<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON , 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------------
INSIGNIA SOLUTIONS PLC
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<S> <C> <C>
ENGLAND AND WALES 7372 NOT APPLICABLE
(State or Other Jurisdiction (Primary Standard Industrial (I.R.S. Employer Identification No.)
of Incorporation or Organization) Classification Code Number)
</TABLE>
------------------------------
<TABLE>
<S> <C>
41300 CHRISTY STREET THE MERCURY CENTRE, WYCOMBE LANE
FREMONT, CALIFORNIA 94538 WOOBURN GREEN
UNITED STATES OF AMERICA HIGH WYCOMBE, BUCKS HP10 0HH
(510) 360-3700 UNITED KINGDOM
(44) 1628-539500
</TABLE>
(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
STEPHEN M. AMBLER
SENIOR VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND SECRETARY
INSIGNIA SOLUTIONS PLC
41300 CHRISTY STREET
FREMONT, CALIFORNIA 94538
(510) 360-3700
(Name, Address and Telephone Number of Agent for Service)
------------------------------
COPIES TO:
CORINNA M. WONG, ESQ.
BAKER & MCKENZIE
660 HANSEN WAY
PALO ALTO, CALIFORNIA 94304
(650) 856-2400
------------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: FROM TIME TO
TIME AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.
------------------------------
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, please check the following box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, please check the following box. /X/
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / / ____________
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / / ____________
<TABLE>
<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED(1) BE REGISTERED PER SHARE OFFERING PRICE REGISTRATION FEE
<S> <C> <C> <C> <C>
Ordinary Shares, 20 pence nominal value per share,
represented by American depositary shares....... 3,600,000 $6.25 (2) $22,500,000 (2) $5,940
Ordinary Shares, 20 pence nominal value per share,
represented by American depositary shares
underlying purchase warrants.................... 1,800,000 $6.25 (3) $11,250,000 (3) $2,970
Ordinary Shares, 20 pence nominal value per share,
represented by American depositary shares
underlying placement agent purchase warrants.... 225,000 $6.25 (3) $1,406,250 (3) $371.25
Total............................................. 5,625,000 $37,089,844 $9,281.25
</TABLE>
(1) A separate Registration Statement on Form F-6 is effective with respect to
the American depositary shares represented by American depositary receipts
issuable on a one-for-one basis with the Ordinary Shares being registered
hereby upon deposit of such Ordinary Shares.
(2) Estimated solely for the purpose of calculating the amount of the
registration fee, pursuant to Rule 457(c) under the Securities Act, based on
the average of the high and low prices of the ADSs on the Nasdaq National
Market on December 1, 2000.
(3) Estimated solely for the purpose of calculating the amount of the
registration fee, pursuant to Rule 457(g) under the Securities Act, based on
the average of the high and low prices of the ADSs on the Nasdaq National
Market on December 1, 2000.
THE REGISTRANT SHALL HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION DATED , 2000
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
<PAGE>
INSIGNIA SOLUTIONS PLC
5,625,000 AMERICAN DEPOSITARY SHARES
EACH REPRESENTING ONE ORDINARY SHARE OF
20 PENCE NOMINAL VALUE
----------------
All of the 5,625,000 American Depositary Shares of Insignia Solutions plc
are being sold by securityholders of Insignia. Insignia will not receive any
proceeds from the sale of shares offered by the selling securityholders. See
"Selling Securityholders" and "Plan of Distribution."
The shares are listed on the Nasdaq National Market under the symbol
"INSGY." The shares offered will be sold as described under "Plan of
Distribution."
On December 1, 2000, the closing price per share of the ADSs on the Nasdaq
National Market was $6.125.
------------------------
THE SHARES OFFERED INVOLVE A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
BEGINNING ON PAGE 2.
------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION, NOR ANY STATE SECURITIES
COMMISSION, HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF
THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS , 2000.
<PAGE>
INSIGNIA SOLUTIONS PLC
Insignia, which commenced operations in 1986, develops, markets and supports
virtual machine technology that enables software applications and operating
systems to be run on various computer platforms. In late 1997, we began a
strategic review of our business and explored new markets that would leverage
our 10 years of emulation software development experience. In January 1998, we
announced our intention to launch a new product line. This product line, called
Jeode-TM-, is based on Insignia's Embedded Virtual Machine, or EVM-TM-,
technology. Jeode is our implementation of Sun Microsystems, Inc.'s
Java-Registered Trademark- technology developed specifically for Internet
appliances and wireless devices. The Jeode platform is enabled by our EVM and is
designed to enable software developers to create reliable, efficient and
predictable Internet appliances and wireless devices.
Jeode became available in March 1999 and generated 23% of our total revenues
for 1999 and 98% of our total revenues for the first nine months of 2000. Jeode
is our principal product line for the foreseeable future. The Jeode product line
revenue model is based on original equipment manufacturer's customer
transactions. We derive revenue from the Jeode product line from four main
sources: the sale of a development license, the sale of annual maintenance and
support, a commercial use royalty based on shipments of products that include
Jeode technology, and customer-funded engineering activities.
Our principal executive offices in the United States are located at 41300
Christy Street, Fremont, California 94538. Our telephone number at that location
is (510) 360-3700. Our principal executive offices in the United Kingdom are
located at The Mercury Centre, Wycombe Lane, Wooburn Green, High Wycombe, Bucks
HP10 0HH. Our telephone number at that location is (44) 1628-539500.
RISK FACTORS
THIS OFFERING IS RISKY. ANYONE WHO PURCHASES SHARES UNDER THIS PROSPECTUS
SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS IN ADDITION TO THE OTHER
INFORMATION PRESENTED IN OR INCORPORATED BY REFERENCE INTO THIS PROSPECTUS AND
ANY PROSPECTUS SUPPLEMENT.
WE MUST SELL PRODUCTS IN OUR JEODE PRODUCT LINE TO PRODUCE REVENUES.
Our future performance depends upon sales of products within our Jeode
product line, which is a relatively new product line. During the third quarter
of 2000, revenues of products in the Jeode product line were $2.88 million,
which was 99.3% of our total revenue for the quarter. We incurred a net loss of
$2.3 million in the third quarter of 2000. Jeode may not achieve or sustain
market acceptance or provide the desired revenue levels. At current overhead
levels, we require revenues of more than $5.0 million per quarter to achieve an
operating profit. The Jeode product line is our sole product line and we rely
and will continue to rely upon sales of Jeode products for our revenue for the
foreseeable future.
THE LONG AND COMPLEX PROCESS OF LICENSING OUR JEODE PRODUCT MAKES OUR REVENUE
UNPREDICTABLE.
Our revenue is dependent upon our ability to license the Jeode product to
third parties. Licensing our Jeode product is a long and complex process. Before
committing to license our product, potential customers must generally consider a
wide range of issues including product benefits, infrastructure requirements,
ability to work with existing systems, functionality and reliability. The
process of entering into a development license with a company typically involves
lengthy negotiations. As a result of the sales cycle, it is difficult for us to
predict when, or if, a particular prospect might sign a license agreement.
Development license fees may be delayed or reduced as a result of this process.
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<PAGE>
OUR LICENSEES MUST INTEGRATE OUR JEODE TECHNOLOGY INTO THEIR PRODUCTS, WHICH
DELAYS OUR RECEIPT OF REVENUES FROM COMMERCIAL LICENSES.
Our success depends upon the use of our technology by our licensees in their
Internet appliances or wireless devices. Our licensees undertake a lengthy
process of developing systems that use our technology. When a licensee enters
into a development license with us, we normally require the licensee to prepay
some future commercial use royalties, typically an amount projected to cover 3
to 6 months of future usage. Thereafter, until a licensee has sales of its
systems incorporating our technology which generate sufficient commercial use
royalties to surpass any prepayment to us, we do not receive any further
royalties from that licensee. We expect that the period of time between entering
into a development license and actually recognizing further commercial use
royalties to be not only lengthy, but contingent on many factors, which makes it
difficult for us to predict when we will recognize royalties from commercial use
licenses.
