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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

CLICK COMMERCE, INC.
(Exact name of registrant as specified in its charter)

        Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No o

        Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ý

        Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2). Yes o No ý

        As of June 28, 2002, the last business day of the registrant's most recently completed second fiscal quarter, the aggregate market value of the registrant's common stock held by non-affiliates was approximately $13,627,000. The aggregate market value was calculated by using the closing price of the common stock as of that date on the NASDAQ National Market. Shares of common stock held by officers, directors, and 5% or more stockholders have been excluded in making that calculation because such persons may be deemed affiliates. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

        As of March 28, 2003, there were 8,092,786 shares of the registrant's common shares issued and outstanding.

DOCUMENTS INCORPORATED HEREIN BY REFERENCE

        Portions of the registrant's Definitive Proxy Statement for its 2003 Annual Meeting of Shareholders to be held on May 2, 2003 are incorporated by reference in Part III of this report.

CLICK COMMERCE, INC.

INDEX

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PART I

        This report and the documents incorporated herein by reference contain forward-looking statements that involve risks and uncertainties. Actual results may differ significantly from those indicated in such forward-looking statements. Some of the factors that may cause actual results to differ include, but are not limited to, those discussed in "Risk Factors" contained in Item 1 of this report, "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in Item 7 of this report and "Quantitative and Qualitative Disclosures About Market Risk" contained in Item 7a of this report.

Item 1.    Business

General

        We were incorporated in Delaware in August of 1996 under the name Click Interactive, Inc. In December 1999, we changed our name to Click Commerce, Inc. Our principal executive offices are located in Chicago, Illinois. We completed our initial public offering on June 30, 2000 and our common stock is listed on the NASDAQ National Market under the symbol "CKCM." As used herein, Click Commerce includes Click Commerce, Inc. and its wholly owned subsidiaries. Additional information about Click Commerce is available on our website at www.clickcommerce.com. Our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports are available free of charge through our website.

Overview

        We provide business-to-business partner relationship management software products that connect large, global manufacturing companies with their distribution channel partners. Click Commerce software products and supplemental integration services enable manufacturers to effectively manage and engage in collaborative business-to-business interactions throughout their sell-side channels and processes. The software we offer uses the Internet to enable communication between companies and all participants in the network or chain of distribution who have a password and an Internet browser. These partners may include:

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distributors;



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dealers;



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retailers;



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original equipment manufacturers;



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resellers;



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specifiers;



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affiliates;



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service centers and contractors;



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channel partners' employees; and



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channel partners' customers.

        By providing an easy way for distribution channel partners to communicate and transact business, our software products enable companies to strengthen and broaden their relationships with their partners, as well as their customers, through continuous access to information and ability to process transactions.

        Many global companies provide sales, service and after-market support for their goods and services through complex distribution channels. These channels have traditionally been limited by inefficient,

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labor intensive, error-prone communication processes driven by mail, phone and fax. Our software products permit faster and more accurate transaction processing and communication than these traditional methods. Our software products also reduce the hidden costs of errors and delays in information delivery by reducing the need for human involvement. We believe that providing information and transacting business using software applications designed to manage channel relationships can improve the commercial relationships among a company and its distribution channel partners and provide benefits to all participants in the distribution channel by improving efficiency, financial performance, customer service and brand loyalty.

        The Click Commerce solution, comprised of the Partner Portal, fourteen business applications, and the Click Commerce Developer Studio, automates communication and business processes across the distribution channel. The Click Commerce system is personalized to each individual user, accommodating, for example, each user's language, time zone and currency preferences. Companies using our software products can receive and track orders, provide warranty information and provide product and pricing information to their channel partners. Our system is specifically designed to use the Internet and integrates with existing back-office computer systems, without requiring significant additional technology expenditures.

        We currently market our products and integration services through our direct sales force and our joint marketing relationships, primarily to large, global companies that have large distribution networks.

Industry Background

Limitations of Existing Distribution Channel Management Products and Services

        Traditional phone, fax and paper-based communications systems are inherently labor intensive, inefficient and prone to error. Companies must allocate significant resources and time to the manual entry of information from faxed or phoned-in purchase orders and the manual processing of paper checks, invoices and shipping notices. Further, the large volume of paper generated by these transactions and the mass of information to be sorted and processed frequently results in hidden costs such as errors and delays in information delivery. Change is also difficult to implement on a timely basis without incurring significant costs. For example, if a manufacturer produces a paper-based catalog, it cannot quickly or inexpensively inform customers of changes in product offerings, availability or pricing. In addition, the manufacturer and members of its distribution network have limited capability to track orders, inventory, warranties and other information or to compile useful databases using paper-based or semi-automated processes. Using these standard forms of communication, manufacturers and their business partners are unable to exchange information on a real-time basis, and as a result, potential customers do not have easy access to the information needed to transact business with the manufacturer or its channel partners. Manufacturers may also be unable to tap into new revenue streams that exist due to restraints imposed by differences in language and time zone, barriers that traditional methods cannot easily overcome.

        Companies have worked to develop technologies and software to overcome the problems and limitations presented by traditional forms of communication and processes to transact business. Many companies have developed internally or purchased enterprise resource planning software as a means to better manage their businesses. Enterprise resource planning software systems are used for identifying and planning a company's resources needed to fill customer orders. These systems, however, have not traditionally been designed to communicate outside of an enterprise, and therefore do not provide real-time communication with business partners. In addition, enterprise resource planning software systems are expensive and take a significantly long time to implement, typically anywhere from 12 to 24 months depending on the complexity of the system and the size of the company.

