<PAGE>
As filed with the Securities and Exchange Commission on July 9, 1999
Registration No. 333-46685
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
______________________
POST-EFFECTIVE AMENDMENT NO. 3
TO
FORM S-1
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
______________________
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<S> <C> <C>
Delaware 7372 58-1972600
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
______________________
Clarus Corporation
3970 Johns Creek Court, Suite 100
Suwanee, Georgia 30024
(770) 291-3900
(Address and telephone number of Registrant's principal executive offices)
_________________________
Mr. Stephen P. Jeffery
Clarus Corporation
3970 Johns Creek Court, Suite 100
Suwanee, Georgia 30024
(770) 291-3900
(Name, address and telephone number of agent for service)
_________________________
Copies To:
G. Donald Johnson, Esq.
Sharon L. Mcbrayer, Esq.
Elizabeth O. Derrick, Esq.
WOMBLE CARLYLE SANDRIDGE & RICE, PLLC
1201 West Peachtree Street, N.e., Suite 3500
Atlanta, Georgia 30309
(404) 872-7000
_________________________
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this registration statement becomes effective.
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box:[X]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering.[_] ____________
If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the box and list the Securities Act registration
statement for the same offering.[_] ____________
If the delivery of the prospectus is expected to be made pursuant to Rule
434, check the following box.[_]
_________________
The registrant hereby amends this Registration Statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically sates that this Registration
Statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
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<PAGE>
RESALE
PROSPECTUS
[LOGO]
Issuer
480,790 SHARES OF COMMON STOCK
Clarus Corporation We develop, market and support Web-based
3970 Johns Creek Court electronic commerce applications and client/server
Suite 100 financial and human resources applications.
Suwanee, Georgia 30024
(770) 291-3900 This is a resale prospectus. The 480,790 shares of
our common stock offered by this prospectus are
being sold by certain of our stockholders. We will
not receive any proceeds from the sale of these
shares.
The Offering
Per Share Total
--------- -----
Offering Price .............. $5.00 $2,403,950
The offering price is based on recent prices of our common stock as quoted on
the NASDAQ National Market. There are no underwriters involved in this
offering.
Trading Symbol:
NASDAQ National Market-CLRS
____________________
See "Risk Factors" commencing on page 5 for a discussion of certain factors that
you should consider before purchasing our common stock.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities, or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
July __, 1999
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TABLE OF CONTENTS
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PAGE
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WHERE YOU CAN FIND MORE INFORMATION.................................... ii
INCORPORATION BY REFERENCE............................................. ii
SUMMARY................................................................ 1
RISK FACTORS........................................................... 5
USE OF PROCEEDS........................................................ 18
SELLING STOCKHOLDERS................................................... 19
MARKET PRICES.......................................................... 22
DIVIDEND POLICY........................................................ 23
DILUTION............................................................... 23
PLAN OF DISTRIBUTION................................................... 23
EXPERTS................................................................ 26
LEGAL MATTERS.......................................................... 26
INDEMNIFICATION........................................................ 26
</TABLE>
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<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
Our fiscal year ends on December 31. We file annual, quarterly and special
reports, proxy statements and other information with the Securities and Exchange
Commission. You may read and copy any reports, statements or other information
we file at the SEC's public reference rooms in Washington, D.C., New York, New
York, and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further
information on the public reference rooms. Our SEC filings are also available
to the public from commercial document retrieval services and on the web site
maintained by the SEC at http://www.sec.gov.
INCORPORATION BY REFERENCE
The documents listed below are incorporated by reference into this prospectus
and all documents that we file as required by Sections 13(a), 13(c), 14 or 15(d)
of the Securities Exchange Act of 1934 after the date of this prospectus will be
deemed to be incorporated by reference into this prospectus and to be a part
hereof from the date of filing of such documents:
. Our Annual Report on Form 10-K for the year ended December 31, 1998;
. Our Quarterly Report on Form 10-Q for the quarter ended March 31, 1999;
. The description of our common stock, par value $.0001 per share,
contained in our Registration Statement on Form 8-A (Registration
No. 000-29277), filed with the SEC on May 18, 1998.
We will provide you, without charge, with a copy of any and all of the
information (including exhibits) this prospectus incorporates by reference.
Please direct all requests for this information, as well as any requests for
additional information about us, to:
William A. Fielder, III
Vice President and Chief Financial Officer
Clarus Corporation
3970 Johns Creek Court
Suwanee, Georgia 30024
Telephone: (770) 291-4956
Fax: (770) 291-4997
-ii-
<PAGE>
SUMMARY
Because this is a summary, it does not contain all the information that may be
important to you. You should read the entire prospectus carefully before you
decide to purchase our common stock.
Clarus Corporation
We develop, market, and support Web-based electronic commerce applications and
client/server financial and human resources applications. Our applications
enable organizations to gain and improve control of operational resources, the
non-production goods and services that are vital to the operation of every
company, by leveraging Web commerce technology to connect large populations of
frontline employees.
Our Clarus(TM) Commerce line of products is a Web-based class of systems that
analysts have termed Business Resource Management.
Our entire Clarus(TM) line of products is based on a flexible, open architecture
called Active Architecture(R) which allows for the leverage of leading commerce
technologies and industry standards such as the Microsoft(R) Commerce platform,
Biztalk and XML.
We offer Web-commerce solutions and applications that allow companies to
leverage the technology of the Internet to automate business processes and
proactively manage business resources. Our solutions are designed to provide a
closed-loop management process that enables companies to plan, control, and
analyze their operational, financial, and human resources in a real-time manner.
Our solutions are designed to provide open enterprise integration by employing a
message-based integration layer between our operational resource systems, our
budgeting and planning systems, our analysis and control systems, and
traditional enterprise resource planning solutions, including that of other
enterprise resource planning vendors. Our solutions are also designed with
Clarus View, a personalized real-time view of the business operating environment
that facilitates proactive control.
Our Clarus(TM) product line also includes a full suite of financial and human
resources applications. These applications cover the full range of financial and
accounting functions, including general accounting, expense accounting, revenue
accounting and human resources. We license a series of modules, Graphical
Architects(R), that are designed to extend, enhance, integrate and change the
look and feel of our core applications. Through a visual point-and-click
interface, the Graphical Architects(R) modules allow users to personalize and
configure our applications without source code programming.
In addition, we provide dedicated implementation services as an integral part of
our solution, and believe that these services result in a high level of customer
satisfaction, strong customer references and long-term relationships. We provide
ongoing support services to assist customers in maintaining and updating their
systems, training their employees and adding functionality as the customers'
businesses grow and their requirements change.
Our objective is to be a leading provider of Web-commerce, financial and human
resources applications. The key elements of our strategy are:
<PAGE>
. leveraging partner relationships to distribute our Clarus Commerce
of products through expanded sales and marketing channels;
. expanding our Web-based commerce applications;
. extending our technology leadership;
. leveraging our expertise in financial and human resource applications; and
. leveraging our installed customer base.
We license our products and services through multiple partnership and co-
marketing arrangements and a direct sales force in the United States and Canada.
Since we started our business, we have had more than 300 customers, including
leading organizations such as MasterCard International, Hyatt Regency Chicago,
Investment Technology Group, Blue Cross and Blue Shield of Alabama, Chartwell Re
Holdings Corporation, First Data Corporation, Land's End, Inc., T. Rowe Price
Associates, Inc., and Toronto-Dominion Bank.
We were incorporated in Delaware in 1991. On May 26, 1998, we completed an
initial public offering of our common stock and sold 2.5 million shares which
resulted in net proceeds of approximately $22.0 million. On November 6, 1998, we
acquired ELEKOM Corporation in a merger. Unless the context otherwise requires,
references in this prospectus to "us" or "we" refer to Clarus Corporation.
The Offering
Our stockholders are offering a total of 480,790 shares of our common stock for
resale. We will not receive any of the proceeds from the sale of these shares of
common stock. You should read the Risk Factors section, beginning on page 5, as
well as the other cautionary statements throughout the entire prospectus to
ensure that you understand the risks associated with an investment in our common
stock before purchasing any shares.
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<PAGE>
Summary Consolidated Financial Data
(In Thousands, except per share data)
We are providing the following information to aid you in your analysis of our
financial condition. We obtained this information from audited financial
statements prepared by our auditors, Arthur Andersen LLP, for 1994 through 1998
and from unaudited financial statements prepared by management as of and for the
three months ended March 31, 1999.
