Delaware
|
|
58-1972600
|
(State
of Incorporation)
|
|
(I.R.S.
Employer Identification No.)
|
PAGE
|
||
PART
I
|
||
ITEM
1.
|
BUSINESS
|
1
|
FORWARD-LOOKING
STATEMENTS
|
1
|
|
OVERVIEW
|
1
|
|
BUSINESS
|
1
|
|
PRIOR
BUSINESS
|
2
|
|
EMPLOYEES
|
3
|
|
AVAILABLE INFORMATION |
3
|
|
ITEM
1A.
|
RISK
FACTORS
|
4
|
ITEM
1B.
|
UNRESOLVED
STAFF COMMENTS
|
7
|
ITEM
2.
|
PROPERTIES
|
7
|
ITEM
3.
|
LEGAL
PROCEEDINGS
|
7
|
ITEM
4.
|
SUBMISSION
OF MATTERS TO A VOTE OF SECURITY HOLDERS
|
8
|
PART
II
|
||
ITEM
5.
|
MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES
OF
EQUITY SECURITIES
|
9
|
ITEM
6.
|
SELECTED
FINANCIAL DATA
|
13
|
ITEM
7.
|
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
14
|
ITEM
7A.
|
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
20
|
ITEM
8.
|
FINANCIAL
STATEMENTS AND SUPPLEMENTAL DATA
|
21
|
ITEM
9.
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
|
41
|
ITEM
9A.
|
CONTROLS
AND PROCEDURES
|
41
|
ITEM
9B
|
OTHER
INFORMATION
|
42
|
PART
III
|
||
ITEM
10.
|
DIRECTORS
AND EXECUTIVE OFFICERS OF THE REGISTRANT
|
42
|
ITEM
11.
|
EXECUTIVE
COMPENSATION
|
42
|
ITEM
12.
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|
42
|
ITEM
13.
|
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
|
42
|
ITEM
14.
|
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
|
42
|
PART
IV
|
||
ITEM
15.
|
EXHIBITS,
FINANCIAL STATEMENT SCHEDULES
|
43
|
SIGNATURES |
46
|
|
EXHIBIT
INDEX
|
49
|
-
|
On
May 26, 1998, we completed an initial public offering of our common
stock
in which we sold 2.5 million shares of common stock at $10.00 per
share,
resulting in net proceeds to us of approximately $22.0 million.
|
-
|
On
October 18, 1999, we sold substantially all of the assets of our
financial
and human resources software ("ERP") business to Geac Computer Systems,
Inc. and Geac Canada Limited. In this sale, we received approximately
$13.9 million.
|
-
|
On
March 10, 2000, we sold 2,243,000 shares of common stock in a secondary
public offering at $115.00 per share resulting in net proceeds to
us of
approximately $244.4 million.
|
High
|
Low
|
|||||||
Calendar
Year 2007
|
||||||||
First
Quarter (through March 8, 2007)
|
$
|
7.95
|
$
|
7.05
|
||||
Year
ended December 31, 2006
|
||||||||
First
Quarter
|
$
|
8.45
|
$
|
6.90
|
||||
Second
Quarter
|
$
|
7.19
|
$
|
6.30
|
||||
Third
Quarter
|
$
|
7.34
|
$
|
6.40
|
||||
Fourth
Quarter
|
$
|
7.50
|
$
|
6.70
|
||||
Year
ended December 31, 2005
|
||||||||
First
Quarter
|
$
|
9.50
|
$
|
7.90
|
||||
Second
Quarter
|
$
|
9.00
|
$
|
7.20
|
||||
Third
Quarter
|
$
|
8.50
|
$
|
7.27
|
||||
Fourth
Quarter
|
$
|
8.75
|
$
|
7.60
|
12/31/01
|
12/31/02
|
12/31/03
|
12/31/04
|
12/31/05
|
12/31/06
|
||||||||||||||
CLARUS
CORPORATION
|
$
|
100.00
|
$
|
90.06
|
$
|
116.99
|
$
|
144.23
|
$
|
133.81
|
$
|
112.98
|
|||||||
NASDAQ
NATIONAL
MARKET
COMPOSITE
|
$
|
100.00
|
$
|
68.47
|
$
|
102.72
|
$
|
111.54
|
$
|
113.08
|
$
|
123.84
|
|||||||
THE
RUSSELL 2000 INDEX
|
$
|
100.00
|
$
|
78.42
|
$
|
114.00
|
$
|
133.38
|
$
|
137.81
|
$
|
161.24
|
Plan
Category
|
(A)
Number
of securities to be issued upon exercise of outstanding options,
warrants
and rights
|
(B)
Weighted-average
exercise price of outstanding options, warrants and rights
|
(C)
Number
of securities remaining available for future issuance under equity
compensation plans (excluding securities reflected in column
(A))
|
|||||||
Equity
compensation plans approved by security holders (1) (2)
|
1,082,536
|
|
$
|
5.97
|
|
|
4,434,679
|
|
||
Equity
compensation plans not approved by security holders (3) (4)
(5)
|
1,100,000
|
|
$
|
7.83
|
|
|
--
|
|
||
Total
|
2,182,536
|
|
$
|
6.91
|
|
|
4,434,679
|
Years
ended December 31,
|
||||||||||||||||
2006
|
2005
|
2004
|
2003
|
2002
|
||||||||||||
(in
thousands, except per share data)
|
||||||||||||||||
Statement
of Operations Data:
|
||||||||||||||||
Revenues:
|
||||||||||||||||
License
fees
|
$
|
--
|
$
|
--
|
$
|
1,106
|
$
|
--
|
$ | 2,808 | ||||||
Service
fees
|
--
|
--
|
--
|
130
|
6,226 | |||||||||||
Total
Revenues
|
--
|
--
|
1,106
|
130 |
9,034
|
|||||||||||
Cost
of Revenues:
|
||||||||||||||||
License
fees
|
--
|
--
|
--
|
--
|
26
|
|||||||||||
Service
fees
