As filed with the Securities and Exchange Commission on __________, 2001.January 30, 2002.
Registration No. ____-____
===============================================================================================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
----------------------
Billserv, Inc.
(Exact name of registrant as specified in its charter)
NEVADA 98-0190072
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
211 North Loop 1604 East, Suite 100, San Antonio,
Texas 78232 210.402.5000 (Address, including zip
code, and telephone number,
including area code, of registrant's principal executive offices)
---------------------
MARSHALL N. MILLARD
Secretary, Senior Vice President and General Counsel
Billserv, Inc.
211 North Loop 1604 East, Suite 100
San Antonio, Texas 78232
210.402.5000
(Name, address, including zip code,
and telephone number, including area code, of agent for service)
TIMOTHY N. TUGGEY, ESQ.
Loeffler, Jonas & Tuggey LLP
700 N. St. Mary's St. #800
San Antonio, Texas 78205
210.354.4300
---------------------
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, 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. / /
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. /X// /
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
=============================================================================================================
==================================== =============== =================== =================== ================
Proposed maximum Proposed
Title of each class of securities Amount to be offering price per maximum aggregate Amount of
to be registered registered share (1) offering price (1) registration
fee
- ------------------------------------ --------------- ------------------- ------------------- ----------------
-------------------
Common Stock, $0.001 par value 4,000,000 $1.10 $4,400,000 $1,051.60
common
shares
==================================== =============== =================== =================== ================
(1) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, as amended, and
based on the average of the high and low prices for the common stock
reported on the NASDAQ National Market on December 6, 2001.
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 SAID SECTION 8(A),
MAY DETERMINE.
As filed with the Securities and Exchange Commission on __________, 2001.January 30, 2002.
Registration No. ____-____
===============================================================================================================================================================
211 North Loop 1604 East, Suite 100
San Antonio, Texas 78232
210.402.5000
Billserv, Inc.
4,000,000 SHARES
COMMON STOCK
Our common stock is traded on the NASDAQ National Market under the
symbol "BLLS." On November 28, 2001, the closing bid quotation for the common
stock was $1.19.
We issued and sold 2,000,000 shares of our common stock, along with
warrants to purchase an additional 2,000,000 shares of common stock to raise
additional capital to be used to continue the pursuit of our growth strategy,
which is described more fully in this Prospectus. The selling stockholders
identified below have advised Billserv, Inc. (the "Company") that they may from
time to time sell or otherwise dispose of these shares, at prices then
obtainable. The Company will not receive any of the proceeds from the sale of
common stock by such security holders. Such security holders, and any securities
dealers or brokers to or through which they effect sales of the above shares of
common stock, may be deemed to be underwriters with respect to such securities
within the meaning of the Securities Act of 1933, and any profits realized by
such persons may be deemed to be underwriting commissions.
BUYING SHARES OF OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" BEGINNING ON PAGE 3 OF THIS PROSPECTUS FOR A DISCUSSION OF
CERTAIN FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE PURCHASERS OF SHARES OF
OUR COMMON STOCK.
------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED.
THE SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION
STATEMENT FILED WITH THE SEC IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO
SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES
IN ANY STATE WHERE THE OFFER OR SALES IS NOT PERMITTED.
------------------
THE DATE OF THIS PROSPECTUS IS DECEMBER 20, 2001.JANUARY 30, 2002.
1
As filed with the Securities and Exchange Commission on __________, 2001.January 30, 2002.
Registration No. ____-____
===============================================================================================================================================================
TABLE OF CONTENTS
PART I
AVAILABLE INFORMATION .........................................................2
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS .....................2
RISK FACTORS ..................................................................3
THE COMPANY ..................................................................11
USE OF PROCEEDS ..............................................................12
SELLING STOCKHOLDERS .........................................................12
PLAN OF DISTRIBUTION .........................................................13
LEGAL MATTERS ................................................................14
EXPERTS ......................................................................14
MORE INFORMATION .............................................................14
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS .......................................16
SIGNATURES AND POWER OF ATTORNEY .............................................19
EXHIBIT INDEX ................................................................20
AVAILABLE INFORMATION
Prior to filing the registration statement on Form 3 of which this Prospectus is
a part, the Company has been subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"). As such,
Billserv, Inc. is a "reporting company."
The Company has filed with the Commission a registration statement on Form 3 of
which this Prospectus is a part. This registration statement or any part
thereof, together with all other reports and other information filed by
Billserv, Inc. may be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street N.W., Judiciary Plaza,
Washington, D.C. 20549. Copies of such material may be obtained from the Public
Reference Section of the Commission's Washington, D.C. office at prescribed
rates. The Commission maintains a Web site that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission at http://www.sec.gov.
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS
The discussion in this Prospectus contains forward-looking statements that
involve risks and uncertainties. A number of important factors could cause the
Company's actual results to differ materially from those expressed in any
forward-looking statements made by, or on behalf of, the Company. Factors that
could cause or contribute to such differences include, but are not limited to,
those discussed in "Risk Factors" and "The Company" as well as those discussed
elsewhere in this Prospectus. Investors should carefully consider the
information set forth under "Risk Factors".
2
As filed with the Securities and Exchange Commission on __________, 2001.January 30, 2002.
Registration No. ____-____
===============================================================================================================================================================
The Company intends to furnish its shareholders with annual reports containing
audited financial statements certified by its independent public accountants and
quarterly reports containing unaudited financial statements for each of the
first three quarters of each fiscal year.
RISK FACTORS
AN INVESTMENT IN THE SECURITIES IS SPECULATIVE IN NATURE AND INVOLVES A HIGH
DEGREE OF RISK. YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS AND OTHER
INFORMATION IN THIS PROSPECTUS BEFORE DECIDING TO INVEST IN THE SECURITIES. YOU
SHOULD ONLY PURCHASE THE SECURITIES IF YOU CAN AFFORD TO LOSE YOUR ENTIRE
INVESTMENT. THE RISKS DESCRIBED BELOW MAY NOT BE THE ONLY RISKS FACING THE
COMPANY.
FUTURE CAPITAL NEEDS; UNCERTAINTY OF ADDITIONAL FINANCING.
The Company currently plans to meet their capital requirements primarily through
issuance of equity securities, equipment leasing and new borrowing arrangements,
and in the longer term, revenue from operations. If current cash, marketable
securities and cash that may be generated from operations are insufficient to
satisfy their liquidity requirements, the Company may seek to sell additional
equity or secure borrowings prematurely. The sale of additional equity or
convertible debt securities would result in additional dilution to the Company's
stockholders, and debt financing, if available, may involve restrictive
covenants which could restrict their operations or finances. There can be no
assurance that financing will be available in amounts or on terms acceptable to
the Company, if at all. If the Company cannot raise funds, on acceptable terms,
they may not be able to continue to exist, expand our operation, grow market
share, take advantage of future opportunities or respond to competitive
pressures or unanticipated requirements, any of which would negatively impact
their business, operating results and financial condition.
LACK OF OPERATING HISTORY; LIMITED RELEVANCE OF HISTORICAL FINANCIAL
INFORMATION.
The Company was organized in 1998 and began operations as a public company in
1999. The Company has not been profitable. Through September 30, 2001, the
Company's accumulated deficit was $34.1 million. Therefore, all information
included herein may not necessarily reflect the results of operations, financial
position and cash flows of the Company in the future.
