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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: (DATE OF EARLIEST EVENT REPORTED):
DECEMBER 6, 2002
CLARUS CORPORATION
(Exact name of Registrant as specified in its charter)
DELAWARE 0-24277 58-1972600
(State or other jurisdiction of (Commission (IRS Employer
incorporation or organization) File No.) Identification No.)
One Pickwick Plaza
Greenwich, CT 06830
(Address of principal executive offices, including zip code)
(203) 302-2000
(Registrant's telephone number, including area code)
(Former name or Former Address if Changed Since Last Report)
3970 Johns Creek Court
Suite 100
Suwanee, Georgia 30024
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ITEM 2. Acquisition Or Disposition Of Assets
On December 6, 2002, Clarus Corporation ("Clarus" or the "Company")
consummated the sale of substantially all of the assets of its electronic
commerce business (the "Asset Sale" or the "Sale") to Epicor Software
Corporation ("Epicor") for a purchase price, determined through arms-length
negotiation of the parties, of $1.0 million in cash, pursuant to the terms of an
Asset Purchase Agreement, dated as of October 17, 2002, between Clarus and
Epicor ("Asset Purchase Agreement"). Upon the consummation of the Sale, Mr.
Stephen P. Jeffery ceased serving as the Company's Chief Executive Officer and
Chairman, and Mr. James McDevitt ceased serving as the Company's Chief Financial
Officer.
The description of the Asset Purchase Agreement and the transactions
contemplated by it is not intended to be complete and is qualified in its
entirety by the complete text of the Asset Purchase Agreement which is attached
as Exhibit 2.1 to this report.
The Company is currently seeking opportunities to sell its remaining
operating assets.
ITEM 5. Other Events and Required FD Disclosure.
Following the Sale, Mr. Warren B. Kanders was appointed the Executive
Chairman of the Company's Board of Directors, and Mr. Nigel P. Ekern was
appointed the Company's Chief Administrative Officer and Secretary, each
pursuant to the terms of an employment agreement with the Company. In addition,
Mr. Jeffery entered into a Consulting Agreement with the Company.
In order to supplement the Company's directors' and officers'
liability insurance coverage, and to provide the Company's directors and
executive officers with contractual assurance that the protection provided by
the Company's Certificate of Incorporation will be available to them (regardless
of any amendment or revocation of the Company's Certificate of Incorporation),
the Company has agreed to enter into Indemnification Agreements with its
directors and executive officers.
ITEM 7. Financial Statements, Pro Forma Information and Exhibits
(b) Pro Forma Financial Information
The following unaudited pro forma Condensed Consolidated Statements
of Operations for the twelve month period ended December 31, 2001 and
the nine month period ended September 30, 2002 give effect to the
Sale as though it occurred on January 1, 2001. The unaudited pro
forma balance sheet assumes the Sale was completed as of September
30, 2002. The unaudited pro forma financial data and the notes
thereto should be read in conjunction with the Company's historical
financial statements. The unaudited pro forma financial data is based
upon the Company's historical consolidated financial statements and
certain assumptions and estimates of the Company's management that
are subject to change. The unaudited pro forma financial data is
presented for illustrative purposes only and is not necessarily
indicative of any future results of operations or the results that
might have occurred if the Sale had actually occurred on the
indicated dates.
