UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT,
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (Date of Earliest Event Reported):
January 13, 2005
clickNsettle.com, Inc.
(Exact Name of Registrant as Specified in Charter)
Delaware 0-21419 25-2753988
(State or Other Jurisdiction (Commission File Number) (I.R.S. Employer
of Incorporation) Identification No.)
1010 Northern Boulevard
Great Neck, New York 11021
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (516) 829-4343
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2 below):
|_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act (17 CFR 240.13e-4(c))
1
Index to Current Report on Form 8-K
of clickNsettle.com, Inc.
January 13, 2005
Item Page
---- ----
Item 2.01 Completion of Disposition of Assets 3
Item 5.02 Departure of Directors 3
Item 9.01 Pro Forma Financial Information 3
Signatures 10
2
Item 2.01 Completion of Disposition of Assets
On January 13, 2005, clickNsettle.com, Inc. (the "Company") completed the sale
of its dispute resolution business (the "Sale") to National Arbitration &
Mediation, Inc., a company affiliated with its Chief Executive Officer, Roy
Israel, pursuant to which the buyer acquired the assets and assumed all of the
current and future liabilities and obligations of the Company's dispute
resolution business. Such transaction occurred after the Company conducted its
annual shareholders' meeting, whereby the shareholders approved the transaction.
Currently, the Company is actively searching for a new operating business to
acquire. At this time, the Company has no operating business and has not entered
into any agreement for a business acquisition. There can be no assurance that it
will find a suitable business.
Item 5.02 Departure of Directors
On January 13, 2005, after the sale of the Company's alternative dispute
resolution business, the Board decided that it would be prudent to reduce the
size of the board from seven to five as the Company no longer had an operating
business. Concurrent with that decision, two directors who also function as
hearing officers for the alternative dispute resolution business, resigned from
the Board, effective that day. The resigning directors were as follows: Hon.
Anthony J. Mercorella, Director and Chairperson of the Compensation Committee,
and Hon. Robert M. Silverson, Jr., Director and member of the Audit Committee
and Compensation Committee. As a result of the smaller board and the fact that
the Company does not currently have any operations, the Board has suspended the
Audit Committee and Compensation Committee and the entire Board will take over
such functions. Director Kenneth Geraghty will continue to serve as the audit
committee financial expert.
Item 9.01 Pro Forma Financial Information
The following unaudited pro forma condensed consolidated financial information
of the Company is based on and should be read in conjunction with the historical
financial statements and notes thereto appearing in the Company's Annual Report
on Form 10-KSB for the fiscal year ended June 30, 2004 and the unaudited
consolidated financial statements filed in the Company's Quarterly Report on
Form 10-QSB for the quarter ended September 30, 2004. The Pro Forma Condensed
Consolidated Balance Sheet as of September 30, 2004 reflects the financial
position of the Company after giving effect to the Sale and assumes that such
transaction was consummated as of September 30, 2004. The Pro Forma Condensed
Consolidated Statements of Operations for the quarter ended September 30, 2004
and the years ended June 30, 2004 and June 30, 2003 present the operating
results of the Company assuming the existing operations of the Company have been
sold and include estimated ongoing results of the Company thereafter as a
company with no operations. The pro forma statements of operations do not
include non-recurring items representing the costs of the transaction and the
estimated loss on the transaction. Such amounts are reflected in the pro forma
balance sheet in the stockholders' equity line.
In the opinion of Management, the accompanying pro forma condensed consolidated
financial information includes all material adjustments necessary to reflect, on
a pro forma basis, the impact of the transaction on the historical financial
information of the Company. The adjustments are described in the notes to the
unaudited pro forma condensed consolidated financial statements and are set
forth in the "Pro Forma Adjustments" column. The condensed consolidated pro
forma statements of operations presented do not include non-recurring items
directly related to the transaction. The table presented in the footnotes
summarizes the effect of such items upon the closing of the transaction. The
condensed consolidated pro forma statements of operations for the three months
ended September 30, 2004 and for the years ended June 30, 2004 and 2003 do not
include the loss on the transaction.
The unaudited pro forma condensed consolidated financial information have been
presented for illustrative purposes only and are not necessarily indicative of
the future financial position or future results of operations of the Company, or
of the financial position or results of operations of the Company that would
have actually occurred had the transaction been in effect as of the date or the
periods presented.