UNCERTAIN RELIABILITY, GROWTH AND CONSUMER ACCEPTANCE OF THE INTERNET, INTERNET
TECHNOLOGY, AND ELECTRONIC COMMERCE.
The electronic commerce market is a relatively new and growing service industry.
If the electronic commerce market fails to grow or grows slower than
anticipated, or if the Company, despite an investment of significant resources,
is unable to adapt to meet changing customer requirements or technological
changes in this emerging market, or if the Company's services and related
products do not maintain a proportionate degree of acceptance in this growing
market, the Company's business, operating results, and financial condition could
be materially adversely affected. Additionally, the security and privacy
concerns of existing and potential customers may inhibit the growth of the
electronic commerce market in general, and the Company's customer base and
revenues in particular. Similar to the emergence of the credit card and
automatic
3
As filed with the Securities and Exchange Commission on __________, 2001.January 30, 2002.
Registration No. ____-____
===============================================================================================================================================================
teller machine ("ATM") industries, the Company and other organizations serving
the electronic commerce market must educate users that electronic transactions
use encryption technology and other electronic security measures that make
electronic transactions more secure than paper-based transactions. While the
Company believes that it is utilizing proven applications designed for premium
data security and integrity to process electronic transactions, there can be no
assurance that the Company's use of such applications will be sufficient to
address the changing market conditions or the security and privacy concerns of
existing and potential customers. Adverse publicity raising concerns about the
safety or privacy of electronic transactions, or widely reported breaches of the
Company's or another providers' security, have the potential to undermine
consumer confidence in the technology and thereby have a materially adverse
effect on the Company's business. In addition, there can be no guarantee that
the Internet will continue to grow in acceptance or maintain its reliability, or
that new technologies might supplant the Internet in part or in whole.
UNCERTAIN GROWTH OF PROPORTION OF ELECTRONIC REMITTANCES.
The Company's future financial performance will be materially affected by the
percentage of bill payments which can be cleared electronically. As compared
with making payment by paper check or by draft, the Company believes that
electronic payments: (i) cost much less to complete; (ii) give rise to fewer
errors, which are costly to resolve; and (iii) generate far fewer customer
inquiries and therefore consume fewer customer care resources. Accordingly, the
Company's inability to continue to decrease the percentage of remittances
effected by paper documents will result in flat or decreased margins, and a
reversal of the current trend toward a smaller proportion of paper-based
payments would have a material adverse effect upon the Company's business,
operating results, and financial condition.
RISK OF INABILITY TO ADAPT TO RAPID TECHNOLOGICAL CHANGE; RISK OF DELAYS.
The Company's success is highly dependent on its ability to develop new and
enhanced services, and related products that meet changing customer
requirements. At present, the Company's four principal products, EServ, eCare,
EPublishing and EConsulting are available. The market for the Company's
services, however, is characterized by rapidly changing technology, evolving
industry standards, emerging competition and frequent new and enhanced software,
service and related product introductions. In addition, the software market is
subject to rapid and substantial technological change. The Company, to remain
successful, must be responsive to new developments in hardware and semiconductor
technology, operating systems, programming technology and computer capabilities.
In many instances, the new and enhanced services, products, and technologies are
in the emerging stages of development and marketing, and are subject to the
risks inherent in the development and marketing of new software, services, and
products. The Company may not successfully identify new service opportunities,
and develop and bring new and enhanced services and related products to market
in a timely manner; there can be no assurance that any such services, products
or technologies will develop or will be commercially successful, that the
Company will benefit from such developments or that services, products, or
technologies developed by others will not render the Company's services, and
related products noncompetitive or obsolete. If the Company is unable, for
technological or other reasons, to develop and introduce new services and
products in a timely manner in response to changing market conditions or
customer requirements, or if new or
4
As filed with the Securities and Exchange Commission on __________, 2001.January 30, 2002.
Registration No. ____-____
===============================================================================================================================================================
enhanced software, services and related products do not achieve a significant
degree of market acceptance, the Company's business, operating results and
financial condition would be materially adversely affected.
CHANGES IN REGULATION OF ELECTRONIC COMMERCE AND RELATED FINANCIAL SERVICES.
Management believes that the Company is not required to be licensed by the
Office of the Comptroller of the Currency, the Federal Reserve Board, or other
federal or state agencies that regulate or monitor banks or other types of
providers of electronic commerce services. There can be no assurance that a
federal or state agency will not attempt to regulate providers of electronic
commerce services, such as the Company, which could impede the Company's ability
to do business in the regulator's jurisdiction. The Company is subject to
various laws and regulations relating to commercial transactions generally, such
as the Uniform Commercial Code, and may also be subject to the electronic funds
transfer rules embodied in Regulation E, promulgated by the Federal Reserve
Board. Given the expansion of the electronic commerce market, it is possible
that the Federal Reserve might revise Regulation E or adopt new rules for
electronic funds transfer affecting users other than consumers. Because of
growth in the electronic commerce market, Congress has held hearings on whether
to regulate providers of services and transactions in the electronic commerce
market, and it is possible that Congress or individual states could enact laws
regulating the electronic commerce market. If enacted, such laws, rules and
regulations could be imposed on the Company's business and industry and could
have a material adverse effect on the Company's business, operating results, and
financial condition.
UNCERTAINTY OF ACH ACCESS.
The ACH (Automated Clearinghouse) Network is a nationwide batch-oriented
electronic funds transfer system which provides for the interbank clearing of
electronic payments for participating financial institutions. The Federal
Reserve rules provide that the ACH system is available only through a bank. To
access the Network, the Company or its authorized representative may originate
an ACH entry. As the originator, the Company forwards transaction data to the
Originating Depository Financial Institution ("ODFI"), which is a participating
financial institution that must abide by the provisions of the ACH Operating
Rules and Guidelines. The OFDI sorts and transmits the file to an ACH Operator.
The Automated Clearing House Association, Federal Reserve, New York Automated
Clearing House, and Visa USA act as ACH Operators, central clearing facilities
through which financial institutions transmit or receive ACH entries. The ACH
Operator then distributes the ACH file to the Receiving Depository Financial
Institution, the bank of the customer, which makes the funds available to the
customer. If the Federal Reserve rules were to change to further restrict or
modify access to the ACH, the Company's business could be materially adversely
affected.
INTENSE COMPETITION IN ELECTRONIC COMMERCE AND RELATED FINANCIAL SERVICES.
Portions of the electronic commerce market are becoming increasingly
competitive. The Company expects to face significant competition in all areas of
the EBPP market. Although few companies have focused their efforts as service
bureau consolidators in the EBPP industry, the Company expects that new service
bureau companies will emerge and
5
As filed with the Securities and Exchange Commission on __________, 2001.January 30, 2002.
Registration No. ____-____
===============================================================================
and================================================================================
compete for billers of all sizes. The Company further believes that software
providers, consumer front ends, banks and Internet portals will provide
increasingly competitive billing solutions for billers of all sizes. In
addition, a number of banks have developed, and others in the future may
develop, home banking services in-house. The Company believes that banks will
also compete for the EBPP business of billers.
The Company expects competition to increase from both established and emerging
companies and that such increased competition could result in reduced
transaction pricing which could materially adversely affect the Company's
business, operating results and financial condition. Moreover, the Company's
current and potential competitors, many of whom have greater financial,
technical, marketing, and other resources than the Company, may respond more
quickly than the Company to new or emerging technologies or could expand to
compete directly against the Company in any or all of its target markets.