        Electronic data interchange ("EDI") attempted to solve the problem of facilitating real-time communication by providing a means for the paperless exchange of documents between a company and

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its customers, such as purchase orders, shipment authorizations, advanced shipment notices and invoices. EDI is inflexible because it is based on pre-defined, fixed data formats that are not easily adjusted. EDI systems also typically require the use of expensive and proprietary communications networks, and specific software that may require difficult and time-consuming point-to-point integration. In addition, EDI is not readily "scalable," or able to run on multiple servers to accommodate a larger number of users, for large numbers of small business partners, and because information is stored and sent at specific time intervals, known as batched processes, it lacks real-time data exchange capability.

        We believe that the system that manufacturers, and businesses in general, require is one that allows them to conduct business through a communications network that integrates all aspects of the distribution channel and takes advantage of existing back-office computer systems. In addition, companies need to be able to easily exchange information and conduct transactions securely, reliably and in real-time. The system must be flexible enough to meet the unique business process requirements of large, multi-national organizations with complex distribution channels and must be highly scalable and rapidly deployable.

Growth Strategy

        Our objective is to offer the most comprehensive business-to-business partner relationship management software products that automate the business processes between large, global companies and their channel partners. Key elements of our strategy to achieve this objective include:

        Targeting Large, Global Enterprises.    We believe, based on the breadth of applications we offer, we have developed the most comprehensive business-to-business software products and integration services currently available for large, global companies. By focusing on the complex needs of these companies, we provide them with significant competitive advantages, such as improved efficiency, financial performance, customer service and brand loyalty, through effectively managing their complex distribution networks. We specifically target divisions of these large companies. Once we have sold to a division, there are numerous opportunities to sell to other divisions within the organization. We believe that this provides us with significant leverage in our sales model. We intend to continue to primarily target large, multi-national corporations.

        Developing Joint Marketing and Business Development Relationships.    We believe that in order to fully take advantage of our capabilities, rapidly increase our revenues and enhance our suite of software applications, we will need to continue to seek to enter into agreements with a number of business consultants and resellers that provide for joint marketing of our products. By entering into these relationships, we intend not only to take advantage of the vertical expertise of these business associates but also to market our products and services to their client base. In addition, we have entered into agreements with technology companies to provide components for our software products and we intend to pursue additional relationships as new technologies and standards emerge to further improve our software and the rapid implementation of our system.

        Providing Value-Added Services to Our Customers.    We plan to introduce new products and service offerings that will deliver additional value to our customers, extending the scope of the applications that are available to them and increasing the depth of certain applications to deliver new capabilities. It is our intent that the results of these new product development initiatives will be attractive to both new and existing customers, strengthening the business case for sales to new customers and providing a stream of revenue through additional sales to current customers.

        Acquiring Complementary Businesses.    The Company continues to evaluate strategic alternatives, including opportunities to grow the business by entering into business combinations

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that will increase the breath and depth of our product offerings. Such combinations would enlarge our customer base, provide additional revenue streams, and leverage our existing infrastructure.

The Click Commerce Solution

        We deliver partner relationship management products and integration services that enable global corporations to create a competitive advantage by collaborating with their trading partners. Our software provides the infrastructure and applications that global enterprises use to extend their organizations to any member of their partner network. Using our products, dealers, distributors, retailers, original equipment manufacturers, resellers, service centers and independent contractors, along with each of their respective employees and all of their customers can engage in collaborative business. Our software products and integration services provide our customers with the following benefits:

        Improved Relationships with Channel Partners and Consumers.    Our software products help global companies build stronger relationships with their partners by making it easier to exchange information and transact business with each other. With our system, companies can effectively maintain a direct relationship with even the smallest of their channel partners. In addition, our system is capable of allowing our customers and their channel partners to make a direct connection with consumers where one might not have previously existed by providing consumers with direct access to the manufacturer. This allows our customers to effectively build brand awareness and brand loyalty and potentially target consumers with ancillary sales such as parts, accessories and financing. We believe that the ease with which channel partners can securely transact business and exchange information quickly translates into a significant competitive advantage for our customers.

        Improved Efficiency and Reduced Operating Cost.    The direct connection with channel partners and the automation of multiple processes afforded by our software products enable our customers to reduce personnel costs in areas such as call centers, regional offices, sales support and administration. Transaction costs are also lowered by the reduced need for manual entry of information from faxed and phoned-in purchase orders and manual processing of paper checks, invoices and shipping notices. In addition, error rates are reduced by the reduction in human involvement. The fact that our customers can communicate and transact business in real-time with their channel partners may also allow them to reduce the time it takes them to fulfill orders and to maintain lower inventories.

        Improved Revenue Opportunities.    Our products and integration services can help companies increase market share by making them more accessible to channel partners, which facilitates follow-on sales. We believe that companies often lose sales to competitors not because of pricing, quality or availability, but due to the fact that it may be more convenient for the channel partner to do business with a competitor. The greater reach and broader access companies have to new and existing customers using our solution also enables them to conduct focused marketing and promotional campaigns, as well as targeted add-on sales, such as repair, maintenance and other value-added services. Because of the closer relationships through improved communications that our software enables, we believe that our customers are able to capture a larger portion of these follow-on sales.

Business-To-Business Collaboration over The Internet

        Our products and integration services allow our customers to create a collaborative environment in which access to information and applications is shared by all members of distribution networks. Using our technology, it is easy for partners and customers to do business through a seamless, real-time information exchange that delivers high value to every participant.

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        Our software allows our customers to:

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Leverage the extensive investments that they have made in back-office systems, such as enterprise resource planning ("ERP"), supply chain planning ("SCP"), and customer relationship management ("CRM"). Our products draw upon the capabilities and information contained within these systems to provide a uniform experience to partners and customers.



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Manage complex channel relationships in order to streamline business processes and speed information flow. Our software provides the technical infrastructure that models and manages the relationships that exist in a partner network. We deliver a customized, personalized experience to our customers based upon the relationships that their businesses have with the rest of their partner network. This ability to handle complex relationships greatly increases the efficiency and effectiveness of each transaction.