|
--
|
--
|
--
|
--
|
5,498
|
|||||||||||
Total
Cost of Revenues
|
--
|
--
|
--
|
--
|
5,524
|
|||||||||||
Operating
expenses:
|
||||||||||||||||
Research
and development
|
--
|
--
|
--
|
--
|
7,263
|
|||||||||||
Sales
and marketing
|
--
|
--
|
--
|
--
|
7,938
|
|||||||||||
General
and administrative
|
3,530
|
3,504
|
3,395
|
4,986
|
12,574
|
|||||||||||
Provision/(credit)
for doubtful accounts
|
--
|
--
|
--
|
18
|
(560
|
)
|
||||||||||
Transaction
expense
|
1,431
|
(59
|
)
|
1,636
|
--
|
--
|
||||||||||
Loss
on impairment of goodwill and intangible assets
|
--
|
--
|
--
|
--
|
10,360
|
|||||||||||
Loss
on sale or disposal of assets
|
--
|
--
|
--
|
36
|
1,748
|
|||||||||||
Depreciation
and amortization
|
346
|
334
|
186
|
762
|
4,243
|
|||||||||||
Total
Operating Expenses
|
5,307
|
3,779
|
5,217
|
5,802
|
43,566
|
|||||||||||
Operating
Loss
|
(5,307
|
)
|
(3,779
|
)
|
(4,111
|
)
|
(5,672
|
)
|
(40,056
|
)
|
||||||
Other
income/(expense)
|
--
|
(2
|
)
|
19
|
169
|
27
|
||||||||||
Interest
income
|
4,016
|
2,490
|
1,203
|
1,238
|
2,441
|
|||||||||||
Interest
expense, including amortization of debt discount
|
--
|
--
|
--
|
(66
|
)
|
(225
|
)
|
|||||||||
Net
Loss
|
$
|
(1,291
|
)
|
$
|
(1,291
|
)
|
$
|
(2,889
|
)
|
$
|
(4,331
|
)
|
$
|
(37,813
|
)
|
|
Loss
Per Share
|
||||||||||||||||
Basic
|
$
|
(0.08
|
)
|
$
|
(0.08
|
)
|
$
|
(0.18
|
)
|
$
|
(0.27
|
)
|
$
|
(2.42
|
)
|
|
Diluted
|
$
|
(0.08
|
)
|
$
|
(0.08
|
)
|
$
|
(0.18
|
)
|
$
|
(0.27
|
)
|
$
|
(2.42
|
)
|
|
Weighted
Average Common Shares Outstanding
|
||||||||||||||||
Basic
|
16,613
|
16,329
|
16,092
|
15,905
|
15,615
|
|||||||||||
Diluted
|
16,613
|
16,329
|
16,092
|
15,905
|
15,615
|
Balance
Sheet Data:
|
As
of December 31,
|
|||||||||||||||
2006
|
|
|
2005
|
|
|
2004
|
|
|
2003
|
|
|
2002
|
||||
Cash
and cash equivalents
|
$
|
1,731
|
$
|
23,270
|
$
|
48,377
|
$
|
15,045
|
$
|
42,225
|
||||||
Marketable
securities
|
$
|
82,634
|
$
|
61,601
|
$
|
35,119
|
$
|
73,685
|
$
|
52,885
|
||||||
Total
assets
|
$
|
86,673
|
$
|
88,278
|
$
|
86,437
|
$
|
89,445
|
$
|
97,764
|
||||||
Total
stockholders' equity
|
$
|
85,716
|
$
|
86,609
|
$
|
84,854
|
$
|
86,819
|
$
|
89,360
|
Contractual
Obligations
(in
thousands)
|
Payment
Due By Period
|
|||||||||||||||
Total
|
Less
Than
|
|
|
More
Than
|
||||||||||||
|
|
1
Year
|
1-3
Years
|
3-5
Years
|
5
Years
|
|||||||||||
Operating
Leases
|
$
|
2,828
|
$
|
403
|
$
|
846
|
$
|
1,579
|
$
|
--
|
||||||
Total
|
$
|
2,828
|
$
|
403
|
$
|
846
|
$
|
1,579
|
$
|
--
|
2006
|
|||||||||||||
First
|
Second
|
Third
|
Fourth
|
||||||||||
Quarter
|
Quarter
|
Quarter
|
Quarter
|
||||||||||
Revenues
|
$
|
--
|
$
|
--
|
$
|
--
|
$
|
--
|
|||||
Operating
loss
|
$
|
(2,249
|
)
|
$
|
(1,019
|
)
|
$
|
(961
|
)
|
$
|
(1,078
|
)
|
|
Net
(loss) income
|
$
|
(1,382
|
)
|
$
|
(24
|
)
|
$
|
99
|
$
|
16
|
|||
Net
(loss) income per share:
|
|||||||||||||
Basic
|
$
|
(0.08
|
)
|
$
|
(0.00
|
)
|
$
|
0.01
|
$
|
0.00
|
|||
Diluted
|
$
|
(0.08
|
)
|
$
|
(0.00
|
)
|
$
|
0.01
|
$
|
0.00
|
2005
|
|||||||||||||
First
|
|
Second
|
|
Third
|
|
Fourth
|
|
||||||
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|
Quarter
|
|||||
Revenues
|
$
|
--
|
$
|
--
|
$
|
--
|
$
|
--
|
|||||
Operating
loss
|
$
|
(871
|
)
|
$
|
(1,082
|
)
|
$
|
(797
|
)
|
$
|
(1,029
|
)
|
|
Net
loss
|
$
|
(390
|
)
|
$
|
(516
|
)
|
$
|
(127
|
)
|
$
|
(258
|
)
|
|
Net
loss per share:
|
|||||||||||||
Basic
|
$
|
(0.02
|
)
|
$
|
(0.03
|
)
|
$
|
(0.01
|
)
|
$
|
(0.02
|
)
|
|
Diluted
|
$
|
(0.02
|
)
|
$
|
(0.03
|
)
|
$
|
(0.01
|
)
|
$
|
(0.02
|
)
|
Page
|
|
Report
of Independent Registered Public Accounting Firm on Consolidated
Financial
Statements
|
22
|
Report
of Independent Registered Public Accounting Firm on Internal Control
Over
Financial Reporting
|
23
|
Consolidated
Balance Sheets -December 31, 2006 and 2005
|
24
|
Consolidated
Statements of Operations -Years Ended December 31, 2006, 2005 and
2004
|
25
|
Consolidated
Statements of Stockholders' Equity and Comprehensive Loss -Years
Ended
December 31, 2006, 2005 and 2004
|
26
|
Consolidated
Statements of Cash Flows -Years Ended December 31, 2006, 2005 and
2004
|
28
|
Notes
to Consolidated Financial Statements
|
29