Accordingly, it is possible that current or potential competitors could rapidly
acquire market share. There can be no assurance that the Company will be able to
compete against current or future competitors successfully or that competitive
pressures faced by the Company will not have a material adverse effect on its
business, operating results and financial condition.
DEPENDENCE ON KEY PERSONNEL.
The Company's success depends to a significant degree upon the continued
contributions of its key management, marketing, service and related product
development and operational personnel, including its Chairman and Chief
Executive Officer, Michael R. Long; its President and Chief Operating Officer,
Louis A. Hoch; and its Senior Vice President of Sales and Marketing, Tony
Diamond. The Company's operations could be affected adversely if, for any
reason, any of these officers ceased to be active in the Company's management.
The Company maintains proprietary nondisclosure and non-compete agreements with
all of its key employees. The success of the Company depends to a large extent
upon its ability to retain and continue to attract highly skilled personnel.
Competition for employees in the electronic commerce industry is intense, and
there can be no assurance that the Company will be able to attract and retain
enough qualified employees. If the Company experiences significant growth, it
may become increasingly difficult to hire, train and assimilate the new
employees needed.
The Company's inability to retain and attract key employees could have a
material adverse effect on the Company's business, operating results, and
financial condition. To date, the Company has not experienced any of these
difficulties.
POTENTIAL FLUCTUATIONS IN QUARTERLY RESULTS.
The Company's quarterly results of operations may fluctuate significantly as a
result of a number of factors, including changes in the Company's pricing
policies or those of its competitors, relative rates of acquisition of new
customers, delays in the introduction of new or enhanced services, software and
related products by the Company or by its competitors or market acceptance of
such services and products, other changes in operating expenses, personnel
changes and general economic conditions. These factors will impact the Company's
operating results. Fluctuations in operating results could result in volatility
in the price of the Company's common stock.
6
As filed with the Securities and Exchange Commission on __________, 2001.January 30, 2002.
Registration No. ____-____
===============================================================================================================================================================
RISK OF PRODUCT DEFECTS.
The software products utilized by the Company could contain errors or "bugs"
that could adversely affect the performance of services or damage a user's data.
In addition, as the Company increases its share of the electronic commerce
services market, software reliability and security demands will increase. The
Company attempts to limit its potential liability for warranty claims through
SAS 70 technical audits and limitation-of-liability provisions in its customer
agreements. There can be no assurance that the measures taken by the Company
will prove effective in limiting the Company's exposure to warranty claims.
Despite the existence of various security precautions, the Company's computer
infrastructure may also be vulnerable to viruses or similar disruptive problems
caused by its customers or third parties gaining access to the Company's
processing system.
EROSION OF REVENUE FROM SERVICES.
The profitability of the Company's business depends, to a substantial degree,
upon billers electing to continue to periodically renew contracts. In the event
that a substantial number of these customers were to decline to renew these
contracts for any reason, the Company's revenues and profits would be adversely
affected. Sales of the Company's services are dependent upon customer demand for
the services, which is affected by pricing decisions, the competition of similar
products and services, and reputation of the products and services for
performance. Most of the Company's services are likely to be sold within the
utilities and financial services industries, and poor performance by the Company
in performing its services has the potential to undermine the Company's
reputation and affect future sales of other services. A substantial decrease in
revenue from services would have a material adverse effect upon the Company's
business, operating results, and financial condition.
RISK OF LOSS FROM RETURNED TRANSACTIONS, MERCHANT FRAUD OR ERRONEOUS
TRANSMISSIONS.
The Company relies upon the Federal Reserve's ACH for electronic fund transfers
and conventional paper check and draft clearing systems for settlement of
payments by check or drafts. In its use of these established payment clearance
systems, the Company generally bears the same credit risks normally assumed by
other users of these systems arising from returned transactions caused by
insufficient funds, stop payment orders, closed accounts, frozen accounts,
unauthorized use, disputes, theft or fraud. In addition, the Company also
assumes the risk of merchant fraud and transmission errors when it is unable to
have erroneously transmitted funds returned by an unintended recipient. Merchant
fraud includes such actions as inputting false sales transactions or false
credits.
RISK OF SYSTEM FAILURE.
The Company's operations are dependent on its ability to protect its computer
equipment against damage from fire, earthquake, power loss, telecommunications
failure or similar event. Any damage or failure that causes interruptions in the
Company's operations could have a material adverse effect on the Company's
business, operating results, and financial condition. The Company's property and
business interruption insurance may not be adequate to compensate the Company
for all losses that may occur.
7
As filed with the Securities and Exchange Commission on __________, 2001.January 30, 2002.
Registration No. ____-____
===============================================================================================================================================================
LIMITED PROTECTION OF PROPRIETARY SERVICES.
The Company regards some of its services as proprietary and relies primarily on
a combination of trademark and trade secret laws, employee and third party
non-disclosure agreements, and other intellectual property protection methods to
protect its services. Existing intellectual property laws afford only limited
protection, and it may be possible for unauthorized third parties to copy the
Company's services and related products or to reverse engineer or obtain and use
information that the Company regards as proprietary. There can be no assurance
that the Company's competitors will not independently develop services and
related products that are substantially equivalent or superior to those of the
Company.
VOLATILITY OF STOCK PRICE.
The market price of the Company's common stock is subject to significant
fluctuations in response to variations in quarterly operating results, the
failure of the Company to achieve operating results consistent with securities
analysts' projections of the Company's performance, and other factors. The stock
market has experienced extreme price and volume fluctuations and volatility that
has particularly affected the market prices of many technology, emerging growth,
and developmental stage companies. Such fluctuations and volatility have often
been unrelated or disproportionate to the operating performance of such
companies. Factors such as announcements of the introduction of new or enhanced
services or related products by the Company or its competitors, announcements of
joint development efforts or corporate partnerships in the electronic commerce
market, market conditions in the technology, banking, telecommunications and
other emerging growth sectors, and rumors relating to the Company or its
competitors may have a significant impact on the market price of the Company's
common stock.
CONTROL BY PRINCIPAL STOCKHOLDERS.
As of November 1, 2001, the directors and officers of the Company and their
affiliates collectively own approximately 15% of the outstanding shares of the
Company's common stock. As a result, these stockholders are able to exercise
significant influence over matters requiring stockholder approval, including the
election of directors and approval of significant corporate transactions. Such
concentration of ownership may have the effect of delaying or preventing a
change in control of the Company.
SHARES ELIGIBLE FOR FUTURE SALE; POSSIBLE ADVERSE EFFECT ON MARKET PRICE.
As of December 6, 2001, the Company has 20,538,526 shares of common stock
outstanding. If the Company needs future equity financing to meet its
operational and strategic requirements, such future equity financing may have a
significant dilutive effect on the Company's stock price.
ANTI-TAKEOVER PROVISIONS; CERTAIN PROVISIONS OF NEVADA LAW; CERTIFICATE OF
INCORPORATION, BYLAWS, AND STOCKHOLDER RIGHTS PLAN.
On October 4, 2000, the Company approved a stockholder rights plan to protect
stockholders in the event of an unsolicited attempt to acquire the Company in a
manner that would not be in the best interests of its stockholders. This
stockholders rights plan could have the effect of making it more difficult for a
third party to acquire, or of
8
As filed with the Securities and Exchange Commission on __________, 2001.January 30, 2002.
Registration No. ____-____
===============================================================================================================================================================
discouraging a third party from attempting to acquire, control of the Company.