CLARUS CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
YEAR ENDED DECEMBER 31, 2001
--------------------------------------------------------
PRO FORMA PRO FORMA
HISTORICAL ADJUSTMENTS AS ADJUSTED
--------------- -------------- ----------------
REVENUES:
License fees $ 7,807 $(4,500)(1) $3,307
Services fees 9,198 (4,543)(1) 4,655
--------------- -------------- ----------------
Total revenues 17,005 (9,043)(1) 7,962
COST OF REVENUES:
License fees 211 (122)(2) 89
Services fees 12,253 (6,818)(3) 5,435
--------------- -------------- ----------------
Total cost of revenues 12,464 (6,940) 5,524
OPERATING EXPENSES:
Research and development 16,220 (9,853)(4) 6,367
Sales and marketing 27,294 (20,191)(5) 7,103
General and administrative 14,918 - (6) 14,918
Impairment of intangible assets 36,756 (36,756)(7) -
Gain on disposal of assets (20) - (20)
--------------- -------------- ----------------
Operating expenses, before non-cash items 95,168 (66,800) 28,368
Depreciation 3,750 (589)(8) 3,161
Amortization 8,462 (8,462)(9) -
--------------- -------------- ----------------
Operating expenses, before compensation expense 107,380 (75,851) 31,529
Non-cash sales and marketing 6,740 (391)(10) 6,349
Non-cash general and administrative 252 - 252
--------------- -------------- ----------------
Total operating expenses 114,372 (76,242) 38,130
Operating income/(loss) (109,831) 74,139 (35,692)
Other income 107 - 107
Loss on impairment of investments (16,472) - (16,472)
Interest income 6,570 - 6,570
Interest expense 228 - 228
--------------- -------------- ----------------
Income/(loss) from continuing operations
before tax provision (119,854) 74,139 (45,715)
Income tax provision - - -
--------------- -------------- ----------------
Net loss from continuing operations (119,854) 74,139 (45,715)
=============== ============== ================
Loss per common share, basic and diluted
Net loss from continuing operations $ (7.72) $ 4.77 $ (2.95)
=============== ============== ================
Weighted average shares outstanding
Basic 15,530 15,530 15,530
Diluted 15,530 15,530 15,530
CLARUS CORPORATION
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
NINE MONTHS ENDED SEPTEMBER 30, 2002
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PRO FORMA PRO FORMA
HISTORICAL ADJUSTMENTS AS ADJUSTED
--------------- -------------- ----------------
REVENUES:
License fees $ 2,649 $ (804)(1) $1,845
Services fees 5,352 (2,748)(1) 2,604
--------------- -------------- ----------------
Total revenues 8,001 (3,552)(1) 4,449
COST OF REVENUES:
License fees 21 (6)(2) 15
Services fees 4,809 (2,726)(3) 2,083
--------------- -------------- ----------------
Total cost of revenues 4,830 (2,732) 2,098
OPERATING EXPENSES:
Research and development 6,437 (3,508)(4) 2,929
Sales and marketing 7,249 (2,200)(5) 5,049
General and administrative 6,758 -(6) 6,758
Impairment of intangible assets 10,360 (10,360)(7) -
Loss on disposal of assets 918 - 918
--------------- -------------- ----------------
Operating expenses, before non-cash items 31,722 (16,068) 15,654
Depreciation 3,404 (523)(8) 2,881
Amortization 455 (455)(9) -
--------------- -------------- ----------------
Operating expenses, before compensation expense 35,581 (17,046) 18,535
Non-cash sales and marketing 450 (450)(10) -
Non-cash general and administrative - - -
--------------- -------------- ----------------
Total operating expenses 36,031 (17,496) 18,535
Operating income/(loss) (32,860) 16,676 (16,184)
Other income 26 - 26
Loss on impairment of investments - - -
Interest income 1,986 - 1,986
Interest expense 169 - 169
--------------- -------------- ----------------
Income/(loss) from continuing operations
before tax provision (31,017) 16,676 (14,341)
Income tax provision - - -
--------------- -------------- ----------------
Net loss from continuing operations (31,017) 16,676 (14,341)
=============== ============== ================
Loss per common share, basic and diluted
Net loss from continuing operations $ (1.99) $ 1.07 $ (0.92)
=============== ============== ================
Weighted average shares outstanding
Basic 15,597 15,597 15,597
Diluted 15,597 15,597 15,597
CLARUS CORPORATION
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
SEPTEMBER 30, 2002
-----------------------------------------------------
PRO FORMA PRO FORMA