|
/s/ KPMG LLP | ||
|
||
KPMG
LLP
Stamford,
Connecticut
March
13, 2007 |
/s/ KPMG LLP | ||
|
||
KPMG
LLP
Stamford,
Connecticut
March
13, 2007 |
ASSETS
|
|||||||
2006
|
2005
|
||||||
CURRENT
ASSETS:
|
|||||||
Cash
and cash equivalents
|
$
|
1,731
|
$
|
23,270
|
|||
Marketable
securities
|
82,634
|
61,601
|
|||||
Interest
receivable
|
402
|
320
|
|||||
Prepaids
and other current assets
|
207
|
135
|
|||||
Total
current assets
|
84,974
|
85,326
|
|||||
PROPERTY
AND EQUIPMENT, NET
|
1,699
|
1,996
|
|||||
OTHER
ASSETS:
|
|||||||
Deposits
and other long-term assets
|
--
|
956
|
|||||
Total
assets
|
$
|
86,673
|
$
|
88,278
|
|||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
CURRENT
LIABILITIES:
|
|||||||
Accounts
payable and accrued liabilities
|
$
|
680
|
$
|
1,461
|
|||
Total
current liabilities
|
680
|
1,461
|
|||||
Deferred
rent
|
277
|
208
|
|||||
Total
liabilities
|
957
|
1,669
|
|||||
COMMITMENTS
AND CONTINGENCIES (Note 9)
|
|||||||
STOCKHOLDERS'
EQUITY:
|
|||||||
Preferred
stock, $.0001 par value; 5,000,000 shares authorized; none
issued
|
--
|
--
|
|||||
Common
stock, $.0001 par value; 100,000,000 shares authorized;
|
|||||||
17,188,622
and 17,187,170 shares issued; and 17,113,622 and
17,112,170
|
|||||||
outstanding
in 2006 and 2005, respectively
|
2
|
2
|
|||||
Additional
paid-in capital
|
367,945
|
370,704
|
|||||
Accumulated
deficit
|
(282,238
|
)
|
(280,947
|
)
|
|||
Less
treasury stock, 75,000 shares at cost
|
(2
|
)
|
(2
|
)
|
|||
Accumulated
other comprehensive gain/(loss)
|
9
|
(88
|
)
|
||||
Deferred
compensation
|
--
|
(3,060
|
)
|
||||
Total
stockholders' equity
|
85,716
|
86,609
|
|||||
Total
liabilities and stockholders' equity
|
$
|
86,673
|
$
|
88,278
|
2006
|
2005
|
2004
|
||||||||
REVENUES:
|
||||||||||
License
fees
|
$
|
--
|
$
|
--
|
$
|
1,106
|
||||
Services
fees
|
--
|
--
|
--
|
|||||||
Total
revenues
|
--
|
--
|
1,106
|
|||||||
OPERATING
EXPENSES:
|
||||||||||
General
and administrative
|
3,530
|
3,504
|
3,395
|
|||||||
Transaction
expense
|
1,431
|
(59
|
)
|
1,636
|
||||||
Depreciation
|
346
|
334
|
186
|
|||||||
Total
operating expenses
|
5,307
|
3,779
|
5,217
|
|||||||
OPERATING
LOSS
|
(5,307
|
)
|
(3,779
|
)
|
(4,111
|
)
|
||||
OTHER
INCOME /(EXPENSE)
|
--
|
(2
|
)
|
19
|
||||||
INTEREST
INCOME
|
4,016
|
2,490
|
1,203
|
|||||||
NET
LOSS
|
$
|
(1,291
|
)
|
$
|
(1,291
|
)
|
$
|
(2,889
|
)
|
|
NET
LOSS PER SHARE
|
||||||||||
Basic
|
$
|
(0.08
|
)
|
$
|
(0.08
|
)
|
$
|
(0.18
|
)
|
|
Diluted
|
$
|
(0.08
|
)
|
$
|
(0.08
|
)
|
$
|
(0.18
|
)
|
|
WEIGHTED
AVERAGE COMMON SHARES OUTSTANDING
|
||||||||||
Basic
|
16,613
|
16,329
|
16,092
|
|||||||
Diluted
|
16,613
|
16,329
|
16,092
|
|
|
|
|
Accumulated
|
||||||||||||||||||
|
|
|
|
|
Other
|
|||||||||||||||||
|
Common
Stock
|
Additional
Paid-In
|
Accumulated
|
Treasury
Stock
|
Comprehensive
Income
|
|||||||||||||||||
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Shares
|
|
|
Amount
|
|
|
(loss)
|
||||
BALANCES,
December 31, 2003
|
16,649
|
2
|
367,031
|
(276,767
|
)
|
(75
|
)
|
(2
|
)
|
(17
|
)
|
|||||||||||
Exercise
of stock options
|
86
|
--
|
454
|
--
|
--
|
--
|
--
|
|||||||||||||||
Issuance
of restricted shares,
|
||||||||||||||||||||||
net
of amortization
|
--
|
--
|
900
|
--
|
--
|
--
|
--
|
|||||||||||||||
Net
loss
|
--
|
--
|
--
|
(2,889
|
)
|
--
|
--
|
--
|
||||||||||||||
Increase
in unrealized loss on
|
||||||||||||||||||||||
marketable
securities
|
--
|
--
|
--
|
--
|
--
|
--
|
(113
|
)
|
BALANCES,
December 31, 2004
|
16,735
|
2
|
368,385
|
(279,656
|
)
|
(75
|
)
|
(2
|
)
|
(130
|
)
|
|||||||||||
Exercise
of stock options
|
448
|
--
|
2,594
|
--
|
--
|
--
|
--
|
|||||||||||||||
Issuance
of restricted shares,
|
||||||||||||||||||||||
net
of amortization
|
4
|
--
|
(275
|
)
|
--
|
--
|
--
|
--
|
||||||||||||||
Net
loss
|
--
|
--
|
--
|
(1,291
|
)
|
--
|
--
|
--
|
||||||||||||||
Increase
in unrealized gain on
|
||||||||||||||||||||||
marketable
securities
|
--
|
--
|
--
|
--
|
--
|
--
|
42
|
BALANCES,
December 31, 2005
|
17,187
|
2
|
370,704
|
(280,947
|
)
|
(75
|
)
|
(2
|
)
|
(88
|
)
|
|||||||||||
Exercise
of stock options
|
--
|
--
|
--
|
--
|
--
|
--
|
--
|
|||||||||||||||
Issuance
