As filed with the Securities and Exchange Commission on January 28,May ____, 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
____________________--------------------
BILLING CONCEPTS CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 74-2781950
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7411 JOHN SMITH DRIVE, SUITE 200
SAN ANTONIO, TEXAS 78229
(210) 949-7000
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
____________________--------------------
W. AUDIE LONG, ESQ.
SENIOR VICE PRESIDENT, GENERAL COUNSEL AND CORPORATE SECRETARY
BILLING CONCEPTS CORP.
7411 JOHN SMITH DRIVE, SUITE 200
SAN ANTONIO, TEXAS 78229
(210) 949-7000
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
____________________--------------------
COPIES OF ALL COMMUNICATIONS, INCLUDING ALL COMMUNICATIONS SENT TO THE AGENT
FOR SERVICE, SHOULD BE SENT TO:
PHILLIP M. RENFRO, ESQ.
FULBRIGHT & JAWORSKI L.L.P.
300 CONVENT STREET, SUITE 2200
SAN ANTONIO, TEXAS 78205
(210) 270-7172
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after the effective date of this Registration Statement.
____________________--------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, 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 Rule415Rule 415 under the Securities Act of
1933, other than securitiesthansecurities 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
- - ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
TITLE OF EACH CLASS OF AMOUNT OF SHARES PROPOSED MAXIMUM OFFERING PROPOSED MAXIMUM AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED TO BE REGISTERED PRICE PER SHARE(1) OFFERING PRICE(1) REGISTRATION FEE
- - ----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
COMMON STOCK, $.01 PAR VALUE PER
SHARE........................... 1,100,000(4) $6.375 $7,012,500 $1,851.30SHARE............................... 769,232 $4.84375 $3,725,967.50 $983.66
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PURCHASE RIGHTS(2)(3) 1,100,000(4)............... 769,232 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL............................... 769,232 - ----------------------------------------------------------------------------------------------------------------------------------
TOTAL 1,100,000(4) - $7,012,500 $1,851.30
==================================================================================================================================$3,725,967.50 $983.66
===================================================================================================================================
(1) Pursuant to Rule 457(c), the proposed maximum offering price per share
and proposed maximum aggregate offering price have been calculated on the
basis of the average of the bid and ask prices of the Common Stock as
reported on the Nasdaq National Market on January 25,May 16, 2000.
(2) No fee pursuant to Rule 457(g).
(3) Purchase Rights related to the Common Stock pursuant to Rights Agreement
dated as of July 10, 1996, between Registrant and U.S. Trust Company of
Texas, N.A., Rights Agent.
(4) Pursuant to Rule 416(a), this Registration Statement shall also cover any
additional shares of Common Stock which become issuable by reason of any
stock dividend, stock split, recapitalization or other similar
transactions effected without the receipt of consideration which results
in an increase in the number of the outstanding shares of Common Stock.
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 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 the Registration Statement shall become
effective on such date as the Commission, acting pursuant to Section 8(a), may
determine.
- - --------------------------------------------------------------------------------===============================================================================
P R O S P E C T U S
1,100,000769,232 SHARES
BILLING CONCEPTS CORP.
COMMON STOCK
---------------
This Prospectus relates to the public offering, which is not being
underwritten, of up to 1,100,000769,232 shares (the "Shares") of our common stock, par
value $.01 per share ("Common Stock"), which is held by certain of our current
stockholders.
The prices at which such stockholders may sell the Shares will be
determined by the prevailing market price for the Shares or in negotiated
transactions. We will not receive any of the proceeds from the sale of the
Shares.
Our Common Stock is traded on the National Market System of Nasdaq (the
"Nasdaq National Market") under the symbol "BILL." On January 26,May 16, 2000, the last
reported sale price for our Common Stock on the Nasdaq National Market was
$6.4375$4.84375 per share.
The selling stockholders acquired their shares of Common Stock on November 8, 1999April
4, 2000 in connection with our acquisition of FIData, Inc.Operator Service Company.
This Prospectus is not an offer to sell these securities and is not
soliciting an offer to buy these securities in any state where the offer or
sale is not permitted.
---------------
INVESTING IN THE COMMON STOCK INVOLVES RISKS. YOU SHOULD READ THE "RISK
FACTORS" BEGINNING ON PAGE 3.
---------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
The date of this Prospectus is January 28,May , 2000.
AVAILABLE INFORMATION
We have filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-3 under the Securities Act of
1933, as amended (the "Securities Act"), related to the Shares. This
Prospectus is part of that Registration Statement and does not contain all of
the information set forth in the Registration Statement and its exhibits. You
may obtain further information with respect to the Company and the Shares by
reviewing the Registration Statement and the attached exhibits, which you may
read and copy at the following locations of the Commission:
Public Reference Room New York Regional Office Chicago Regional Office
Judiciary Plaza Seven World Trade Center Citicorp Center
450 Fifth Street, N.W., Rm. 1024 13th Floor 500 West Madison Street, Suite 1400
Washington, D.C. 20549 New York, New York 10048 Chicago, Illinois 60661-2511
We are subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"). Accordingly, we file
reports, proxy statements and other information with the Commission. Such
reports, proxy statements and other information can be inspected and copied at
the locations described above. Copies of such materials can be obtained from
the Public Reference Section of the Commission at 450 Fifth Street, N.W.,
Washington, D.C. 20549, at prescribed rates. The Commission maintains a Web
site that contains the Registration Statement, reports, proxy statements and
other information regarding the Company at http://www.sec.gov.
We furnish our stockholders with annual reports containing audited
financial statements with a report thereon by our independent public
accountants, Arthur Andersen LLP.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Commission allows us to "incorporate by reference" certain
information into this Prospectus. This means that we can disclose important
information to you by referring you to another document we have filed
separately with the Commission. The information incorporated by reference is
considered to be a part of this Prospectus, except for any information that is
superseded by other information that is set forth directly in this document.
The following documents that we have previously filed with the Commission
pursuant to the Exchange Act are hereby incorporated by reference into the
Prospectus:
(1) Our Annual Report on Form10-KForm 10-K for the fiscal year ended September
30, 1999.1999;
(2) Our Quarterly Report on Form 10-Q for the quarter ended December 31,
1999;
(3) Our Quarterly Report on Form 10-Q for the quarter ended March 31,
2000;
(4) Our Current Report on Form 8-K dated February 25, 2000;
(5) Our Current Report on Form 8-K dated March 29, 2000;
(6) Our Current Report on Form 8-K dated April 10, 2000;
(7) Our Registration Statement on Form 10/A dated July 11, 1996
(Registration No. 0-28536).
(3); and
(8) The description of our Common Stock and our Preferred Stock Purchase
Rights, each of which is contained under the caption "Description of Capital
Stock" in the Registration Statement on Form 10/A dated July 11, 1996
(Registration No. 0-28536).
Billing Concepts also incorporates by reference additional documents that
may be filed with the Commission between the date of this Prospectus and the
date of completion of the offering of the shares of common stock by the
selling stockholders. These include periodic reports, such as Annual Reports
on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K,
as well as proxy statements.
2
Documents incorporated by reference are available from us without charge,
excluding all exhibits, except that if we have specifically incorporated by
reference an exhibit in this Prospectus, the exhibit also will be available
without charge. Stockholders may obtain documents incorporated by reference in
this Prospectus by requesting them in writing or by telephone from Billing
Concepts at the following address:
Billing Concepts Corp.
