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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 24, 1998
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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INFORMATION MANAGEMENT ASSOCIATES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
CONNECTICUT
(STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION)
06-1289928
(I.R.S. EMPLOYER IDENTIFICATION NUMBER)
ONE CORPORATE DRIVE, SUITE 414
SHELTON, CONNECTICUT 06484
(203) 925-6800
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
ABERT R. SUBBLOIE, JR.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
INFORMATION MANAGEMENT ASSOCIATES, INC.
ONE CORPORATE DRIVE, SUITE 414
SHELTON, CONNECTICUT 06484
(860) 925-6800
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
AGENT FOR SERVICE)
COPY TO:
THOMAS L. FAIRFIELD, ESQ.
LEBOEUF, LAMB, GREENE & MACRAE, L.L.P.
GOODWIN SQUARE
225 ASYLUM STREET
HARTFORD, CONNECTICUT 06103
(860) 293-350
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: After the
effective date of this Registration Statement as determined by market
conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, 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, other than securities offered only in connection with dividend or
interest reinvestment plans, 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, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
CALCULATION OF REGISTRATION FEE
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<CAPTION>
PROPOSED PROPOSED
MAXIMUM MAXIMUM
AMOUNT AGGREGATE AGGREGATE AMOUNT OF
TO BE PRICE OFFERING REGISTRATION
TITLE OF SHARES TO BE REGISTERED REGISTERED PER UNIT* PRICE* FEE
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<S> <C> <C> <C> <C>
Common Stock, (no par value).... 143,762 $5.57 $800,754.34 $237.00
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* Inserted solely for the purpose of calculating the registration fee; computed
on the basis of the average of the reported high and low sales prices on the
Nasdaq National Market on November 20, 1998 pursuant to Rule 457 (c).
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.
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<PAGE>
(SUBJECT TO COMPLETION)
DATED NOVEMBER 24, 1998
PROSPECTUS
INFORMATION MANAGEMENT ASSOCIATES, INC.
ONE CORPORATE DRIVE, SUITE 414
SHELTON, CONNECTICUT 06484
(203) 925-6800
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143,762 SHARES
COMMON STOCK
Our Common Stock is listed on the Nasdaq National Market under the symbol
"IMAA." The reported last sale price of the Common Stock on the Nasdaq National
Market on November 20, 1998, was $5.38 per share.
The shareholders of Information Management Associates, Inc. listed in this
prospectus are offering 143,762 shares of our Common Stock under this
prospectus.
The selling shareholders obtained their shares of our stock through a pro
rate dividend for no value by Marketing Information Systems, Inc. ("MIS") on
November 17, 1998. MIS obtained the shares in connection with the purchase by
us of substantially all of MIS's assets. The selling shareholders may offer
their shares through public or private transactions, on or off the United
States exchanges, at prevailing market prices, or at privately negotiated
prices.
You should consider carefully the risk factors beginning on page 4 of this
prospectus before purchasing any of the common stock offered hereby.
----------------
THE SHARES HAVE NOT BEEN APPROVED BY THE SEC OR ANY STATE SECURITIES
COMMISSION, NOR HAVE THESE ORGANIZATIONS DETERMINED THAT THIS PROSPECTUS IS
ACCURATE OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
----------------
November , 1998
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TABLE OF CONTENTS
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PAGE
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<S> <C>
Where You Can Find More Information..................................... 3
About Information Management Associates, Inc............................ 4
Risk Factors............................................................ 4
Use of Proceeds......................................................... 12
Selling Shareholders.................................................... 12
Plan of Distribution.................................................... 12
Legal Matters........................................................... 13
Experts................................................................. 13
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WHERE YOU CAN FIND
MORE INFORMATION
You should rely only on the information incorporated by reference or provided
in this prospectus or any supplement. We have not authorized anyone else to
provide you with different information. The selling shareholders will not make
an offer of these shares in any state where the offer is not permitted. You
should not assume that the information in this prospectus or any supplement is
accurate as of any date other than the date on the front of those documents.
In this prospectus, the "Company," the "Registrant," "Information Management
Associates, Inc.," "IMA," "we," "us," and "our" refer to Information Management
Associates, Inc.
AVAILABLE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the SEC. You may read and copy any document we file at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Our SEC filings are also available
to the public at the SEC's web site at http://www.sec.gov.
INFORMATION INCORPORATED BY REFERENCE
The SEC allows us to "incorporate by reference" the information we file with
it, which means that we can disclose important information to you by referring
you to those documents. The information incorporated by reference is considered
to be part of this prospectus, and later information that we file with the SEC
will automatically update and supersede this information. This prospectus is
part of a registration statement we filed with the SEC (Registration No. 333-
). We incorporate by reference the documents listed below and any future
filings made with the SEC under Sections 13(a), 13(c), 14, or 15(d) of the
Securities Exchange Act of 1934 (the "Exchange Act"):
. Annual Report on Form 10-K for the year ended December 31, 1997;
. Definitive Proxy Statement, filed on April 14, 1998, for the 1998 Annual
Meeting of Shareholders:
. Quarterly Reports on Form 10-Q as amended on Form 10-Q/A for the quarters
ended March 31, 1998, June 30, 1998 and September 30, 1998;
. The description of the Common Stock contained in our Registration
Statement on Form 8-A, filed on July 24, 1997; and
. Current Reports on Form 8-K dated August 17, 1998, October 7, 1998 and
November 3, 1998.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Assistant Secretary
Information Management Associates, Inc.