The Company's Board of Directors is also classified into three classes of
directors serving staggered three-year terms. Such classification of the Board
of Directors expands the time required to change the composition of a majority
of directors and may tend to discourage a proxy contest or other takeover bid
for the Company. The issuance of common stock under a stockholder rights plan
could decrease the amount of earnings and assets available for distribution to
the holders of the Company's common stock or could adversely affect the rights
and powers, including voting rights, of the holders of the Company's common
stock. In certain circumstances, such issuance could have the effect of
decreasing the market price of the Company's common stock.
DIFFICULTY IN MANAGEMENT OF GROWTH.
The Company may experience a period of rapid growth which could place a
significant strain on its resources. The Company's ability to manage growth
successfully will require the Company to continue to improve its operational,
management and financial systems and controls as well as to expand its work
force. A significant increase in the Company's customer base would necessitate
the hiring of a significant number of additional customer care and technical
support personnel as well as computer software developers and technicians,
qualified candidates for which, at the present time, are in short supply. In
addition, the expansion and adaptation of the Company's computer and
administrative infrastructure will require substantial operational, management
and financial resources. Although the Company believes that its current
infrastructure is adequate to meet the needs of its customers in the foreseeable
future, there can be no assurance that the Company will be able to expand and
adapt its infrastructure to meet additional demand on a timely basis, at a
commercially reasonable cost, or at all. If the Company's management is unable
to manage growth effectively, hire needed personnel, expand and adapt its
computer infrastructure or improve its operational, management, and financial
systems and controls, the Company's business, operating results, and financial
condition could be materially adversely affected.
ACQUISITION-RELATED RISKS.
In the future, the Company may pursue acquisitions of complementary service or
product lines, technologies, or businesses. Future acquisitions by the Company
could result in potentially dilutive issuance of equity securities, the
incurrence of debt and contingent liabilities, and amortization expenses related
to goodwill and other intangible assets, any of which could materially adversely
affect the Company's business, operating results, and financial condition. In
addition, acquisitions involve numerous risks, including difficulties in the
assimilation of the operations, technologies, services, and products of the
acquired companies, the diversion of management's attention from other business
concerns, risks of entering markets in which the Company has no or limited
direct prior experience, and the potential loss of key employees of the acquired
company. From time to time, the Company evaluates potential acquisitions of
businesses, services, products, or technologies. The Company has no present
commitments or agreements with respect to any material acquisition of other
businesses, services, products, or technologies. In the event that such an
acquisition was to occur, however, there can be no assurance that the Company's
business, operating results, and financial condition would not be materially
adversely affected.
9
As filed with the Securities and Exchange Commission on __________, 2001.January 30, 2002.
Registration No. ____-____
===============================================================================================================================================================
UNLIKELY PAYMENT OF DIVIDENDS.
The Company has paid no cash dividends and has no present plan to pay cash
dividends, intending instead to reinvest its earnings, if any. However, payment
of future cash dividends will be determined from time to time by its board of
directors, based upon its future earnings, financial condition, capital
requirements and other factors. The Company is not presently subject to any
restriction on its present or future ability to pay such dividends.
DEPENDENCE UPON CONTRACTS WITH BILLERS.
The Company's business is dependent upon performing under the terms of
agreements with billers. Although the Company is unaware of any circumstance
which would prevent the operational ability to perform these agreements, there
can be no assurance that the Company might not be able to fully perform under
these agreements or that other factors may prevent billers from processing
billing information through the Company.
DEPENDENCE UPON CONTRACTS WITH TRADING PARTNERS.
The Company's business is dependent upon executing and maintaining agreements
with distribution and payment partners such as CheckFree Services Corporation
and Paymentech, Inc. to provide dependable financial services for customers of
billers. Such financial services include ACH processing through the customer's
bank and delivery of good funds to the Company for remittance to the billers.
There can be no assurance that any of the distribution or payment partners will
be able to perform under these agreements in the future.
ANTICIPATED BILLING SYSTEM EXPENDITURES.
To facilitate and support the growth anticipated in its business, the Company
plans to make significant expenditures in its operations over the next one to
three years. These expenditures are expected to be made in the areas of software
development, licensing, hardware and related staffing. The Company believes that
it will be able to fund these expenditures with internally generated funds and
financing, but there can be no assurance that such funds will be generated or
spent in these areas.
FORWARD-LOOKING STATEMENTS MAY PROVE INACCURATE.
This private placement memorandum contains certain forward-looking statements
and information relating to the Company that are based on the beliefs of the
Company's management as well as assumptions made by and information currently
available to the Company's management. When used in this document, the words
"anticipate," "believe," "estimate," "expect," and "intend" and similar
expressions, as they relate to the Company or its management, are intended to
identify forward-looking statements. Such statements reflect the current views
of the Company with respect to future events and are subject to certain risks,
uncertainties and assumptions, including the risk factors described in this
private placement memorandum. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those described herein as anticipated, believed,
estimated, expected or intended.
10
As filed with the Securities and Exchange Commission on __________, 2001.January 30, 2002.
Registration No. ____-____
===============================================================================================================================================================
THE COMPANY
We provide electronic bill presentment and payment ("EBPP") and related services
to companies generating recurring paper-based bills. EBPP is the process of
presenting a bill in a secure environment on the Internet and facilitating
payment of the bill utilizing an electronic transfer of funds. We provide a
turnkey outsourcing solution that enables our customers to offer EBPP services
to their customers. Our solution also enables our customers to utilize the EBPP
channel to enhance business, Internet and customer relationship management
strategies by establishing an interactive, online relationship with their
customers, creating additional revenue streams, increasing branding
opportunities, enhancing customer service and reducing the costs associated with
customer care and the billing function. Through the implementation of our
complete solution, we become our customers' single point of contact for
developing, implementing and managing their entire EBPP channel.
Our services combine our industry knowledge and expertise as well as state of
the art technology components (both hardware and software) to offer a complete
outsourced solution to our customers. We use certain proprietary components
which we have integrated with third-party, "best-of-breed" hardware and software
platforms to offer our customers a scalable, branded and secure EBPP solution.
All of the technology components of our solution have been integrated and are
operational. We have designed our system so that it is reliable, flexible, and
can easily be expanded to meet growth demands without significant cost or
changes. Our modular solution allows us to work with our customers to build a
customized EBPP solution tailored to their specific needs. The services we offer
include:
o EServ - Internet billing clearinghouse services for EBPP;
o EPublishing - Electronic publishing services for online statement
delivery;
o ECare - Internet-enabled, interactive customer care center operation;
o EConsulting - Professional consulting services for billing
organizations offering in-house bill presentment, and;
o ASP Gateway Services - Provides billers who already have an in-house
EBPP system with limited distribution points, a solution to deliver
bills to virtually any distribution point across the Internet.
To enable us to offer the most comprehensive solution to our customers, we have
entered into partnership agreements with many significant EBPP and
Internet-based services companies, including Bank of America Corporation, Bank
One, BlueGill Technologies, Inc., CheckFree Corporation (including the
operations of CheckFree i-Solutions), International Business Machines
Corporation, MasterCard International, Spectrum and Wells Fargo. We believe that
these partnerships, by allowing us to outsource certain components of our
solution, will enable us to provide more flexibility, higher quality and
potentially lower cost services to our customers than if we were to provide
these components ourselves.