3
clickNsettle.com, Inc. and Subsidiaries
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
September 30, 2004
(unaudited)
Pro Forma Adjustments
---------------------
As Effects of the Pro
Reported Transaction (1) Other (2) Forma (3)
----------------------------------------------------------
ASSETS
CURRENT ASSETS
Cash and cash equivalents and certificates of deposit $ 1,166,818 (869,108) (99,497) $ 198,213
Accounts receivable, net 275,406 (275,406) --
Prepaid expenses and other current assets, net 45,350 (23,350) 22,000
----------------------------------------------------------
Total current assets 1,487,574 (1,167,864) (99,497) 220,213
FURNITURE AND EQUIPMENT, net -- --
OTHER ASSETS 49,726 (49,726) --
----------------------------------------------------------
$ 1,537,300 $ (1,217,590) $ (99,497) $ 220,213
==========================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable $ 197,495 $ (178,591) $ (18,904) $ --
Accrued expenses and other liabilities 286,123 (264,873) (80,593)
59,343 --
Accrued payroll and employee benefits 88,523 (88,523) --
Deferred revenues 233,478 (233,478) --
----------------------------------------------------------
Total current liabilities 805,619 (765,465) (40,154) --
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock - $.001 par value; 25,000,000 shares authorized;
8,701,554 shares issued and outstanding 8,702 8,702
Additional paid-in capital 10,104,325 10,104,325
Accumulated deficit (9,297,428) (452,125) (59,343) (9,808,896)
Less common stock in treasury at cost, 252,498 shares (83,918) (83,918)
----------------------------------------------------------
Total stockholders' equity 731,681 (452,125) (59,343) 220,213
----------------------------------------------------------
$ 1,537,300 $ (1,217,590) $ (99,497) $ 220,213
==========================================================
See accompanying Notes to Pro Forma Condensed Financial Information.
4
clickNsettle.com, Inc. and Subsidiaries
NOTES TO PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
(unaudited)
(1) The pro forma balance sheet reflects the financial position of the Company
after giving effect to the sale of principally all the Company's assets
and liabilities and assumes that such transaction was consummated as of
September 30, 2004. As such, the Company would recognize a financial
reporting loss equal to the excess of assets sold (excluding assets
remaining with the Company) over the recorded liabilities assumed by the
Buyer and other adjustments as follows:
Book value of liabilities assumed $ 765,465
Consideration by Buyer in providing future mgt services 17,000
Book value of assets sold (1,234,590)
-----------
Book loss on the transaction $ (452,125)
===========
Such loss is reflected in stockholders' equity in the column "Effects of
the Transaction" on the accompanying pro forma balance sheet.
The cash that is to remain in the Company after the Transaction is to
increase to the extent of 60% of the excess of the Remaining Net Capital
before Commitments over $380,462 as of the closing date. The Remaining Net
Capital Before Commitments is calculated as the fair market value of the
assets purchased less the following: (a) recorded liabilities assumed; (b)
commitment for unused advertising in the amount of $75,854 and (c)
$170,497 (that is, $200,000 in cash to remain with the Company less
payments of $29,503 already made through September 30, 2004 for certain of
the transaction costs. As of September 30, 2004, the Remaining Net Capital
Before Commitments would have been $592,484. Therefore, $212,022
represents the amount in excess of $380,462; 60% of which, or $127,213 is
additional cash to remain in the Company. Therefore, total remaining cash
in the Company would be $297,710 before unpaid transaction costs and taxes
of $99,497 (see 2 below).
(2) The Company estimates that $129,000 will be incurred for expenses related
to the transaction (which will include the costs of legal, accounting, tax
advice, the fairness opinion and the printing and mailing of proxy
statements) and for taxes as follows:
Estimated legal, accounting and tax advice $ 70,000
Cost of fairness opinion 42,500
Estimated cost of printing and mailing 6,000
--------
Subtotal $118,500
Estimated taxes on transaction 10,500
--------
Total net non-recurring expenses $129,000
Of such total, $69,657 has already been recorded in the historical
September 30, 2004 financial statements. Therefore, an additional $59,343
of accrued expenses are recorded on the accompanying pro forma balance
sheet. Such amount is reflected in stockholders' equity in the column
"Other" on the accompanying pro forma balance sheet. Also, as of September
30, 2004, $29,503 of the total estimated transaction costs and taxes have
already been paid, leaving an outstanding balance due of $99,497 as of
September 30, 2004.
(3) The pro forma balance sheet after the transaction reflects the payment of
the remaining balance of $99,497 of non-recurring expenses and taxes
relating to the transaction. After the transaction, the pro forma balance
sheet contains only cash and a prepaid balance for insurance, management
services to be provided by the Buyer and taxes relating to the
transaction.
5
clickNsettle.com, Inc. and Subsidiaries
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the three months ended September 30, 2004
(unaudited)
Pro Forma Adjustments
---------------------
As Effects of the Pro
Reported Transaction (1) Other (2) Forma
-------------------------------------------------------
Net revenues $ 770,394 $ (770,394) $ --
-------------------------------------------------------
Operating costs and expenses
Cost of services 166,736 (166,736) --
Sales and marketing expenses 253,597 (253,597) --
General and administrative expenses 508,964 (508,964) 40,000 40,000
Loss on impairment of furniture and equipment 1,066 (1,066) --
Reorganization costs 69,657 (69,657) --
-------------------------------------------------------
1,000,020 (1,000,020) 40,000 40,000
-------------------------------------------------------
Loss from operations (229,626) 229,626 (40,000) (40,000)
Other income
Investment income 48,636 (48,636) --
Other income 513 (513) --
-------------------------------------------------------
49,149 (49,149) -- --
-------------------------------------------------------
Loss before income taxes (180,477) 180,477 (40,000) (40,000)
Income taxes -- -- -- --
-------------------------------------------------------
NET LOSS $ (180,477) 180,477 (40,000) $ (40,000)
=======================================================
Net loss per common share - basic and diluted $ (0.02) 0.02 $ (0.00)
=======================================================
Weighted-average shares outstanding - basic and diluted 8,449,056 8,449,056 8,449,056
=======================================================
See accompanying Notes to Pro Forma Condensed Financial Information.
