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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K/A
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AMENDMENT NO. 1
CURRENT REPORT
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PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
February 3, 1999
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DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
CLARITI TELECOMMUNICATIONS INTERNATIONAL, LTD.
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(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE
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(STATE OR JURISDICTION OF INCORPORATION)
33-90344 23-2498715
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(COMMISSION FILE NUMBER) (IRS EMPLOYER
IDENTIFICATION NO.)
1341 North Delaware Avenue, Philadelphia, PA 19125
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(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(215) 425-8682
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(REGISTRANT'S TELEPHONE NUMBER)
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
In a Form 8-K filed on February 18, 1999, Clariti Telecommunications
International, Ltd. ("Clariti") disclosed in Item 2 that it had sold all of the
outstanding capital stock of Telnet Products & Services, Ltd. ("Telnet") on
February 3, 1999. Prior to its sale, Telnet was one of several businesses
Clariti had acquired as part of its December 8, 1998 acquisition of GlobalFirst
Holdings, Ltd. ("GlobalFirst"). The pro forma financial information required to
be included in such Form 8-K was not included therein and is included in this
Form 8-K/A pursuant to Item 7(b)(2) of such form.
PAGE
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(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED
None
(b) PRO FORMA FINANCIAL INFORMATION F-1
Unaudited Pro Forma Combined Balance Sheet as of
December 31, 1998 F-2
Unaudited Pro Forma Combined Statement of Operations
for the year ended June 30, 1998 F-4
Unaudited Pro Forma Combined Statement of Operations
for the six months ended December 31, 1998 F-5
Notes to Unaudited Pro Forma Combined Financial Statements F-6
(c) EXHIBITS
None
2
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
CLARITI TELECOMMUNICATIONS INTERNATIONAL, LTD.
(Registrant)
By: s/James M. Boyd, Jr.
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James M. Boyd, Jr.
Vice President of Finance and
Chief Accounting Officer
Date: April 19, 1999
3
CLARITI TELECOMMUNICATIONS INTERNATIONAL, LTD.
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
On December 8, 1998, Clariti Telecommunications International, Ltd. ("Clariti")
acquired all of the outstanding capital stock of GlobalFirst Holdings, Ltd.
("GlobalFirst"). On February 3, 1999 Clariti sold all of the outstanding
capital stock of Telnet Products & Services, Ltd. ("Telnet"), a wholly owned
subsidiary of GlobalFirst.
The following unaudited pro forma combined financial statements are based on
the historical financial statements of Clariti, GlobalFirst and Telnet, after
giving effect to the acquisition of GlobalFirst (including Telnet) by Clariti
in a transaction accounted for as a reverse acquisition under the purchase
method of accounting. The pro forma adjustments are based upon preliminary
allocations of the GlobalFirst purchase price and upon the assumptions
described in the accompanying notes. Actual allocations of the GlobalFirst
purchase price are likely to be different from that reflected in these pro
forma financial statements. References in this document to data presented on a
"pro forma basis" as of any date or for any period shall have the meaning set
forth above with respect to such date or period.
The unaudited pro forma combined financial statements should be read in
conjunction with Clariti's financial statements appearing in its Form 10-QSB
filed February 22, 1999 and the financial statements of GlobalFirst appearing
in a Form 8-K/A filed by Clariti on February 22, 1999. The unaudited pro forma
combined financial statements are presented for information purposes only and
are not necessarily indicative of the results that would have been reported had
such events occurred on the dates specified, nor is it indicative of Clariti's
future results.
F-1
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF DECEMBER 31, 1998
(Dollars and Shares in Thousands, Except Per Share Amounts)
Deduct Pro Forma
Historical Adjustments
Historical Historical Telnet for the
Clariti GlobalFirst Products Acquisition
Telecoms. Holdings & Svcs. and Sale Pro Forma
Int'l Ltd. Ltd. Ltd. (a) Combined
---------- ----------- --------- ----------- ---------
ASSETS
CURRENT ASSETS
Cash and cash
equivalents $ 14,944 $ 1,349 $( 108) $ - $ 16,185
Trade accounts
receivable - 8,705 ( 1,364) - 7,341
Advances to
subsidiaries 2,975 - - ( 2,975)(b) -
Other receivables - 1,002 ( 1,002) - -
Refundable taxes - 1,005 - - 1,005
Prepaid expenses
and other
current assets 126 936 ( 737) - 325
-------- -------- -------- -------- --------
18,045 12,997 ( 3,211) ( 2,975) 24,856
PROPERTY AND
EQUIPMENT 319 4,720 ( 3,374) - 1,665
INTANGIBLE ASSETS 230 - - 89,957 (c) 90,187
-------- -------- -------- -------- --------
TOTAL ASSETS $ 18,594 $ 17,717 $( 6,585) $ 86,982 $116,708
======== ======== ======== ======== ========
F-2
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