One Corporate Drive, Suite 414
Shelton, CT 06484
(203) 925-6800
This prospectus, including the information incorporated by reference herein,
contains forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of
the Exchange Act. Our actual results could differ materially from those
projected in the forward-looking statements as a result of the risk factors set
forth below. In particular, please review the sections captioned "Management's
Discussion and Analysis of Financial Condition and Results of Operations" in
our annual report on Form 10-K for the fiscal year ended December 31, 1997, and
our quarterly report on Form 10-Q for the quarters ended March 31, 1998, June
30, 1998 and September 30, 1998 as the same have been amended on Forms 10-Q/A
which reports are incorporated herein by reference and such section of any
subsequently filed Exchange Act reports. In connection with the forward-looking
statements which appear in these disclosures, prospective purchasers of the
shares offered hereby should carefully consider the factors set forth in this
prospectus under "Risk Factors." beginning on page 4 of this prospectus.
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ABOUT INFORMATION MANAGEMENT ASSOCIATES, INC.
We are a global provider of enterprise customer interaction solutions
designed to maximize the customer satisfaction, loyalty, retention, and
revenue-generating opportunities of call centers used for sales, marketing and
customer service. The Company's award-winning, CTI- and Web-enabled front
office software has been licensed to over 400 clients with more than 40,000 end
users worldwide in a wide variety of industries. Our products and services are
the choice of leading corporations such as Avery Dennison, Bank of Tokyo-
Mitsubishi, Bose Corporation, ICT Group, Lloyds TSB Bank, Pacific Gas and
Electric, SNET, and Xerox. The Company also offers a full range of professional
consulting, technical support, and education services. Our headquarters are in
Shelton, Connecticut, and we maintain development facilities in Irvine,
California and offices throughout the United States, in Melbourne, London,
Paris, Frankfurt, and we have representatives worldwide.
RISK FACTORS
In addition to the other information in this prospectus or included by
reference, you should carefully consider the following risk factors in
evaluating us and our business before buying the shares offered by this
prospectus. Statements in this prospectus which express "belief",
"anticipation" or "expectation", as well as other statements which are not
historical fact, and statements as to product compatibility, design, features,
functionality and performance insofar as they may apply prospectively, are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 and our actual results could differ materially
from those expressed in these forward-looking statements as a result of
numerous factors, including those set forth below, elsewhere in this prospectus
or incorporated by reference.
If any of the following risk factors actually occurs, our business, financial
condition, or results of operations could be materially adversely affected. In
such case, the trading price of our common stock could decline and you may lose
all or part of your investment.
The risk factors stated below do not contain all the information that may be
important to you. In addition to carefully reading these risk factors, you
should read the information incorporated by reference into this prospectus,
especially "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in our quarterly and annual filings on Forms 10-Q, 10-
Q/A and 10-K.
History of Operating Losses; Uncertainty of Future Operating Results. We
incurred significant net operating losses in each of 1992, 1993, 1994, 1995 and
the first nine months of 1998. As of September 30, 1998, we had an accumulated
deficit of $22.3 million. Given our operating history, we cannot predict our
future operating results with any certainty. You should not consider our recent
revenue growth as indicative of future revenue growth or operating results. We
cannot assure you that our business strategies will be successful, nor can we
assure you that we will achieve or sustain profitability on a quarterly or
annual basis.
Fluctuations in Quarterly Performance. Our quarterly operating results have
varied significantly in the past and may continue to do so depending on several
factors, many of which are beyond our control. These factors include, among
others:
.our ability to develop, introduce and market new and enhanced versions of
our products on a timely basis;
.demand for our products;
.the lengthy sales cycle for full implementation of our products;
.the size, timing and contractual terms of significant orders;
.the timing and significance of product enhancements and new product
announcements by us or our competitors;
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.changes in our business strategies;
.the budgeting cycles of our potential customers;
.customer order deferrals in anticipation of enhancements or new products;
.changes in the mix of products and services we sell;
.changes in the amount of our revenue attributable to domestic and
international sales;
.changes in foreign currency exchange rates;
.product and price competition;
.cancellations or non-renewals of licenses or maintenance agreements;
.investments to develop marketing and distribution channels; and
.changes in the level of our operating expenses.
To achieve our quarterly revenue objectives, we depend upon obtaining orders
in that quarter for delivery in that quarter. The timing of our revenue
recognition is affected by the amount of contracts executed and delivered,
whether the contract contains post delivery obligations and when our customers
accept the product. We derive a significant portion of our revenues in any
quarter from non-recurring, large license fees paid to us by a relatively small
number of customers. We expect this trend to continue for the foreseeable
future. Therefore, if a customer defers, cancels or fails to honor its
contractual obligations, our operating results could be materially adversely
affected in a given quarter. On the other hand, significant sales occurring
earlier than expected may adversely affect subsequent quarters. In addition, we
have experienced and expect to continue to experience stronger demand during
the quarters ending in June and December than during the quarters ending in
March and September. We receive a substantial portion of our orders in the last
months or weeks of any given quarter.
Because of the factors stated above, we are not able to predict our quarterly
revenues and operating results with any significant degree of accuracy. If
revenue levels fall below expectations, the shortfall would likely materially
adversely affect our business, operating results and financial condition. As a
result, we believe that you should not rely on period-to-period comparisons of
our results of operations as meaningful indicators of future performance. We
cannot assure you that we will be able to achieve or sustain profitability on a
quarterly or annual basis. We expect that in some future quarter or quarters
our total revenues or operating results will not meet the expectations of
public market analysts and investors. Our failure to meet expectations or
adverse conditions prevailing or appearing to prevail generally or with respect
to our business will likely materially adversely affect our Common Stock price.