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Extend their brands to reach new customers. Our software provides an environment that not only ensures consistent treatment of corporate branding and marketing messages, but also permits controlled distribution of product information to a broad audience of partners, customers and prospects.



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Improve visibility of critical information throughout the channel. Our software provides personalized access to critical business information including inventory levels, pricing schedules, and customer information.



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Deliver new products to market rapidly, lengthening product lifecycles and increasing the return on investment in new product development. Our software allows virtually instantaneous distribution of critical product launch materials, product specifications, configuration guides and pricing to all members of a distribution system, eliminating the weeks and months of delays commonly found in traditional systems.

Products

        Our software can be readily integrated with back-office systems such as ERP systems, SCP systems and CRM systems. In some cases, our customers have requested that the software interoperate with systems at partner businesses, typically ERP or dealer management systems. The open architecture of the Click Commerce products supports this integration. The software uses a modular design that allows rapid configuration of solutions that meet the needs of a wide variety of customers.

        Our software consists of the Partner Portal platform—which includes the Relationship Manager, Portal Framework, and the Commerce Suite—the Click Commerce Developer Studio, and fourteen business applications, which manage the relationships in the partner network and deliver functionality that manages the partner life cycle, and pre-sales, sales and post-sales transactions. These components are:

        Relationship Manager:    As the cornerstone of every installation, the Relationship Manager models and records all of the relevant information about partner relationships, as well as the hundreds of thousands of transactions that are processed through the system. This software ensures that content, interactions and transactions are tailored to conform to the needs and interests of each partner. The Relationship Manager also allows our customers' trading partners and employees to administer and maintain content using only a Web browser and enables every member of the channel to transact real-time business, twenty-four hours a day.

        Portal Framework:    The Portal Framework provides a common site framework that is used throughout the customer's channel network. It is an element of the software that is configurable and addresses commonly developed site features allowing a customer to customize the look and

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feel, the navigation of the site, the overall layout of the site to match their specifications and branding.

        Commerce Suite:    A broadly featured, integrated solution to support and measure online transactions throughout a channel network. The Commerce Suite offers a product catalog, multi-tiered order administration, promotions marketing, and account visibility.

        Click Performance:    Click Performance provides Click Commerce customers with an intuitive data analysis solution that allows the measurement of performance through the distribution channel. The powerful business intelligence that Click Performance uncovers allows customers to continuously improve and to identify the most profitable customers and partners.

        Account Manager:    Account Manager empowers companies and their partners to view and manage critical customer data, including invoices, credits, rebates, contact and account history. The solution facilitates self-service and reduces costs/errors by enabling users to make payments online as well as reconcile their accounts.

        Claims Manager:    Claims Manager increases after-market sales and service by automating the post-sales processes. The solution provides the ability to manage returns and warranty information, including registration, verification, tracking and repair history, transforming aftermarket activities into a streamlined, self-service process.

        Collaboration Manager:    Collaboration Manager enables teams of internal and external users to communicate, share, and manage data in relation to complex projects from disparate geographic locations. By virtually relocating dispersed teams, Collaboration Manager helps companies improve their workflow, speeding time-to-market for new products and reducing communication costs.

        Configuration Manager:    Configuration Manager streamlines operations for organizations that sell, price and quote complex products and services by enabling partners and customers to match their requirements to the best available product configurations. The solution also reduces reliance on product experts for sales support, shortening sales cycles and improving sales effectiveness.

        Content Manager:    This offering enables companies to integrate their Partner Portal solution with a new or existing content management system to maintain highly dynamic web-based content thereby reducing the cost of creating, maintaining, and presenting personalized content throughout the channel network.

        Developer Studio:    The Click Commerce Developer Studio enables system integrators and Click customers to extend and tailor the Click Commerce software to meet specific needs. With over 100 Click Commerce-centric web controls, the Developer Studio provides tools for developers to create their own applications leveraging the Click Commerce Partner Portal platform.

        Inventory Manager:    Inventory Manager enables companies and their partners to locate inventory anywhere in the distribution network, helping to improve forecasting and automate replenishment.

        Lead Manager:    Lead Manager allows companies to manage customer leads, through any online interaction and regardless of channel complexity, with a robust business process management engine that ensures follow-up via a closed-loop methodology. Lead Manager distributes leads to appropriate users/partners and tracks the responsiveness ensuring that leads receive timely follow-up, reducing lost sales.

        Learning Manager:    Learning Manager provides personalized course catalogs, registration for classroom-led and online training and testing management capabilities. The solutions ensure that partners, employees, and service providers are kept aware of the latest product developments and

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are provided with point-of-sale expertise while reducing the costs associated with distributing and validating that information.

        Marketing Manager:    Marketing Manager generates, maintains, and maximizes channel partner loyalty by driving leads and delivering personalized, targeted content to partners and customers. Companies are able to increase the effectiveness of interaction with partners and customers by providing them with the tools and content to maintain profitable relationships.

        Price and Contract Manager:    This application delivers accurate, real-time buying and selling experiences for customers by enabling channel partners to configure pricing rules to manage relationship-level contracts and prices. Partners and customers enjoy fast and cost-effective order placement without sacrificing negotiated contract pricing, removing a common barrier to doing business over the Internet.

        Quote Manager:    Quote Manager enables customers and partners to react to opportunities with tailored quotations and provides tracking of the sales process until it transforms into a sale. Channel partners are able to streamline the quote and response process, by providing that accurate information regarding the status of inquiries is available to all involved parties.

        Service Manager:    Service Manager enables service personnel with the ability to manage service requests, create and maintain service work orders, and view unit maintenance history online in a streamlined, self-service process. The solution makes service partners more efficient, empowering corporations to simplify and accelerate the aftermarket service process for customers, to improve satisfaction and stimulate repeat business.