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Year ended December 31, Three Months
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Ended
1994 1995 1996 1997 1998 March 31, 1999
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Statement of Operations Data:
Total revenues........................ $ 3,821 $ 8,190 $13,056 $25,988 $ 41,640 $11,401
Operating loss........................ (5,157) (7,987) (7,658) (3,358) (11,078) (1,394)
Net loss.............................. (5,140) (8,049) (7,879) (4,110) (10,702) (1,303)
Loss per common share:
Basic............................... (5.65) (6.19) (5.74) (2.97) (1.70) (0.12)
Diluted............................. (5.65) (6.19) (5.74) (2.97) (1.70) (0.12)
Weighted average common
Shares outstanding:
Basic............................... 910 1,300 1,373 1,386 6,311 10,947
Diluted............................. 910 1,300 1,373 1,386 6,311 10,947
</TABLE>
<TABLE>
<CAPTION>
At
March 31,
1999
-----------------
Balance Sheet Data:
<S> <C>
Cash and cash equivalents.............................................................................. $10,418
Working capital........................................................................................ 7,218
Total assets........................................................................................... 38,309
Long-term debt, net of current portion................................................................. -0-
Total stockholders' equity............................................................................. 20,881
</TABLE>
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<PAGE>
Forward-Looking Statement
This prospectus contains certain forward-looking statements, as defined in the
Private Securities Litigation Reform Act of 1995, including or related to our
future results, including certain projections and business trends.
These and other statements, which are not historical facts, are based largely on
management's current expectations and assumptions and are subject to a number of
risks and uncertainties that could cause actual results to differ materially
from those contemplated by such forward-looking statements. These risks and
uncertainties include, among others, the risks and uncertainties described in
"Risk Factors," beginning on page 5. Assumptions related to forward-looking
statements include that we will continue to price and market our products
competitively; that competitive conditions within our markets will not change
materially or adversely; that the demand for our products will remain strong;
and that we will retain key personnel.
Assumptions relating to forward-looking statements involve judgments with
respect to, among other things, future economic, competitive and market
conditions and future business decisions, all of which are difficult or
impossible to predict accurately and many of which are beyond our control. When
used in this prospectus, the words "estimate," "project," "intend," "believe"
and "expect" and similar expressions are intended to identify forward-looking
statements. Although we believe that assumptions underlying the forward-looking
statements are reasonable, any of the assumptions could prove inaccurate and,
therefore, there can be no assurance that the results contemplated by the
forward-looking statement will be realized. Management decisions are subjective
in many respects and susceptible to interpretations and periodic revisions based
on actual experience and business developments, the impact of which may cause us
to alter our business strategy or capital expenditure plans which may, in turn,
affect our results of operations. In light of the significant uncertainties
inherent in the forward-looking information included in this prospectus, the
inclusion of such information should not be regarded as our representation that
we will achieve any strategy, objectives or other plans. The forward-looking
statements contained in this prospectus speak only as of the date of this
prospectus as stated on the front cover, and we have no obligation to update
publicly or revise any of these forward-looking statements.
Trademarks
Active Architecture(R), Graphical Architects(R), World Class Applications . . .
Breakthrough in Time(R) and ELEKOM(R) are our trademarks registered with the
U.S. Patent and Trademark Office. Data Exchange/Graphical Architect (TM),
Solution/Graphical Architect(TM), Workload/Graphical Architect (TM),
Workflow/Graphical Architect(TM), Business Controls/Graphical Architect(TM),
and Clarus(TM) are our trademarks. All other trademarks and registered
trademarks used in this prospectus are the property of their respective owners.
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<PAGE>
RISK FACTORS
In addition to the other information in this prospectus, you should consider
carefully the following risk factors.
We have a history of operating losses and operating losses may continue.
We have incurred significant net losses in each year since our formation. The
continuation of such losses may adversely affect the market price of our common
stock. As of March 31, 1999, we had an accumulated deficit of approximately
$40.0 million. These losses have occurred, in part, because of the substantial
costs we incurred to develop our products, expand our product research, and hire
and train our direct sales force. We may not be able to generate the
substantial additional growth in revenues that will be necessary to sustain
profitability.
Our future operating results are uncertain due to the approach of Year 2000 and
possible decline in demand for our software applications.
Future spending for software applications in general, and for our applications
in particular, is uncertain and has declined recently due to the approach of the
Year 2000. If such decline in demand continues, our operations will be
adversely affected. Many industry experts have predicted that software sales
may decline in 1999 due to customer concerns over the Year 2000 issue and the
time remaining to implement system replacements. Recently, a number of vendors
have warned of slowing market conditions, which we began to experience during
the fourth quarter of 1998, and continued to experience in the first quarter of
1999. Because this issue is unprecedented, we cannot forecast the expected
impact of the Year 2000 issue on our quarterly revenue. Additionally, should
the market for our products further decline, our revenue may not be sufficient
to maintain our present infrastructure and number of employees.
Revenues from our financial and human resources applications accounted for a
substantial portion of revenue during 1998, and are expected to account for a
substantial portion of our product revenues for the foreseeable future.
Therefore, any factor, including the Year 2000 issue, adversely affecting sales
or pricing levels of these applications may have a material adverse effect on
our business, results of operations and financial condition. Other factors that
may affect market acceptance include the availability and price of competing
products and technologies and the success of our sales efforts.
We may not be successful in developing our new products.
Our future performance will also depend in part on whether we are successful in
developing, introducing and gaining market acceptance of new and enhanced
products, including the Clarus Commerce suite of products. We may not
successfully develop our new or enhanced products. The failure to do so would
have a material adverse effect on our business, results of operations and
financial condition. To diversify, on November 6, 1998, we acquired ELEKOM and
its electronic procurement product. ELEKOM was a development-stage enterprise
that had a limited operating history upon which an evaluation of its business
and prospects could be based.
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<PAGE>
Prior to the merger, ELEKOM had generated minimal operating revenues, had
incurred significant losses and had experienced substantial negative cash flow
from operations.
Our prospect of success with the ELEKOM products must be considered in light of
the considerable risks, expenses, and difficulties frequently encountered by
companies in their early stage of development, particularly technology-based
companies operating in unproven markets with unproven products. We expect to
incur substantial costs to complete the development of the Clarus(TM) Commerce
suite of products, including the Clarus E-Procurement product, to integrate the
ELEKOM Procurement software in its existing stage of development with our Clarus
Purchasing Control module, and to market and support this product. Our
investments in ELEKOM's products and technologies may not achieve the desired
returns.
Our common stock has been publicly traded only since May 1998, and our common
stock has declined and been highly volatile since our initial public offering.
Prior to May 1998, there was no public market for the shares of our common
stock. An active public market for the shares of our common stock may not be
sustained. The market price of the shares of common stock has been, and may
continue to be, highly volatile. The market price could be subject to wide
fluctuations in response to variations in results of operations, announcements
of technological innovations of our new products or new products of our
competitors, changes in our financial estimates, changes in financial estimates
by securities analysts or other events or factors. In addition, the financial
markets have experienced significant price and volume fluctuations that have
particularly affected the market prices of equity securities of many high
technology companies. These fluctuations often have been unrelated to the
operating performance of such companies or have resulted from the failure of the
operating results of such companies to meet market expectations in a particular
quarter. Additionally, broad market fluctuations or any failure of our operation
results in a particular quarter to meet market expectations may adversely affect
the market price of the shares of our common stock.
In the past, following periods of volatility in the market price of a company's
securities, securities class action litigation has often been instituted against
such a company. Any securities litigation involving us could result in
substantial costs and a diversion of management's attention and resources. The
market price of our common stock has declined and has been highly volatile since
our initial public offering in May, 1998.
Our sales and profitability may be negatively impacted if the in-process
research and development acquired in the ELEKOM merger is not successfully
developed.
The accounting treatment for the acquisition of ELEKOM negatively impacted our
results of operations. We recognized a write-off of acquired in-process
research and development of approximately $10.5 million and will amortize the
remainder of approximately $6.9 million over a period ranging from three months
to ten years. Such amortization will adversely affect our results of operations
through 2008. The amounts allocated under purchase accounting to developed
technology and in-process research and development in the merger involve
valuations utilizing estimations of future revenues, expenses, operating profit,
and cash flows. The actual
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<PAGE>
revenues, expenses, operating profit, and cash flows from the acquired
technology recognized in the future may vary materially from such estimates. If
the in-process research and development product is not successfully developed,
our sales and profitability may be adversely affected in future periods.
