<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A2
/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the fiscal year ended March 31, 1998
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 For the transition period from ________ to ________
Commission file number 0-15946
DELPHI INFORMATION SYSTEMS, INC.
(Exact name of registrant as specified in its charter)
Delaware 77-0021975
(State or other jurisdiction of incorporation) (I.R.S. Employer
3501 Algonquin Road Identification Number)
Rolling Meadows, Illinois 60008
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (847) 506-3100
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Title of each class
-------------------
Common Stock, par value $0.10 per share
Preferred Share Purchase Rights
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 reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes /X/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein and will not be contained, to the best
of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to the
Form 10-K. [ ]
As of June 1, 1998, the number of shares of Common Stock outstanding was
7,395,449. As of such date, the aggregate market value of Common Stock held by
nonaffiliates, based upon the last sale price of the shares as reported on the
NASDAQ National Market System on such date, was approximately $29,690,000.
Documents Incorporated by Reference: None
<PAGE>
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The directors of the Company are as follows:
YUVAL ALMOG, 48, was elected a director of the Company in September 1991 and was
elected Chairman of the Board of Directors on November 30, 1993. Mr. Almog is
President of Coral Group, Inc. and Managing Partner of its venture capital
partnerships. He joined the Coral Group in 1986 and became its Managing Partner
in 1991. Mr. Almog is Chairman of the Board of Directors of Tricord Systems,
Inc. and is also a director of CallConnect Communications, Inc., Friendly
Machines, GGC Networks, Inc., Optical Solutions, Inc., Teltech Resource Network
Corp. and BayStone Software, Inc.
WILLIAM R. BAUMEL, 30, was appointed a director of the Company in July 1996.
Mr. Baumel is a partner with Coral Group, where he specializes in information
services and technology investing. Mr. Baumel is also a director of Optical
Solutions, Inc. Mr. Baumel joined Coral Group in 1996. From 1994 to 1996, Mr.
Baumel held various positions with the Private Markets Group of Brinson
Partners, Inc., an institutional money manager. His last position with
Brinson Partners' Private Market Group was as portfolio manager. Mr. Baumel
held a marketing position with Proctor & Gamble, a consumer products company,
during 1993, and from 1990 to 1992, was a certified public accountant and
consultant with Deloitte & Touche, an international accounting and consulting
firm.
LARRY G. GERDES, 49, was elected a director of the Company in 1985. Since 1991,
Mr. Gerdes has been Chief Executive Officer of Transcend Services, Inc. (NASDAQ
- - TRCR), a provider of outsourced services to hospitals in the health management
area. Mr. Gerdes is also a director of Transcend Services, Inc. Prior to
Transcend, Mr. Gerdes spent over 14 years in various executive capacities at HBO
& Company (NASDAQ - HBOC), including serving as Chief Financial Officer of HBO &
Company and as CEO of Medical Systems Support, Inc., a wholly owned subsidiary
of HBO & Company. Since 1983 Mr. Gerdes has been a general partner of Sand Hill
Financial Company, a venture capital partnership located in Palo Alto,
California. Additionally, since 1991 Mr. Gerdes has been a general partner in
Gerdes Huff Investments, a private investment partnership located in Atlanta.
MAX SEYBOLD, 37, was appointed to the Board of Directors in March 1998. Mr.
Seybold joined the Company in January, 1998 as Senior Vice President of
Professional Services and was named President and Chief Executive Officer in
February 1998. Prior to joining the Company, Mr. Seybold held the position of
President and Chief Executive Officer for Mindware/BPR, Inc. of Waltham,
Massachusetts, an international solutions consulting firm. Prior to joining
Mindware/BPR, Mr. Seybold founded software/professional services firms based in
Switzerland and Germany. Mr. Seybold holds a Masters of Business Administration
in Strategic Management and Information Technology from
Freidrich-Alexander-University in Nurenburg, Germany.