        B2B Integrator:    The B2B Integrator product is designed to reduce the time and effort required to create and manage integration between Click Commerce software and other software systems, either at the Click Commerce customer or at its partners.

Technology

        We deliver our solutions through tightly integrated, high-performance technologies designed for maximum compatibility with customers' existing systems and computing environments. Proven, scalable, fault-tolerant architecture and best-of-breed integration methods ensure that Click Commerce software works with database, ERP, wireless technology, field dispatch systems and financial systems, as well as hardware and software from all major vendors. The Click Commerce solution uses standard scripting languages, allowing functionality to be easily woven into complex business processes.

        The Partner Portal provides a platform for implementing sophisticated partner relationship management applications. It provides a framework to incorporate these applications, as well as other company intranet and external portals. This framework can be personalized to fit the needs of the implementation at a site level, as well as at a partner and user level. Without customization, it provides all the basic functionality of a business-to-business site including partner registration, partner communications, promotions delivery, catalog, and commerce features. All functionality is built upon the Microsoft.NET framework.

        The Click Commerce architecture is what is called "service-oriented." This is a software design pattern that establishes an architecture made up of robust modules of functionality called services. These services can be core or common services such as authentication, personalization and globalization, as well as application-specific services such as order presentment, catalog search, status inquiry, etc. These services are then loosely coupled to the architecture—meaning that the service is not permanently imbedded in the software—allowing alternative services to be plugged-in in their place. Each layer of the Click Commerce architecture offers these pluggable services, with communications between the layers being handled by eXtensible Markup Language ("XML"). From

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the display layer, to business components, to data access, XML provides a consistent and open technology for interoperating with our platform.

        The Partner Portal product comes bundled with the Click Commerce management portal, called the Relationship Manager. It provides services to manage and model representation of a sophisticated channel, complete with partner organizational structure, business relationships between partners, and relationships between users and the partners with which they interact. It is responsible for providing a common security framework, globalization services, and tools for site configuration and deployment. Relationship Manager is responsible for capturing all site activity and transactions, so that our customer can use our Click Performance product, as well as other business intelligence tools to report site metrics and evaluate return on investment. It provides a personalization component that allows the targeting of content including: catalog information, pricing, promotions, and documentation to different individuals and partners within the distribution network. Finally, the Relationship Manager delivers business process management through configurable business rules abstracted from the applications it supports.

        Our Developer Studio delivers on the power of .NET by providing the re-usable components, tools, and guidelines to extend and maintain a Click Commerce implementation. Rich APIs (application programming interfaces), sample applications, design-time web controls, web services, and documentation delivered through the Click Commerce Developer Network ("CCDN") provide the flexibility to allow our customers to shape the solution to fit their needs. This investment in extensibility allows our customers to deploy integrations inside as well as outside the enterprise. This is critical in large multi-division companies and marketplaces where maximum flexibility and self-sufficiency are required.

        Our application suite provides an extensively featured set of applications that are built using the same-layered approach as the Partner Portal. Each application consists of a display layer built using Microsoft's ASP and .NET technologies. This allows for rapid deployment and tailoring of the product to specific client requirements. In addition, business logic drawn from years of experience in complex channels is encapsulated in components that are easily reused and integrated. Each application leverages the Click Commerce Relationship Manager to understand the complex business relationships between large, global companies and their distribution channels.

Professional Services and Customer Support

        We offer a variety of professional services in connection with our software, including integration services, training, maintenance and customer support.

        Project consulting and implementation services.    Our professional services are delivered under our Click Start Methodology developed from a collection of best practices culled from our experience with previous customer implementations. The Click Start Methodology utilizes several tools and templates to effectively leverage our knowledge capital, including resource and project planning, scheduling, timing and piloting the engagement. Our professional services teams are staffed with project managers and developers who are experienced in both the underlying programming language of our software as well as the customer system and Internet technologies surrounding our product implementations. We have also entered in agreements with outside consulting firms to implement our software, including Accenture and Cap Gemini Ernst & Young. In implementations performed by these outside firms, we may provide technical support through our professional services organization.

        Training.    We believe that customer education is essential to fully leverage the system functions and technology. We have developed a curriculum of courses specifically designed for our customers' key users and technical staff. Our course offerings can be performed either at our facilities or at the customer's site and are usually between two and four days long, depending on the specific class.

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        Maintenance and customer support.    We take a personalized approach to support. We work proactively with our customer base to ensure ongoing success. We offer rapid resolution through our support team and Click Connect, the Click Commerce customer portal, collaborative planning of portal updates and software upgrades, dedicated support teams that understand our customers' implementations, and managed services to outsource routine partner portal operations and maintenance. We provide access to our team of knowledgeable specialists twenty-four hours a day, seven days a week.

Customers

        We have established a strong, referenceable portfolio of Global 2000 clients. Our clients are alike in that they have complex products and multi-level, hierarchical relationships with a broad range of channel partners. The following is a partial list of the companies that have licensed our software and that we believe are representative of our overall customer base. We do not intend the identification of these customers to imply that these customers are actively endorsing or promoting our products.

Research and Development

        We have made and will continue to make investments in research and development through internal development, technology acquisitions and joint marketing and business development relationships. In fiscal 2002, 2001 and 2000, we spent approximately $4,230,000, $9,656,000 and $6,895,000, respectively, on research and development. Our research and development staff is responsible for enhancing our existing products and services and expanding our product line and services offered. Our current product development activities focus on product enhancements to increase the robustness, functionality and ease of integration of our configurable applications and the Relationship Manager and the integration of external services and partner technology.