Ability to Integrate Acquisitions. We completed the acquisitions of
substantially all of the assets of Marketing Information Systems, Inc. ("MIS")
and Telemar Software International, LLC ("TSI") on March 30, 1998 for an
aggregate purchase price of $8.6 million. Each has product lines that focused
on the IBM AS/400 market, a platform to which IMA's flagship product EDGE has
only recently been introduced. Failure to successfully integrate the acquired
product lines, and the employees, distributors, and customers of the acquired
businesses could have a material adverse effect on our business, operating
results and financial condition.
Product Concentration. Although we now receive some revenues from MIS and TSI
products, licensing of EDGE and the provision of professional consulting,
technical support and maintenance services relating to EDGE account for
substantially all of our revenues. We do not expect this to change in the
foreseeable future. Accordingly, factors adversely affecting the pricing of or
demand for EDGE products and services, such as competition or technological
changes, could have a material adverse effect on our business, operating
results and financial condition. Our future financial performance will depend,
in significant part, on the continued market acceptance of our EDGE products
including its new and enhanced versions. We cannot assure you that we will
continue to successfully develop and market EDGE.
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Lengthy Sales and Implementation Cycles; Post-Delivery Obligations. The
following factors over which we may have little or no control may
significantly delay our sales cycle:
. significant commitment of customer resources for licensing and
implementing our products;
. significant level of education required by prospective customers regarding
the use of our products;
. lengthy customer approval process typically associated with significant
capital expenditures; and
. implementation of our products generally extends for several months and
for larger, more complex implementations, multiple quarters.
We recognize licensing fees upon delivery of the product if:
. we have no significant post-delivery obligations;
. our customer has no acceptance conditions; and
. we believe that we can collect the resulting receivable.
If any of the above conditions do not exist, we will defer the revenue until
all of the conditions are satisfied.
Previously, when we have provided consulting services to implement certain
larger projects, some customers have not honored their obligations by delaying
payments of a portion of license fees until we completed implementation or
disputing the consulting fees charged for implementation. We may experience
delays, cancellations or disputes in the future. If these occur, they could
have a material adverse effect on our business, operating results and
financial condition. They could also cause our quarterly operating results to
vary significantly.
Dependence on Proprietary Technology. Our success and ability to compete
depends in part upon proprietary technology. We rely primarily on a
combination of copyright and trademark laws, trade secrets, nondisclosure
agreements and technical measures to protect our proprietary rights. We
typically enter into confidentiality or license agreements with our employees,
distributors, clients and potential clients and limit access to and
distribution of our software, documentation and other proprietary information.
We cannot assure you that these steps will adequately deter misappropriation
or independent third-party development of our technology. Also, the laws of
some foreign countries do not protect proprietary rights to the same extent as
the laws of the United States.
We have placed, and may continue to place, our source code in escrow for the
benefit of a small number of our customers. The escrow agreements permit these
customers to use the source code on a limited, non-exclusive basis if: (i) we
initiate bankruptcy proceedings or bankruptcy proceedings are initiated
against us; (ii) we cease to do business; or (iii) we fail to meet our support
obligations. In addition, we use third-party contractors for selected product
development projects. The escrow of source code and the use of a third-party
contractor may increase the possibility of misappropriation by third parties.
As the numbers of products and competitors in our industry segment grow and
the functionality of products in different segments overlaps, we expect that
software product developers increasingly will be subject to infringement
claims. The use of patents to protect software has increased. We believe that
our products and technology do not infringe on any existing proprietary
rights. Nevertheless, we cannot assure you that third parties will not assert
successful infringement claims. The following could have a material adverse
effect upon our business, operating results and financial condition:
. any infringement claim against us, even if unfounded, resulting in
diversion of our time and resources, costly litigation and product
shipment delays;
. any infringement claim that results in the necessity that we enter into a
royalty or licensing agreements which may not be available on terms
favorable to us;
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. any infringement claim resolved against us;
. litigation to protect our trade secrets or other intellectual property
rights or to determine the validity and scope of the proprietary rights
of others resulting in substantial costs and diversion of resources.
Dependence on Indirect Marketing and Distribution Channels; Potential
Conflicts. In addition to our own marketing efforts, we maintain relationships
with consulting and systems integration companies to increase our domestic and
international visibility. In addition to our direct sales force, we distribute
our products domestically and internationally through remarketers and
distributors. We do not maintain exclusive relationships with any of the
consultants, systems integration companies, remarketers or distributors. They
are not under our direct control. They have no minimum purchase obligations and
they may terminate their relationship with us at any time without cause. In
addition, they are free to co-market and distribute potentially competitive
products. Accordingly, we must compete for the focus and sales efforts of these
third party entities. Also, selling through indirect channels may limit our
contacts with our customers, hindering our ability to accurately forecast sales
and revenue, determine contract terms, evaluate customer credit, evaluate
customer satisfaction and recognize emerging customer needs. We cannot assure
you that co-marketers, remarketers and distributors will successfully continue
to distribute or recommend the Company's products. We may not continue to
succeed in increasing the use of these indirect channels profitably. Also, one
or more of these companies may begin to market products in competition with us,
which may adversely affect our business, operating results and financial
condition.