7411 John Smith Drive, Suite 200
San Antonio, Texas 78229
Attention: Investor Relations
Telephone: (210) 949-7000
You should rely only on the information contained or incorporated by reference
in this Prospectus. We have not authorized anyone to provide you with
information that is different from what is contained in this Prospectus. This
Prospectus is dated January 27,May 18, 2000. You should not assume that the information
contained in this Prospectus is
2
accurate as of any date other than that date.
In this Prospectus, the "Company," "Billing Concepts," "Billing," "we," "us"
and "our" refer to Billing Concepts Corp.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus and the documents incorporated by reference contain
certain forward-looking statements, including, without limitation, statements
concerning our expectations of future sales, gross profits, research and
development expenses, selling, general and administrative expenses, product
introductions and cash requirements. Forward-looking statements often,
although not always, include words or phrases such as "will likely result,"
"expect," "will continue," "anticipate," "estimate," "intend," "plan,"
"project," "outlook" or similar expressions. Actual results may vary
materially from those expressed in such forward-looking statements. Factors
which could cause actual results to differ from expectations include those set
forth under "Risk Factors." We cannot be certain that our results of
operations will not be adversely affected by one or more of these factors.
RISK FACTORS
You should carefully examine this entire Prospectus and should give
particular attention to the risk factors set forth below in conjunction with
the other information contained or incorporated by reference in this
Prospectus in evaluating an investment in the Shares.
LIMITED OPERATING HISTORY; LIMITED RELEVANCE OF HISTORICAL FINANCIAL
INFORMATION. We were organized in 1996 for the purpose of effecting the
distribution to the stockholders of U.S. Long Distance Corp. ("USLD") of all
of the then outstanding shares of common stock of the Company. We have a
limited operating history as an independent public company, but we operate the
billing clearinghouse and information management services business previously
conducted by USLD. We entered the software market in 1997 and the Internet
services market in 1999, which makes an evaluation of our current business and
prospects difficult.
In addition, because of our limited operating history, we have a
limited insight into trends that may emerge in our markets and affect our
businesses. Our ability to succeed is subject to the risks and difficulties
associated with establishing a new business in the new and rapidly evolving
markets for our services. In addition, some of the financial information
incorporated by reference into this Prospectus may not necessarily reflect the
results of operations, financial position and cash flows of the Company in the
future.
FUNDAMENTAL CHANGES IN THE TELECOMMUNICATIONS MARKET COULD REDUCE
DEMAND FOR OUR SYSTEMS.PRODUCTS AND SERVICES. Future developments in the
telecommunications industry, such as continued industry consolidation, the
formation of alliances among network operators and service providers and
changes in the regulatory environment, could materially affect our existing or
potential customers. This could reduce the demand for our products and
services. As a result, we may be unable to effectively market and sell our
information systems to potential customers in the telecommunications industry.
THE MARKET FOR OUR PRODUCTS AND SERVICES IS UNPREDICTABLE, AND IF
THIS MARKET HAS A DOWNTURN OR DOES NOT GROW AS WE ANTICIPATE, OUR BUSINESS
WILL SUFFER. In fiscal 1999, we derived approximately 95% of our revenues from
sales of products and services to customers in the telecommunications
industry. The telecommunications industry has undergone a period of rapid
growth and consolidation during the last decade. Our business, financial
condition and results of operations will be seriously harmed if a significant
slowdown in the growth of the telecommunications
3
industry occurs. In addition, consolidations of our prospective customers may
delay or cause cancellations of significant sales of our products, which could
seriously harm our operating results.
OUR QUARTERLY RESULTS MAY FLUCTUATE WIDELY. Our operating results in
the past have fluctuated on a quarterly basis, and we expect fluctuations may
continue to occur in the future, which may impair our stock price. Many
factors contribute to these quarterly fluctuations, including:
- the demand for our products and services;
- market acceptance of our new products or those of our competitors;
- the ability of our Internet business to generate significant
revenues;
- specific economic conditions in our businesses; and
- general economic conditions
3
conditions.
IF WE CANNOT COMPETE SUCCESSFULLY WITH EXISTING OR NEW COMPETITORS,
OUR BUSINESS COULD BE MATERIALLY ADVERSELY AFFECTED. We may be unable to
compete successfully with existing or new competitors and our failure to adapt
to changing market conditions and to compete successfully with established or
new competitors could have a material adverse effect on our results of
operations and financial condition.
The market for our software business is highly competitive and
fragmented, and we expect this competition to increase. We compete with
independent providers of information systems and services and with in-house
software departments of telecommunications companies. Our competitors include
firms that provide comprehensive information systems, software vendors that
sell products for the billing aspects of a total information system, software
vendors that specialize in billing software systems for particular
telecommunications services such as Internet services, systems integrators,
service bureaus and companies that offer software systems in combination with
the sale of network equipment. We anticipate continued growth and competition
in the telecommunications industry and, consequently, the emergence of new
software providers in the industry that will compete with Billing.
The market for Internet products and services is highly competitive
and lacks significant barriers to entry. Competition in this market may
intensify in the future.
We also believe that our ability to compete depends in part on a
number of competitive factors, including:
- the development by others of products and services competitive
with our products and services;
- the price at which others offer competitive products and services;
- the responsiveness of our competitors to customer needs; and
- the ability of our competitors to hire, retain and motivate key
personnel.
Numerous well-established companies and smaller entrepreneurial
companies are focusing significant resources on developing products and
services that compete with ours. We compete with a number of companies that
have longer operating histories, larger customer bases, substantially greater
financial, technical, sales, marketing and other resources, and greater name
recognition. Current and potential competitors have established, and may
establish in the future, cooperative relationships among themselves or with
third parties to increase their ability to address the needs of our
prospective customers. Accordingly, new competitors or alliances among
competitors may emerge and rapidly acquire significant market share. As a
result, our competitors may be able to adapt more quickly than we to new or
emerging technologies and changes in customer requirements, and may be able to
devote greater resources to the promotion and sale of their products.
TRANSACTION PROCESSING REVENUE. Despite the overall increase inSince 1998, transaction processing
or(or LEC billing services, revenue from 1997,
transaction processing revenue growth has been negatively impacted byservices) revenues have declined due to the impact of
"slamming" and "cramming" issues that have occurred in the long distance
industry. Slamming is defined as the unauthorized and illegal switching of a
customer's telephone service from one carrier to another carrier, while
cramming is the practice of a company billing customers for products and
services that they may not have ordered, and may not have received. These
"slamming and cramming" issues have caused some of the larger Local Exchange
Carriers ("LECs") to affect the ability of certain of Billing's customers to
market certain services. Also, as a proactive measure, Billing has taken
action against certain customers that includes, but is not limited to, the
cessation of billing for certain new or existing products. Management
continues to take actions in order to mitigate the effects of "slamming and
cramming" issues on the call record volumes of its current customer base.
These actions have
4
negatively impacted transaction processing revenue. It is
still unclear what monetary impact these actions willrevenues. Additionally, revenues
have onbeen adversely affected by the transaction
processing businessloss of certain customers now using direct
billing methods versus LEC billing through the Company. The Company recently
began offering a direct billing product in order to retain and the Company's revenues in the future.capture market
share.