AS OF DECEMBER 31, 1998
(Dollars and Shares in Thousands, Except Per Share Amounts)
Deduct Pro Forma
Historical Adjustments
Historical Historical Telnet for the
Clariti GlobalFirst Products Acquisition
Telecoms. Holdings & Svcs. and Sale Pro Forma
Int'l Ltd. Ltd. Ltd. (a) Combined
---------- ----------- --------- ----------- ---------
LIABILITIES AND
STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 330 $ 17,843 $( 4,624) $ - $ 13,549
Deferred revenue - 1,063 - - 1,063
Accrued expenses
and other current
liabilities 130 4,549 ( 3,334) - 1,345
Funding from
parent - 2,975 - ( 2,975)(b) -
-------- -------- -------- -------- --------
TOTAL LIABILITIES 460 26,430 ( 7,958) ( 2,975) 15,957
-------- -------- -------- -------- --------
STOCKHOLDERS' EQUITY
Common stock 35 - - - 35
Warrants
outstanding 1,881 - - - 1,881
Additional
paid-in-capital 51,005 24,770 (24,921) 128,510 (c) 151,920
(27,444)(d)
Accumulated deficit (34,787) (33,676) 26,481 (38,553)(c) (53,091)
27,444 (d)
Cumulative
translation
adjustment - 193 ( 187) - 6
-------- -------- -------- -------- --------
TOTAL STOCKHOLDERS'
EQUITY (DEFICIT) 18,134 ( 8,713) 1,373 89,957 100,751
-------- -------- -------- -------- --------
TOTAL LIABILITIES
AND STOCKHOLDERS'
EQUITY $ 18,594 $ 17,717 $( 6,585) $ 86,982 $116,708
======== ======== ======== ======== ========
F-3
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED JUNE 30, 1998
(Dollars and Shares in Thousands, Except Per Share Amounts)
Deduct Pro Forma
Historical Adjustments
Historical Historical Telnet for the
Clariti GlobalFirst Products Acquisition
Telecoms. Holdings & Svcs. and Sale Pro Forma
Int'l Ltd. Ltd. Ltd. (a) Combined
---------- ----------- --------- ----------- ---------
Revenue $ - $ 13,558 $(12,972) $ - $ 586
Cost of revenue - 21,953 (21,541) - 412
------- -------- -------- -------- --------
Gross profit (loss) - ( 8,395) 8,569 - 174
Sales and marketing - 1,900 ( 1,631) - 269
Research and
development 1,321 - - - 1,321
General and
administrative 3,294 7,883 ( 7,580) - 3,597
Amortization - - - 25,702(c) 25,702
------- -------- -------- -------- --------
Net loss (4,615) (18,178) 17,780 (25,702) (30,715)
Other comprehensive
income (loss):
Foreign currency
translation adjs. - ( 64) 147 - 83
------- -------- -------- -------- --------
Comprehensive loss $(4,615) $(18,242) $ 17,927 $(25,702) $(30,632)
======= ======== ======== ======== ========
Weighted average number of shares outstanding 108,906
Basic and diluted loss per common share $( 0.28)
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F-4
UNAUDITED PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1998
(Dollars and Shares in Thousands, Except Per Share Amounts)
Deduct Pro Forma
Historical Adjustments
Historical Historical Telnet for the
Clariti GlobalFirst Products Acquisition
Telecoms. Holdings & Svcs. and Sale Pro Forma
Int'l Ltd. Ltd. Ltd. (a) Combined
---------- ----------- --------- ----------- ---------
Revenue $ - $ 20,536 $( 5,693) $ - $ 14,843
Cost of revenue - 23,105 ( 6,068) - 17,037
------- -------- -------- -------- --------
Gross profit (loss) - ( 2,569) 375 - ( 2,194)
Sales and marketing - 1,013 ( 320) - 693
Research and
development 867 - - - 867
General and
administrative 1,861 10,986 ( 5,963) - 6,884
Amortization - - - 12,851(c) 12,851
------- -------- -------- -------- --------
Net loss (2,728) (14,568) 6,658 (12,851) (23,489)
Other comprehensive
income (loss):
Foreign currency
translation adjs. - 235 40 - 275
------- -------- -------- -------- --------
Comprehensive loss $(2,728) $(14,333) $ 6,698 $(12,851) $(23,214)
======= ======== ======== ======== ========
Weighted average number of shares outstanding 111,945
Basic and diluted loss per common share $( 0.21)
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F-5
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
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(a) The Unaudited Pro Forma Combined Balance Sheet and Statements of Operations
have been prepared to reflect the February 1999 sale of Telnet. In
addition, the December 1998 business combination between Clariti and
GlobalFirst (including Telnet) has been reflected as a reverse acquisition
in which GlobalFirst is considered the acquiror and Clariti is considered
the acquired company.
(b) Pro forma adjustment reflects elimination of intercompany loans.
(c) Pro forma adjustment reflects intangible assets and related amortization
resulting from the business combination between Clariti and GlobalFirst
(excluding Telnet) on a straight-line basis over a useful life of five
years. Management has not yet allocated any of the excess purchase price of
this acquisition to identifiable intangible assets such as technology, in-
process research and development, or goodwill, as final valuations of any
potential intangible assets are not currently available. Appropriate
revisions will be made when the final valuations are available. The useful
life of any individual asset so identified may differ from the five-year
amortization period reflected in the Pro Forma Combined Statements of
Operations.
(d) In accordance with reverse acquisition accounting requirements, pro forma
adjustment reflects elimination of Clariti's accumulated deficit as of
July 1, 1997, the assumed date of Clariti's acquisition of GlobalFirst in
preparing these pro forma financial statements.
F-6