of restricted shares,
|
||||||||||||||||||||||
net
of amortization
|
1
|
--
|
301
|
--
|
--
|
--
|
--
|
|||||||||||||||
Net
loss
|
--
|
--
|
--
|
(1,291
|
)
|
--
|
--
|
--
|
||||||||||||||
Reclassification
of deferred compensation upon adoption of SFAS No. 123R as of
January
1, 2006
|
--
|
--
|
(3,060
|
)
|
--
|
--
|
--
|
--
|
||||||||||||||
Increase
in unrealized gain on
marketable securities |
--
|
--
|
--
|
--
|
--
|
--
|
--
|
BALANCES, December 31, 2006 | 17,188 | $ | 2 | $ | 367,945 | $ | (282,238 | ) | (75 | ) | $ | (2 | ) | $ | 9 |
|
|
Total
|
|
|||||||
|
Deferred
|
Stockholders'
|
Comprehensive
|
|||||||
Compensation
|
Equity
|
Loss
|
||||||||
BALANCES,
December 31, 2003
|
(3,428
|
)
|
86,819
|
--
|
||||||
Exercise
of stock options
|
--
|
454
|
--
|
|||||||
Issuance
of restricted shares,
|
||||||||||
net
of amortization
|
(317
|
)
|
583
|
--
|
||||||
Net
loss
|
--
|
(2,889
|
)
|
(2,889
|
)
|
|||||
Increase
in unrealized loss on
|
||||||||||
marketable
securities
|
--
|
(113
|
)
|
(113
|
)
|
|||||
Total
comprehensive loss
|
(3,002
|
)
|
||||||||
BALANCES,
December 31, 2004
|
(3,745
|
)
|
84,854
|
--
|
||||||
Exercise
of stock options
|
--
|
2,594
|
--
|
|||||||
Issuance
of restricted shares,
|
||||||||||
net
of amortization
|
685
|
410
|
--
|
|||||||
Net
loss
|
--
|
(1,291
|
)
|
(1,291
|
)
|
|||||
Increase
in unrealized gain on
|
||||||||||
marketable
securities
|
--
|
42
|
42
|
|||||||
Total
comprehensive loss
|
$
|
(1,249
|
)
|
|||||||
BALANCES,
December 31, 2005
|
(3,060
|
)
|
86,609
|
--
|
||||||
Exercise
of stock options
|
--
|
--
|
--
|
|||||||
Issuance
of restricted shares,
|
||||||||||
net
of amortization
|
--
|
301
|
--
|
|||||||
Net
loss
|
--
|
(1,291
|
)
|
(1,291
|
)
|
|||||
Reclassification
of deferred compensation
|
||||||||||
upon
the adoption of SFAS No. 123R as of
|
||||||||||
January
1, 2006.
|
3,060
|
--
|
--
|
|||||||
Increase
in unrealized gain on
|
||||||||||
marketable
securities
|
--
|
97
|
97
|
|||||||
Total
comprehensive loss
|
$
|
(1,194
|
)
|
|||||||
BALANCES,
December 31, 2006
|
$
|
--
|
$
|
85,716
|
2006
|
|
2005
|
|
2004
|
||||||
OPERATING
ACTIVITIES:
|
||||||||||
Net
loss
|
$
|
(1,291
|
)
|
$
|
(1,291
|
)
|
$
|
(2,889
|
)
|
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
||||||||||
Depreciation
of property and equipment
|
346
|
334
|
186
|
|||||||
Amortization
of (discount) and premium on securities, net
|
(2,405
|
)
|
(669
|
)
|
982
|
|||||
Gain
on sale of marketable securities and other
|
--
|
--
|
(17
|
)
|
||||||
Amortization
of deferred employee compensation plans
|
301
|
410
|
583
|
|||||||
Changes
in operating assets and liabilities:
|
||||||||||
(Increase)/decrease
in interest receivable, prepaids and other current assets
|
(154
|
)
|
77
|
107
|
||||||
Decrease/(increase)
in deposits and other long-term assets
|
956
|
(1
|
)
|
(4
|
)
|
|||||
Decrease
in accounts payable and accrued liabilities
|
(781
|
)
|
(731
|
)
|
(52
|
)
|
||||
Decrease
in deferred revenue
|
--
|
--
|
(1,106
|
)
|
||||||
Increase
in deferred rent
|
69
|
93
|
115
|
|||||||
Net
cash used in operating activities
|
(2,959
|
)
|
(1,778
|
)
|
(2,095
|
)
|
||||
INVESTING
ACTIVITIES:
|
||||||||||
Purchase
of marketable securities
|
(161,004
|
)
|
(93,887
|
)
|
(59,754
|
)
|
||||
Proceeds
from the sale and maturity of marketable securities
|
142,473
|
68,116
|
97,242
|
|||||||
Purchase
of property and equipment
|
(49
|
)
|
(17
|
)
|
(2,515
|
)
|
||||
Increase
in transaction expenses
|
--
|
(135
|
)
|
--
|
||||||
Net
cash (used in) provided by investing activities
|
(18,580
|
)
|
(25,923
|
)
|
34,973
|
|||||
FINANCING
ACTIVITIES:
|
||||||||||
Proceeds
from the exercise of stock options
|
--
|
2,594
|
454
|
|||||||
Net
cash provided by financing activities
|
--
|
2,594
|
454
|
|||||||
CHANGE
IN CASH AND CASH EQUIVALENTS
|
(21,539
|
)
|
(25,107
|
)
|
33,332
|
|||||
CASH
AND CASH EQUIVALENTS, beginning of year
|
23,270
|
48,377
|
15,045
|
|||||||
CASH
AND CASH EQUIVALENTS, end of year
|
$
|
1,731
|
$
|
23,270
|
$
|
48,377
|
||||
SUPPLEMENTAL
DISCLOSURE:
|
||||||||||
(Decrease)/increase
in transaction expenses included in accounts payable and
|
||||||||||
accrued
liabilities
|
$
|
(778