WE HAVE LIMITED SOFTWARE PRODUCT OFFERINGS AND OUR BUSINESS MAY
SUFFER IF DEMAND FOR ANY OF THESE PRODUCTS DECLINES OR IF WE CANNOT DEVELOP
NEW PRODUCTS TO MEET THE NEEDS OF OUR CUSTOMERS. We currently offer only threemultiple
applications within a solution set of software products. If another company
were to develop competitive products with more features, better performance or
wider acceptance than our products, sales of our software products could
decline. Any significant decrease in the sales of our software products could
seriously harm our results of operations.
DEPENDENCE UPON CONTRACTS WITH LOCAL TELEPHONE COMPANIES. Billing's
business is dependent upon its contractual relationships with over 1,300 local
telephone companies pursuant to which these local telephone companies bill and
collect from their customers on Billing's behalf. Most of the billing and
collection agreements cover a one to five year period and provide for
automatic renewals unless notice of termination is given. Certain of these
local telephone companies, whose billing services provide access to a vast
majority of the businesses and households in the United States, are legally
required to provide billing and collection services for Billing if they
provide such services for
4
any other third party, such as Billing's competitors
and their own competition. Although the Company has not experienced the
termination of any contracts in the past, there can be no assurance that these
contracts will continue in effect on their present terms, if at all. The
termination of one or more of these contracts would severely diminish the
Company's capacity to provide billing services in the geographic areas covered
by the terminated contracts and could adversely affect the Company's business.
WE MAY BE UNABLE TO PROTECT OUR PROPRIETARY TECHNOLOGY. Any
misappropriation of our technology or the development of competitive
technology could seriously harm our business. We regard all of our software
products and systems as proprietary and rely on a combination of statutory and
common law copyright, trademark and trade secret laws, customer licensing
agreements, employee and third party non-disclosure agreements and other
methods to protect our proprietary rights. We do not include in our software
any mechanisms to prevent or inhibit unauthorized use, but we generally enter
into confidentiality agreements with our employees, consultants, customers and
potential customers that limit access to and distribution of proprietary
information.
The steps we have taken to protect our proprietary rights may be
inadequate. If so, we may not be able to prevent others from using what we
regard as our technology to compete with us. Existing trade secret, copyright
and trademark laws offer only limited protection. In addition, the laws of
some foreign countries do not protect our proprietary technology to the same
extent as the laws of the United States. Other companies could independently
develop similar or superior technology without violating our proprietary
rights.
If we have to resort to legal proceedings to enforce our intellectual
property rights, the proceedings could be burdensome and expensive and could
involve a high degree of risk.
OUR LENGTHY SALES CYCLE MAKES IT DIFFICULT TO ANTICIPATE THE TIMING
OF SALES. The sales cycle associated with the purchase of our software systems
is lengthy, with the time between the making of an initial proposal to a
prospective customer and the signing of a sales contract typically averaging
between six and twelve months. Software billing systems are relatively complex
and their purchase generally involves a significant commitment of capital,
with attendant delays frequently associated with large capital expenditures
and implementation procedures within an organization. Moreover, the purchase
of such products typically requires coordination and agreement across a
potential customer's entire organization. Delays associated with such timing
factors may reduce our revenue in a particular period without a corresponding
reduction in its costs, which could have a material adverse effect on the
results of operations and financial condition of Billing.
OUR FUTURE SUCCESS DEPENDS ON OUR ABILITY TO DEVELOP LONG-TERM
RELATIONSHIPS WITH OUR CUSTOMERS AND OTHER THIRD PARTIES. We believe that our
future success depends to a significant extent on our ability to develop
long-term relationships with our customers and third parties. We may be unable
to develop new customer relationships and our new customers may be
unsuccessful in their business, thereby ending our relationship. Our Internet
business is dependent upon arrangements with third parties related to
generating traffic on our Internet Web sites. Our failure to maintain these
customer and other third-party relationships or the failure of new customers
to be successful could have a material adverse effect on our business, results
of operations and financial condition.
THE SKILLED EMPLOYEES THAT BILLING NEEDS MAY BE DIFFICULT TO HIRE AND
RETAIN. Our success depends in large part on our ability to attract, train,
motivate and retain highly skilled information technology professionals,
software programmers and telecommunications engineers. These types of
qualified personnel are in great demand and are likely to remain a limited
resource for the foreseeable future. The ability of Billing to expand its
business is highly dependent upon its success in recruiting such personnel and
its ability to manage and coordinate its developing efforts. Billing may
5
be unable to continue to attract and retain the skilled employees it requires,
and any inability to do so could adversely impact its ability to manage and
complete its existing projects and to compete for new customer contracts. In
addition, the resources required to attract and retain such personnel may
adversely affect Billing's operating margins. The failure to attract and
retain qualified personnel may have a material adverse effect on the business,
results of operations and financial condition of Billing.
PRODUCT DEFECTS OR SOFTWARE ERRORS COULD ADVERSELY AFFECT OUR
BUSINESS. Design defects or software errors may cause delays in product
introductions or damage customer satisfaction and may have a material adverse
effect on the business, results of operations and financial condition of
Billing. Our software products are highly complex and may, from time to time,
contain design defects or software errors that may be difficult to detect and
correct.
Since our products generally are generally used by our customers to perform
mission-critical functions, design defects, software errors, misuse of our
products, incorrect data from external sources or other potential problems
within or outside of our control may arise from the use of our products, and
may result in financial or other damages to our customers. Completion of the
development and implementation phases of a project generally requires between
six and twelve months of work. During this period, a customer's budgeting
constraints and internal reviews, over which we have little or no control, can
impact operating results. Our failure or inability to meet a customer's
expectations in providing
5
products or performing services may result in the
termination of our relationship with that customer or could give rise to
claims against us. Although we have license agreements with our customers that
contain provisions designed to limit our exposure to potential claims and
liabilities arising from customer problems, these provisions may not
effectively protect us against such claims in all cases. Claims and
liabilities arising from customer problems could damage our reputation,
adversely affecting our business, results of operations and financial
condition.
BREACHES IN THE SECURITY OF THE DATA COLLECTED BY OUR SYSTEMS COULD
ADVERSELY AFFECT OUR REPUTATION AND RESULTS OF OPERATIONS. Our customers rely
on third-party security features to protect the privacy and integrity of
customer data. Our products may be vulnerable to breaches in security due to
defects in the security mechanisms, the operating system, the hardware
platform or the networks linked to the platform. Our BC WEBTRACK product,
which provides access to information using Web access, presents additional
security issues for our customers. Security vulnerabilities could jeopardize
the security of information stored in and transmitted through the computer
systems of our customers. If the security of our products were compromised,
our reputation and product acceptance would be significantly harmed, which
would cause our business to suffer.
CLAIMS BY OTHERS THAT WE INFRINGE ON THEIR PROPRIETARY TECHNOLOGY
COULD HARM OUR BUSINESS. Although we have not received any formal notices from
third parties alleging infringement claims, third parties could claim that our
current or future products or technology infringe their proprietary rights. We
expect that software developers and Internet businesses will increasingly be
subject to infringement claims as the number of products and competitors
providing various products and services increases and overlaps occur. Any
claim of infringement by a third party could cause Billing to incur
substantial costs defending against the claim, even if the claim is invalid,
and could distract its management from Billing's business. Furthermore, a
party making such a claim could secure a judgment that requires Billing to pay
substantial damages. A judgment also could also include an injunction or other
court order that could prevent Billing from selling its products. Any of these
events could seriously harm Billing's business.