Our strategy of marketing our products directly to end-users and indirectly
through remarketers and distributors may result in conflicts between our direct
sales efforts and third party indirect sales efforts; and conflicts between and
among some of our resellers targeting the same customers. These conflicts could
materially adversely affect our relationships with existing remarketers and
distributors and may adversely affect our ability to attract new remarketers
and distributors.
Need to Expand Marketing and Distribution Channels. As part of our
international strategy, we intend to increase our use of remarketers and
distributors and to expand our existing co-marketing relationships and
establish new relationships with other consulting and systems integration
companies. Also, we seek to expand our international direct sales force to take
advantage of international growth opportunities. Our ability to achieve revenue
growth depends on successful implementation of this strategy. We have
experienced, and continue to experience, difficulty in recruiting and retaining
qualified personnel. We cannot assure you that we will successfully expand our
direct or indirect sales force. Even if we are successful, we cannot assure you
that such sales force expansion will result in increased revenues. Failure to
expand our sales force could materially and adversely affect our business,
operating results and financial condition.
Emerging Markets for Call Center Customer Interaction Software; Dependence on
Increased Use of Products by Existing Customers. The market for call center
customer interaction software is relatively new. It is characterized by:
.ongoing technological developments;
.frequent new product announcements and introductions;
.evolving industry standards; and
.changing customer requirements.
Our future financial performance depends in large part on continued growth in
the number of organizations adopting call center customer interaction software
products on an enterprise-wide basis and on the number of applications and
software components developed for such use. We cannot assure you that the call
center customer interaction software market will continue to grow. Failure of
this market to grow, or market growth slower than our current expectations
could materially adversely affect our business, operating results and financial
condition.
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Also, some of our larger customers have licensed our software on an
incremental basis and we cannot assure you that these customers will expand
their use of our software on an enterprise-wide basis or license new or
enhanced software products as we introduce them to the market. If our customers
do not deploy our software on an enterprise-wide basis because the software has
not met their expectations or for other reasons, our business, operating
results and financial condition could be materially and adversely affected.
Rapid Technological Change. Any of the following factors which are present in
the call center customer interaction software market could render our existing
products obsolete and unmarketable:
.rapid technological change;
.frequent introductions of new products;
.changes in customer demands; and
.evolving industry standards.
These factors could rapidly diminish our position in existing and future
markets. We expect to make substantial investments from time to time in our
product development and testing although we cannot assure you that we will have
sufficient resources to make the necessary investments.
Our customers have adopted a wide variety of hardware, software, database and
networking platforms. To gain broad market acceptance, we must continue to
support and maintain our products on a variety of such platforms and develop
and introduce enhancements to our existing products and new products on pace
with technological developments, changing customer requirements and evolving
industry standards. Our future success depends on our ability to address the
increasingly sophisticated needs of our customers. Our success may also depend,
in part, on our ability to introduce products that are compatible with the
Internet, and on the broad acceptance of the Internet as a viable customer
interaction channel. We cannot assure you that the Internet will become a
viable customer interaction channel or that the demand for Internet-related
products and services will increase in the future.
We also cannot assure you that we will be successful in developing and
marketing enhancements to our products that respond to technological
developments, changing customer requirements or evolving industry standards. We
may experience difficulties that could delay or prevent the successful
development, introduction and sale of such enhancements. Our enhancements may
not adequately meet the requirements of the marketplace and achieve any
significant degree of market acceptance. Product enhancements and new product
delays or failure to achieve market acceptance when released could materially
and adversely affect our business, operating results or financial condition. In
addition, the introduction or announcement of new product offerings or
enhancements by us, our competitors or major hardware, systems or software
vendors may cause customers to defer or forego licensing of our products, which
could have a material adverse effect on our business, operating results and
financial condition.
We depend upon the products of other software vendors, including certain
system software vendors, such as Microsoft Corporation, and relational database
software vendors to remain competitive and respond to technological change.
Design defects in such products or unexpected delays in their introduction,
could materially and adversely affect our business, operating results and
financial condition.
Management of Growth. We recently have experienced rapid growth. This growth
could place a significant strain on our management and other resources. We
anticipate that the growth of our company, if any, will require us to recruit,
hire, train and retain a substantial number of new and highly skilled product
development, managerial, finance, sales and marketing and support personnel.
The market for such personnel is intensely competitive and we expect that such
competition will continue for the foreseeable future. We cannot assure you that
we will be able to hire or retain such personnel.
Our ability to compete effectively and to manage future growth, if any,
depends on our ability to continue to implement and improve operational,
financial and management information systems on a timely basis and to expand,
train, motivate and manage our work force. We cannot assure you of the future
adequacy of our
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personnel, systems, procedures and controls. Inability to effectively manage
growth and the quality of our products could materially and adversely affect
our business, operating results and financial condition.
Competition. The market for telemarketing, telesales and customer service
software is:
. intensely competitive;
. rapidly evolving; and
. highly sensitive to new product introductions or enhancements and
marketing efforts by industry participants.
Our competitors range from internal information systems departments to
packaged software application vendors. We believe that as the United States and
international software markets continue to grow, a number of new vendors will
enter the market and existing competitors and new market entrants will attempt
to develop applications targeting additional markets. Our segment of the
software industry has experienced consolidation as certain of our larger
competitors have recently acquired other smaller competitors. In addition,
competitors have established and may in the future establish cooperative
relationships or alliances that may increase their ability to provide superior
software solutions or services.