IF WE LOSE THIRD-PARTY LICENSE RIGHTS, WE MAY NOT BE ABLE TO SELL OUR JEODE
PRODUCTS.
In the first quarter of 1999, we signed a five-year agreement with Sun
Microsystems, Inc. under which Sun established Insignia as a Sun authorized
virtual machine provider. The agreement also grants us immediate access to the
Java compatibility test suite and the Java technology source code. The agreement
includes technology sharing and compatibility verification. Under the agreement,
we will pay Sun a per unit royalty on each Jeode-enabled Internet appliance or
wireless device shipped by our customers, plus a royalty on all development
licenses between our customers and us. If the agreement with Sun terminates or
expires without renewal, we would not be able to market our Jeode product line.
Any disruption in our relationship with Sun would likely impair our sales of
Jeode.
We also license software development tool products from other companies to
distribute with some of our products. These third parties may not be able to
provide competitive products with adequate features and high quality on a timely
basis or to provide sales and marketing cooperation. In addition, our products
compete with products produced by some of our licensors. When these licenses
terminate or expire, continued license rights might not be available to us on
reasonable terms. In addition, we might not be able to obtain similar products
to substitute into our tool suites.
IF ADDITIONAL FUNDS ARE NOT AVAILABLE AS NEEDED, WE MAY NOT BE ABLE TO TAKE
ADVANTAGE OF MARKET OPPORTUNITIES OR OTHERWISE GROW OUR BUSINESS.
We may need to raise additional funds in the future, and additional
financing may not be available on favorable terms, if at all. Further, if we
issue additional equity securities, securityholders may experience dilution, and
the new equity securities may have rights, preferences or privileges senior to
those of our ordinary shares. If we cannot raise funds on acceptable terms, we
may not have sufficient net assets to maintain the listing of our shares on the
Nasdaq National Market. Further, we may not be able to develop new products or
enhance our existing products, take advantage of future opportunities or respond
to competitive pressures or unanticipated requirements. We believe the proceeds
from a private placement that closed on November 24, 2000 will be sufficient to
fund our planned growth through the end of 2002.
WE HAVE A HISTORY OF LOSSES AND WE MUST GENERATE SIGNIFICANTLY GREATER REVENUE
IF WE ARE TO ACHIEVE PROFITABILITY.
We have experienced operating losses in each quarter since the second
quarter of 1996. To achieve profitability, we will have to increase our revenue
significantly. Our ability to increase revenues depends upon the success of our
Jeode product line. Jeode is a relatively new product and it may not achieve
market acceptance. If we are unable to generate revenues from Jeode in the form
of development
3
<PAGE>
license fees, maintenance and support fees, commercial use royalties and
customer-funded engineering services, our current revenues will be insufficient
to sustain our business.
WE EXPECT OUR SALES AND MARKETING EXPENSES TO CONTINUE AT HIGH LEVELS.
We expect to continue to incur disproportionately high sales and marketing
expenses for the foreseeable future. To market Jeode effectively, we must
further develop direct sales channels in the Internet appliance and wireless
device market. We must continue to incur the expenses for a sales and marketing
infrastructure before we recognize significant revenue from sales of the
product. Because customers in the Internet appliance and wireless device market
tend to remain with the same vendor over time, we believe that we must devote
significant resources to each potential sale. To the extent potential customers
do not design our products into their systems, the resources we have devoted to
the sales prospect would be lost. If we fail to achieve and sustain significant
increases in our quarterly sales, we may not be able to continue to increase our
investment in these areas. In addition, with increased expenses, we must
significantly increase our revenues if we are to become profitable.
IF OUR NEW PRODUCTS OR PRODUCT ENHANCEMENTS FAIL TO ACHIEVE CUSTOMER ACCEPTANCE,
OR IF WE FAIL TO MANAGE PRODUCT TRANSITIONS, OUR BUSINESS REPUTATION AND
FINANCIAL PERFORMANCE WOULD SUFFER.
The market for Internet appliances and wireless devices is fragmented and is
characterized by technological change, evolving industry standards and rapid
changes in customer requirements. Our existing products will be rendered less
competitive or obsolete if we fail to introduce new products or product
enhancements that anticipate the features and functionality that customers
demand. The success of our new product introductions will depend on our ability
to:
- accurately anticipate industry trends and changes in technology standards;
- complete and introduce new product designs and features in a timely
manner;
- continue to enhance our existing product lines;
- offer our products across a spectrum of microprocessor families used in
the Internet appliance and wireless devices market; and
- respond promptly to customers' requirements and preferences.
In addition, the introduction of new or enhanced products also requires that
we manage the transition from older products to minimize disruption in customer
ordering patterns.
Development delays are commonplace in the software industry. We have
experienced delays in the development of new products and the enhancement of
existing products in the past and are likely to experience delays in the future.
We may not be successful in developing and marketing, on a timely basis or at
all, competitive products, product enhancements and new products that respond to
technological change, changes in customer requirements and emerging industry
standards.
COMPETITION CAN LEAD TO PRICING PRESSURES AND REDUCED MARKET SHARE.
The market for commercially available Internet appliances and wireless
devices is fragmented and highly competitive. The Jeode product line is targeted
to the emerging Java-based Internet appliance and wireless device marketplace,
which is rapidly changing and is characterized by an increasing number of new
entrants whose products compete with Jeode. As the industry continues to
develop, we expect competition to increase in the future from existing
competitors and from other companies that may enter our existing or future
markets with similar or substitute solutions that may be less costly or provide
better performance or functionality than our products. Many of our current
competitors, as well as potential competitors, have substantially greater
financial, technical, marketing and sales resources than we do, and we might not
be able to compete successfully against these companies. If
4
<PAGE>
price competition increases significantly, competitive pressures could cause us
to reduce the prices of our products, which would result in reduced profit
margins and could harm our ability to provide adequate service to our customers.
Our pricing model for our software products is based on a range of mid-priced
development license packages, combined with low-priced per-unit production, or
commercial use, licenses. Commercial use licenses, which provide for per-unit
royalty payments for each Internet appliance or wireless device that
incorporates our technology, may be subject to significant pricing pressures,
including buy-out arrangements. Also, the market may demand alternative pricing
models in the future. A variety of other potential actions by our competitors,
including increased promotion and accelerated introduction of new or enhanced
products, could also harm our competitive position.
FLUCTUATIONS IN OUR QUARTERLY RESULTS COULD CAUSE THE MARKET PRICE OF OUR ADSS
TO DECLINE.
Our quarterly operating results can vary significantly depending on a number
of factors. These factors include:
- the volume and timing of orders received during the quarter;
- the mix of and changes in customers to whom our products are sold;
- the mix of product and service revenue received during the quarter;
- the mix of development license fees and commercial use royalties received;
- the timing and acceptance of new products and product enhancements by us
or by our competitors;
- changes in pricing;
- buyouts of commercial use licenses;
- product life cycles;
- the level of our sales of third party products;
- variances in costs associated with fixed price contracts;
- purchasing patterns of customers;
- competitive conditions in the industry;
- foreign currency exchange rate fluctuations;
- business cycles and economic conditions that affect the markets for our
products; and
- extraordinary events, such as litigation, including related charges.
All of these factors are difficult to forecast. Our future operating results
may fluctuate as a result of these and other factors, including our ability to
continue to develop innovative and competitive products. An increasing amount of
our sales orders involve products and services that yield revenue over multiple
quarters or upon completion of performance. If license agreements entered into
during a quarter do not meet our revenue recognition criteria, even if we meet
or exceed our forecast of aggregate licensing and other contracting activity, it
is possible that our revenues would not meet expectations.