We currently market our services through a direct sales force and through
organizations that resell our services to their clients and prospects. To date,
we have billing relationships representing 86 billers who send over 3.1 billion
paper-based bills annually (or approximately 15.5% of the total annual bills
produced in the United States). These customers include AFSA Data Corporation,
AT&T Corporation, Central Hudson Gas and Electric Corporation, Chevron U.S.A.,
Inc., Dow-Jones & Company (Wall Street Journal/Barron's), LASON, Inc., Reliant
Energy, Sallie Mae Corporation and Time Warner Cable. Of these customers, 67 are
in a full production environment and 19 are in various stages of implementation.
A major component of our growth strategy involves not only obtaining new
customers, but also actively assisting these companies in developing a strategy
designed to encourage the highest possible acceptance by the consumer. This
includes assigning a dedicated marketing professional to each customer to assist
in developing a marketing strategy aimed at maximizing consumer adoption of the
EBPP services, as well as through the effective implementation of our EpiCenter
strategy. Our EpiCenter strategy's objective is to positively influence
11
As filed with the Securities and Exchange Commission on __________, 2001.January 30, 2002.
Registration No. ____-____
===============================================================================================================================================================
consumer adoption rates in each metropolitan area by working with local,
regional and national billers to deliver marketing opportunities to volumes of
households. To date, we have seen positive results in both adoption rates and in
early market tests of certain marketing programs designed to enhance consumer
adoption rates.
Our stock is traded on the NASDAQ National Market under the symbol BLLS. Our
corporate offices are located at 211 North Loop 1604 East, Suite 100, San
Antonio, Texas, 78232. Our phone number is (210) 402-5000.
USE OF PROCEEDS
We will not receive any proceeds from the sale of the common stock being sold by
the selling stockholders.
THE SELLING STOCKHOLDERS
The following table sets forth the name and number of shares of common stock and
the number of Shares underlying the Warrants owned by each selling stockholder.
Since the selling stockholders may sell all, a portion or none of their shares,
no estimate can be made of the aggregate number of shares that are offered
hereby or that will be owned by each selling stockholder upon completion of the
offering to which this Prospectus relates. The shares offered by this Prospectus
may be offered from time to time by the selling stockholders named below:
12
As filed with the Securities and Exchange Commission on __________, 2001.January 30, 2002.
Registration No. ____-____
===============================================================================================================================================================
SELLING STOCKHOLDERS NUMBER OF SHARES BENEFICIALLYPERCENT OF NUMBER OF SHARES BEING PERCENTAGE OF NUMBER OF
BENEFICIALLY CLASS OWNED BENEFICIALLY CLASS OWNED SHARES BEING
OWNED BEFORE BEFORE OWNED BEFORE THE OFFERING*BEFORE OFFERED UNDER
PLACEMENT PLACEMENT OFFERING* OFFERING* THIS
CLASS OWNED AFTER
PROSPECTUS*
OFFERING
John F. Arangio 91,000 80,000 0
Harry Benham, Jr. 40,000 40,000 0
Gary Brewer11,000 <1 91,000 <1 80,000
Harry Benham, Jr. 0 <1 40,000 <1 40,000
Gary Brewer and 13,200 <1 53,200 <1 40,000
Donna G. Brewer
Robert Evans 907,700 4.4 1,867,700 7.6 960,000
Robert J. Filipe 22,000 <1 126,000 <1 104,000
Robert J. Filipe 3,000 <1 163,000 <1 160,000
Robert J. Lastowski JT TEN
Samuel A. Fruscione 112,000 <1 182,000 <1 70,000
Family Trust
Samuel A. Fruscione, TTEE
Joanne Gardner 20,000 <1 140,000 <1 120,000
Lee Getson and Margaret 0 <1 160,000 <1 160,000
Getson JT TEN
William T. Hagan 50,000 <1 130,000 <1 80,000
John E. Hamilton III and 23,000 <1 63,000 <1 40,000
Elizabeth A. Hamilton JOWROS
Mitchell D. Hovendick 183,900 <1 523,700 2.1 339,800
Robert Keller 5,000 <1 20,200 <1 15,200
James D. Knoll and
Donna M. Knoll JT TEN 3,632 <1 19,632 <1 16,000
Mark A. McMahon and Stefanie 0 <1 135,000 <1 135,000
B. McMahon JTWROS
Michael Procacci, Jr. 173,600 <1 1,173,600 4.8 1,000,000
Peter S. Rawlings 0 <1 160,000 <1 160,000
Anthony W. Tedeschi
and Lois 15,000 <1 495,000 2.0 480,000
P. Tedeschi JTWROS
TOTAL 1,543,032 5,543,032 4,000,000
* All share numbers include shares underlying warrants described in this
prospectus. The total outstanding shares listed in this form was adjusted to
reflect the newly issued shares and 53,200 40,000
Donna G. Brewer
Robert Evans 1,867,700 960,000 4.03
Robert J. Filipe 126,000 104,000 0
Robert J. Filipe 163,000 160,000
Robert J. Lastowski JT
TEN
Samuelshares underlying warrants when
calculating percent owned after offering.
13
As filed with the Securities and Exchange Commission on January 30, 2002.
Registration No. ____-____
================================================================================
PLAN OF DISTRIBUTION
This Prospectus relates to the offer and sale or other distribution from time to
time of up to 4,000,000 shares of common stock by the holders thereof, whether
by sale of shares or by exercise of warrants and sale of underlying shares of
common stock. The Company has registered the shares to provide the holders
thereof with freely tradeable securities, but the registration of such shares
does not necessarily mean that any of such shares will be offered or sold by the
holders thereof.
The Company will not receive any proceeds from the offering of the shares by the
selling stockholders. The selling stockholders may from time to time sell all or
a portion of the shares through the NASDAQ National Market System, in negotiated
transactions or otherwise, at prices then prevailing or related to the then
current market price or at negotiated prices. The shares may be sold directly or
through brokers or dealers, or in a distribution by one or more underwriters on
a firm commitment or best-efforts basis. The methods by which the shares may be
sold include (i) a block trade (which may involve crosses) in which the broker
or dealer so engaged will attempt to sell the securities as agent but may
position and resell a portion of the block as principal to facilitate the
transaction, (ii) purchases by a broker or dealer as principal and resale by
such broker or dealer for its account pursuant to this Prospectus, (iii)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers, and (iv) privately negotiated transactions. The selling stockholders
may from time to time deliver all or a portion of the shares to cover a short
sale or sales made after the date of this Prospectus, or upon the exercise or
closing of a call equivalent position or a put equivalent position entered or
established after the date of this Prospectus. The selling stockholders and any
broker-dealers participating in the distribution of the shares may be deemed to
be "underwriters" within the meaning of the Securities Act, and any profit on
the sale of the shares by the selling stockholders and any commissions received
by any such broker-dealers may be deemed to be underwriting commissions or
discounts under the Securities Act. The selling stockholders may sell all or any
portion of the shares in reliance upon Rule 144 under the Securities Act.
At a time a particular offer of shares is made, a Prospectus Supplement, if
required, will be distributed that will set forth the name of any dealers or
agents and any commissions and other terms constituting compensation from the
selling stockholders and any other required information. The shares may be sold
from time to time at varying prices determined at the time of sale or at
negotiated prices. In order to comply with the securities laws of certain
states, if applicable, the shares may in such circumstances be sold only through
registered or licensed brokers or dealers. In addition, in certain states, the
shares may not be sold unless they have been registered or qualified for sale in
such state or an exemption from such registration or qualification requirement
is available and is complied with.
