMATION SYSTEMS INC /DE/ DATE OF NAME CHANGE: 19920703 10-Q 1 0001.txt 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q [ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2000 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 0-15946 EBIX.COM, INC. (Exact name of registrant as specified in its charter) DELAWARE --------------------------------- (State or other jurisdiction of incorporation or organization) 1900 E. GOLF ROAD SCHAUMBURG, IL -------------- (Address of principal executive offices) 77-0021975 ---------- (I.R.S. Employer Identification No.) 60173 ----- (Zip Code) Registrant's telephone number, including area code: 847-789-3047 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes |X| No |_| Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. 11,382,182 Shares as of November 8, 2000. EBIX.COM, INC. AND SUBSIDIARIES FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2000
INDEX Part I - FINANCIAL INFORMATION PAGE Item 1. Consolidated Financial Statements Consolidated Balance Sheets at September 30, 2000 (unaudited) and December 31, 1999.................................. 3 Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2000 and 1999 (unaudited)............... 4 Consolidated Statements of Stockholders' Equity (Deficit) for the Three and Nine Months Ended September 30, 2000 (unaudited)............. 5 Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2000 and 1999 (unaudited)...................... 6 Notes to Consolidated Financial Statements (unaudited).................. 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations....................................... 10 Item 3. Quantitative and Qualitative Disclosures About Market Risk...................................................... 17 PART II - OTHER INFORMATION Item 1. Legal Proceedings................................................... 18 Item 2. Changes to Securities and Use of Proceeds........................... 18 Item 5. Other Information................................................... 18 Item 6. Exhibits and Reports on Form 8-K................................... 19 SIGNATURES....................................................................... 19
2 EBIX.COM, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, except for share amounts)
(Unaudited) SEPTEMBER 30, DECEMBER 31, 2000 1999 ---- ---- ASSETS CURRENT ASSETS: Cash and cash equivalents $4,937 $7,055 Accounts receivable, less allowance of $1,004 Unbilled receivables 118 120 Trade receivables 2,590 2,977 --------------- ----------------- Total accounts receivable 2,708 3,097 --------------- ----------------- Other receivables 118 332 Other current assets 236 169 --------------- ----------------- TOTAL CURRENT ASSETS 7,999 10,653 Property and equipment, net 1,438 2,059 Purchased software, net 25 97 Goodwill, net 360 503 Other assets 47 77 --------------- ----------------- TOTAL ASSETS $9,869 $13,389 =============== ================= LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) CURRENT LIABILITIES: Current portion of long term debt $214 $217 Accounts payable and accrued expenses 4,655 3,166 Accrued payroll and related benefits 407 827 Current portion of capital lease obligation 172 97 Deposit liability 2,225 2,324 Deferred revenue 2,472 3,046 --------------- ----------------- TOTAL CURRENT LIABILITIES 10,145 9,677 Long term debt, less current portion - 106 Long term capital lease obligation, less current portion 413 623 Other liabilites 252 - --------------- ----------------- TOTAL LIABILITIES 10,810 10,406 --------------- ----------------- STOCKHOLDERS' EQUITY (DEFICIT): Convertible Series D Preferred stock, $.10 par value, 2,000,000 shares authorized, no shares issued and outstanding at - 49 September 30, 2000: 221 shares issued and outstanding at December 31, 1999 Common stock, $.10 par value, 20,000,000 shares authorized, 11,382,182 and 10,763,548 issued and outstanding 1,138 1,076 Additional paid-in capital 80,715 76,687 Deferred compensation (627) (1,549) Accumulated deficit (81,958) (73,166) Accumulated other comprehensive loss (209) (114) --------------- ----------------- TOTAL STOCKHOLDERS' EQUITY (DEFICIT) (941) 2,983 --------------- ----------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) $9,869 $13,389 =============== =================
See accompanying notes to consolidated financial statements. 3 EBIX.COM, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited)
THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, 2000 1999 2000 1999 ---- ---- ---- ---- REVENUE: Software $545 $674 $1,380 $1,771 Services and other 2,338 2,389 7,351 8,675 ----- ----- ----- ----- TOTAL REVENUE 2,883 3,063 8,731 10,446 OPERATING EXPENSES: Software costs 65 117 243 421 Services and other costs 1,564 2,649 4,907 7,626 Product development 867 1,873 2,969 4,424 Sales and marketing 1,330 1,740 4,071 3,346 General and administrative 1,480 1,014 5,258 5,756 Amortization of goodwill and non-compete agreement 47 95 189 283 ----- ----- ------ ------ TOTAL OPERATING EXPENSES 5,353 7,488 17,637 21,856 ----- ----- ------ ------ OPERATING LOSS (2,470) (4,425) (8,906) (11,410) Interest income 81 14 325 14 Interest expense (27) (21) (77) (187) ----- ----- ------ ------ Loss before income taxes (2,416) (4,432) (8,658) (11,583) Income tax provision (59) (1) (134) (26) ----- ----- ------ ------ Net loss ($2,475) ($4,433) ($8,792) ($11,609) ======= ======= ======= ======== Basic and Diluted net loss per common share ($0.22) ($0.43) ($0.78) ($1.30) ====== ====== ====== ====== Basic and Diluted weighted average shares outstanding 11,377 10,213 11,337 8,910 ====== ====== ====== =====
See accompanying notes to consolidated financial statements. 4 EBIX.COM, INC. AND SUBSIDIARIES CONSOIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Deficit) (IN THOUSANDS, EXCEPT SHARE AMOUNTS) (UNAUDITED)
Preferred stock COMMON STOCK --------------- ------------ SHARES AMOUNT SHARES AMOUNT ---------------------------------------------------------- BALANCE, DECEMBER 31, 1999 221 $49 10,763,549 $1,076 Net loss -- -- -- -- Translation adjustment -- -- -- -- Other comprehensive loss Conversion of preferred stock (221) (49) 9,945 1 Exercise of stock options -- -- 12,988 2 Exercise of stock warrants -- -- 595,700 59 Deferred compensation and amortization related to options and warrants ---------------------------------------------------------- BALANCE, SEPTEMBER 30, 2000 (UNAUDITED) 0 $0 11,382,182 $1,138 ---------------------------------------------------------- ACCUMULATED ADDITIONAL OTHER PAID-IN DEFERRED ACCUMULATED COMPREHENSIVE CAPITAL COMPENSATION DEFICIT (LOSS) INCOME TOTAL ----------------------------------------------------------------------- BALANCE, DECEMBER 31, 1999 $76,687 ($1,549) ($73,166) ($114) $2,983 ----------------------------------------------------------------------- Net loss -- -- (8,792) -- (8,792) Translation adjustment -- -- -- (95) (95) Other comprehensive loss Conversion of preferred stock 48 -- Exercise of stock options 50 -- -- 52 Exercise of stock warrants 4,408 -- 4,467 Deferred compensation and amortization related to options and warrants (478) 922 444 ------------------------------------------------------------------------------ BALANCE, SEPTEMBER 30, 2000 (UNAUDITED) $80,715 ($627) ($81,958) ($209) ($941) ------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements. 5 EBIX.COM, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
NINE MONTHS ENDED SEPTEMBER 30, 2000 1999 ---- ---- CASH FLOWS FROM OPERATING ACTIVITIES: Net loss ($8,792) ($11,609) ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH USED IN OPERATING ACTIVITIES: Depreciation and amortization of property and equipment 621 453 Amortization of intangibles 263 165 Stock-based compensation 444 1,556 CHANGES IN ASSETS AND LIABILITIES: Trade receivable, net 387 831 Unbilled receivables, other receivables, and other current assets 131 (192) Accounts payable and accrued expenses 1,489 (838) Accrued payroll and related benefits (420) (1,077) Deposit liability, deferred revenue and other liabilities (421) 334 ---------- ---------- Net cash used in operating activities (6,298) (10,377) ---------- ---------- CASH FLOWS FROM INVESTING ACTIVITIES: Capital expenditures - (722) Purchase of minority interest - (50) ---------- ---------- Net cash used in investing activities - (772) ---------- ---------- CASH FLOWS FROM FINANCING ACTIVITIES: Repayments of debt (109) (3,979) Repayments of capital lease obligations (135) 313 Proceeds from exercise of common stock warrants 4,467 19,565 Proceeds from exercise of common stock options 52 753 ---------- ---------- Net cash provided by financing activities 4,275 16,652 ---------- ---------- Effect of foreign exchange rates on cash (95) (31) Net change in cash and cash equivalents (2,118) 5,472 Cash and cash equivalents at the beginning of the period 7,055 1,053 ---------- ---------- Cash and cash equivalents at the end of the period $ 4,937 $ 6,525 ---------- ---------- SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Interest paid $ 54 $ 231 Income taxes paid 14 7
