SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 8K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported) March 12, 1999
CELERITY SOLUTIONS, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 0-20102 52-1283993
(State of Jurisdiction) (Commission File Number) (IRS Employer ID No.)
270 Bridge Street, Suite 301
Dedham, MA 02026
(Address of Principle Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (781) 329-1900
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Former Name or Former Address, if Changed Since Last Report
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Item 5: Other Events
On March 12, 1999, Celerity Solutions, Inc. ("Celerity" or "the Company")
announced that it had completed several organizational changes, including the
resignation of four directors, and a company-wide restructuring. The
organizational changes included the resignation of Luda Kopeikina as President
and CEO of the Company, and the appointment of Paul Carr, the founder of Client
Server Technologies, Inc., which was acquired by Celerity on March 31, 1997, to
the position of President and CEO, effective immediately. In addition, Ms.
Kopeikina, Igor Razboff, Philip Redmond, and Alan White resigned from the
Company's Board of Directors. Mr. Carr and Luc Ringuette, the founder of
Somerset Automation, Inc., which was acquired by Celerity on December 31, 1997,
were elected to the Company's Board of Directors.
On March 12, 1999 the Company also announced a company-wide restructuring that
included a reduction in its work force by approximately 20%, a restructuring
charge related to the work force reduction of approximately $375,000, a
write-off of $800,000 related to several uncollectable accounts receivables, and
the establishment of a $100,000 liability reserve related to a recovery claim
associated with the 1996 bankruptcy case of Marvel Entertainment Group, Inc. The
charges are all expected to be realized in the fiscal fourth quarter ending
March 31, 1999.
Item 7: Financial Schedules and Exhibits
(a.) Financial Statements of Business Acquired
Not applicable
(b.) Pro Forma Financial Information
Not applicable
(c.) Exhibits
Press Release, dated March 12, 1999, "Celerity Solutions Announces
Organizational Changes and Company-Wide Restructuring"
SIGNATURES
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.
CELERITY SOLUTIONS, INC.
(Registrant)
Date: March 18, 1999 By: /s/ Edward Terino
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Edward Terino
Chief Financial Officer
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EXHIBIT INDEX
Number Description of Exhibits
Page
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99.01 Press Release, dated March 12, 1999, "Celerity Solutions Announces 4
Organizational Changes and Company-Wide Restructuring"
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Exhibit 99.01
CELERITY SOLUTIONS [LOGO]
FOR IMMEDIATE RELEASE
Celerity Solutions Announces Organizational Changes and
Company-Wide Restructuring
Dedham, MA, March 12, 1999 -- Celerity Solutions, Inc. (Celerity, "the Company",
NASDAQ: CLTY), announced today that it has completed a company-wide
restructuring, including management changes and changes to its Board of
Directors. Effective today, Paul Carr, the founder of Client Server
Technologies, Inc. (CSTI), which Celerity acquired on March 31, 1997, will
rejoin the Company as President and Chief Executive Officer and assume
responsibility of the Company's day-to-day operations. Mr. Carr has over 20
years of experience in the supply chain management software industry, and has
managed several successful companies, including Cardinal Data Corp and Ross
Systems (Logistics Product Division). Luda Kopeikina has resigned from her
position as President and Chief Executive Officer of the Company and will pursue
other business interests.
Mr. Carr and Luc Ringuette, the founder of Somerset Automation, Inc. (Somerset),
which was acquired by Celerity on December 8, 1997, have been elected to the
Company's Board of Directors. Mr. Ringuette will be the Chairman of the Board.
Luda Kopeikina, Igor Razboff, Philip Redmond and Alan White have resigned from
the Board of Directors. Richard J. Santagati will continue to serve as a
Director on the Board. The Company plans to add additional directors to its
Board in the next several weeks.
The Company also announced that it has entered into an agreement with both Mr.
Carr and Mr. Ringuette to reschedule payments on their Promissory Notes, which
were issued to them as part of the Company's acquisitions of CSTI and Somerset.