If anyone asserts a claim against Billing relating to proprietary
technology or information, Billing might seek to license that party's
intellectual property or to develop non-infringing technology. Billing might
not be able to obtain a license on commercially reasonable terms or on any
terms. Alternatively, Billing's efforts to develop non-infringing technology
could be unsuccessful. Its failure to obtain the necessary licenses or other
rights or develop non-infringing technology could prevent Billing from selling
its products and could therefore seriously harm its business.
DEPENDENCE UPON KEY PERSONNEL. Our future success depends to a
significant degree upon the continued services of our Chairman of the Board
and Chief Executive Officer, Parris H. Holmes, Jr., and other key senior
management personnel. We have a five-year evergreen employment agreement with
Mr. Holmes which contains non-compete and confidentiality provisions. Our
Internet business is substantially dependent upon C. Lee Cooke, Jr.,
Garett Davis and John
Hokkanen. We currently do not have a president of Aptis, Inc., the subsidiary
through which we operate our software systems and services business. Billing's
future success depends on its continuing ability to attract and retain highly
qualified managerial personnel. Competition for such personnel is intense, and
there can be no assurance that Billing will be able to retain its key
managerial employees or attract, assimilate or retain other highly qualified
managerial personnel in the future. Failure to do so could have a material
adverse effect upon the Company's business and results of operations.
OUR INTERNET BUSINESSDIVISION MAY HAVE PROBLEMS RAISING MONEY IN THE FUTURE.
Our Internet businessdivision was formed in 1999 and has lost money since inception.
The Company has funded these losses out of its available cash. The Company may
not be able to continue funding such losses in the future, and our Internet
business may need to seek
6
additional funding from outside sources. We cannot assure you that such
funding will be available, or if it is, that it will be available on terms
advantageous to the Company.
OUR INTERNET BUSINESSDIVISION FACES CERTAIN RISKS INHERENT TO THE INTERNET
INDUSTRY. Our Internet business faces those business risks inherent to the
Internet industry, including:
- - - our Internet business is dependent on the increased use of the
Internet by credit unionsfinancial institutions and other businesses and
individuals;
- -
- growing concerns about the placement of "cookies" on a user's
drive may limit our ability to develop user profiles;
- - - we may be liable for information downloaded from the Internet;
- -our Internet holdings are represented by investments where we may
not have control;
- our Internet business must be able to respond to the rapid changes
in technology and distribution channels related to the Internet;
and
6
- - - we must develop and maintain positive brand awareness of our
Internet brand names, including Good2CU.com.names.
OUR INVESTMENTINVESTMENTS IN PRINCETON ECOM CORPORATION ISAND COREINTELLECT, INC.
ARE SUBJECT TO RISKS, AND WE COULD LOSE OUR ENTIRE INVESTMENT. We currently
have a minoritymajority interest in Princeton eCom Corporation ("Princeton"). Accordingly, and a
minority interest in COREINTELLECT, Inc. Since we do not control
Princeton, and
ourCOREINTELLECT, we do not have authority to make operational or strategic
decisions for it. Our ability to achieve an acceptable rate of return on this investmentthese
investments is subject to a number of risk factors often beyond our control,
including any
strategic or operational decisions made by Princeton, increased competition and lack of market share, quality of management, cyclical or uneven
financial results, technological obsolescence and regulatory delays. As
an early-stage company,companies, Princeton isand COREINTELLECT are subject to various
risks common to early-stage and start-up companies, including lack of a
customer base, lack of name recognition and credibility and the need to
develop and refine the plan of operation of the business. We do not know
whether Princeton or COREINTELLECT will mature and generate a return or permit
us to recoup invested capital. Our investmentinvestments in Princeton and COREINTELLECT
may not provide us with any benefit, and we may not achieve any economic
return on this investment.these investments. The marketmarkets for the products of Princeton isand
COREINTELLECT are intensely competitive. Many of itstheir current and potential
competitors have longer operating histories and substantially greater
financial, technical and marketing resources and name recognition. Current or
potential competitors may develop products comparable or superior to those
developed by Princeton and COREINTELLECT or adapt more quickly than them to
new technologies, evolving industry standards, new product introductions or
changing customer requirements. Princeton isand COREINTELLECT are a privately
held companycompanies and, as such, our investment isinvestments are not readily marketable. As
such, we may not be able to sell our investmentinvestments in Princeton and
COREINTELLECT at an acceptable priceprices or at all.
These investments have a limited operating history and neither has
achieved profitability. It is possible that we may be required to make
additional capital contributions in the future and that they will never
achieve profitable operations. Additionally, it is possible that Princeton and
COREINTELLECT may be required to raise additional funds, thereby diluting our
ownership.
We expect our interest in Princeton to be less than a majority by
September 30, 2000 and we have less than a majority representation on the
Board of Princeton.
THE MARKET PRICE OF OUR COMMON STOCK HAS AND MAY CONTINUE TO
FLUCTUATE WIDELY. The market price of our Common Stock has fluctuated widely
and may continue to do so. Moreover, the stock market experiences significant
price and volume fluctuations. These fluctuations particularly affect the
market prices of the securities of many high technology and Internet
companies. These broad market fluctuations could adversely affect the market
price of our Common Stock. When the market price of a stock has been volatile,
holders of the stock often have often instituted securities class action litigation
against the company that issued the stock. If any of our stockholders brought
a securities class action lawsuit against us, we could incur substantial costs
defending the lawsuit. The lawsuit also could also divert the time and attention of
our management. Any of these events could seriously harm our business.
YEAR 2000. As of January 26, 2000, the Year 2000 date change has not
posed a significant problem for the Company. However, because the Company's
business relies on processing date-sensitive telephone call records supplied
by third parties, it is possible that non-compliant third-party computer
systems may not have provided accurate data for processing through the
Company's computer systems. The Company's business, financial condition and
results of operations could be materially adversely affected by the Year 2000
date change if it or unrelated parties failed to successfully address this
issue.
The above Year 2000 disclosure constitutes a "Year 2000 Readiness
Disclosure" as defined in The Year 2000 Information and Readiness Disclosure
Act (the "Act"), which was signed into law on October 19, 1998. The Act
provides added protection from liability for certain public and private
statements concerning a company's Year 2000 readiness.
DIVIDEND POLICY. The Company has never paid cash dividends. The
future payment of dividends by the Company will depend on decisions that will
be made by the Board of Directors of the Company based on the results of
operations and financial condition of Billing and such other business
considerations as the Board of Directors of Billing considers relevant. We do
not expect to pay dividends in the foreseeable future. Additionally, the
Company is a holding company whose only material assets are the stock of its
subsidiaries. As a result, we conduct no business and will be dependent on
distributions we receive from our subsidiaries to pay dividends. There can be
no assurance
7
that any such distributions will be adequate to pay any dividends. Moreover,
Billing is subject to certain restrictions on the payment of dividends
pursuant to its credit agreements.