|
)
|
$
|
778
|
$
|
--
|
|||
(Decrease)/increase
in transaction expenses included in other assets
|
$
|
(913
|
)
|
$
|
913
|
$
|
--
|
|||
Grant
of restricted stock
|
$
|
--
|
$
|
50
|
$
|
50
|
||||
Cash
paid for franchise and property taxes
|
$
|
540
|
$
|
684
|
$
|
465
|
December
31,
|
Useful
Life
|
|||||||||
2006
|
2005
|
(in
years)
|
||||||||
Computers
and equipment
|
$
|
249
|
$
|
200
|
1
- 5
|
|||||
Furniture
and fixtures
|
488
|
488
|
7
|
|||||||
Leasehold
improvements
|
1,893
|
1,893
|
8
|
|||||||
2,630
|
2,581
|
|||||||||
Less:
accumulated depreciation
|
(931
|
)
|
(585
|
)
|
||||||
Property
and equipment, net
|
$
|
1,699
|
$
|
1,996
|
2006
|
2005
|
||||||
Accounts
payable
|
$
|
335
|
$
|
150
|
|||
Accrued
compensation, benefits and commissions
|
30
|
220
|
|||||
Restructuring
accruals
|
--
|
17
|
|||||
Accrued
professional services
|
201
|
1,023
|
|||||
Accrued
franchise taxes
|
98
|
43
|
|||||
Other
|
16
|
8
|
|||||
$
|
680
|
$
|
1,461
|
2005
|
|
2004
|
|
||||
Net
loss, as reported
|
$
|
(1,291
|
)
|
$
|
(2,889
|
)
|
|
Add
stock-based employee compensation expense included in
|
|||||||
reported
net loss
|
410
|
584
|
|||||
Deduct
total stock-based employee compensation expense
|
|||||||
determined
under fair-value based method for all awards
|
(3,467
|
)
|
(2,613
|
)
|
|||
Pro
forma net loss
|
$
|
(4,348
|
)
|
$
|
(4,918
|
)
|
|
Earnings
per Share:
|
|||||||
Basic
- as reported
|
$
|
(0.08
|
)
|
$
|
(0.18
|
)
|
|
Basic
- pro forma
|
$
|
(0.27
|
)
|
$
|
(0.31
|
)
|
|
Diluted
- as reported
|
$
|
(0.08
|
)
|
$
|
(0.18
|
)
|
|
Diluted
- pro forma
|
$
|
(0.27
|
)
|
$
|
(0.31
|
)
|
2006
|
2005
|
2004
|
||||||||
Weighted
average common shares - basic
|
16,613
|
16,329
|
16,092
|
|||||||
Effect
of dilutive stock options
|
112
|
316
|
616
|
|||||||
Effect
of dilutive restricted stock
|
205
|
502
|
504
|
|||||||
Total
effect of potential incremental shares
|
317
|
818
|
1,120
|
|||||||
Weighted
average common shares - diluted
|
16,930
|
17,147
|
17,212
|
(in
thousands)
|
2006
|
2005
|
2004
|
|||||||
Revenue:
|
||||||||||
United
States
|
$
|
--
|
$
|
--
|
$
|
--
|
||||
International
|
--
|
--
|
1,106
|
|||||||
Total
|
$
|
--
|
$
|
--
|
$
|
1,106
|
||||
Property
and equipment, net:
|
||||||||||
United
States
|
$
|
1,699
|
$
|
1,996
|
$
|
2,367
|
||||
Total
|
$
|
1,699
|
$
|
1,996
|
$
|
2,367
|
YEARS
ENDED
DECEMBER
31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Pre-Tax
Loss:
|
||||||||||
United
States
|
$
|
(1,291
|
)
|
$
|
(1,291
|
)
|
$
|
(2,889
|
)
|
|
Foreign
|
--
|
--
|
--
|
|||||||
$
|
(1,291
|
)
|
$
|
(1,291
|
)
|
$
|
(2,889
|
)
|
YEARS
ENDED
DECEMBER
31,
|
||||||||||
2006
|
2005
|
2004
|
||||||||
Current:
|
||||||||||
Federal
|
$
|
--
|
$
|
--
|
$
|
--
|
||||
State
|
--
|
--
|
--
|
|||||||
Foreign
|
--
|
--
|
--
|
|||||||
$
|
--
|
|
$
|
--
|
$
|
--
|
YEARS
ENDED
DECEMBER 31, |
||||||||||
2006
|
2005
|
2004
|
||||||||
Deferred:
|
||||||||||
Federal
|
(168
|
)
|
(3,122
|
)
|
(30,455
|
)
|
||||
State
|
350
|
7,057
|
(7,251
|
)
|
||||||
Foreign
|
--
|
--
|
441
|
|||||||
182
|
3,935
|
(37,265
|
)
|
|||||||
Increase/(decrease)
in valuation allowance for deferred
income taxes |
(182
|
)
|
(3,935
|
)
|
37,265
|
|||||
$
|
--
|
$
|
--
|
$
|
--
|
2006
|
2005
|
2004
|
||||||||
Income(loss)
from operations
|
$
|
(182
|
)
|
$
|
(3,935
|
)
|
$
|
37,265
|
||
Shareholders'
equity
|
(38
|
)
|
34
|
--
|
||||||
Total
|
$
|
(220
|
)
|
$
|
(3,901
|
)
|
$
|
37,265
|
YEARS
ENDED
DECEMBER 31, |
||||||||||
2006
|
2005
|
2004
|
||||||||
Computed
"expected" income tax expense (benefit)
|
(34.0
|
)%
|
(34.0
|
)%
|
(34.0
|
)%
|
||||
Increase
(decrease) in income taxes resulting from:
|
||||||||||
State
income taxes,
net of federal income taxes
|
(0.5
|
)
|
(7.4
|
)
|
(5.0
|
)
|
||||
NOL
adjustments
|
18.3
|
376.6
|
(1,265.9
|
)
|
||||||
Capital
loss carryforward adjustment
|
30.3
|
--
|
--
|
|||||||
Non-cash stock compensation
|
--
|
(29.5
|
)
|
--
|
||||||
Income
tax effect attributable to foreign operations
|
--
|
--
|
15.3
|
|||||||
(Decrease)
Increase in valuation allowance and other items
|
(14.1
|
)
|
(305.7
|
)
|
1,289.6
|
|||||
Income
tax expense (benefit)
|
--
|
%
|
--
|
%
|
--
|
%
|
|