These obligations represent approximately $1.5 million, or 72% of the Company's
outstanding debt. The Company expects to finalize the restructuring of the
payment schedule related to these Promissory Notes within the next 90 days.
The Company also announced that it has completed a reduction of its domestic
work force by approximately 20% and decreased operating expenses. The employment
and cost reductions affect all functional areas of the Company at its Dedham, MA
and Irvine, CA locations. The reductions are expected to save approximately
$150,000 a month beginning in April 1999. The cost of the restructuring to be
recognized in the Company's fiscal fourth quarter will be approximately
$375,000. The reductions are intended to improve the Company's results from
operations and cash flow concerns that were discussed in the Management
Discussion and Analysis section of the Company's most recently filed Form
10-QSB. The Company also announced that it would take a write-off in its fiscal
fourth quarter ending March 31, 1999 related to certain accounts receivables
totaling about $800,000. Conditions surrounding several customers' accounts have
changed in the past 30 days that resulted in the Company concluding that these
write-offs are necessary. Further, the Company will establish a reserve of
$100,000 for a recovery claim related to litigation from the 1996 bankruptcy
case of Marvel Entertainment Group, Inc. The write-offs and restructuring
charges will result in the Company incurring
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a loss for both the fiscal fourth quarter and fiscal 1999. The Company estimates
a net loss of between $1.6 to $1.9 million for the fiscal fourth quarter and a
net loss of between $2.3 to $2.5 million for fiscal 1999. The Company expects
revenues for fiscal 1999 will be approximately $12 million versus $13 million
projected by the Company in previous press releases.
Paul Carr, the new President and Chief Executive Officer of Celerity commented,
"Revenues were adversely affected by consulting capacity constraints, which
reduced professional services revenues and delayed license fee recognition. In
addition, the Company's use of outside contractors eroded margins. These factors
contributed to the Company's losses and negative cash flow. Work force
reductions were necessary to reduce operating losses and improve cash flow.
These reductions were primarily in executive, administrative and marketing &
sales positions."
Mr. Carr added, "The Company must now concentrate on increasing consulting
capacity and tightening project controls. This will ensure highly successful,
satisfied, and referencable customers. The Company also plans to expand its
delivery capabilities through partnerships and alliances."
* * *
Celerity Solutions, Inc., provides a unique broad-based offering of supply chain
planning and execution products for the manufacturing and distribution
industries ranging from Supply Chain Planning through Warehouse Management
software products. Celerity, which means "with swiftness of movement", is
focused on accelerating customers' materials and products through their supply
chains, while optimizing their inventory investment and improving customer
service. Celerity's software is designed to integrate planning and
transaction-based systems, and to provide real-time visibility to inventory
movement throughout the supply chain. Founded in 1982, Celerity has offices in
Dedham, Massachusetts; Newark, New Jersey; Chicago, Illinois; Irvine,
California; and St. Petersburg, Russia. Some of Celerity's customers include
Distribution Dynamics, United Liquors Limited, Corporate Express, Nortel,
Pleasant Company, Honeywell, Wesley Jessen, Champion Paper, Image Entertainment,
and Methanex Methanol. Additional information is available through the company's
Web sites: www.celeritysolutions.com and www.somersetwms.com.
For More Information Contact - 781.329.1900
Paul Carr, President and CEO, ext. 218 or Edward Terino, CFO, ext. 229
This press release contains certain forward-looking statements, e.g. "expects",
"project", "projected", "will allow", and "intends", within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements are subject to
certain risks and uncertainties that could cause actual results to differ
materially from those presently anticipated or projected. Celerity cautions
readers not to place undue reliance on any forward looking statements, which
speak only as to management's expectations on the date hereof. Please refer to
Celerity's 1998 Annual Report and quarterly SEC filings for a description of the
risks and uncertainties prepared by Celerity. Celerity does not undertake - and
specifically declines any obligation - to publicly release the result of any
revision which may be made to any forward-looking statements to reflect events
or circumstances after the date hereof or to reflect the occurrence of
anticipated or unanticipated events
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