2
<PAGE>
The executive officers and senior management of the Company are as follows:
<TABLE>
<CAPTION>
Name Age Position
- ---- ---- ---------
<S> <C> <C>
Max Seybold 37 President, Chief Executive Officer
Reid E. Simpson 41 Senior Vice President-Finance & Administration
and Chief Financial Officer
Robin Raina 30 Senior Vice-President
</TABLE>
The executive officers of the Company are elected annually by the Board.
Max Seybold joined the Company in January 1998 as Senior Vice
President-Professional Services and was named President and Chief Executive
Officer in February 1998. In March 1998, Mr. Seybold was elected to the Board of
Directors. Prior to joining the Company, Mr. Seybold held the position of
President and Chief Executive Officer for Mindware/BPR, Inc. of Waltham,
Massachusetts, an international solutions consulting firm. Prior to joining
Mindware/BPR Mr. Seybold founded software/professional services firms based in
Switzerland and Germany. Mr. Seybold holds a Masters of Business Administration
in Strategic Management and Information Technology from
Friedrich-Alexander-University in Nuernberg, Germany.
Reid Simpson joined the Company in December 1997 as Senior Vice
President-Finance & Administration and Chief Financial Officer. Prior to joining
the Company, Mr. Simpson served the Dun & Bradstreet Corporation (D&B), a
business information and solutions company for seventeen years. While at D&B,
Simpson served as Chief Financial Officer of three divisions as follows: from
1993 to 1997, DonTech, a yellow pages publisher; from 1991 to 1993, Nielson
Marketing Research, a market research company; and from 1988 to 1991, D&B Plan
Services, a third party administrator for health insurance plans. In addition,
while at D&B, Mr. Simpson held positions at McCormack & Dodge, a provider of
packaged financial software, Corporate headquarters, and internal audit. Mr.
Simpson received a B.S. in Accounting from Michigan State University in 1979.
Robin Raina joined the Company in October 1997 as Vice President-Professional
Services and was promoted to Senior Vice President in February 1998. Prior to
joining the Company, Mr. Raina held senior management positions for Mindware/BPR
serving in Asia and North America. While employed by Mindware/BPR, an
international technology consulting firm, Mr. Raina was responsible for managing
projects for multinational corporations including setting-up offshore
laboratories, building intranets, managing service bureaus and support centers,
providing custom programming, and year 2000 conversions. Mr. Raina holds an
Industrial Engineering degree from Thapar University in Punjab, India.
3
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
Set forth below is information regarding the annual and long-term compensation
for the fiscal years ended March 31, 1998, 1997, and 1996 for the current and
former Chief Executive Officers, two current executive officers, and one former
executive officer of the Company (collectively, the "Named Officers").
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
---------------------------
Long-Term
Annual Compensation Compensation
------------------------------------------ -----------------
Name and Fiscal Other Annual Stock Options All other
Current Position Year Salary Bonus Compensation (A) (# of shares) Compensation (B)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Max Seybold (1) 1998 29,423 23,538 91,000 180,000 -
President and Chief Executive Officer 1997 - - - - -
1996 - - - - -
Reid E. Simpson (2) 1998 43,269 - - 90,000 -
Senior Vice President-Finance & 1997 - - - - -
Administration and Chief Financial 1996 - - - - -
Officer
Robin Raina (3) 1998 66,692 20,000 - 90,000 -
Senior Vice President 1997 - - - - -
1996 - - - - -
John Trustman (4) 1998 122,500 60,577 - 180,000 111,057
Former President and Chief Executive 1997 - - - - -
Officer 1996 - - - - -
James Harsch (5) 1998 121,577 30,450 - - 24,168
Former Vice President-Administration and 1997 100,385 - 43,963 60,000 -
Chief Financial Officer 1996 - - - - -
</TABLE>
(A) Represents reimbursement for relocation expenses and consulting fees.
(B) Represents severance payments.
(1) Mr. Seybold joined the Company effective January 9, 1998.
(2) Mr. Simpson joined the Company effective December 8, 1997.
(3) Mr. Raina joined the Company effective November 1, 1997.