Sales and Marketing

        We market our products and services through our direct sales force and also through our joint marketing relationships. Our sales force is assisted throughout the sales process by a team consisting of a Click Commerce business consultant, technical consultant, and a project manager. This team oversees the project from start to finish and is responsible for ensuring that the client receives the best partner relationship management solution in the shortest period of time. To complement our direct sales efforts, we also use methods such as telemarketing, direct mail campaigns, Web site marketing and speaking engagements to build market awareness of Click Commerce and our products and to generate leads. Our clients provide extremely strong references for us to our prospects and the industry analyst community.

        We strive to identify "qualified prospects," which are potential customers that meet a majority of the following criteria:

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Global enterprise with over $500 million in revenues or a division with over $500 million in revenues;



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Complex sales/distribution network;

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Recognized brand name;



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Senior management sponsorship initiative; and



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Desire for a rapid implementation.

        We focus our marketing efforts toward educating our target market, generating new sales opportunities and creating awareness of our products and integration services through telemarketing and direct mail efforts. We have engaged in marketing activities such as industry conferences and trade shows, industry analyst programs and advisory councils. Our marketing professionals also produce marketing materials to support sales to prospective customers that include data sheets, brochures and white papers.

Strategic Relationships and Alliances

        To further penetrate the market for our products and integration services, we have established strategic relationships with industry-leading firms whose products and services add value to our software solutions. We work together with our partners to address the business-to-business needs of customers, providing a best-of-breed solution that is mutually rewarding to all parties. Our partners fall broadly into the categories of consulting/systems integration and technology.

        We have system integrator relationships with Cap Gemini Ernst & Young and Accenture. Accenture has given notice of its intent not to renew the strategic marketing relationship. These relationships have assisted us in sales lead generation and also in the implementation of our products. We have trained consultants in these organizations for the installation and integration of our products.

        We have developed key technology relationships with Action Technologies, ARI Network Services, Framework Technologies, Microsoft, Visual Insights and Vitria Technology. These technology relationships enhance our ability to base our products on industry standards and to take advantage of current, emerging technologies.

Intellectual Property and Other Proprietary Rights

        Our success and ability to compete is affected by our ability to develop and maintain the proprietary aspects of our technology and operate without infringing on the proprietary rights of others. We rely primarily on a combination of copyright, patent, trade secret and trademark laws, confidentiality and nondisclosure procedures, contractual provisions and other similar measures to protect our proprietary information. Any patents issued to us may be invalidated, circumvented or challenged. Any of our pending or future patent applications, whether or not being currently challenged, may not be issued within the scope of the claims we seek, if at all. Furthermore, others may develop technologies that are similar or superior to our technology or design around our patents. As part of our confidentiality procedures, we enter into nondisclosure agreements with virtually all of our employees, directors, contractors, consultants, corporate partners, customers and prospective customers. These legal protections, however, afford only limited protection for our technology. Due to rapid technological change, we believe that factors such as the technological and creative skills of our personnel, new product developments and enhancements to existing products are more important than the various legal protections of our technology to establishing and maintaining a technology leadership position.

        Despite our best efforts to protect our proprietary rights, unauthorized parties may attempt to copy or otherwise obtain and use our products or technology that we consider proprietary and third parties may attempt to develop similar technology independently. Policing unauthorized use of our products is difficult. While we are unable to determine the extent to which piracy of our software exists, we expect software piracy to be a persistent problem. In addition, effective protection of proprietary rights may be unavailable or limited in certain countries. The laws of some foreign

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countries do not protect our proprietary rights to the same extent as do the laws of the United States. Overall, the protection of our proprietary rights may not be adequate and our competitors may independently develop similar technology.

        We are not aware that our products, trademarks, copyrights or other proprietary rights infringe the proprietary rights of third parties, however we have not reviewed existing patents and patent applications in order to determine whether grounds exist for an infringement claim against us. Third parties may assert infringement claims against us in the future with respect to current or future products. Further, we expect that software product developers will increasingly be subject to infringement claims as the number of products and competitors in our industry segment grows and the functionality of products in different industry segments overlaps. From time to time, we hire or retain employees or consultants who have worked for independent software vendors or other companies developing products similar to those offered by us. Those prior employers may claim that our products are based on their products and that we have misappropriated their intellectual property. Any claims of that variety, with or without merit, could cause a significant diversion of management attention, result in costly and protracted litigation, cause product shipment delays or require us to enter into royalty or licensing agreements. Those royalty or licensing agreements, if required, may not be available on terms acceptable to us or at all, which would have a material adverse effect on our business.

Competition

        The market for our products is intensely competitive, subject to rapid technological change and is significantly affected by new product introductions and other market activities of industry participants. There are relatively few barriers to entry in the Internet-based software market and we expect competition to persist and intensify in the future. We currently have four primary sources of competition: in-house development teams of our potential clients; large software and enterprise resource planning vendors that directly address partner relationship management products and services; infrastructure and platform providers; and independent software vendors. In the past, when competing for customers, we have directly competed with providers of alternative products and services, including Allegis, Comergent, Haht Commerce, IBM (with the Websphere product), SAP, and Siebel Systems. The number and nature of competitors and the competition we will experience are likely to change substantially in the future.

        We believe that the principal competitive factors affecting our market include speed of implementation, price, knowledge of the industry and its respective distribution channel, core technology, an ability to integrate and interoperate with existing technology and the financial capacity of the respective vendor. Although we believe that our products and integration services currently compete favorably with respect to most of these factors, our market is evolving rapidly. We may not be able to maintain our competitive position against current and potential competitors, especially those with significantly greater financial, marketing, service, support, technical and other resources.

        Many of our competitors have longer operating histories in related markets, significantly greater financial, technical, marketing and other resources, significantly greater name recognition and a larger installed base of customers in related markets. Moreover, a number of our competitors, particularly major business software companies, have well-established relationships with our current and potential customers as well as with independent systems consultants and other vendors and service providers. In addition, these competitors may be able to respond more quickly to new or emerging technologies and changes in customer requirements, or to devote greater resources to the development, promotion and sale of their products, than we can.