AUTHORIZATION OF PREFERRED STOCK. The Company's Certificate of
Incorporation authorizes the issuance of preferred stock with designations,
rights and preferences determined from time to time by its Board of Directors.
Accordingly, the Board of Directors is empowered, without your approval, to
issue preferred stock with dividend, liquidation, conversion, voting or other
rights that could adversely affect the voting power or other rights of the
holders of the Common Stock. In the event of issuance, the preferred stock
could be used, under certain circumstances, as a method of discouraging,
delaying or preventing a change in control of the Company. Although the
Company has no present intention to issue any shares of its preferred stock,
we may do so in the future.
THE COMPANY
Billing is a business services and technology company with operations
in three principal segments - Transaction Processing ("Transaction Processing"),
Software ("Aptis") and Internet.
TRANSACTION PROCESSING
Transaction Processing provides third-party billing clearinghouse and
information management services billing. This process is known within the
industry as "Local Exchange Carrier billing" or "LEC billing." Transaction
Processing's customers include direct dial long distance telephone companies,
operator services providers, information providers, competitive local exchange
companies, Internet service providers and integrated communications services
providers.
Transaction Processing maintains contractual billing arrangements
with over 1,300 local telephone companies that provide access lines to, and
collect for services from, end users of telecommunication services.
Transaction Processing processes telephone call records and other transactions
and collects the related end-user charges from these local telephone companies
on behalf of its customers.
The direct dial long distance customers of Transaction Processing use
the Company as a billing clearinghouse for processing and collecting call
records generated by their end users. Although such carriers can bill end
users directly,
7
Billing provides these carriers with a cost-effective means of
billing and collecting residential and small commercial accounts through the
local telephone companies.
Transaction Processing also processes telephone call records for
customers providing operator services largely to the hospitality, penal and
private pay telephone industries. In addition, Billing processes records for
telephone calls that require operator assistance and/or alternative billing
options such as collect and person-to-person calls, third-party billing and
calling card billing. Since operator services providers have only the billing
number and not the name or address of the billed party, they must have access
to the services of the local telephone companies to collect their charges.
Transaction Processing provides this access to its customers through its
contractual billing arrangements with the local telephone companies that bill
and collect on behalf of these operator services providers.
This business segment acts as an aggregator of telephone call records
and other transactions from various sources, and due to its large volume, it
receives discounted billing costs with the local telephone companies and can
pass on these discounts to its customers. Additionally, Billing can provide
its services to those long distance carriers and operator services providers
who would otherwise not be able to make the investments in billing and
collection agreements with the local telephone companies, fees, systems,
infrastructure and volume commitments required to establish and maintain the
necessary relationships with the local telephone companies.
In 1994, Transaction Processing began providing enhanced billing
services for processing transactions related to providers of premium services
or products that can be billed through the local telephone companies, such as
charges for 900 access pay-per-call transactions, cellular long distance
services, paging services, voice mail services, Internet access, Caller ID and
other non-regulated telecommunications equipment charges.
In addition to its full-service LEC billing product, Transaction
Processing also offers billing management services to customers who have their
own billing arrangements with the local telephone companies. These management
services may include data processing, accounting, end-user customer service
and telecommunication tax processing and reporting.
In addition, Transaction Processing Services offers through its OSC
operation, located in Lubbock, Texas, inbound, directory assistance and
interactive voice response (IVR) and customer relationship management (CRM)
services to the telecommunications (CLEC, long distance and cellular), car
rental and consumer products industries.
8
As a provider of CRM services, OSC offers customer management, customer care,
interactive voice response, telesales, operator services, directory
assistance, billing inquiry and help desk. OSC offers a Web-enabled (e-care)
customer call center product which utilizes technology that allows clients'
customers to communicate with a customer service representative immediately in
a variety of ways, including telephone, e-mail, a Website callback request, an
Internet call using Voice-Over-Internet Protocol, facsimile or a chat session
request. OSC is also a provider of directory assistance to the growing
Competitive Local Exchange Carrier (CLEC) industry, interexchange carriers
(IXCs) and cellular companies.
SOFTWARE
Aptis develops, markets and supports convergent billing and customer
care software applications. Aptis' customers include facilities-based
operators and resellers of community services based on the traditional public
switched network as well as next generation networks built around IP
("Internet Protocol"). These companies include competitive local exchange
companies, long distance companies, integrated communications providers
("ICP"), Internet services providers ("ISP"), applications services providers,
network service providers ("NSP") and enhanced data services providers.
Aptis has developed, and continues to enhance, sophisticated software
applications in order to meet the current and evolving billing requirements of
its customers. The Company's software applications support complex billing of
NSP, ISP and ICP customers in a multi-service environment. Aptis' convergent
billing platform has the capability to produce a single convergent bill
whereby multiple services and products such as local exchange, long distance
wireless and data communications can be billed directly to the end user under
one, unified billing statement. The software also has the flexibility to be
configured to meet a company's unique business rules and product set.
In addition to its software products, a full range of professional
services are also available through the Company. These services include
consulting, development and systems operations services centered on the
Internet and communications industries and their software products. Aptis also
provides ongoing support, maintenance and training related to customers'
billing and customer care systems. In addition to its software applications
and services, Aptis is a reseller of IBM AS/400 hardware that is used as the
hardware platform to host certain Aptis software applications.
Billing entered the software market in June 1997 in conjunction with
the acquisition of Computer Resources Management, Inc. ("CRM"). At that time
the software division was re-named Billing Concepts Systems, Inc. ("BCS"). CRM
had developed and sold billing applications to the long distance and
convergent services markets. Additionally, in October 1998, BCCthe Company
acquired Expansion Systems Corp. ("ESC") and integrated it into BCS. ESC had
developed a customer care and billing application for ISPs that automates the
registration of new Internet subscribers and creates bills for customers'
services. In December 1998, Billing completed the merger of Communications
Software Consultants, Inc. ("CommSoft"). CommSoft was an international
software development and consulting firm specializing in the
telecommunications industry. In April 1999, BCCthe Company announced that BCS
would operate under the name Aptis. Through these actions, Aptis has expanded
its potential markets to include companies focused on providing sophisticated
broadband Internet Protocol and enhanced data services.
8
INTERNET
Over the last five years, the Internet and the Worldwide Web have
grown at an explosive rate. The growth of the Internet is a global phenomenon
that is fundamentally changing the way business is conducted. The increase in
the number of Internet users, coupled with the proliferation of new types of
on-line and electronic commerce, or e-commerce,e- commerce, has fueled the emergence of
new service providers such as ISPs and Internet telephony providers. In
addition, traditional telecommunications carriers have entered the Internet
market, providing on-line and e-commerce services to both businesses and
consumers. One of the consequences of the widespread growth and acceptance of
Web use is that consumers are rapidly embracing the ability to pay their bills
and conduct other personal business over the Internet. This trend has
generated a growing interest by large national and regional bill senders to
publish their bills electronically. The Company has embraced the Internet
phenomenon and addressed it in its core Transaction Processing and Aptis
businesses. Additionally, the Company has invested in acquisition
opportunities directly related to the Internet, as discussed below.