6
clickNsettle.com, Inc. and Subsidiaries
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year ended June 30, 2004
(unaudited)
Pro Forma Adjustments
---------------------
As Effects of the Pro
Reported Transaction (1) Other (2) Forma
-------------------------------------------------------
Net revenues $ 3,759,372 $(3,759,372) $ --
-------------------------------------------------------
Operating costs and expenses
Cost of services 860,325 (860,325) --
Sales and marketing expenses 1,278,207 (1,278,207) --
General and administrative expenses 2,314,803 (2,314,803) 160,000 160,000
Loss on impairment of furniture and equipment 85,721 (85,721) --
-------------------------------------------------------
4,539,056 (4,539,056) 160,000 160,000
-------------------------------------------------------
Loss from operations (779,684) 779,684 (160,000) (160,000)
Other income
Investment income 54,298 (54,298) --
Other income 2,682 (2,682) --
-------------------------------------------------------
56,980 (56,980) -- --
-------------------------------------------------------
Loss before income taxes (722,704) 722,704 (160,000) (160,000)
Income taxes -- -- -- --
-------------------------------------------------------
NET LOSS $ (722,704) 722,704 (160,000) $ (160,000)
=======================================================
Net loss per common share - basic and diluted $ (0.09) 0.09 $ (0.02)
=======================================================
Weighted-average shares outstanding - basic and diluted 8,449,056 8,449,056 8,449,056
=======================================================
See accompanying Notes to Pro Forma Condensed Financial Information.
7
clickNsettle.com, Inc. and Subsidiaries
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
For the Year ended June 30, 2003
(unaudited)
Pro Forma Adjustments
---------------------
As Effects of the Pro
Reported Transaction (1) Other (2) Forma
-------------------------------------------------------
Net revenues $ 4,078,119 $(4,078,119) $ --
-------------------------------------------------------
Operating costs and expenses
Cost of services 1,006,562 (1,006,562) --
Sales and marketing expenses 1,137,489 (1,137,489) 160,000 160,000
General and administrative expenses 2,437,805 (2,437,805) --
-------------------------------------------------------
4,581,856 (4,581,856) 160,000 160,000
-------------------------------------------------------
Loss from operations (503,737) 503,737 (160,000) (160,000)
Other income
Investment income 13,448 (13,448) --
Other income 10,778 (10,778) --
-------------------------------------------------------
24,226 (24,226) -- --
-------------------------------------------------------
Loss before income taxes (479,511) 479,511 (160,000) (160,000)
Income taxes -- -- -- --
-------------------------------------------------------
NET LOSS $ (479,511) 479,511 (160,000) $ (160,000)
=======================================================
Net loss per common share - basic and diluted $ (0.06) 0.06 $ (0.02)
=======================================================
Weighted-average shares outstanding - basic and diluted 8,449,056 8,449,056 8,449,056
=======================================================
See accompanying Notes to Pro Forma Condensed Financial Information.
8
clickNsettle.com, Inc. and Subsidiaries
NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENTS OF OPERATION
(unaudited)
(1) The effect of the transaction would be to sell all the existing operations
of the Company.
(2) Estimated ongoing costs for continued reporting obligations of the Company
after the transaction:
Estimated legal, accounting, tax and printing expenses for SEC filings $ 72,000
Estimated cost of insurance 60,000
Estimated management fee expense 17,000
Estimated directors fees and transfer agent fees 11,000
--------
Total recurring operating expenses for full year $160,000
--------
Total recurring operating expenses for three months $ 40,000
Although an operating loss would normally result in the Company booking a
tax benefit, at this point in time, the Company cannot predict if, in
fact, it will ever be able to actually apply those benefits to future
earnings. Due to this uncertainty, the Company has not recorded a tax
benefit for projected losses as part of this pro forma.
9
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report on Form 8-K to be signed on its behalf by
the undersigned, hereunto duly authorized.
clickNsettle.com, Inc.
By: /s/ Roy Israel
Name: Roy Israel
Title: Chief Executive Officer and President
By: /s/ Patricia Giuliani-Rheaume
Name: Patricia Giuliani-Rheaume
Title: Chief Financial Officer and Vice President
Date: January 19, 2005
10