        Such competition could materially and adversely affect our ability to obtain revenues from either license or maintenance and service fees from new or existing customers on terms favorable to us. Further, competitive pressures may require us to reduce the price of our products and services. In

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either case, our business, operating results and financial condition would be materially and adversely affected. There can be no assurance that we will be able to compete successfully with existing or new competitors or that competition will not have a material adverse effect on our business, financial condition and operating results.

Employees

        As of December 31, 2002, our full-time headcount was 74. Our employees are not represented by a labor union, and we consider our relations with our employees to be good. In order to provide benefits to our employees in a cost-effective manner, we have entered into a client services agreement with Administaff Companies, Inc. under which Administaff provides us with certain personnel management services, such as payroll, medical and dental insurance and the administration of our 401(k) plan. Under the agreement, Administaff and we are intended to be co-employers of all of our employees. Co-employment is necessary for Administaff to administer payroll and sponsor and maintain benefit plans.

Risk Factors

Risks Related to Our Business

We have incurred net losses in twelve consecutive quarters and we may experience losses in the future, which could cause the market price of our stock to decline.

        We have incurred net losses for twelve consecutive quarters. We can provide no assurance that we will achieve profitability in 2003. If we do achieve profitability in 2003, we may not sustain or increase profitability in the future. If we do not become profitable within the timeframe expected by investors, the market price of our common stock will likely decline.

We are dependent on the success of our suite of applications and related services for our success.

        To date, substantially all of our revenues have been attributable to sales of licenses of the Partner Portal (including the Relationship Manager) and our suite of applications and related services, consisting of implementation, integration with a customer's existing back-office computer systems and maintenance and support of our software products. We currently expect the Partner Portal and our suite of applications and related services to account for a substantial portion of our future revenues. Accordingly, factors adversely affecting the pricing of or demand for the Partner Portal and our suite of applications, such as competition or technological change, could have a material adverse effect on our business, financial condition, and operating results. Our future financial performance will depend, in significant part, on the successful development, introduction and customer acceptance of new and enhanced versions of the Partner Portal and our suite of applications and of new products and services we develop. We can provide no assurance that we will be successful in upgrading and continuing to market the Partner Portal and our suite of applications or that we will successfully develop new products and services or that any new products and services will achieve market acceptance.

Our business is subject to quarterly fluctuations in operating results, which may negatively impact the price of our common stock.

        Our quarterly operating results have varied significantly in the past and we expect that they will continue to vary significantly from quarter to quarter in the future. We have difficulty predicting the volume and timing of contracts, and short delays in closing contracts or implementation of products can cause our operating results to fall substantially short of anticipated levels for that quarter. This is in part due to the fact that our products have a long sales cycle, which makes it difficult to predict the periods in which we will recognize revenue and may cause operating results to vary significantly. Additionally, we began selling our software products separately from our integration services during

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fiscal 2000. As a result of these and other factors, we believe that period-to-period comparisons of our historical results of operations are not necessarily meaningful and are not a good predictor of our future performance. We may not be successful in generating recurring revenue streams to offset the above effects.

        In addition, we may incur expenses in order to develop products and service offerings ancillary to our existing line of products and services. These expenses may affect our earnings and may result in losses in particular quarterly or annual periods.

        For all of these reasons, in some future quarters or years our operating results may be below the expectations of investors, which could cause volatility or a decline in the price of our common stock.

        If we are unable to complete a substantial number of sales contracts when anticipated or experience delays in the process on a project or problems with satisfying contract terms, we may have to defer or not recognize revenue, causing our quarterly results to fluctuate and fall below anticipated levels. For contracts in which revenue is recognized using a percentage-of-completion method, we may not be able to recognize all or a portion of the revenue because milestones were not achieved or the level of hours incurred fell short of expectations. If we are unable to complete one or more substantial anticipated license sales or experience problems with satisfying contract terms required for revenue recognition in a particular quarter, we may not be able to recognize revenue when anticipated. We would nonetheless recognize marketing and other expenses, causing our quarterly results to fluctuate and fall below anticipated levels. This could cause our stock price to decline.

The continuing economic slowdown, particularly in information technology, may adversely impact our business.

        Our business has been adversely impacted by the economic slowdown, particularly the decline in information technology spending. The adverse impacts from the economic slowdown include longer sales cycles, lower average selling prices and reduced bookings and revenue. A prolonged economic slowdown could continue to adversely impact our business.

If our relationships with system integrators and business consultants terminate, we may lose important sales and marketing opportunities.

        We have established relationships with system integrators and business consultants. We expect that these relationships, though not exclusive, will expose our software to many potential customers to which we may not otherwise have access. If our relationships with any of these organizations do not develop as we expect or are terminated, or any of these organizations begin promoting the products of our competitors instead of our products, we might lose important opportunities, including sales and marketing opportunities, and our business may suffer.

We license certain software from third parties.

        We license a small amount of software from third parties. These third party software licenses may not continue to be available to us on acceptable terms. The loss of, or inability to maintain, any of these software licenses could result in shipment delays or reductions in revenue. This could adversely affect our business, operating results and financial condition.

We will not be able to achieve desired growth in our business if we cannot increase our direct and indirect sales channels, which could negatively affect our stock price.

        Our products and services require a sophisticated sales effort targeted at several people within our prospective clients' organizations. We believe that our future success is dependent upon establishing and maintaining productive relationships with a variety of distributors, resellers, system integrators and

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other joint marketing relationships with third parties. We cannot be sure that we will be successful in establishing these desired relationships or that these third parties will devote adequate resources or have the technical and other sales capabilities to sell our products.

Acquisitions or investments in other technology companies or related businesses may disrupt or otherwise have a negative impact on our business and dilute shareholder value.