Due to all of these factors, we believe that period-to-period comparisons of
our results of operations are not necessarily meaningful and should not be
viewed as an indication of our future performance. In the past, we have
experienced actual performance that did not meet financial market expectations.
It is likely that, in some future quarters, our operating results will again be
below the expectations of stock market analysts and investors.
5
<PAGE>
INTERNATIONAL SALES OF OUR PRODUCTS, WHICH WE EXPECT TO ACCOUNT FOR A
SIGNIFICANT PORTION OF OUR TOTAL REVENUE IN THE FUTURE, EXPOSE US TO THE
BUSINESS AND ECONOMIC RISKS OF INTERNATIONAL OPERATIONS.
Sales from outside of the United States accounted for approximately 18% of
our total revenue in 1999 and 22% of our total revenue in the first nine months
of 2000 and are expected to increase over time. We market Jeode to manufacturers
of Internet appliance and wireless devices in Europe and Asia, particularly in
Japan. Economic conditions in Asia and Europe generally, as well as fluctuations
in the value of the Japanese yen and the Euro against the U.S. dollar and
British pound sterling, could impair our revenues and results of operations.
International operations are subject to a number of other special risks. These
risks include:
- foreign government regulation;
- reduced protection of intellectual property rights in some countries where
we do business;
- longer receivable collection periods and greater difficulty in accounts
receivable collection;
- unexpected changes in, or imposition of, regulatory requirements, tariffs,
import and export restrictions and other barriers and restrictions;
- potentially adverse tax consequences;
- the burdens of complying with a variety of foreign laws and staffing and
managing foreign operations;
- general geopolitical risks, such as political and economic instability,
hostilities with neighboring countries and changes in diplomatic and trade
relationships; and
- possible recessionary environments in economies outside the United States.
PRODUCT DEFECTS CAN BE EXPENSIVE TO FIX AND CAN CAUSE US TO LOSE CUSTOMERS.
As a result of their complexity, software products may contain undetected
errors or compatibility issues, particularly when first introduced or as new
versions are released. Despite testing by us and testing and use by current and
potential customers, errors might be found in new products after commencement of
commercial shipments. The occurrence of errors could result in loss of or delay
in market acceptance of our products. The increasing use of our products for
applications in systems that interact directly with the general public,
particularly applications in transportation, medical systems and other markets
where the failure of the Internet appliances or wireless devices could cause
substantial property damage or personal injury, could expose us to significant
product liability claims. In addition, our products are used for applications in
business systems where the failure of our product could be linked to substantial
economic loss. Our license and other agreements with our customers typically
contain provisions designed to limit our exposure to potential product liability
and other claims. It is likely, however, that the limitation of liability
provisions contained in our agreements are not effective in all circumstances
and in all jurisdictions. We may not have adequate insurance against product
liability risks and renewal of our insurance may not be available to us on
commercially reasonable terms. Our errors and omissions insurance may not be
adequate to cover claims. A product liability claim or claim for economic loss
brought against us, or a product recall involving our software, could lead to
significant unexpected expenses and lost sales.
Our operations depend on our ability to protect our computer equipment and
the information stored in our databases against damage by fire, natural
disaster, power loss, telecommunications failure, unauthorized intrusion and
other catastrophic events. We believe we have taken prudent measures to reduce
the risk of interruption in our operations. However, these measures might not be
sufficient.
6
<PAGE>
IF WE LOSE KEY PERSONNEL OR ARE UNABLE TO HIRE ADDITIONAL QUALIFIED PERSONNEL AS
NECESSARY, WE MAY NOT BE ABLE TO SUCCESSFULLY MANAGE OUR BUSINESS OR SELL OUR
PRODUCTS.
Our future performance depends to a significant degree upon the continued
contributions of our key management, product development, sales, marketing and
operations personnel. We do not have agreements with any of our key personnel
that require them to work for us for a specific term, and we do not maintain any
key person life insurance policies. In addition, we believe our future success
will also depend in large part upon our ability to attract and retain highly
skilled managerial, engineering, sales, marketing and operations personnel, many
of whom are in great demand. Competition for qualified personnel is intense in
the San Francisco Bay area, where our United States operations are
headquartered, and we may not be able to attract and retain personnel.
OUR INABILITY TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS FROM THIRD-PARTY
CHALLENGES MAY SIGNIFICANTLY IMPAIR OUR COMPETITIVE POSITION.
We depend on our proprietary technology. Despite our efforts to protect our
proprietary rights, it may be possible for unauthorized third parties to copy
our products or to reverse engineer or obtain and use information that we regard
as proprietary. Our competitors could independently develop technologies that
are substantially equivalent or superior to our technologies. Policing
unauthorized use of our products is difficult, and while we are unable to
determine the extent to which software piracy of our products exists, software
piracy can be expected to be a persistent problem. In addition, effective
protection of intellectual property rights may be unavailable or limited in
foreign countries. The status of United States patent protection in the software
industry is not well defined and will evolve as the United States Patent and
Trademark Office grants additional patents. Patents have been granted on
fundamental technologies in software, and patents may issue that relate to
fundamental technologies incorporated into our products.
OUR PRODUCTS MAY INFRINGE ON THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES,
WHICH MAY RESULT IN LAWSUITS AND PREVENT US FROM SELLING OUR PRODUCTS.
As the number of patents, copyrights, trademarks and other intellectual
property rights in our industry increases, products based on our technology may
increasingly become the subject of infringement claims. Third parties could
assert infringement claims against us in the future. Infringement claims with or
without merit could be time consuming, result in costly litigation, cause
product shipment delays or require us to enter into royalty or licensing
agreements. Royalty or licensing agreements, if required, might not be available
on terms acceptable to us. In addition, we may initiate claims or litigation
against third parties for infringement of our proprietary rights or to establish
the validity of our proprietary rights. Litigation to determine the validity of
any claims, whether or not the litigation is resolved in our favor, could result
in significant expense to us and divert the efforts of our technical and
management personnel from productive tasks. In the event of an adverse ruling in
any litigation, we may be required to pay substantial damages, discontinue the
use and sale of infringing products, expend significant resources to develop
non-infringing technology or obtain licenses to infringing technology. Our
failure to develop or license a substitute technology could prevent us from
selling our products.
CERTAIN SELLING SECURITYHOLDERS HAVE RIGHTS UNDER THEIR WARRANTS TO PURCHASE
SIGNIFICANT NUMBERS OF ADSS AT LOW OR NOMINAL PRICES, AND TO RECEIVE OTHER
CONSIDERATION FROM US UPON THE OCCURRENCE OF SPECIFIED EVENTS WHICH, IF
TRIGGERED, WOULD DILUTE THE OWNERSHIP INTERESTS OF EXISTING SHAREHOLDERS.
Certain selling securityholders who hold a total of 3,600,000 ADSs and
warrants to purchase an additional 1,800,000 ADSs, have rights under their
subscription agreements to be issued additional ADSs if (a) we do not register
with the Securities and Exchange Commission (the "SEC") their ADSs and the ADSs
underlying their warrants included in this prospectus and the SEC does not
declare the
7
<PAGE>
registration statement effective by February 22, 2001, or (b) the registration
statement is suspended for more than 60 days in any 12 month period by Insignia.
Other securityholders also have rights under their warrants to purchase
additional ADSs if our share price on the Nasdaq National Market falls below
specified levels. In some of these circumstances, the purchase price these
securityholders will pay per additional ADS is the nominal value, or L0.20 per
ADS, which is the lowest amount these shares can be purchased under English law.
If we issue additional ADSs under these obligations, the ownership interest of
existing securityholders will be substantially diluted.
WE ARE AT RISK OF SECURITIES CLASS ACTION LITIGATION DUE TO OUR SHARE PRICE
VOLATILITY.