See accompanying notes to consolidated financial statements. 6 ebix.com, Inc. and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (All dollar amounts in thousands, except share data) Note 1. BASIS OF PRESENTATION These financial statements are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of the results of the interim periods. These financial statements should be read in conjunction with the consolidated financial statements, and accompanying notes thereto, included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1999. The results of operations for the current interim period are not necessarily indicative of results to be expected for the entire current year. Certain prior period amounts have been reclassified to conform to the current presentation. Note 2. RESTATEMENT In its Form 10-K for the fiscal year ended December 31, 1999 ("Fiscal 1999"), the Company restated and reclassified its consolidated financial statements for the nine month transition period ended December 31, 1998 ("Transition Period 1998") and the fiscal year ended March 31, 1998 (`Fiscal 1998"). Unaudited quarterly financial data for Fiscal 1999 has been restated and reclassified. The effect of such reclassifications and the restatements on the third quarter of Fiscal 1999 statement of operations line items is shown in the following table:
Q3 Q3 AS FILED RESTATED 9/30/1999 ADJ 9/30/1999 --------- --- --------- REVENUE: Software $536 (138) (a) $674 Services and other 2,656 267 2,389 --------------- --------------- TOTAL REVENUE 3,192 3,063 OPERATING EXPENSES: Software costs 648 (531) 117 Services and other costs 2,134 515 2,649 Product development 1,364 509 1,873 Sales and marketing 1,740 - 1,740 General and administrative 1,232 (218) 1,014 Amortization of goodwill and non-compete - agreements 49 46 95 --------------- --------------- TOTAL OPERATING EXPENSES 7,167 7,488 --------------- --------------- OPERATING LOSS (3,975) (4,425) Interest income 14 14 Interest expense - (21) (21) --------------- --------------- Income loss before income taxes (3,961) (4,432) Income tax provision 1 1 --------------- --------------- Net loss ($3,962) ($4,433) =============== =============== Basic and Diluted net loss per common share ($0.39) ($0.43) =============== =============== Basic and Diluted weighted average shares outstanding 10,213 10,213 =============== ===============
(a) ($135) of this adjustment represents the reversal of revenue which was reflected in the Company's 1999 Form 10-K as reversed in the first and second quarters of 1999 rather than the third quarter of 1999. Note 3. WARRANTS In conjunction with the May 1996 and January 1997 private equity placements and conversion of a $1,500 outstanding promissory note, the Company issued units, each consisting of one share of common stock and one redeemable warrant to purchase one share of common stock at an exercise price of $7.50 per share, subject to certain anti-dilutive adjustments. Between January 1, 2000 and January 16, 2000, all remaining such warrants, which were due to expire on January 16, 2000, were exercised for 595,700 shares of common stock generating approximately $4,467 in cash. In connection with the May 1996 private equity placement described above, the Company issued a warrant to the placement agent (the "Agent's Warrant") to purchase 200,000 shares of the Company's common stock at $5.00 per share. The Agent's Warrant is not subject to redemption and expires May 1, 2001. At September 30, 2000, 11,450 shares may still be purchased under this warrant. 7 Note 4 - STOCK OPTIONS AND WARRANTS During 1999, the Company granted selected executives and key employees 466,000 incentive stock option awards whose vesting is contingent upon increases in the Company's stock price and other performance based measures, such as achieving specified revenues for new products. During 2000, the Company granted an additional 40,000 stock option incentive awards. For these options, vesting generally occurs when the Company's stock price equals $9.00, $12.00, $15.00 and $20.00 per share. The exercise price of each option, which has a ten year life, is equal to the market price of the Company's stock on the date of grant. Compensation cost is measured and recorded for these options using variable plan accounting as prescribed by APB Opinion No. 25 at the end of each quarterly reporting period and is subsequently adjusted for increases or decreases in the Company's stock price until the exercise date. A credit to compensation expense related to these incentive options of approximately $708 was recognized during the nine month period ended September 30, 2000. This benefit offsets expense previously recorded under variable plan accounting. A credit is recognized in periods where the strike price exceeds the stock price to the extent of expense previously recognized. At September 30, 2000, 196,125 of the incentive options were vested. The Company has granted nonstatutory and incentive options outside the Company's stock option plan to persons who were not directors, officers or employees to purchase up to an aggregate of 79,333 shares. These options are granted at prices determined by the Board of Directors (no less than 100 percent of the market price). The options are exercisable within ten years of the date of the grant. Included in these options are 5,000 options which the Company granted in the second quarter of 2000, 30,000 options which the Company granted in the first quarter of 2000, 43,333 options which the Company granted in 1999, and 1,000 options granted prior to 1999. No such options were granted in the third quarter of 2000. These non-employee options were valued using the fair value method as prescribed by SFAS No. 123. The majority of these options are performance based awards, with no service commitment and subject to vesting only if the Company's stock price reaches a certain level. At September 30, 2000, 69,958 of the non-employee options were vested. The Company has recognized compensation expense of approximately $154 related to these options during the nine month period ended September 30, 2000. On August 20, 1999, the Company granted a two year warrant to Hewlett-Packard to purchase 4.9% of the Company's outstanding common stock for $15.00 per share during the first year of the warrant and $20.00 per share during the second year of the warrant. The Company also granted a second warrant to Hewlett-Packard under the same agreement for the purchase of 4.5% of the Company's outstanding common stock during the second year of the term of the agreement for $20.00 per share. The number of shares eligible to be purchased upon exercise of the warrants will be measured based on the outstanding common stock as of the most recent quarter or year-end as reported on the Company's report on Form 10-Q or Form 10-K. At September 30, 2000, the warrants issued to Hewlett - Packard represent the rights to purchase 557,240 and 511,751 shares, respectively. For both warrants, if the fair value of the common stock is greater than the purchase price, Hewlett-Packard may elect to receive shares equal to the value of the warrant in lieu of exercising the warrant with cash. 8 The Company also issued warrants in connection with the InfoSpace.com Internet Promotion Agreement dated August 31, 1999. The first warrant is for the purchase of 250,000 shares of the Company's common stock at a price of $15.00 per share if exercised during the first year of the agreement or $20.00 per share if exercised during the second year of the agreement. The warrant vested 62,500 shares on September 30, 1999, 62,500 shares on December 31, 1999 and 125,000 shares on March 31, 2000. The Company also granted a second warrant to InfoSpace.com under the same agreement for the purchase of 4.9% of the Company's outstanding common stock at August 31, 1999, on a fully diluted basis including conversion of this warrant. This warrant issued to Infospace.com represents the rights to purchase 526,572 shares at a price of $15.00 per share if exercised during the first year of the agreement or $20.00 per share if exercised during the second year of the agreement. The second warrant is exercisable in lieu of the Company paying invoices rendered by InfoSpace.com. Expense of $961 was recognized during the nine month period ended September 30, 2000 related to these warrants. Note 5. EARNINGS (LOSS) PER SHARE Basic earnings (loss) per share ("EPS") is equal to net income (loss) divided by the weighted average number of shares of common stock outstanding for the period. The weighted average number of common shares outstanding for the three and nine months ended September 30, 2000 were 11,377,155 and 11,337,023, respectively. The weighted average number of common shares outstanding for the three and nine months ended September 30, 1999 were 10,212,650 and 8,909,553, respectively. Diluted EPS recognizes the dilutive effect of common stock equivalents and is equal to net income divided by the sum of the weighted average number of shares outstanding and common stock equivalents. The Company's common stock equivalents consist of stock options, common stock warrants, and convertible preferred stock. Consistent with previous standards, SFAS No. 128 prohibits inclusion of the impact of common stock equivalents in the calculation of EPS when inclusion results in antidilution. Accordingly, for the three and nine months ended September 30, 2000 and September 30, 1999, basic and diluted EPS are equal because all potentially issuable common shares would be antidilutive. As of September 30, 2000 there were approximately 2,820,000 shares potentially issuable with respect to stock options, warrants and convertible preferred stock, which could dilute Basic EPS in the future. Note 6. COMPREHENSIVE LOSS