Additionally, the value of other intangible assets acquired may become impaired.
We expect to begin to benefit from the purchased in-process technology in the
second quarter of 1999.
We expect to continue to experience significant fluctuations in quarterly
operating results.
We have experienced, and expect to continue to experience, significant
fluctuations in quarterly operating results caused by many factors, including,
but not limited to:
. changes in the demand for our products;
. the timing, composition, and size of orders from our customers;
. spending patterns and budgetary resources of our customers;
. our success in generating new customers;
. a general economic downturn caused by the Year 2000;
. introductions or enhancements of our products;
. changes in our pricing policies or those of our competitors;
. our ability to anticipate and adapt effectively to developing markets and
rapidly changing technologies;
. our ability to attract, retain and motivate qualified personnel;
. changes in the mix of products sold;
. the publication of opinions or reports about us and our products, or our
competitors and their products, by industry analysts, or others; and
. changes in general economic conditions.
The loss of a large sale, or the deferral of a large sale to a subsequent
quarter, could have a material, adverse effect on current quarter operating
results and could cause significant fluctuations in revenues and earnings from
quarter to quarter. Additionally, because a smaller percentage of our revenues
flow from maintenance contracts than many software companies with a longer
history of operations, we do not have a significant ongoing revenue stream that
could mitigate quarterly fluctuations in operating results.
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<PAGE>
We also have experienced, and expect to experience, a high degree of
seasonality, and in recent years have recognized proportionately greater
percentage of our total revenues in the fourth quarter than in any other quarter
during such year. Fourth quarter revenues in 1996, 1997, and 1998 were 33.6%,
32.5% and 26.3% of total revenues for those years. As a result of this
seasonality, we could experience unanticipated reduced net income, or net losses
at year end.
Consistent with software industry practice, we typically ship our software
promptly following receipt of a firm order. We operate with minimal backlog.
As a result, quarterly sales and operating results depend generally on the
volume and timing of orders received within the quarter, all of which are
difficult to forecast and manage. Our expense levels are based in part on our
expectations of future orders and sales. A substantial portion of our operating
expenses are related to personnel, facilities, and sales and marketing programs.
This level of spending for such expenses cannot be adjusted quickly and is
therefore relatively fixed in the near term. Accordingly, any significant
shortfall in demand for our products in relation to our expectations would have
an immediate and material adverse financial effect on us.
Due to all of these factors, we believe that our quarterly operating results are
likely to vary significantly in the future. Therefore, our results of
operations may fall below the expectations of securities analysts and investors.
In such event, or in the event that such result is perceived by market analysts
to have occurred, the trading price of our common stock would likely be
materially adversely affected.
We Have Limited Experience With Internet Commerce.
The success of our Clarus Commerce suite of Internet-based computer software
applications, including Clarus E-Procurement, depends upon the development and
expansion of the market for Internet-based software applications, in particular
electronic commerce applications. This market is new and rapidly evolving. The
acceptance of electronic commerce generally, and the Internet specifically, as a
forum for corporate procurement is uncertain and subject to a number of risks.
Many significant issues relating to such use of the Internet (including
security, reliability, cost, ease of use, quality of service, and government
regulation) remain unresolved and could delay or prevent the necessary growth of
the Internet. If widespread use of the Internet for commercial transactions
does not develop or if the Internet otherwise does not develop as an effective
forum for corporate procurement, the success of Clarus E-Procurement and other
Clarus Commerce products would be materially adversely affected as well as,
potentially, our overall business, operating results, and financial condition.
The adoption of the Internet for corporate procurement and other commercial
transactions requires acceptance of new ways of transacting business. In
particular, enterprises with established patterns of purchasing goods and
services that have already invested substantial resources in other means of
conducting business and exchanging information may be particularly reluctant to
adopt a new strategy that may make some of their existing personnel and
infrastructure obsolete. Also, the security and privacy concerns of existing and
potential users of Internet-based products and services may impede the growth of
online business generally and the market's acceptance of our products and
services in particular. A functioning market for such products may not emerge
or be sustained. If the market for Internet-based packaged procurement
-8-
<PAGE>
applications fails to develop or develops more slowly than we anticipate, or if
Clarus E-Procurement and any other Internet-based products we develop do not
achieve market acceptance, our business, operating results, and financial
condition could be materially adversely affected.
We utilize a direct sales model.
To date, we have sold our products exclusively through our direct sales force.
We intend to continue to employ direct sales model. As a consequence, our
ability to achieve significant revenue growth in the future will depend in part
on our success in recruiting, training and retaining additional direct sales and
consulting personnel and on the continuing success of the direct sales force.
Our financial success will depend in part on our direct sales force's ability to
increase sales to levels necessary to sustain profitability. In order to
increase direct sales, we must hire, train and deploy continually increasing
staff competition sales personnel. We believe that there is a shortage of, and
significant competition for, direct sales personnel with the advanced sales
skills and technological knowledge necessary to sell our products. Our inability
to hire, or failure to retain, competent sales persons would have a material
adverse effect on our business, results of operations and financial condition.
We are developing indirect distribution channels through third-party
distribution and other channel arrangements. We may not be successful in
developing successful third-party distribution arrangements. Any expansion of
our indirect distribution channels may not result in revenues.
We rely on third-party software to allow us to integrate our product with
relational database management systems.
We maintain nonexclusive license agreements with Microsoft Corporation, Oracle
and Sybase, Inc. that allow us to integrate our products with relational
database management systems provided by these companies. If our customers
experience significant problems with these database management systems and the
database system provider does not correct such problems, our customers may not
be able to continue to use our products. Additionally, our inability to maintain
upward compatibility with a new database management system release could impact
the ability of our customers to use our products.
For certain of our financial and human resources applications, we maintain a
nonexclusive license agreement with Centura Corporation that allows us to use
their software development tools and operating environment. Centura has
announced that it does not intend to enhance its development technology further.
Centura's decision will require us to spend significant amounts of time and
money over the next few years to re-architect these applications. Re-
architecting the applications may divert resources from the development of new
and enhanced products and other business requirements. However, the failure to
re-architect these products to a different development language could result in
our inability to continue to market these products, resulting in a substantial
loss of revenue, which would materially and adversely affect our business,
financial condition and results of operations. Also, the customer's inability to
use our products
-9-
<PAGE>
would affect customer's renewal of software maintenance for such products, which
would materially and adversely affect on our business, results of operations and
financial condition.
We rely on nonexclusive license agreements with Hyperion Solutions Corporation,
Centura, FRx Software Corporation and others for third-party software that we
distribute. The loss of, or inability to maintain, any of these software
licenses would result in delays or reductions in product shipments until
equivalent software could be identified, licensed, or developed. Any such delays
could have a material adverse effect on our business, operating results, and
financial condition. Furthermore, in some instances, we only receive object code
from our licensors, causing us to rely on software support services from third
parties. If these third parties fail to satisfy their maintenance obligations to
us, then we would likely fail to satisfy our software support obligations to our
customers. Any such failure would materially and adversely affect our business,
results of operations, and financial condition.
We have also entered into agreements with various other third-party licensors
for products which are used as tools with our products, licensed as
complementary products to our products, or integrated with, and enhance, the
operation of our products. These agreements contain customary warranty, software
maintenance, and infringement indemnification terms for the third- party
software that we distribute. In most cases, we depend upon the third party to
maintain, support, update and enhance their products. The failure of any third
party to do so or the loss or inability to maintain any of these software
licenses could result in delays or reductions in product shipments until
equivalent software could be identified, licensed or developed. Any such delays
could materially and adversely affect our business, operating results and
financial condition.
The expiration or termination of any such licenses or the failure of any of
these third-party licensors to adequately maintain, support or update their
products could delay the shipment of certain of our products until we implement
software offered by alternative sources. Any required replacement licenses could
prove costly. While it may be necessary or desirable in the future to obtain
licenses of alternative or new products relating to one or more of our products,
or relating to current or future technologies, we may not be able to do so on
commercially reasonable terms, or at all.
Intense competition may reduce demand for our products and cause us to reduce
the prices of our products.