|||||||
YEARS
ENDED
DECEMBER 31, |
|||||||
2006
|
2005
|
||||||
Deferred
income tax assets:
|
|||||||
Net
operating loss, capital loss amount and research & experimentation
credit carryforwards
|
$
|
90,209
|
$
|
90,708
|
|||
Charitable
contribution carryforward
|
4
|
4
|
|||||
Depreciation
|
(241
|
)
|
(340
|
)
|
|||
Unrealized
(loss)/gain
|
(4
|
)
|
34
|
||||
Non-cash
compensation
|
608
|
499
|
|||||
Accrued
liabilities
|
181
|
72
|
|||||
Reserves
for investments
|
1,728
|
1,728
|
|||||
Net
deferred income tax assets before valuation allowance
|
92,485
|
92,705
|
|||||
Valuation
allowance for deferred income tax assets
|
(92,485
|
)
|
(92,705
|
)
|
|||
Net
deferred income tax assets
|
$
|
--
|
$
|
--
|
Shares
|
Range of
Exercise
Prices
|
Weighted
Average
Exercise
Price
|
||||||||
December
31, 2003
|
2,098,867
|
$
|
3.67-$10.00
|
$
|
6.77
|
|||||
Granted
|
40,000
|
$
|
8.60-$9.00
|
$
|
8.65
|
|||||
Forfeited
|
(80,000
|
)
|
$
|
5.35-$8.60
|
$
|
5.76
|
||||
Expired
|
--
|
|||||||||
Exercised
|
(85,899
|
)
|
$
|
3.67-$7.63
|
$
|
5.29
|
||||
Prior Period Adjustments
|
(11,351
|
)
|
$
|
3.49-$68.38
|
$
|
9.95
|
||||
December
31, 2004
|
1,961,617
|
$
|
4.83-$10.00
|
$
|
6.93
|
|||||
Granted
|
175,000
|
$
|
7.40-$8.50
|
$
|
8.16
|
|||||
Forfeited
|
--
|
|||||||||
Expired
|
(7,500
|
)
|
$
|
7.63
|
$
|
7.63
|
||||
Exercised
|
(447,867
|
)
|
$
|
4.83-$7.00
|
$
|
5.79
|
||||
December
31, 2005
|
1,681,250
|
$
|
5.35-$10.00
|
$
|
7.36
|
|||||
Granted
|
--
|
|||||||||
Forfeited
|
--
|
|||||||||
Expired
|
(7,500
|
)
|
$
|
5.41
|
$
|
5.41
|
||||
Exercised
|
--
|
|||||||||
December
31, 2006
|
1,673,750
|
$
|
5.35-$10.00
|
$
|
7.36
|
|||||
Vested
and exercisable at December 31, 2006
|
1,673,750
|
$
|
7.36
|
|||||||
Vested
and exercisable at December 31, 2005
|
1,681,250
|
$
|
7.36
|
|||||||
Vested
and exercisable at December 31, 2004
|
1,117,754
|
$
|
6.55
|
2006
|
2005
|
2004
|
||||||||
Dividend
yield
|
N/A
|
0%
|
|
0%
|
|
|||||
Expected
volatility
|
N/A
|
57%
|
|
57%
|
|
|||||
Risk-free
interest rate
|
N/A
|
4.31%
|
|
2.55%
|
|
|||||
Expected
life
|
N/A
|
Four
years
|
Four
years
|
Outstanding
|
Exercisable
|
|||||||||||||||
Exercise
Price
Range
|
Number
of
Shares
Outstanding
at
December
31, 2006
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual
Life
(Years)
|
Number
of
Shares
Exercisable
at
December
31, 2006
|
Weighted
Average
Exercise
Price
|
|||||||||||
$5.35
- $ 7.50
|
1,103,750
|
$
|
6.25
|
5.7
|
1,103,750
|
$
|
6.25
|
|||||||||
$8.35
- $10.00
|
570,000
|
$
|
9.51
|
6.1
|
570,000
|
$
|
9.51
|
|||||||||
1,673,750
|
$
|
7.36
|
5.8
|
1,673,750
|
$
|
7.36
|
Gross
Rental
Obligations
|
Sub-Lease
Income
|
||||||
Year ending December 31,
|
|||||||
2007
|
403
|
101
|
|||||
2008
|
420
|
105
|
|||||
2009
|
426
|
106
|
|||||
2010
|
451
|
113
|
|||||
2011
|
1,128
|
282
|
|||||
Thereafter
|
--
|
--
|
|||||
Total
|
$
|
2,828
|
$
|
707
|
Page
|
||||
Report
of Independent Registered Public Accounting Firm on Consolidated
Financial
Statements
|
22
|
|||
Report
of Independent Registered Public Accounting Firm on Internal Control
Over
Financial Reporting
|
23
|
|||
Consolidated
Balance Sheets - December 31, 2006 and 2005
|
24
|
|||
Consolidated
Statements of Operations -Years Ended December 31, 2006, 2005 and
2004
|
25
|
|||
Consolidated
Statements of Stockholders' Equity and Comprehensive Loss -Years
Ended
December 31, 2006, 2005 and 2004
|
26
|
|||
Consolidated
Statements of Cash Flows -Years Ended December 31, 2006, 2005 and
2004
|
28
|
|||
Notes
to Consolidated Financial Statements
|
29
|
|||
(2) The following additional financial statement schedule and report of independent registered public accounting firm are furnished herewith pursuant to the requirements of Form 10-K: |
||||
Schedule
II Valuation and Qualifying Accounts
|
48
|
|||
(3) The following Exhibits are hereby filed as part of this Annual Report on Form 10-K: |
Exhibit
Number |
Exhibit
|
3.1
|
Amended
and Restated Certificate of Incorporation of the Company (incorporated
herein by reference to Exhibit 3.3 of the Company's Form S-1
Registration
Statement filed with the Securities and Exchange Commission on
April 6,
1998 (File No. 333- 46685)).