Three Months Ended Nine Months Ended September 30, September 30, 2000 1999 2000 1999 --------- -------- -------- -------- Net loss ($ 2,475) ($ 4,433) ($ 8,792) ($11,609) Other comprehensive income (loss): Foreign currency translation adjustment (102) 13 (95) (31) -------- -------- -------- -------- Comprehensive loss ($ 2,577) ($ 4,420) ($ 8,887) ($11,640) ======== ======== ======== ========
9 Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following information should be read in conjunction with the unaudited financial statements and the notes thereto included in Part 1 Item 1 of this Quarterly Report and the financial statements and notes thereto, and Management's Discussion and Analysis of Financial Condition and Results of Operations contained in the Company's Annual Report on Form 10-K, for the fiscal year ended December 31, 1999. All dollar amounts in this Management Discussion and Analysis are in thousands. As more fully described in the Notes to the Consolidated Financial Statements, certain financial information in this filing has been restated to correct previously issued financial statements. The discussion in this item reflects those restatements. FINANCIAL CONDITION LIQUIDITY AND CAPITAL RESOURCES During the nine months ended September 30, 2000, the Company experienced negative operating cash flow of $6,298. The Company funded cash used in operating activities and investing activities primarily through the use of cash proceeds from the exercise of stock warrants and employee stock options of $4,519. Although the cash proceeds resulting from the exercise of stock warrants and options have provided the Company with unused sources of capital, the Company continues to experience operating losses as well as negative cash flows. In addition, the Company's current product strategy has added the design and development of ebix.com, which was launched on September 8, 1999; the Company is pursuing the successful commercialization of this e-commerce insurance portal. Although transactions have occurred on ebix.mall in 1999 and 2000, because the Company has not processed the charges, which are de minimis in amount, no revenue has been recognized to date. Transactions have not occurred on the website for ebix.link. However, the Company expects to generate increased traffic to its website, having just entered into an agreement whereby ebix.com becomes the exclusive online insurance services provider for AltaVista, (See exhibit 99, press release dated November 7, 2000 re: Agreement with AltaVista incorporated herein by reference). However, there can be no assurance of the volume of traffic or amount of revenue that the ebix.com website will generate. The Company is currently faced with liquidity concerns. In order to meet the projected cash requirements of the business, and to continue as a going concern after the next twelve months, it will be necessary for the Company to increase its revenue sources beyond those accessed during the past two years or secure financing sources, beyond those currently available. Furthermore, the Company believes its cash balances, available credit facility and funds from 10 operations will be sufficient to meet all of its anticipated cash requirements for at least the next 12 months only if supplemented with potential strategic equity investments. Management believes that the required financing sources to operate the business as a going concern will be secured, although there can be no assurances that such financing will be available or that it will be available on terms satisfactory to the Company. Management will endeavor to secure necessary financing sources, which could include one or more equity investors, in order to continue to operate the business. PROFESSIONAL SERVICE COSTS - The Company has incurred substantial professional services costs related to the restatement of its financial statements for the transition period ended December 31, 1998 and fiscal year ended March 31, 1998, as filed on June 1, 2000 in the Company's Form 10-K for the year ended December 31, 1999. Such costs, which totaled approximately $1,100, were recognized in the second quarter of 2000. DEFERRED REVENUE - The Company traditionally invoices software maintenance and support in advance of providing the service. The software maintenance fees are recorded as deferred revenue and recognized ratably over the term of the software maintenance agreement. The Company's current liabilities at September 30, 2000 include deferred revenue of $2,472 and deposit liabilities of $2,225. The liability is satisfied through normal ongoing operations of the Company's service organization and generally does not require payment to third parties. PRODUCT DEVELOPMENT - At September 30, 2000, the Company employed 19 full-time employees engaged in product development activities. These activities include research and development of software enhancements, improving usefulness, adaptation to newer software and hardware technologies, and increasing responsiveness. Product development expenditures were $867 and $2,969 for the three and nine month periods ended September 30, 2000, respectively. BANK LINE OF CREDIT - Effective January 1997, the Company established a line of credit up to $4,000, subject to borrowing base limits. Borrowings are secured by accounts receivable and certain other assets. The agreement provides for a minimum monthly interest at the bank's prime lending rate plus two and one-half percent (2.5%) on the greater of the actual amount outstanding or $1,600. The agreement contains certain covenants including the maintenance of a minimum net worth of $2,000, and restrictions upon certain activities by the Company without the approval of the bank including the incurrence of senior debt, certain mergers or acquisitions, and the payment of dividends. The October 1999 amendment to the bank line of credit provides for a forbearance period until the maturity date. Since July 1999 the Company has had no borrowings under the bank line of credit but the Company is nevertheless obligated, until the January 31, 2001 maturity date, to pay to the lender minimum interest on the sum of $1,600 at prime plus 2.5%. NON-COMPETE NOTE PAYABLE - The Company, in the first quarter of 2000 paid a $120 installment (principal and interest) on an 11.75% interest bearing unsecured note. The remaining installment of $120 is due in the first quarter of 2001. 11 PREFERRED STOCK CONVERSION - On August 1, 2000, the Company's only preferred stockholder converted 221 shares of the Company's Series D Preferred Stock to 9,945 shares of the Company's Common Stock. WARRANTS - Between January 1, 2000 and January 16, 2000, the remaining warrants related to the January 1997 private placement issue of warrants to acquire 1,126,100 shares of common stock, which were due to expire on January 16, 2000, were exercised resulting in the issuance of 595,700 shares of common stock generating approximately $4,467 in cash. In connection with a May 1996 private equity placement, the Company issued a warrant to the placement agent (the "Agent's Warrant") to purchase 200,000 shares of the Company's common stock at $5.00 per share. The Agent's Warrant is not subject to redemption and expires May 1, 2001. At September 30, 2000, 11,450 shares may still be purchased under this warrant. On August 20, 1999, the Company granted a two year warrant to Hewlett -Packard to purchase 4.9% of the Company's outstanding common stock for $15.00 per share during the first year of the warrant and $20.00 per share during the second year of the warrant. The Company also granted a second warrant to Hewlett-Packard under the same agreement for the purchase of 4.5% of the Company's outstanding common stock during the second year of the term of the agreement for $20.00 per share. The number of shares eligible to be purchased upon exercise of the warrants will be measured based on the outstanding common stock as of the most recent quarter or year-end as reported in the Company's report on Form 10-Q or Form 10-K. At September 30, 2000, the warrants issued to Hewlett-Packard represent the rights to purchase 557,240 and 511,751 shares, respectively. For both warrants, if the fair value of the common stock is greater than the purchase price, Hewlett-Packard may elect to receive shares equal to the value of the warrant in lieu of exercising the warrant with cash. The Company also issued warrants in connection with the InfoSpace.com Internet Promotion Agreement dated August 31, 1999. The first warrant is for the purchase of 250,000 shares of the Company's common stock at a price of $15.00 per share if exercised during the first year of the agreement or $20.00 per share if exercised during the second year of the agreement. The warrant vested 62,500 on September 30, 1999, 62,500 on December 31, 1999 and 125,000 on March 31, 2000. The Company also granted a second warrant to InfoSpace.com under the same agreement for the purchase of 4.9% of the Company's outstanding