        We may acquire or make investments in complementary businesses, technologies, services or products, or enter into relationships with parties who can provide access to those assets, if appropriate opportunities arise. From time to time we have had discussions and negotiations with companies regarding our acquiring, investing in or partnering with their businesses, products, services or technologies, and we regularly engage in these discussions and negotiations in the ordinary course of our business. We may not identify suitable acquisition, investment or relationship candidates, or if we do identify suitable candidates, we may not complete those transactions on commercially acceptable terms or at all. If we acquire another company, we could have difficulty in assimilating that company's personnel, operations, technology and software. In addition, the personnel of the acquired company may decide not to work for us. If we make other types of acquisitions, we could have difficulty in integrating the acquired products, services or technologies into our operations. These difficulties could disrupt our ongoing business, distract our management and employees and increase our expenses. Furthermore, we may incur indebtedness or issue equity securities to pay for any future acquisitions. The issuance of equity securities would dilute the ownership interests of the holders of our common stock.

We face competition and may face future competition.

        The market for software products and services that enable business-to-business e-commerce is intensely competitive, highly fragmented and rapidly changing. There are relatively few barriers to entry in the channel management market. We expect competition to persist and intensify, which could result in our losing market share or lowering our prices.

Some of our competitors have advantages over us.

        Some of our existing competitors, as well as potential future competitors, have longer operating histories in markets related to ours, greater name recognition, larger customer bases and significantly greater financial, technical and marketing resources than our company. These advantages may allow them to respond more quickly and effectively to new or emerging technologies and changes in customer requirements. It may also allow them to engage in more extensive research and development, undertake farther-reaching marketing campaigns, adopt more aggressive pricing policies, implement their products and services more rapidly, and make more attractive offers to potential employees and other business associates. One or more of these companies could adopt a different business strategy for achieving profitability, which could allow them to charge fees that are lower than ours, in order to attract clients. In addition, current and potential competitors have established or may establish cooperative relationships among themselves or with third parties to increase the ability of their products or services to address the needs of our current and prospective clients.

Our chief executive officer is critical to our business.

        Our future success largely depends upon the continued service of our chief executive officer. If we lose the services of Michael W. Ferro, Jr., our founder, chairman of the board of directors and chief executive officer, he would be extremely difficult to replace.

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If we fail to protect our intellectual property rights or face a claim of intellectual property infringement by a third party, we could lose our intellectual property rights or be liable for significant damages.

        Our success depends significantly upon our proprietary technology. We have a limited number of patents and no plans to apply for any new patents. Unauthorized parties may copy aspects of our products or services or obtain and use information that we regard as proprietary. Our means of protecting our proprietary rights may not be adequate, and our competitors may independently develop similar technology or duplicate our products or our other intellectual property rights. Our failure to protect our proprietary rights adequately or our competitors' successful duplication of our technology could negatively affect our operating results and cause the price of our common stock to decline.

        In addition, we have agreed, and may agree in the future, to indemnify certain of our customers against claims that our software infringes upon the intellectual property rights of others. We could incur substantial costs in defending ourselves and our customers against infringement claims. In the event of a claim of infringement, we and our customers may be required to obtain one or more licenses from third parties. We or our customers may be unable to obtain necessary licenses from third parties at a reasonable cost, or at all. Defense of any lawsuit or failure to obtain any such required licenses could harm our business, operating results and financial condition.

Litigation over intellectual property rights could disrupt or otherwise have a negative impact on our business.

        There has been frequent litigation in the computer industry regarding intellectual property rights. Third parties may make claims of infringement by us with respect to current or future products, trademarks or other proprietary rights. These claims could be time-consuming, result in costly litigation, divert management's attention, cause product or service release delays, require us to redesign our products or services or require us to enter into costly royalty or licensing agreements. Any of these effects could have a material and adverse effect on our financial condition and results of operations.

If we become subject to product liability litigation, it could be costly and time consuming to defend.

        Since our products are used for company-wide, integral computer applications with potentially strong impact on our customers' sales of their products, errors, defects or other performance problems could result in financial or other damages to our customers. Although we have contractual limits to our liability, product liability litigation, would be time consuming and costly to defend, even if we are successful.

We have disclosed Pro Forma Financial Information

        We prepare and release quarterly unaudited financial statements prepared in accordance with generally accepted accounting principles ("GAAP"). We also have disclosed and discussed certain pro forma financial information in certain previous earnings releases and related investor conference calls. This pro forma financial information excluded certain non-cash charges, consisting primarily of amortization of stock-based compensation, restructuring charges, accretion related to preferred stock and income tax expense or benefit. Although we believe the disclosure of pro forma information may have helped investors more meaningfully evaluate the results of our ongoing operations and although we provided a reconciliation of the pro forma information to our GAAP financial statements, we urge investors to carefully review the GAAP financial information included as part of our Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K and our quarterly earnings releases and compare that GAAP financial information with the pro forma financial results previously disclosed in the related earnings releases and investor calls.

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Risks Related to Our Industry

We are highly dependent on the acceptance and effectiveness of the Internet as a medium for business-to-business commerce.

        Our future revenues and the success of a number of our products and services are dependent in large part on an increase in the use of the Internet for business-to-business commerce. The failure of the Internet to continue to develop as a commercial or business medium could harm our business, operating results and financial condition. The acceptance and use of the Internet for business-to-business commerce could be limited by a number of factors, such as the growth and the use of the Internet in general, the threat of illegal activity that causes performance degradations at unprotected sites across the Internet, the relative ease of conducting business on the Internet, the efficiencies and improvements that conducting commerce on the Internet provides, concerns about transaction security and taxation of transactions on the Internet.

We depend on the speed and reliability of the Internet.