The prices for our ADSs have fluctuated widely in the past. During the
12 months ended December 1, 2000, the closing price of a share of our common
stock ranged from a high of $27.50 to a low of $4.0625. Under the rules of The
Nasdaq Stock Market, our stock price must remain above $1.00 per share for
continued quotation of our shares on the Nasdaq National Market. Stock price
volatility has had a substantial effect on the market prices of securities
issued by us and other high technology companies, often for reasons unrelated to
the operating performance of the specific companies. In the past, following
periods of volatility in the market price of a company's securities, securities
class action litigation has often been instituted against the company. We may in
the future be the target of similar litigation. Regardless of the outcome,
securities litigation may result in substantial costs and divert management
attention and resources.
IT MAY BE DIFFICULT TO ENFORCE JUDGMENTS AGAINST US IN U.S. COURTS.
Insignia is incorporated under the laws of England and Wales. Two of our
executive officers and two of our directors reside in England. All or a
substantial portion of the assets of these persons, and a significant portion of
our assets, are located outside of the United States. As a result, it may not be
possible for investors to effect service of process within the United States
upon these persons or to enforce against them or against us, in United States
courts, judgments obtained in United States courts predicated upon the civil
liability provisions of United States securities laws. There is doubt as to the
enforceability outside of the United States, in original actions or in actions
for enforcement of judgments of United States courts, of civil liabilities
predicated solely upon United States securities laws. In addition, the rights of
holders of our shares and, therefore, of the ADS holders, are governed by
English law, including the Companies Act 1985, and by our Memorandum and
Articles of Association. These rights differ from the rights of shareholders in
typical United States corporations.
INSIGNIA HAS UNDERGONE A CLASS-ACTION LAWSUIT AND AN SEC INVESTIGATION IN THE
PAST FIVE YEARS.
On April 3, 1996, a class-action lawsuit was filed against us alleging that
we misrepresented the Company's business, the strength of our sales force and
our financial health. The suit stemmed from our failure to achieve the consensus
earnings estimates of research analysts in the first quarter following our
initial public offering in November 1995. In August 1997, we reached a
memorandum of understanding to settle the suits. Although we never agreed with
the allegations, we paid $8.0 million to the plaintiffs (of which our insurance
company paid $7.5 million).
In February 1997, we restated our financial results for the quarters ended
March 31 and June 30, 1996. We revised our revenue and net income numbers
downward for these two quarters due to inflated revenues resulting from
misstatement of inventory levels of one of our resellers by two of our sales and
marketing personnel. We agreed with the SEC to cease and desist from engaging in
similar accounting practices. The two Insignia sales and marketing people
involved in the revenue misstatement are no longer with Insignia and were forced
to pay significant fines. Insignia did not have to pay any fines.
8
<PAGE>
THERE IS NO GUARANTEE THAT INSIGNIA WILL BE ABLE TO RECEIVE FUNDS CURRENTLY HELD
IN ESCROW.
An escrow was established in January 1998 under the agreements relating to
the purchase by Citrix Systems, Inc. of our NTRIGUE product line. Originally,
$8.75 million was deposited into the escrow as security for our indemnification
obligations. In August 1999, Citrix released $2.5 million of the escrow funds to
us and made a claim estimated at a maximum amount of the remainder of the funds,
which was $6.25 million. The claim is based on an action that Citrix filed
against GraphOn Corporation in November 1998. The action seeks a declaratory
judgment that Citrix does not infringe any GraphOn rights and has not
misappropriated any GraphOn trade secrets. Citrix filed this action in response
to and to resolve assertions first made to us, which we disclosed to Citrix,
that we used GraphOn confidential information to develop products, including the
product line that we sold to Citrix in February 1998. GraphOn did not file an
action against either Insignia or Citrix relating to its assertions. We have
filed an action against Citrix for release of the escrow funds.
In February 2000 and September 2000, $1.0 million and $0.3 million,
respectively, was released from escrow to us. There is currently $4.975 million
still being held in escrow. There is a possibility that Insignia will never be
able to recover any of the funds in escrow.
CAUTIONARY NOTE ON FORWARD LOOKING STATEMENTS
This prospectus (including the documents incorporated by reference) contains
forward-looking statements regarding our plans, expectations, estimates and
beliefs. These statements involve risks and uncertainties, and actual results
could differ materially from those reflected in the forward-looking statements.
Forward-looking statements in this prospectus are typically identified by words
such as "believes," "anticipates," "expects," "intends," "will" and "may" and
other similar expressions. In addition, any statements that refer to
expectations, projections or other characterizations of future events or
circumstances are forward-looking statements. Insignia will not necessarily
update the information in this prospectus if and when any forward-looking
statement later turns out to be inaccurate. Some of the important risks and
uncertainties that may affect our future results and performance are described
in "Risk Factors," above. Additional information about factors that could affect
our future results and events is included in our reports filed with the SEC and
incorporated by reference in this prospectus.
USE OF PROCEEDS
Insignia will not receive any of the proceeds from the sale of shares by the
selling securityholders.
9
<PAGE>
PRIVATE PLACEMENTS
PRIVATE PLACEMENT ON NOVEMBER 24, 2000
In a private placement that closed on November 24, 2000, certain
securityholders purchased from us a total of 3,600,000 units at a price of $5.00
per unit. Each unit comprises one ADS and one half of one warrant to purchase
one ADS. As described below, Insignia may cancel the warrants if the closing
sale price of our ADSs exceeds $9.00 for 30 consecutive trading days following
the effectiveness of the registration statement. As compensation for services in
connection with the private placement, we (i) issued five-year warrants to
purchase 225,000 of Insignia's ADSs at an exercise price of $5.00 per share, and
(ii) paid a cash compensation equal to six percent (6%) of the gross proceeds
received by us in the private placement, to Jefferies & Company, Inc., the
placement agent.
The securityholders that participated in this private placement received
warrants to purchase one ADS for every two ADSs they purchased. The exercise
price of the warrants was set at an exercise price per ADS equal to the lower of
$6.00 and the average quoted closing sale price of our ADSs for the ten trading
days ending on the day preceding the day Insignia is informed of the security
holder's intent to exercise, less a 10% discount. These warrants expire on
November 24, 2003. However, subject to certain conditions, if the quoted closing
sale price of our ADSs exceeds $9.00 per share for any thirty consecutive
trading days, we may cancel the warrants upon sixty days prior written notice.
These securityholders also have rights under their subscription agreements
to be issued additional ADSs by Insignia if (a) we do not register with the SEC
their ADSs and the ADSs underlying their warrants included in this prospectus
and the SEC does not declare the registration statement effective by
February 22, 2001, or (b) the registration statement is suspended for more than
60 days in any 12 month period by Insignia. If the registration statement we
file with the SEC is not declared effective by the deadline, or if the
registration statement is suspended beyond the 60 day limit, we must issue to
these securityholders 0.07 ADS for each ADS purchased in the private placement.
In addition, we must issue 0.02 ADS for each ADS purchased in the private
placement for each month thereafter until the registration statement is declared
effective by the SEC. In these circumstances, the securityholders must only pay
the nominal value, or L0.20, per additional ADS, which is the lowest amount
these ADSs can be purchased under English law. If we issue additional ADSs under
these obligations, the ownership interest of existing shareholders will be
substantially diluted.
DILUTION ADJUSTMENTS
In December 1999, we issued 1,063,515 Ordinary Shares in ADS form at a price
of $4.23 per share through a private placement. We received $4.5 million less
offering expenses totaling $0.4 million. Along with ADSs, we also issued to the
purchasing securityholders warrants that entitle the purchasing securityholders
to purchase a total of 319,054 ADSs at an exercise price of $5.29 per ADS. As
described below, the exercise price and the number of ADSs issuable under the
warrants are subject to various adjustments. In addition, we may issue
additional warrants that entitle the purchasing securityholders to purchase ADSs
at the nominal value on designated adjustment dates in the future.