common stock at August 31, 1999, on a fully diluted basis including conversion of this warrant. This warrant issued to Infospace.com represents the rights to purchase 526,572 shares at a price of $15.00 per share if exercised during the first year of the agreement or $20.00 per share if exercised during the second year of the agreement. The second warrant is exercisable in lieu of the Company paying invoices rendered by InfoSpace.com. The Company's common stock has traded at prices from $3.56 to $2.00 from September 29, 2000 to October 31, 2000, rendering it improbable that the warrants held by Hewlett-Packard and InfoSpace.com will be exercised. COMMON STOCK OPTIONS - During the nine months ended September 30, 2000, the Company received approximately $52 from the exercise of outstanding stock options. As of September 30, 2000, there are outstanding vested options to purchase approximately 482,828 shares of common 12 stock at an average exercise price of $5.77 per share. The majority of outstanding options have expiration dates in excess of five years from September 30, 2000. NEW ACCOUNTING STANDARDS - In June 1999, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 133 ("Statement 133"), "Accounting for Derivative Instruments and Hedging Activities." This standard requires that an entity recognize derivatives as either assets or liabilities on its balance sheet and measure those instruments at fair value. As a result of Statement of Financial Accounting Standards No. 137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of the Effective Date of Statement 133," the Company will adopt this standard in the first quarter of 2001. Based on current circumstances, the Company does not believe that the application of Statement 133 will have a material effect on the Company's financial condition or results of operations. EURO CONVERSION - Effective January 1, 1999, eleven of the fifteen member countries of the European Union (the "participating countries") have agreed to adopt a new common legal currency (the "euro"). The participating countries established fixed conversion rates between their existing sovereign currencies (the "legacy currencies") and the euro. Following the introduction of the euro, the legacy currencies are scheduled to remain legal tender in the participating countries as denominations of the euro between January 1, 1999 and January 1, 2002 (the "transition period"). During the transition period transactions may be settled using either the euro or the participating country's legacy currency on a "no compulsion, no prohibition" basis. Conversion rates will no longer be computed directly from one legacy currency to another but rather will utilize a "triangulation" method specified by European Union regulations whereby payments made in a legacy currency are converted to the euro and subsequently converted to the recipient's desired legacy currency. Beginning January 1, 2002, the participating countries will issue new euro-denominated bills and coins for use in cash transactions. No later than July 1, 2002, the participating countries will withdraw all bills and coins denominated in legacy currencies such that legacy currencies will no longer be legal tender for any transactions, completing the euro conversion. The Company currently has no bank accounts denominated in any legacy currency and has not entered into any material transactions denominated in any legacy currency. The Company has produced enhancements to certain software products marketed in Europe to accommodate the euro conversion process (the "euro module"). The cost to develop the euro module was not material and it will be provided at minimal cost to existing customers under maintenance agreements. Management believes the euro module allows for the continued marketing and sale of the Company's products to customers requiring euro conversion capabilities. RESULTS OF OPERATIONS THREE MONTH PERIODS ENDED SEPTEMBER 30, 2000 AND 1999 TOTAL REVENUE - The Company's revenue is derived from the licensing and sale of proprietary software and third party software ("Software") and from professional services, maintenance services, and support services ("Services"). Professional services include consulting, implementation, training and project management provided to the Company's customers with 13 installed systems and those in the process of installing systems. Total revenue is comprised of software revenue and service revenue. No revenue has yet been recorded for the Company's ebix.com website. Total revenue for the quarter ended September 30, 2000 decreased $180 or 5.9% from the comparable quarter of the prior year. SOFTWARE REVENUE - The Company's current product strategy is centered on a new generation of products, collectively referred to as the ebix (formerly "cd") product line and are comprised of ebix.global (formerly "cd.global"), a modular, state of the art, agency management solution providing flexibility and the ability to handle unstructured data and complex risk, ebix.com, a website, and ebix.one (formerly "cd.one"), a structured system utilizing many features of the Company's previous products. The Company also has six "legacy" products including: INfinity, INSIGHT, PC-ELITE, Insurnet, SMART, and Vista. The legacy products provide basic functions such as policy administration, claims handling, accounting, and financial reporting. Current legacy products will be maintained and supported as long as there is adequate economic and strategic justification. Customers utilizing legacy products will continue to be encouraged to migrate to newer products. Software revenue is comprised of revenue from the sale of ebix (formerly "cd") products, current legacy products, and other third party software. During the second quarter of Fiscal 1997, the Company discontinued the sale and marketing of computer hardware. The sale of hardware was discontinued in order to focus the Company's resources on the development and sale of software and services. Subsequent to the Company's exit from the hardware sector, the Company continues to receive commissions from hardware vendors for product referrals although this is not a material source of revenue for the Company. These commissions are included in other income. ebix.mall is expected to generate revenues through transaction fees and acceptance fees (currently, charges payable by an agent, broker or carrier, as the case may be, are $1.00 upon quoting and $20.00 upon processing a sale of a policy through the Company's site). ebix.link is expected to generate revenues through transaction fees. Although transactions have occurred on ebix.mall in 2000, because the Company has not processed the charges, which are de minimis in amount, no revenue has been recognized to date. Transactions have not occurred on the website for ebix.link. However, the Company expects its sales to increase, having recently entered into the agreement with the AltaVista Company described above under "Liquidity and Capital Resources," incorporated herein by reference. Total software revenue for the quarter decreased $129 or 19.1% from the comparable quarter of the prior year. This decrease reflects the shifting of the Company's focus away from the agency management legacy products and towards the website which has not yet begun generating revenues. SERVICES REVENUE - Total services revenue for the quarter decreased $51 or 2.1 % from the comparable quarter of the prior year. This decrease is due to a decrease in support revenue associated with legacy products. 14 SOFTWARE COSTS - Cost of Software revenue includes the cost of third party software and the amortization of purchased software. Total software costs for the quarter decreased $52 or 44.4% from the comparable quarter of the prior year. This decrease is due to a decrease in third party sales and the costs associated with such sales. SERVICES AND OTHER COSTS - Cost of Services revenue includes costs associated with support, consulting, implementation and training services. Total services and other costs for the quarter decreased $1,085 or 41.0% from the comparable quarter of the prior year. This decrease is related to the reduction in staffing levels for consultants, trainers and support staff. PRODUCT DEVELOPMENT EXPENSES - Total product development expenses for the quarter decreased $1,006 or 53.7% from the comparable quarter of the prior year. This decrease reflects a change in the Company's focus from the agency management products to the website which at this time requires less product development. SALES AND MARKETING EXPENSES - Total sales and marketing expenses for the quarter decreased $410 or 23.6 % from the comparable quarter of the prior year. This decrease is attributable to a decrease in the amount of ebix promotion in third quarter 2000 as compared to third quarter 1999 when ebix was launched. The Company expects its sales and marketing expenses to increase, having recently entered into the agreement with the AltaVista Company described above under "Liquidity and Capital Resources," incorporated herein by reference. GENERAL AND ADMINISTRATIVE EXPENSES -Total general and administrative expenses for the quarter increased $466 or 46.0 % from the comparable quarter of the prior year. This increase is due to