LEGAL MATTERS
The law firm of Loeffler, Jonas & Tuggey, LLP is acting as counsel for
the Company in connection with this Offering and will pass upon the validity of
the securities offered hereby.
EXPERTS
The consolidated financial statements of the Billserv, Inc. appearing
in the Annual Report (Form 10-K) for the year ended December 31, 2000 have been
audited by Ernst & Young, LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference. Such
financial statements referred to above are incorporated herein by reference in
reliance upon such report given on authority of such firm as experts in
accounting and auditing.
14
As filed with the Securities and Exchange Commission on January 30, 2002.
Registration No. ____-____
================================================================================
WHERE YOU CAN FIND MORE 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 on the SEC's
Website at "http://www.sec.gov."
The SEC allows us to "incorporate by reference" information from other
documents that we file with them, which means that we can disclose important
information by referring to those documents. The information incorporated by
reference is considered to be part of this prospectus, and information that we
file later with the SEC will automatically update and supersede this
information. We incorporate by reference the documents listed below and any
future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 prior to the sale of all the shares covered
by this prospectus:
o Annual Report on Form 10-K for the year ended December 31, 2000;
o Quarterly Reports on Forms 10-Q for the quarters ended March 31, June
30, and September 30, 2001; and,
o Definitive Proxy Statement on Schedule 14A dated April 9, 2001.
You may request a copy of these or any other filings, at no cost, by
writing or telephoning us using the following contact information:
Jack Roney
Vice President, Investor Relations
Billserv, Inc.
211 North Loop 1604 East, Suite 100
San Antonio, Texas 78232
210.402.5160
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. 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.
15
As filed with the Securities and Exchange Commission on January 30, 2002.
Registration No. ____-____
================================================================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Expenses in connection with the offering of the shares will be borne by
the registrant and are estimated as follows:
SEC Registration Fee-------------------------- $ 1,051.60(1)
Legal fees and expenses----------------------- 10,000.00
Accounting fees and expenses------------------ 2,500.00
Total------------------------------------ $ 13,551.60
-----------
(1) Pursuant to Rule 457(c) promulgated by the Commission under the
Securities Act, the registration fee was calculated based upon the
average of the high and low price per share of the Company's common
stock, as reported by the NASDAQ National Market, on December 6, 2001,
and the conversion ratio in effect on that date.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers or persons controlling
the Company, the Company has been informed 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.
The Company has agreed to indemnify each selling stockholder, its officers,
directors and constituent partners, if any, and each person controlling (within
the meaning of the Securities Act) such selling stockholder, against all claims,
losses, damages or liabilities (or actions in respect thereof) suffered or
incurred by any of them, to the extent such claims, losses, damages or
liabilities arise out of or are based upon any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus or any related
registration statement incident to this Registration, or any omission (or
alleged omission) to state therein a material fact required to be stated herein
or necessary to make the statements herein not misleading, or any violation by
the Company of any rule or regulation promulgated under the Securities Act
applicable to the Company and relating to actions or inaction required of the
Company in connection with any such Registration. The Company has agreed to
reimburse each selling stockholder, its officers, directors and constituent
partners, if any, and each person who controls any such selling stockholder, for
any reasonable, documented legal and other expenses incurred in connection with
investigating or defending any such claim, loss, damage, liability or action.
Each selling stockholder has agreed to indemnify the Company, each of its
directors and officers, each placement agent and underwriter, if any, of the
Company's securities covered by this Registration Statement, each person who
controls the Company or such underwriter within the meaning of the Securities
Act, and each other selling stockholder, each of its officers, directors and
constituent partners and each person controlling such other selling stockholder,
against all claims, losses, damages and liabilities (or actions in respect
thereof) suffered or incurred by any of them and arising out of or based upon
any untrue statement (or alleged untrue statement) of a material fact contained
in this Registration Statement or related prospectus, or any omission (or
alleged omission) to state herein a material fact required to be stated herein
or necessary to make the statements herein not misleading; and will reimburse
the Company, such other selling stockholders, such directors, officers,
partners, persons, placement agent, underwriters and controlling persons for any
reasonable, documented legal and other expenses incurred in connection with
investigating or defending any such claim, loss, damage, liability or action.
16
As filed with the Securities and Exchange Commission on January 30, 2002.
Registration No. ____-____
================================================================================
ITEM 16. EXHIBITS
See Exhibit Index immediately following the signature page hereof.
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:
(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. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20 percent change in
the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective 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 Commission by the
registrant pursuant to Section 13 of 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
amendmentany 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 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 that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the provisions referred to in Item 15 hereof, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the 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
17
As filed with the Securities and Exchange Commission on January 30, 2002.
Registration No. ____-____
================================================================================
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 Act and
will be governed by the final adjudication of such issue.
18
As filed with the Securities and Exchange Commission on January 30, 2002.
Registration No. ____-____
================================================================================
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 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 City of San Antonio, State of Texas, on January 30,
2002.
Billserv, Inc.
By: /s/ Terri A. Fruscione 182,000 70,000 0
Family Trust
SamuelHunter
----------------------
Terri A. Fruscione,
TTEE
Joanne Gardner 140,000 120,000 0
Lee GetsonHunter
Treasurer, Executive Vice
President and Margaret 160,000 160,000 0
Getson JT TEN
William T. Hagan 130,000 80,000 0
John E. Hamilton III 63,000 40,000 0Chief
Financial Officer
POWER OF ATTORNEY
We, the undersigned officers and Elizabethdirectors of Billserv, Inc., hereby
severally constitute and appoint Michael R. Long and Louis A. Hamilton JOWROS
Mitchell D. Hovendick 523,700 339,800 0
Robert Keller 20,200 15,200 0
James D. KnollHoch, and 19,632 16,000 0
Donna M. Knoll JT TEN
Mark A. McMahoneach of
them singly, our true and 135,000 135,000 0
Stefanie B. McMahon
JTWROS
Michael Procacci, Jr. 1,173,600 1,000,000 0
Peter S. Rawlings 160,000 160,000 0
Anthony W. Tedeschilawful attorneys, with full power to them in any and
495,000 480,000 0
Lois P. Tedeschi JTWROS
TOTAL 5,543,032 4,000,000 4.03
* All share numbers include shares underlying warrants described in this
prospectus.
PLAN OF DISTRIBUTION
This Prospectus relates to the offer and sale or other distribution from time to
time of up to 4,000,000 shares of common stock by the holders thereof, whether
by sale of shares or by exercise of warrants and sale of underlying shares of
common stock. The Company has registered the shares to provide the holders
thereof with freely tradeable securities, but the registration of such shares
does not necessarily mean that any of such shares will be offered or sold by the
holders thereof.
The Company will not receive any proceeds from the offering of the shares by the
selling stockholders. The selling stockholders may from time to time sell all or
13
As filed with the Securities and Exchange Commission on __________, 2001.