Under the December 1999 private placement, the purchasing securityholders
received warrants to purchase three ADSs for every 10 ADSs they purchased. The
exercise price of the warrants was set at 125% of the original per ADS purchase
price, or $5.29. However, the warrants contain anti-dilution provisions which
decrease this exercise price and increase the number of ADSs purchasable if we
sell or are deemed to sell any shares at below market price during the term of
the warrants, which ends on December 9, 2004. The private placement that closed
on November 24, 2000 was a sale which triggered the anti-dilution provisions in
the warrants, and, as a consequence, the exercise price of the warrants has been
decreased from $5.29 to $4.77 per ADS, and the number of ADSs purchasable has
increased to 353,834.
10
<PAGE>
As part of their warrant agreements, the purchasing securityholders may be
entitled to cash payments upon the occurrence of certain Major Transactions, as
defined in the warrant agreements, including change of control provisions. Cash
payments are determined in a methodology described in the agreement. Such
methodology is impacted by market prices.
Under the December 1999 private placement, the purchasing securityholders
may be entitled to additional warrants to purchase ADSs at L0.20 nominal value
per share. These rights terminate upon the earlier of (a) at least
$4.75 million of the funds originally held in escrow on December 9, 1999 being
released to by Citrix, or (b) March 28, 2001. Because Citrix has not released
enough of these funds in escrow, the purchasing securityholders have had an
adjustment date each month since March 10, 2000. The purchasing securityholders
will continue to have an adjustment date each month until enough funds are
released from the escrow or March 28, 2001, whichever comes earlier. In
February 2000 and September 2000, $1.0 million and $0.3 million, respectively,
was released from escrow to Insignia.
The additional warrants entitle these securityholders to purchase ADSs at
L0.20 nominal value per share if the average of the closing bid price of the
ADSs over ten days before an adjustment date is less than $4.23. Through the
date of the filing of this prospectus, there have been 13 adjustment dates.
However, as calculated, the average share price of Insignia's ADSs on those
adjustment dates has exceeded the adjustment price of $4.23 per share and
consequently no adjustment has occurred. The remaining adjustment dates are
January 10, 2001, February 10, 2001, March 10, 2001.
If an adjustment is necessary following an adjustment date, the number of
additional ADSs each such securityholder is entitled to purchase is determined
under a formula. The following table illustrates the number of ADSs issuable
upon exercise of the additional warrants and the percentage ownership that each
represents, assuming: (1) the average bid price is 100%, 75%, 50%, 25% and
24.7696% of the adjustment price of $4.23; (2) the number of ordinary shares
issued and outstanding is 17,883,050 (which is the number of ordinary shares
outstanding on November 24, 2000, immediately after the issuance of 3,600,000
ADSs under a private placement); (3) there was no adjustment of the number of
ADSs issuable upon exercise of the warrants; and (4) the exchange rate remains
at $1.43 per British pound sterling.
<TABLE>
<CAPTION>
ADSS ISSUED AS A PERCENTAGE OF
TOTAL ORDINARY SHARES IN ISSUE
PERCENT OF BID PRICE ADSS ISSUABLE AFTER ISSUANCE
-------------------- ------------- ------------------------------
<S> <C> <C>
100% ($4.23) 0 0%
75% ($3.1725) 389,630 2.13%
50% ($2.115) 1,229,816 6.43%
25% ($1.0575) 4,373,301 19.65%
24.7696% ($1.0477) 4,442,859 19.90%
</TABLE>
The exercise of the additional warrants and sale of the ADSs into the public
market could cause the market price of the ADSs to decline. The ADSs issuable to
those securityholders following an adjustment date may be resold into the public
market. The presence of these additional ADSs in the public market may depress
the share price.
Further, the warrants could result in substantial dilution to all of our
shareholders. If the average bid price of the ADSs before an adjustment date is
less than $4.23, as described above, the additional warrants are exercisable for
a varying number of ADSs based on the bid price. The number of ADSs that may
ultimately be issued upon exercise of the additional warrants is indeterminable,
but will increase as the price of the ADSs drops. This would, in turn, place
additional downward pressure on the price of our ADSs.
11
<PAGE>
Limitations in the transaction agreements preclude these shareholders in
question from achieving certain levels of beneficial ownership.(1) The
restrictions on the levels of beneficial ownership in these documents do not,
however, restrict those securityholders from exercising the warrants or
additional warrants up to those limitations, selling ADSs to decrease their
level of beneficial ownership, and exercising the warrants to receive additional
ADSs. This could result in additional dilution to the holders of our ADSs and a
potential decrease in the price of the ADSs.
Any significant downward pressure on the price of our ADSs as a result of
the exercise of the warrants or additional warrants and the sale of material
amounts of our ADSs could encourage short sales of our ADSs. Short sales could
place further downward pressure on the price of our ADSs.
(1) The securities purchase agreement, the warrants and the additional warrants
contain the restriction that we may not issue and a selling shareholder may not
purchase, and the warrants and additional warrants may not be exercised for any
ADSs if doing so would cause such shareholder to beneficially own more than 9.9%
of the total ordinary shares in issue as determined in accordance with section
13(d) of the Securities Exchange Act of 1934. Under the additional warrants, if
such shareholders are prohibited from exercising the additional warrant as a
result of the 9.9% restriction, the selling shareholder may, at its option and
in addition to its other rights under the securities purchase agreement and the
warrant, retain the warrant or demand payment, in cash, from us in an amount
calculated by the Black-Scholes formula multiplied by the number of ADSs for
which the additional warrant was exercisable, without regard to any limits on
exercise.
12
<PAGE>
SELLING SECURITYHOLDERS
The ADSs covered by this prospectus consist of ADSs currently held and ADSs
issuable upon exercise of warrants.
The number of ADSs that may actually be sold by each selling shareholder
will be determined by the selling shareholder. Because each selling shareholder
may sell all, some or none of the ADSs that it holds, and because the offering
contemplated by this prospectus is not currently being underwritten, no estimate
can be given as to the number of ADSs that will be held by the selling
securityholders at the termination of the offering.
The selling securityholders have advised us that they are the beneficial
owners of the shares being offered.
<TABLE>
<CAPTION>
NUMBER OF ADSS
BENEFICIALLY OWNED ADSS NUMBER OF ADSS
BEFORE OFFERING BEING BENEFICIALLY OWNED AFTER
NAME OF BENEFICIAL OWNER (1) OFFERED (2) OFFERING (3)
------------------------ ------------------ ----------- ------------------------
<S> <C> <C> <C>
Sun Microsystems, Inc......................... 900,000 900,000 0
BSQUARE Corporation........................... 900,000 900,000 0
Warburg Pincus Global Post Venture Capital
Fund........................................ 275,400 275,400 0
Warburg Pincus Trust -- Global Post Venture
Capital Portfolio........................... 244,800 244,800 0
Warburg Pincus International Small Company
Fund........................................ 86,700 86,700 0
Warburg Pincus Global Telecommunications
Fund........................................ 413,100 413,100 0
Castle Creek Technology Partners LLC (4)...... 1,770,422 1,200,000 570,422
Lagunitas Partners LP......................... 198,000 198,000 0
Gruber & McBaine International................ 60,000 60,000 0
Jon D. Gruber................................. 30,000 30,000 0
Jon D. Gruber Trustee fbo Lindsay D Gruber DTD
12/30/75.................................... 6,000 6,000 0
Jon D. Gruber Trustee fbo Jonathan Wyatt
Gruber 12/27/76............................. 6,000 6,000 0
Clarion Partners, L.P......................... 148,500 148,500 0
Clarion Offshore Fund Ltd..................... 76,500 76,500 0
Velocity Investment Partners, Ltd............. 322,500 322,500 0
Ocean Strategic Holdings Limited.............. 75,000 75,000 0
Avalon Panama SA.............................. 349,198 30,000 319,198
Vincent S. Pino (5) (6)....................... 177,082 84,375 92,707
Tiffany R. Pino............................... 99,201 84,375 14,826
Michael V. Pino............................... 99,202 84,375 14,827
Rosemary G. Pino.............................. 89,374 84,375 4,999
Richard N. Zehner (Barbara L. Zehner as
additional investor) (7).................... 544,750 52,500 492,250
Robert Bernard Waley-Cohen.................... 212,811 37,500 175,311
Jefferies & Company, Inc. (8)................. 225,000 225,000 0
</TABLE>
------------------------
(1) Except as otherwise indicated, such beneficial ownership assumes the
exercise of all warrants that are exercisable within the next 60 days.