The market for Internet procurement applications, such as Clarus E-Procurement
and electronic commerce technology generally, is rapidly evolving and intensely
competitive. Clarus E-Procurement is designed to compete with prepackaged
electronic commerce software, software tools for developing commerce
applications, system integrators, and business application software. In
addition, potential customers may elect to develop their own electronic commerce
solutions.
We will face competition from other electronic procurement providers. In
addition, we believe we will experience increased competition from travel and
expense software companies. We also anticipate increased competition from some
of the larger enterprise resource planning software vendors.
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<PAGE>
The market for financial and human resources applications is intensely and
increasingly competitive. Our applications are designed for use in client/server
environments utilizing Windows NT and Unix servers. We also face indirect
competition from companies that sell financial software applications for use
mainly on proprietary mid-range computing systems, from suppliers of custom-
developed financial applications software systems, from the consulting groups of
major accounting firms and from the IT departments of potential customers that
choose to develop systems internally.
The majority of our principal current and potential competitors have
significantly greater financial, technical, and marketing resources and name
recognition than we have. In addition, because of relatively low barriers to
entry and relatively high availability of capital in today's markets, new
competitors will likely emerge in our markets. We anticipate facing pricing
pressures and we anticipate that one or more companies in our markets may face
financial failure. In the past, a number of software markets have become
dominated by one or a small number of suppliers, and a small number of suppliers
or even a single supplier may dominate our markets. If we do not offer products
that continue to achieve success in their respective markets in the short term,
we could suffer a loss in market share and brand name acceptance. Moreover, any
material reduction in the price of our products would negatively affect margins
as a percentage of net revenues and would require us to increase sales or reduce
costs to maintain or increase net income. The occurrence of any of the foregoing
would materially and adversely affect our business, results of operations, and
financial condition. We may not compete effectively in our markets.
Our markets are characterized by rapid technological change that could render
our products obsolete and unmarketable.
The market for financial, human resources, and Web-commerce applications is
characterized by rapid technological change, frequent introductions of new and
enhanced products, changes in customer demands, and evolving industry and
financial accounting standards and practices. The introduction of products
embodying new technologies and functionality can render existing products
obsolete and unmarketable. As a result, our future success will depend, in part,
upon our ability to enhance our existing products, develop and introduce new
products that keep pace with technological developments, and satisfy customer
requirements and preferences, while remaining price competitive and achieving
market acceptance. We may not identify new product opportunities and develop and
bring new products to the market in a timely and cost-effective manner.
Products, capabilities or technologies others develop may render our products or
technologies obsolete or noncompetitive or shorten life cycles of our products.
In particular, Clarus E-Procurement has a limited product implementation
history. Clarus E-Procurement may not be successfully and efficiently developed
and marketed.
-11-
<PAGE>
We may not be able to introduce enhancements to our products and technologies
in a timely manner.
Because of these potentially rapid changes in the financial, human resources and
Web-commerce applications markets, the life cycle of our technology is difficult
to estimate. Our future success will depend upon our ability to address the
increasingly sophisticated needs of our customers by developing and introducing
enhancements to our products and technologies in a timely manner that keeps pace
with technological developments, emerging industry standards and customer
requirements. We may not be successful in developing and marketing enhancements
to existing products or in developing new products that respond to technological
changes, evolving industry or accounting standards or practices or customer
requirements. Our failure to develop and introduce new or enhanced products that
offer advanced technology and function adequate to compete with other available
products could materially and adversely affect our business, results of
operations, and financial condition.
Any inability to manage our infrastructure will negatively impact our business
and results of operations.
Our prior growth, coupled with the rapid evolution of our markets, has placed,
and is likely to continue to place, strain on our administrative, operational
and financial resources and internal systems, procedures and controls.
Additionally, should the market for our products further decline, our revenues
may not be sufficient to maintain our infrastructure and number of employees
that resulted from our prior growth. If we are unable to manage future growth
effectively, our business, results of operations and financial condition could
be materially adversely affected.
The loss of services of our personnel could negatively impact our business and
results of operations.
Our performance is substantially dependent on the performance of our key
management, sales support, marketing and technical personnel, substantially all
of whom are not bound by employment agreements to continue in our employ. The
loss of the services of any such personnel could materially and adversely affect
our business, results of operations and financial condition. We do not maintain
key person life insurance policies on any of our employees or consultants.
We believe that there is a shortage of qualified personnel with the skills
required to manage, develop, sell and market Web-commerce applications in
today's highly competitive market. Accordingly, we may not be able to attract,
assimilate, or retain highly qualified personnel. Our inability to attract and
retain necessary personnel could materially and adversely affect our business,
results of operations, and financial condition.
Clarus E-Procurement may not perform adequately in a high volume environment.
Clarus E-Procurement was designed for use in environments that include, without
limitation, numerous users, large amounts of catalog and other data, and
potentially high peak transaction
-12-
<PAGE>
volumes. The product currently operates as designed in existing customer sites.
The final product, however, may not operate as designed when deployed.
Therefore, when deployed, Clarus E-Procurement, and the third-party computer
software and hardware on which Clarus E-Procurement is dependent, may not
operate as designed. Any failure by Clarus E-Procurement to perform adequately
in a high volume environment could materially and adversely affect on the market
for Clarus E-Procurement and our business, results of operations and financial
condition.
The length of our sales cycles is likely to increase in the future, which would
contribute to fluctuations in our operating results.
A customer's decision to license and implement our financial, human resources
and Web-commerce applications presents significant enterprise-wide implications
and involves a substantial commitment of the customer's management attention and
resources. We believe that the period of time between initial customer contact
and the customer's purchase commitment typically ranges from four to seven
months for our applications. As companies achieve Year 2000 compliance, and as
our products and competing products become increasingly sophisticated and
complex, the length of sales cycles are likely to increase in the future. Our
future sales cycle could extend beyond current levels as a result of lengthy
evaluation and approval processes that typically accompany major initiatives or
capital expenditures, including delays over which we have little or no control.
The loss of individual orders due to increased sales and evaluation cycles, or
delays in the sale of even a limited number of systems, could materially and
adversely affect our business, results of operations and financial condition
and, in particular, could contribute to significant fluctuations in our
operating results on a quarterly basis.
Claims against us with respect to our proprietary technology could materially
impact our business and results of operations.
Our success depends significantly upon our internally-developed proprietary
intellectual property and intellectual property we license from others. We rely
on a combination of copyright, trademark and trade secret laws as well as on
confidentiality procedures and licensing arrangements, to establish and protect
our proprietary rights in our products. We currently have no patents or patent
applications pending, and existing trade secret and copyright laws provide only
limited protection of our proprietary rights. We have registered or applied for
registration for certain copyrights and trademarks. Despite our efforts to
protect our products' respective proprietary rights, unauthorized parties may
attempt to copy aspects of our products or to obtain and use information that we
regard as proprietary. Third parties may also independently develop products
similar to our products. In addition, the laws of some foreign countries do not
protect proprietary rights to the same extent as the laws of the United States.
We enter into license agreements with our customers that give the customer the
non-exclusive right to use the object code version of our products. These
license agreements prohibit the customer from disclosing object code to third
parties or reverse-engineering our products and disclosing our confidential
information. In certain rare circumstances, typically for the earliest releases
of our products, we have granted our customers a source code license, solely for
the customer's internal use.
-13-
<PAGE>
Although we do not believe that we are infringing on the intellectual property
rights of others, claims of infringement are becoming increasingly common as the
software industry matures and as expanded legal protections are applied to
software products. Third parties may assert infringement claims against us with
respect to our proprietary technology and intellectual property licensed from
others. Generally, our third-party software licensors indemnify us from claims
of infringement. However, our licensers may not be able to indemnify us fully
for such claims, if at all. Infringement claims against us could cause product
release delays, require us to redesign our products, or require us to enter into
royalty or license agreements. Such agreements may not be available on terms
acceptable to us or at all. Furthermore, litigation, regardless of the outcome,
could result in substantial cost to us, divert management attention and delay or
reduce customer purchases. Any infringement claim against us could materially
and adversely affect our business, results of operations and financial
condition.
Claims against our third-party patent and other intellectual property rights
could cause us to pay additional fees and expenses or to stop selling our
products.
Although we do not believe that our technology infringes any third-party rights,
the cost of defending any such claim, regardless of its validity, can be
substantial and result in significant expenses and diversion of resources, which
could materially and adversely affect our business and financial condition. One
or more of our products may, in the future, be found to infringe the patent
rights of one or more third parties. Because knowledge of a third party's patent
rights is not required for a determination of patent infringement and, because
new patents are being issued by the U.S. Patent and Trademark Office on an
ongoing basis, this is a continuing risk for us.
