Ideal Market Environment for Clarus Corporation

Current market conditions have enhanced Clarus Corp.’s (CLRS.PK) assets for a future combination. Clarus Corp. is a shell company with no current operating business but instead has about 86 million in cash or $4.95 per share and 223 million in NOLs. 90% of the NOLs expire 2020 or latter. The current stock price is only $4.06!

CLRS.PK is seeking to acquire a business in any industry and is being managed by the highly successful CEO Warren Kanders. Kanders has a successful track record most notably with AH (NYSE) Armor Holdings. Armor Holdings (AH) posted a ~30% compounded growth rate after he took over.

The first conference call for CLRS.PK was this past Tuesday 03/03/09.He believed given current market conditions it was important to update shareholders on the company’s status and future activities. The next conference call will only be after a new company is acquired.

Competitions for new deals have been dramatically reduced and valuations have fallen substantially. These conditions are improving opportunities for their projected 2009 asset redeployment. Clarus offers a unique opportunity. The ability to provide fresh capital with 86 million in net cash, 225 million in NOLs, immediate access to a public listing, a quick combination with no shareholder vote, and a proven talented manager with Warren Kanders.

There are many companies that would benefit from a Clarus combination. Some examples would be companies with short term liquidity issues, forced divestiture of corporate assets to generate needed liquidity, public companies selling off non core operating divisions, private entities and other situations. All of these actionable opportunities are increasing.

Clarus has stated a clear vision for the new combination and would include 25 million in EBITDA, long term favorable macro trends, an industry leading management team, a diversified customer and supplier base, predictable recurring revenue stream but would also consider acquiring ideas below the 25 million EBITDA.

I consider CLRS.PK a compelling opportunity with an excellent risk reward ratio or margin of safety.

Disclosure: I have a long position in CLRS.PK

Comments

[Silverfox2:]

How did Clarus preserve it's NOLs when it sold it's software business?

Mar 05 10:55 AM

[John DiStan...:]

I'm not a tax accountant but KPMG LLP, an independent registered public accounting firm, has audited the consolidated financial statements.

Warren Kanders and the CFO of Clarus have done this before.

Good luck
John




On Mar 05 10:55 AM Silverfox2 wrote:

> How did Clarus preserve it's NOLs when it sold it's software business?

Mar 05 07:04 PM

[ebschor:]

Kanders has been talking about this for 7 years now. The guy took over a defunct software company by buying enough shares to get himself on the board, sold off the assets, then "moved" the shell to CT so he could furnish his existing company's office space, pay himself and his cronies from the cash, and mention every year or so that he's looking for investment opportunities. It is about time that he cr4p or get off the pot! There's also an expiration on those NOLs.

John, I think you're writing this article hoping that you get a "pop" in the stock price by getting people to look at an extremely LOW volatility stock trading on the PINK SHEETS. Come on man, pump and dump somewhere else! Seeking Alpha has integrity standards!

Mar 05 08:07 PM

[John DiStan...:]

Hi ebschor

What got me seriously interested in CLRS.PK at this time was the first conference call the other day. He said the call would never occur until a combination took place. But Warren Kanders did sound optimistic in this environment. He discussed many scenarios for a successful combination.

CLRS has a 70 million market cap supported mostly by cash and an average volume of 37,000. Investors that have an interest must wait for a potential combination and the ultimate success of the new firm. I believe Kanders will pull this off and now is the right time as he spoke about this issue for 2009.My intention is to wait at least one year.

Kanders has been aligning his interests with the shareholders.

From 8/5/2008 to 12/30/2008 Warren Kanders purchased 1,001,027 shares in the open market for an average price of $4.46 investing $4,467,208.

Additional shares were purchased before 8/05/08

CLARUS CORP --- Insider Trades

Insider Date Trans Type Form Shares Traded Price Shares Held
KANDERS WARREN B 12/30/2008 B Form 4 300,000 3.75 3,213,977
KANDERS WARREN B 11/26/2008 B Form 4 125,000 4.2 2,913,977
KANDERS WARREN B 11/21/2008 B Form 4 142,027 4.2 2,788,977
KANDERS WARREN B 8/11/2008 B Form 4 309,000 5.105 2,646,950
KANDERS WARREN B 8/5/2008 B Form 4 125,000 5.146 2,337,950
KANDERS WARREN B 11/15/2007 B Form 4 58,500 6.5 2,212,950
EHRLICH BURTT R 8/22/2007 B Form 4 25,000 7 88,000



On Mar 05 08:07 PM ebschor wrote:

> Kanders has been talking about this for 7 years now. The guy took
> over a defunct software company by buying enough shares to get himself
> on the board, sold off the assets, then "moved" the shell to CT so
> he could furnish his existing company's office space, pay himself
> and his cronies from the cash, and mention every year or so that
> he's looking for investment opportunities. It is about time that
> he cr4p or get off the pot! There's also an expiration on those NOLs.
>
>
> John, I think you're writing this article hoping that you get a "pop"
> in the stock price by getting people to look at an extremely LOW
> volatility stock trading on the PINK SHEETS. Come on man, pump and
> dump somewhere else! Seeking Alpha has integrity standards!

Mar 05 10:45 PM

[ebschor:]

He's buying a share of CLRS for less than CLRS has in cash per share. No risk there, expecially since HE controls the cash. This is exactly what he did 7 years ago when he started buying CLRS when it was a software company. The company's pps was below cash per share. He bought enough to take over the board, and did. Then he booted everyone and took the shell to CT to pay for his existing office space. The last thing Kanders wants to do is run another company. Sooner or later (probably much later) he'll just pass the potato to someone else and get a price equal to cash per share (thus his investment is safe). My guess is he'll do that after the NOLs expire.

Don't expect huge gains here. Nobody else is - meaning, if market price efficiently reflects all available information then the market consensus is that Kanders isn't going to do a damn thing with CLRS and the current share holders are just bag holders right now. He doesn't care if he sits on $4.00 per share but I darn well bet you do.

Every few years or so someone gets CLRS to pop up on a screener and he thinks he's found a hidden gem. Read the history on this dog and you'll see you're just putting money into a mattress.

Mar 07 03:12 PM

[ebschor:]

Other reasons I can think of as to why Kanders is buying so many shares:
1) The average volume for the past three months is 38,273 shares. Kanders is buying all the shares. He's the only real buyer. Lots of institutions are selling, he needs to buy the shares to keep an orderly market. CLRS is on the Pink Sheets.

2) The way Kanders took over CLRS in the first place was by buying shares trading at less than cash per share. CLRS is again in that boat. Someone could come along and take CLRS away from him the way he took the company away from the original executives. To prevent this, he is risklessly purchasing shares of the company he controls to thwart any other "raider" from taking his free cash away from him.

Mar 07 06:21 PM