(2) All ADSs listed in this table will be offered unless otherwise indicated.
(3) Assumes the sale of all ADSs being offered hereby
13
<PAGE>
(4) Represents 9.9% of the ordinary shares outstanding as of the date of this
prospectus, and includes ordinary shares and warrants covered separately by
Registration Statement No. 333-94357. Each of the warrants held by Castle
Creek cannot be exercised at any time to the extent that exercise would
result in Castle Creek having beneficial ownership of more than 9.9% of the
total number of ordinary shares in issue at the time of exercise. The
aggregate number of shares issuable to Castle Creek under all outstanding
warrants exceeds the number set forth herein. If the total number of
ordinary shares in issue increases, including as a result of issuance of
ordinary shares upon exercise of the warrants, then the number of shares
beneficially owned by Castle Creek may also increase.
(5) Mr. Pino is a director of Insignia.
(6) Does not include ADSs held by Ms. Tiffany R. Pino, Mr. Michael V. Pino and
Ms. Rosemary G. Pino, members of Mr. Pino's family
(7) Includes 104,200 shares held by trusts for the benefit of Mr. Zehner's
children, as to which Mr. Zehner disclaims beneficial ownership.
(8) The placement agent of the November 2000 private placement
PLAN OF DISTRIBUTION
We are registering the shares on behalf of the selling securityholders. The
selling securityholders acquired their shares and warrants from Insignia on
November 24, 2000. This prospectus covers the shares they purchased on
November 24, 2000 and the shares that we issue if and when they exercise the
warrants. To our knowledge, the selling securityholders have not entered into
any agreement, arrangement or understanding with any particular broker or market
maker with respect to the sale of the shares covered by this prospectus.
The selling securityholders may offer and sell shares from time to time. In
addition, a selling shareholder's donees, pledgees, transferees and other
successors in interest may sell shares received from a named selling shareholder
after the date of this prospectus. The selling securityholders will act
independently of Insignia in making decisions with respect to the timing, manner
and size of each sale. Sales may be made over the Nasdaq National Market or
otherwise, at then prevailing market prices, at prices related to prevailing
market prices or at negotiated prices. The shares may be sold by one or more of
the following:
- a block trade in which the broker-dealer engaged by a selling shareholder
will attempt to sell the shares as agent but may position and resell a
portion of the block as principal to facilitate the transaction;
- purchases by the broker-dealer as principal and resale by the broker or
dealer for its account pursuant to this prospectus; and
- ordinary brokerage transactions and transactions in which the broker
solicits purchasers.
The selling securityholders have advised Insignia that they have not, as of
the date of this prospectus, entered into any agreements, understandings or
arrangements with any underwriters or broker-dealers for the sale of shares, nor
is there an underwriter or coordinating broker acting in connection with the
proposed sale of shares by the selling securityholders.
In connection with distributions of the shares or otherwise, the selling
securityholders may enter into hedging transactions with broker-dealers or other
financial institutions. In connection with these transactions, broker-dealers or
financial institutions may engage in short sales of the shares in the course of
hedging the positions they assume with selling securityholders. The selling
securityholders may also sell shares short and redeliver the shares to close out
these short positions. The selling
14
<PAGE>
securityholders may also enter into option or other transactions with
broker-dealers or other financial institutions that require the delivery to the
broker-dealer or financial institution of the shares, which the broker-dealer or
financial institution may resell or otherwise transfer under this prospectus.
The selling securityholders may also loan or pledge the shares to a
broker-dealer or other financial institution and the broker-dealer or financial
institution may sell the shares so loaned or, upon a default, the broker-dealer
may sell the pledged shares under this prospectus. In addition, any securities
covered by this prospectus that qualify for sale under Rule 144 of the
Securities Act may be sold under Rule 144 rather than under this prospectus.
Transactions under this prospectus may or may not involve brokers or
dealers. The selling securityholders may sell shares directly to purchasers or
to or through broker-dealers, who may act as agents or principals.
Broker-dealers engaged by the selling securityholders may arrange for other
broker-dealers to participate in selling shares. Broker-dealers or agents may
receive compensation in the form of commissions, discounts or concessions from
the selling securityholders in amounts to be negotiated in connection with the
sale. Broker-dealers or agents may also receive compensation in the form of
discounts, concessions or commissions from the purchasers of shares for whom the
broker-dealers may act as agents or to whom they sell as principal, or both.
This compensation as to a particular broker-dealer might exceed customary
commissions.
The selling securityholders and any participating broker-dealers may be
deemed to be "underwriters" within the meaning of the Securities Act in
connection with sales of shares covered by this prospectus. Any commission,
discount or concession received by a broker-dealer and any profit on the resale
of shares sold by them while acting as principals might be deemed to be
underwriting discounts or commissions under the Securities Act. Because selling
securityholders may be deemed to be underwriters within the meaning of the
Securities Act, the selling securityholders will be subject to the prospectus
delivery requirements of the Securities Act.
Insignia has informed the selling securityholders that the anti-manipulation
rules under the Exchange Act apply to sales of shares in the market and to the
activities of the selling securityholders and their affiliates. The selling
securityholders have advised Insignia that during the time they may be engaged
in the attempt to distribute registered shares, they will:
- not engage in any stabilization activity in connection with any of
Insignia's securities;
- not bid for or purchase any of Insignia's securities or any rights to
acquire Insignia's securities, or attempt to induce any person to purchase
any of Insignia's securities or rights to acquire Insignia's securities,
other than, in each case, as permitted under the Exchange Act; and
- not sell or distribute the shares until after the prospectus has been
appropriately amended or supplemented, if required, to set forth the terms
of sale or distribution.
Insignia has the ability to suspend the use of this prospectus for a total
of 60 business days in any 12 month period if, in the good faith judgment of the
Insignia board of directors, it would be seriously detrimental to Insignia and
its securityholders for resales of shares to be made.
This offering will terminate on the earlier of:
- November 24, 2003; or
- the date on which all shares offered have been sold by the selling
securityholders.
Insignia has agreed to pay the expenses of registering the shares under the
Securities Act, including registration and filing fees, printing expenses,
administrative expenses and certain legal and accounting fees. The selling
securityholders will bear all discounts, commissions or other amounts payable to
underwriters, dealers or agents as well as fees and disbursements for legal
counsel retained by any selling shareholder.
15
<PAGE>
Insignia and the selling securityholders have agreed to indemnify each other
and other related parties against specified liabilities, including liabilities
arising under the Securities Act. The selling securityholders may agree to
indemnify any agent, dealer or broker-dealer that participates in transactions
involving sales of shares against liabilities, including liabilities arising
under the Securities Act.
Upon the occurrence of any of the following events, a supplement to this
prospectus will be filed, if required, under Rule 424(b) under the Securities
Act to include additional disclosure before offers and sales of the securities
in question are made:
- to the extent the securities are sold at a fixed price or at a price other
than the prevailing market price, such price would be set forth in the
prospectus;
- if the securities are sold in block transactions and the purchaser acting
in the capacity of an underwriter wishes to resell, such arrangements
would be described in the prospectus;
- if the selling securityholders sell to a broker-dealer acting in the
capacity as an underwriter, such broker-dealer will be identified in the
prospectus;
- if the compensation paid to broker-dealers is other than usual and
customary discounts, concessions or commissions, disclosure of the terms
of the transaction would be included in the prospectus; and
- if a selling shareholder notifies Insignia that a donee or pledgee intends
to sell more than 500 shares.