In addition to the risk of infringing a third party's patent rights, there is a
risk that our products may infringe upon other intellectual property rights of
third parties (e.g., copyrights, trademark and trade secrets). We have taken
steps to ensure that our employees and contractors have assigned to us all of
their third parties' rights in and to any of the computer software inventions,
and other work product created by third parties for us or on our behalf. In
addition, we have taken steps to ensure that they have the proper licenses for
using and distributing all third-party company software included in or with our
products.
If it is later determined that a third party's patent or other intellectual
property rights apply to a product of ours, there is a material risk that the
revenue from the sale of such product will be significantly reduced or
eliminated, as we may have to:
. pay licensing fees or royalties to such third party in order to continue
selling the product;
. incur substantial expense in the modification of the product so that the
third party's patent or other intellectual property rights no longer apply
to such product; or
. stop selling the product.
In addition, if a product is adjudged to be infringing a third party's patent or
other intellectual property rights, then we may be liable to such third party
for actual damages and attorneys' fees.
-14-
<PAGE>
If the infringement of a third party's patent were found to be willful on our
part, then the third party may be able to recover treble damages, plus
attorneys' fees and costs.
Product defects and product liability could cause revenue loss.
As a result of their complexity, software products may contain undetected errors
or failures when first introduced or as new versions are released. Despite our
testing and use by current customers, errors may be found in new applications
after commencement of commercial shipments. If discovered, we cannot guarantee
that we will successfully correct such errors in a timely manner or at all. We
could, in the future, lose revenues as a result of software errors or other
product defects. Our products and future products are intended for use in
applications that may be critical to a customer's business. As a result, our
customers and potential customers might have a greater sensitivity to product
defects than the market for software generally. The occurrence of errors and
failures in our products could result in the loss of or delay in market
acceptance of our applications, and alleviating such errors and failures could
require us to expend significant capital and other resources. The consequences
of such errors and failures could materially and adversely affect our business,
results of operations, and financial condition.
Our customers use our financial applications for financial reporting and
analysis, and payroll processing. Accordingly, any design defects, software
errors, misuse of our products, incorrect data from network elements, or other
potential problems within or beyond our control that may arise from the use of
our products could result in financial or other damages to our customers. Our
customers use Clarus E-Procurement for procurement processing and analysis. Any
design defect, software errors, misuse of this product, incorrect data from
network elements, or other potential problems within or beyond our control that
may arise from the use of this product could also result in financial or other
damages to our customers.
Although our license agreements with our customers typically contain provisions
designed to limit our exposure to potential claims, as well as any liabilities
arising from such claims, such provisions may not effectively protect us against
such claims. We do not maintain product liability insurance. Accordingly, any
such claim could materially and adversely affect our business, results of
operations, and financial condition. We provide warranties for our products
after the software is purchased for the period in which the customer maintains
our support of the products. We generally support only current releases and the
immediately prior releases of our products. Our license agreements generally do
not permit product returns by the customer, and product returns and warranty
expense for 1996, 1997, and 1998 represented less than 4.9%, 1.2%, and 2.1% of
total revenues, respectively. However, product returns may increase as a
percentage of total revenues in future periods.
Our customers may not be able to continue to use our products if the relational
database management systems used with our software is not Year 2000 compliant.
Our applications are designed to be Year 2000 compliant. However, we are in the
process of determining the extent to which third-party licensed software
distributed by us and used in our products are Year 2000 compliant, as well as
the impact of any non-compliance on us and our customers. If the relational
database management systems used with our software are not Year
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<PAGE>
2000 compliant, our customers may not be able to continue to use our products.
We do not currently believe that the effects of any Year 2000 non-compliance in
our installed base of software will result in a material, adverse impact on our
business or financial condition. However, our investigation with respect to
third-party software is in its preliminary stages. We may be exposed to
potential claims resulting from system problems associated with the century
change.
Businesses may not continue to adopt Microsoft technologies or other
technologies that operate with our products.
We have entered into partnership and marketing arrangements with Microsoft. Our
products operate with, or are based on, Microsoft's proprietary products, such
as: Windows NT, Visual C++, Foundation Classes, Active X, OLE/COM, SQL Server,
and Visual Basic. We have designed our products and technology to be compatible
with new developments in Microsoft technology. Businesses may not continue to
adopt such technologies as anticipated, may migrate from older Microsoft
technologies to newer Microsoft technologies, or may adopt alternative
technologies that we do not support.
In the future, a government agency could regulate our business and require us to
make significant expenditures or discontinue certain services.
We are not currently subject to direct regulation by any government agency,
other than regulations applicable to businesses generally, and there are
currently few laws or regulations specifically addressing commerce on the
Internet. However, due to the increasing use and growth of the Internet, it is
possible that the federal or state governments may adopt such laws and
regulations covering issues such as user privacy, pricing, and characteristics
and quality of products and services. The Telecommunications Act of 1996, which
Congress enacted in January 1996, prohibits transmitting over the Internet
certain types of information and content. The scope and applicability of this
statute is currently unsettled, but the imposition upon us of potential
liability for information carried on or disseminated through our application
systems by this or other laws could require us to reduce our exposure to such
liability. This could require us to make significant expenditures or to
discontinue certain services. The adoption of any such laws or regulations also
could slow the growth of the Internet, which could in turn adversely affect our
business, operating results, or financial condition. Moreover, the applicability
to the Internet of existing laws governing issues such as property ownership,
libel, and personal privacy is uncertain.
Legislation limiting further levels of encryption technology will adversely
affect the prospects for Clarus E-Procurement.
As a result of customer demand, it is possible that Clarus E-Procurement will be
required to incorporate encryption technology, the export of which is regulated
by the United States government. Export regulations, either in their current
form or as they may be subsequently enacted, may limit our ability to distribute
our software outside the United States. Moreover, legislation or regulation may
further limit the levels of encryption or authentication technology that we are
able to utilize in our software. Any revocation or modification of our export
-16-
<PAGE>
authority, unlawful exportation of our software, or adoption of new legislation
or regulation relating to exportation of software and encryption technology
could materially and adversely affect the prospects for Clarus E-Procurement
and, potentially, on our business, financial condition, and operating results as
a whole.
A compromise of the encryption methods we employ in Clarus E-procurement could
adversely impact us.
A significant barrier to commerce involving the Internet is the secure exchange
of valued and confidential information over public networks. We anticipate that
Clarus E-Procurement will rely on encryption and authentication technology to
provide the security and authentication necessary to render secure the exchange
of valuable and confidential information. Advances in computer capabilities,
discoveries in the field of cryptography, or other events or developments may
result in a compromise of any encryption methods we employ in Clarus E-
Procurement to protect transaction data. If any compromise of security were to
occur, it could materially and adversely affect our business, financial
condition, and operating results.
Our market price could decline as a result of a large number of shares of our
common stock in the market.
The market price for our common stock could drop as a result of sales of a large
number of shares of our common stock in the market or the perception that such
sales could occur. The holders of the fully vested stock options granted during
the period of January l, 1998, through March 31, 1998, have entered into lock-up
agreements restricting the sale or transfer of such shares for a four-year
period following the date of the initial public offering. Of these shares, 25%
were released from such restriction on May 26, 1999. We have filed a
Registration Statement on Form S-8 that has made eligible for sale approximately
3.6 million additional shares issuable upon the exercise of stock options.
The former holders of Series A Preferred Stock and Series B Preferred Stock of
ELEKOM and Norman N. Behar have agreed not to sell any shares of our common
stock they received in connection with the merger until August 6, 1999. After
that date, approximately 1.4 million additional shares will be freely tradable,
subject to the rules of the Securities and Exchange Commission.
Our certificate of incorporation, our Bylaws, and Delaware corporate law contain
provisions that may discourage a takeover attempt of our company.
Our Certificate of Incorporation permits us to issue up to 5.0 million shares of
preferred stock and permits our Board of Directors to fix the rights,
preferences, privileges, and restrictions of such shares without any further
vote or action by our stockholders. Although we have no current plans to issue
new shares of preferred stock, the potential issuance of preferred stock may
delay, defer or prevent a change in our control. The potential issuance may also
discourage bids for the common stock at a premium over the market price of the
common stock and may adversely affect the market price of, and the voting and
other rights of, the holders of common stock. Our Board of Directors is divided
into three classes, each of which serves for a staggered three-year
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<PAGE>
term. Such staggered board may make it more difficult for a third party to gain
control of our Board of Directors. In addition, certain provisions of our
Certificate of Incorporation and Bylaws and of Delaware corporate law may have
an anti-takeover effect and may discourage takeover attempts not first approved
by our Board of Directors, including takeovers which stockholders may deem to be
in their best interest.