HISTORICAL ADJUSTMENTS AS ADJUSTED
-------------- --------------- ---------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 17,745 $ 895(1) $ 18,640
Marketable securities 84,832 - 84,832
Accounts receivable, less allowance for doubtful accounts
of $631 963 - 963
Prepaids and other current assets 1,488 (151)(2) 1,337
-------------- --------------- ---------------
Total current assets 105,028 744 105,772
PROPERTY AND EQUIPMENT, NET 3,129 (694)(3) 2,435
OTHER ASSETS:
Deposits and other long-term assets 45 - 45
-------------- --------------- ---------------
TOTAL ASSETS $108,202 $ 50 $108,252
============== =============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 5,200 $ - $ 5,200
Deferred revenue 2,185 (604)(4) 1,581
-------------- --------------- ---------------
Total current liabilities 7,385 (604) 6,781
LONG-TERM LIABILITIES:
Deferred revenue 67 (5)(4) 62
Long-term debt 5,000 - 5,000
Other long-term liabilities 256 - 256
-------------- --------------- ---------------
Total liabilities 12,708 (609) 12,099
STOCKHOLDERS' EQUITY:
Preferred stock, $0.0001 par value; 5,000,000 shares
authorized; none issued - - -
Common stock, $0.0001 par value; 100,000,000 shares 2 - 2
authorized: 15,728,108 shares issued and 15,653,108
outstanding
Additional paid-in capital 361,018 - 361,018
Accumulated deficit (265,640) 659(5) (264,981)
Treasury stock, at cost (2) - (2)
Accumulated other comprehensive income 116 - 116
-------------- --------------- ---------------
Total stockholders' equity 95,494 659 96,153
-------------- --------------- ---------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 108,202 $ 50 $ 108,252
============== =============== ===============
Notes - Statements of Operations:
The Asset Sale involves the sale of certain assets associated
with our electronic commerce business to Epicor. The assets
sold include the following products and related assets:
eProcurement, Sourcing, View (for eProcurement), eTour (for
eProcurement), ClarusNet and Settlement products, our customer
lists, certain contracts and certain intellectual property
rights that are primarily related to the transferred assets,
maintenance payments that we received between October 17,
2002, and the closing date of the Asset Sale for maintenance
and services to be performed by Epicor after the closing date
of the Asset Sale, and certain property and equipment.
(1) Reflects the revenues directly associated with the
products and certain contracts included in the Asset
Sale.
(2) Represents the cost of royalties associated with products
licensed to customers included in the Asset Sale.
(3) Cost of services revenue associated with the assets sold.
With the exception of our Cashbook product, services
costs are not capable of being calculated on a product-
by-product basis. All cost of services revenue, other
than cost of services revenue attributable to the
Cashbook product, has been allocated based upon revenue.
(4) Reflects the development costs associated with the assets
sold allocated based upon the research and development
headcount by product.
(5) Represents the sales and marketing expenses associated
with the assets sold based upon an allocation utilizing
license fee revenue as the basis.
(6) General and administrative expenses are not included in
the assets sold. The majority of our general and
administrative costs are related to administration and
our facilities.
(7) Reflects the intangible impairment loss related to the
assets sold.
(8) Depreciation related to the specific property and
equipment included in the Asset Sale.
(9) Amortization of the intangible assets included in the
Asset Sale.
(10) Noncash sales and marketing expense related to sales and
marketing agreements included in the Asset Sale.
Notes - Balance Sheet
(1) Includes the $1.0 million closing cash payment less
certain expenses related to the sale including $50,000 to
be paid to our financial advisor, U.S. Bancorp Piper
Jaffray and $55,000 to Willamette for issuing a fairness
opinion.
(2) Prepaid expenses for future support related to licensed
products used in research and development that are
included in the Asset Sale.
(3) Net book value of property and equipment that are
included in the Asset Sale.
(4) Deferred revenue associated with the products and certain
contracts included in the Asset Sale.