LEGAL MATTERS
The validity, under English law, of the shares offered hereby will be passed
upon for Insignia by Macfarlanes, London.
EXPERTS
The consolidated financial statements incorporated in this prospectus by
reference to our Annual Report on Form 10-K for the year ended December 31,
1999, have been so incorporated in reliance on the report of
PricewaterhouseCoopers LLP, independent accountants, given on the authority of
said firm as experts in auditing and accounting.
DOCUMENTS INCORPORATED BY REFERENCE IN THIS PROSPECTUS
The SEC allows Insignia to "incorporate by reference" the information that
Insignia files with the SEC. This means that Insignia can disclose important
information by referring the reader to those SEC filings. The information
incorporated by reference is considered to be part of this prospectus, and later
information Insignia files with the SEC will update and supersede this
information. Insignia incorporates by reference the documents listed below and
any future filings made with the SEC under Section 13(a), 13(c), 14, or 15(d) of
the Securities Exchange Act of 1934 until termination of the offering:
- Quarterly report on Form 10-Q for the quarter ended September 30, 2000;
- Annual report on Form 10-K for the year ended December 31, 1999;
- Current report on Form 8-K as filed on November 29, 2000 with the SEC;
- The description of Insignia's ordinary shares contained in Insignia's
registration statement on Form 8-A, and any amendment or report filed for
the purpose of updating such description.
16
<PAGE>
SOME OF THE INFORMATION ABOUT INSIGNIA THAT MAY BE IMPORTANT TO AN
INVESTMENT DECISION IS NOT PHYSICALLY INCLUDED IN THIS PROSPECTUS. INSTEAD, THE
INFORMATION IS "INCORPORATED" INTO THIS PROSPECTUS BY REFERENCE TO ONE OR MORE
DOCUMENTS THAT INSIGNIA FILED WITH THE SEC. THESE DOCUMENTS (INCLUDING ANY
EXHIBITS THAT ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO THE INFORMATION
THAT THIS PROSPECTUS INCORPORATES) ARE AVAILABLE UPON REQUEST WITHOUT CHARGE
FROM INVESTOR RELATIONS, INSIGNIA SOLUTIONS PLC, 41300 CHRISTY STREET, FREMONT,
CALIFORNIA 94538 (TELEPHONE NUMBER (510) 360-3700). RECIPIENTS SHOULD MAKE ALL
REQUESTS FOR DOCUMENTS BY THE FIFTH BUSINESS DAY BEFORE THEY MAKE THEIR FINAL
INVESTMENT DECISION, TO BE SURE THE DOCUMENTS ARRIVE ON TIME. INFORMATION THAT
HAS BEEN INCORPORATED BY REFERENCE IS CONSIDERED PART OF THIS PROSPECTUS AND
DISCLOSED TO INVESTORS, WHETHER OR NOT INVESTORS OBTAIN A COPY OF THE DOCUMENT
CONTAINING THE INFORMATION.
This prospectus may contain information that updates, modifies or is
contrary to information in one or more of the documents incorporated by
reference in this prospectus. Reports Insignia files with the SEC after the date
of this prospectus may also contain information that updates, modifies or is
contrary to information in this prospectus or in documents incorporated by
reference in this prospectus. Investors should review these reports as they may
disclose a change in the business, prospects, financial condition or other
affairs of Insignia after the date of this prospectus.
WHERE YOU CAN FIND MORE INFORMATION
The documents incorporated by reference into this prospectus are available
from us upon request. We will provide a copy of any and all of the information
that is incorporated by reference in this prospectus, not including exhibits to
the information unless those exhibits are specifically incorporated by reference
into this proxy statement prospectus, to any person, without charge, upon
written or oral request.
Requests for documents should be directed to Investor Relations, Insignia
Solutions plc, 41300 Christy Street, Fremont, California 94538 (telephone number
(510) 360-3700).
We file reports, proxy statements and other information with the Securities
and Exchange Commission. Copies of our reports, proxy statements and other
information may be inspected and copied at the public reference facilities
maintained by the SEC:
<TABLE>
<S> <C> <C>
Judiciary Plaza Citicorp Center Seven World Trade Center
Room 1024 5000 West Madison Street 13th Floor
450 Fifth Street, N.W. Suite 1400 New York, New York 10048
Washington, D.C. 20549 Chicago, Illinois 60661
</TABLE>
Copies of these materials can also be obtained by mail at prescribed rates
from the Public Reference Section of the SEC, 450 Fifth Street, N.W.,
Washington, D.C. 20549 or by calling the SEC at 1-800-SEC-0330. The SEC
maintains a Website that contains reports, proxy statements and other
information regarding each of us. The address of the SEC Website is
http://www.sec.gov.
Insignia has filed a registration statement under the Securities Act with
the Securities and Exchange Commission with respect to the shares to be sold by
the selling securityholders. This prospectus has been filed as part of the
registration statement. This prospectus does not contain all of the information
set forth in the registration statement because certain parts of the
registration statement are omitted in accordance with the rules and regulations
of the SEC. The registration statement is available for inspection and copying
as set forth above.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF
AN OFFER TO PURCHASE, THE SECURITIES OFFERED BY THIS PROSPECTUS IN ANY
JURISDICTION TO OR FROM ANY PERSON TO WHOM OR FROM WHOM IT IS UNLAWFUL TO MAKE
SUCH OFFER, SOLICITATION OF AN OFFER OR PROXY SOLICITATION IN SUCH JURISDICTION.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES
PURSUANT TO THIS PROSPECTUS SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE INFORMATION SET FORTH OR
INCORPORATED HEREIN BY REFERENCE OR IN OUR AFFAIRS SINCE THE DATE OF THIS
PROSPECTUS.
17
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The aggregate estimated expenses to be paid by the Registrant in connection
with this offering are as follows:
<TABLE>
<CAPTION>
<S> <C>
Securities and Exchange Commission registration fee......... $ 9,281.25
Accounting fees and expenses*............................... 10,000.00
Legal fees and expenses*.................................... 10,000.00
Miscellaneous*.............................................. 5,718.75
----------
Total................................................... $35,000.00
</TABLE>
------------------------
* Estimate
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Insignia's Articles of Association contain a provision to the effect that,
so far as permitted by the statutory provisions of English law, Insignia shall
indemnify the directors and secretary against liabilities incurred by them in
relation to the affairs of Insignia. However, the Companies Act 1985 rendered
any such indemnity ineffective to the extent it applies to neglect or breach of
duty in relation to Insignia, except to the extent that it covers costs incurred
by the director or secretary in respect of court proceedings in which judgment
is given in his favor.
Insignia's policy is to enter into indemnity agreements with each of its
directors and executive officers. In addition, Insignia Solutions, Inc., a
Delaware corporation and a wholly owned subsidiary of Insignia, enters into
indemnity agreements with each of Insignia's directors and executive officers.
The indemnity agreements provide that directors and executive officers will be
indemnified and held harmless to the fullest possible extent permitted by law,
including against all expenses (including attorneys' fees), judgments, fines and
settlement amounts paid or reasonably incurred by them in any action, suit or
proceeding, including any derivative action by or in the right of Insignia, on
account of their services as directors, officers, employees or agents of
Insignia or as directors, officers, employees or agents of any other company or
enterprise when they are serving in such capacities at the request of Insignia.