|
3.2
|
Amendment
to Amended and Restated Certificate of Incorporation (incorporated
herein
by reference to Exhibit 9.1 of the Company's 10-Q filed with
the
Securities and Exchange Commission on August 14, 2000).
|
3.3
|
Amended
and Restated Certificate of Incorporation of the Company (incorporated
herein by reference to Appendix C of the Company’s Definitive Proxy
Statement filed with the Securities and Exchange Commission on
November 6,
2002).
|
3.4
|
Amendment
to Amended and Restated Certificate of Incorporation of the Company
(incorporated herein by reference to Exhibit 3.1 of the Company's Current
Report on Form 8-K, filed with the Securities and Exchange Commission
on
July 31, 2003).
|
3.5
|
Amended
and Restated Bylaws of the Company (incorporated herein by reference
to
Appendix D of the Company's Definitive Proxy Statement filed
with the
Securities and Exchange Commission on November 6,
2002).
|
3.6
|
Amendment
No. 1 to the Amended and Restated Bylaws of the Company. (incorporated
herein by reference to Exhibit 3.4 of the Company's Annual Report
on Form
10-K, filed with the Securities and Exchange Commission on March
31,
2003).
|
4.1
|
See
Exhibits 3.1, 3.2, 3.3, 3.4 and 3.5 for provisions of the Amended
and
Restated Certificate of Incorporation and Amended and Restated
Bylaws of
the Company defining rights of the holders of Common Stock of
the
Company.
|
4.2
|
Specimen
Stock Certificate (incorporated herein by reference to Exhibit
9.1 of the
Company's Registration Statement on Form S-1 filed with the Securities
and
Exchange Commission on May 26, 1998 (File No.
333-46685)).
|
4.3
|
Restricted
Stock Agreement, dated as of April 11, 2003, between the Company
and
Warren B. Kanders (incorporated herein by reference to Exhibit
4.1 of the
Company's Form 10-Q filed with the Securities and Exchange Commission
on
May 15, 2003). *
|
10.1
|
Asset
Purchase Agreement, dated as of October 17, 2002, between Epicor
Software
Corporation and the Company (incorporated herein reference to
Exhibit 2.1
of the Company's Form 8-K filed with the Securities and Exchange
Commission on October 18, 2002).
|
10.2
|
Bill
of Sale and Assumption Agreement, dated as of December 6, 2002,
between
Epicor Software Corporation and the Company (incorporated herein
by
reference to Exhibit 2.2 of the Company's Form 8-K filed with
the
Securities and Exchange Commission on October 18,
2002).
|
10.3
|
Trademark
Assignment, dated as of December 6, 2002, by the Company in favor
of
Epicor Software Corporation, (incorporated herein by reference
to Exhibit
2.3 of the Company's Form 8-K filed with the Securities and Exchange
Commission on October 18, 2002).
|
10.4
|
Patent
Assignment, dated as of December 6, 2002, between Epicor Software
Corporation and the Company (incorporated herein by reference
to Exhibit
2.4 of the Company's Form 8-K filed with the Securities and Exchange
Commission on October 18, 2002).
|
10.5
|
Noncompetition
Agreement, dated as of December 6, 2002, between Epicor Software
Corporation and the Company (incorporated herein by reference
to Exhibit
2.5 of the Company's Form 8-K filed with the Securities and Exchange
Commission on October 18, 2002).
|
10.6
|
Transition
Services Agreement, dated as of December 6, 2002, between Epicor
Software
Corporation and the Company (incorporated herein by reference
to Exhibit
2.7 of the Company's Form 8-K filed with the Securities and Exchange
Commission on October 18, 2002).
|
10.7
|
Form
of Indemnification Agreement for Directors and Executive Officers
of the
Company (incorporated herein by reference to Exhibit 10.1 of
the Company's
Form 8-K filed with the Securities and Exchange Commission on
December 23,
2002).
|
10.8
|
Employment
Agreement, dated as of December 6, 2002, between the Company
and Warren B.
Kanders (incorporated herein by reference to Exhibit 10.2 of
the Company's
Form 8-K filed with the Securities and Exchange Commission on
December 23,
2002).*
|
10.9
|
Employment
Agreement, dated as of December 6, 2002, between the Company
and Nigel P.
Ekern (incorporated herein by reference to Exhibit 10.3 of the
Company's
Form 8-K filed with the Securities and Exchange Commission on
December 23,
2002).*
|
10.10
|
Consulting
Agreement, dated as of December 6, 2002, between the Company
and Stephen
P. Jeffery (incorporated herein by reference to Exhibit 10.4
of the
Company's Form 8-K filed with the Securities and Exchange Commission
on
December 23, 2002).*
|
10.11
|
Amended
and Restated Stock Incentive Plan (incorporated herein by reference
to
Exhibit 10.2 of the Company's Form 10-Q filed with the Securities
and
Exchange Commission on August 14, 2000). *
|
10.12
|
Employee
Stock Purchase Plan (incorporated herein by reference to Exhibit
10.3 of
the Company's Form 10-Q filed with the Securities and Exchange
Commission
on August 14, 2000). *
|
10.13
|
Global
Employee Stock Purchase Plan (incorporated herein by reference
to Exhibit
10.4 of the Company's Form 10-Q filed with the Securities and
Exchange
Commission on August 14, 2000). *
|
10.14
|
Form
of Nonqualified Stock Option Agreement (incorporated herein by
reference
to Exhibit 10.5 of the Company's Form 10- Q filed with the Securities
and
Exchange Commission on August 14, 2000). *
|
10.15
|
Stock
Incentive Plan of Software Architects International, Limited
(incorporated
herein by reference to Exhibit 2.2 of the Company's Form 8-K
filed with
the Securities and Exchange Commission on June 13, 2000).