(5) Gain on the Asset Sale assuming the transaction occurred
on September 30, 2002. The gain on sale is calculated is
follows (in thousands):
Total proceeds from sale $ 1,000
Less:
Transaction costs 105
------------
Net proceeds from sale 895
Assets sold to Epicor:
Prepaid assets 151
Property and equipment 694
------------
Total Assets sold to Epicor 845
Liabilities assumed by Epicor:
Deferred revenue 609
------------
Net assets sold to Epicor 236
------------
Gain on sale of assets $ 659
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(c) Exhibits
2.1 Asset Purchase Agreement, dated as of October 17, 2002, by and
between Epicor Software Corporation and Clarus Corporation
(Incorporated by reference from the Company's Form 8-K filed on
October 18, 2002)
2.2 Form of Bill of Sale and Assumption Agreement (Incorporated by
reference from the Company's Form 8-K filed on October 18, 2002)
2.3 Form of Trademark Assignment (Incorporated by reference from the
Company's Form 8-K filed on October 18, 2002)
2.4 Form of Patent Assignment (Incorporated by reference from the
Company's Form 8-K filed on October 18, 2002)
2.5 Form of Noncompetition Agreement (Incorporated by reference from
the Company's Form 8-K filed on October 18, 2002)
2.6 Form of Legal Opinion (Incorporated by reference from the
Company's Form 8-K filed on October 18, 2002)
2.7 Form of Transition Services Agreement (Incorporated by reference
from the Company's Form 8-K filed on October 18, 2002)
2.8 Form of Escrow Agreement (Incorporated by reference from the
Company's Form 8-K filed on October 18, 2002)
2.9 Source Code Sublicense Agreement (Incorporated by reference from
the Company's Form 8-K filed on October 18, 2002)
10.1 Form of Indemnification Agreement for Directors and Executive
Officers of the Company.
10.2 Employment Agreement, dated as of December 6, 2002, between the
Company and Warren B. Kanders.
10.3 Employment Agreement, dated as of December 6, 2002, between the
Company and Nigel P. Ekern.
10.4 Consulting Agreement, dated as of December 6, 2002, between the
Company and Stephen P. Jeffery.
99.1 Press Release
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 hereunto duly authorized.
CLARUS CORPORATION
Date: December 23, 2002 /S/ NIGEL P. EKERN
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NIGEL P. EKERN
Chief Administrative Officer
EXHIBIT INDEX
2.1 Asset Purchase Agreement, dated as of October 17, 2002, by and
between Epicor Software Corporation and Clarus Corporation
(Incorporated by reference from the Company's Form 8-K filed on
October 18, 2002)
2.2 Form of Bill of Sale and Assumption Agreement (Incorporated by
reference from the Company's Form 8-K filed on October 18, 2002)
2.3 Form of Trademark Assignment (Incorporated by reference from the
Company's Form 8-K filed on October 18, 2002)
2.4 Form of Patent Assignment (Incorporated by reference from the
Company's Form 8-K filed on October 18, 2002)
2.5 Form of Noncompetition Agreement (Incorporated by reference from
the Company's Form 8-K filed on October 18, 2002)
2.6 Form of Legal Opinion (Incorporated by reference from the
Company's Form 8-K filed on October 18, 2002)
2.7 Form of Transition Services Agreement (Incorporated by reference
from the Company's Form 8-K filed on October 18, 2002)
2.8 Form of Escrow Agreement (Incorporated by reference from the
Company's Form 8-K filed on October 18, 2002)
2.9 Source Code Sublicense Agreement (Incorporated by reference from
the Company's Form 8-K filed on October 18, 2002)
10.1 Form of Indemnification Agreement for Directors and Executive
Officers of the Company.
10.2 Employment Agreement, dated as of December 6, 2002, between the
Company and Warren B. Kanders.
10.3 Employment Agreement, dated as of December 6, 2002, between the
Company and Nigel P. Ekern.
10.4 Consulting Agreement, dated as of December 6, 2002, between the
Company and Stephen P. Jeffery.
99.1 Press Release