In September 1998, Billing acquired 22% of the capital stock of
Princeton eCom Corporation ("Princeton"), formerly known as Princeton Telecom
Corporation. Princeton, founded in 1983 by a group of Princeton University
professors, is a privately held company headquartered in Princeton, New Jersey
specializing in comprehensive electronic bill presentment and payment services
via the Internet to financial institutions and large businesses. Princeton's
services eliminate the need for companies to generate and mail paper bills as
well as the need for consumers to write and mail paper checks. Princeton also
provides electronic lockbox (els)(ELS) and credit card balance transfer services.
Through September 30, 1999, the Company acquired additional shares of
Princeton common stock, increasing the Company's
9
ownership to approximately 24% at September 30, 1999. In November
1999,March 2000, the
Company increased its ownership interest in Princeton to 27%approximately 51%,
with
an additional equity investment of $2.6investments totaling $33.5 million. The Company
also
anticipates that Princeton will require more capital before it attains
profitability, and the Company may invest additional funds. In the event
Princeton raises additional funds from the sale of equity investmentsand the Company does
not participate, our equity interest will be diluted. We expect our interest
in Princeton as Princeton positions
itself for further growth.to be less than a majority by September 30, 2000 and we have less
than a majority representation on the Board of Princeton.
In November 1999, the Company completed the acquisition of FIData,
Inc., a company located in San Antonio, Texas that provides Internet-based
automated loan approval products to the financial services industries. FIData
was formed in 1987 to provide the credit union industry with self-service
technology. The proprietary products of FIData facilitate Internet-based
automated approval of consumer loans. The FIData state-of-the-art technology
is easily installed and may rapidly change a lender's Web site into an
interactive revenue and self-service center. In addition to credit unions, the
FIData products have application in the banking, insurance, mortgage and
retail markets. In conjunction with the FIData transaction, the Company also
completed the acquisition of a company located in Austin, Texas that is
developing an Internet-based financial services Web site focused on the credit
union industry and its members.
In April 2000, the Company purchased 22% of the capital stock of
CoreINTELLECT, Inc. ("CoreINTELLECT"). CoreINTELLECT is a Texas-based
application service provider that develops and markets business-to-business
products for the acquisition, classification, retention and dissemination of
business-to-business critical knowledge and information. CoreINTELLECT's
products utilize the Internet and various public and proprietary information
databases to deliver highly relevant, personalized content to business users
while reducing the problem of information overload that traditional
information dissemination systems create.
As of the date of this report, the Company has invested $21.7$65 million,
and committed an additional $2.6 million of capital resources in the Internet
arena and plans tomay make further significant investments of capital in Internet-related operations
over the foreseeable future. The Company will continue to review additional
strategic Internet acquisition opportunities that will complement or enhance
its existing operations.
Billing is a Delaware corporation. Our principal executive offices
are located at 7411 John Smith Drive, Suite 200, San Antonio, Texas 78229, and
our telephone number is (210)949-7000.
USE OF PROCEEDS
The Shares to be sold pursuant to the Prospectus are owned by certain
stockholders of the Company. The Company will not receive any of the proceeds
from the sale of the Shares. See "Selling Stockholders."
10
SELLING STOCKHOLDERS
The table below presents the following information about the number
of shares of the Common Stock of the Company which is owned by the Selling
Stockholders: (i) the number of shares each Selling Stockholder beneficially
owns as of the date of this Prospectus, (ii) the percentage of the Company's
outstanding shares of Common Stock that each Selling Stockholder beneficially
owns prior to the offering, (iii) the number of shares that each Selling
Stockholder is offering under this Prospectus, (iv) the number of shares that
each Selling Stockholder will beneficially own after the completion of this
offering and (v) the percentage of the Company's outstanding shares of Common
Stock that each Selling Stockholder will beneficially own after the completion
of the offering.
9
BENEFICIAL OWNERSHIP BENEFICIAL OWNERSHIP
BEFORE THE OFFERING AFTER THE OFFERING(1)
------------------------ ------------------------------------------------------- -------------------------------
NUMBER PERCENTAGE SHARES TO NUMBER PERCENTAGE
NAME OF SHARES OF CLASS(2) BE SOLD OF SHARES OF CLASS
---- ---------------------------- ------------- ------------- ------------------ ----------- --------- --------- ----------
Mel Ray 387,277 1.0 387,277 0 0
Southwest Business Corporation 135,170Michael R. Smith 2,307,691 5.4 461,537 1,846,154 4.4
James Kirk Smith 608,021 1.4 121,604 486,417 1.1
Estate of Mary Jane Pettigrew 218,351 * 135,170 0 0
First Advisors, Inc. 53,37743,670 174,681 *
53,377 0 0
Troy Asset Advisors, Inc. 53,377Barry D. and Harriet M. Austin 134,370 * 53,377 0 0
Daniel N. Matheson 53,37726,874 107,496 *
53,377 0 0
HCIE, L.L.C. 53,377Karla J. Hatton 134,370 * 53,377 0 0
Mary Lake Partners, Ltd. 47,93026,874 107,496 *
47,930 0 0
Troy Partners, Ltd. 47,930John J. Jelinek 78,718 * 47,930 0 0
Troy Partners II, Ltd. 47,93015,744 62,974 *
47,930 0 0
William Hammock 37,234Virgil B. Pettigrew 75,992 * 37,234 0 0
FIData Equity Partners, L.P.(3) 36,84014,198 61,794 *
36,840 0 0
An additional twelve Selling
Stockholders, each of whom
beneficially owns less than one-
tenth of one percent of the
outstanding Common Stock of
Billing at January 26, 2000 146,181Michael and Jenny Starcher 53,748 * 146,181 0 010,750 42,998 *
Chris and Suzanne Austin 44,790 * 8,958 35,832 *
Greg Austin 44,790 * 8,958 35,832 *
George E. Lass 24,699 * 4,860 19,839 *
Charles P. Beall 23,515 4,703 18,812 *
Paula D. Wilkinson 23,291 * 4,658 18,633 *
Robert C. Hawk 17,916 * 3,583 14,333 *
Tangela Kai Lovering 14,970 * 2,994 11,976 *
James Kirk Smith, Custodian for
Brian Jeffrey Smith 14,781 * 2,956 11,825 *
James Kirk Smith, Custodian for
Eric Justin Smith 14,781 * 2,956 11,825 *
Gregory L. Camp 4,814 * 941 3,873 *
Carl Glenn Haddock 3,359 * 672 2,687 *
Jason J. Plumb 2,687 * 537 2,150 *
James B. Lovering 1,303 * 261 1,042 *
Tangela Kai Lovering, Custodian
for James Michael Lovering, a
Minor 1,303 * 261 1,042 *
John M. Turner 896 * 179 717 *
David L. Craven 448 * 90 358 *
Deborah Jill Froman 448 * 90 358 *
Angelita Rey 448 * 90 358 *
Mark G. Smitherman 448 * 90 358 *
Abbie Upchurch 448 * 90 358 *
Marvin L. Pyle 269 * 54 215 *
TOTAL 1,100,000 2.9 1,100,000 0 03,851,665 769,232 3,082,433
-
- -------------------------
* represents less than 1%
(1) Assumes all shares of Common Stock offered hereby are sold.
(2) Based on 38,544,55742,308,326 shares of the Company outstanding as of January 26,May 16, 2000.