Registration No. ____-____
===============================================================================
a portion of the shares through the NASDAQ National Market System, in negotiated
transactions or otherwise, at prices then prevailing or related to the then
current market price or at negotiated prices. The shares may be sold directly or
through brokers or dealers, or in a distribution by one or more underwriters on
a firm commitment or best-efforts basis. The methods by which the shares may be
sold include (i) a block trade (which may involve crosses) in which the broker
or dealer so engaged will attempt to sell the securities as agent but may
position and resell a portion of the block as principal to facilitate the
transaction, (ii) purchases by a broker or dealer as principal and resale by
such broker or dealer for its account pursuant to this Prospectus, (iii)
ordinary brokerage transactions and transactions in which the broker solicits
purchasers, and (iv) privately negotiated transactions. The selling stockholders
may from time to time deliver all or a portion of the shares to cover a short
sale or sales made after the date of this Prospectus, or upon the exercise or
closing of a call equivalent position or a put equivalent position entered or
established after the date of this Prospectus. The selling stockholders and any
broker-dealers participating in the distribution of the shares may be deemed to
be "underwriters" within the meaning of the Securities Act, and any profit on
the sale of the shares by the selling stockholders and any commissions received
by any such broker-dealers may be deemed to be underwriting commissions or
discounts under the Securities Act. The selling stockholders may sell all or any
portion of the shares in reliance upon Rule 144 under the Securities Act.
At a time a particular offer of shares is made, a Prospectus Supplement, if
required, will be distributed that will set forth the name of any dealers or
agents and any commissions and other terms constituting compensation from the
selling stockholders and any other required information. The shares may be sold
from time to time at varying prices determined at the time of sale or at
negotiated prices. In order to comply with the securities laws of certain
states, if applicable, the shares may in such circumstances be sold only through
registered or licensed brokers or dealers. In addition, in certain states, the
shares may not be sold unless they have been registered or qualified for sale in
such state or an exemption from such registration or qualification requirement
is available and is complied with.
LEGAL MATTERS
The law firm of Loeffler, Jonas & Tuggey, LLP is acting as counsel for
the Company in connection with this Offering and will pass upon the validity of
the securities offered hereby.
EXPERTS
The consolidated financial statements of the Billserv, Inc. appearing
in the Annual Report (Form 10-K) for the year ended December 31, 2000 have been
audited by Ernst & Young, LLP, independent auditors, as set forth in their
report thereon included therein and incorporated herein by reference. Such
financial statements referred to above are incorporated herein by reference in
reliance upon such report given on authority of such firm as experts in
accounting and auditing.
WHERE YOU CAN FIND MORE 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 on the SEC's
Website at "http://www.sec.gov."
The SEC allows us to "incorporate by reference" information from other
documents that we file with them, which means that we can disclose important
information by referring to those documents. The information incorporated by
reference is considered to be part of this prospectus, and information that we
14
As filed with the Securities and Exchange Commission on __________, 2001.
Registration No. ____-____
===============================================================================
file later with the SEC will automatically update and supersede this
information. We incorporate by reference the documents listed below and any
future filings we make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of
the Securities Exchange Act of 1934 prior to the sale of all the shares covered
by this prospectus:
o Annual Report on Form 10-K for the year ended December 31, 2000;
o Quarterly Reports on Forms 10-Q for the quarters ended March 31, June
30, and September 30, 2001; and,
o Definitive Proxy Statement on Schedule 14A dated April 9, 2001.
You may request a copy of these or any other filings, at no cost, by
writing or telephoning us using the following contact information:
Jack Roney
Vice President, Investor Relations
Billserv, Inc.
211 North Loop 1604 East, Suite 100
San Antonio, Texas 78232
210.402.5160
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. 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.
15
As filed with the Securities and Exchange Commission on __________, 2001.
Registration No. ____-____
===============================================================================
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
Expenses in connection with the offering of the shares will be borne by
the registrant and are estimated as follows:
SEC Registration Fee------------------------------- $ 1,051.60(1)
Legal fees and expenses---------------------------- 10,000.00
Accounting fees and expenses----------------------- 2,500.00
Total----------------------------------------- $ 13,551.60
-----------
(1) Pursuant to Rule 457(c) promulgated by the Commission under the
Securities Act, the registration fee was calculated based upon the
average of the high and low price per share of the Company's common
stock, as reported by the NASDAQ National Market, on December 6, 2001,
and the conversion ratio in effect on that date.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Insofar as indemnification for liabilities arising under the Securities Act of
1933 (the "Act") may be permitted to directors, officers or persons controlling
the Company, the Company has been informed 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.
The Company has agreed to indemnify each selling stockholder, its officers,
directors and constituent partners, if any, and each person controlling (within
the meaning of the Securities Act) such selling stockholder, against all claims,
losses, damages or liabilities (or actions in respect thereof) suffered or
incurred by any of them, to the extent such claims, losses, damages or
liabilities arise out of or are based upon any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus or any related
registration statement incident to this Registration, or any omission (or
alleged omission) to state therein a material fact required to be stated herein
or necessary to make the statements herein not misleading, or any violation by
the Company of any rule or regulation promulgated under the Securities Act
applicable to the Company and relating to actions or inaction required of the
Company in connection with any such Registration. The Company has agreed to
reimburse each selling stockholder, its officers, directors and constituent
partners, if any, and each person who controls any such selling stockholder, for
any reasonable, documented legal and other expenses incurred in connection with
investigating or defending any such claim, loss, damage, liability or action.
Each selling stockholder has agreed to indemnify the Company, each of its
directors and officers, each placement agent and underwriter, if any, of the
Company's securities covered by this Registration Statement, each person who
controls the Company or such underwriter within the meaning of the Securities
Act, and each other selling stockholder, each of its officers, directors and
constituent partners and each person controlling such other selling stockholder,
against all claims, losses, damages and liabilities (or actions in respect
thereof) suffered or incurred by any of them and arising out of or based upon
any untrue statement (or alleged untrue statement) of a material fact contained
in this Registration Statement or related prospectus, or any omission (or
alleged omission) to state herein a material fact required to be stated herein
or necessary to make the statements herein not misleading; and will reimburse
the Company, such other selling stockholders, such directors, officers,
partners, persons, placement agent, underwriters and controlling persons for any
reasonable, documented legal and other expenses incurred in connection with
investigating or defending any such claim, loss, damage, liability or action.
16
As filed with the Securities and Exchange Commission on __________, 2001.
Registration No. ____-____
===============================================================================
ITEM 16. EXHIBITS
See Exhibit Index immediately following the signature page hereof.
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:
(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. Notwithstanding the
foregoing, any increase or decrease in volume of securities offered
(if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
20 percent change in the maximum aggregate offering price set forth in
the "Calculation of Registration Fee" table in the effective
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 Commission by the
registrant pursuant to Section 13 of 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) The undersigned registrant hereby undertakes 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 that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the provisions referred to in Item 15 hereof, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the 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
17
As filed with the Securities and Exchange Commission on __________, 2001.
Registration No. ____-____
===============================================================================
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 Act and
will be governed by the final adjudication of such issue.
18
As filed with the Securities and Exchange Commission on __________, 2001.
Registration No. ____-____
===============================================================================
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 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 City of San Antonio, State of Texas, on December 20,
2001.
Billserv, Inc.
By: /s/ Terri A. Hunter
-------------------------
Terri A. Hunter
Treasurer, Executive Vice
President and Chief Financial
Officer
POWER OF ATTORNEY
We, the undersigned officers and directors of Billserv, Inc., hereby
severally constitute and appoint Michael R. Long and Louis A. Hoch, and each of
them singly, our true and lawful attorneys, with full power to them in any and
all capacities, to sign any amendments to this Registration Statement on Form
S-3 (including any Pre- and Post-Effective Amendments), and any related Rule
462(b) registration statement or amendment thereto, and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact may 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 indicated as of December 20, 2001.