Increased competition resulting from new entrants, consolidation of the call
center customer interaction software industry and cooperative relationships or
alliances could result in new or stronger competitors, price reductions,
reduced operating income or loss of market share, any of which could materially
adversely affect our business, operating results or financial condition. Many
of our current and potential competitors have significantly greater financial,
technical, marketing, service, support and other resources. They generate
higher revenues and have greater name recognition. We cannot assure you that
our competitors will not develop products comparable or superior to ours or
adapt more quickly than we do to new technologies, evolving industry trends or
changing client requirements. We cannot assure you that we will compete
effectively against competitors or that competitive pressures will not
materially and adversely affect our business, operating results or financial
condition.
Dependence on Key Personnel. Our business involves the development, marketing
and installation of complex software products and the delivery of professional
services. Our success will depend in large part upon our ability to attract,
retain and motivate highly skilled employees. The market for such employees is
intensely competitive and we expect that such competition will continue for the
foreseeable future. We cannot assure you that we will hire or retain such
personnel. Failure to hire and retain sufficient numbers of highly skilled
employees could materially and adversely affect our business, operating results
and financial condition. In addition, the loss of Albert R. Subbloie, Jr., the
President and Chief Executive Officer, or Gary R. Martino, Chairman of the
Board and Chief Financial Officer, or some of our other key personnel could
have a material adverse effect on our business, operating results and financial
condition, including our ability to attract employees and secure and complete
engagements. We maintain key-man life insurance policies with respect to
certain of our executive officers, including Mr. Subbloie and Mr. Martino.
Risk of Product Defects. Software products, particularly new versions,
frequently contain errors, especially when first introduced. We conduct
extensive product testing during product development. Nevertheless, we have at
times delayed commercial release of software until we corrected problems. In
some cases, we have provided enhancements to correct errors in released
software. We could, in the future, lose revenues as a result of software errors
or defects. Despite testing by us and by current and potential customers,
future software or releases after commencement of commercial shipments may
contain defects, resulting in:
. loss or delay of revenue;
. delay in market acceptance;
. diversion of development resources;
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.damage to our reputation; or
.increased service and warranty costs.
Any of these results could materially and adversely affect our business,
operating results and financial condition.
Risks Associated with International Operations. International operations
account for a significant portion of our total revenues and we intend to
continue and expand our international sales activity. Continuation and
expansion of international operations will require significant management
attention and financial resources and will require us to establish additional
foreign operations and hire additional personnel. We may not be able to
maintain or increase international market demand for our products and failure
to do so could materially and adversely affect our business, operating results
and financial condition.
International Currency Risks. We currently denominate our international sales
in U.S. dollars with respect to sales outside of the United Kingdom, Europe and
Australia, and generally in pounds sterling with respect to sales in the United
Kingdom and Europe. An increase in the value of the U.S. dollar or pound
sterling relative to other currencies could make our products more expensive
and, therefore, potentially less competitive in foreign markets. Currently, we
have not employed currency hedging strategies to reduce this risk although we
may consider employing hedging strategies in the future based on our assessment
of exposure to fluctuations in foreign currency exchange rates. We cannot
assure you that our assessments of exposure to fluctuations in foreign currency
exchange rates will be accurate or that any hedging strategies we may use in
the future will be effective.
International Operation and Collection Risks. The following risk factors
associated with our international business may have a material adverse effect
on our future international sales and, consequently, on our business, operating
results and financial condition:
.potentially longer payment cycles;
.difficulties in collecting international accounts receivable;
.difficulties in enforcement of contractual obligations and intellectual
property rights;
.potentially adverse tax consequences;
.increased costs associated with maintaining international marketing
efforts;
.increased costs of localizing products for foreign markets;
.tariffs, duties and other trade barriers;
.adverse changes in regulatory requirements;
.possible recessionary economies outside of the United States; and
.political and economic instability.
Dependence on Licensed Technology. We license, and expect to license in the
future, technology from other companies for use in and with our products. Our
inability to license these products or other necessary products for use in or
with our products could have a material adverse effect on our business,
operating results and financial condition. In addition, the effective
implementation of our products may depend in the future upon the successful
operation of licensed products as an integrated part of, or in conjunction
with, our products. Any undetected errors in such licensed products could
impair the functionality of our products or otherwise delay or prevent the
implementation of an installation or the introduction of new products, and
injure our reputation, which could have a material adverse effect on our
business, operating results or financial condition.
Increased Use of Third-Party Development Tools. Our EDGE products include
application development tools produced by third parties used to build and
modify our applications. Third-party application development tools may become
more widely used as a result of technological advances or customer
requirements. Wider use
10
<PAGE>
of third-party applications could require us to make greater use of third-party
tools in the future. This increased use would require us to enter into license
arrangements with such third parties resulting in higher royalty payments, a
loss of product differentiation and delays. Such effects or our inability to
enter into commercially reasonable licenses could have a material adverse
effect on our business, operating results or financial condition.
Dependence on Growth of Client/Server Computing Environment. We market our
products to customers:
.committed or committing their call center systems to client/server
computing environments; or
.converting legacy systems, in part or in whole, to a client/server
computing environment.
Our success will depend on further growth in the number of organizations
adopting client/server computing environments. We cannot assure you that the
anticipated client/server computing trends will occur or that we will respond
effectively to the evolving requirements of this market. Failure of the
client/server market to grow, or growth at a rate slower than experienced in
the past, could materially and adversely affect our business, operating results
or financial condition.