(4) Mr. Trustman was employed by the Company from May 28, 1997 to February 5,
1998. While no definitive employment agreement was entered into, upon
execution of such an agreement, the Company contemplated awarding Mr.
Trustman options to purchase 180,000 shares of Common Stock subject to
certain terms and conditions. Pursuant to the terms and conditions of
the Delphi Information Systems, Inc. 1996 Stock Option Plan,
participants have 90 days from the termination of employment to exercise
vested stock options. Mr. Trustman left the Company effective February
5, 1998 and did not exercise any options within 90 days.
(5) Mr. Harsch was employed by the Company from July 15, 1996 to December 31,
1997.
4
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
Set forth in the table below is information regarding individual grants of
stock options to purchase shares of Common Stock made during the fiscal year
ended March 31, 1998 to each of the Named Officers.
OPTION GRANTS IN LAST FISCAL YEAR
Individual Grants (A)
<TABLE>
<CAPTION>
Potential Realizable
Value At Answered Annual
Rates of Stock
Appreciation For Term
Number of Securities % of Total Options Exercise
Underlying Options Granted to Employees Price Expiration
Name Granted (#) in Fiscal Year ($/SH) Date 5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
Max Seybold 15,000 (1) 4.07 07/09/08 42,040 112,652
15,000 (1) 4.07 07/09/09 47,314 130,841
15,000 (1) 4.07 07/09/10 52,858 150,935
15,000 (1) 4.07 07/09/11 58,686 173,132
15,000 (2) 3.28 03/23/09 35,979 97,933
15,000 (2) 3.28 03/23/10 40,337 113,340
15,000 (2) 3.28 03/23/11 44,917 130,360
15,000 (2) 3.28 03/23/12 49,733 149,162
60,000 (2) 3.28 03/23/15 262,830 872,911
------- ------- ---------
180,000 23% 634,694 1,931,266
------- --- ------- ---------
Reid E. Simpson 15,000 (3) 5.00 06/08/08 51,646 138,393
15,000 (3) 5.00 06/08/09 58,126 160,738
15,000 (3) 5.00 06/08/10 64,937 185,423
15,000 (3) 5.00 06/08/11 72,096 212,693
30,000 (2) 3.28 03/23/15 131,415 436,455
------- ------- ---------
90,000 11% 378,220 1,133,702
------- --- ------- ---------
Robin Raina 5,000 (4) 5.15 05/01/08 17,732 47,515
5,000 (4) 5.15 05/01/09 19,956 55,187
5,000 (4) 5.15 05/01/10 22,295 63,662
5,000 (4) 5.15 05/01/11 24,753 73,025
10,000 (2) 3.28 03/23/09 23,986 65,289
10,000 (2) 3.28 03/23/10 26,891 75,556
10,000 (2) 3.28 03/23/11 29,945 86,906
10,000 (2) 3.28 03/23/12 33,155 99,441
30,000 (2) 3.28 03/23/15 131,415 436,455
------- ------- ---------
90,000 11% 330,128 1,003,036
------- --- ------- ---------
John Trustman 37,500 (5) 5.47 11/28/07 141,252 378,506
37,500 (5) 5.47 11/28/08 158,974 439,619
37,500 (5) 5.47 11/28/09 177,602 507,133
37,500 (5) 5.47 11/28/10 197,183 581,716
30,000 (5) 5.47 05/31/13 200,505 643,322
-------- --- ------- ---------
180,000 23% 875,516 2,550,296
-------- --- ------- ---------
</TABLE>
(A) All options granted under the Delphi Information Systems, Inc. 1996 Stock
Incentive Plan
(1) Granted on January 9, 1998
(2) Granted on March 23, 1998
(3) Granted on December 8, 1997
(4) Granted on November 1, 1997
(5) While no definitive employment agreement was entered into, upon
execution of such an agreement, the Company contemplated awarding Mr.