a $389 loss related to the sublease of property and a $285 of expense related to a legal settlement partially offset by a reduction in staffing levels and rent expense. AMORTIZATION OF GOODWILL AND NON-COMPETE AGREEMENT -Total amortization of goodwill and non-compete agreement for the quarter decreased $48 or 50.5% from the comparable quarter of the prior year. This decrease is due to the non-compete agreement being fully amortized as of March 31, 2000. INTEREST INCOME - Total interest income for the quarter increased $67 for the quarter and represents income earned on the Company's investment of surplus cash in short term investments. INTEREST EXPENSE - Interest expense increased $6 from the comparable quarter of the prior year. NINE MONTH PERIODS ENDED SEPTEMBER 30, 2000 AND 1999 TOTAL REVENUE - Total revenue for the nine month period ended September 30, 2000 decreased $1,715 or 16.4% from the comparable period of the prior year. 15 SOFTWARE REVENUE - Total software revenue for the nine month period decreased $391 or 22.1% from the comparable quarter of the prior year. This decrease reflects the shifting of the Company's focus away from the agency management legacy products and towards the website which has not yet begun generating revenues. However, the Company expects its sales to increase, having recently entered into the agreement with AltaVista Company described above under "Liquidity and Capital Resources," incorporated herein by reference. SERVICES REVENUE - Total services revenue for the period decreased $1,324 or 15.3 % from the comparable period of the prior year. This decrease is due to a decrease in support revenue associated with legacy products and decreases in consulting and custom programming revenue. SOFTWARE COSTS - Total software costs for the period decreased $178 or 42.3% from the comparable period of the prior year. This decrease is due to a decrease in third party sales and the costs associated with such sales. SERVICES AND OTHER COSTS - Total services and other costs for the period decreased $2,719 or 35.7% from the comparable period of the prior year. This decrease is related to the reduction in staffing levels for consultants, trainers and support staff. PRODUCT DEVELOPMENT EXPENSES - Total product development expenses for the period decreased $1,455 or 32.9% from the comparable period of the prior year. This decrease reflects a change in the Company's focus from the agency management products to the website, which at this time requires less product development. SALES AND MARKETING EXPENSES - Total sales and marketing expenses for the period increased $725 or 21.7 % from the comparable period of the prior year. This increase is attributable to $758 of expense associated with warrants issued to third parties during 1999 partially offset by a decrease in ebix.com product promotion. The Company expects its sales and marketing expenses to increase, having recently entered into the agreement with AltaVista Company described above under "Liquidity and Capital Resources," incorporated herein by reference. GENERAL AND ADMINISTRATIVE EXPENSES -Total general and administrative expenses for the period decreased $498 or 8.7% from the comparable period of the prior year. This decrease is due to a reduction in staffing levels partially offset by professional services costs related to the restatement of its financial statements for the transition period ended December 31, 1998 and fiscal year ended March 31, 1998 as filed on June 1, 2000 in the Company's Form 10-K for the year ended December 31, 1999, a $389 loss related to the sublease of property and a $285 of expense related to a legal settlement. AMORTIZATION OF GOODWILL AND NON-COMPETE AGREEMENT -Total amortization of goodwill and non-compete agreement for the period decreased $94 or 33.2% from the comparable period of the prior year. This decrease is due to the non-compete agreement being fully amortized as of March 31, 2000. INTEREST INCOME - Total interest income for the period increased $311 from the comparable period of the prior year due to the Company's investment of surplus cash in short term investments. INTEREST EXPENSE - Interest expense for the period decreased $110 from the comparable period of the prior year. This decrease is attributable to the fact that the Company had borrowings under its bank line of credit agreement in the 1999 period but incurred only minimum interest in the 2000 period because it had no borrowings under the bank line of credit in that period. 16 SAFE HARBOR FOR FORWARD-LOOKING STATEMENTS UNDER THE SECURITIES LITIGATION REFORM ACT OF 1995 - This Quarterly Report on Form 10-Q contains various forward-looking statements and information that are based on management's beliefs as well as assumptions made by and information currently available to management, including statements regarding future economic performance and financial condition, liquidity and capital resources, acceptance of the Company's products by the market and management's plans and objectives. Such statements are subject to various risks and uncertainties which could cause actual results to vary materially from those stated. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, expected or projected. Such risks and uncertainties include the Company's ability to overcome its recent history of operating losses and declining revenues, the availability and amount of future sources of capital and the terms thereof, the extent to which the Company's ebix.com website can be successfully developed and marketed, the effects of the restatement of the Company's financial statements and the possible delisting from the NASDAQ SmallCap Market on the availability and terms of future sources of capital, the effects of such restatement and such possible delisting on the market for the Company's common stock, the possible effects of the Securities and Exchange Commission's investigation of the Company's financial reporting, the risks associated with future acquisitions, the willingness of independent insurance agencies to outsource their computer and other processing needs to third parties, the Company's ability to continue to develop new products to effectively address market needs in an industry characterized by rapid technological change, the Company's dependence on the insurance industry (and in particular independent agents), the highly competitive and rapidly changing automation systems market, the Company's ability to effectively protect its applications software and other proprietary information, the Company's ability to attract and retain quality management, and software, technical sales and other personnel, the risks of disruption of the Company's Internet connections or internal service problems, the possibly adverse effects of a substantial increase in volume of traffic on the Company's website, mainframe and other servers, possible security breaches on the Company's website, and the possible effects of insurance regulation on the Company's business. Certain of these as well as other risks and uncertainties are described in more detail in the Company's Registration Statement on Form S-3 filed under the Securities Act of 1933, Registration No. 333-12781, and the Company's periodic filings pursuant to the Securities Exchange Act of 1934. The Company undertakes no obligation to update any such factors or to publicly announce the results of any of the forward-looking statements contained herein to reflect future events or developments. Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK There have been no material changes in the Company's market risk during the nine months ended September 30, 2000. For additional information on market risk, refer to the "Quantitative and Qualitative Disclosures About Market Risk" section of the Company's Annual Report on Form 10-K for the year ended December 31, 1999. 17 Part II - OTHER INFORMATION Item 1. LEGAL PROCEEDINGS In IN THE MATTER OF THE ARBITRATION BETWEEN DELEWARE VALLEY UNDERWRITING AGENCY, ---------------------------------------------------------------------------- INC., AND APEX INSURANCE AGENCY, INC. AND DELPHI INFORMATION SYSTEMS, INC., NOW - ------------------------------------------------------------------------------- KNOWN AS EBIX.COM, the arbitrator has issued an award against the Company, - -------------- including costs, of approximately $285,000, related to claims with respect to the functionality of a system sold by the Company in 1995. Item 2. CHANGES IN SECURITIES AND USE OF PROCEEDS During Fiscal 2000, the Company sold securities (all in the first quarter of Fiscal 2000 unless otherwise noted) that were not registered under the Securities Act of 1933 as follows: The Company sold a total of 595,700 shares of its common stock on various dates in the first quarter of 2000 for an aggregate consideration of $4,467,000 to persons who held warrants issued in private placements by the Company in 1996 and 1997. The consideration paid per share consisted of the surrender of a warrant with respect to one share and $7.50 in cash. The exemption claimed from registration under the Securities Act of 1933 was Section 4(2) thereof, exempting transactions by an issuer not involving a public offering, based upon the fact that the sales were made