Industry Concentration. We derive a substantial portion of our revenues from
customers in the teleservices outsourcing, telecommunications and financial
services industries. We intend to further develop our knowledge of the business
processes and requirements of other industries in order to establish additional
market opportunities. We may not successfully do so. Our failure to increase
our customers among a broader base of varied industries, or a downturn in one
or more of the teleservices outsourcing, telecommunications or financial
services industries could have a material adverse effect on our revenues from
that industry or the collectibility of customer obligations from that industry
or other aspects of our business, operating results or financial condition.
Product Liability. The risk of product liability claims is inherent in the
sale and support of products. Our license agreements with our customers
typically contain provisions designed to limit our exposure to potential
product liability claims. The laws of certain jurisdictions, however, may not
enforce the limitation of liability provisions contained in our license
agreements. A party could bring a successful product liability claim against
us, which could result in a material adverse effect on our business, operating
results and financial condition.
Regulatory Environment. Federal, state and foreign law regulates certain uses
of outbound call processing systems. Our systems can be programmed to operate
in compliance with these laws through the use of appropriate calling lists and
calling campaign time parameters. Compliance with these laws, however, may
limit the potential use of our products. In addition, future legislation
further restricting telephone solicitation practices, if enacted, could
adversely affect us.
Year 2000 Risks. Many computer systems and software products are coded to
accept only two digit entries in the date code field. These date code fields
will need to accept four digit entries to distinguish 21st century dates from
20th century dates. As a result, many companies' software and computer systems
may need to be upgraded or replaced in order to comply with such Year 2000
requirements. Our failure or inability to identify and correct Year 2000
problems in our products, internal information or other systems, software,
hardware or firmware could have a material, adverse effect on our business,
operating results, and financial condition.
We are still reviewing the impact the Year 2000 issue will have on our
internal information systems. We plan to take necessary actions based on the
results of such analyses. If costs related to Year 2000 are material, our
business, operating results, and financial condition could be materially
adversely affected.
In certain cases, we have warranted that the use or occurrence of dates on or
after January 1, 2000 will not adversely affect the performance of our products
with respect to four digit date dependent data or the ability to create, store,
process, and output information related to such data. If any of our licensees
experience Year 2000 problems, those licensees could assert claims for damages.
Such claims, whether or not successful, could materially and adversely affect
our business, operating results and financial condition.
11
<PAGE>
In addition, the purchasing patterns of our customers and potential customers
may be affected by Year 2000 issues. Many companies are expending significant
resources to correct their current software systems for Year 2000 compliance.
These expenditures may result in reduced funds available to purchase software
products such as those offered by us. This may adversely affect our business,
operating results, and financial condition.
USE OF PROCEEDS
We will not receive any proceeds from the sale of shares of Common Stock by
the selling shareholders.
SELLING SHAREHOLDERS
Under an Asset Purchase Agreement dated March 30, 1998, among us, MIS and
certain of MIS's shareholders, we agreed to register the shares issued under
the Asset Purchase Agreement and to use our best efforts to keep the
registration statement effective for 180 days or until all of the registered
shares are sold under the registration statement, whichever comes first. Our
registration of the shares does not necessarily mean that the selling
shareholders will sell all or any of the shares.
The following list of selling shareholders includes the shareholders who
received their shares for no value in a dividend from MIS, which received the
shares from completion of the Asset Purchase Agreement.
The following list sets forth the selling shareholders and the number of
shares that may be sold pursuant to this prospectus:
<TABLE>
<CAPTION>
PERCENTAGE
TO BE OWNED
AMOUNT OF BY SHAREHOLDER NUMBER OF SHARES
SECURITIES OF THE AFTER OFFERED PURSUANT
CLASS OWNED COMPLETION OF TO THIS
SELLING SHAREHOLDER PRIOR TO OFFERING OFFERING PROSPECTUS
------------------- ----------------- -------------- ----------------
<S> <C> <C> <C>
Edison Venture Fund II,
L.P........................ 1%(1) * 84,207
Edison Venture Fund II-Pa,
L.P........................ 1%(1) * 16,193
John B. Kennedy............. * * 20,608
John A. Kennedy Estate c/o
Mary Ann Kennedy........... * * 12,880
Richard McIntire............ * * 5,152
Jane Fitzgibbons............ * * 2,576
Chris Stockwell............. * * 2,146
</TABLE>
- --------
*Less than 1%
(1) Edison Venture Fund II, L.P. and Edison Venture Fund II-Pa, L.P. may be
deemed to beneficially own 100,400 shares which may be sold pursuant to
this prospectus.
PLAN OF DISTRIBUTION
We are registering the shares on behalf of the selling shareholders. The term
"selling shareholders" includes donees and pledgees selling shares received
from a selling shareholder after the date of this prospectus. All costs,
expenses and fees in connection with the registration of the shares offered
hereby will be borne by us. The selling shareholders will bear the costs of
brokerage commissions and similar selling expenses, if any, attributable to the
sale of shares. Sales of shares may be caused by selling shareholders from time
to time in one or more types of transactions (which may include block
transactions) through the Nasdaq National Market, in the over-the-counter
market, in negotiated transactions, through put or call options transactions
relating to the shares, through short sales of shares, or a combination of such
methods of sale, at market prices prevailing at the time of sale, or at
negotiated prices. Such transactions may or may not involve brokers or dealers.
The selling shareholders have advised us that they have not entered into any
agreements, understandings or arrangements with any underwriters or broker-
dealers regarding the sale of their securities, nor is there an underwriter or
coordinating broker acting in connection with the proposed sale of shares by
the selling shareholders.