USE OF PROCEEDS
We will not receive any proceeds of the sale of shares of common stock offered
by the selling stockholders.
SELLING STOCKHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of our common stock by each selling stockholder.
<TABLE>
<CAPTION>
Beneficial Ownership Beneficial Ownership
Prior to Offering(1) After Offering(1)
---------------------- ----------------------
Number of Number of
Shares of Percent of Shares of Percent of
Common Common Shares to Common Common
Name And Address Stock Stock be sold Stock Stock
- -------------------------------------- --------- ----------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
Judith Bassoul
5265 Linnadine Way
Norcross, Georgia 30092............... 600 * 600 - -
Scott J. Brady
6154 Poplar Bluff Circle
Norcross, Georgia 30092............... 104,350 * 89,100 15,250 *
Michael P. Caffyn
2201 Bierce Drive 1,005 * 1,005 - -
Virginia Beach, Virginia 23454........
Gerald E. Cassidy
135 Bittersweet Drive
Hershey, Pennsylvania 17033........... 1,740 * 1,740 - -
Gregory M. Corley
83 Waddell Street, N.E.
Atlanta, Georgia 30307................ 390 * 390 - -
Mary B. Flock
1511 S.W. Park Avenue, #1303
Portland, Oregon 97201................ 75 * 75 -
Jeffrey A. Fourman
1212 N. Grove
Oak Park, Illinois 60302.............. 1,680 * 1,680 - -
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Beneficial Ownership Beneficial Ownership
Prior to Offering(1) After Offering(1)
---------------------- ----------------------
Number of Number of
Shares of Percent of Shares of Percent of
Common Common Shares to Common Common
Name And Address Stock Stock be sold Stock Stock
- -------------------------------------- --------- ----------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
Robert J. Fousch, Jr.
4617 Howell Farms Drive
Acworth, Georgia 30101................ 45 * 45 - -
Wesley C. Hewatt
5694 Kilrush Court
Mableton, Georgia 30126............... 45 * 45 - -
Laurie Maceyko Hood
110 Huntington Road, N.E.
Atlanta, Georgia 30309................ 150 * 150 - -
Tracey D. Jackson
510 Shale Court
Alpharetta, Georgia 30202............. 900 * 900 - -
John M. McCall
3019 Blandwood Drive
Valdosta, Georgia 31601............... 7,500 * 7,500 - -
Rudolph Russell McCall
3019 Blandwood Drive
Valdosta, Georgia 31601............... 7,500 * 7,500 - -
James Patrick McVey
4037 Dream Catcher Drive
Woodstock, Georgia 30189.............. 300 * 300 - -
Denise L. Miles
3346 Muscadine Trail
Kennesaw, Georgia 30144............... 615 * 615 - -
Ronnie D. Philpot
212 Melrah Hill
Peachtree City, Georgia 30269......... 342 * 342 - -
Gary J. Rogers
17534 Charity Lane
Germantown, Maryland 20874............ 8,400 * 8,400 - -
Janet V. Smith
7315 Chattahoochee Bluff Drive
Atlanta, Georgia 30350................ 390 * 390 - -
Noreen M. Snellman
1100 Oakhaven Drive
Roswell, Georgia 30075................ 1,800 * 1,800 - -
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Beneficial Ownership Beneficial Ownership
Prior to Offering(1) After Offering(1)
---------------------- ----------------------
Number of Number of
Shares of Percent of Shares of Percent of
Common Common Shares to Common Common
Name And Address Stock Stock be sold Stock Stock
- -------------------------------------- --------- ----------- --------- --------- -----------
<S> <C> <C> <C> <C> <C>
Nancy W. Swager
5345 Myras Court
Cumming, Georgia 30040................ 33 * 33 - -
Technology Ventures, L.L.C.
Two Ravinia Drive, Suite 1090
Atlanta, Georgia 30346
Attn: Joseph S. McCall................ 488,950 4.5% 357,700 131,250 1.2%
Charlyn Thompson
9975 Barston Court
Alpharetta, Georgia 30202............. 240 * 240 - -
Michael P. Tuttle
1072 High Point Drive
Atlanta, Georgia 30306................ 240 * 240 - -
</TABLE>
_______________
* Represents less then 1% of the outstanding common stock.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. In computing the number of shares
beneficially owned by a person and the percentage ownership of that person,
shares of common stock subject to options held by that person that are
currently exercisable or that are or may become exercisable within 60 days
are deemed outstanding. Such shares, however, are not deemed outstanding
for the purposes of computing the percentage ownership of any other person.
Each selling stockholder named in the table has sole voting and investment
power with respect to the shares set forth opposite such selling
stockholders' name.
Technology Ventures, L.L.C. ("Tech Ventures") is controlled by Joseph S. McCall.
The common stock was issued to Tech Ventures on February 5, 1998, in connection
with our purchase of Tech Ventures' 20% ownership interest in Clarus
Professional Services, L.L.C. (formerly SQL Financials Services, L.L.C.). In
May 1999, we merged Clarus Professional Services, LLC into us. Mr. McCall
founded Clarus Corporation in November 1991 and has previously served as its
Chairman, President, and Chief Executive Officer, and served as a member of the
Board of Directors from 1991 until December 1998. Mr. McCall founded McCall
Consuting Group Inc. in 1986 and he currently serves as its President.
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<PAGE>
MARKET PRICES
Market Prices
Our common stock has been listed on Nasdaq/NMS since May 26, 1998, the effective
date of our initial public offering. Effective May 26, 1998, our common stock
was listed under the symbol "SQLF". On August 28, 1998, we changed our name to
Clarus Corporation and effective September 2, 1998, changed our Nasdaq/NMS
symbol from "SQLF" to "CLRS." Prior to May 26, 1998, there was no established
trading market for our common stock. The following table sets forth, for the
indicated periods, the high and low closing sales prices for our common stock as
reported by the Nasdaq/NMS for quarters since May 26, 1998.
<TABLE>
<CAPTION>
Sales Price
----------------------
Calendar Period High Low
--------------------------------------------------------- ---------- ----------
<S> <C> <C>
1998
Second Quarter (beginning May 27, 1998).................. $10.00 $7.625
Third Quarter............................................ 9.62 3.50
Fourth Quarter........................................... 8.63 2.75
1999
First Quarter............................................ $ 6.00 $ 3.31
Second Quarter (through July 15, 1999)................... ____ ____
</TABLE>
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DIVIDEND POLICY
We currently anticipate that we will retain all future earnings for use in our
business and do not anticipate that we will pay any cash dividends in the
foreseeable future. The payment of any future dividends will be at the
discretion of our Board of Directors and will depend upon, among other things,
our results of operations, capital requirements, general business conditions,
contractual restrictions on payment of dividends, if any, legal and regulatory
restrictions on the payment of dividends and other factors our Board of
Directors deems relevant. In addition, our line of credit prohibits the payment
of dividends without prior lender approval.
DILUTION
As of March 31, 1999, our net tangible book value was approximately $9.3
million, or $0.85 per share.
After giving effect to the sale of the 481,795 shares of common stock offered by
this prospectus, our pro forma net tangible book value as of March 31, 1999,
would have been approximately $9.0 million, or $0.83 per share. The following
table illustrates this net tangible book value.
<TABLE>
<S> <C>
Net tangible book value per share at March 31, 1999................. $ 0.85
Decrease in pro forma net tangible book value per share, due to the
sale of common stock by stockholders................................ $ (0.02)
------
Pro forma net tangible book value per share at March 31, 1999....... $ 0.83
======
</TABLE>
As of March 31, 1999, we have outstanding options to acquire a total of
2,184,192 shares of common stock at exercise prices ranging from $0.67 to $10.00
per share, and a weighted average exercise price of $4.66 per share. The
exercise of a material number of these options would have the effect of
increasing the pro forma net tangible book value dilution per share to new
investors.