Trustman options to purchase 180,000 shares of Common Stock subject to
certain terms and conditions. Pursuant to the terms and conditions of
the Delphi Information Systems, Inc. 1996 Stock Option Plan,
participants have 90 days from the termination of employment to exercise
vested stock options. Mr. Trustman left the Company effective February
5, 1998 and did not exercise any options within 90 days.
5
<PAGE>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Set forth in the table below is information regarding the exercise of stock
options of Common Stock during the fiscal year ended March 31, 1998 by each
of the Named Officers and the fiscal year-end value as of March 31, 1998 of
unexercised stock options of Common Stock.
<TABLE>
<CAPTION>
Value of unexercised in-the-
Number of unexercised money options at fiscal
options at FY-end year-end
Shares ----------------------------------------------------------------
acquired Value
Name on exercise realized Exercisable Unexercisable Exercisable Unexercisable
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Max Seybold -- -- -- 180,000 -- 75,120
Reid E. Simpson -- -- -- 90,000 -- 18,780
Robin Raina -- -- -- 90,000 -- 43,820
John Trustman -- -- 37,500 142,500 -- --
James Harsch -- -- -- -- -- --
</TABLE>
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of July 15, 1998, the ownership of Common
Stock and Series D Preferred Stock by each director of the Company, by each of
the Named Officers, by all current executive officers and directors of the
Company as a group, and by all persons known to the Company to be beneficial
owners of more than five percent of the Common Stock or the Series D Preferred
Stock. The Common Stock and the Series D Preferred Stock are the Company's only
outstanding classes of voting securities. The information set forth in the table
as to directors and officers is based upon information provided to the Company
by such persons in connection with the preparation of this filing.
6
<PAGE>
<TABLE>
<CAPTION>
Common Stock Series D Preferred
------------------------------------------------------------------
Name and Position Percent of Percent
of Beneficial Owner (1) Ownership (2) Class (3) Ownership (2) of Class
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Bay Area Micro-Cap Fund, L.P. (4) 703,150 9.2% - - - -
Covington Associates (5) - - - - 221 100.0%
Coral Partners II, 1,282,483 16.9% - - - -
a limited partnership (6)
Okabena Partnership K. 476,900 6.2% - - - -
a general partnership (7)
Yuval Almog 1,318,483 17.3% - - - -
Director and Chairman of the Board (8)
William Baumel 1,293,383 17.0% - - - -
Director (9)
Larry Gerdes 46,744 * - - - -
Director (10)
Max Seybold 18,500 * - - - -
Director and President and Chief
Executive Officer (11)
Reid Simpson 16,700 * - - - -
Senior Vice President, Finance and Administration;
Chief Financial Officer (12)
Robin Raina 5,000 * - - - -
Senior Vice President (13)
All directors and executive officers as a group 1,416,327 18.5% -- - -
(6 persons)
</TABLE>
(1) Except where otherwise indicated, the mailing address of each of the stock
holders named in the table is c/o Delphi Information Systems, Inc., 3501
Algonquin Road, Suite 500, Roling Meadows, Illinois 60008.
(2) Each holder has sole voting and investment power with respect to the shares
listed unless otherwise indicated.
(3) Percentage less than one percent are indicated by an asterisk.
(4) Includes 283,000 shares of Common Stock which may be acquired upon exercise
of warrants and 25,300 shares of Common Stock held by Gregory F. Wilbur and
Carolyn G. Wilbur as joint tenants with right of survivorship. The address
of Bay Area Micro-Cap Fund, L.P. is 1151 Bay Laurel Drive, Menlo Park,
California 94025.
(5) The address of Covington Associates is 60 State Street, Boston,
Massachusetts 02109.
(6) Includes 200,000 of Common Stock which may be acquired upon exercise of
warrants. The address of Coral Partners II is 60 South Sixth Street, Suite
3510, Minneapolis, Minnesota 55402.
(7) Includes 200,000 of Common Stock which may be acquired upon exercise of
warrants. The address of Okabena Partnership K is 5140 Norwest Center,
Minneapolis, Minnesota 55402-4133.