exclusively to holders of warrants that had been issued in an earlier private placement. The shares issued on exercise of the warrants were subject to restrictions on resale. Options were granted to consultants to the Company to purchase 30,000 shares of the Company's common stock at per share exercise prices of $9.25, and in the second quarter of Fiscal 2000, 5,000 shares of the Company's common stock at a per share exercise prices of $5.09. The consideration for such option issuances is services to the Company. The exemption claimed from registration under the Securities Act of 1933 was Section 4(2) thereof, exempting transactions by an issuer not involving a public offering, based on the fact that these transactions involved sales to an institution and a single consultant, respectively, in private transactions. Item 5. OTHER INFORMATION On October 2, 2000, October 4, 2000, and October 10, 2000, Roy L. Rogers, Douglas C. Chisholm, and Dennis Drislane, respectively, were appointed as Directors of the Company. As stated in Note 2 to the consolidated financial statements in this Form 10-Q the Company restated and reclassified its consolidated financial statements for the 1998 transition period and fiscal 1998, which were included as reaudited and restated, in the Company's annual report on Form 10-K for the fiscal year ended December 31, 1999. On August 11, 2000, the Company was advised that the Securities and Exchange Commission had issued a formal Order of Investigation and subpoenaed documents relating to the Company's financial reporting since April 1, 1997, including, in particular, revenue recognition, software development cost capitalization, royalty costs, and classification of cash receipts, which were affected by the restatement. 18 The Company has received a request dated October 27, 2000 of the NASDAQ Stock Market Staff to furnish it with the Company's plan to achieve and sustain compliance with the NASDAQ SmallCap Market Listing requirements. The NASDAQ request was made in connection with its current review of the Company's eligibility for continued listing in light of its present failure to meet the NASDAQ requirement that a Company satisfy any one of NASDAQ's minimum net tangible assets, market capitalization, or earnings standards. Item 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits See exhibit index. (b) Reports on Form 8-K None. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ebix.com, Inc. Date: November 8, 2000 By: /s/ Richard J. Baum -------------------------------------------- Richard J. Baum Chief Financial Officer 19 EXHIBIT INDEX ----------------------
EXHIBIT NO. DESCRIPTION - ----------- -------------------------------------------- 3 Amendment to the by-laws (adopted by October 10, 2000 Board of Directors Resolution). 10 Richard J. Baum Severance Agreement* 27.1 Financial Data Schedule, which is submitted electronically to the Securities and Exchange Commission for information only and not filed - September 30, 2000. 27.2 Restated Financial Data Schedule, which is submitted electronically to the Securities and Exchange Commission for information only and not filed - September 30, 1999. 99 Press release dated November 7, 2000 re: Agreement with AltaVista
* Management contract. 20 EX-3.(II) 2 0002.txt EXHIBIT 3 Exhibit 3 Effective October 10, 2000, Section 3.02 of the Bylaws is hereby amended and restated to read as follows: The number of directors that shall constitute the whole Board shall be established by the Board from time to time, but in no event shall be less than four nor more than eight. EX-10 3 0003.txt EXHIBIT 10 Exhibit 10 EBIX.COM, INC. EXECUTIVE SEVERANCE AGREEMENT This Executive Severance Agreement ("Agreement") is being made in Chicago, Illinois, on this 4th day of October 2000, by and between ebix.com, Inc. ("EBIX"), a Delaware corporation, formerly known as Delphi Information Systems, Inc. and Richard J. Baum ("Executive"), who presently serves as Senior Vice President - Finance and Administration, Chief Financial Officer and Secretary of EBIX. RECITALS WHEREAS EBIX provides services and products to the insurance industry and to the general public, and is presently in a state of redefinition which could include a possible sale of part or all of the company. WHEREAS Executive is part of EBIX's executive workforce, is a critical asset to EBIX, and is especially necessary at this time. WHEREAS EBIX desires that Executive remain employed by EBIX, and recognizes that Executive needs some special assurances at this time. WHEREAS EBIX is a publicly-traded company that desires stability in its executive workforce. Said stability is a benefit to EBIX's shareholders, especially during this period of redefinition. WHEREAS EBIX and Executive understand that to ensure stability in EBIX's executive workforce, and to protect Executive in the event of a change of control of the company, an Executive Severance Agreement is a valuable component of a benefit package. CONSIDERATION NOW, THEREFORE, in consideration of the mutual promises and covenants made herein, in consideration of Executive continuing his employment with EBIX, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties do hereby agree as follows. TERMS 1. ADOPTION OF RECITALS. The foregoing recitals are hereby adopted and incorporated herein and made a part of this Agreement. 2. SEVERANCE AGREEMENT. This Severance Agreement provides for Severance Pay and Severance Insurance payable or provided, as the case may be, as follows: A. Severance Pay, Salary. Upon an Event Triggering Payment of Severance as described in Section 3, EBIX shall pay Executive a Severance salary, in an amount equal to the highest annual salary earned by Executive during the twelve (12) month period ending with the last day of employment (calculated as the product of 12 and the highest monthly base salary earned by him during such period). EBIX shall pay Executive his Severance salary in twelve (12) equal monthly installments commencing on the last day of the calendar month immediately subsequent to his last day of his employment by EBIX. Payment of the Severance salary is subject to normal withholding ("Normal Withholding"), i.e., withholding required for income taxes, FICA, premiums for benefit plan coverages, and any other withholding to which Executive consents in writing or which is required by applicable law. B. Severance Pay, Bonus. Upon an Event Triggering Payment of Severance as described in Section 3, EBIX shall pay Executive a bonus for the calendar year in which his employment terminates in an amount equal to the bonus paid to Executive during the immediately preceding calendar year multiplied by a fraction, the numerator of which is the number of whole months elapsed in the calendar year of termination and the denominator of which is 12. EBIX shall pay the Executive the Severance bonus portion in full within (30) thirty days of the last day of employment, subject to Normal Withholding.. C. Severance Insurance, Medical Coverage. Upon an Event Triggering Payment of Severance as described in Section 3, if Executive has been insured with this coverage throughout the six months ending with the last day of employment (and is eligible for and elects COBRA coverage), EBIX shall subsidize COBRA coverage so that, during the twelve month period commencing with the month commencing after the last day of employment, the Executive is not required to pay more toward the premiums than a similarly situated executive who remains actively employed by EBIX. After the end of such twelve month period, the Executive shall be solely responsible for COBRA premiums for the balance of the COBRA period. 3. Events Triggering Payment of Severance. EBIX shall be obligated to comply with the Severance Plan Salary, Bonus and Medical Coverage provisions set forth in Section 2 of this Agreement, if the events described in Paragraphs A and B of this Section occur: A. There is a change of control of EBIX. "Change of Control" shall mean either of the following: (i) the acquisition (other than from EBIX) by any person, entity or "group" within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934 ("Exchange Act") [excluding for this purpose EBIX or its subsidiaries or any employee benefit plan of EBIX or its subsidiaries which acquires beneficial ownership of voting securities of EBIX) of beneficial ownership (within the meaning of Rule 13(d)-3 promulgated under the Exchange Act) of securities of EBIX, resulting in such person, entity or group having greater than Page 2 of 7 EBIX.COM, INC. EXECUTIVE SEVERANCE AGREEMENT 30% of either the then outstanding shares of common stock or the combined voting power of EBIX's then outstanding voting securities entitled to vote generally in the election of directors, or (ii) a change in composition of the Board of Directors of EBIX ("Board") such that a majority of its members at any time are not "Incumbent Members." For this purpose, an "Incumbent Member" is any member of the Board on the date hereof and any member of the Board nominated or elected as such by the Board at a time when a majority of its members are "Incumbent Members," and B. Within twelve (12) months after a Change of Control of EBIX, (i) Executive is fired for any reason without cause(as defined in