PLAN OF DISTRIBUTION
Our common stock may be sold by the selling stockholders, from time to time
while the Registration Statement to which this prospectus relates is effective,
on the Nasdaq National Market or otherwise at prices and terms prevailing at the
time of sale, at prices and terms related to such prevailing prices and terms,
in negotiated transactions or at fixed prices. Although the selling
stockholders have advised us of the manner in which they currently intend to
sell the shares of our common stock, the selling stockholders may choose to sell
all or a portion of such shares from time to time in any manner described in
this prospectus. The methods by which the selling stockholders may sell their
shares of our common stock include, without limitation:
. ordinary brokerage transactions, which may include long or short sales;
. transactions involving crosses or block trades or any other transactions
permitted by the Nasdaq National Market;
. purchases by a broker or dealer as principal and resale by such broker or
dealer for its account pursuant to this prospectus;
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<PAGE>
. "at the market" to or through market makers or into an existing market for
the common stock;
. other ways not involving market makers or established trading markets,
including direct sales to purchasers or sales effected through agents;
. through transactions in options, swaps or other derivatives, whether
exchange-listed or otherwise; or
. any combination of any such methods or sale.
In effecting sales, brokers and dealers that the selling stockholders engage
may arrange for other brokers or dealers to participate. Brokers or dealers may
receive commissions or discounts from the selling stockholders to sell a
specified number of shares at a stipulated price per share, and, to the extent
such a broker or dealer is unable to do so acting as agent for the selling
stockholders, may purchase as principal any unsold shares at the price required
to fulfill such broker or dealer commitment to the selling stockholders.
Brokers or dealers who acquire shares as principals may thereafter resell such
shares from time to time in transactions, which may involve crosses and block
transactions, and which may involve sales through other brokers or dealers,
including transactions of the nature described above, in the over-the-counter
market, in negotiated transactions or otherwise, at market prices and terms
prevailing at the time of sale, at prices and terms related to such prevailing
prices and terms, in negotiated transactions or at fixed prices and in
connection with the methods as described above. The selling stockholders may
sell their shares of our common stock direct or by pledgees, donees, tranferees
or other successors in interest.
We will maintain the effectiveness of the registration of our common stock
offered by this prospectus until May 26, 2000, two years from the effective date
of our initial public offering or the date on which the shares offered by this
prospectus, in the opinion of counsel, may be sold by the selling stockholders
pursuant to Rule 144 of the Securities Act of 1933, without regard to volume
limitations. Any shares which qualify for sale pursuant to Rule 144 under the
Securities Act of 1933 may be sold under that Rule rather than pursuant to this
prospectus. There can be no assurance that the selling stockholders will sell
any or all of the shares offered hereby.
We are bearing all the costs relating to registering the shares of our common
stock offered by this prospectus, including attorneys' fees. Any commissions,
discounts or other fees payable to a broker, dealer, underwriter, agent or
market maker in connection with the sale of any of the shares of our common
stock will be borne by the selling stockholders.
In the Acquisition Agreement dated February 5, 1998, we have agreed to indemnify
Tech Ventures, a selling stockholder, any person who controls Tech Ventures and
any underwriters for Tech Ventures, against certain liabilities and expenses
arising out of, or based upon, the information set forth in this prospectus, and
the Registration Statement of which this prospectus is a part, including
liabilities under the Securities Act of 1933, and if a court holds such
indemnification to be unavailable, to contribute to the amount of such
liabilities and expenses.
-23-
<PAGE>
The selling stockholders and any brokers participating in such sales may be
deemed to be underwriters within the meaning of Section 2(11) of the Securities
Act of 1933. Any commissions paid or any discounts or concessions allowed to
any broker, dealer, underwriter, agent or market maker and, if any such broker,
dealer, underwriter, agent or market maker purchases any of the shares as
principal, any profits received on the resale of such shares, may be deemed to
be underwriting commissions or discounts under the Securities Act of 1933.
Because the selling stockholders may be deemed to be underwriters, they may be
subject to prospectus delivery requirements under the Securities Act of 1933.
Furthermore, in the event the selling stockholders are deemed underwriters and a
sale of shares is deemed to be a "distribution" or part of a distribution of the
shares, the selling stockholders, any selling broker or dealer and any
"affiliated purchasers" may be subject to Regulation M under the Securities
Exchange Act of 1934, which prohibits, with certain exceptions, any such person
from bidding for or purchasing any security which is the subject of such
distribution until his participation in that distribution is completed. In
addition, Regulation M prohibits, with certain exceptions, any "stabilizing bid"
or "stabilizing purchase" for the purpose of pegging, fixing or stabilizing the
price of common stock in connection with this offering.
-24-
<PAGE>
EXPERTS
The consolidated financial statements and schedule as of December 31, 1998 and
1997, and for each of the three years in the period ended December 31, 1998,
incorporated by reference in this prospectus and elsewhere in this registration
statement have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto and are included
herein in reliance upon the authority of such firm as experts in giving said
reports.
LEGAL MATTERS
Womble Carlyle Sandridge & Rice, PLLC, Atlanta, Georgia, will pass on certain
legal matters.
INDEMNIFICATION
Our Restated Bylaws and our Restated Certificate of Incorporation provide that
our directors and officers shall be indemnified by us to the fullest extent
authorized by Delaware law, as it now exists or may in the future be amended,
against all expenses and liabilities reasonably incurred in connection with
service for or on behalf of us. Insofar as indemnification for liabilities
arising under the Securities Act of 1933, as amended, may be permitted to our
directors, officers and controlling persons pursuant to our Restated Bylaws, in
the opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act of 1933 and is,
therefore, unenforceable. We have obtained insurance which insures our
directors and officers against certain losses and which insures us against
certain of our obligations to indemnify our officers and directors. In
addition, our Restated Certificate of Incorporation provides that our directors
will not be personally liable for monetary damages to us for breaches of their
fiduciary duty as directors unless they violated their duty of loyalty to us or
our stockholders, acted in bad faith, knowingly or intentionally violated the
law, authorized illegal dividends or redemptions or derived an improper personal
benefit from their actions as directors. Such limitations of personal liability
under the Delaware Business Corporation law do not apply to liabilities arising
out of certain violations of the federal securities laws. While non-monetary
relief such as injunctive relief, specific performance and other equitable
remedies may be available to us, such relief may be difficult to obtain or, if
obtained, may not adequately compensate us for our damages.
There is no pending litigation or proceeding involving any of our directors,
officers, employees or agents where indemnification by us will be required or
permitted. We are not aware of any threatened litigation or proceeding that
might result in a claim for such indemnification.
-25-
<PAGE>
================================================================================
No dealer, salesperson, or other person has been authorized to give any
information or to make any representations not contained in this prospectus. If
any such information is given or any such representations are made, they must
not be relied upon as having been authorized by us or the selling stockholders.
This prospectus does not constitute an offer to sell, or a solicitation of an
offer to buy any of the shares of our common stock offered hereby, to any person
in any jurisdiction in which such offer or solicitation is unlawful. Neither the
delivery of this prospectus nor any sale made hereunder shall, under any
circumstances, create any implication that the information herein is correct as
of any time subsequent to the date hereof or that there has been no change in
our affairs since such date.
___________
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Where You Can Find More Information........................................ i
Incorporation By Reference................................................. i
Summary.................................................................... 1
Risk Factors............................................................... 5
Use of Proceeds............................................................ 18
Selling Stockholders....................................................... 18
Market Prices.............................................................. 21
Dividend Policy............................................................ 21
Dilution................................................................... 21
Plan of Distribution....................................................... 23
Experts.................................................................... 26
Legal Matters.............................................................. 26
Indemnification............................................................ 26
</TABLE>
480,790 Shares of Common Stock
[LOGO]
__________
PROSPECTUS
__________
July ___, 1999
<PAGE>
PART II
Item 13. Other Expenses of Issuance and Distribution
<TABLE>
<S> <C>
Securities and Exchange Commission registration fee............................................ $ 13,440
National Association of Securities Dealers, Inc. fee........................................... 5,275
Nasdaq National Market listing fee............................................................. 75,625
Accountants' fees and expenses................................................................. 410,000
Underwriting Fees and Commissions.............................................................. 1,750,000
Legal fees and expenses........................................................................ 430,000
Blue Sky fees and expenses..................................................................... 10,000
Transfer Agent's fees and expenses............................................................. 20,000
Printing and engraving expenses................................................................ 300,000
Miscellaneous.................................................................................. 135,660
----------
TOTAL EXPENSES $3,050,000
==========
</TABLE>
_____________
All fees other than the SEC registration fee, the NASD fee and the Nasdaq
listing fee are estimated.