(8) Of the 1,318,483 shares of Common Stock, 1,282,483 shares of Common Stock
are held by Coral Partners II, 10,000 shares are held by Coral Group, Inc.
Retirement Plan for the benefit of
7
<PAGE>
Yuval Almog, 10,000 shares of Common Stock are held by Mr. Almog, 10,000
shares of Common Stock may be acquired by Mr. Almog upon exercise of
warrants and 6,000 shares of Common Stock are held by Mr. Almog and his
wife who have shared voting and investment power. Mr. Almog is the
Managing General Partner of Coral Partners II. The address of Coral
Partners II is 60 South Sixth Street, Suite 3510, Minneapolis, Minnesota
55402.
(9) Of the 1,293,383 shares of Common Stock, 1,282,483 shares of Common Stock
are held by Coral Partners II, 1,400 shares are held by Coral Group, Inc.
Retirement Plan for the benefit of William Baumel, 4,000 shares of Common
Stock held by Mr. Baumel, and 5,500 shares of Common Stock, of which 4,000
shares of Common Stock may be acquired upon exercise of warrants and 1,500
shares of Common Stock are held by Mr. Baumel and his wife who have shared
voting and investment power. Mr. Baumel is a Venture Partner of Coral
Partners II. Mr. Baumel disclaims beneficial ownership of the shares held
by Coral Partners II. The address of Coral Partners II is 60 South Sixth
Street, Suite 3510, Minneapolis, Minnesota 55402.
(10) Includes 14,000 shares of Common Stock which may be acquired upon exercise
of warrants. The address of Mr. Gerdes is 3353 Peachtree Road, N.E., Suite
1030, Atlanta, Georgia 30326.
(11) Includes 15,000 shares of Common Stock subject to stock options which may
be exercised.
(12) Includes 15,000 shares of Common Stock subject to stock options which may
be exercised and 1,700 shares of Common Stock held by The Reid E.
Simpson Revocable Trust as to which Mr. Simpson, as trustee, has sole
voting and investment power.
(13) Represents shares of Common Stock subject to stock options which may be
exercised.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The members of the Compensation Committee are Messrs. Almog and Gerdes. None of
the executive officers of the Company serves on the board of directors of
another company in any instance where an executive officer of the other company
serves on the Board of Directors.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's officers, directors and
persons who beneficially own more than ten percent of a registered class of the
Company's equity securities to file with the SEC reports of securities ownership
on Form 3 and changes in such ownership on Forms 4 and 5. Officers, directors
and more-than-ten-percent beneficial owners also are required by rules
promulgated by the SEC to furnish the Company with copies of all such Section
16(a) reports that they file. Based solely upon a review of the copies of Forms
3, 4, and 5 furnished to the Company, the Company believes that during the
period from April 1, 1997, through March 31, 1998, the following persons failed
to file on a timely basis, as disclosed in the above Forms, reports required by
Section 16(a) of the Exchange Act:
Robin Raina was appointed Senior Vice President effectve February 1998. Mr Raina
reported his appointment and certain grants of options under the Delphi
Information Systems, Inc. Stock Incentive Plan made throughout the fiscal year
by filing a Form 5 on a timely basis.
8
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
DELPHI INFORMATION SYSTEMS, INC.
(Registrant)
By /s/ Max Seybold
------------------------------------
Max Seybold
President and Chief Executive Officer
Date: July 29, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- --------- ----- -----
<S> <C> <C>
/s/Yuval Almog Chairman of the Board July 29, 1998
- ----------------------
(Yuval Almog)
/s/Max Seybold Director, President. and July 29, 1998
- ----------------------
(Max Seybold) Chief Executive Officer
/s/Reid E. Simpson Vice President-Finance & July 29, 1998
- ----------------------
(Reid E. Simpson) Administration and
Chief Financial Officer
/s/William R. Baumel Director July 29, 1998
- ---------------------
(William R. Baumel)
/s/Larry G.Gerdes Director July 29, 1998
- ---------------------
(Larry G. Gerdes)
</TABLE>
9