Neither Insignia nor Insignia Solutions, Inc. will be obligated pursuant to the
agreements to indemnify or advance expenses to an indemnified party with respect
to proceedings or claims:
- initiated by the indemnified party and not by way of defense, except with
respect to a proceeding authorized by the board of directors and
successful proceedings brought to enforce a right to indemnification under
the indemnity agreements;
- for any amounts paid in settlement of a proceeding unless Insignia
consents to the settlement;
- on account of any suit in which judgment is rendered against the
indemnified party for an accounting of profits made from the purchase or
sale by the indemnified party of securities of Insignia under
Section 16(b) of the Exchange Act and related laws;
- on account of conduct by an indemnified party that is finally adjudged to
have been in bad faith or conduct that the indemnified party did not
reasonably believe to be in, or not opposed to, the best interests of
Insignia;
- on account of any criminal action or proceeding arising out of conduct
that the indemnified party has reasonable cause to believe was unlawful;
or
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<PAGE>
- if a final decision by a court having jurisdiction in the matter shall
determine that such indemnification is not lawful.
The indemnity agreements are not exclusive of any rights a director or
executive officer may have under the Articles of Association, other agreements,
any majority-in-interest vote of the shareholders or vote of disinterested
directors, applicable law or otherwise.
The indemnification provision in the Articles of Association, and the
indemnity agreements, may be sufficiently broad to permit indemnification of
Insignia's directors and executive officers for liabilities arising under the
Securities Act. In addition, Insignia has director and officer liability
insurance.
ITEM 16. EXHIBITS.
The following exhibits are filed herewith or incorporated by reference
herein:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
--------------------- -------------
<C> <S>
3.01 Registrant's Articles of Association (incorporated herein by
reference to Exhibit 3.02 of the Registrant's Registration
Statement on Form F-1 (No. 33-98230) declared effective by
the Commission on November 13, 1995 (the "Form F-1")).
3.02 Registrant's Memorandum of Association (incorporated herein
by reference to Exhibit 3.04 of the Form F-1).
4.01 Registration Rights Agreement, dated as of June 5, 1992, as
amended (incorporated herein by reference to Exhibit 4.02
of the Form F-1).
4.02 Deposit Agreement between Registrant and The Bank of New
York (incorporated herein by reference to Exhibit 4.03 of
the Registrant's Annual Report on Form 10-K (File No.
0-27012) for the year ended December 31, 1995 (the "1995
10-K")).
4.03 Form of American Depositary Receipt (included in Exhibit
4.02) (incorporated herein by reference to Exhibit 4.03 of
the 1995 10-K).
4.04 Securities Purchase Agreement dated as of December 9, 1999,
between Insignia Solutions plc and Castle Creek Technology
Partners LLC (incorporated herein by reference to Exhibit
10.50 to the Registrant's Current Report on Form 8-K filed
on December 15, 1999 (the "1999 8-K")).
4.05 Securities Purchase Agreement dated as of December 9, 1999,
between Insignia Solutions plc and the Purchasers named
therein (incorporated herein by reference to Exhibit 10.51
to the 1999 8-K).
4.06 Registration Rights Agreement dated as of December 9, 1999,
between Insignia Solutions plc and Castle Creek Technology
Partners LLC (incorporated herein by reference to Exhibit
4.05 to the 1999 8-K).
4.07 Registration Rights Agreement dated as of December 9, 1999,
between Insignia Solutions plc and the Purchasers named
therein (incorporated herein by reference to Exhibit 4.08
to the 1999 8-K).
4.08 ADSs Purchase Warrant issued to Castle Creek Technology
Partners LLC dated December 9, 1999 (incorporated herein
by reference to Exhibit 4.06 to the 1999 8-K).
4.09 ADSs Purchase Reset Warrant issued to Castle Creek
Technology Partners LLC dated December 9, 1999
(incorporated herein by reference to Exhibit 4.07 to the
1999 8-K).
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
--------------------- -------------
<C> <S>
4.10 Form of ADSs Purchase Warrant issued December 9, 1999
(incorporated by reference to Exhibit 4.09 to the 1999
8-K).
4.11 Form of ADSs Purchase Reset Warrant issued December 9, 1999
(incorporated by reference to Exhibit 4.10 to the 1999
8-K).
4.12 Form of ADSs Purchase Warrant issued to the Investors in the
Private Placement (incorporated by reference to Exhibit
4.11 to the Registrant's Current Report on Form 8-K filed
on November 29, 2000 (the "2000 8-K")).
4.13 ADSs Purchase Warrant issued to Jefferies & Company, Inc.
dated November 24, 2000 (incorporated by reference to
Exhibit 4.12 to the 2000 8-K).
5.01 Opinion of MacFarlanes.
10.52 Form of Subscription Agreement for the Purchase of units by
the investors in the Private Placement (incorporated by
reference to Exhibit 10.52 of the 2000 8-K).
10.53 Warrant Agreement, dated as of November 24, 2000, between
Insignia Solutions plc and Jefferies & Company, Inc.
(incorporated by reference to Exhibit 10.53 to the 2000
8-K).
23.01 Consent of MacFarlanes (included in Exhibit 5.01).
23.02 Consent of PricewaterhouseCoopers LLP, Independent
Accountants.
24.01 Power of Attorney (included on signature page).
</TABLE>
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made
pursuant to this Registration Statement, a post-effective amendment to this
Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act")
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
Registration Statement (notwithstanding the foregoing, any increase or
decrease in volume or securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
maybe reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum offering price set forth
in the "Calculation of Registration Fee" table in the effective registration
statement); and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the Registration Statement or any
material change to such information in the Registration Statement; provided,
however, that paragraphs (1)(i) and (1)(ii) do not apply if the information
required to be included in a post-effective amendment by paragraphs
(1)(i) or (1)(ii) is contained in any periodic report filed with or
furnished to the Securities and Exchange Commission by the Registrant
pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of
1934 (the "Exchange Act") that are incorporated by reference in the
Registration Statement.
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<PAGE>
(2) That, for the purpose of determining any liability under the Securities
Act, each post-effective amendment shall be deemed a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
(4) That, for purposes of determining any liability under the Securities
Act, each filing of the Registrant's annual report pursuant to Section 13(a) or
Section 15(d) of the Exchange Act (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the Exchange
Act) that is incorporated by reference in this Registration Statement shall be
deemed to be a new registration statement relating to the securities offered
herein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the event
that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this amendment to
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Fremont, State of California, on December 4,
2000.
<TABLE>
<S> <C> <C>
INSIGNIA SOLUTIONS PLC
By: /s/ RICHARD M. NOLING
-----------------------------------------
Richard M. Noling
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Richard M. Noling, as his true and lawful
attorney-in-fact and agent with full power of substitution and resubstitution,
for him and in his name, place and stead, in any and all capacities, to sign any
or all amendments (including post-effective amendments) to this Registration
Statement on Form S-3 of Insignia Solutions plc, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, grant unto said attorney-in-fact and agent,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the foregoing, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or his substitutes, may
lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
PRINCIPAL EXECUTIVE OFFICER:
/s/ RICHARD M. NOLING
------------------------------------------- President, Chief Executive December 4, 2000
Richard M. Noling Office and Director
PRINCIPAL FINANCIAL OFFICER AND PRINCIPAL ACCOUNTING
OFFICER:
/s/ STEPHEN M. AMBLER Senior Vice President,
------------------------------------------- Chief Financial Officer December 4, 2000
Stephen M. Ambler and Secretary
ADDITIONAL DIRECTORS:
/s/ NICHOLAS, VISCOUNT BEARSTED
------------------------------------------- Chairman of the Board of December 4, 2000
Nicholas, Viscount Bearsted Directors
/s/ ALBERT E. SISTO
------------------------------------------- Director December 4, 2000
Albert E. Sisto
/s/ VINCENT S. PINO
------------------------------------------- Director December 4, 2000
Vincent S. Pino
/s/ DAVID G. FRODSHAM
------------------------------------------- Director December 4, 2000
David G. Frodsham
</TABLE>
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<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT TITLE
--------------------- -------------
<C> <S>
5.01 Opinion of MacFarlanes
Consent of PricewaterhouseCoopers LLP, Independent
23.02 Accountants
</TABLE>
