UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES AND EXCHANGE ACT OF 1934
Date of Report (Date of earliest reported): February 15, 2006
MANARIS CORPORATION
(Exact name of registrant as specified in its charter)
NEVADA 000-33199 88-0467848
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(State or other jurisdiction (Commission File No.) (IRS Employer ID)
of incorporation)
1155 Rene-Levesque Blvd. West
Suite 2720
Montreal, Quebec
Canada H3B 2K8
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(Address of principal executive offices and Zip Code)
(514) 337-2447
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(Registrant's telephone number, including area code)
WITH COPIES TO:
DARRIN OCASIO ESQ.
SICHENZIA ROSS FRIEDMAN FERENCE LLP
1065 AVENUE OF AMERICAS
NEW YORK, NEW YORK 10018
Tel:(212) 930-9700 Fax:(212) 930-9725
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
ITEM 2.01 COMPLETION OF DISPOSITION OF ASSETS
As previously disclosed, on February 8th 2006, Manaris Corporation ("the
Company" or "Manaris") entered into a Share Purchase Agreement (the "CLI
Agreement") to sell all of the shares of its wholly-owned subsidiary, 6327915
Canada Inc., the holding company of Chartrand Laframboise Inc. and Bureau de
credit commercial Inc. (collectively, the "CLI Group") to The Garda Security
Group Inc. (the "Purchaser") for a purchase price of $4,288,532*
(CDN$5,000,000). The purchase price is subject to adjustments should certain
events occur or conditions be met.
In connection with the CLI Agreement, the following transactions were
effectuated:
o The purchaser assumed the Company's obligations to two executives of
the CLI Group for settlement of long-term notes payable in the
amount of $943,477. The notes were issued to two executives of the
CLI Group when Manaris acquired CLI Group in February 2005. In
addition, the Company settled its remaining obligations to the two
CLI Group executives in the amount of $471,739 (the "Settlement
Amount"). The Settlement Amount consisted of cash payments totaling
$257,312 and the issuance of 631,038 shares of the Company's common
stock with a fair market value of $214,427. Subject to adjustments,
a balance of $42,885 remains outstanding to the two CLI Group
executives.
o Manaris repaid advances from the CLI Group totaling $214,427 as well
as $41,019 in accrued interest.
In the aggregate, taking into account the foregoing transactions, the Company
received gross cash proceeds of $3,345,055 (CDN$3,900,000) and net cash proceeds
of $2,679,971 as a result of the CLI Agreement.
The closing date of the CLI Agreement was February 15, 2006 and the effective
date was February 18, 2006. The CLI Group provides security consulting services.
* Dollar values are in United States currency unless otherwise indicated.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(b) Pro Forma Financial Information
The required Pro Form Financial Information is attached hereto.
(c) Exhibits
Exhibit Description
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10.1 Stock Purchase Agreement dated February 8, 2006 (as
incorporated by reference to Form 8-K filed with the
Commission on February 14, 2006).
99.1 Press Release dated February 17, 2006 (as incorporated by
reference to Form 8-K filed with the Commission on February
15, 2006)
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.
MANARIS CORPORATION
Dated: April 19, 2006 By: /s/ John G. Fraser
-------------------
John G. Fraser
President and Chief
Executive Officer
Manaris Corporation
(Formerly A Development Stage Company)
Pro Forma Consolidated Financial Information
Unaudited
Index
Pro Forma Consolidated Balance Sheet as at December 31, 2005...................2
Pro Forma Consolidated Statement of Operations for the year
ended June 30, 2005............................................................3
Notes to Pro Forma Consolidated Financial Information..........................4
1
Manaris Corporation
(formerly a Development Stage Company)
Pro Forma Consolidated Balance Sheet
As at December 31, 2005
(expressed in U.S. dollars)
(unaudited)
Manaris Pro Forma Pro Forma
adjustments 1 Consolidated
$ $ $
ASSETS
Current Assets
Cash and cash equivalents 362,001 1,393,411 2 1,755,412
Deposit in trust - 1,286,560 2
1,286,560
Accounts receivable 1,954,082 - 1,954,082
Other receivables 732,313 - 732,313
Inventories 1,328,175 - 1,328,175
Prepaid expenses 77,734 - 77,734
Restricted marketable securities 85,771 - 85,771
Current assets of discontinued operations 804,816 (804,816) 3 -
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Total Current Assets 5,344,892 1,875,155 7,220,047
Property & equipment 548,223 - 548,223
Intangible assets 3,883,165 - 3,883,165
Goodwill 5,291,767 - 5,291,767
Deferred financing costs 211,499 - 211,499
Prepaids - long term 14,615 - 14,615
Assets of discontinued operations 3,813,698 (3,813,698) 3 -
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Total Assets 19,107,859 (1,938,543) 17,169,316
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LIABILITIES AND STOCKHOLDER'S EQUITY
Current Liabilities
Accounts payable 1,360,164 - 1,360,164
Accrued liabilities 1,100,187 (22,282) 2 1,077,905
