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): April 8, 2002
ClearOne Communications, Inc.
----------------------------
(Exact Name of Registrant as Specified in its Charter)
UTAH 0-17219 87-0398877
----------------------------- --------------- ----------------------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification Number)
1825 Research Way, Salt Lake City, Utah 84119
---------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
(801) 975-7200
---------------
(Registrant's Telephone Number, Including Area Code)
----------------------------------
(Former Name or Former Address, if Changed Since Last Report)
Item 5. Other Events.
Amendment to Share Purchase Agreement between Registrant and the Former
Shareholders of Ivron Systems, Ltd.
ClearOne Communications, Inc. has entered into an amendment to the
original Share Purchase Agreement between ClearOne and the shareholders of Ivron
Systems, Ltd. Under the original agreement, on October 3, 2001, ClearOne,
through its wholly owned subsidiary, Gentner Ventures, Inc., purchased all of
the issued and outstanding shares of Ivron Systems. Under the original Share
Purchase Agreement, the shareholders of Ivron received approximately
US$6,000,000 at closing of the purchase. Further, under that agreement, after
June 30, 2002, each former Ivron shareholder would be entitled to receive
approximately .08 shares of ClearOne's common shares for each Ivron share
previously held by such shareholder, provided that certain video product
development contingencies were achieved. That represented approximately 429,000
shares of ClearOne's common stock. Thereafter, for ClearOne's completed fiscal
years 2003 and 2004, the former Ivron shareholders would be entitled to share in
up to approximately US$17,000,000 of additional cash and stock consideration
provided that certain agreed upon earnings per share targets for ClearOne were
achieved. As part of the purchase, all outstanding options to purchase Ivron
shares were cancelled in consideration for an aggregate cash payment of
US$650,000, allocated among the optionees on the basis of the number of options
originally held by each such optionee. In addition, former optionees of Ivron
who remain with Ivron are eligible to participate in a cash bonus program paid
by Ivron, but based on the combined performance of ClearOne and Ivron in fiscal
years 2003 and 2004. The maximum amount payable under this bonus program is up
to approximately US$1,000,000.
On March 26, 2002, ClearOne entered into negotiations with the former
shareholders of Ivron Systems to modify the terms of the original purchase
agreement because, upon further analysis, certain aspects of the acquired
technology may not meet the intended product objectives established by ClearOne
in its original purchase negotiations. Originally, ClearOne expected to develop
a full line of videoconferencing products, including an installed video codec
product, based on the Ivron Systems V-There(TM) technology platform. Given the
results of its analysis, ClearOne has now identified an opportunity to
collaborate in the development of a video codec, based on other
readily-available technology, specifically designed for the high-end, installed
videoconferencing market, that combines faster frames-per-second, built-in
multipoint conferencing, and ClearOne's high-quality audio. The negotiations
were based on the results of an analysis by ClearOne that although the Ivron
platform is well-suited for the lower- to mid-priced videoconferencing products,
it is not as well-suited for an installed video codec product. These
negotiations resulted in an amendment to the original October 3, 2001 purchase
agreement. A copy of the amendment, which was effective April 8, 2002, is
attached to this form 8-K as exhibit 2.4.
The amendment eliminates the earn-out that the Ivron shareholders would
have been entitled to receive after June 30, 2002 for approximately 429,000
shares and the $17 million earn-out in subsequent years. Instead, upon meeting
certain gross profit targets for the "V-There", "Vu-Link" set top
videoconferencing products, technologies, and variants and sub-elements thereof
(including licensed products), the former Ivron Shareholders may share in an
earn-out of up to 109,000 shares of common stock of ClearOne, issuable in four
installments, on a quarterly basis, through July 15, 2003. Therefore, with the
amendment, the total purchase price will now include the original $6.7 million
in cash paid in October of 2001, the revised earn-out of up to 109,000 shares,
and the original bonus to be paid in 2003 and 2004 of up to $1 million for the
former option holders of Ivron.
ClearOne currently anticipates that the Dublin, Ireland operations
acquired in the Ivron transaction will continue, although it is expected that
existing research and development efforts and personnel there will be reduced to
focus primarily on the development and enhancement of the V-ThereTM products and
not on the installed video codec element.
Item 7. Financial Statements and Exhibits
(c)
Exhibits
Exhibit No. Description
----------- -----------
2.4 First Amendment to Share Purchase Agreement among ClearOne
Communications Inc., and the former shareholders of Ivron
Systems, Ltd., dated April 8, 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
theRegistrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CLEARONE COMMUNICATIONS, INC.
(The Registrant)
By: /s/Randall J. Wichinski
-----------------------------------------
Its: Chief Financial Officer
EXHIBIT INDEX
Exhibit
No. Description
------- -----------
2.4 First Amendment to Share Purchase Agreement among ClearOne
Communications Inc., and the former shareholders of Ivron Systems,
Ltd., dated April 8, 2002