(3) Subsequent to11
In April 2000, a wholly owned subsidiary of the date of this Prospectus, the shares held by FIData Equity
Partners, L.P. may be distributed to First Advisors, Inc., Troy Asset
Advisors, Inc., Daniel N. Matheson, HCIE, L.L.C., Roger K. Beasley,
Austin A. Cooper, Joe Gilliland, Gary J. Davis, Newton F. Hamlin, Greg
Hurd, Robert E. Johnson, KJEI, Ltd., Mary Lake Partners, Ltd., Charles
H. McCoy, Jane L. Riley, Edward H. Solter, Troy Partners, Ltd., Troy
Partners II, Ltd. and Steffen E. Waltz.
In November 1999, FIDataCompany was merged
(the "Merger") into a wholly owned
subsidiary of the Company.Operator Service Company ("OSC"). In connection with the
Merger, the Selling Stockholders received an aggregate of 1,100,0003,846,154 shares of
Common Stock of Billing, 769,232 of which are being offered hereby.
PLAN OF DISTRIBUTION
All 1,100,000769,232 shares of Common Stock being offered hereby are being
registered on behalf of the Selling Stockholders. All of the shares were
issued by us in connection with our acquisition of FIData.OSC. Billing will receive
no proceeds from this offering. As used herein, the term "Selling Stockholder"
includes donees and pledgees selling Shares received from a Selling
Stockholder after the date of this Prospectus.
Each Selling Stockholder will act independently of Billing in making
decisions with respect to the timing, manner and size of each sale. Each
Selling Stockholder may choose to sell the Shares from time to time at market
prices prevailing at the time of the sale, at prices related to the then
prevailing market prices or in negotiated transactions, including pursuant to
an underwritten offering or pursuant to one or more of the following methods:
- a block trade in which the broker or dealer so engaged will
attempt to sell the Shares as agent but may position and resell a
portion of the block as principal in order to facilitate the
transaction,
- purchases by a broker or dealer as principal and resale by such
broker or dealer for its account pursuant to this Prospectus, and
- ordinary brokerage transactions and transactions in which the
broker solicits purchasers.
In connection with the sale of the Shares, a Selling Stockholder may
engage broker-dealers who in turn may arrange for other broker-dealers to
participate. Broker-dealers may receive commissions or discounts from a
Selling
10
Stockholder in amounts to be negotiated immediately prior to the sale.
In addition, underwriters or agents may receive compensation from a Selling
Stockholder or from purchasers of the Shares for whom they may act as agents,
in the form of discounts, concessions or commissions. Underwriters may sell
shares to or through dealers, and such dealers may receive compensation in the
form of discounts, concessions or commissions from the underwriters or
commissions from the purchasers for whom they act as agents. A Selling
Stockholder, underwriters, brokers, dealers and agents that participate in the
distribution of the Shares may be deemed to be underwriters, and any discounts
or commissions received by them from a Selling Stockholder and any profit on
the resale of the Shares by them may be deemed to be underwriting discounts
and commissions under the Securities Act.
At the time a particular offer of Shares is made, to the extent
required, a supplement to this Prospectus will be distributed which will
identify and set forth the aggregate amount of Shares being offered and the
terms of the offering. Such supplement will also disclose the following
information:
- the name or names of any underwriters, dealers or agents,
- the purchase price paid by any underwriter for Shares purchased
from the Selling Stockholders,
- any discounts, commissions and other items constituting
compensation from the Selling Stockholders and/or Billing, and
- any discounts, commissions or concessions allowed or reallowed or
paid to dealers, including the proposed selling price to the
public.
We have agreed to indemnify the Selling Stockholders in certain
circumstances against certain liabilities, including liabilities under the
Securities Act. Each Selling Stockholder has agreed to indemnify Billing in
certain circumstances against certain liabilities, including liabilities under
the Securities Act.
The Selling Stockholders also may resell all or a portion of the
Shares in open market transactions in reliance upon Rule 144 under the
Securities Act, provided he, she or it meets the criteria and conforms to the
requirements of such Rule.
The Selling Stockholders and any other persons participating in the
sale or distribution of the Shares being registered hereby will be subject to
the provisions of the Exchange Act and the rules and regulations thereunder,
including Regulation M, to the extent applicable. The foregoing provisions may
limit the timing of purchases and sales of any of the Shares by a Selling
Stockholder or any other such person. This may affect the marketability of the
Shares.
12
Each Selling Stockholder also will comply with the applicable prospectus
delivery requirements under the Securities Act in connection with the sale or
distribution of the Shares hereunder.
In order to comply with certain states' securities laws, if
applicable, the Shares will be sold in such jurisdictions only through
registered or licensed brokers or dealers. In certain states, the Shares may
not be sold unless the Shares have been registered or qualified for sale in
such state, unless an exemption from registration or qualification is
available and is obtained.
Billing will bear all out-of-pocket expenses incurred in connection
with the registration of the Shares, including, without limitation, all
registration and filing fees imposed by the Commission, The Nasdaq Stock
Market, Inc. and blue sky laws, printing expenses, transfer agents' and
registrars' fees, and the fees and disbursements of Billing's outside counsel
and independent public accountants. The Selling Stockholders will bear all
underwriting discounts and commissions and transfer or other taxes.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION
FOR SECURITIES ACT LIABILITIES
Article XV of the Company's Certificate of Incorporation ("Article
XV") eliminates the personal liability of the Company's directors to the
Company or its stockholders for monetary damages for breach of fiduciary duty
except under certain circumstances. Directors remain liable for (i) any breach
of the duty of loyalty to the Company or its stockholders, (ii) any act or
omission not in good faith or which involves intentional misconduct or a
knowing violation of law, (iii) any violation of Section 174 of the Delaware
General Corporation Law ("DGCL"), which proscribes the payment of dividends
and stock purchases or redemptions under certain circumstances, and (iv) any
transaction from which a director derived an improper personal benefit.
11
Article XV further provides that future repeal or amendment of its
terms will not adversely affect any rights of directors existing thereunder
with respect to acts or omissions occurring prior to such repeal or amendment.
Article XV also incorporates any future amendments to Delaware law which
further eliminate or limit the liability of directors.
Under Section 145 of the DGCL, directors and officers as well as
other employees and individuals may be indemnified against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement in
connection with specified actions, suits or proceedings, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the corporation -- a "derivative action"), if they acted in good
faith and in a manner they reasonably believed to be in or not opposed to the
best interests of the Company, and with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was unlawful. A
similar standard of care is applicable in the case of derivative actions,
except that indemnification extends only to expenses (including attorneys'
fees) incurred in connection with defense or settlement of such an action, and
the DGCL requires court approval before there can be any indemnification where
the person seeking indemnification has been found liable to the Company.
Article VIII of the Company's Amended and Restated Bylaws provides
that the Company shall indemnify any person to whom, and to the extent,
indemnification may be granted pursuant to Section 145 of the DGCL.
Article XI of the Company's Certificate of Incorporation provides
that each person who was or is made a party to, or is involved in any action,
suit or proceeding by reason of the fact that he is or was a director, officer
or employee of the Company, will be indemnified by the Company against all
expenses and liabilities, including attorneys' fees, reasonably incurred by or
imposed upon him, except in such case where the director, officer or employee
is adjudged guilty of willful misfeasance or malfeasance in the performance of
his duties. Article XI also provides that the right of indemnification shall
be in addition to and not exclusive of all other rights to which such
director, officer or employee may be entitled.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors and officers and controlling
persons pursuant to the foregoing provisions, the Company has been advised
that, in the opinion of the Commission, such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable.