Signature Title
- --------- -----all capacities, to sign any amendments to this Registration Statement on Form
S-3 (including any Pre- and Post-Effective Amendments), and any related Rule
462(b) registration statement or amendment thereto, and to file the same, with
exhibits thereto and other documents in connection therewith, with the
Securities and Exchange Commission, hereby ratifying and confirming all that
each of said attorneys-in-fact may 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 indicated as of January 30, 2002.
SIGNATURE TITLE
/s/ Michael R. Long Chairman of the Board and Chief
- ----------------------------------------------------------------------------- Executive Officer
Michael R. Long
/s/ Louis A. Hoch Director, President and Chief
- ----------------------------------------------------------------------------- Operating Officer
Louis A. Hoch
/s/ Terri A. Hunter Treasurer, Executive Vice President
- ----------------------------------------------------------------------------- and Chief Financial Officer
Terri A. Hunter
/s/ Anthony L. Diamond Senior Vice President, Sales and
- ----------------------------------------------------------------------------- Marketing
Anthony L. Diamond
/s/ Marshall N. Millard Secretary, Senior Vice President
- ----------------------------------------------------------------------------- and General Counsel
Marshall N. Millard
/s/ E. Scott Crist Director
- -----------------------------------------------------------------------------
E. Scott Crist
/s/ Roger R. Hemminghaus Director
- -----------------------------------------------------------------------------
Roger R. Hemminghaus
/s/ Peter G. Kirby Director
- -----------------------------------------------------------------------------
Peter G. Kirby
/s/ Richard B. Bergman Director
- -----------------------------------------------------------------------------
Richard B. Bergman
19
As filed with the Securities and Exchange Commission on __________, 2001.
Registration No. ____-____
===============================================================================
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
5.1 Opinion of Loeffler, Jonas & Tuggey LLP. Filed herewith.
23.1 Consent of Ernst & Young, LLP, independent accountants to the
registrant. Filed herewith.
23.2 Consent of Loeffler, Jonas & Tuggey LLP (contained in Exhibit 5.1).
24.1 Power of Attorney (included on the signature page of this
Registration Statement).
20
--------------------------- -------------------------------------------------------------------------
LJT LOEFFLER JONASAs filed with the Securities and Exchange Commission on January 30, 2002.
Registration No. ____-____
================================================================================
EXHIBIT INDEX
EXHIBIT
NO. DESCRIPTION
5.1 Opinion of Loeffler, Jonas & TUGGEYTuggey LLP. Filed herewith.
23.1 Consent of Ernst & Young, LLP, --------------------------- -------------------------------------------------------------------------
ATTORNEYS AT LAW
AUSTIN SAN ANTONIO WASHINGTON, D.C.
One Riverwalk Place
1005 Congress Avenue 700 North St. Mary's Street 1801 K Street, N.W.
Suite 330 Suite 800 Suite 340
Austin, Texas 78701 San Antonio, Texas 78205-3596 Washington, D.C. 20006
TELEPHONE 512.479.6403 TELEPHONE 210.354.4300 TELEPHONE 202.775.4430
FACSIMILE 512.479.8282 FACSIMILE 210.354.4304 FACSIMILE 202.775.0836
Decemberindependent accountants to the
registrant. Filed herewith.
23.2 Consent of Loeffler, Jonas & Tuggey LLP (contained in Exhibit 5.1).
24.1 Power of Attorney (included on the signature page of this
Registration Statement).
20 2001
Billserv, Inc.
211 North Loop 1604, Ste. 100
San Antonio, TX 78232
Re: Registration Statement On Form S-3
----------------------------------
Gentlemen:
We have been advised that on or about December 20, 2001, Billserv,
Inc., a Nevada corporation (the "Company"), expects to file under the Securities
Act of 1933, as amended (the "Act") with the Securities and Exchange Commission
(the "Commission"), a Registration Statement on Form S-3 (the "Registration
Statement"). Such Registration Statement relates to the offering (the
"Offering") of up to: (1) 2,000,000 units (the "Units"), each Unit consisting of
one share of the Company's stock, $.001 par value (such class of stock being
hereafter called the "Common Stock" and the aggregate of 2,000,000 shares of
Common Stock included in the Units hereinafter called the "Unit Shares") and a
Warrant to purchase one additional share of the Company's Common Stock (the
warrants to purchase in the aggregate 2,000,000 shares initially purchasable
upon the exercise of the warrants being hereinafter called the "Warrant
Shares"). The Unit Shares and the Warrant Shares are collectively referred to
herein as the "Offered Securities." This firm has acted as counsel to you in
connection with the preparation and filing of the Registration Statement and you
have requested our opinion with respect to certain legal aspects of the Offering
of the Offered Securities.
In rendering our opinion, we have participated in the preparation of
the Registration Statement and have examined and relied upon the original or
copies, certified to our satisfaction, of such documents and instruments of the
Company as we have deemed necessary and have made such other investigations as
we have deemed appropriate in order to express the opinions set forth herein. In
our examinations, we have assumed the genuineness of all signatures and the
authenticity of all documents submitted to us as originals, and the conformity
to original documents of all documents submitted to us as certified or
reproduction copies. In addition, we have assumed and have not verified the
accuracy of factual matters of each document we have reviewed.
As to certain questions of fact material to this opinion, we have
relied, to the extent we deem reasonably appropriate, upon the representations
or certificates of officers or directors of the company.
Based upon the following examination and subject to the comments and
assumptions as noted below, we are of the opinion as follows:
1) The sale of the Unit Shares and the Warrant Shares has been duly
authorized;
2) The Unit Shares have been duly authorized and are validly issued,
fully paid and nonassessable; and
3) The Warrant Shares have been duly authorized and when issued upon
such exercise in accordance with the terms of the Warrant
Agreement at the price therein provided, will be validly issued
and fully paid and nonassessable.
Insofar as the foregoing opinions relate to the legality, validity,
binding effect or enforceability of any agreement or obligations of the Company,
(i) we have assumed that each party to such agreement or obligation has
satisfied those legal requirements that are applicable to it to the extent
necessary to make such agreement or obligation enforceable against it; (ii) such
opinions are subject to applicable bankruptcy, insolvency, reorganization,
liquidation, receivership, fraudulent conveyance or similar laws, now or
hereafter in effect, relating to creditors' rights generally, and (iii) such
opinions are subject to the general principals of equity, including, without
limitation, concepts of materiality, reasonableness, good faith and fair dealing
(regardless of whether considered in a proceeding at law or in equity).
This opinion is limited in all respects to the laws of the State of
Nevada and the State of Delaware. We do not purport to be admitted to practice
in the State of Nevada or the State of Delaware and for the purposes of
rendering the opinions set in this letter we have assumed that the applicable
laws of the State of Nevada and the State of Delaware are the same as the laws
of the State of Texas.
We bring to your attention the fact that this legal opinion is an
expression of professional judgment and not a guaranty of results. This opinion
is given as of the date hereof, and we assume no obligation to update or
supplement such opinion to reflect any facts or circumstances that may hereafter
come to our attention or any changes in laws or judicial decisions that may
hereafter occur.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement. In giving such consent, we do not admit that we have
come within the category of persons whose consent is required by the Section 7
of the Act or the rules and regulations of the Commission thereunder.
Respectfully submitted,
/s/ Loefler, Jonas & Tuggy, llp
--------------------------------
LOEFFLER, JONAS & TUGGEY, LLP