*
|
10.16
|
2000
Declaration of Amendment to Software Architects International
Limited
Stock Incentive Plan (incorporated herein by reference to Exhibit
2.3 of
the Company's Form 8-K filed with the Securities and Exchange
Commission
on June 13, 2000). *
|
10.17
|
Lease,
dated as of September 23, 2003, between Reckson Operating Partnership,
L.P., the Company and Kanders & Company, Inc. (incorporated herein by
reference to Exhibit 10.1 of the Company's 10-Q filed with the
Securities
and Exchange Commission on November 12,
2003).
|
10.18
|
Transportation
Services Agreement, dated as of December 18, 2003, between Kanders
Aviation, LLC and the Company (incorporated herein by reference
to Exhibit
10.23 of the Company's 10-K filed with the Securities and Exchange
Commission on March 11, 2004).
|
10.19
|
Clarus
Corporation 2005 Stock Incentive Plan (incorporated herein by
reference to
Appendix A of the Company's Definitive Proxy Statement on Schedule14A
filed with the Securities and Exchange Commission on May 2, 2005).
*
|
10.20
|
Form
of Stock Option Agreement for the Clarus Corporation 2005 Stock
Incentive
Plan (incorporated herein by reference to Exhibit 10.1 of the
Company's
Form 10-Q filed with the Securities and Exchange Commission on
November
11, 2005). *
|
10.21
|
Amendment
to the form of Stock Option Agreement for the Clarus Corporation
2005
Stock Incentive Plan (incorporated herein by reference to Exhibit
10.1 of
the Company's Form 8-K filed with the Securities and Exchange
Commission
on January 6, 2006). *
|
10.22
|
Stock
Option Agreement, dated December 23, 2002, between the Company
and Warren
B. Kanders (incorporated herein by reference to Exhibit 4.6 of the
Company's Registration Statement Form S-8 filed with the Securities
and
Exchange Commission on August 18, 2005). *
|
10.23
|
Extension
Agreement, dated as of May 1, 2006, to the Employment Agreement,
dated as
of December 6, 2002, between the Company and Nigel P. Ekern (incorporated
herein by reference to Exhibit 10.1 of the Company’s Form 8-K filed with
the Securities and Exchange Commission on May 4,
2006).*
|
10.24
|
Extension
Agreement, dated as of May 1, 2006, to the Employment Agreement,
dated as
of December 6, 2002, between the Company and Warren B. Kanders
(incorporated herein by reference to Exhibit 10.2 of the Company’s Form
8-K filed with the Securities and Exchange Commission on May
4,
2006).*
|
10.25
|
Resignation
and Severance Agreement and General Release, dated as of December
11,
2006, between the Company and Nigel P. Ekern (incorporated herein
by
reference to Exhibit 10.1 of the Company’s Form 8-K filed with the
Securities and Exchange Commission on December 12,
2006).*
|
23.1
|
Consent
of Independent Registered Public Accounting Firm.
|
31.1
|
Certification
of Principal Executive Officer, as required by Rule 13a-14(a)
of the
Securities Exchange Act of 1934.
|
31.2
|
Certification
of Principal Financial Officer, as required by Rule 13a-14(a)
of the
Securities Exchange Act of 1934.
|
32.1
|
Certification
of Principal Executive Officer, as required by Rule 13a-14(b)
of the
Securities Exchange Act of 1934.
|
32.2
|
Certification
of Principal Financial Officer, as required by Rule 13a-14(b)
of the
Securities Exchange Act of 1934.
|
* Management contract or compensatory plan or arrangement. |
|
|
|
Date: March 14, 2007 | By: | /s/ Philip A. Baratelli |
|
||
Philip
A. Baratelli Chief Financial Officer |
Signature
|
Title
|
Date
|
||
/s/
Warren B.
Kanders
|
Executive
Chairman of the Board of Directors
|
March
14, 2007
|
||
Warren
B. Kanders
|
(principal
executive officer)
|
|||
/s/
Philip A.
Baratelli
|
Chief
Financial Officer
|
March
14, 2007
|
||
Philip
A. Baratelli
|
(principal
financial officer)
|
|||
/s/
Donald L. House
|
Director
|
March
14, 2007
|
||
Donald
L. House
|
||||
/s/
Burtt R. Ehrlich
|
Director
|
March
14, 2007
|
||
Burtt
R. Ehrlich
|
||||
/s/
Nicholas Sokolow
|
Director
|
March
14, 2007
|
||
Nicholas
Sokolow
|
||||
|
|
|
/s/ KPMG LLP | ||
|
||
KPMG
LLP Stamford, Connecticut March 13, 2007 |
Balance
at
Beginning
of
Period
|
Charged
(Credited)
to
Costs
and
Expenses
|
Deductions
(a)
|
Balance
at
End
of
Period
|
||||||||||
Valuation
Allowance for Deferred Income Tax Assets
|
|||||||||||||
2004
|
$
|
59,341,000
|
$
|
37,265,000
|
$
|
--
|
$
|
96,606,000
|
|||||
2005
|
96,606,000
|
(3,901,000
|
)
|
--
|
92,705,000
|
||||||||
2006
|
92,705,000
|
(220,000
|
)
|
--
|
92,485,000
|
||||||||
Restructuring
Accruals
|
|||||||||||||
2004
|
$
|
230,000
|
$
|
33,000
|
$
|
190,000
|
$
|
73,000
|
|||||
2005
|
73,000
|
--
|
56,000
|
17,000
|
|||||||||
2006
|
17,000
|
--
|
17,000
|
--
|
Number
|
Exhibit
|
|
23.1
|
Consent
of Independent Registered Public Accounting Firm.
|
|
31.1
|
Certification
of Principal Executive Officer, as required by Rule 13a-14(a)
of the
Securities Exchange Act of 1934.
|
|
31.2
|
Certification
of Principal Financial Officer, as required by Rule 13a-14(a)
of the
Securities Exchange Act of 1934.
|
|
32.1
|
Certification
of Principal Executive Officer, as required by Rule 13a-14(b)
of the
Securities Exchange Act of 1934.
|
|
32.2
|
Certification
of Principal Financial Officer, as required by Rule 13a-14(b)
of the
Securities Exchange Act of 1934
|