LEGAL MATTERS
The validity of the securities offered hereby will be passed upon by
W. Audie Long, General Counsel of the Company. At January 26,May 16, 2000, Mr. Long
beneficially owned 184,000 shares of Billing's Common Stock.
13
EXPERTS
The consolidated financial statements included in the Company's
Annual Report on Form 10-K for the fiscal year ended September 30, 1999
incorporated by reference in this Prospectus have been audited by Arthur
Andersen LLP, independent public accountants, to the extent and for the
periods set forth in their reports incorporated herein by reference, and are
incorporated herein in reliance on such reports given upon the authority of
such firm as experts in accounting and auditing.
12auditing in giving said reports.
14
=====================================================================================================================================
NO DEALER, SALESMAN OR OTHER PERSON HAS BEEN
AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, THE SECURITIES
OFFERED HEREBY IN ANY JURISDICTION TO ANY PERSON TO
WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER OR
SOLICITATION IN SUCH JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
------------------------------
------------------------------------
TABLE OF CONTENTS
PAGE
----
Available Information ....................................................Information....................... 2
Incorporation of Certain Documents
by Reference ..........................Reference.............................. 2
Special Note Regarding Forward-Looking
Statements ........................Statements................................ 3
Risk Factors .............................................................Factors................................ 3
The Company .............................................................. 7Company................................ 8
Use of Proceeds .......................................................... 9Proceeds........................... 10
Selling Stockholders ..................................................... 9Stockholders....................... 11
Plan of Distribution ..................................................... 10Distribution....................... 12
Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities ............................................................ 11Liabilities.............................. 13
Legal Matters ............................................................ 12
Experts .................................................................. 12Matters.............................. 13
Experts.................................... 13
1,100,000=====================================================
=====================================================
769,232 SHARES
BILLING CONCEPTS CORP.
COMMON STOCK
----------------------
P R O S P E C T U S
JANUARY 28,MAY , 2000
----------
================================================================================------------
=====================================================
PART II
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses in connection with this offering are:
Commission registration fee $1,851.30
Legal fees and expenses* 5,000.00
Miscellaneous* 500.00
Total $7,351.30
Commission registration fee $ 983.66
Legal fees and expenses* 5,000.00
Miscellaneous* 500.00
Total $6,483.66
=========
____________________
--------------------
* Estimated
The Company has agreed to pay all the costs and expenses of this
offering.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the DGCL empowers the Registrant to, and the Bylaws of
the Registrant provide that it shall, indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding by reason of the fact that he is or was a
director, officer, employee or agent of the Registrant, or is or was serving
at the request of the Registrant as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise,
against expenses, judgments, fines and amounts paid in settlement actually and
reasonably incurred by him in connection with such action, suit or proceeding
if he acted in good faith and in a manner he reasonably believed to be in or
not opposed to the best interests of the Registrant, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his conduct
was unlawful; except that, in the case of an action or suit by or in the right
of the Registrant, no indemnification may be made in respect of any claim,
issue or matter as to which such person shall have been adjudged to be liable
for negligence or misconduct in the performance of his duty to the Registrant
unless and only to the extent that the Court of Chancery or the court in which
such action or suit was brought shall determine that such person is fairly and
reasonably entitled to indemnity for proper expenses.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers or persons controlling
the Company pursuant to the foregoing provisions, the Company has been
informed that in the opinion of the Commission, such indemnification is
against public policy as expressed in the Securities Act and is therefore
unenforceable.
The Registrant maintains directors' and officers' liability insurance
that covers the directors and officers of the Registrant.
ITEM 16. EXHIBITS.
Exhibit No. Exhibit
-EXHIBIT NO. EXHIBIT
- ----------- -------
5.1 Opinion of Billing Concepts Corp. regarding legality (filed
herewith)
10.1 Registration Rights Agreement dated November 8, 1999,April 4, 2000, among Billing
Concepts Corp., FIData Equity Partners, L.P., Southwest Business Corporation,
Mel Ray and William Hammockthe Selling Stockholders (filed herewith)
23.1 Consent of Billing Concepts Corp. (contained in Exhibit 5.1)
23.2 Consent of Arthur Andersen LLP (filed herewith)
24.1 Power of Attorney (included on signature page).
II-1
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement 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;
(2) That, for the purpose of determining any liability under the
Securities Act, 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; and
(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) The undersigned Registrant hereby undertakes 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 15(d) of the Exchange
Act 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) The undersigned Registrant hereby undertakes that, 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 foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the 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 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.
II-2
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as
amended, the Registrant certifies that it has reasonable grounds to believe
that it meets all 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 City of San Antonio and State of Texas on
the 27th18th day of January,May, 2000.
BILLING CONCEPTS CORP.
By: /s/ David P. Tusa
------------------------------------------------------------------
David P. Tusa
Senior Vice President and
Chief Financial Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints Parris H. Holmes, Jr. and David P.
Tusa, or either of them, 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 and all amendments
(including post-effective amendments) to this registration statement, and to
file the same and all exhibits thereto, and all documents in connection
therewith, with the Securities and Exchange Commission, granting said
attorney-in-fact and agent, and each of them, full power and authority to do
and perform each and every act and thing requisite and necessary to be done in
and about the premises, 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 either of them, or their or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as
amended, this registration statement has been signed by the following persons
in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
- - --------- ----- ----
/s/ Parris H. Holmes, Jr. Chairman of the Board and January 27,May 18, 2000
- - ------------------------------------------------------------- Chief Executive Officer
Parris H. Holmes, Jr. and a Director
(Principal Executive Officer)
/s/ David P. Tusa Senior Vice President January 27,May 18, 2000
- - ------------------------------------------------------------- and Chief Financial Officer
David P. Tusa (Principal Financial and
Accounting Officer)
/s/ Lee Cooke Director January 27,May 18, 2000
- - -------------------------------------------------------------
Lee Cooke
/s/ William H. Cunningham Director January 27,May 18, 2000
- - -------------------------------------------------------------
William H. Cunningham
/s/ Thomas G. Loeffler Director January 27,May 18, 2000
- - -------------------------------------------------------------
Thomas G. Loeffler
/s/ James E. Sowell Director January 27,May 18, 2000
- - -------------------------------------------------------------
James E. Sowell
II-3
EXHIBIT INDEX
EXHIBIT NO. EXHIBIT -PAGE
- ----------- ------- ----
5.1 Opinion of Billing Concepts Corp. regarding legality (filed herewith) .................................II-4
10.1 Registration Rights Agreement dated November 8, 1999,April 4, 2000, among Billing
Concepts Corp., FIData Equity Partners, L.P., Southwest Business
Corporation, Mel Ray and William Hammock ......................................the Selling Stockholders (filed herewith).................................II-4
23.1 Consent of Billing Concepts Corp. (contained in Exhibit 5.1) ...................................................II-4
23.2 Consent of Arthur Andersen LLP (filed herewith) .............................................................................II-5
24.1 Power of Attorney (included on signature page) ...............................................................................II-3
II-4