Loans payable 1,733,706 1,733,706
Current portion of long term debt 141,410 - 141,410
Current portion of convertible debentures 310,983 - 310,983
Due to related parties 40,000 - 40,000
Current liabilities of discontinued operations 643,510 (643,510) 3 -
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Total Current Liabilities 5,329,960 (665,792) 4,664,168
Long term debt, less current portion 248,533 - 248,533
Convertible debentures 2,147,535 (1,415,216) 3 732,319
Long term liabilities of discontinued operations 14,571 (14,571) 3 -
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Total Liabilities not subject to compromise 7,740,599 (2,095,579) 5,645,020
Liabilities subject to compromise 660,017 - 660,017
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Non-controlling interest 18,413 - 18,413
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Stockholders' Equity
Common Stock 692 5 2 697
Additional Paid-in Capital 31,378,162 214,422 2 31,592,584
Accumulated Other Comprehensive Loss (381,854) 17,349 (364,505)
Deficit (20,308,170) (74,740) 2 (20,382,910)
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Total Stockholders' Equity 10,688,830 157,036 10,845,866
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Total Liabilities and Stockholders' Equity 19,107,859 (1,938,543) 17,169,316
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2
Manaris Corporation
(formerly a Development Stage Company)
Pro Forma Consolidated Statement of Operations
For the year ended June 30, 2005
(expressed in U.S. dollars)
(unaudited)
Manaris Pro Forma Pro Forma
adjustments 1 Consolidated
$ $ $
Revenue
Product 3,580,619 - 3,580,619
Service 3,440,609 (1,449,976) 4 1,990,633
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Total Revenue 7,021,228 (1,449,976) 5,571,252
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Cost of Revenue
Product 2,255,020 - 2,255,020
Service 2,411,480 (803,280) 4 1,608,200
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Total Cost of Revenue 4,666,500 (803,280) 3,863,220
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Gross Margin 2.354,728 (646,696) 1,708,032
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Operating Expenses
Depreciation and amortization 461,819 (86,473) 4 375,346
Selling, general and administrative 4,538,256 (527,398) 4 4,010,858
Acquired in-process research and development 386,749 - 386,749
Impairment of goodwill and other intangible assets 180,974 - 180,974
Impairment of long-lived assets 15,487 - 15,487
Research and development 731,865 - 731,865
Stock based compensation 1,216,542 - 1,216,542
Settlement costs 192,549 - 192,549
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7,724,241 (613,871) 7,110,370
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Operating loss (5,369,513) (32,825) (5,402,338)
Interest expense (income) 288,735 (42,267) 246,468
4,5
Debenture accretion 609,225 - 609,225
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Net Loss from Continuing Operations Before Income Tax
Benefit (6,267,473) 9,442 (6,258,031)
Income Tax Benefit 37,787 27,441 4 65,228
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Net Loss from Continuing Operations Before
Non-controlling Interest (6,229,686) 36,883 (6,192,803)
Non-controlling Interest 1,257 - 1,257
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Net Loss from Continuing Operations (6,230,943) 36,883 4 (6,194,060)
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Net Loss from Continuing Operations per Share - Basic and
Diluted (0.16) - (0.16)
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Weighted Average Shares Outstanding 41,022,000 631,000 41,653,000
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3
Manaris Corporation
(formerly a Development Stage Company)
Notes to Pro Forma Consolidated Financial Statements
(unaudited)
1. On February 8th 2006, Manaris Corporation ("the Company" or "Manaris")
signed a Share Purchase Agreement (the "Agreement") to sell all of the
shares of its wholly-owned subsidiary, 6327915 Canada Inc., the holding
company of Chartrand Laframboise Inc. and Bureau de credit commercial Inc.
(the "CLI Group") to The Garda Security Group Inc. (the "Purchaser") for a
purchase price of US$4,288,532 (CDN$5,000,000) resulting in gross cash
proceeds to the Company of US$3,345,055 (CDN$3,900,000). In conjunction
with the Agreement, the purchaser assumed the Company's obligations to two
executives of the CLI Group for settlement of long-term notes payable
amounting to US$943,477 issued by Manaris when the CLI Group was
originally acquired in February 2005. In conjunction with the Agreement,
Manaris was required to repay advances from the CLI Group totaling
US$214,427 and accrued interest on the debt obligations of US$41,019. In
addition, the Company settled the majority of the remaining obligations to
the two CLI Group executives in the amount of US$471,739 by a payment of
cash consideration totaling US$257,312 and the issuance of 631,038 shares
with a fair value of US$214,427 or approximately US$0.34 per share. These
payments resulted in net cash proceeds from the disposal of US$2,679,971.