None of the expenses of issuance and distribution will be borne by the
selling stockholders.
Item 14. Indemnification of Directors and Officers
Our Restated Bylaws (the "Restated Bylaws") and our Restated Certificate of
Incorporation (the "Restated Certificate") provide that we shall indemnify the
directors and officers to the fullest extent authorized by Delaware law, as it
now exists or may in the future be amended, against all expenses and liabilities
reasonably incurred in connection with service for or on behalf of us. Insofar
as indemnification for liabilities arising under the Securities Act of 1933, as
amended (the "Securities Act"), may be permitted to our directors, officers and
controlling persons pursuant to the Restated Bylaws, in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act and is, therefore, unenforceable. We
have obtained insurance which insures our directors and officers against certain
losses and which insures us against certain of our obligations to indemnify such
directors and officers. In addition, our Restated Certificate provides that our
directors will not be personally liable for monetary damages to us for breaches
of their fiduciary duty as directors, unless they violated their duty of loyalty
to us or our stockholders, acted in bad faith, knowingly or intentionally
violated the law, authorized illegal dividends or redemptions or derived an
improper personal benefit from their action as directors. Such limitations of
personal liability under the Delaware Business Corporation Law do not apply to
liabilities arising out of certain violations of the federal securities laws.
While non-monetary relief such as injunctive relief, specific performance and
other equitable remedies may be available to us, such relief may be difficult to
obtain or, if obtained, may not adequately compensate us for our damages.
II-1
<PAGE>
There is no pending litigation or proceeding involving any of our
directors, officers, employees or agents where indemnification by us will be
required or permitted. We are not aware of any threatened litigation or
proceeding that might result in a claim for such indemnification.
Item 15. Recent Sales of Unregistered Securities
During the past three years, we have issued the securities set forth below
which were not registered under the Securities Act. The number of shares and
purchase price have been restated to reflect a three-for-two stock split on
February 19, 1998.
(i) On September 26, 1997, we issued 943,213 shares of Series F
Preferred Stock for $6.40 per share. Of the 943,213 shares of Series F Preferred
Stock, Spitfire Capital Partners, L.P., an affiliate of NationsBanc Montgomery
Securities LLC, acquired 312,501 shares of Series F Preferred Stock for $6.40
per share.
(ii) On September 26, 1997, we issued warrants to purchase 70,231 shares
of Series F Preferred Stock for $6.40 per share to certain stockholders in
connection with loans made to us.
(iii) On February 5, 1998, we issued 225,000 shares of common stock and a
warrant to purchase 300,000 shares of Common Stock at an exercise price of $3.67
per share, to Technology Ventures LLC in exchange for its 20% interest in SQL
Financials Services, LLC.
(iv) On February 9, 15, 17, 18 and 19, 1998, we issued 26,316 shares of
Series D Preferred Stock to certain existing stockholders upon the exercise of
existing warrants, at a price of $5.70 per share.
(v) Since November 30, 1995, we have issued stock options to purchase an
aggregate of 1,635,946 shares of our common stock under the 1992 Stock Option
Plan at prices ranging from $0.66 to $10.00 per share.
Except as described above, no underwriters were engaged in connection with
any of the foregoing issuances of securities. The sale and issuance of shares
listed above were exempt from registration under the Securities Act by virtue of
Sections 3(a), 3(b) and 4(a) of the Securities Act and in reliance on Rule 701
and Regulation D promulgated thereunder.
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibits. The following is a list of exhibits filed as part of the
Registration Statement.
II-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit Description
No.
<S> <C>
2.1* Acquisition Agreement between the Registrant and Technology Ventures, LLC dated February 5,
1998.
2.2* Non-Negotiable Subordinated Promissory Note to Technology Ventures, LLC dated February 5,
1998.
2.3* Warrant for purchase of 200,000 shares issued to Technology Ventures, LLC dated February 5,
1998.
3.1* Amended and Restated Certificate of Incorporation of the Registrant.
3.2* Amended and Restated Bylaws of the Registrant.
4.1* See Exhibits 3.1 and 3.2 for provisions of the Amended and Restated Certificate of
Incorporation and Amended and Restated Bylaws of the Registrant defining rights of the
holders of Common Stock of the Registrant.
4.2 Specimen Stock Certificate. (Incorporated by Reference from Exhibit 9.1 to Registrant's
Registration Statement on Form S-4 (File No. 333-63535)).
5.1* Opinion of Womble Carlyle Sandridge & Rice, PLLC, as to the legality of the shares being
registered.
21.1 List of Subsidiaries.
23.1 Consent of Arthur Andersen LLP.
23.2* Consent of Womble Carlyle Sandridge & Rice, PLLC (included in Exhibit 5.1).
24.1 Powers of Attorney (included on signature page).
99.1 Report of Independent Public Accountants on Financial Statement Schedule (Incorporated by
Reference from Exhibit 99.1 of the Form 10-K for the fiscal year ended December 31, 1998).
</TABLE>
(b) Financial Statement Schedule
(i) Schedule II-Valuation and Qualifying Accounts (Incorporation by
Reference from Schedule II of the Company's Form 10-K for the fiscal year ended
December 31, 1998).
- --------------
* Previously filed in connection with this Registration Statement.
Item 17. Undertakings
(a) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to our directors, officers and controlling persons pursuant
to the foregoing provisions or otherwise, we have been advised that, in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by us of expenses incurred or paid by a
director, officer or controlling person of us in the successful defense of any
action, suit or proceeding) is asserted by such director, officer or controlling
person in connection with the securities being
II-3
<PAGE>
registered, we will, unless in the opinion of its counsel the matter has been
settled by controlling precedent, submit to a court of appropriate jurisdiction
the question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
(b) We hereby undertake that:
(i) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in the
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of the
Registration Statement as of the time it was declared effective.
(ii) For purposes of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(c) The Registrant hereby further undertakes:
(i) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(1) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
(2) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most
recent post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in
the aggregate, the changes in volume and price represent no more than
a 20% change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration
statement.
(3) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement.
II-4
<PAGE>
(ii) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
II-5
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act, the Registrant has duly
caused this Post-Effective Amendment No. 3 to Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Suwanee, State of Georgia on the 9th day of July, 1999.
CLARUS CORPORATION
By: /s/ Stephen P. Jeffery
---------------------------------------
Stephen P. Jeffery,
Chairman, Chief Executive Officer
and President
Pursuant to the requirements of the Securities, this Registration Statement
has been signed by the following persons in the capacities and on the dates
indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------- ----------------------------------------- ----------------------------
<S> <C> <C>
/s/ Stephen P. Jeffrey Chairman, Chief Executive Officer July 9, 1999
- ------------------------------------------------- (Principal Executive Officer); President
Stephen P. Jeffery and Director
/s/ William A. Fielder, III Chief Financial Officer (Principal July 9, 1999
- ------------------------------------------------- Financial and Accounting Officer)
William A. Fielder, III
/s/ William S. Kaiser Director July 9, 1999
- -------------------------------------------------
William S. Kaiser
/s/ Donald L. House Director July 9, 1999
- -------------------------------------------------
Donald L. House
/s/ Tench Coxe Director July 9, 1999
- -------------------------------------------------
Tench Coxe
/s/ Said Mohammadioun Director July 9, 1999
- -------------------------------------------------
Said Mohammadioun
/s/ Mark A. Johnson Director July 9, 1999
- -------------------------------------------------
Mark A. Johnson
/s/ Norman N. Behar Director July 9, 1999
- -------------------------------------------------
Norman N. Behar
/s/ Stephen P. Jeffery
- -------------------------------------------------
* By Stephen P. Jeffery, attorney-in-fact
</TABLE>
<PAGE>
EXHIBIT 21.1
The subsidiaries of the Clarus Corporation are:
SQL Financials Europe, Inc., Delaware corporation
Clarus CSA, Inc., a Delaware corporation
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation by
reference in this registration statement of our reports dated January 29, 1999
included in Clarus Corporation and Subsidiaries' (formerly SQL Financials
International, Inc.) Form 10-K for the year ended December 31, 1998 and to all
references to our Firm included in this registration statement.
ARTHUR ANDERSEN LLP
Atlanta, Georgia
July 2, 1999