        The recent growth in Internet traffic has caused frequent periods of decreased performance. If Internet usage continues to grow rapidly, its infrastructure may not be able to support these demands and its performance and reliability may decline. Decreased performance at some unprotected Internet sites has also been attributed to illegal attacks by third parties. If outages or delays on the Internet occur frequently or increase in frequency, or businesses are not able to protect themselves adequately from such illegal attacks, business-to-business e-commerce could grow more slowly or decline, which may reduce the demand for our software products and services. The ability of our products to satisfy our customers' needs is ultimately limited by and depends upon the speed and reliability of the Internet. Consequently, the emergence and growth of the market for our software products and services depends upon improvements being made to the entire Internet to alleviate overloading and congestion. If these improvements are not made, the ability of our customers to benefit from our products and services will be hindered, and our business, operating results and financial condition may suffer.

Increased security risks of the Internet may deter future use of our software products and services.

        A fundamental requirement of Internet-based, business-to-business software is the secure transmission of confidential information over public networks. Advances in computer capabilities, new discoveries in the field of cryptography, or other developments may result in a compromise or a breach of the security features contained in our software or the algorithms used by our customers and their business partners to protect content and transactions on Internet e-commerce marketplaces or proprietary information in our customers' and their business partners' databases. Anyone who is able to circumvent security measures could misappropriate proprietary, confidential customer information or cause interruptions in our customers' and their business partners' operations. Our customers and their business partners may be required to incur significant costs to protect against security breaches or to alleviate problems caused by breaches, reducing the demand for our software products and services. Further, a well-publicized compromise of security could deter businesses from using the Internet to conduct transactions that involve transmitting confidential information. The failure of the security features of our software to prevent security breaches, or well-publicized security breaches affecting the Internet in general, could significantly harm our business, operating results and financial condition.

Internet-related laws could adversely affect our business.

        Regulation of the Internet is largely unsettled. The adoption of laws, regulations or taxes that increase the costs or administrative burdens of doing business using the Internet could cause companies to seek an alternative means of transacting business. If the adoption of new Internet laws, regulations

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or taxes causes companies to seek alternative methods for conducting business, the demand for our software products and services could decrease and our business could be adversely affected.

Item 2.    Properties

        Our corporate headquarters are located in leased office space in Chicago, Illinois. This lease expires on August 31, 2005. During 2002, the Company also leased additional office space in Chicago, Illinois. We also have leased offices in Detroit, Michigan and Amsterdam, Netherlands.

Item 3.    Legal Proceedings

        On or about December 4, 2001, a putative securities class action, captioned Murphy v. Click Commerce, Inc., et at, Civil Action 01-CV-11234 was filed against us, two of our executive officers and Morgan Stanley & Co., Dain Rauscher Incorporated, Lehman Brothers, Inc., Deutsche Bank Securities, Inc., and U.S. Bancorp Piper Jaffray, Inc., the underwriters of our initial public offering, in the United States District Court for the Southern District of New York. The complaint, alleged violations of Section 11 of the Securities Act of 1933 (the "Securities Act") against all defendants, a violation of Section 15 of the Securities Act against two of our executive officers and violations of Section 12(a)(2) of the Securities Act and Section 10(b) of the Securities Exchange Act of 1934 (the "Exchange Act"), including Rule 10b-5 promulgated thereunder, against the underwriters. The complaint sought unspecified damages on behalf of a purported class of purchasers of common stock between June 26, 2000 and December 6, 2000. On February 19, 2003, an Opinion and Order to dismiss the complaint was issued dismissing with prejudice, all claims against Click Commerce in their entirety. The claims against executive officers of Click Commerce had previously been dismissed.

Item 4.    Submission of Matters to a Vote of the Securities Holders

        There were no matters submitted to a vote of our shareholders during the fourth quarter of the year covered by this Annual Report on Form 10-K.

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PART II

Item 5.    Market for Registrant's Common Stock and Related Shareholder Matters

Market Information

        Our common stock trades on the NASDAQ National Market under the symbol "CKCM." On March 28, 2003, the last reported closing price per common share was $2.37. Unless otherwise indicated, all shares and per share amounts set forth below have been adjusted to reflect a 1-for-5 reverse stock split of the Company's Common Stock effectuated on September 4, 2002 (the "Reverse Stock Split").

        The following table sets forth the high and low bid prices per share of our common stock for the years ended December 31, 2002 and 2001, as reported on the NASDAQ National Market:

Holders of Record

        As of March 17, 2003, there were 58 holders of record of our common stock. The number of holders of record is not representative of the number of beneficial holders because many shares are held by depositories, brokers or other nominees.

Dividends

        We have never declared or paid any cash dividends on our common stock. We currently intend to retain earnings, if any, to support our growth strategy and do not anticipate paying cash dividends in the foreseeable future.

Sales of Unregistered Securities

        In April 2000, we issued a warrant to Accenture to purchase up to 163,646 shares of our common stock at an exercise price of $61.11 per share. In the fourth quarter of 2002, the Company reached an agreement with Accenture to cancel the warrant.

Equity Compensation Plan Information

        Information about securities authorized for issuance under our equity compensation plans appears under "Equity Compensation Plan Information" in the Proxy Statement. That portion of the Proxy Statement is incorporated by reference into this annual report.

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Item 6.    Selected Financial Data

        The following selected financial data should be read in conjunction with our consolidated financial statements and related notes to the consolidated financial statements and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere in this report. The consolidated statements of operations data for the years ended December 31, 2002, 2001, 2000, 1999 and 1998, and the consolidated balance sheet data as of December 31, 2002, 2001, 2000, 1999 and 1998, are derived from our consolidated financial statements that have been audited by KPMG LLP, independent auditors. The historical results presented below are not necessarily indicative of the results to be expected for any future fiscal year. All shares and per share amounts in the selected financial data below have been retroactively restated to give effect to the 1-for-5 reverse stock split of the Company's common stock, effectuated on September 4, 2002.