12
<PAGE>
The selling shareholders may cause such transactions by selling shares
directly to purchasers or to or through broker-dealers, which may act as agents
or principals. Such broker-dealers may receive compensation in the form of
discounts, concessions, or commissions from the selling shareholders and/or the
purchasers of shares for whom such broker-dealers may act as agents or to whom
they sell as principal, or both (which compensation as to a particular broker-
dealer might be in excess of customary commissions).
The selling shareholders and any broker-dealers that act in connection with
the sale of shares might be deemed to be "underwriters" within the meaning of
Section 2(11) of the Securities Act, and any commissions received by such
broker-dealers and any profit on the resale of the shares sold by them while
acting as principals might be deemed to be underwriting discounts or
commissions under the Securities Act. The selling shareholders may agree to
indemnify any agent, dealer or broker-dealer that participates in transactions
involving sales of the Shares against certain liabilities, including
liabilities arising under the Securities Act.
Because selling shareholders may be deemed to be "underwriters" within the
meaning of Section 2(11) of the Securities Act, the selling shareholders will
be subject to the prospectus delivery requirements of the Securities Act. We
have informed the selling shareholders that the anti-manipulative provisions of
Regulation M promulgated under the Exchange Act may apply to their sales in the
market.
Selling shareholders also may resell all or a portion of the shares in open
market transactions in reliance upon Rule 144 under the Securities Act,
provided they meet the criteria and conform to the requirements of Rule 144.
When a selling shareholder notifies us that any material arrangement has been
entered into with a broker-dealer for the sale of shares through a block trade,
special offering, exchange distribution or secondary distribution or a purchase
by a broker or dealer, a supplement to this prospectus will be filed, if
required, pursuant to Rule 424(b) under the Act, disclosing (i) the name of
each such selling shareholder and of the participating broker-dealer(s), (ii)
the number of shares involved, (iii) the price at which such shares were sold,
(iv) the commissions paid or discounts or concessions allowed to such broker-
dealer(s), where applicable, (v) that such broker-dealer(s) did not conduct any
investigation to verify the information set out or incorporated by reference in
this prospectus and (vi) other facts material to the transaction. In addition,
when a Selling Shareholder notifies us that a donee or pledgee intends to sell
more than 500 shares, a supplement to this prospectus will be filed.
LEGAL MATTERS
Our attorneys, LeBoeuf, Lamb, Greene & MacRae, L.L.P., will issue an opinion
about the legality of the shares for us and for the selling shareholders.
EXPERTS
Arthur Andersen LLP, independent accountants, audited our annual financial
statements and schedules incorporated by reference in this prospectus and
elsewhere in the registration statement. These documents are incorporated by
reference herein in reliance upon the authority of Arthur Andersen LLP as
experts in accounting and auditing in giving the report.
13
<PAGE>
"Until , 1999, all dealers that effect transactions in these securities,
whether or not participating in this offering, may be required to deliver a
prospectus. This is in addition to the dealers' obligation to deliver a
prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions."
<PAGE>
143,762 SHARES
COMMON STOCK
(NO PAR VALUE)
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses, payable by the Company
in connection with the sale of common stock being registered. All amounts are
estimates except the SEC registration fee.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee.............. $ 236.00
Services of Independent Accountants.............................. $ 5,000.00
Legal Fees and Expenses.......................................... $50,000.00
Printing Expenses................................................ $ 4,000.00
Miscellaneous Expenses........................................... $ 5,000.00
Total.......................................................... $64,236.00
</TABLE>
- --------
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 33-771 of the Connecticut Business Corporation Act (the "CBCA")
permits a corporation generally to indemnify any individual made a party to a
proceeding because he is or was a director or officer of the corporation
against any liabilities incurred by such person in such proceedings if: (i) he
conducted himself in good faith; and (ii) he reasonably believed (A) in the
case of conduct in his official capacity with the corporation, that his conduct
was in its best interests and (B) in all other cases, that his conduct was at
least not opposed to its best interests; and (iii) in the case of any criminal
proceeding, he had no reasonable cause to believe his conduct was unlawful;
provided, however, a corporation may not indemnify a director or officer under
such section if: (i) in connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the corporation; or
(ii) in connection with any other proceeding charging improper personal benefit
to him, whether or not involving action in his official capacity, in which he
was adjudged liable on the basis that personal benefit was improperly received
by him. In addition, Sections 33-772 and 33-776 of the CBCA provide that,
unless limited by its certificate of incorporation, a corporation shall
indemnify each officer and director who is wholly successful, on the merits or
otherwise, in the defense of any proceeding to which he was a party because he
is or was a director or officer of the corporation against reasonable expenses
incurred by him in connection with the proceeding.
Article VIII of the Certificate of Incorporation and Section 7.2 of the
Bylaws provide that we will indemnify all directors and officers to the fullest
extent permitted by the CBCA.
Section 7.2 of the Bylaws also provides that our Board of Directors may have
the Company indemnify an employee or agent to the same extent as an officer or
director.
ITEM 16. EXHIBITS.
. Opinion of LeBoeuf, Lamb, Greene & MacRae, L.L.P., counsel to Information
Management Associates, Inc.
. Consent of LeBoeuf, Lamb, Greene & MacRae, L.L.P., counsel to Information
Management Associates, Inc.
. Consent of Arthur Andersen LLP, Independent Certified Public Accountants.
. Power of Attorney
See the Exhibit Index filed as a part of this Registration Statement.
II-1
<PAGE>
ITEM 17. UNDERTAKINGS.
(a) We hereby undertake:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(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;
(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 (a)(1)(i) and (a)(1)(ii) do not apply if the
Registration Statement is on Form S-3, Form S-8, or Form F-3 and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports 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 that are incorporated by
reference in the Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be 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.