Section 3.C. hereof); or (ii) Executive resigns due to a demotion or other new and onerous requirement placed on Executive, including but not limited to, relocation of Executive's office greater than 50 miles from its current location. A demotion is defined as a material reduction in salary and benefits, which includes bonus opportunity, which reduction does not apply to the ten most highly compensated employees of the Company generally, or a material reduction in title or responsibilities. For purposes of this clause (ii), a reduction is "material" if it would be viewed as significant to a reasonable person in Executive's position in determining whether to continue in such position. C. "Cause" means any of the following: (i) commission by Executive of any felony which includes as an element of the crime a premeditated intention to commit the act, (ii) Executive's inability to perform his duties due to habitual alcohol use or drug addition, (iii) serious misconduct involving dishonesty in the course of Executive's employment, or (iv) Executive's habitual neglect of his duties (other than on account of disability) which habitual neglect materially adversely affects Executive's performance of duties and continues for thirty (30) days following Executive's receipt of notice from the Board which specifically identifies the nature of the habitual neglect and the duties that are materially adversely affected and states that, if not cured, such habitual neglect constitutes grounds for termination. 4. COOPERATION. Executive agrees to cooperate with EBIX for a period of twelve (12) months after the last day of employment in respect of corporate administrative affairs arising during his employment, including but not limited to answering questions posed by EBIX employees, counsel, or auditors; providing a summary of matters pending as of the last day of employment, if requested and within 21 days of the request; signing corporate minutes; or any other reasonable requests made by EBIX. Page 3 of 7 EBIX.COM, INC. EXECUTIVE SEVERANCE AGREEMENT 5. INDEMNIFICATION; HOLD HARMLESS. EBIX agrees to indemnify, defend, and hold Executive, or his heirs, legatees or estate, forever harmless to the fullest extent permitted by law from any and all damages, claims, demands, judgments, losses, costs and expenses, including but not limited to reasonable attorneys' fees and costs ("Losses") arising out of law suits or other legal procedures which may hereinafter at any time be incurred, suffered, sustained by or imposed upon Executive that may be due or required to be paid by virtue of, or incident to, the performance of Executive's duties, including but not limited to the authorization and execution of contracts on behalf of EBIX, other than any such Losses arising by virtue of or incident to Executive's gross neglect or willful misconduct. For purposes of this Section 5, "gross neglect" means neglect or negligence that is substantially greater than ordinary neglect or negligence. 6. CONFIDENTIALITY OF PROPRIETARY INFORMATION. Executive agrees to keep confidential all proprietary information belonging to EBIX. Proprietary information includes, but is not limited to, client lists, as well as technical, marketing, business, financial, or other information that may reasonably be considered confidential. For a period of one (1) year after Executive's employment by EBIX is terminated, but only if such termination results in payment of the severance benefits provided for in Section 2, Executive shall not, without the prior written consent of EBIX, directly or indirectly, as an individual or otherwise, own, manage, operate, control, be or remain employed or retained by, render any services for, or be financially interested in any manner (other than as a shareholder of five percent 5% or less of the capital stock of a corporation whose publicly traded securities are listed on a national or regional securities exchange or the NASDAQ Stock Market) in any corporation, firm, partnership, sole proprietorship or other entity which at any time during such period of one (1) year after the date of termination of employment, is engaged in offering insurance on the internet or offering transaction processing of insurance, or was so engaged at any time within one year prior to such termination date. EBIX does business and renders services throughout the U. S. and the rest of the world and it is therefore agreed that the foregoing restriction shall be operative throughout the U.S. and the rest of the world. 7. NON-DISPARAGEMENT. Executive agrees that he will not at any time, or in any way, either verbally or in writing, or by gesture or innuendo, disparage, place in false light, or demean EBIX, its directors, officers, employees, or any activities in which EBIX is involved. EBIX agrees that it, through its officer and directors, will not, at any time, or in any way, either verbally or in writing, or by gesture or innuendo, disparage, place in false light, or demean the Executive. 8. CONFIDENTIALITY OF THIS AGREEMENT. Executive agrees that all the terms and conditions of this agreement are confidential and that said terms and conditions shall not be disclosed, discussed, or in any way revealed by Executive to any persons or entities, whether inside or outside of EBIX, other than Executive's attorney, or personal tax advisor, as may be necessary, or in any action to enforce the terms of this Agreement. Confidentiality extends to the mere fact that this agreement has been offered to Executive by EBIX. Page 4 of 7 EBIX.COM, INC. EXECUTIVE SEVERANCE AGREEMENT EBIX and Executive recognize and acknowledge that notwithstanding the foregoing, this Agreement will pursuant to law be filed as an exhibit to the next Form 10-K or Form 10-Q to be filed by EBIX and described in EBIX's Form 10-K and proxy statement. In the event that Executive is requested or required (by oral questions, interrogatories, requests for information or documents, subpoena, civil investigative demand or similar process) to disclose any information supplied to Executive in the course of his dealings with EBIX or its representatives, it is agreed that Executive will provide EBIX with prompt notice of such request(s) and the documents requested thereby so that EBIX may seek an appropriate protective order and/or waive Executive's compliance with the provisions of this Agreement. It is further agreed that, if in the absence of a protective order or the receipt of a waiver hereunder Executive is nonetheless, in the written opinion of Executive's counsel, compelled to disclose information concerning EBIX to any tribunal or else stand liable for contempt or suffer other censure or penalty, Executive may disclose such information to such tribunal without liability hereunder; provided, however, that Executive shall give EBIX written notice of the information to be so disclosed as far in advance of its disclosure as is practicable and shall use his best efforts to obtain an order or other reliable assurance that confidential treatment will be accorded to such portion of the information required to be disclosed as EBIX designates. 9. RETURN OF EBIX PROPERTY. Executive agrees to return to EBIX, by the close of business on his last day of employment, all property belonging to EBIX which was or may be in the Executive's possession, including, without limitation, books, records, documents, files, memoranda, credit cards, passes, keys, computer access codes, computer disks, instructional manuals, tools, computers and any other physical property of any kind. 10. JUDICIAL REVISION. In the event that any of the provisions, covenants, warranties or agreements in this Agreement are held by any Court to be in any respect an unreasonable restriction or are otherwise invalid, for any reason or cause, then the parties expressly authorize the Court to modify the period of time in which it operates, the scope of activity to which it pertains, or to make any other changes to the extent necessary to render any of the restrictions of this Agreement enforceable. 11. SEVERABILITY. Each of the terms and provisions of this Agreement is to be deemed severable in whole or in part and, if any term or provision or the application thereof in any circumstances should be invalid, illegal or unenforceable, the remaining terms and provisions or the application thereof to circumstances other than those as to which it is held invalid, illegal or unenforceable, shall not be affected thereby and shall remain in full force and effect. 12. BINDING AGREEMENT. This Agreement shall be binding upon the parties and their successors. EBIX may assign this Agreement to any successor in interest, or to a successor to any part thereof, provided that such successor is capable of meeting its obligations hereunder. This Agreement is not assignable by Executive. Page 5 of 7 EBIX.COM, INC. EXECUTIVE SEVERANCE AGREEMENT 13. CONTROLLING LAW AND JURISDICTION. This Agreement shall be governed by, and interpreted and construed in accordance with, the internal laws of the State of Illinois without giving effect to the principles of conflict of laws thereof. 14. LEGAL FEES. In any litigation, arbitration, or other legal proceeding which may arise between the parties hereto, the prevailing party shall be entitled to recover all his or its costs and all reasonable attorneys' fees in addition to any other relief to which the prevailing party may be entitled. 