The closing date of the transaction was February 15, 2006 and the
effective date was February 18, 2006. The purchase price is subject to
adjustments should certain events occur or conditions be met.
The accompanying unaudited pro forma consolidated financial information
which gives effect to the sale of the CLI Group and the repayment of the
obligations noted above has been prepared from the unaudited interim
consolidated financial statements of Manaris Corporation (`'Manaris") for
the six-month period ended December 31, 2005 and the audited consolidated
financial statements for the year ended June 30, 2005. This pro forma
information is unaudited and should be read in conjunction with the
above-noted consolidated financial statements of Manaris. The accompanying
unaudited pro forma consolidated balance sheet of Manaris was prepared by
adjusting the unaudited interim consolidated balance sheet of Manaris as
of December 31, 2005 for the effects of the disposition of the CLI Group
as if the disposition had occurred on December 31, 2005. The accompanying
unaudited pro forma consolidated statement of operations for the year
ended June 30, 2005 has been prepared by adjusting the audited
consolidated statement of operations of Manaris for the year ended June
30, 2005 for the effects of the disposition as if the disposition was
consummated as of the beginning of that fiscal year, being July 1, 2004.
An unaudited pro forma consolidated statement of operations has not been
presented for the six-month period ended December 31, 2005 since the CLI
Group had been presented as discontinued operations in the unaudited
interim consolidated financial statements for such period, therefore, no
adjustments are required for such period in order to reflect the pro forma
loss from continuing operations as if the disposition had been consummated
as of the beginning period.
The unaudited Pro Forma Consolidated Balance Sheet and Pro Forma
Consolidated Statement of Operations have been prepared for informational
purposes only and do not purport to be indicative of the financial
position or the results of operations that actually would have occurred if
the sale had been consummated at the beginning of the period presented,
nor of results to be expected in the future.
2. To record the proceeds on disposition of the CLI Group of US$3,192,729
(net of estimated direct transaction costs in the amount of $152,326 which
primarily relates to professional fees) of which US$1,286,560 as been
placed in trust. The deposit in trust partially represents a holdback in
the amount of US$214,427 which will become payable by the purchaser no
later than 10 days following acceptance by the purchaser of the unaudited
financial statements of the CLI Group for the period from July 1, 2005 to
February 18, 2006. The remaining amount of US$1,072,133 represents
withholding tax of 25% of the sale price which is required to be withheld
under Section 116 of the Canadian Income Tax Act since the Company is not
a Canadian resident corporation. The withholding tax amount will be
remitted to the Company once Canada Revenue Agency has delivered a
certificate of compliance with respect to this transaction. The purchase
price is subject to adjustments should certain events occur or conditions
be met. The estimated gain on disposal to be included in the loss from
discontinued operations has been computed as follows:
Proceeds: $
Cash 2,058,495
Deposit in Trust 1,286,560
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Total proceeds: 3,345,055
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Estimated direct transaction costs (152,326)
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Sub-total: 3,192,729
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Net assets of discontinued operations (3,016,956)
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Gain on the sale of the CLI Group 175,773
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The net assets of discontinued operations in the above table are net of
the obligations to the two CLI Group executives assumed by the purchaser
in amount of $943,477.
4
Manaris Corporation
(formerly a Development Stage Company)
Notes to Pro Forma Consolidated Financial Statements
(unaudited)
Cash proceeds noted above was used as follows:
$
Total proceeds 3,345,055
Estimated direct transaction costs (152,326)
Settlement of advances from the CLI Group (214,427)
Settlement of debt obligations in cash (257,312)
Interest paid on settlement of debt obligations (41,019)
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Net cash proceeds 2,679,971
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3. To remove the assets and liabilities of the CLI Group and the obligations
to the two CLI Group executives assumed by the purchaser and settled by
the Company in the amounts of US$943,477 and US$471,739 respectively, from
the consolidated balance sheet of Manaris as at December 31, 2005.
4. To remove the results of operations of the CLI Group from the consolidated
results of Manaris for the year ended June 30, 2005 which were translated
in US dollars using the average rate for the year. Includes direct
interest of the CLI Group on the obligations assumed by the purchaser and
settled by Manaris. No interest from general debt obligations of the
Company was allocated to the discontinued operations.
5. The pro forma adjustments outlined from 2 through 3 have been determined
by translating the relevant Canadian dollar amounts into US dollars using
the exchange rate effective as at December 31, 2005 which was 1.1659.
5