(b) We hereby undertake that, for purposes of determining any liability under
the Securities Act of 1933, each filing of the Registrant's annual report
pursuant to Section 13(a) or Section 15(d) of the Securities Exchange Act of
1934 (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that
is incorporated by reference in the Registration Statement shall be deemed to
be 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.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to our directors, officers and controlling persons
pursuant to the provisions described under Item 15 above, or otherwise, we have
been advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by us 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, we will, unless in the opinion of our counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by us is against public policy as
expressed in the Act and will be governed by the final adjudication of such
issue.
II-2
<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 REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED IN THE TOWN OF SHELTON, STATE OF CONNECTICUT, ON NOVEMBER 23, 1998.
Information Management Associates,
Inc.
/s/Albert Subbloie, Jr.
By: _________________________________
ALBERT SUBBLOIE, JR.
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
POWER OF ATTORNEY AND SIGNATURES
We, the undersigned officers and directors of Information Management
Associates, Inc. hereby severally constitute and appoint Albert R. Subbloie,
Jr. and Gary R. Martino, and each of them singly, our true and lawful attorneys
with full power to them, and each of them singly, to sign for us and in our
names in the capacities indicated below, the Registration Statement on Form S-3
filed herewith and any and all pre-effective and post-effective amendments to
said Registration Statement, and generally to do all such things in our names
and on our behalf in our capacities as officers and directors to enable
Information Management Associates, Inc. to comply with the provisions of the
Securities Act of 1933, as amended, and all requirements of the Securities and
Exchange Commission, hereby ratifying and confirming our signatures as they may
be signed by our said attorneys, or any of them, to said Registration Statement
and any and all amendments thereto.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Albert R. Subbloie, Jr. President, Chief Executive November 23, 1998
______________________________________ Officer and Director
ALBERT R. SUBBLOIE, JR. (Principal Executive
Officer)
/s/ Gary R. Martino Chairman of the Board of November 23, 1998
______________________________________ Directors, Chief
GARY R. MARTINO Financial Officer,
Treasurer and Director
(Principal Financial and
Accounting Officer)
/s/ Paul J. Schmidt Director November 23, 1998
______________________________________
PAUL J. SCHMIDT
/s/ Andrie Poludnewycz Director Novemner 23, 1998
______________________________________
ANDREI POLUDNEWYCZ
/s/ Thomas F. Hill Director November 23, 1998
______________________________________
THOMAS F. HILL
/s/ Donald P. Miller Director November 23, 1998
______________________________________
DONALD P. MILLER
/s/ David J. Callard Director November 23, 1998
______________________________________
DAVID J. CALLARD
</TABLE>
II-3
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER EXHIBIT
------- -------
<C> <S>
5 Opinion of LeBoeuf, Lamb, Greene & MacRae, L.L.P., counsel to
Information Management Associates, Inc.
23(a) Consent of LeBoeuf, Lamb, Greene & MacRae, L.L.P., counsel to
Information Management Associates, Inc. [included in Exhibit 5].
23(b) Consent of Arthur Andersen LLP, Independent Certified Public
Accountants.
24 Power of Attorney (See Page II-3)
</TABLE>
<PAGE>
Exhibit 5
LeBoeuf, Lamb, Greene & MacRae, L.L.P.
225 Asylum Street
Hartford, CT 06103
(860) 293-3500
November 23, 1998
Information Management Associates, Inc.
One Corporate Drive, Suite 414
Shelton, Connecticut 06484
Ladies and Gentlemen:
This opinion is provided in connection with the Registration Statement on
Form S-3 (the "Registration Statement") filed by Information Management
Associates, Inc. (the "Company") with the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as amended (the "Securities
Act"). The Registration Statement covers the resale by certain selling
shareholders of up to 143,762 shares of the Company's common stock, no par value
(the "Shares").
In rendering the opinions contained herein, we have examined originals or
copies certified or otherwise identified to our satisfaction of such documents,
corporate records and other instruments as we have deemed necessary or
appropriate to enable us to render the opinions set forth below. In such
examination we have assumed the genuineness of all signatures, the authenticity
of all documents submitted to us as originals, the conformity to original
documents of all documents submitted to us as photostatic or certified copies
and the authenticity of the originals of such copies.
<PAGE>
Information Management Associates, Inc.
November 23, 1998
Page 2
Based upon the foregoing, we are of the opinion that the issuance of the
Shares was duly authorized by the Company and the Shares are validly issued,
fully paid and nonassessable.
We express no opinion as to the laws of any jurisdiction other than the
State of Connecticut. The opinions expressed herein concern only the effect of
the laws (excluding the principles of conflict of laws) of the State of
Connecticut as currently in effect.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to our name under the heading "Legal
Matters" in the Prospectus forming a part of the Registration Statement. In
giving this consent, we do not hereby admit that we are within the category of
persons whose consent is required under Section 7 of the Securities Act or the
Rules and Regulations of the Commission.
Very truly yours,
/s/ LeBoeuf, Lamb, Greene & MacRae, L.L.P.
LeBoeuf, Lamb, Greene & MacRae, L.L.P
<PAGE>
Exhibit 23(b)
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated January 30, 1998
included in Information Management Associates, Inc...'s Form 10-K for the year
ended December 31, 1997 and to all references to our Firm included in this
registration statement.
ARTHUR ANDERSEN LLP
Hartford, Connecticut
November 20, 1998