15. PARACHUTE CAP. If it is determined (by the reasonable computation of EBIX's independent auditors, which determinations shall be certified by such auditors and set forth in a written certificate ("Certificate") delivered to Executive) that any amount paid or deemed paid to Executive pursuant to this Agreement or otherwise (collectively, the "Payments") is or will become subject to any excise tax under Section 4999 of the Code or any similar tax payable under any United States federal, state, local or other law (such excise tax and all such similar taxes collectively, "Excise Taxes"), then the aggregate present value of such amount shall be reduced to an amount (expressed in present value) which maximizes the aggregate present value thereof without causing any portion thereof to be subject to Excise Taxes. 16. LEGAL REPRESENTATION, REIMBURSEMENT. Executive agrees to assist EBIX, in any reasonable way, during EBIX's prosecution or defense of a lawsuit, or its representation at an administrative hearing or any other proceeding. EBIX agrees to be responsible for expenses and reasonable attorney's fees, in addition to lost wages and a reasonable hourly per diem. This provision shall survive any termination of Executive's employment hereunder for a period of three (3) years. 17. ENTIRE AGREEMENT. This instrument contains the entire agreement of the parties with respect to the subject matter hereof, and may not be changed orally but only by an agreement in writing signed by the parties hereto and specifically referenced to this agreement. 19. NON-WAIVER. The failure to enforce any of the provisions of this Agreement shall not be construed as a waiver of such provisions. Further, any express waiver by any party with respect to any breach of any provision hereunder by any other party shall not constitute a waiver of such party's right to thereafter fully enforce every other provision of the Agreement. 20. HEADINGS. All numbers and heading of paragraphs are for reference only and are not intended to qualify, limit or otherwise affect the meaning or interpretation of any paragraph. 21. COUNTERPARTS. This Agreement may be executed in one or more counterparts which together shall constitute a single Agreement. Page 6 of 7 EBIX.COM, INC. EXECUTIVE SEVERANCE AGREEMENT WHEREFORE, the parties have executed this Agreement in Illinois on the date and year first above-written, said Agreement consisting of seven (7) pages. EBIX.COM, INC. By: /s/ Robin Raina Title: President and Chief ------------------------------------------------- By (Printed Name): ROBIN RAINA Executive Officer By: /s/ William R. Baumel ------------------------------------------------- By (Printed Name): WILLIAM R. BAUMEL, not individually, but solely as authorized agent of ebix.com, Inc. EXECUTIVE Signature: /s/ Richard J. Baum ------------------------------------------ Printed Name: RICHARD J. BAUM Executive authorizes that payments, correspondences, and notices should be sent to the following address: Address: -------------------------------------------- City, State, Zip Code: ------------------------------ Page 7 of 7 EX-27 4 0004.txt EXHIBIT 27.1
5 9-MOS DEC-31-2000 JAN-01-2000 SEP-30-2000 4,937 0 3,712 (1,004) 0 7,999 10,475 (9,037) 9,869 10,145 0 0 0 1,138 (2,079) 9,869 8,731 8,731 0 0 17,637 0 (248) (8,658) (134) (8,792) 0 0 0 (8,792) (.78) (.78)
EX-27 5 0005.txt EXHIBIT 27.2
5 9-MOS DEC-31-1999 JAN-01-1999 SEP-30-1999 7,055 0 4,101 (1,004) 0 10,653 9,772 (8,571) 13,389 9,677 0 0 49 1,076 1,907 13,389 10,446 10,446 0 0 21,856 0 173 (11,583) (26) 0 0 0 0 (11,609) (1.30) (1.30)
EX-99 6 0006.txt EXHIBIT 99 [EBIX.COM LETTERHEAD] NEWS RELEASE: For Immediate Release
EBIX.COM INC. EBIX.COM: MILLER/SHANDWICK CONTACT: - ------------- -------- ------------------------- 5 Concourse Pkwy. Jeff Larson Daryl Richard/Joe Potvin Suite 3200, Atlanta, GA 30328 Director - Strategic Alliances (617) 536-0470 (678) 281-2020 (678) 281-2038 drichard @miller.shandwick.com NASDAQ: EBIX jlarson@ebix.com jpotvin@miller.shandwick.com
ALTAVISTA SELECTS EBIX.COM AS EXCLUSIVE INSURANCE MARKETPLACE TO DELIVER PREMIER INSURANCE SERVICES AltaVista to feature ebix's Internet Insurance Exchange and other ebix insurance content ATLANTA, GA -- November 07, 2000 -- EBIX.COM INC. (NASDAQ: EBIX), the world's most comprehensive insurance portal, today announced it has entered into an alliance with ALTAVISTA COMPANY. Under the terms of the agreement, ebix.com will become the exclusive online insurance services provider for AltaVista's millions of unique users. Concurrent with the start of this alliance, ebix.com will launch their B2C Internet Insurance Exchange on AltaVista, which will deliver relevant insurance related content and quotes to AltaVista's users and others. AltaVista Company is the leading search service and information marketplace, ranked as the second most popular referring search engine according to StatMarket. AltaVista performs more than 50 million web search queries on an average day. "AltaVista is the leader in search technology and we're committed to providing our users with the tools they need to find the information they are looking for," said Jeff Housenbold, vice president and general manager, Web & Enterprise Products and Marketing, AltaVista Company. "Our agreement with ebix.com will provide our users with not only the ability to quickly and easily search for a wealth of information on a variety of insurance related topics, but also to access a competitive array of insurance services that only ebix.com can provide." "Combining our depth of content and insurance relationships with an established and high quality search engine like AltaVista creates a truly valuable set of resources for consumers," said Robin Raina, president and CEO, ebix.com Inc. "This agreement is a great validation of ebix's position as the leading insurance marketplace." With its unique market-making model, ebix functions as a non-aligned engine allowing consumers to buy insurance from a large aggregation of insurance carriers and agents, without getting involved in commissions. ebix.com is the largest insurance marketplace online, offering consumers access to over 1,000 agents representing nearly 2,000 different carriers, as well as 30 carriers quoting direct. Users in all 50 states and the District of Columbia can receive quotes on seven different lines of insurance: Auto, Home, Health, Life, Dental, Vision and Long Term Care. AltaVista Company is the leading search service and information marketplace at HTTP://WWW.ALTAVISTA.COM, headquarted in Palo Alto, Calif. ABOUT EBIX.COM: ebix.com, an HP Enabled E-Service which ebix.com Inc. launched on September 8, 1999, is the only site on the Web to meet the insurance needs of both the consumer and the insurance professional. ebix.com includes a virtual marketplace, ebix.mall, where consumers can define their policy coverages and seek competitive quotes from a number of carriers or agents/brokers in a timeframe defined by the consumer. This allows consumers to compare prices in a non-threatening environment and buy insurance online if they so desire. ebix.com offers consumers access to over 1,000 agents representing nearly 2,000 different carriers, as well as 30 carriers quoting direct. ebix.com also incorporates powerful and secure business tools for agents/brokers, including the workflow and management engine ebix.link. ebix.link is currently being piloted by a number of leading carriers and agents in the United States, drawing from ebix.com Inc.'s strong business relationships with six of the ten largest insurance agencies in the world and over 3,000 agencies in the United States. This workflow engine, launched in January, can save insurance professionals up to 70 percent in time, energy and costs associated with processing day-to-day transactions. ABOUT EBIX.COM INC.: Founded in 1976, ebix.com Inc. - formerly known as Delphi Information Systems, Inc. (NASDAQ: EBIX - news) - is a leading international supplier of software and Internet solutions to the property & casualty insurance industry. The recent name change to ebix.com Inc. aligns the identity of the company with its strategic focus of using the Internet to enhance the way insurance business is transacted, through solutions that encompass both e-commerce and web-enabled agency management systems. An independent provider, ebix.com Inc. employs insurance and technology professionals who provide products, support and consultancy to over 3,000 customers on six continents. ebix.com Inc. is the only insurance software provider that offers agency/broker management systems created by insurance professionals to serve the unique needs of each insurance segment around the world. ebix.com Inc.'s agency management products feature fully customizable and scaleable software designed to improve the way insurance professionals manage all aspects of insurance distribution, including: marketing, sales, service, accounting and management. For more information on ebix.com Inc. products and services, call 678-281-2020 or visit the ebix.com Inc. web site at WWW.EBIX.COM. ### -----END PRIVACY-ENHANCED MESSAGE-----